Government Financial Assistance
In the United States, the major airlines and government financial assistance in the form of subsidies have been able to elicit mixed reactions and debate among experts and the general population. To a large extent, major United States airlines such as United, Delta, and American have been established through financial assistance from the federal government. Part of such financial assistance from the government to some airlines in the United States has been conducted through various agreements and subsidies. For instance, most of the infrastructure and technologies used by virtually all airlines in the United States have been introduced and developed by the government through a significant level of financial commitment. Presently, the federal government continues to give more financial support to airlines by finding initiatives and programs that support such carriers (Lee & Mo, 2013). For example, the federal government funds the Essential Air Service program that is charged with the responsibility of giving subsidies to carriers that offers their services people from rural communities. The Fly America Act mandates the federal government through its various agencies to finance the flying of cargo and passengers using American airlines.
High Technological Turnover
High rates of technological changes in the airline industry in the United States have a significant role to play in influencing competition which has a way of leading to the elimination of monopoly. Such technological turnover changes also go to the extent of influencing the reduction of the competitive nature among the major American carriers such as United, Delta, and American. Technology has been credited for assisting such airline companies in enhancing the delivery of the services by promoting their brands and offering reliability to their customers thus creating more loyalty. Mostly, a considerable number of American airline companies have been experiencing a considerable technological turnover owing to the need to have simplified travel experiences for their clients through deeper engagements in innovation and technology (Keeler, 2014). Besides, connectivity has proved to be among some of the fast-growing trends in the techniques adopted by American carriers owing an increasing use of digital devices by their employees, passengers, procurement officials, suppliers, and business networks. High technological turnover among airlines such as Allegiant Air, Alaska, Delta, Southwest, and JetBlue among others concerning the connectivity technology has significantly contributed to the growth of the industry by enhancing the travel experience for customers (Keeler, 2014).
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High Labor and Fuel Expenses
Higher fuel and labor cost have often weighed heavily on the profits made by most major American airlines such as Alaska, Delta, Southwest, and Allegiant Air among others. According to Brady and Cunningham (2015), fuel is regarded as being among some of the most primary and essential costs for airlines in America and across the globe. Fuel represents one of the most basic costs for an airline. During peak times when the price of crude oil was about $100 per barrel, the cost of fuel could account for close to 35% of the all the operating costs incurred by airline companies in the United States. Besides, the drastic falling of crude oil prices from around the middle of the year 2014 led to a significant decline in the fuel costs incurred by airline companies. Before a reduction in the costs of fuel, labor was often being considered as the second highest expenditure for most of the major airlines in the United States. Presently, labor has increased to a level of becoming the highest component of costs for most American carriers. The cost of labor for American airlines grew from 22% of overall operating expenses in the year 2014 to 27% in the year 2015 (Augustine, 2017).
Schedule Frequency Advantages
Some of the advantages associated with the schedule frequency used by air carriers in the United States are that they have one of the broadest coverage around the globe considering that they usually fly to more than 250 locations around the world and within America. Owing to the diverse and flexible nature of some of the major airlines in the United States concerning the schedule of their frequencies, passengers usually enjoy enhanced customer experience characterized by the affordability of tickets, convenience, and reliability. For instance, reservations for affordable air tickets by American Airlines are typically available on Expedia which daily packages of discount offers on fares (Lee & Mo, 2013). According to Lee and Mo (2013), a large number of flights conducted by American carriers normally depart and arrive in different hubs situated across the country. Dallas-Fort Worth International Airport (DFW) is among the largest is among the most significant hubs used by most airline companies in the United States and is capable of handling a significant number of flights regularly. Other hubs within the United States that the advantages of schedule frequencies for American carriers include John F. Kennedy International Airport (JFK) in New York City, O'Hare International Airport (ORD) in Chicago, Miami International Airport (MIA), and Los Angeles International Airport (LAX).
Excess Capacity and Marginal Costs
Excess capacity and marginal costs have prompted most airline companies in the United States to consider renewal programs in their plans with the objective of continuing with the modernization of clubs and refurbishment of several planes. In dealing with the concern of marginal costs and excess capacity, the major American air carriers have contributed to further segmentation of the airline industry (Keeler, 2014). However, further observation by Keeler (2014) indicates that there has been a level of relative success in the plans of most of these airlines to achieve a significant increase in the extent of revenues collected. Presently, more than half of passengers depend on American air carriers for their traveling within the country and overseas. The success of these airlines in addressing the issues of excess capacity and the marginal cost has often involved taking a careful approach to the management of the growing capacity by providing different categories of the air ticket.
Sensitivity to Economic Fluctuations
To a larger extent, most of the major airlines in the United States have managed to demonstrate considerable levels of sensitivities to various forms of economic fluctuations. In this respect, such airlines have often adjusted their costs, expeditors, and air tickets according to with the aim of ensuring that they remain in operation. Other indicators of increased levels of sensitivities demonstrated by American air carriers include efforts aimed at regulating their workforce be commensurate with the changes in the economy (Brady & Cunningham, 2015). Revenues and profit margins made by these companies have been playing a crucial role in determining the appropriate measures taken as a way of responding to fluctuations in both the American and global economies.
Close Government Regulations
The federal government has been closely involved in the operations and activities of the American airline sector. Besides, the efforts by the government to enhance regulatory measures have formed part of the common features that are usually experienced among some of the major airlines in the United States. Regulatory agencies from the federal government have been able to assist in the development of a robust competition policy thereby reforming the general aviation industry in the United States (Lee & Mo, 2013). Close government regulations on airline operations have led to the enhancement of strategic coordination and cooperation among some of the major airlines such as Alaska, Delta, Southwest, and JetBlue. (Lee & Mo, 2013). The federal government of the United States is also involved in checking standards of quality and compliance when it comes to expected service delivery by the major airline companies.
References
Augustine, A. (2017). World’s Largest Airlines, Proposed Merger of US Airways – American
Airlines. SSRN Electronic Journal , 8 (12), 78-85. doi: 10.2139/ssrn.2338566
Brady, S., & Cunningham, W. (2015). Exploring Predatory Pricing in the Airline Industry.
Transportation Journal, 41 (1), 5-15. Retrieved from
http://www.jstor.org/stable/20713478
Keeler, J. (2014). Measuring Excess Capacity In U.S. Passenger Airlines. International
Journal of Transport Economics / Rivista Internazionale Di Economia Dei Trasporti,
31 (2), 157-181. Retrieved from http://www.jstor.org/stable/42747695
Lee, J., & Mo, J. (2013). Analysis of technological innovation and environmental
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