The Competitive Environment of the US Domestic Airline Industry in 2010

Abstract

The competitive landscape of the U.S. domestic airlines dramatically changed when the industry was deregulated in 1978. While airline traffic and revenues grew exponentially, aided by unfettered market competition and resulting efficiency, airline profitability had mostly stayed lackluster due to cost pressures, chronic oversupply of seats, and intense price-based rivalry to fill seats. Thirty-two years into deregulation, the major airlines were still searching for the Holy Grail that would defend them against industry threats and deliver sustained profitability. This case describes the evolution of the U.S. domestic airline industry over the years, the cost pressures and revenue uncertainties airlines faced at the beginning of 2010, and the strategic options they were contemplating to effectively deal with these issues. The options ranged from shaping the industry structure to achieving differentiation through service offerings. The exact choices they made would determine their survival and long-term success.

Citation

Parthasarthy, R. and Gopinath, C. (2011), "The Competitive Environment of the US Domestic Airline Industry in 2010", , Vol. 8 No. 1, pp. 140-156. https://doi.org/10.1108/TCJ-08-2011-B006