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FEATURED REPORT

Airline Industry Turbulence

- January 18, 2019
Can big carriers overcome looming market challenges?
Featured Report

After decades of bankruptcies and mergers, the U.S. airline industry is cruising smoothly. In the years since the 2007–09 recession, airlines have shed money-losing routes, acquired more fuel-efficient planes and, despite complaints from passengers, fit more seats into planes and started charging for services previously included in ticket prices. The result has been eight consecutive years of profitability for U.S. carriers. But the economics of the airline industry are changing. Low-cost carriers, including Spirit and Frontier, increasingly are challenging larger airlines such as American, Delta and United in the domestic market, and budget carriers also are eating into the bigger airlines' trans-Atlantic business. Meanwhile, in a move aimed at boosting revenues but that may alienate thrift-minded passengers, airlines are adopting a new “dynamic-pricing” system, in which ticket prices are based on what the carriers know about individual travelers' past purchases. A growing pilot shortage and increasingly crowded airports are further roiling the industry's outlook.

Nagging Worries

Protecting Passengers

 
1920s–1960sCommercial aviation evolves into the Jet Age, making air travel a mass phenomenon.
1970s–1990sGovernment deregulates airline fares and routes; major carriers implement a hub-and-spoke system, which reduces flights to smaller communities and eventually leads to the rise of regional airlines.
2000s–PresentBeefed-up post-9/11 security measures, increased competition from low-cost carriers and waves of bankruptcies and mergers lead to airline consolidation and new business strategies.
   

Should the federal government regulate airline industry fees?

Pro

Sen. Edward J. Markey D-Mass.
Member, Senate Committee on Commerce, Science and Transportation.

Con

Douglas Lavin
Vice President, Member and External Relations, International Air Transport Association.

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