Seemingly since the beginning of aviation history there has been discussion and speculation on the remarkable inability of the industry to generate profits. This is even more so the case now, when a number of the world's airlines are bankrupt. The failure of aviation, or at least of airlines, to produce a reasonable rate of return on investments has been a fact pondered by many at great length but never satisfactorily understood. Somehow the industry seems to violate the most basic principles of economics and business. The question as to how this is the case and how the industry managed to survive, let alone actually grow and prosper so far, is the subject of this book. It details the historical performance of the industry and critically explores the various theories proposed to explain its lack of profitability. Summarizing the analysis, the book also looks to the future, combining lessons from the past and recommendations regarding the better management of airlines. In conclusion it offers a prediction on the future of the global airline industry.
Contents: Preface; Introduction; Part I How Bad Is It?: Reality of losses; Decomposing the elements of losses; Forecasting. Part II Reasons for Losses: Nature of the Beast (Exogenous Factors): Cyclicality; Ease of access to capital; Cost of aircraft; Too much competition and the need for consolidation; Sexy industry drawing in dreamers and suckers. Part III Reason for Losses: Self Inflicted (Endogenous Factors): Labor; Bad Management; Pricing. Part IV Reason for Losses: Overregulation: Government regulation; Public ownership of airlines. Part V How Can the Industry be Profitable?: Prescription for health; Summary and conclusions; Index.
