Airline Industry Turbulence

January 18, 2019 • Volume 29, Issue 3
Can big carriers overcome looming market challenges?
By Mike Christensen


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.

Ultra-low-cost carriers such as Spirit Airlines (Getty Images/Gary Hershorn)
Ultra-low-cost carriers such as Spirit Airlines are pressuring larger carriers such as United Airlines, whose planes are shown in the foreground, to lower fares and charge extra for aisle seats, snacks and other amenities. (Getty Images/Gary Hershorn)
ISSUE TRACKER for Related Reports
Air Transportation
Jan. 18, 2019  Airline Industry Turbulence
May 15, 2015  Airline Safety
Oct. 18, 2013  Domestic Drones
Mar. 07, 2008  Future of the Airlines
Jun. 21, 2002  Future of the Airline Industry
Sep. 24, 1999  Airline Industry Problems
Oct. 08, 1993  Airline Safety
Oct. 24, 1986  Airline Deregulation
Oct. 19, 1984  Safety in the Air
Nov. 26, 1982  Troubled Air Transport Industry
Jun. 25, 1976  Air Safety
Mar. 21, 1975  Air-Fare Control
Jan. 27, 1971  Future of the Airlines
Sep. 10, 1969  Jumbo Jets: New Travel Era
Feb. 22, 1967  Airport Modernization
Mar. 18, 1964  Supersonic Transport Race
Feb. 07, 1962  Troubles of the Airlines
May 11, 1960  Prevention of Air Accidents
Sep. 17, 1958  Safety in the Air
May 23, 1956  Jet Age Problems
May 20, 1953  Safer Flying
Feb. 26, 1947  Air Safety
Jun. 08, 1944  Domestic Air Transportation
Apr. 08, 1944  International Air Transport
Mar. 02, 1939  Transatlantic Air Commerce
Jul. 14, 1927  Commercial Aeronautics
Jun. 20, 1925  Development of Commercial Air Navigation
Air Safety and Security
Air Transportation
Congress Actions
Consumer Behavior
Consumer Protection and Product Liability
Crime and Law Enforcement
Economic Analyses, Forecasts, and Statistics
General Employment and Labor
Regulation and Deregulation
Travel and Tourism