Restructuring in Airline Industry Essay Example | Topics and Well Written Essays - 2500 words

Restructuring in Airline Industry - Essay Example The cause of this crisis was the increase in the fuel prices as in the worse economic fiasco faced by many nations across the globe. This led to the falling down in demand of fuel in USA and Britain. Breaking out of Gulf War saw many airlines shutting their business down, among these were the Eastern Airlines -US, British airline Air Europe, Pan American and a few smaller airlines like Midway-US and TEA in Belgium. The end of Gulf War was not any better for any of these airlines. From the world's top-20 airlines only British Airways, Cathay, SIA (Singapore Airlines) and Swissair made a net surplus in each of the three years 1991-1993. The worst hit was the North-American airlines; on the contrary many Asian airlines functioned beneficially. Many airlines needed huge capitals to survive in those years among them was Air France. The member states of the European Union received US $ 10.4 billion in 'state aid' in the year 1995. This was government support offered following authorization by the European Commission. In 1997, Alitalia was given $ 1.7 billion of state aid. Several Airlines received government funds about $ 1.3 billion that were not classified as state support. Subsequently, in 1994 and the years to follow, with financial prudence a number of airlines returned to stipulate development and gain profits. Generally, this was the time when a boom occurred in the airline business. In addition, 1998 was the most lucrative year ever. (Doganis, 2001) Airlines suffered a setback right after 9/11. A year following the assault on WTC, 54% of airline employees in NY district who were removed remained jobless. By and large, joblessness in the New York state remains towering, at 7.4 percent, and current statistics illustrate that more or less 40 percent of those laid off subsequent to 9/11 are still jobless. Even though billions of dollars in centralized support have been billed to help the airlines affected by the rebellious assault, removed airline employees have by and large been unsuccessful to profit up to now from this aid. Apparently, not just US but many other countries suffered in the aftermath of 9/11's events. There was an abrupt, close to total disruption of air traffic in the United States on 9/11, which persisted for quite a few days after that. On the other hand, Clark (Sept. 25, 2001) found that even though some businesses proposed to use video-conferencing and automobiles to replace for air travel, largely companies hadn't suspended business travel by air. Airline industry possibly has attained soaring rates of development, but this has not been convoyed by soaring rates of productivity, relatively contradicting. The Airline industry profits have been relatively less as compared to some other businesses, and in recent years there have been extreme losses too. It is alongside this setting that the industry is experiencing several fundamental 'restructuring'. The better part of the post-war period the industry was subjugated by the nationalized airlines, known as 'flag carriers', and the regimes that possessed them frequently financed and used them as devices to further their