ABSTRACT
This chapter provides an overview of the fundamentals and intricacies of the airline industry that have made it overly complex, producing a multi-faceted challenge for the industry—namely, the achievement of a reasonable net profit margin in the marketplace. Government intervention in terms of political, social and fiscal policies is understandable given the strategic importance of the airline industry. The airline business is a network business and the network effect adds enormous complexity. The global interline system is feature of the airline network business. The system provides global travelers convenient services, for example, payment in one currency, for travel involving multiple airlines and intermediaries. The airline industry is highly unionized not only with respect to the percentage of the labor force that is represented but also the strength of the unions. Some airlines have tried to lessen the impact of fuel price swings through the implementation of hedging strategies.
