Aviation is moving from being highly regulated to a more liberalized and competitive marketplace. During the past 25 years, three main forces have radically changed the airline industry: the regulatory environment, airplane and aerospace capabilities, and airline strategies.
Government regulations have been critical in shaping the structure of the airline industry. We have also seen increased liberalization ? even "open skies" ? in international markets. This freer market access intensifies airline competition.
Airplane capability has also reshaped airline networks. Today, airlines have much greater selection of airplane capacity and range combinations to meet competitive market demands.
The combination of changing regulation and improved airplane capabilities has shaped airline strategies in recent years. The events of the recent down cycle have accelerated the effects of these factors. These three main forces will continue to drive the industry's evolution.
Passengers drive airline strategies
In today's competitive marketplace, passengers drive airline strategies. So, what do passengers want?
? Safe, reliable service
? Shortest trip times - nonstop, point-to-point flights with more frequency choices
? Low fares in comfortable surroundings
The recent down cycle has placed considerable emphasis on lowering airline operating costs. This, in addition to the competitive, more liberalized environment, has forced airlines to re-examine their business models. The result has been more efficient airline systems to meet the desires of passengers for lower fares. A good example of this is the significant growth in low cost carriers who base their networks on the more efficient point-to-point systems ...