Read and analyze the case study below. Provide a background of the study as your introduction. Repeat each question as your main headings as you answer each part completely. Utilize at least one course reference and two outside references to support your statements. All writing assignments must follow APA guidelines, such as: title page, headings/sub-headings, referencing, quoting, paraphrasing, writing style and formatting.
- For Case Studies, write as if you are employed by the subject company and writing an internal report — no need to cite internal sources (e.g. the Case Study).
- You are solving this case as a current-day project — write in the present tense!
- Write as a formal document submitted by a work team, so avoid 1st person (i.e. “I” or “We”).
- If help is needed for general writing, contact the NU’s Writing Center immediately. –
- Students should use National University’s digital library for credible business sources and other peer-reviewed papers as references.
According to Airlines for America, there have been approximately 51 airline mergers/ acquisitions since 1930. Although this is not necessarily a verifiable number, it does show the magnitude of the consolidationns that have taken place in the passenger airline industry. Probably the most significant combinations of carriers began in 2009 with Delta and Northwest, followed by United and Continental in 2010, Southwest and Airtran in 2011, and American and US Airways in 2013. These four “mega-carriers” account for approximately 80 percent of all domestic airline passengers today.
The Airline Deregulation Act of 1978 was intended to open the passenger market to new entrants to increase the level of competition. Since then, however, there have been no new entrants into the traditional hub-and-spoke airline market. While there have been a few successful entrants into the market (for example, Southwest), they were point-to-point airlines that did not compete against the legacy hub-and-spoke carriers (for example, United).
1. Based on publicly available data, compare the four mega-carriers across the following characteristics:
a. Number of aircraft by type; b. Number of employees; c. Departures; d. Revenue passengers;
e. Revenue passenger miles; f. Available seat miles; g. Operating revenue (total); h. Operating revenue per seat mile; i. Operating profit.
2. Knowing the intent of the Airline Deregulation Act of 1978, explain why the number of passenger airlines in the industry has actually decreased. Be sure to include a dis- cussion of barriers to entry in your explanation.
3. With the total U.S. market being oligopolistic in nature and at some hubs monopo- listic, should the federal government takes steps to impose economic regulation on the passenger airlines again? Explain your opinion.
4. In your opinion, why did the Justice Department allow such consolidations to take place?