INTRODUCTION


Air transportation remains a huge and growing industry. It enables economic advancements, global trade, worldwide investment and leisure industry. Consequently, it is central to the globalization experienced among many industries.

Over the past decade, the industry has grown by 7% with travelling for leisure and business purposes growing significantly. The availability of large aircrafts made it convenient and inexpensive for people to travel to various locations worldwide. Governments in developing countries recognised the impact of tourism on their economies and incited the improvement of resorts and infrastructures to attract tourists from prosperous countries.

MIT added that business travels have also increased as organizations tend to expand their business globally. Over the years, the industry as experienced some turbulences which saw some of the major players folding up and forcing many airlines to merge.

This writing looks critical at the aviation industry as a whole, challenges surrounding it and insights for a more productive future.


MARKET STRUCTURE


The aviation industry presently has more than 2100 airlines with the various companies handling over 23,000 air crafts operating in over 3,700 airports with over 32 million flights made and 2.5 billion passengers carried. In spite of the global crisis, the industry has become larger.

Modern air craft production is capital-intensive, demanding immense expenditure. As technology as improved and the economies of scale benefits have become more profound, the cost of designing and marketing an aircraft have become extensive, strengthening the barriers to entry in the industry, thereby leading to few firms competing in the industry and producing a market structure that looks like an oligopoly.


CHALLENGES IN THE INDUSTRY


    Dubois added that some of the challenges faced by the industry are:

  • high labour cost
  • unstable fuel prices
  • harsh legislation
  • Osborne also identified some of the challenges to be:

  • security
  • Inflight connectivity
  • safety in the air
  • consumer demands

CONCLUSION


In spite of the challenges faced by the aviation industry, their increasing productivity is quite an achievement. Much of the changes however have been at the passengers’ expense. Business passengers will like to see a balance in the industry: an aviation industry that is fit enough to avoid government intervention or widespread liquidation, but competitive enough to bring down the prices of tickets and improve services.