Nowadays, people consider the airline industry one of the most popular ways of transport as airline companies provide a great variety of services to satisfy the clients’ demands. The changes that the airline industry has made during the last decades and continues to adopt to provide the quality service predetermine the popularity of flights. These changes often depend on some factors that have both external and internal nature. To external factors, one may refer those issues, which cannot be regulated by the airline industry but have a crucial impact on airline companies´ workability. External factors may vary from climate changes and their influence on routes to the legal legislations that may lead to some difficulties in providing airline services in a particular region. On the other hand, internal factors include some changes that concern primarily the airline performance. Among these factors, one may outline those that target the improvement of the airline industry performance, decreasing costs and increasing the general efficiency of the airline industry.
All the changes that the airline industry adopts today also confront some challenges, which make their implementation more difficult and raise numerous disputes regarding their necessity. Some of the changes might be effective only at first glance, but a detailed analysis will show that they will also bring some adversities. Other changes are beneficial only for the airline industry, but may cause various troubles to other fields closely connected with airline companies. Hence, such innovations will face numerous barriers because the airline industry is a business, where every party is interested in satisfying personal needs and accomplishing particular goals. Therefore, changes are the necessity for the airline industry to improve its performance while challenges that these changes withstand indicate that there is always another side of the coin, where other players are not interested in such changes.
Internal and External Factors
The airline industry confronts many challenges that are necessary to overcome to stay popular and profitable in the market. Today, in the era of rapid-changed technologies in a fast-developing world, the airline industry should adopt certain changes to satisfy the demands of current time. As mentioned earlier, all changes that the airline industry implements can be divided into internal and external. These factors drive the airline industry to change its outdated performance, enhancing some improvements and innovations (Andreas 2001).
Among the external factors, one may outline the environmental problem, especially climate change. It turned out to have a serious impact on the wind patterns, which results in the additional costs for airline companies. According to the team of the U.S. scientists, long flights lead to the enormous emission of carbon dioxide into the atmosphere. As a result, it changes the wind patterns, making tail winds change the direction. The change of wind patterns means that airplanes should spend more fuel on each flight; therefore, airline companies spend millions of dollars of additional costs.
Therefore, there is a need for the airline industry to adopt some changes that will help to overcome these unnecessary costs. The scientists took into account 34 known climate models and three most used airline routes (Hüschelratha & Müllera 2015). They found out that each eastbound trip was 10 minutes shorter while every westbound trip was 11 minutes longer. Hence, wind patterns make airline companies spend in average10 minutes more in the air. In 2014, there were more than 100,000 flights a day on more than 49,500 routes (Hüschelratha & Müllera 2015). Every extra minute in the air means that planes spend extra 300,000 hours a year and burn additional billion of fuel (Hüschelratha & Müllera 2015). Thus, the optimization of flight routes and the correct use of wind patterns may result in a billion-dollar decrease in airline companies’ costs. Consequently, airline companies decided to change some routes to reduce costs and even receive benefits from wind patterns.
To the external factors that have a great impact on the development of the airline industry, one may refer the demographic one (O'Connor 2001). New generations more tolerate flights than the previous ones. According to the statistics, Generation X and Generation Y use the services of airline companies more frequently than other generations. Further generations will demonstrate even bigger interest and will give preferences to flights than to other ways of traveling (Gerede 2015). The increased demand in flights makes the airline industry implement some innovations to satisfy clients’ demands. As a result, the airline industry develops new airplanes, which will transport more people spending less time on a flight. Hence, the popularity of the airline industry’s services makes it adopt changes, which enable to meet the new demands.
One of the most crucial internal factors that make airline companies adopt changes is the cost of fuel. The airline industry searches for ways that could increase its fuel efficiency. Almost 40 percent of costs are fuel buying. Despite the fact that airplane fuel is untaxed, the airline companies still spend enormous sums of money on it. Therefore, the airline industry develops new airplanes, which will be more fuel-efficient. The industry expects to reduce the expenditures on fuel over 1.5 percent annually by 2020 (Gerede 2015). Such innovation is beneficial for airline companies because, unlike other types of transports, air carriers have a durable period of exploitation. The planes built in 2010 can be used by 2040 (Fritzschea Guptab & Laschc 2014). Hence, the innovation that can be adopted today will bring benefits during the next few decades. Consequently, the airline industry will be able to decrease the consumption of fuel over 25 percent by 2025 (Fritzschea, Guptab & Laschc 2014). This innovation presupposes that new planes will use 3 liters of fuel on every passenger per 100 km, which is even less than a small car (Fritzschea, Guptab & Laschc 2014).
Another change widely discussed in the airline industry today is the use of turboprop planes. Planes with jet engines are faster than the ones equipped with turboprop engines. However, modern planes with jet engines consume more fuel than the turboprop ones. The scientists concluded that the utilization of planes with jet engines at short distances is not a beneficial decision because the time saved on a flight does not cover the spending on fuel (Waddell, Cummings & Worley 2011). In other words, at short distances, turboprop planes are as effective as planes with jet engines. They will be less fast, but it is not noticeable at distances less than 500 nautical miles (Babić, Kuljanin & Kalić 2014). As a rule, airline companies use small 70-seat planes for regional routes, which are usually up to 500 nautical miles (Babić, Kuljanin & Kalić 2014). Bigger planes are used for international routes and, in this case, the use of jet engines is a justified measure. It reduces the general time of flight over few hours depending on a route while the regional routes save about 15 minutes. However, it uses much fuel, which is uneconomic for airline companies. The reason of such measure is such internal factor as the oil price. The increased prices on oil make the airline industry search for new ways that could help to reduce the costs. New turboprop engines with which regional planes will be equipped will decrease the utilization of oil though the duration of an average flight will be longer. Nevertheless, it will not be as noticeable as it can be on international routes.
Numerous changes affect the change process in the airline industry, making this process difficult or even in some cases impossible. For instance, one of the most significant factors that challenge the change process is profitability. Nowadays, the airline business is far from being a profitable venture; in fact, airline companies spend more money on services than receive the real profit from it. As mentioned above, airline companies spend the large sums of money on fuel, though it is untaxed. Hence, despite the significant benefits that the airline industry has, it is still not one of the prosperous businesses. On average, the airline industry earns only 6 dollars on each passenger, which amounts to approximately 2.5 percent of profits (Bubaloa & Gaggerob 2015). Thus, any significant changes that the airline industry needs to adopt may face the financial challenges. For example, if the airline industry takes some measures to reduce CO2 emission produced by numerous planes that make flights every minute all over the world, it may bring some airline companies to bankruptcy. The change of route will mean the extra fuel expenses, where every additional minute of flight costs hundred thousand dollars a year (Coza 2014). Hence, even if airline companies have a strong desire to bring some changes, especially when it concerns an environmental issue, they withstand a challenge of extra spending which the flow or profit may not cover.
Another example is the investment in new turboprop planes, which should reduce the spending on fuel on regional flights. This innovation may significantly increase the profitability of airline companies, decrease environment pollution, and bring some other positive shifts. However, the manufacturing of new planes is an expensive and durable process while the airline business experiences not nearly the best times. In particular, 9.11 tragedy, Ebola, and other adverse factors have created a negative reputation for business investment in the airline industry (Bubaloa & Gaggerob 2015). Today, the investments in airline business are a risky venture, which enables the airline industry to move to significant transformations that can finally change the perception of the airline business.
One more factor that challenges the airline industry’s ability for changes is the provision of effective security. The inability to guarantee safety for its passengers both in the air and in the airports slows down the airline businesses’ capacity for changes. Naturally, every airline company strives to become more popular, to increase the number of planes and flights, and to serve more clients. However, even the largest companies cannot provide total safety of their passengers. The large flow of passengers makes it difficult to check carefully every passenger via body-scanner. Some airports do not allow their passengers to fly if they do not pass the scan while others remove such technology at all because it slows down the security process. Besides the airport safety, there is also air safety, where airline companies are helpless. People consider flights the safeties way of traveling because the rate of accidents is low as compared to other transports. Nevertheless, the airline industry cannot prevent some aspect of flight. For instance, the Malaysia Boeing that came down last autumn in the eastern part of Ukraine because of the terrorist activity in that region led to the deaths of 288 passengers (Milioti, Karlaftis & Akkogiounoglou 2015). Such situations happen rarely, but they still take place and the number of victims is always high. Therefore, the security issue becomes a significant barrier in changes that airline companies attempt to adopt. The inability to guarantee safe flights decreases the airline businesses’ capacity for the further growth.
Finally, another factor, which creates challenges for the changes in the airline business, is the barriers that airline companies face when searching for new ways of cost reduction. For instance, the issue of fuel, which is the number one in the airline industry, cannot be resolved in a simple way because of some other aspects. The alternative fuel will decrease the airline industry’s costs and reduce the environmental problem caused by CO2 emission produced by planes (Nie 2015). These two crucial opportunities will bring positive changes both to the airline companies and to the environment. However, the transaction of biological fuel is not a cost-efficient process. One can view such project as not financially viable because of the amount of the resources that is necessary to use to produce enough biological fuel for planes. In other words, the utilization of biological fuel will decrease the environmental problem and the airline companies’ costs, but it may lead to another challenge such as a shortage of food in the developing countries. In addition, airline companies depend much on the government and almost 78 percent of all airline companies’ decisions are made under the governmental control (Milioti, Karlaftis & Akkogiounoglou 2015). If the airline business transits to biological fuel successfully, it will mean that oil suppliers who also belong to governmental institutions will lose the biggest consumer of oil. As a result, it will lead to the decreasing profit received by the oil distributors and, consequently, the shortage of the governmental income (Buhalis 2004). Thus, the transaction of the airline industry of biological fuel is a measure, which is not demandable today, though it could significantly improve the future of airline companies.
The concept of change in the airline industry depends on various factors that may have both direct and indirect influence on such decisions. For instance, the shifts in the environment make the airline companies review their routes to reduce the flight’s duration. Besides, the change of wind patterns led to another problem connected with the additional use of fuel by airline companies. The airline industries’ desire to find the way of fuel utilization, which is more economical, promotes some other factors of innovation. In fact, the necessity to decrease costs, increase performance, and, as a result, receive more profit motivates any change promoted by the airline industry. Nevertheless, some changes cannot be implemented in a real life because of the challenges and barriers that the airline industry confronts. For example, the attempts to solve an environmental problem may result in the occurrence of other problems. Particularly, the use of biofuel will lead to the shortage of food in the developing countries. The enlargement of airports and an increasing amount of flights may have the adverse consequences on flight security since it would be impossible to provide the careful scanning of every passenger before the flight. Other barriers have an economic and political background when the government is not interested in the airline industry’s switch to cheaper fuel because it means the decrease in their profit.
According to the fact mentioned above, one can conclude that the necessity in changes is the result of the industry’s searches for new ways of development and improvement. Airline companies require new approaches that will help them to save money and increase performance. The only way to achieve these goals it to implement some changes and innovations. However, sometimes even the most beneficial changes may face challenges, which make the achievement of results impossible.