1. Statement of the Topic
It is difficult to conceive and almost Machiavellian to imagine that someone ordinary could have foreseen the change in the world order that would be caused by the attacks of September 11, 2001 that ended with the demolition of the twin towers of the World Exchange Center located on the commercial heart of Manhattan Island. and New York City Business Center. This reflection certainly does not consider the primary objective achieved by those who planned it, which is none other than to spread terror. However, in 1996 there was a terrorist attack on the same towers, going almost unnoticed. However and beyond the regrettable human and material losses, the economic effect of longer duration and greater depth, hit the airline industry, which sinisterly and for seconds,it became a tool of mass destruction.
Subject rationale
The stated topic alone attracts the attention of the reader and much could be written about it, however due to the magnitude of the impact on the aero-commercial industry and closely related service sectors, it is interesting to verify the effect through figures and the profound changes that Industry participants have carried out, in their structures and strategies, all oriented, to survive, remain or consolidate in a collapsed industrial sector. Suddenly, it should be noted that in a pandemonium situation, not everyone loses.
Research objective
General objective
Provide a diagnosis on the effects and process of changes that the airline industry has undergone after the events of September 11, 2001.
Specific objectives
• Know the market strategies used by large airlines, locally and globally before September 11, 2001.
• Know the effects in figures on aero-commercial companies and the passenger and cargo transport market.
• Know the effects on service companies and the repercussions on commercial airlines
• Know the new requirements and security concepts that arise from these events.
• Know the changes incorporated into flight and safety regulations by international and local regulatory bodies.
Investigation methodology
The study will be descriptive in nature, and will be based on information from primary1 and secondary2 sources collected by the doctoral student. However, one year after the events, there are countless books on the market on the subject that have not been considered in this work due to the biases incorporated in them and that do not respond to any other variable than to political, anthropological and of cultural relativism in which each author is immersed.
1 For this monograph, airlines and regulatory bodies such as International Civil Aviation Organization (ICAO), International Air Transport Association (IATA), Airports Council International (ACI) are identified as primary sources.
2 As secondary sources are cited magazines specialized in aerial topics such as, Alas, Revista Aérea, AeroNews.
Structuring the research
The work is structured in three chapters and incorporates in its development theoretical and methodological elements such as:
Theoretical elements
This monograph incorporates some theoretical elements on generic strategies and specific strategies used by companies and a brief description of the regulations that have been subject to modification due to the facts already mentioned.
Methodological elements
Essentially, generic and specific strategy concepts are reviewed that allow the reader (not knowledgeable in the subject), to relate a theoretical framework with specific actions undertaken by airlines.
2. The strategies
Undoubtedly, one of the great exponents of the theory of market competition has been Michael Porter, from whom many of the contemporary authors have supported subsequent writings. One of the texts that have marked an inevitable milestone to read in university courses is Competitive Advantages, where it defines in a simple way competitive strategies as the offensive or defensive actions that a company must carry out to create a defensible position within a industry, actions that were the response to the five competitive forces1 that the author defined as determining the nature and degree of competition that surrounded a company and that, as a result, sought to obtain an important return on investment.Within this study, Porter identifies three generic strategies that could be used individually or together, to create in the long term that defensible position that exceeds the performance of competitors in an industry.
• Cost leadership
• Differentiation
• Focus.
1 the five forces defined by Porter are 1.Competition between companies, 2. Possibility of market access for new companies, 3. Possibility of using substitute products or services, 4. Bargaining power of suppliers, and 5. Bargaining power of buyers or clients.
The strategy based on "Cost Leadership"
This was a very popular strategy in the 1970s, due to the deep-rooted concept of the experience curve. Maintaining the lowest cost against competitors and achieving high sales volume was the central theme of the strategy. Therefore, quality, service, cost reduction through greater experience, efficient construction of economies of scale, rigid control of costs and, particularly, of variable costs, were subject to constant and iron scrutiny. Marginal performance clients were avoided and cost minimization was sought in the areas of research and development, sales force, advertising, personnel and in general in each area of the company's operation. If the company had a low cost position,This was expected to lead to earnings above the industry average and protect it from the five competitive forces. As competitors struggled through price, their profits eroded until those remaining at the level closest to the most efficient competitor were eliminated. Obviously, the least efficient competitors were the first to suffer from competitive pressures. Achieving a low total cost position often required a high relative market share1 or other advantage such as servicing emerging markets with larger customer segments to ensure ticket sales volume.its profits were eroded until those remaining at the level closest to the most efficient competitor were eliminated. Obviously, the least efficient competitors were the first to suffer from competitive pressures. Achieving a low total cost position often required a high relative market share1 or other advantage such as servicing emerging markets with larger customer segments to ensure ticket sales volume.its profits were eroded until those remaining at the level closest to the most efficient competitor were eliminated. Obviously, the least efficient competitors were the first to suffer from competitive pressures. Achieving a low total cost position often required a high relative market share1 or other advantage such as servicing emerging markets with larger customer segments to ensure ticket sales volume.it frequently required a high relative market share1 or other advantage such as servicing emerging markets with larger customer segments to ensure ticket sales volume.it frequently required a high relative market share1 or other advantage such as servicing emerging markets with larger customer segments to ensure ticket sales volume.
1 (refers to the market share of a company in relation to its most important competitor
This strategy was widely used by European airlines such as Lufthansa, Iberia, Britichs, Alitalia, Asian, North American and Latin American airlines in general, in their fight for local markets and attractive markets for some European countries and the United States, such as the market. Latin American and Caribbean.
However, not all companies were efficient in this strategy, moreover, the United States in the midst of the cold war did not show interest in leading the market in costs, on the contrary, its eagerness focused on world supremacy at any cost, similar is the Venezuela case that although without the same eagerness with the oil boon, it wasted millions of dollars in subsidies to this type of Companies.
The strategy based on differentiation
A second strategy was to create something or a product that was perceived throughout the industry as unique. Differentiation was seen as the protective barrier against competition due to brand loyalty, which as a result should result in lower price sensitivity. Differentiating yourself meant sacrificing market share and engaging in expensive activities like research, product design, high-quality materials, or increasing customer service. However, this situation of incompatibility with the low cost leadership strategy did not occur in all industries and there were businesses that could compete with low costs and prices comparable to those of the competition.In this strategy, US companies were backed by a high degree of technological development achieved by Boeing, however, years later, France broke all commercial air navigation schemes with the staging of the Concord, while the rest of the European countries highly Technologized were dedicated to manufacturing only parts and pieces such as motors and hydraulic systems. In this context, they only had to differentiate themselves in passenger services, a strategy sometimes at odds with the cost strategy, if they did not innovate in the differentiation in services, as did the Asian airline Singapore Airlines, which set the standard in terms of attention the passenger refers to,Along with them were some Latin American airlines that stood out not necessarily for the service but for the beauty of those who provided the service on board. Another important milestone in terms of differentiation strategy is what Iberia marks in the 1970s with the creation of the airlift in Europe, the creation of Serviberia and the service of the Red Jackets.
The approach-based strategy
This strategy has been one of the most used by large airlines in the search for new routes, whether regional or continental local, standing out as the Iberia European line when it made the first flight between Europe and South America in the mid-1940s. Essentially it consists of focusing on a specific group of customers, on a segment of the product line or on a geographic market. The strategy was based on the premise that the company was in a position to serve a smaller strategic objective more efficiently than broad-coverage competitors. As a result, the company differentiated itself by better serving the needs of a specific target market, or by reducing costs by serving that market, or both.
The Sustainable Competitive Advantages
Competitive advantages are incrementally transitory. Competitive advantages follow the "Law of Nemesis", which in short means that each advantage harbors its own destruction. If a company is a leader in profitability in its industry, it will attract competitors who will seek to neutralize, match or exceed it. Very few advantages can be maintained indefinitely, since over time we will see how they are being replaced by others. In some areas where competitive maneuvers take place more slowly, some companies manage to maintain their advantages for a relatively long period of time. But on dynamic terrains, the process of creating and eroding competitive advantages accelerates. The role of managers should not be, then, to seek illusory impregnable static advantages,rather, building organizations that continually seek new sources of competitive advantage.
Our task as strategists is none other than to find a competitive opportunity before our rivals and at the same time slow down the erosion of the advantages that we currently have.
Creation and Maintenance of Competitive Advantages
Traditionally, airline managers have used two approaches. The first is based on the original model of Porter's generic competitive strategies, which tells us that the advantages derive from the creation of a defensible position in costs or in differentiation, as was seen when we reviewed each of the strategies, while the second approach has been based on the advantages generated by the airlines' resources, that is, on the assets and capacities (resources) that they have accumulated throughout their existence. Both approaches have served to determine what the benefits are and what was done to achieve them, but do not indicate how to maintain them. What has been said also corroborates a known concept and that the creation and maintenance of competitive advantage are a continuous cycle.Some of these resources, made up of assets and capacities, may be equal to or less than those of the competition, while a few others may be superior and the source of competitive advantage will reside in them. This position of competitive superiority has had a noticeable effect on market share and profits, but both results continue to be continually subject to erosion due to the maneuvers of competition and changes in the market. In this order, in the nineties, airlines invested billions of dollars in fleet renewal1, infrastructure, brand image, process technology, crew training, security, new routes, mergers, etc.all this aimed at maintaining advantages over competition and addressing the new order imposed by globalization.
Strategic Alliances
Strategic alliances are cooperation agreements between companies, which go beyond the normal deals made between one company and another, but which either constitute a merger or a total partnership. An alliance can include joint research efforts, technology exchange, joint use of production facilities, sale of finished products. Through strategic alliances, companies in the same industry located in different countries can compete on a more global scale, without losing their independence. Historically, export-minded companies in industrialized nationals sought alliances with companies in less developed countries to import and sell their products locally, oftenThis type of arrangement was necessary to gain access to the market of the least developed country. More recently, leading companies from various parts of the world have formed strategic alliances to strengthen their ability to serve entire continental areas and to move towards greater global market share.
1provider companies such as Airbus, was consolidated in the market, with the 300 series of aircraft with capacities above 50 tons maximum takeoff weight (PMD).
Both Japanese and American companies formed strategic alliances with European companies in preparation for the Europe of 1992 and the opening of Eastern European markets.
Airlines have formed alliances for various strategically beneficial reasons. The three most important are: achieving an economy of scale in service provision and marketing, filling gaps in your technical expertise and service delivery, and primarily gaining access to the local market. Allies learn a lot from each other by conducting joint research, exchanging technological knowledge, and studying their respective base process management methods for service delivery, safety standards, fleet and crew maintenance. Foreign companies often use alliances to meet government requirements for local ownership; allies can share facilities and systems. Furthermore, alliances affect competition;Not only can these compensate for competitive disadvantages, but they can also result in allied companies directing their competitive energies more towards their mutual rivals and less towards themselves. Many second-placed companies, trying to retain their independence, have resorted to alliances rather than mergers in an attempt to bridge the competitive gap with the leading companies.
However, alliances have their dangers. Effective coordination between independent companies, each with different motives and perhaps conflicting goals, is a challenging task that requires multiple meetings of many people over a period of time to delineate what will be shared, what will continue to belong to each company, and how cooperative agreements will work. Allies may have to overcome cultural and language barriers, mistrust and susceptibilities. After a promising start, relationships can cool down, and the expected benefits may never materialize. Most important, however, is the danger of depending, over time, on the experience and capabilities of the other company. To be a serious competitor,A company must develop its own capabilities in all important areas in order to strengthen its competitive position and create a lasting competitive advantage. If this is not feasible, the merger is a better solution than the strategic alliance. Strategic alliances are useful as a form of transition to combat competitive disadvantages in international markets; rarely, if ever, can they be used as a basis for creating a competitive advantage.Strategic alliances are useful as a form of transition to combat competitive disadvantages in international markets; rarely, if ever, can they be used as a basis for creating a competitive advantage.Strategic alliances are useful as a form of transition to combat competitive disadvantages in international markets; rarely, if ever, can they be used as a basis for creating a competitive advantage.
However, since 1998, several airlines have been joining strategic alliances with the aim of accessing new markets or the passenger, in a new concept of services called shared code, among which the Oneworld alliance stands out, which It brings together lines such as Air Lingus, American Airlines, British Airways, Cathay, Finnair, Iberia, Lan Chile and Qantas and alliances on shared codes of Iberia and British, among others. However, these alliances seem to represent a form of almost general survival, adopted by the companies, after the events of September 11, as we will review in the next chapter.
The market
In order to have a panoramic view of the economic effects that are hitting the industrial sector in analysis, we must know some figures related to market share, in other words, how the cake of passenger and cargo transport was distributed in the main world markets at the close of the third quarter of the year 2001. For this it should be noted that the two main routes in which the greatest passenger traffic occurs between Latin America and the world are Europe and North America. For this reason, what is shown is a comparison between the participation of passengers transporting the airlines of the region (Latin American) and the external ones. A great difference can be seen between the two routes, where the participation in each of them is 22.2% for Europe and 30.8% for North America,generating a difference of almost nine percentage points between both regions.
During the years 2000 and 2001, 12,037,549 and 8,322,980 passengers were transported respectively on routes within Latin America (CLAC Database), a service provided by all the airlines in the world. It should be noted that nearly 70% of these passengers are carried by 9 of the region's main airlines, along with a subsidiary of American Airlines. It is important to verify that the number of total passengers transported on these routes fell by 30.85%, as well as that there have been significant variations in the market share of the airlines, standing out according to the graph shown below, Varig with an increase in regional participation from 11.7% to 14.4%; American Eagle from 3.7% to 5.5%;the most important decrease in participation was led by Aerolíneas Argentinas from 11.0% to 6.9% and then Copa from 8.6% to 5.8%. With the aforementioned changes in market share, they remain as leaders in the region, Varig 14.4%; Lan Chile 10.1% and Avianca 7.4%.
The small size of the Latin American cargo market compared to the world market is also reflected in the size of the cargo operators. Latin American cargo airlines must make an arduous fight at the world concert to gain space, and this is how two operators have managed to position themselves in the top 40 ranking worldwide; they are Lanchile and Varig, occupying the 21st and 31st place respectively, transporting only 4.6 and 7.6 times less than the RTKs carried by the world leader, Federal Express.
There is a great difference in the size of the domestic passenger markets of Latin American countries due to the great economic, geographic and demographic heterogeneity between the different countries of the region. The markets of only 4 countries together account for 90% of the total domestic passengers transported in the region, which correspond to Brazil, Mexico, Argentina and Colombia.
The size of domestic markets is of great importance to the development of airlines in the world, since companies operating in large domestic markets receive effective protection from the regulation prevailing in global civil aviation, which restricts such international competition markets. There are some exceptions in the world for companies that have developed from very small domestic markets such as Singapore Airlines or KLM, but overall, there is a very high positive correlation between the size of domestic markets and the number of successful airlines in a country.
In Latin America there are also such exceptions, since there are quite successful airlines that have developed from very small domestic markets, such as Lan Chile, TACA or COPA, and that either due to the different regional strategies used or the product mix offered, have been able to successfully compete in international markets.
The small size of the Latin American cargo market compared to the world market is also reflected in the size of the cargo operators. Latin American cargo airlines must make an arduous fight at the world concert to gain space, and this is how two LATAM operators have managed to position themselves in the top 40 ranking worldwide; Lanchile and Varig, ranking 21st and 31st respectively, transporting just 4.6 and 7.6 times less than the RTKs carried by the world leader, Federal Express.
3. Effects on the Aviation Industry, builders and related sectors
Terrorist Attacks
In the beginning of this work it is exposed on the unthinkable for the common people to imagine a fact of this nature. I was careful when writing this text, since in the opinion not of ordinary people, but of experts on the subject, the attacks were totally predictable and even more so with the reactive force of bomber houses, added to a satellite network without comparison in the world, and an air navigation service that detects in seconds an aircraft how many go off its route, the collapse of the towers could have been avoided. Specifically, and because it does not correspond to the research area, we will focus on a brief review of the facts:
The plane is a 54-meter-long Boeing 767-300, about 47 meters in wingspan and a top speed of 662 kilometers per hour, allegedly the speed of impact if terrorists fully accelerated the turbines at the time of impact. The fuel capacity, the explosive charge, is about 53,000 liters, the capacity of a good swimming pool.
Attack 1: American Airlines Flight 11 departs at 7:59 AM from Boston bound for Los Angeles with the impact being at 8:54 AM.
Attack 2: Flight 175 of the same airline leaves a little earlier, at 7:58 AM with the same destination, Los Angeles, being the impact 18 minutes later, at 9:03 AM.
The complex consists of six buildings, including two 110-story towers each, located in an area of about 6.5 hectares, including a 2-hectare plaza. The height of the Twin Towers was approximately 412 meters with 104 elevators each and externally a true glass loft with 21,800 windows in each tower. Its main occupants were the Port Authorities of New York and New Jersey, Sumitomo Bank, United States Customs, and more than 1,000 international business firms.
The useful space for offices was 445,000 square meters and 50,000 employees worked. Car parking space was relatively small as it is used in Manhattan, where people commute from 50 miles leaving their cars at the train stations where they live. The Twin Towers were one of New York's top attractions, being visited by some 200,000 people daily.
Attack 3: A Boeing 757-200 of 47 meters in length and 37 meters in wingspan, with a maximum speed of 645 kilometers per hour and a fuel capacity of 35,600 liters of fuel is the "missile" that hits the Pentagon.
American Airlines Flight 77 departs Dulles Airport at 8:10 AM for Los Angeles, impacting the Pentagon at 9:40 PM.
The sensitivity of the area is appreciated, very close to the White House and El Capitolio. The plane turns around apparently halfway.
In the Pentagon, headquarters of the United States Armed Forces and one of the largest office buildings in the world, being the headquarters of the Secretary of Defense and his Command, it houses about 26,000 people.
Between building and gardens it covers an area of almost 14 hectares. It was built in 1941 in reinforced concrete. The figure shows the attack on the southwest side, where the impact throws the rubble into the inner garden.
Attack 4: A Boeing 757-200 on United Airlines Flight 93, which departed at 8:01 AM with 45 passengers from Newark Airport to San Francisco, destroying itself on land in Jennerstown at 10:10 AM.
At the same time, the President of the United States leaves the commitments in Sarasota, State of Florida, and heads to Barksdale Air Force Base near Shreveport, Louisiana, where he activates a phantom government out of fear of a nuclear war. This concept of security created by the United States during the Cold War is made up of a select group of authorities and responsible persons at the ministerial level whose objective is to give continuity to the government in the event of an attack against Washington.
The Effects on the Aviation Industry on Companies
One of the first measures adopted by the airlines after the unfortunate events that occurred on September 11, 2001, and in the face of the drastic reduction in traffic that occurred, was to reduce capacity, which brings with it significant reductions in personnel. The following tables show the layoffs announced by airlines in Europe, North America and Latin America during the fourth quarter of 2001, as well as the number of employees per plane for each airline, before and after the attacks.
| Layoffs | Percentage | EE No. by Fleet | EE No. by Fleet | |||
| North America | FLEET | Employees | Announced | of dismissals | Pre Sept 11 | Post Sept 11 |
| American Airlines | 853 | 100,000 | 20,000 | twenty% | 117 | 94 |
| United | 533 | 76,923 | 20,000 | 26% | 144 | 107 |
| Delta | 553 | 87,000 | 13,000 | fifteen% | 157 | 134 |
| Continental | 348 | 67,000 | 12,000 | 18% | 193 | 158 |
| US Airways | 318 | 47,826 | 11,000 | 2. 3% | 150 | 116 |
| Northwest | 432 | 50,000 | 10,000 | twenty% | 116 | 93 |
| Air canada | 215 | 31,560 | 9,000 | 29% | 147 | 105 |
| America West | 131 | 13,145 | 2,000 | fifteen% | 100 | 85 |
| Midway | 6 | 2,500 | 1,700 | 68% | 417 | 133 |
| Air Transat | 22 | 2,336 | 1,300 | 56% | 106 | 47 |
| Midwest Express | 3. 4 | 2,860 | 450 | 16% | 84 | 71 |
| air France | 241 | |||||
| Virgin Atlantic | 26 | |||||
| Finnair | 57 | |||||
| KLM UK | 26 | |||||
| Olympic Airways | 28 | |||||
| Rynair | 40 | |||||
| Sabena | 0 | |||||
|
Europe |
FLEET | Employees | Announced layoffs | Percentage of dismissals | EE Number per Fleet Pre Sept 11 | EE No. by Post Sept 11 Fleet |
| British Airways | 246 | 70,000 | 13,000 | 19% | 285 | 232 |
| Swissair | 60 | 28,485 | 9,400 | 33% | 475 | 318 |
| air France | 241 | 64,717 | 6,472 | 10% | 269 | 242 |
| Lufthansa | 210 | 43,636 | 4,800 | eleven% | 208 | 185 |
| Iberia | 144 | 26,814 | 3,000 | eleven% | 186 | 165 |
| Aer Lingus | 37 | 10,000 | 2,500 | 25% | 270 | 203 |
| Alitalia | 144 | 19,231 | 2,500 | 13% | 134 | 116 |
| KLM | 100 | 16,666 | 2,500 | fifteen% | 167 | 142 |
| Virgin Atlantic | 26 | 6,000 | 1,200 | twenty% | 231 | 185 |
| Austrian Airlines | 3. 4 | 7,700 | 800 | 10% | 226 | 203 |
| Finnair | 58 | 8,974 | 628 | 7% | 155 | 144 |
| British Midland | 38 | 3,000 | 600 | twenty% | 79 | 63 |
| Air Europe | 27 | 2,081 | 330 | 16% | 77 | 65 |
| 0 | ||||||
| 0 | ||||||
| 0 | ||||||
| 0 | ||||||
| 0 | ||||||
| 0 | ||||||
| 0 | ||||||
| Total Employee Layoffs and Averages x Fleet | 47,730 | 16% | 212 | 174 | ||
| Source; TO YOU; ILO |
|
LATAM |
FLEET | Employees | Announced | Layoffs | Pre Sept 11 | Post Sept 11 |
| LanChile Group | 46 | 11,106 | 1100 | 10% | 241 | 218 |
| Mexican | 58 | 6,714 | 70 | one% | 116 | 115 |
| Varig | 85 | 16,869 | 1700 | 10% | 198 | 178 |
| Total Employee Layoffs and Averages x Fleet | 2,870 | 8% | 185 | 170 | ||
| ATI source; ILO |
ATI source; ILO
From the preceding tables it is clear the great difference in terms of the reduction percentages announced between the airlines by region. While North America and Europe announced the firing of 21% and 16% of their workforce, respectively, few airlines in the Latin American region announced their intentions to reduce personnel, totaling only 8% of the total workforce, even though they maintain high Indexes of number of employees per plane when compared to its main competitors, North American airlines.
The following graph shows the number. of employees per plane for the sample of airlines by region, where North America stands out as the region with the lowest number of employees per plane.
The graph above clearly shows how airlines in the North American region quickly adjusted to the drop in traffic, even falling below the world standards of 115 employees per aircraft. Even after the announced reductions, Latin American and European airlines remain well above the world efficiency standard. It is important to note that for the purposes of this study the number of aircraft was left constant, in order to analyze the effects on employment.
In the Industrial sector
With an average drop in passenger traffic, airlines will accumulate in two years over 24 billion dollars in losses from attacks on the Twin Towers in New York, According to sources of the International Association of Air Transport for Latin America and the Caribbean (IATA), it is claimed that, based on this calculation, companies "must lower their costs by 10 percent and increase their profits by another 10 percent" to make up for the loss that hit US Airways and United Airlines, the largest operators. of the sector.
Although air traffic had been deteriorating since the beginning of 2001 due to the slowdown in the world economy, the events of September 11 deepened it. The strategies to lower the high cost of operating an airplane made them more vulnerable to a drop in demand like the current one. Added the high load of benefits that the crews acquired in the good times. The traditional lines were harmed by the advancement of technology in the construction of ships, the air demand has been redistributed, as shorter routes have emerged and at lower prices. The rise in costs such as: fuels, air taxes and insurance, also impacted the sector. According to IATA, the companies that successfully alleviated the crisis in Latin America are those that integrated their operating networks and take advantage of the distribution of their passengers,as Lan Chile and Grupo Taca have been doing. Other companies such as US Airways, which filed for bankruptcy on the same day 11, stated to maintain their routes, except to Saginaw, Michigan, where they will let go since September. A year later, US Airways files for bankruptcy in a court in Alexandria, Virginia.
The American Grant
After the attacks of September 11, the congress approved in November 2001 a financial rescue of 15,000 million dollars for the airlines affected by the terrorist attacks last year.
Faced with the bankruptcy filed by US Airways considered the sixth in the US and the repercussions nationwide with the reduction of its flights by 20% and the announced dismissal of 11,000, a federal judge approved a financial aid emergency plan for 75 million dollars will allow you to stay operational until September. However, the company was seeking support for a $ 500 million financing plan, an initiative that was approved by a banking group led by Texas Pacific that would take control of 38% of the shares of US Airways and that would suddenly allow it the airlines continue their regular flights to more than 200 cities in the United States and abroad.
Undoubtedly, the announcement of the bankruptcy of US Airways affected the aviation industry, which has not managed to fully recover from the ravages caused by the economic slowdown and the attacks.
In a bid to contain its million dollar losses, the world's largest airline, American Airlines, will launch an unprecedented restructuring that includes mass layoffs, suspension of flights and, fundamentally, a change in the way it connects passengers to its hubs or operations centers. The measure includes the elimination of first-class service on secondary routes in Europe and Latin America (but probably maintained for London, Tokyo, São Paulo and other important markets for business travel), so that it can add more business class seats and tourist on their planes.
The reorganization is an effort to try to pull the airline out of a downward spiral that stems from a general recession in the sector. In the first six months of 2002, US airlines have already lost nearly $ 4 billion, and AMR, the parent company of American Airlines, represents $ 1 billion of that amount.
Like US Airways' bankruptcy filing, AMR's actions will translate into major changes to service, and could push rival lines to implement changes that could be painful.
Almost a year after the September 11 attacks, the United States air industry continues to fly amid severe turbulence. Three airlines, Midway Airlines, Vanguard Airlines and US Air, have recently filed for bankruptcy protection, and United, the country's second-largest airline, could be the next victim.
This scenario predicts that it will take 28 to 42 months for airlines in the region to recover from the impact of September 11, 2001.
You can no longer speak of a hard landing in the aviation industry. Due to the crisis in the sector, more airline bankruptcies are imminent. With historic losses of $ 12 billion in 2001 and amid bankruptcies, cutbacks, competition from other transportation and expensive and cumbersome security practices imposed since last year, global airlines face a turbulent horizon.
The exit is not in the medium term, since the expected losses for the sector in 2002 will reach similar figures to those of 2001.
On the other hand and very aware that the impact of the crisis is less in Europe, it has also been the coup de grace for some traditional flag companies such as Sabena (Belgium) or Swissair (Switzerland). Others such as British Airways or Iberia have been forced to undergo a major restructuring, which includes cuts in both the workforce and the fleet.
The Effects on the Aviation Industry
In the Farnborough show (South London) where one of the best samples of aeronautics in the world has been represented after Le Bourget (North of Paris), a balance was made on the current state of the sector and the manufacturers of commercial aircraft in crisis after the attacks of September 11, anticipating the impossibility of the sample for this year (2002) reaching the record order amount of two years ago, for 52,000 million dollars.
The fragility of airlines, and the doubts that surround their ability to restore the expected pace, weigh on civil aeronautics, the two main rivals in the market for aircraft with more than one hundred seats, Boeing (United States) and Airbus. (Europe), but also on the regional aircraft manufacturers, Bombardier (Canada) and Embraer (Brazil).
"The big companies in Europe and the United States are slowing down in their recovery rate after the terrorist attacks last year, which have a direct impact on completing the orders for planes made in advance.
Airbus sales and material delivery forecasts reached 300 aircraft this year and next year, while Boeing forecasts 380 in 2002 and between 275 and 300 in 2003.
In this order, the big builders have had to take measures aimed at supporting the drop in orders and maintaining a competitive situation that was already happening very strongly between the two giants such as La Boeing (American) and Airbus (European), but that since September 11 has become more acute. This competition has not been without serious disqualifications and extreme measures on both sides. In its strategic plan, Boeing plans to reduce its production by 28% less than 2001, reaching its total manufacturing to 380 aircraft and a decrease in staff of more than 28,000 employees, while its European competitor will decrease its production by 8%, which means building up to 300 aircraft this year.
The effect of Airbus' pace of production on prices is being seen in the competition to sell short-haul aircraft for EasyJet, the UK-based low-priced airline.
Finally, Boeing states that Airbus's attitude is not healthy since it is focusing on producing a certain number of commercial aircraft without taking into account whether the market demands them or not.
The Effect on Tourism
The events of September 11 determined the results of international tourism in 2001 as well as the way in which certain destinations and sectors were affected, but they were only one of the factors -although the most important- of the decline in tourism statistics. The economic situation in western countries, such as Germany and the United States, had begun to deteriorate in late 2000, and the process had started even earlier in Asia, with the reduction of outbound tourism from Japan. The effects of the economic recession on inbound tourism in regions such as the Americas, South Asia and the Middle East were already observed in the first eight months of 2001.
The saturation of images of the tragedy in the media, the repetition of the messages associated with it and the magnification of diplomatic and military reactions, at first due to lack of accurate data and then due to overflow of information, led to a contraction of the international tourist movements. What was seen in the months after September 2001 was not that travel was renounced, but rather that they were restructured, giving priority to the closest, known and accessible destinations, with means of transport perceived as safe, perhaps because they were individually controllable. The situation in which the airline sector found itself only worsened, and its consequences still endure with an ending that is not easy to predict at the moment. At the present time, one year after the events,Assessing the situation of the tourism market is an exercise that most operators have given up until the season is late. They simply do not have enough information, given the changes that have occurred in vacation consumption. Not many countries have a statistical apparatus that allows them to evaluate recent reality with a certain rigor. The sectoral estimates may be biased by voluntary or convenience intentions, the series handled are of a different nature (visitors, tourists, clients or overnight stays) or correspond to different periods of the year, which usually vary from January-March to January-July. Perhaps another major drawback is that they do not usually give information about the months of July and August.These months are key to the summer season in the northern hemisphere, and in many countries in the southern hemisphere, July is also an important holiday month. In others, the months of October to March are the high season months, given its weather conditions between July and September.
| Evolution of international tourism | |||
| Year | Arrivals
(millions) |
Increase in
absolute values (millions) |
Annual variation (%) |
| nineteen ninety six | 586 | 3. 4 | 6.2 |
| 1997 | 610 | 24 | 4.1 |
| 1998 | 629 | 19 | 3.1 |
| 1999 | 652 | 2. 3 | 3.7 |
| 2000 | 697 | Four. Five | 6.9 |
| 2001 | 692 |
According to the results of the year 2000, an estimated 697 million international tourists were registered. Of all international tourism, most travel in the direction of or between Europe, generating more than 403 million arrivals in 2000.
America is the second most visited region, with 129 million arrivals, followed by East Asia and the Pacific with 112 million. Africa has received an estimated 28 million arrivals, while the Middle East generated 20 million arrivals, followed by South Asia with 6 million.
According to data registered by the WTO (World Tourism Organization), and presented in a document on "Trends in international tourism", we can see in the previous graph the tourist arrivals by receiving region, generated in recent years, as well as the projections for the next 20 years.
It should be noted that for the first ten years of forecast, an annual growth rate of 3.7% is expected, followed by 4.5% for the years 2010 to 2020. This growth will generate an increase in the number of arrivals of 697 million to 1,006 million in 2010. In 2020 it is estimated that arrivals will reach 1,561 million.
The effect on insurance premiums
In Europe, a sharp increase in war and terrorism risk insurance policies could ruin several European airlines, aviation experts warned. Due to the events and the exaggerated increase in insurance premiums, the European Commission will end the emergency scheme, under which the airlines of the member countries of the European Union are backed against war risks. The move means airlines will have to pay full commercial rates to insurance companies, for the first time since the September 11 attacks on the United States. The attacks last year exposed the potential liability of the airlines, highlighting the possibility of legal action by family members and companies,in case of material and human losses. Previously, European airlines could only cover third party liability for war risks, if the government agreed to endorse the policies, effectively making payments in case of claims. In July the European Union guaranteed an extension of the scheme to allow national governments to cover insurance costs, but now considers that state aid is no longer necessary. The extension to the deadline came after the US government introduced a similar measure. Many believe that an increase in costs cannot be assimilated by some airlines, which are already in economic difficulties. Experts on the subject argue that the measure could have serious implications for the industry and will mean ruin for some companies.Previously, European airlines could only cover third party liability for war risks, if the government agreed to endorse the policies, effectively making payments in case of claims. In July the European Union guaranteed an extension of the scheme to allow national governments to cover insurance costs, but now considers that state aid is no longer necessary. The extension to the deadline came after the US government introduced a similar measure. Many believe that an increase in costs cannot be assimilated by some airlines, which are already in economic difficulties. Experts on the subject argue that the measure could have serious implications for the industry and will mean ruin for some companies.Previously, European airlines could only cover third party liability for war risks, if the government agreed to endorse the policies, effectively making payments in case of claims. In July the European Union guaranteed an extension of the scheme to allow national governments to cover insurance costs, but now considers that state aid is no longer necessary. The extension to the deadline came after the US government introduced a similar measure. Many believe that an increase in costs cannot be assimilated by some airlines, which are already in economic difficulties. Experts on the subject argue that the measure could have serious implications for the industry and will mean ruin for some companies.
In September, unions at United Airlines agreed to accept a decrease of $ 5 billion in personnel costs, including cut wages, to try to save the company from bankruptcy.
For the Latin American market, insurance costs for the aeronautical sector tripled, the Inter-American Federation of Insurance Companies reported Wednesday, also generating two cuts in insurance coverage, mainly linked to terrorist acts, which have also hit airports. To imagine the global impact in figures, it can be pointed out that Latin America generates 5.8 percent of the world insurance sales volume with 35.670 billion dollars, where Brazil, the largest regional economy, concentrates 40 percent. Industry analysts predict that the limits of the sums insured in aviation insurance cases would fall from a billion dollars to just 50 million.
"Standard & Poor's has reported that if total losses from the attack exceed $ 50 billion, some of the insurers would suffer problems and that would affect regional operations." Private estimates indicate that total losses from the attacks on the United States, which included the demolition of the Twin Towers of the World Trade Center in New York, are close to about $ 40 billion.
Insurers will have to face claims for damage to the World Trade Center and surrounding buildings, plus the costs of business interruption while rebuilding. Large property and liability coverages are normally covered between various insurance and reinsurance companies to prevent a single one from being affected by gigantic claims that complicate your assets.
The aircraft-owning airlines could also file claims, where United Airlines and American Airlines each lost two ships.
In safety
The organization for International Civil Aviation (ICAO) held its General Assembly from September 24 to October 4, 2001 in Montreal (Canada), about two weeks after the terrible September 11. It has been a coincidence that the dates almost coincide (this Assembly is held every three years at this time), however, this Assembly was the most critical since ICAO was founded more than 50 years ago.
This Assembly gave the necessary political impetus to reshape international security standards in the aviation sector. One of the strongest presentations of the assembly was that of the International Federation of Air Transport Workers (ITF) represented at this meeting by a delegation of 25 people who made themselves heard by the 187 Member States of ICAO and by the sectoral organizations that will be present there.
The ITF is going to demand new levels of cooperation between governments, industry and unions. Professionals who live the daily reality of air transport and whose lives are in danger when the system fails should be listened to as they deserve.
Although ICAO establishes the minimum international standards for aviation security, each State has its respective procedures and methods, which may vary from country to country. The security system should achieve a higher level of international uniformity. So far, however, companies and manufacturers have chosen, in principle, the “cheapest option for security,” an attitude that is unacceptable today.
However, the United States Armed Forces was the first to put the new security measures into practice, ranging from exhaustive control of passengers and suitcases to the placement of cameras, hermetic cabin access doors, and armed guards on some flights. Suddenly, these measures seem to be exaggerated, but they are applicable throughout the United States and extend to all the foreign lines that operate in that country, especially as regards cabin armor. The foregoing has no less economic impact on the already failed industry.
4. The other side of Crisis Strategies and Trends
The other side of the Air Crisis
We can begin this chapter by saying "A troubled river fishermen's profit", however I think in fairness, that the success in the cases that we will see below have a common factor "clearly differentiated internal and external market strategies, and an administration capable of take appropriate and timely measures to maintain the defined strategy.
This is the case of the European airlines EasyJet, Virgin Express and Ryanair, which have managed to take advantage of the crisis in the airline sector while keeping their low-cost strategy unchanged. They are recognized as low-cost airlines - no frills, or no frills, that have not only survived the turbulence experienced in recent months by the airline sector, but have even taken advantage of them
Since 9/11, low-cost companies have been more successful. The reason seems to be found in that in Europe, where the reaction has not been so emotional, the terrorist attack only reinforced a tendency to save companies, which had been observed for more than a year.
Thus, many companies had already changed their policy, so that their executives continued to travel in business class on intercontinental flights, but on short flights of a couple of hours they traveled in economy class. And from there to low-cost airlines there is only one step, which, in the case of Virgin Express, has been a giant: 52% of the company's passengers fly for work reasons, compared to 34% ago only two years.
Another reason why companies with no extras have weathered the crisis is their ability to adapt to changes. Without a doubt, the business model of low-cost flights is more flexible and adapts more quickly, it is not a giant structure with long bureaucratic processes, such as those that abound in American companies or European giants.
Another European company that despite the turmoil caused by the repeated strikes by its pilots or the crisis in the sector following the September 11 attacks in the United States, Iberia, unlike many of its competitors, was successful. To such a point, even, that on July 1 it will be included in the Ibex-35, the benchmark index of the Spanish Stock Exchange that groups the main Spanish companies. The good results of the company and the good prospects for the sector in the second half of this year have been the keys that will allow Iberia to rub elbows with the cream of the country's companies, and that only 15 months after its privatization.. "Iberia is the only airline in Europe that has managed to earn money after September 11."
The figures corroborate this: In 2001, the company obtained a net profit of 53.1 million euros (about 51 million dollars), and in the first four months of this year the operating profit was 27.7 million euros., 101 million more than in the same period in 2001, while costs were reduced by 6.7 percent. When Iberia went public on April 3, 2001, its shares were worth 1.19 euros. Three days after 9/11, they fell to 0.79 euros and it was feared that this was only the beginning. But in October they began to recover and this year the revaluation is already around 60 percent. In addition, Iberia registers a «free float» -percentage of shares that move in the market- of almost 55 percent, with an average daily price of six million euros (5.8 million dollars). Day by day,The company is one of the 150 stocks on the market with the most shares.
"One of the keys to Iberia's current situation is that we have been able to react quickly and flexibly to a truly difficult situation." If after that fateful date Iberia announced a reduction in flights and a postponement of the renewal of its fleet, now the airline is already thinking about expanding business and has given the green light to acquire 5 of the 17 devices whose reception was frozen.
At the time of publication of the figures, Iberia was waiting for the European Commission to rule on the extension of its trade agreement with British Airways, whose primary objective is flights between Spain and Great Britain and for which the British line it will provide passengers on Iberia's routes to Latin America, while the Spanish company will add clients on British's Asian routes, an agreement that is currently a reality.
The Iberia Group obtained an operating profit of 233 million euros in the first nine months of 2002, which means increasing the 37 million euros it registered in the same period in 2001 more than six times, and plans to obtain an Ebitdar margin (operating profit before depreciation and fleet rental) exceeded 17% in 2002, compared to 13.8% in 2001, the airline reported today.
Alliances as strategies
As we all know, alliances are not strategies that allow maintaining competitive advantages in the long term, however alliances between two or more efficient companies will allow them a series of benefits and capacities to cope with development with the complexity and competencies that globalization brings..
Some of the most important regional and global alliances in the analyzed industrial sector are among others:
• Air France and Alitalia, with an alliance on a new codeshare agreement and mileage system for all their flights in South America.
• Banco Santander and Iberia, an alliance aimed at offering new benefits to its clients who wish to travel the world, paying with Banco Santander credit cards.
• Iberia and British, a code share alliance for the contribution of passengers to their respective markets, including Ibero-America for Iberia and Asia for British, as well as other commercial aspects of interest for the two air groups. The common interest is to increase traffic between the United Kingdom and Spain since between them they control only 27%. In May 2002 the alliance was ratified and the offer of flights with shared codes was expanded, Iberia will expand its offer of flights with British Airways to destinations in Nairobi, Singapore and Budapest. The flights to these destinations, available to Iberia passengers starting on July 12, will be made through London's Heathrow airport.In the same order, the British company will incorporate its code to Iberia-operated flights from Madrid to Havana and Santo Domingo, to offer a broader offer and better connections to its customers.
With these five new destinations, Iberia and British Airways, which began their collaboration in 1999, now have 39 routes in shared code between the two.
• Air Lingus, American Airlines, British Airways, Cathay, Finnair, Iberia, Lan Chile and Qantas, Oneworld Alliance was born with the aim of accessing new markets and sharing passengers, despite the fact that there are a number of initiatives that would lead to benefits for the order of US $ 1 billion, the actions seek to deepen cooperation among the members of the alliance in order to provide more benefits to its clients and also to its shareholders. Among the objectives is the generation of three new types of tickets and the introduction of three more in the coming months in order to strengthen its prestige.
• In search of expanding its distribution network and services in cargo transportation, as well as expanding its business, Singapore Airlines (SIA), Japan Airlines, Lufthansa and Scandinavian Airlines are integrated as of June 2002, to the WOW global alliance of air cargo transportation with a combined fleet of 43 transport aircraft and a capacity of more than 760 passengers.
• Aerolineas Argentinas, Lanchile, Varig, TACA, TAM, Avianca and Aeropostal, have created the Alas Andinas alliance, whose objective is to achieve the joint maintenance of the aircraft; develop shared code agreements; regulate supply and avoid excessive frequencies on certain routes; increase flights as necessary to destinations where necessary and reduce the costs of services. Likewise, in the future the objective of the members of the alliance is the joint purchase of fleets and services and the sale of connections made by their partners where they are not in direct competition. In the same order, the development of a joint cooperation scheme is already underway to harmonize actions and projects, with the aim of lowering costs and increasing the competitiveness of Andean airlines.
• Air Europa and Alitalia; in alliance to operate in codeshare all flights between Madrid and Rome and Madrid and Milan-Malpensa. Between the two companies they will offer 10 flights between Madrid and the two Italian destinations. Alitalia will carry out six flights with an MD-80 and Air Europa will operate four daily flights with a Boeing 738. The objective of both airlines is to increase the number of passengers transported by 10%, which in 2001 stood at 750,000 (Alitalia 500,000 and 250,000 from Air Europa). All flights will carry the codes of both companies and users of the frequent flyer cards of both airlines can add their miles to either company. Both companies plan to continue collaborating and incorporating new routes and destinations with codeshare,although he ruled out that this collaboration could be translated in the future into a shareholding exchange.
In this sense, he remarked that his agreement is of a commercial nature and is not a «joint venture», and his objective is to improve the market position of both airlines and that the codeshare be incorporated into other routes, taking into account the bilateral agreements of different countries.
• Delta, Continental and Northwest; Delta, the third largest EUU, today announced an agreement with rivals Continental and Northwest to share passengers with the aim of improving their competitiveness in the face of falling demand. The agreement to share codes and routes between the three airlines will allow travelers from any of them to use the flights of the others, as well as share the miles or points they may receive for using any of those companies. The airlines also explained that they will start talks immediately to extend this collaboration to their international partners, which, in principle, should not be a problem. Delta currently has collaboration agreements with Alitalia, Aeroméxico, Air France and Korean Air, while Northwest, the fourth largest in the United States,He has them with KLM Royal Dutch. Continental, the country's fifth, also has similar agreements with KLM Royal Dutch and Air Europa, among others. Northwest and Continental have a long history of cooperation in maintaining highly complementary operations, to the extent that Northwest came to own 14 percent of the Continental base in Houston that it had to sell at the request of the authorities. Codes and routes sharing agreements also need to be approved by the authorities, but since it does not involve price or schedule issues, there are usually no problems. The companies expect the Transport Department to review the agreement in November and to be concluded in December of this year. The combination of operations, according to experts,It is one of the ways that airlines have to face the fall in demand, by improving service and coverage without great expenses, thereby improving the use of their available capacity.
• Air France and KLM negotiate a code-share alliance, which could include the French firm's participation in the Dutch capital. However, KLM that begins to negotiate with Air France still maintains contacts on a possible alliance with British Airways.
• Summa Alliance, hopes that an agreement with the North American airline Delta Airlines is ready to attract the loyalty of more customers. Delta would join the codeshare program, which is already closed with Continental Airlines, Air France and the LatinPass Program. The latter, made up of Aviateca, Copa, Lacsa, Nica, Taca, Aeropostal, National Airline, USAirways and KLM. Since April Avianca, Sam and Aces have been working together on loyalty programs. Now, the novelty will be the launch of their new program. Summa's investments have been allocated to software, hardware, research, training and infrastructure programs. The new card will mean the disappearance of Aviancaplus, a program for frequent Avianca and Sam travelers, which had been running since 1992 and Premium Pass, by Aces, in force since 1995.Since October 2002, the new card will not only add current members to both mileage programs, as well as the benefits offered by both programs, it will also offer members new possibilities in accumulating and redeeming miles. However, the miles accrued by the members of both programs will continue to be valid after unification, allowing them to have them in one account and thus access all the benefits of the new program. The launch of Summa's new traveler card would also coincide with the closing of the negotiations that are being carried out with Air France, which would give way to seven weekly flights between Colombia and Europe. The route is currently covered by Air France, with four flights between the country and France. The talks aim to reach seven flights,three of which would be covered by the Summa Alliance. This agreement would mean the return of the Colombian airline to Europe, after the closure of its flights to that destination at the beginning of the year.
Chile, World Call Center
Control of ticket reservations is a first-rate competition variable for airlines with a presence abroad. In this sense, Chile has given the basic guarantees for foreign companies to invest millions in conforming Santiago into a call center. Indeed, political and economic stability are the main attractions for the arrival of these companies that control the ticket reservation system and
Santiago has recently been forging a new feature: to be the reservation call center for some of the most important airlines in the world. Up to 1,500 daily calls are answered by the 25 telephone operators of the most modern and recent call center installed by an area line in Santiago, with an investment of one million dollars, transforming our capital into the nerve center of Air France's operations in Latin America. South. Anyone from Argentina, Uruguay, Colombia and Venezuela who wants to board a plane of the French company must call Santiago, through an 800 number, to book their tickets, and from March Bolivia, Peru and Ecuador will also join.
The technical reasons why Chile is found in telecommunications in Chile is very good and one could speak of a mature market, due to the technological advances that have been incorporated.
Twenty-five people work in the call center, two of them Colombian, with "excellent results," according to González, who noted that in one year the percentage of missed calls dropped from 25 percent to 10 percent of the total. The plans are to continue increasing coverage with the incorporation of Bolivia, Ecuador and Peru, so that in the first months of next year more staff will begin to be hired.
This call center represents the most modern, and its foundation is that it has the best and most advanced technology in telecommunications, apart from the most recent reservation programs, which ensure absolute confidence and efficiency.
Delta Airlines has also maintained a call center for a year and a half, with a plant of 120 people, making it the largest of its kind in Chile. The American company chose our country due to its economic, political and social stability, as well as being much more profitable from a business point of view, compared to other countries in the region.
Delta Airlines concentrated all of its Latin American calls in Santiago after the episodes of September 11 at the Twin Towers. Until then, the central offices were in Mexico City, from where 1,200 calls are received daily.
If alliances are good, direct marketing also works
• If you are innovating, we have to highlight the Australian airline Qantas Airways that named the outstanding actor and former dancer, John Travolta as the first officer with whom he presented a tour around the world in which he promoted airplane travel, in decline in the wake of the September 11 attacks.
Travolta, an avid pilot, trained with Qantas and on 747 simulators at Boeing in Seattle, USA, and is now officially a "plenipotentiary ambassador" for the Australian airline.
• If anyone was surprised by the innovation, it was the passengers of the Italian private airline Volare who saw, with surprise, two beautiful models in swimsuits parading down the aisle of the aircraft, in an unusual initiative launched to mark the summer season. The parades last an average of ten minutes and the models showcase up to five sets of swimsuits and jewelery from Italian designers, using the front part of the planes as costumes.
The parade program, which lasted three weeks, and was carried out on the routes between Milan and four cities in southern Italy: Naples, Bari, Catania and Palermo, with heavy passenger traffic in the summer season that is now beginning.
Planes are clearly not just synonymous with delays, strikes and problems, ”before announcing other initiatives to“ make the flight pleasant for passengers. ”
Trends
Being the International Civil Aviation Organization (ICAO) the body that regulates civil aviation in the world, I dare to argue that the amount of information it handles and the quality of professionals highly specialized in the subject of air navigation and behavior of the industry, attest to the trends presented in the analysis session on the future behavior of aviation and its trends.
One year after the September 11 attacks in the United States, which caused a sharp drop in global air traffic, the situation has stabilized, opening the way to a recovery for 2003.
After registering a decrease of 2.9% in 2001 and "no growth" in 2002, passenger traffic on scheduled flights will pick up in 2003, the year in which the growth forecast stands at 7, 1%, "fundamentally thanks to the general recovery that the world economy must register", as explained by ICAO in a statement.
Likewise, this organism foresees a growth of 5.6% for 2004, which could be around 5% "in the longer term". However, ICAO still foresees for 2002 decreases in air traffic for North American companies (-2.3%) and European companies (-1.2%), which already registered falls of 5.7 and 2 in 2001 % respectively.
"North American carriers were the most affected by the drop in demand after September 11 and it will probably have to wait until 2004 before being able to transport the same number of passengers as in 2000", ICAO considers.
On the other hand, ICAO assures that in other parts of the world 2002 will be the year of confirmation of the growth of passenger traffic, with forecasts of increases of 2% for Latin American companies, 3% for African companies, 3.5% in Asia-Pacific and 3.8% in the Middle East.
Already for 2003, this body considers that the recovery will spread throughout the world, with an increase in air traffic that will range between 6% for North American companies and 7.9% for those of the Asia Pacific, closely followed by the European ones, whose passenger traffic will register, according to these forecasts, an increase of 7.8%.
These forecasts differ from those presented by the International Air Transport Association (IATA), which forecasts a decrease of 3% for all passenger air traffic in 2002, followed by an increase of 6% in 2003 and 4% annually until 2006.
5. Conclusion
It is clear from the development of the text that the trend in terms of generic strategy in the aviation industry is geared towards companies competing with Low Cost strategies. The trick to making this strategy successful is not in companies offering cheap flights, but in keeping them below average and remaining profitable. The idea seems to focus on saving on what the passenger does not mind giving up and not skimping on the essentials: punctuality and security. The above, together with the generation of alliances that allow the maximum use of capabilities, plus the control of an efficient administrative and operational structure, will guarantee the permanence and growth of airlines.
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