On September 11th 2001 tragedy struck the world and in particular the United States of
America when commercial airliners where hijacked by terriosts who proceeded to crash
the fully loaded passenger planes into the world trade centre and the pentagon. This
tragedy had a huge impact on everybody including people and businesses. Although the
tragedy of 9/11 has a lot to do with the fall of the airline industry it is not totally to blame
according to (Wolf 1995) by the beginning of 2001, the airline industry was already feeling
the effects of one of its historical enemies, economic recession. Economic recession
exposes overcapacity in the market leading to declines in prices as carriers scramble to fill
seats and retain market share. Financially weak (or bankrupt) carriers create further
downward price pressure in their attempts to generate revenue.
In this essay I will be discussing arguments for and against the attractiveness of the airline
industry pre and post the tragic events of 9/11 followed by discussion on the strategic
implications for both low cost airliners and full service carriers in the future. To help me
assess the attractiveness of the industry I will be using various models such as Porters 5
forces framework and Swot analysis.
One of the most basic techniques for analysing firm and industry conditions is SWOT
analysis. SWOT stands for: strengths, weaknesses opportunity and threats. Swot analysis
provides a framework for analysing these four elements of a companys internal and
external environment. The strengths and weaknesses portion of SWOT refers to the
internal conditions of a firm and opportunities and threats are environmental conditions
external to the firm (Dess, Lumpkin, Taylor 2006)
I will start by discussing the opportunities for airlines which were very good in 2001 for
many reasons. The most significant opportunity for airlines pre 9/11 was Deregulation
which occurred in 1978 which allowed US airlines to choose their routes and set their
fares. Prior to this they were told where to fly and when they could fly. This event was one
of the turning points in airline history as it led to massive consolidation and the fall of
some popular carriers who couldnt cope with new legislation. (Abrams 2004). Another
opportunity for the airline industry was that the market for business and leisure travel was
on the up with the number of passengers increasing from 450 million to 700 million
between 1990 and 2000 (Chaos in the skies; 2005). The other great opportunity for airline
