Summary of Case
In the case study changing Dynamics of the U.S. Airline industry were discuss and dealt with. Between 2001 and 2005, Delta Airlines, the third largest U.S. Airline, lost $10 billion. Delta wanted to increase its liquidity so they decided to sell its subsidiary Atlantic Southeast Airlines to Sky West Airline for $425 million in August 2005. Analysts believed that Delta was on the merge of bankruptcy. The Civil Aeronautics Board 9cab) imposed major restriction on marketing entry and market access. There were regulation on rates, routes and services that reduce amount of competition among industry participants. The Airline deregulation act was passed in 1978. It provided the airlines with freedom to decide their routes and prices. Different airline started to enter the U.S. market with different pricing strategy, by 1980 about 22 new players with low-cost offering entered the market. While some inefficient airline companies went into bankruptcy others merged to maintain their competitiveness. They started to entered alliances with one another. Airlines started to lease instead of buying aircraft. The industry’s growth continued in the 1990s. The low-cost carriers were gaining market share at the expense of network airlines also called hub-and spoke airlines. Even though the industry was already going through a rough patch after September 11, 2001 attack it had profound impact on all the airlines. The demand of air travel in general reduced. It changes the airline industry drastically. The network airlines had also shifted their attention to international markets. Thirty-one airline industry bankruptcy cases were filed between early 2002 and late 2004. Delta went through a few name changes from 1928 to 1934, from Delta Air Service to Delta Air Corporation to Delta Air Lines. In 1984, Delta expanded its reach in the domestic U.S. market with its Delta connections program. The alliance offered passengers flights to 451 destinations spread across 98...
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