Competitive Strategies

Competitive Strategies and Government Policies
The airline industry has been in constant turmoil in the past decade. Almost every carrier in the United States has seen their profits decline because of high gas prices and a sluggish economy. Companies like Continental and American Airlines have filled bankruptcy in an effort to restructure the organization. Low cost airlines like Southwest have enjoyed growth as consumers have become more budget conscious. Furthermore, consolidation among the biggest carriers is constantly changing the market.
Competitive Environment
Any new company entering a market or merging with another company will meet certainly meet new and existing challenges.   In the airline industry, new companies are testing the water, hoping to get a slice of the high-revenue industry.   American Airlines has been considering a merger with US Airways, in hopes to combine resources, increase market share and company profits. According to Koudal and Engel (2006) “Today, the pace of change in most industries is significantly higher than it was 10 or 20 years ago. Faster product cycles, new and more diverse sources of supply, and ever-more-complex global networks increase the need for companies to continually optimize their value chain networks.” (pp. 41-42).
In the airline industry, globalization results in more people traveling from one point of the world to another point.   This equates to a higher demand for flights provided by the commercial airline industry.   More demand equals more competition, typically benefiting travelers with lower prices.   As the baby-boomers start to retire, leisure travel by commercial airline firms will likely greatly increase.
With high barriers to entry in the commercial airline industry, there is little threat of new entrants.   The enormous capital required to enter this industry is a strong barrier, few companies fiscally capable of and is not...