Key Developments within the Global Airline Industry Essay

Key Developments within the Global Airline Industry - Essay Example The researcher states that the growth of the airline industry is averaged at 5 percent annually through the estimates have changed due to changing economic conditions and differences in air travel safety across continents. According to the International Air Transport Association (IATA), the industry experienced a $ 4 billion decline in profitability in 2011. Surprisingly, analysts point that global air travel passengers will hit a mark of 3.5 billion passengers annually in2015 which is a 30 percent increase from the current figures. IATA clarifies that increase in global fuel costs will impact negatively on the profitability of many airlines since it is estimated that global airlines will experience about $ 1.6 billion fuel cost increases. Accordingly, fuel costs account for about 35 percent of airline costs currently, up from 15 percent in 2000. Numerous uncertainties such as the recent global financial crisis and global terrorism have negatively affected the profitability of the in dustry. The developments have led to shifts in t global air travel services provision as major global players have intensified competition in the new centers of production. Additionally, the emergence of new international financial hubs such as China has led to movements of major airlines from their home markets to new high growth markets. Transnational corporations like the World Trade Bank and International Monetary Fund have facilitated globalization through the elimination of barriers in trade and investment flows among the nations. There are numerous factors affect the competitiveness of the airline in the domestic market. Some factors include the level of technological innovation, the influencing factor creation, and organization of the airline. According to Porter’s diamond model, the structure of the industry, the rivalry of the firms, the factor conditions, demand in the market and supportive industries are the important internal factors that determine the success of the firm in the domestic or national market.