Airline Industry
The airline industry has experienced a lot of problems. The air line industry experienced huge looses in 2008. The losses amounted $4.3 billion in the 2008.There are various factors that led to the losses. First, the high prices for jet fuel contributed a lot to the losses in the industry. This is because the airline firms spent a lot of money on fuel as the prices for jet fuel increased by 60%. The losses were further fueled by the economic crisis in the country.
Most researchers predicted that the airline industry could make profits in 2008. But, the airline industry was unable to achieve the target. The economic crisis in the country has forced US airlines to reduce the number of employees. Also, the airline firms have cut their capacity and reduced the fleet. In addition, the airline firms have established new fees. Moreover, the economic crisis in the country has affected the demand for airline services. The demand for air services has declined both internationally and locally. This is because customers cannot afford the new cost. Also, customers find it difficulty to abide by the new regulations.
Further, the revenue in the airline line industry has reduced and affected future investments. The airline firms have no enough capital to carry out future investment. The future for airline industry is not bright. This is because of the current problems the industry is facing. The revenue has declined and this has affected investment in the industry. Airline firms will not be able to expand in future. The airline industry will continue to record low profits if the economic condition in the country does not changed. The low demand for airline services will affect profits in the industry and make the industry experience slow growth (GAO, 2009).
Reference
GAO. (2009).Commercial aviation. Airline industry contractions due to volatile fuel prices and falling demand affects airports, passengers and the federal government revenues. Retrieved from http://www.gao.gov/new.items/d09393.pdf on 17/08/2010.
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