Major turbulence ahead for the airline industry

Abstract

At this moment, the future may look pretty scary: record fuel prices that make the best of aircraft appear inefficient, a weakening global economy, prospects for further cost restructuring appearing dim, a rigid regulatory and institutional environment, and to top it all off, stricter environmental regulations on the horizon. Consequently, the airline industry is in turbulent times. Times like these require imaginative thinking, bold strategies and rapid actions. As has unfolded many times before, the industry has demonstrated tremendous resilience, and, as this paper argues, it will once more. This paper provides a brief discussion on the nature of turbulence, outlines major steps that the industry is taking and future prospects, with a special emphasis on the US airline industry.