Category: Analysis Essay

Since the invention of the aircraft during the period before and after the infamous world war, air travel has tremendously changed the way people live and carry out their business across the globe. Over time, the various inventions that have been witnessed in the air travel industry have had a great impact in improving the industry’s performance to delivering better and safer travel services to the entire world. However, the air travel industry has experienced several challenges through ever-changing climatic and financial factors. The air travel has become such a commonplace that it has changed the concept of distance worldwide, despite the challenges, air travel has made it possible to visit and do business in a place which was once considered remote.

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External factors

Global recession

In modern air travel industry, the most significant factor that has greatly influenced trends in air travel is the global recession. Most airlines have inevitably cut on their numbers of available flights purposely to avoid a situation of making flights with empty seats, to save money on fuel and related labor costs. Pricing of air travel packages has gone down due to relative competition in the industry. A significant decline in first class and business class has been recorded over the previous year which has resulted in decreased profits for airline companies. A majority of US airlines have shown an indicator of declining profits. In a financial health analysis of the industry, an airline’s success is measured by its ability in generating adequate revenues to cover costs both before and after the non-profit generating items which include sales from sales of assets, interest charges and other adjustments or provisions. In fact, airlines cannot make sufficient income without positive operating and net results to meet financial commitments and cut on the high borrowing that has become the only solution over the previous years.

Political situation

The political situation has a number of factors which has affected southwest airline drastically. The government regulations on the way airlines operate have been rather very strict on the issue of passengers’ security and fuel. This has put an additional task to the airline due to these factors. The first problem was government regulation regarding old airplanes. The fuel cost was seriously erratic over the years which had led to difficulties in fuel cost estimation to be a difficult task.

US economic situation

Another significant external factor is the country’s economic situation which has been through a tough economic situation hence the negative impact on the airline industry’s profit margins. The capacity to sustain the non-profitable period have proved rather tough hence an increase in the company’s debt. Though after the severe period there has been a period of rapid economic growth, making profits in the airline industry is still a challenging undertaking due to increasing debts.

Social conditions

Another external factor that has also had a great impact on southwest airline is the social condition. For instance, passenger insurance costs have been all high and still on the rise. There is also an extra expenditure by the company on the intended extra security measure for its customers across the network of its operations worldwide.

Technological conditions

Similarly the technological conditions have also had their impact on the airline particularly in the angle of competition from the other airlines entering the field. There has been a consistent increase in the purchase of new and high technologically advanced ones to keep at the top of the business in its competitive dimension.

Internal factors

Marketing strategy

Among its internal factors the airline is greatly influenced by its marketing strategy which targets the tourism industry. The airline’s distinguishing t