Introduction Airline Business
The airline is a company that offers an air source of transport to passengers and freight. The airline companies use airplanes and aircraft to operate their services. These companies also have partnerships and alliances with one another to complete the same flight. The airline companies usually require an air certificate and license by the Government aviation authority to run and operate their flights.
The history of the Airline industry started with the German company DELAG that launched its first aircraft on November 16, 1909. In the beginning, airlines were the personal ownership until the 1930s. But from 1940 to 1980, the government took control over the ownership of major airlines across the world. However, the period of mass-scale privatization and alliances started in the 1980s.
Today, we’ll discuss the SWOT (strengths, weaknesses, opportunities, threats) analysis of the airline industry. What the internal strength and external opportunities companies could use to face the internal weaknesses and external threats.
Here’s the swot analysis Airline Industry.
Strengths of Airline Industry
We will discuss four major strengths of the airline industry.
One thing we all know that airlines are one of the profitable companies, and their income level must be very high. Why? It is because the fare of airlines is very high, and many people who haven’t traveled on an airplane in their entire lives. Traveling on an airplane is a dream to them, but they can’t afford the fare.
Growing Tourism Industry
The tourism industry has been rising for the past decade and a half. TV, media, and films have made people adventurous, and they would like to travel and explore new places across the world. When it comes to traveling inter-continent, then airplanes are the only viable and easy mode of transportation. According to an estimate, there has been a growth of 50% among domestic and local tourists, and a 25% increase in international travelers.
If we look at the graph of airline growth, then except for a few downturns, it has been moving upward consistently. It is due to the number of factors like growth in population, and increased businesses. When more people engaging in businesses, then they will fly from one country to another. If the aviation management uses effective marketing strategies, then they increase the profit rate more than ever.
Safe & Speedy
One thing that we all agree on that airplanes are the fastest mode of transportation. But when it comes to safety, aviation engineers are working on the research and development to make it the safest transportation mode. Even though, it’s a safe mode if we compare it with others. The airline’s security and other staff is highly trained and well equipped, they’re ready and capable to face all kinds of challenges.
Weaknesses of Airline Industry
Below are the key weaknesses in the swot analysis of airline industry.
Slow Rate of Infrastructure
Slow infrastructure is the major problem in the airline industry. If you look at the technological development, the engineers are building new big and sophisticated airplanes. But on ground infrastructure is the same old airports. You would see a huge contrast between the airports and airplanes if you visit an airport. Some of the airports in the developed countries have a good latest technological infrastructure. But it’s not the case everywhere. There should be a balance of investment in both of these sectors.
High Spoilage Rate
Spoilage rate means that the passengers miss their flights. If the passengers miss their flight, then they would have to refund their fare, and the company would losses the income. If you compare the spoilage rates with other transportation means, then it’s very high among airlines.
The airlines companies send a reminder message or call to all of their customers before the flight, the purpose is to make sure that every passenger should be on board, and lower the loss rate.
The airline is one of those industries that require a huge early investment to start. Therefore, a group of shareholders come together and start an airline company. It is nearly impossible to be a sole proprietor in this industry, and the company and shareholder is the only solution for the formation of airlines.
The airline industry is also getting very competitive. In the off-seasons, small airline companies have to reduce the traveling fare. Therefore, it becomes necessary for the bigger companies to reduce the fare as well, and keep attracting the customers. If they don’t lower the price, customers would prefer the smaller airlines with lower prices, and the bigger airline company would losses the market share.
Airline companies require a huge workforce for the smooth running of various operations at one time. Multiple departments are performing multiple tasks at the same time. If a company has a less workforce, then it cannot perform various functions like control tower, runway staff, security entrance personals, ticketing staff, and many others. When all of them perform their duties, then airplanes can safely land, take off, customers come and go, and the whole process continues.
Opportunities of Airline Industry
The following major opportunities can affect the airline industry positively.
Inviting New Stakeholders
As we know that the airline industry is a very profitable business and it has been growing consistently over some time, and hopefully it continues to improve so in the future. However, the management can use its background to attract and invite new investors. They would bring more capital, and the company can improve various functions with it.
Worldwide Mailing Services
Since the aircraft of the airline companies go worldwide. Therefore, such companies should launch the new delivery service by partnering up with the local shipment services of different countries. This delivery service won’t cost the company much, but it can bring a lot of profit. All the airline company has to do is to advertise it, and partner up with the local courier service. Receive packages from the courier of one country and deliver it to the courier service of the other country, and they would receive their profit out of it.
Use Technology to Minimize Cost
The airline companies should invest in the use of technological development at different levels. The cost may be high at one time, but it would reduce the long term miscellaneous expenses. For instance, the website and a smartphone by connecting the company with customers, it would reduce the spoilage rate. A centralized application connecting all the employees, departments and management, where everyone knows one’s roles and how it would affect the performance of others. That’s how investment in the technology would remove delays and spoilage rates.
The airline industry already works beyond borders, the management should take this as an opportunity and expand their geographical market into the new airports and target more people. If the marketers advertise it well, then they surely can attract new customers to new places.
Better Deals with Supplier
The airline companies have direct and contact with the oil companies, and they are very costly suppliers. If the companies manage to lower the operational cost, then they can get better with them.
If the markers and the customer service centers of the company effectively communicate with the customers and send a good reminder. Then they can remove the delays, spoilage rate, and refunding. Customer would get a better timely service, and it would be good for the reputation of the company.
Threats to Airline Industry
Following are the threats to the airline businesses.
Global Economic Crisis
The economy of all the countries is on the downturn. Jobs are less and people are working at the least minimum wages. The tourism industry is declining, and people are using the airlines only for the business purposes. Traveling for adventure and pleasure is getting less and less because people don’t have sufficient savings. In such circumstances, the airline industry has to reduce the expenses to the minimum level. This is the only way to survive under the global crisis.
Government policies can intervene in the airline industry and have a very bad impact. For instance, government pressure to lower or increase the prices, delays in the flight due to the security officials. Such interventions can result in the form of the loss to the company.
The airline industry is helpless to the environment. For instance, tornados, heavy storms, and the strong wind could result in the form of delays. When it happens, some customers have to cancel their flight and the company has to refund the fare. In other words, bad weather and the environment is a loss to the company.
It is a seasonal business because people aren’t usually free the whole year. They have jobs and work to do the whole years; they only get free in the holidays and festivals. When few customers travel in the offseason, then the fare would barely cover the fuel expenses.
The current pandemic of Coronavirus (COVID-19) has caused the lockdown of all the airports and airlines. People are stuck in the country and spending their savings. Tourism and the airlines are one of the few industries that are badly affected by the lockdown. It’s still uncertain to estimate the loss that it would cost after the lockdown. One thing is certain that things won’t go back to normal after the lockdown immediately.
The airline industry is a very profitable business, but the lockdown is becoming very detrimental to the life of this industry. The longer it goes, the more it will be damaging. I guess we have to wait and see how the world would look like after the lockdown, and how it would impact the airline industry.
Photo by Anugrah Lohiya