This paper examines the major challenges facing aviation management in the 21st century, with a focus on the forces of change reshaping the industry. The discussion covers how globalization has intensified competition for legacy airlines, the role of mergers and alliances as strategic responses, and the growing importance of route development. It also addresses the critical shortage of air traffic controllers and its safety implications, and explores ethical challenges including passenger rights during tarmac delays and the aviation industry's responsibility to reduce greenhouse gas emissions. Recommendations are offered for each challenge area.
The paper consistently uses the problem–recommendation pairing technique: each major challenge is introduced, supported with cited evidence, and then followed by concrete managerial recommendations. This approach grounds abstract policy concerns in actionable guidance and is a hallmark of applied management writing.
The paper opens with a brief introduction framing the scope of 21st-century aviation challenges, then moves through five substantive sections — globalization and legacy airline competition, mergers and alliances, route development, air traffic control shortages, and ethics (covering both passenger rights and environmental responsibility). Each section closes with targeted recommendations. A short conclusion synthesizes the key findings before a Works Cited list.
Aviation management is a complex undertaking in any environment, and the 21st century has introduced a particularly demanding set of challenges. These challenges are related to globalization, pressures specific to legacy airlines, air traffic control shortages, and ethics — including the impact of greenhouse gas emissions. The purpose of this discussion is to examine the challenges of the 21st century in aviation management and the forces driving change.
Like any industry, aviation is affected by globalization and the manner in which it has altered how and when people travel. Globalization has also spurred the development of many new airlines in various parts of the world, and these new carriers create significant competition for legacy airlines. The U.S. Government Accountability Office (GAO) reports that:
"U.S. airlines, particularly legacy airlines, have faced an unprecedented set of challenges since 1998. These challenges were both internal factors that are reshaping the airline industry and external events that sharply reduced the demand for air travel. Within the airline industry, even before the events of September 11, the growth of the Internet as a means to sell and distribute tickets, the growth of low-cost airlines as a powerful market force, and the shifting role of regional airlines were all transforming the industry" ("Commercial Aviation," 2004).
As a result of these internal and external forces, the manner in which legacy airlines are managed must change so that they can compete with newer carriers. The new ways in which tickets can be sold — through 24-hour reservations and online communications — have also transformed the industry and present ongoing challenges for aviation management. The ability of customers to compare prices among airlines instantaneously gives them an advantage that was not possible prior to the 21st century. Numerous travel websites perform all price comparisons at no charge and allow customers to book a flight immediately. This change in the way tickets are purchased requires aviation managers to engage in careful study of price points and demand for particular destinations. The proliferation of information available to consumers has fundamentally changed the airline industry and the nature of aviation management.
One major internal issue is the aging fleets of legacy airlines. Many newer carriers have entered the market with the latest aircraft available — sleek planes featuring amenities that consumers now expect, including wider seats, greater legroom, and in-seat internet access and entertainment. Managers must respond to this competition, which may mean retiring older aircraft and replacing them with more efficient and competitive models.
In addition to heightened competition, legacy airlines face a significant decline in profitability. The GAO explains that:
"Since 2000, legacy airlines' financial performance has deteriorated significantly, while low-cost airlines have used their comparative cost advantage to expand their market share. Low-cost airlines maintained their unit cost advantage over legacy airlines between 2000 and 2003, despite concerted cost-cutting efforts by legacy airlines. For several of the legacy airlines, their weakened financial condition combined with significant future financial obligations makes their recovery uncertain."
The GAO further illustrates the difference in unit costs between legacy airlines and low-cost airlines. In 2003, low-cost carriers paid nearly six cents less per 3,000 flights than their legacy counterparts. This means that low-cost carriers are spending considerably less per available seat mile, a cost saving that translates directly into better profit margins.
In response to these pressures, the main recommendation for legacy airlines is to develop management strategies consistent with the changes occurring in the aviation environment. There must be a concerted effort to reduce costs in a manner that allows for growth while remaining competitive. Legacy airlines must also examine their fleets and identify aircraft that no longer meet passenger expectations, replacing them with models offering the amenities that newer airlines provide. Additionally, some managers may benefit from offering supplementary terminal services to customers still at the airport, as such services can increase the perceived value of a ticket purchase. Consumers are more likely to continue buying tickets from companies that offer useful services, and these extras can provide important competitive advantages.
Around the world, alliances and mergers among airline companies have altered the way the entire industry operates. A great many of these arrangements have been created in response to globalization. According to Iatrou and Mason (2009):
"Global alliances have developed in response to the economic demand of global markets and to the opportunities provided by deregulation and liberalization initiatives. These cooperative agreements initially took the form of simple code-share agreements; but as deregulation started to take effect in the European Union and a Single Internal European Aviation Market was created, and as U.S. authorities pursued more 'open' and less restrictive bilateral air services with other countries, the horizontal links between carriers took the form of deeper and more complex cooperation" (Iatrou & Mason, 2009).
Some analysts have argued that airline alliances are merely a second-best solution. European airlines, however, tend to view alliances as a transitional stage that will ultimately lead to mergers (Iatrou, 2004). The argument is that, were it not for regulatory constraints tying traffic rights to the nationality of an airline's ownership, carriers would have moved directly to mergers, which hold the promise of greater efficiencies, synergies, cost reductions, scale benefits, and better operational control.
Alliances and mergers carry both benefits and risks. On the negative side, large-scale mergers can reduce competition to the point that consumers have fewer choices, and service quality may deteriorate as a result. On the other hand, well-managed alliances and mergers allow airline companies to combine their resources and expertise to create more efficient entities capable of considerably reducing costs. From an aviation management perspective, it is essential to properly exploit all resources made available through an alliance or merger. Failure to do so can result in an unsuccessful merger and, ultimately, the collapse of an airline.
Overall, legacy airlines must learn to adjust to the impact of globalization. Without such adjustments, many will continue to lose profitability well into the future. Those responsible for aviation management must understand the issues that arise from globalization so that appropriate strategies can be implemented to ensure the long-term success of their organizations.
Stoller, G. (2009, December 22). New rule to let fliers off after 3 hours. USA Today.
Strickland, R. (2010). Route development and airport strategy. In Airport Management (pp. 108–109).
Wadhwa, V. (2009, August 18). Why be an ethical company? They're stronger and last longer. BusinessWeek Online, p. 18.
You’re 42% through this paper. Sign up to read the remaining 3 sections.
Sign Up Now — Instant Access Already a member? Log inAlways verify citation format against your institution’s current style guide requirements.