General Environment Analysis of the Airline Industry

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The U.S. airline industry has been in a chaotic state for a number of years. In 1993, a U.S. government report indicated that the industry had “Lost huge amounts of money in the past three years, and it has never made a sustained, substantial return on investment…” According to the Air Transport Association, the airline industry trade association, the loss from 1990 through 1994 was about $13 billion, while from 1995 through 2000, the airlines earned about $23 billion and then lost about $35 billion from 2001 through 2005. Early in 2006 the association expected about a $10 billion loss in 2005.
In 1903, the Wright brothers ' first successful flight in Kitty Hawk, North Carolina marked the beginning of the aviation industry. In the early years, the public did not embrace airplane travel as an option, thinking that it was too dangerous. The first major stimulus that helped to develop the industry was the United States ' participation in World War I. After the war, though, the government stopped funding research and development, practically stagnating growth in the aviation industry. In 1927, Charles Lindbergh successfully completed a solo flight across the Atlantic Ocean and created massive interest in flying with the general public.
One of the biggest factors in the growth of the air transportation industry during this time was the development of a mail transport system by the U.S. Postal Service. The Kelly Airmail Act of 1925 provided private airlines the opportunity to function as mail carriers through involvement in a competitive bidding system. These private carriers, through the airmail revenue, could then expand into carrying other forms of cargo, including passengers. Charles Lindbergh, in the position of "technical adviser" to Pan Am World Airways, piloted that airline 's first airmail service flight to South America in 1929. Passengers were targeted as a way to supplement the income of the airmail systems. Slow starting, due to the perception of less

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