Trends in the U.S. Airline Industry

One trend in the Airline Industry which has not endeared them to investors has been stock prices. According to Thompson, Strickland, and Gamble, (2010) a significant trend in a drop in stock value has occurred from 2002 to 2007. Analysts indicate positive directions in the next year, however with the Airline Index at $40, Jet Blue showing $5.54, and Southwest at $11.63 one is tempted to ask if there is any direction they can take but up, or out. One can anticipate airlines seeking cost cutting measures, added with increasing revenue streams in order to revitalize the value of the companies, and through such the value of investments. Analysts indicate a trend towards an increase in airline travel demand over the next year. As one of the leading analysts Dirks (2011), points out that despite increase in Video Telecommuting for business resulting in reduction in business travel, many families are finding the cost of fuel is causing them to rethink driving and relooking at air travel. Statistics support this and reflect that as of this past November among the top six airlines, two reported their best traffic levels in 18 months. Many airlines reflected increases in miles flown per passenger, and passenger numbers have returned to the high passenger counts of 2007. These factors are supplemented by the Official Airline Guide (2011) which tracks air industry trends. The OAG reports a record number of seat bookings in April 2011. Many airlines are focusing on more appropriate alignment of routes in order to maximize bookings. Another trend is towards airline and supplier consolidations; an example of this cones from the case study discussion of Jet Blue and on board video provider LiveTV. A number of airlines have expanded their reservations services through merger of online services, and some have