All This, Despite 'Being Central to Globalization'
Recent analysis of the airline industry raises some intriguing,
yet troubling issues. A recent report suggests that, "Air travel
remains an extensive and growing industry that facilitates tourism,
international investment, world trade and economic growth.
Central to the globalization occurring in other industries, air
travel remains a very restricted industry. Business travel has
grown over the last decade as companies become increasingly
international in their investments, supply and production chains,
and customers. The rapid growth in international direct investment
has also contributed to a rise in business travel."
The analysis, from a
report by Frost & Sullivan, entitled 'Merging Air Transport
Market Dynamics,' finds that airlines earn revenue by transporting
cargo, selling frequent flyer miles to other companies, fuel
surcharges, baggage fees, and up-selling in-flight services. The
largest proportion of the industries generated revenue derives from
regular and business passengers. This research covers market
segments by the geographic regions of Europe, Latin America,
Russia, North America, Africa, Middle East and the Asia
"The airline industry is the most global
business, while being the most restricted industry," says Frost
& Sullivan Industry Analyst Nathan K. Smith. "Some regulation
of the industry is likely and essential if governments continue
restricting the global airline industry from the freedom allowed to
other industries." Customers have fewer issues about their flag
carrier. Instead, they are more concerned about the service quality
and value provided.
Airline profitability is closely tied to economic growth and
trade. The economic slump in the United States and the weaker
global economy has led to low passenger demand and cargo growth.
Labor, one of the airline industry's biggest adversaries, is
putting pressure on the industry for unacceptably high wages and
benefits. Further, the U.S. government has and continues to react
too slowly to resolving the air traffic congestion and security
issues that confront it. To ensure airport, airline and passenger
safety, governments monitor threats and seek continual improvements
in screening, surveillance, perimeter and access control.
"Airport security is a major concern for airlines, airports and
governments," concludes Smith. "Innovative technologies and
solutions are creating effective options for increased security and
cost efficiency, thereby driving the market."