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Regular services to Cairo and Basra began in and were extended to Karachi in Imperial's aircraft were small, most seating fewer than twenty passengers, and catered for the rich.
Only about 50, passengers used Imperial Airways in the s. Most passengers on intercontinental routes or on services within and between British colonies were men doing colonial administration, business or research.
Although Germany lacked colonies, it also began expanding its services globally. In , the airship Graf Zeppelin began offering regular scheduled passenger service between Germany and South America, usually every two weeks, which continued until This was the first time an airline flew across an ocean.
During the Soviet era Aeroflot was synonymous with Russian civil aviation, as it was the only air carrier. It became the first airline in the world to operate sustained regular jet services on 15 September with the Tupolev Tu Deregulation of the European Union airspace in the early s has had substantial effect on the structure of the industry there.
The shift towards 'budget' airlines on shorter routes has been significant. Airlines such as EasyJet and Ryanair have often grown at the expense of the traditional national airlines.
There has also been a trend for these national airlines themselves to be privatized such as has occurred for Aer Lingus and British Airways. Other national airlines, including Italy's Alitalia , have suffered — particularly with the rapid increase of oil prices in early Tony Jannus conducted the United States' first scheduled commercial airline flight on 1 January for the St.
His passenger was a former mayor of St. Lauderdale , Chalk's claimed to be the oldest continuously operating airline in the United States until its closure in Many decided to take their war-surplus aircraft on barnstorming campaigns, performing aerobatic maneuvers to woo crowds.
In , the United States Postal Service won the financial backing of Congress to begin experimenting with air mail service, initially using Curtiss Jenny  aircraft that had been procured by the United States Army Air Service.
Private operators were the first to fly the mail but due to numerous accidents the US Army was tasked with mail delivery.
During the Army's involvement they proved to be too unreliable and lost their air mail duties. Service during the early s was sporadic: In , however, the Ford Motor Company bought out the Stout Aircraft Company and began construction of the all-metal Ford Trimotor , which became the first successful American airliner.
With a passenger capacity, the Trimotor made passenger service potentially profitable. At the same time, Juan Trippe began a crusade to create an air network that would link America to the world, and he achieved this goal through his airline, Pan American World Airways , with a fleet of flying boats that linked Los Angeles to Shanghai and Boston to London.
This trend continued until the beginning of World War II. Many airlines in the Allied countries were flush from lease contracts to the military, and foresaw a future explosive demand for civil air transport, for both passengers and cargo.
They were eager to invest in the newly emerging flagships of air travel such as the Boeing Stratocruiser , Lockheed Constellation , and Douglas DC Most of these new aircraft were based on American bombers such as the B , which had spearheaded research into new technologies such as pressurization.
Most offered increased efficiency from both added speed and greater payload. The next big boost for the airlines would come in the s, when the Boeing , McDonnell Douglas DC , and Lockheed L inaugurated widebody "jumbo jet" service, which is still the standard in international travel.
In , Airbus began producing Europe's most commercially successful line of airliners to date. The added efficiencies for these aircraft were often not in speed, but in passenger capacity, payload, and range.
Airbus also features modern electronic cockpits that were common across their aircraft to enable pilots to fly multiple models with minimal cross-training.
New start-ups entered during the downturn, during which time they found aircraft and funding, contracted hangar and maintenance services, trained new employees, and recruited laid off staff from other airlines.
Major airlines dominated their routes through aggressive pricing and additional capacity offerings, often swamping new start-ups.
In the place of high barriers to entry imposed by regulation, the major airlines implemented an equally high barrier called loss leader pricing.
The industry side effect is an overall drop in revenue and service quality. By incurring massive losses, the airlines of the USA now rely upon a scourge of cyclical Chapter 11 bankruptcy proceedings to continue doing business.
In many ways, the biggest winner in the deregulated environment was the air passenger. Although not exclusively attributable to deregulation, indeed the U.
Many millions who had never or rarely flown before became regular fliers, even joining frequent flyer loyalty programs and receiving free flights and other benefits from their flying.
New services and higher frequencies meant that business fliers could fly to another city, do business, and return the same day, from almost any point in the country.
Air travel's advantages put long distance intercity railroad travel and bus lines under pressure, with most of the latter having withered away, whilst the former is still protected under nationalization through the continuing existence of Amtrak.
By the s, almost half of the total flying in the world took place in the U. Toward the end of the century, a new style of low cost airline emerged, offering a no-frills product at a lower price.
Southwest Airlines , JetBlue , AirTran Airways , Skybus Airlines and other low-cost carriers began to represent a serious challenge to the so-called "legacy airlines", as did their low-cost counterparts in many other countries.
However, of these, ATA and Skybus have since ceased operations. Increasingly since , US airlines have been reincorporated and spun off by newly created and internally led management companies, and thus becoming nothing more than operating units and subsidiaries with limited financially decisive control.
Among some of these holding companies and parent companies which are relatively well known, are the UAL Corporation , along with the AMR Corporation , among a long list of airline holding companies sometime recognized worldwide.
Less recognized are the private equity firms which often seize managerial, financial, and board of directors control of distressed airline companies by temporarily investing large sums of capital in air carriers, to rescheme an airlines assets into a profitable organization or liquidating an air carrier of their profitable and worthwhile routes and business operations.
Thus the last 50 years of the airline industry have varied from reasonably profitable, to devastatingly depressed.
As the first major market to deregulate the industry in , U. In fact, no U. Through the ATSB Congress sought to provide cash infusions to carriers for both the cost of the four-day federal shutdown of the airlines and the incremental losses incurred through December 31, , as a result of the terrorist attacks.
This resulted in the first government bailout of the 21st century. Data from the U. Bachrach on December 3, , making it Asia's oldest scheduled carrier still in operation.
Bachrach's death in paved the way for its eventual merger with Philippine Airlines in March and made it Asia's oldest airline. It is also the oldest airline in Asia still operating under its current name.
Soriano has controlling interest in both airlines before the merger. Korean Air was one of the first airlines to be launched among the other Asian countries in along with Asiana Airlines , which later joined in The license to operate as an airliner was granted by the federal government body after reviewing the necessity at the national assembly.
The Hanjin occupies the largest ownership of Korean Air as well as few low-budget airlines as of now. The Korean Air is among the founders of Sky Team , which was established in Asiana Airlines joined Star Alliance in Korean Air and Asiana Airlines comprise one of the largest combined airline miles and number of passenger served at the regional market of Asian airline industry.
India was also one of the first countries to embrace civil aviation. On October 15, , J. Tata Airlines was also one of the world's first major airlines which began its operations without any support from the Government.
With the outbreak of World War II, the airline presence in Asia came to a relative halt, with many new flag carriers donating their aircraft for military aid and other uses.
Following the end of the war in , regular commercial service was restored in India and Tata Airlines became a public limited company on July 29, , under the name Air India.
In return, the airline was granted status to operate international services from India as the designated flag carrier under the name Air India International.
A regular service between Manila and San Francisco was started in December. It was during this year that the airline was designated as the flag carrier of Philippines.
During the era of decolonization , newly born Asian countries started to embrace air transport.
All the previous airlines started regular operations well before World War II. The air travel market has evolved rapidly over recent years in Latin America.
Some industry estimates indicate that over 2, new aircraft will begin service over the next five years in this region.
These airlines serve domestic flights within their countries, as well as connections within Latin America and also overseas flights to North America, Europe, Australia, and Asia.
Only two airlines - Avianca and LATAM Airlines - have international subsidiaries and cover many destinations within the Americas as well as major hubs in other continents.
Many countries have national airlines that the government owns and operates. Fully private airlines are subject to a great deal of government regulation for economic, political, and safety concerns.
For instance, governments often intervene to halt airline labor actions to protect the free flow of people, communications, and goods between different regions without compromising safety.
In the past, these governments dictated airfares, route networks, and other operational requirements for each airline.
Since deregulation, airlines have been largely free to negotiate their own operating arrangements with different airports, enter and exit routes easily, and to levy airfares and supply flights according to market demand.
The entry barriers for new airlines are lower in a deregulated market, and so the U. This has produced far greater competition than before deregulation in most markets.
The added competition, together with pricing freedom, means that new entrants often take market share with highly reduced rates that, to a limited degree, full service airlines must match.
This is a major constraint on profitability for established carriers, which tend to have a higher cost base.
As a result, profitability in a deregulated market is uneven for most airlines. These forces have caused some major airlines to go out of business, in addition to most of the poorly established new entrants.
In the United States, the airline industry is dominated by four large firms. Because of industry consolidation, after fuel prices dropped considerably in , very little of the savings were passed on to consumers.
Groups such as the International Civil Aviation Organization establish worldwide standards for safety and other vital concerns.
Most international air traffic is regulated by bilateral agreements between countries, which designate specific carriers to operate on specific routes.
The model of such an agreement was the Bermuda Agreement between the US and UK following World War II, which designated airports to be used for transatlantic flights and gave each government the authority to nominate carriers to operate routes.
Bilateral agreements are based on the " freedoms of the air ", a group of generalized traffic rights ranging from the freedom to overfly a country to the freedom to provide domestic flights within a country a very rarely granted right known as cabotage.
Most agreements permit airlines to fly from their home country to designated airports in the other country: In the s, " open skies " agreements became more common.
These agreements take many of these regulatory powers from state governments and open up international routes to further competition.
Open skies agreements have met some criticism, particularly within the European Union, whose airlines would be at a comparative disadvantage with the United States' because of cabotage restrictions.
In July , the total weekly airline capacity was Historically, air travel has survived largely through state support, whether in the form of equity or subsidies.
The airline industry as a whole has made a cumulative loss during its year history, once the costs include subsidies for aircraft development and airport construction.
One argument is that positive externalities , such as higher growth due to global mobility, outweigh the microeconomic losses and justify continuing government intervention.
A historically high level of government intervention in the airline industry can be seen as part of a wider political consensus on strategic forms of transport, such as highways and railways , both of which receive public funding in most parts of the world.
Although many countries continue to operate state-owned or parastatal airlines, many large airlines today are privately owned and are therefore governed by microeconomic principles to maximize shareholder profit.
In December , the collapse of Pan Am, an airline often credited for shaping the international airline industry, highlighted the financial complexities faced by major airline companies.
Following the deregulation , U. They drop loss-making routes, avoid fare wars and market share battles, limit capacity growth, add hub feed with regional jets to increase their profitability.
They change schedules to create more connections, buy used aircraft, reduce international frequencies and leverage partnerships to optimise capacities and benefit from overseas connectivity.
The world's largest airlines can be defined in several ways. American Airlines Group is the largest by its fleet size, revenue , profit , passengers carried and revenue passenger mile.
Delta Air Lines is the largest by assets value and market capitalization. Lufthansa Group is the largest by number of employees , FedEx Express by freight tonne-kilometers , Ryanair by number of international passengers carried and Turkish Airlines by number of countries served.
Airlines assign prices to their services in an attempt to maximize profitability. The pricing of airline tickets has become increasingly complicated over the years and is now largely determined by computerized yield management systems.
Because of the complications in scheduling flights and maintaining profitability, airlines have many loopholes that can be used by the knowledgeable traveler.
Many of these airfare secrets are becoming more and more known to the general public, so airlines are forced to make constant adjustments.
Most airlines use differentiated pricing, a form of price discrimination , to sell air services at varying prices simultaneously to different segments.
Factors influencing the price include the days remaining until departure, the booked load factor, the forecast of total demand by price point, competitive pricing in force, and variations by day of week of departure and by time of day.
Carriers often accomplish this by dividing each cabin of the aircraft first, business and economy into a number of travel classes for pricing purposes.
Airlines have to make hundreds of thousands of similar pricing decisions daily. The advent of advanced computerized reservations systems in the late s, most notably Sabre , allowed airlines to easily perform cost-benefit analyses on different pricing structures, leading to almost perfect price discrimination in some cases that is, filling each seat on an aircraft at the highest price that can be charged without driving the consumer elsewhere.
The intense nature of airfare pricing has led to the term " fare war " to describe efforts by airlines to undercut other airlines on competitive routes.
Through computers, new airfares can be published quickly and efficiently to the airlines' sales channels. The extent of these pricing phenomena is strongest in "legacy" carriers.
In contrast, low fare carriers usually offer pre-announced and simplified price structure, and sometimes quote prices for each leg of a trip separately.
Computers also allow airlines to predict, with some accuracy, how many passengers will actually fly after making a reservation to fly.
This allows airlines to overbook their flights enough to fill the aircraft while accounting for "no-shows", but not enough in most cases to force paying passengers off the aircraft for lack of seats, stimulative pricing for low demand flights coupled with overbooking on high demand flights can help reduce this figure.
This is especially crucial during tough economic times as airlines undertake massive cuts to ticket prices to retain demand.
The demand for air transport will be less elastic for longer flights than for shorter flights, and more elastic for leisure travel than for business travel.
Full-service airlines have a high level of fixed and operating costs to establish and maintain air services: Thus all but a small percentage of the income from ticket sales is paid out to a wide variety of external providers or internal cost centers.
Moreover, the industry is structured so that airlines often act as tax collectors. Airline fuel is untaxed because of a series of treaties existing between countries.
Ticket prices include a number of fees, taxes and surcharges beyond the control of airlines. Airlines are also responsible for enforcing government regulations.
If airlines carry passengers without proper documentation on an international flight, they are responsible for returning them back to the original country.
Analysis of the — period shows that every player in the air transport chain is far more profitable than the airlines, who collect and pass through fees and revenues to them from ticket sales.
Spinetta, , quoted in Doganis, The widespread entrance of a new breed of low cost airlines beginning at the turn of the century has accelerated the demand that full service carriers control costs.
Many of these low-cost companies emulate Southwest Airlines in various respects, and like Southwest, they can eke out a consistent profit throughout all phases of the business cycle.
As a result, a shakeout of airlines is occurring in the U. Where an airline has established an engineering base at an airport, then there may be considerable economic advantages in using that same airport as a preferred focus or "hub" for its scheduled flights.
Airline financing is quite complex, since airlines are highly leveraged operations. Not only must they purchase or lease new airliner bodies and engines regularly, they must make major long-term fleet decisions with the goal of meeting the demands of their markets while producing a fleet that is relatively economical to operate and maintain; comparably Southwest Airlines and their reliance on a single airplane type the Boeing and derivatives , with the now defunct Eastern Air Lines which operated 17 different aircraft types, each with varying pilot, engine, maintenance, and support needs.
A second financial issue is that of hedging oil and fuel purchases, which are usually second only to labor in its relative cost to the company.
However, with the current high fuel prices it has become the largest cost to an airline. Legacy airlines, compared with new entrants, have been hit harder by rising fuel prices partly due to the running of older, less fuel efficient aircraft.
In view of the congestion apparent at many international airports , the ownership of slots at certain airports the right to take-off or land an aircraft at a particular time of day or night has become a significant tradable asset for many airlines.
Clearly take-off slots at popular times of the day can be critical in attracting the more profitable business traveler to a given airline's flight and in establishing a competitive advantage against a competing airline.
If a particular city has two or more airports, market forces will tend to attract the less profitable routes, or those on which competition is weakest, to the less congested airport, where slots are likely to be more available and therefore cheaper.
Slots will not be allocated as requested, if conflict resolution due to excess demand requires rescheduling or rejection of some slots at least.
This scheduling performance aspect impacts on both airline and passenger habits. Section 2 focuses on the airport coordination process itself.
The results of this analysis allow abstracting the airport coordination process in Section 3. Slot demand input parameter and system load , conflict resolution service process and allocated slots output parameter and system throughput are classified as relevant parameters and dependencies of airport coordination.
Scheduled delay is defined as scheduling performance indicator. It measures the temporal deviation between requested slot time and allocated slot time as resulting from conflict resolution.
A delay analysis shows significant differences at German coordinated airports with regard to scheduling performance. The empirical results confirm the assumption that when slot utilization slot demand vs.
Since the available airport coordination data does not allow a precise and complete reproduction of this interdependency, a deterministic model approach is defined to predict scheduled delays depending on the level of slot utilization.
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