9/11 Case Study

1. Analyze the attractiveness of the airline industry pre 9/11. How attractive was the industry before 9/11? Was it profitable? Was there growth? Was there strong competition or not? If so, in what sectors? PESTEL Analysis of the Airline Industry Pre 9/11

Political
Government support for national carriers (Johnson, Gerry. 2011, pg51)
Security Controls (Johnson, Gerry. 2011, pg51)
Investment support
Restrictions on migration (Johnson, Gerry. 2011, pg51)
Deregulations (try to cut down airfare prices)

Economic
National growth rates (Johnson, Gerry. 2011, pg51)
Fuel prices (Johnson, Gerry. 2011, pg51)
High costs associated with the Full Service Carrier business model
Liberalization
(Fuel, maintenance, labor).

Competitive Rivalry
Low margin cost (1-2% net profit)
Increase in the number of airlines
High costs
High exit barrier

As per the case study “analysts were predicting that the US airline industry world lose some $.5bn because of the slowing economy combined with a large decline in business travel.” So the decrease and losses were already happening, due to technological, mismanagement and economic reasons. 9/11 may have given good reasons for mistakes.

2. Analyze the attractiveness post 9/11.
The decrease hit the bottom with the terrorist attacks. People preferred other ways to travel.

PESTEL Analysis of the Airline Industry Post 9/11

Political
Government support for national carriers (bailout money $4bn)
Tax break for the next five years (national carriers)
Security Controls increased (3 hours early check in)
Restrictions on migration (Johnson, Gerry. 2011, pg51)

Economic
Lay offs
Cost increase due to security increase
Supplier’s suppliers were affected
Probable increase in the demand for metal detectors and security items
Increase in the insurance
How might airlines better plan for disruptive events such as 9/11?

They could have done scenario planning and train the employees according to the worst case scenario.
Shell was the only company during the crisis which survived because they had the scenario before and when they started to feel the crisis they reacted before it reached at the door. Airline industry can do the same thing, and train their employees.
Government can do trainings at the school or public places for worst case scenarios.
Airplane suppliers can produce safer doors for the cockpit. And security companies should not just hire normal people they should have people from the army or police departments at the airports who are well trained. References

Johnson, Gerry. Exploring Strategy. 9th edition. Pearson Education Limited, England.(2011). Pg 51
Porter, Michael E. ‘The Five Competitive Forces That Shape Strategy’. Harvard Business Review. January 2008. Pg. 78-93

Ward, Rodney. September 11 and the Restructuring of the Airline Industry. 2002. Source: http://dollarsandsense.org/archives/2002/0502ward.html. Accessed on [October 5,