ABSTRACT
This chapter examines the perennial challenge of cyclical demand and profits and ends with a look at emerging airline strategies. Irregular cycles of profits followed by steep losses have historically plagued the world airline industry, a trend exacerbated by deregulation and liberalization. Fuel and labor top the list of airline expenses, with fuel often holding the top spot. Airline profitability has historically lagged other industries. Economic theory suggests that some airlines should go out of business until the profitability of the remaining carriers meets the cost of capital. Airlines have historically struggled for control of distribution and ticket sales. Airline corporate structures are becoming more complex with holding companies attempting to manage several airlines with differing business models and cultures often scattered across countries. Airline conglomerates and equity alliances have much in common as each tries to maximize the cooperative benefits from the member airlines and reap whatever synergies may be available from size.
