Airline
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2008-07-15T22:57:11Z
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Reverted edits by [[Special:Contributions/76.182.204.41|76.182.204.41]] to last version by ClueBot (using [[WP:HG|Huggle]])
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{{Infobox Aviation
|name=Airline
|image=Image:Emirates A380 2.JPG
|caption=An [[Airbus A380]] of [[Emirates Airline]]
}}
An '''airline''' provides [[civil aviation|air transport services]] for [[passenger]]s or [[freight]], generally with a recognized operating certificate or license. Airlines [[leasing|lease]] or own their [[airliner|aircraft]] with which to supply these services and may form [[partnership]]s or [[Airline alliance|alliances]] with other airlines for mutual benefit.
'''Airlines''' vary from those with a single airplane carrying mail or cargo, through full-service international airlines operating many hundreds of airplanes. Airline services can be categorized as being intercontinental, intracontinental, or domestic and may be operated as scheduled services or charters.
==History==
{{Unreferencedsection|date=July 2008}}
===The First Airlines===
[[Image:Porter 02.jpg|right|thumb|Failed attempt at an airline before DELAG]]
[[DELAG]], ''Deutsche Luftschiffahrts-Aktiengesellschaft'' ([[German language|German]]: acronym for "German Airship Transport Corporation") was the [[List of airlines by foundation|world's first airline]]. It was founded on [[November 16]], [[1909]] with government assistance, and operated airships manufactured by [[Zeppelin]] Corporation. Its headquarters were in [[Frankfurt]]. (Note: Americans, such as [[Rufus Porter]] and [[Frederick Marriott]], attempted to start airlines in the mid-19th century, focusing on the New York-California route. Those attempts foundered due to such mishaps as the aircraft catching fire and the aircraft being ripped apart by spectators.) The five [[List of airlines by foundation|oldest non-dirigible airlines]] that still exist are Australia's [[Qantas]], Netherland's [[KLM]], Colombia's [[Avianca]], Czech Republic's [[Czech Airlines]] and Mexico's [[Mexicana]]. KLM first flew in May 1920 while Qantas (for the Queensland and Northern Territory Aerial Services Limited) was founded in Queensland, Australia in late 1920. Qantas has operated ever since with a perfect safety record with no loss of lives [http://http://en.wikipedia.org/wiki/Qantas_fatal_accidents].
===U.S. Airline Industry===
==== Early Development ====
[[Tony Jannus]] conducted the United States' first scheduled commercial airline flight on 1 January 1914 for the Saint Petersburg-routes, [[Braniff Airways]], [[American Airlines]], [[Delta Air Lines]], [[United Airlines]] (originally a division of [[Boeing]]), [[Trans World Airlines]], [[Northwest Airlines]], and [[Eastern Air Lines]], to name a few.
[[Image:Airline 1920-1941.jpg|right|thumbnail|US airline route structure before World War II]]
Passenger service during the early 1920s was sporadic: most airlines at the time were focused on carrying bags of mail. In 1925, however, the [[Ford Motor Company]] bought out the [[Stout Aircraft Company]] and began construction of the all-metal [[Ford Trimotor]], which became the first successful American airliner. With a 12-passenger capacity, the Trimotor made passenger service potentially profitable. Air service was seen as a supplement to [[rail transport|rail]] service in the American transportation network.
At the same time, [[Juan Trippe]] began a crusade to create an air network that would link America to the world, and he achieved this goal through his airline, [[Pan American World Airways]], with a fleet of flying boats that linked [[Los Angeles, California|Los Angeles]] to [[Shanghai]] and [[Boston, Massachusetts|Boston]] to [[London]]. Pan Am and Northwest Airways (which began flights to Canada in the 1920s) were the only U.S. airlines to go international before the 1940s.
With the introduction of the [[Boeing 247]] and [[Douglas DC-3]] in the 1930s, the U.S. airline industry was generally profitable, even during the [[Great Depression]]. This trend continued until the beginning of [[World War II]].
===Development since 1945===
[[Image:Airline 1946-1955.jpg|right|thumbnail|Post-war airline route structure.{{Fact|date=October 2007}}]]
As governments met to set the standards and scope for an emergent civil air industry toward the end of the war, it was no surprise that the U.S. took a position of maximum operating freedom. After all, U.S. airline companies were not devastated by the war, as European companies and the few Asian companies had been. This preference for "open skies" operating regimes continues, within limitations, to this day.
World War II, like World War I, brought new life to the airline industry. Many airlines in the Allied countries were flush from lease contracts to the military, and foresaw a future explosive demand for civil air transport, for both passengers and cargo. They were eager to invest in the newly emerging flagships of air travel such as the [[Boeing Stratocruiser]], [[Lockheed Constellation]], and [[Douglas DC-6]]. Most of these new aircraft were based on American bombers such as the [[B-29]], which had spearheaded research into new technologies such as [[pressurization]]. Most offered increased efficiency from both added speed and greater payload.
In the 1950s, the [[De Havilland Comet]], [[Boeing 707]], [[Douglas DC-8]], and [[Sud Aviation Caravelle]] became the first flagships of the Jet Age in the West, while the [[Soviet Union]] bloc countered with the [[Tupolev Tu-104]] and [[Tupolev Tu-124]] in the fleets of state-owned carriers such as [[Aeroflot]] and [[Interflug]]. The [[Vickers Viscount]] and [[Lockheed L-188 Electra]] inaugurated turboprop transport.
[[Image:Airline trunk 1972.jpg|right|thumbnail|Airline trunk route systems.{{Fact|date=October 2007}}]]
The next big boost for the airlines would come in the 1970s, when the [[Boeing 747]], [[McDonnell Douglas DC-10]], and [[Lockheed L-1011]] inaugurated widebody ("jumbo jet") service, which is still the standard in international travel. The [[Tupolev Tu-144]] and its Western counterpart, [[Concorde]], made supersonic travel a reality. Concorde first flew in 1969 and operated through 2003. In 1972, [[Airbus]] began producing Europe's most commercially successful line of airliners to date. The added efficiencies for these aircraft were often not in speed, but in passenger capacity, payload, and range. Airbus also features modern electronic cockpits that were common across their aircraft to enable pilots to fly multiple aircraft with minimal cross-training.
1978's U.S. [[Airline deregulation act|airline industry deregulation]] lowered barriers for new airlines. In this period, new start-ups entered during downturns in the normal 8-10 year business cycle. At that time, they find aircraft, are financed, contract hangar and maintenance services, train new employees, and recruit laid off staff from other airlines.
As the business cycle returned to normalcy, major airlines dominated their routes through aggressive pricing and additional capacity offerings, often swamping new startups. Only [[America West Airlines]] (which has since merged with US Airways) remained a significant survivor from this new entrant era, as dozens, even hundreds, have gone under.
In many ways, the biggest winner in the deregulated environment was the air passenger. Indeed, the U.S. witnessed an explosive growth in demand for air travel, as many millions who had never or rarely flown before became regular fliers, even joining [[frequent flyer]] loyalty programs and receiving free flights and other benefits from their flying. New services and higher frequencies meant that business fliers could fly to another city, do business, and return the same day, for almost any point in the country. Air travel's advantages put intercity bus lines under pressure, and most have withered away.
By the 1980s, almost half of the total flying in the world took place in the U.S., and today the domestic industry operates over 10,000 daily departures nationwide.
[[Image:Airline hub-1995.svg|right|thumbnail|De-regulated [[Spoke-hub distribution paradigm|hub and spoke]] airline route structures.{{Fact|date=October 2007}}]]
Toward the end of the century, a new style of [[low-cost carrier|low cost airline]] emerged, offering a no-frills product at a lower price. [[Southwest Airlines]], [[JetBlue]], [[AirTran Airways]], [[Skybus Airlines]] and other low-cost carriers began to represent a serious challenge to the so-called "legacy airlines", as did their low-cost counterparts in Europe, Canada, and Asia. Their commercial viability represented a serious competitive threat to the legacy carriers. However, of these, ATA and Skybus have since ceased operations.
Thus the last 50 years of the airline industry have varied from reasonably profitable, to devastatingly depressed. As the first major market to deregulate the industry in 1978, U.S. airlines have experienced more turbulence than almost any other country or region. Today, almost every single [[legacy carrier]] except for [[American Airlines]] has operated under Chapter 11 bankruptcy provisions or have gone out of business.
===European Airline Industry===
[[Image:National Audit Office - Victoria - London - 020504.jpg|thumb|right|The Imperial Airways Empire Terminal, Victoria, [[London]]. Trains ran from here to [[flying boats]] in [[Southampton]], and to [[Croydon Airport]].]]
The first countries in Europe to embrace air transport were [[Finland]], [[France]], [[Germany]], the [[Netherlands]] and the [[United Kingdom]].
[[KLM]], the oldest carrier still operating under its original name, was founded in 1919. The first flight (operated on behalf of KLM by [[Aircraft Transport and Travel]]) transported two English passengers to [[Schiphol]], [[Amsterdam]] from [[London]] in 1920. Like other major European airlines of the time (see France and the UK below), KLM's early growth depended heavily on the needs to service links with far-flung colonial possessions ([[Dutch Indies]]). It is only after the loss of the [[Dutch Empire]] that [[KLM]] found itself based at a small country with few potential passengers, depending heavily on transfer traffic, and was one of the first to introduce the hub-system to facilitate easy connections.
France began an air mail service to [[Morocco]] in 1919 that was bought out in 1927, renamed [[Aéropostale (aviation)|Aéropostale]], and injected with capital to become a major international carrier. In 1933, Aéropostale went [[Bankruptcy|bankrupt]], was nationalized and merged with several other airlines into what became [[Air France]].
In Finland, the charter establishing Aero O/Y (now [[Finnair]], one of the oldest still-operating airlines in the world) was signed in the city of [[Helsinki]] on [[12 September]], [[1923]]. [[Junkers F 13]] D-335 became the first aircraft of the company, when Aero took delivery of it on [[14 March]], [[1924]]. The first flight was between Helsinki and [[Tallinn]], capital of [[Estonia]], and it took place on [[20 March]] 1924, one week later.
Germany's [[Lufthansa]] began in 1926. Lufthansa, unlike most other airlines at the time, became a major investor in airlines outside of Europe, providing capital to [[Varig]] and [[Avianca]]. German airliners built by [[Junkers (Aircraft)|Junkers]], [[Dornier GmbH|Dornier]], and [[Fokker]] were the most advanced in the world at the time. The peak of German air travel came in the mid-1930s, when [[Nazism|Nazi]] propaganda ministers approved the start of commercial [[zeppelin]] service: the big [[airship]]s were a symbol of industrial might, but the fact that they used flammable hydrogen gas raised safety concerns that culminated with the [[Hindenburg disaster]] of 1937. The reason they used [[hydrogen]] instead of the not-flammable [[helium]] gas was a United States military embargo on helium.
The [[United Kingdom|British]] company [[Aircraft Transport and Travel]] commenced a London to Paris service on [[25 August]] [[1919]], this was the world's first regular international flight. The [[United Kingdom]]'s [[flag carrier]] during this period was [[Imperial Airways]], which became [[BOAC]] (British Overseas Airways Co.) in 1939. Imperial Airways used huge [[Handley-Page]] [[biplane]]s for routes between [[London]], the [[Middle East]], and [[India]]: images of Imperial aircraft in the middle of the [[Rub'al Khali]], being maintained by [[Bedouin]]s, are among the most famous pictures from the heyday of the [[British Empire]].
==== Deregulation ====
Deregulation of the [[European Union]] airspace in the early 1990s has had substantial effect on structure of the industry there. The shift towards 'budget' airlines on shorter routes has been significant. Airlines such as [[Easyjet]] and [[Ryanair]] have grown at the expense of the traditional national airlines.
There has also been a trend for these national airlines themselves to be privatised such as has occurred for [[Aer Lingus]] (Ireland) and [[British Airways]]. Other national airlines, including Italy's [[Alitalia]], have suffered - particularly with the rapid increase of oil prices in early 2008.
===Latin American Airline Industry===
[[Image:LAN.JPG|thumb|left|LAN jets at Santiago, Chile (SCL)]]
Along the first countries to have regular airlines in Latin America were [[Chile]] with [[LAN Chile]] (today [[LAN Airlines]]), Colombia with [[Avianca]], Mexico with [[Mexicana de Aviación]], Brazil with [[Varig]], and [[Grupo TACA|TACA]] as a bound of several airlines of Central American countries (Honduras, El Salvador, Costa Rica, Guatemala and Nicaragua). All the previous airlines started regular operations before World War II.
[[Aeromexico]] is also in service since 1934, but was initially called Aeronaves de México. The same situation happened with other regional airlines, such as Aerolineas Argentinas. All of these [[airlines]] are still in service.
The air travel market has evolved rapidly over recent years in [[Latin America]]. Some industy estimations over 2000 new aircraft will begin service over the next five years in this region.
These airlines serve domestic flights within their countries, as well as connections within Latin America and also overseas flights to North America, Europe, Australia, Africa and Asia.
Just one airline, LAN (Latin American Networks) has international subsidiaries: [[Chile]] as the central operation along with Peru, Ecuador, Argentina and some operations in the Dominican Republic.
The main [[hubs]] in Latin America are [[Sao Paulo]] in Brazil, [[Bogota]] in Colombia,[[Caracas]] in Venezuela, [[Lima]] in Peru, [[Mexico City]] in Mexico, [[Buenos Aires]] in Argentina, and [[Santiago, Chile|Santiago]] in Chile.
===Asian Airline Industry===
<!-- Deleted image removed: [[Image:PI-C91.jpg|right|thumbnail|A [[Philippine Airlines]] [[DC-3]] at [[Manila]], [[Philippines]]]] -->
Some of the first countries in Asia to embrace air transport were [[India]], [[Hong Kong]], [[Indonesia]], [[Malaysia]] and the [[Philippines]].
One of the first countries in Asia to embrace air transport was the [[Philippines]]. [[Philippine Airlines]] was founded on [[February 26]], [[1941]], making it Asia's oldest carrier and the oldest operating under its current name. The airline was started by a group of businessmen led by Andres Soriano, hailed as one of the Philippines' leading industrialists at the time. The airline’s first flight was made on [[March 15]], [[1941]] with a single [[Beech Model 18]] NPC-54 aircraft, which started its daily services between [[Manila]] (from [[Nielson Field]]) and [[Baguio]], later to expand with larger aircraft such as the DC-3 and Vickers Viscount. Notably [[Philippine Airlines]] leased [[Japan Airlines]] their first aircraft, a DC-3 named "Kinsei".
On [[July 31]], [[1946]], a chartered [[Philippine Airlines]] [[DC-4]] ferried 40 American servicemen to [[Oakland]],[[California]] from Nielson Airport in [[Makati City]] with stops in [[Guam]], [[Wake Island]], [[Johnston Atoll]] and [[Honolulu]], [[Hawaii]], making PAL the first Asian airline to cross the [[Pacific Ocean]]. A regular service between [[Manila]] and [[San Francisco]] was started in December. It was during this year that the airline was designated as the [[Philippines]] [[flag carrier]].
[[Image:airindia b747-400 vt-esn headon arp.jpg|thumb|right|[[Air India]] [[Boeing 747-400]]. The [[Government of India]] is the majority stake-holder in Air India and [[Indian Airlines]].]]
Another airline company to begin early operations was [[Air India]], which had its beginning as Tata Airlines in [[1932]], a division of Tata Sons Ltd. (now [[Tata Group]]) by India's leading industrialist [[JRD Tata]]. On [[October 15]], [[1932]], J. R. D. Tata himself flew a single engined [[De Havilland Puss Moth]] carrying air mail (postal mail of [[Imperial Airways]]) from [[Karachi]] to [[Bombay]] via [[Ahmedabad]]. The aircraft continued to [[Madras]] via Bellary piloted by [[Royal Air Force]] pilot Nevill Vincent.
With the outbreak of World War Two, the airline presence in Asia came to a relative halt, with many new flag carriers donating their aircraft for military aid and other uses.
Following the end of World War II, regular commercial service was restored in India and Tata Airlines became a public limited company on [[29 July]] [[1946]] under the name Air India. After the Independence of India, 49% of the airline was acquired by the Government of India. In return, the airline was granted status to operate international services from India as the designated flag carrier under the name Air India International.
Neighbouring countries also soon embraced air transport, notably with the beginning of a new nation, Pakistan began Orient Airways Ltd ([[Pakistan International Airlines]]), [[Cathay Pacific]] founded in 1946, [[Singapore Airlines]] and [[Malaysian Airlines]] in 1947 ''(as [[Malaysia-Singapore Airlines|Malayan Airways]])'', [[Garuda Indonesia]] in 1949, [[Japan Airlines]] in 1951, and [[Korean Air]] in 1962.
==Regulatory considerations==
===National===
Many countries have [[national airline]]s that the government owns and operates. Fully private airlines are subject to a great deal of government regulation for economic, political, and safety concerns. For instance, the government often intervenes to halt airline labor actions in order to protect the free flow of people, communications, and goods between different regions without compromising safety.
The United States, Australia, and to a lesser extent Brazil, Mexico, the United Kingdom and Japan have "deregulated" their airlines. In the past, these governments dictated airfares, route networks, and other operational requirements for each airline. Since deregulation, airlines have been largely free to negotiate their own operating arrangements with different airports, enter and exit routes easily, and to levy airfares and supply flights according to market demand.
The entry barriers for new airlines are lower in a deregulated market, and so the U.S. has seen hundreds of airlines start up (sometimes for only a brief operating period). This has produced far greater competition than before deregulation in most markets, and average fares tend to drop 20% or more. The added competition, together with pricing freedom, means that new entrants often take market share with highly reduced rates that, to a limited degree, full service airlines must match. This is a major constraint on profitability for established carriers, which tend to have a higher cost base.
As a result, profitability in a deregulated market is uneven for most airlines. These forces have caused some major airlines to go out of business, in addition to most of the poorly established new entrants.
===International===
[[Image:singapore.airlines.b747-400.9v-spa.arp.jpg|thumb|Singapore Airlines [[Boeing 747|Boeing 747-412]] taking off from [[London Heathrow Airport]]. The Boeing 747-412 has been the flagship of the SIA fleet since its first delivery on [[18 March]] [[1989]].]]
Groups such as the [[International Civil Aviation Organization]] establish worldwide standards for safety and other vital concerns. Most international air traffic is regulated by bilateral agreements between countries, which designate specific carriers to operate on specific routes. The model of such an agreement was the [[Bermuda Agreement]] between the US and UK following World War II, which designated airports to be used for transatlantic flights and gave each government the authority to nominate carriers to operate routes.
Bilateral agreements are based on the "[[freedoms of the air]]," a group of generalized traffic rights ranging from the freedom to overfly a country to the freedom to provide domestic flights within a country (a very rarely granted right known as [[cabotage]]). Most agreements permit airlines to fly from their home country to designated airports in the other country: some also extend the freedom to provide continuing service to a third country, or to another destination in the other country while carrying passengers from overseas.
In the 1990s, "[[open skies]]" agreements became more common. These agreements take many of these regulatory powers from state governments and open up international routes to further competition. Open skies agreements have met some criticism, particularly within the [[European Union]], whose airlines would be at a comparative disadvantage with the United States' because of cabotage restrictions.
==Economic considerations==
[[Image:tam.a330-200.pt-mvl.arp.jpg|thumb|right|[[TAM Airlines]] [[Airbus A330-200]]]]
Historically, air travel has survived largely through state support, whether in the form of equity or subsidies. The airline industry as a whole has made a cumulative loss during its 120-year history, once the costs include subsidies for aircraft development and airport construction.<ref>[http://www.guardian.co.uk/airlines/story/0,,1715861,00.html Wings of Desire], Guardian, Thursday [[February 23]] [[2006]]</ref><ref>[http://www.johnkay.com/industries/409 Airlines and the canine features of unprofitable industries] Financial Times, [[27 September]] [[2005]]</ref>
One argument is that [[positive externalities]], such as higher growth due to global mobility, outweigh the microeconomic losses and justify continuing government intervention. A historically high level of government intervention in the airline industry can be seen as part of a wider political consensus on strategic forms of transport, such as [[highways]] and [[railways]], both of which receive public funding in most parts of the world. Profitability is likely to improve in the future as privatization continues and more competitive low-cost carriers proliferate.
Although many countries continue to operate state-owned or parastatal airlines, many large airlines today are privately owned and are therefore governed by microeconomic principles in order to maximize shareholder profit.
[[Image:Flughafen Frankfurt am Main.JPG|thumb|right|[[Lufthansa]] Boeing 747-400]]
===Ticket revenue===
Airlines assign prices to their services in an attempt to maximize profitability. The pricing of airline tickets has become increasingly complicated over the years and is now largely determined by computerized [[yield management]] systems.
Because of the complications in scheduling flights and maintaining profitability, airlines have many loopholes that can be used by the knowledgeable traveler. Many of these airfare secrets are becoming more and more known to the general public, so airlines are forced to make constant adjustments.
Most airlines use differentiated pricing, a form of [[price discrimination]], in order to sell air services at varying prices simultaneously to different segments. Factors influencing the price include the days remaining until departure, the booked load factor, the forecast of total demand by price point, competitive pricing in force, and variations by day of week of departure and by time of day. Carriers often accomplish this by dividing each cabin of the aircraft (first, business and economy) into a number of [[travel class]]es for pricing purposes.
A complicating factor is that of origin-destination control ("O&D control"). Someone purchasing a ticket from Melbourne to Sydney (as an example) for AU$200 is competing with someone else who wants to fly Melbourne to Los Angeles through Sydney on the same flight, and who is willing to pay AU$1400. Should the airline prefer the $1400 passenger, or the $200 passenger plus a possible Sydney-Los Angeles passenger willing to pay $1300? Airlines have to make hundreds of thousands of similar pricing decisions daily.
The advent of advanced computerized reservations systems in the late 1970s, most notably [[Sabre (computer system)|Sabre]], allowed airlines to easily perform [[cost-benefit analysis|cost-benefit analyses]] on different pricing structures, leading to almost perfect price discrimination in some cases (that is, filling each seat on an aircraft at the highest price that can be charged without driving the consumer elsewhere).
The intense nature of airfare pricing has led to the term "[[fare war]]" to describe efforts by airlines to undercut other airlines on competitive routes. Through computers, new airfares can be published quickly and efficiently to the airlines' sales channels. For this purpose the airlines use the [[Airline Tariff Publishing Company]] (ATPCO), who distribute latest fares for more than 500 airlines to [[Computer Reservation System]]s across the world.
The extent of these pricing phenomena is strongest in "legacy" carriers. In contrast, low fare carriers usually offer preannounced and simplified price structure, and sometimes quote prices for each leg of a trip separately.
Computers also allow airlines to predict, with some accuracy, how many passengers will actually fly after making a reservation to fly. This allows airlines to overbook their flights enough to fill the aircraft while accounting for "no-shows," but not enough (in most cases) to force paying passengers off the aircraft for lack of seats. Since an average of ⅓ of all seats are flown empty{{Fact|date=February 2007}}, stimulative pricing for low demand flights coupled with [[overbooking]] on high demand flights can help reduce this figure.
[[Image:virgin atlantic a340-600 g-vyou arp.jpg|thumb|left|An [[Airbus A340]]-600 of [[Virgin Atlantic Airways]]]]
===Operating costs===
Full-service airlines have a high level of fixed and operating costs in order to establish and maintain air services: labor, fuel, airplanes, engines, spares and parts, IT services and networks, airport equipment, airport handling services, sales distribution, catering, training, [[aviation insurance]] and other costs. Thus all but a small percentage of the income from ticket sales is paid out to a wide variety of external providers or internal cost centers.
Moreover, the industry is structured so that airlines often act as tax collectors. Airline fuel is untaxed, however, due to a series of treaties existing between countries. Ticket prices include a number of fees, taxes, and surcharges they have little or no control over, and these are passed through to various providers. Airlines are also responsible for enforcing government regulations. If airlines carry passengers without proper documentation on an international flight, they are responsible for returning them back to the originating country.
Analysis of the 1992-1996 period shows that every player in the air transport chain is far more profitable than the airlines, who collect and pass through fees and revenues to them from ticket sales. While airlines as a whole earned 6% return on capital employed (2-3.5% less than the cost of capital), airports earned 10%, catering companies 10-13%, handling companies 11-14%, aircraft lessors 15%, aircraft manufacturers 16%, and global distribution companies more than 30%. (Source: Spinetta, 2000, quoted in Doganis, 2002)
In contrast, [[Southwest Airlines]] has been the most [[profitable]] of airline companies since 1970.{{Fact|date=April 2008}}
The widespread entrance of a new breed of low cost airlines beginning at the turn of the century has accelerated the demand that full service carriers control costs. Many of these low cost companies emulate [[Southwest Airlines]] in various respects, and like Southwest, they are able to eke out a consistent profit throughout all phases of the business cycle.{{Fact|date=May 2008}}
As a result, a shakeout of airlines is occurring in the U.S. and elsewhere. [[United Airlines]], [[US Airways]] (twice), [[Delta Air Lines]], and [[Northwest Airlines]] have all declared [[Chapter 11]] bankruptcy. Some{{Who|date=July 2008}} argue that it would be far better for the industry as a whole if a wave of actual closures were to reduce the number of "undead" airlines competing with healthy airlines while being artificially protected from creditors via [[bankruptcy]] law. On the other hand, some{{Who|date=July 2008}} have pointed out that the reduction in capacity would be short lived given that there would be large quantities of relatively new aircraft that bankruptcies would want to get rid of and would re-enter the market either as increased fleets for the survivors or the basis of cheap planes for new startups.
Where an airline has established an engineering base at an airport then there may be considerable economic advantages in using that same airport as a preferred focus (or "hub") for its scheduled flights.
===Assets and financing===
[[Image:KLIA jets7.jpg|thumb|right|The [[Boeing]] 777-200 of [[Malaysia Airlines]]]]
Airline financing is quite complex, since airlines are highly leveraged operations. Not only must they purchase (or lease) new airliner bodies and engines regularly, they must make major long-term fleet decisions with the goal of meeting the demands of their markets while producing a fleet that is relatively economical to operate and maintain. Compare [[Southwest Airlines]] and their reliance on a single airplane type (the [[Boeing 737]] and derivatives), with the now defunct [[Eastern Air Lines]] which operated 17 different aircraft types, each with varying pilot, engine, maintenance, and support needs.
A second financial issue is that of [[hedging]] [[Petroleum|oil]] and [[fuel]] purchases, which are usually second only to [[labor]] in its relative cost to the company. However, with the current high fuel prices it has become the largest cost to an airline. While hedging instruments can be expensive, they can easily pay for themselves many times over in periods of increasing fuel costs, such as in the 2000-2005 period.
In view of the congestion apparent at many international [[airport]]s, the ownership of slots at certain airports (the right to take-off or land an aircraft at a particular time of day or night) has become a significant tradable asset for many airlines. Clearly take-off slots at popular times of the day can be critical in attracting the more profitable business traveler to a given airline's flight and in establishing a competitive advantage against a competing airline. If a particular city has two or more airports, market forces will tend to attract the less profitable routes, or those on which competition is weakest, to the less congested airport, where slots are likely to be more available and therefore cheaper. Other factors, such as surface transport facilities and onward connections, will also affect the relative appeal of different airports and some long distance flights may need to operate from the one with the longest runway.
===Airline partnerships===
[[Code sharing]] is the most common type of airline partnership; it involves one airline selling tickets for another airline's flights under its own airline code. An early example of this was [[Japan Airlines]]' code sharing partnership with [[Aeroflot]] in the 1960s on flights from [[Tokyo]] to [[Moscow]]: Aeroflot operated the flights using Aeroflot aircraft, but JAL sold tickets for the flights as if they were JAL flights. This practice allows airlines to expand their operations, at least on paper, into parts of the world where they cannot afford to establish bases or purchase aircraft. Another example was the [[Austrian Airlines|Austrian]]- [[Sabena]] partnership on the [[Vienna]]-[[Brussels]]-[[New York]] JFK route during the late 60's, using a Sabena Boeing 707 with Austrian colors.
Since airline reservation requests are often made by city-pair (such as "show me flights from Chicago to Düsseldorf"), an airline who is able to code share with another airline for a variety of routes might be able to be listed as indeed offering a Chicago-Düsseldorf flight. The passenger is advised however, that Airline 1 operates the flight from say Chicago to Amsterdam, and Airline 2 operates the continuing flight (on a different airplane, sometimes from another terminal) to Düsseldorf. Thus the primary rationale for code sharing is to expand one's service offerings in city-pair terms so as to increase sales.
A more recent development is the [[airline alliance]], which became prevalent in the 1990s. These alliances can act as virtual mergers to get around government restrictions. Groups of airlines such as the [[Star Alliance]], [[Oneworld]], and [[SkyTeam]] coordinate their passenger service programs (such as lounges and frequent flyer programs), offer special interline tickets, and often engage in extensive codesharing (sometimes systemwide). These are increasingly integrated business combinations-- sometimes including cross-equity arrangements-- in which products, service standards, schedules, and airport facilities are standardized and combined for higher efficiency. One of the first airlines to start an alliance with another airline was [[KLM]], who partnered with [[Northwest Airlines]]. Both airlines later entered the [[SkyTeam]] alliance after the fusion of KLM and [[Air France]] in 2004.
Often the companies combine IT operations, buy fuel, or purchase airplanes as a bloc in order to achieve higher bargaining power. However, the alliances have been most successful at purchasing invisible supplies and services, such as fuel. Airlines usually prefer to purchase items visible to their passengers to differentiate themselves from local competitors. If an airline's main domestic competitor flies Boeing airliners, then the airline may prefer to use Airbus aircraft regardless of what the rest of the alliance chooses.
== Environmental impacts ==
{{main|Aviation and the environment}}
[[Aircraft]] engines emit [[noise pollution]], gases and particulate emissions, and contribute to [[global warming]]<ref name="ICAO"> {{cite web|url = http://www.icao.int/icao/en/env/aee.htm|title = Aircraft Engine Emissions |accessdate = 2008-03-19|last = International Civil Aviation Organization, Air Transport Bureau (ATB) |authorlink = |year = undated}}</ref><ref name="Enviro.aeroImpact"> {{cite web|url = http://www.enviro.aero/Impactofflying.aspx|title = What is the impact of flying?|accessdate = 2008-03-19|last = Enviro.aero|authorlink = |year = undated}}</ref> and [[global dimming]].<ref name=contrails>
{{cite journal
| title=Contrails reduce daily temperature range
| first=David J.
| last=Travis
| author=Carleton, Andrew M. & Lauritsen, Ryan G
| journal=[[Nature (journal)|Nature]]
| pages=601
| volume=418
| year=2002
| url=http://facstaff.uww.edu/travisd/pdf/jetcontrailsrecentresearch.pdf
| doi=10.1038/418601a}}</ref>
Modern [[turbofan]] and [[turboprop]] engines are considerably more fuel-efficient and less polluting than earlier models. However, despite this, the rapid growth of [[air travel]] in recent years contributes to an increase in total pollution attributable to [[aviation]], offsetting some of the reductions achieved by automobiles. In the [[European Union|EU]] [[greenhouse gas]] emissions from aviation increased by 87% between 1990 and 2006.<ref>{{cite press release | title = Climate change: Commission proposes bringing air transport into EU Emissions Trading Scheme | publisher = EU press release | date = 2006-12-20 | url = http://europa.eu/rapid/pressReleasesAction.do?reference=IP/06/1862 | accessdate = 2008-01-02 }}</ref>
In the context of climate change and [[peak oil]], there is a debate about possible [[taxation]] of air travel and the inclusion of aviation in an [[emissions trading]] scheme, with a view to ensuring that the total [[external costs]] of aviation are taken into account.<ref>[http://www.defra.gov.uk/environment/climatechange/trading/eu/pdf/including-aviation-icf.pdf Including Aviation into the EU ETS: Impact on EU allowance prices ] ICF Consulting for DEFRA February 2006</ref>
The airline industry is responsible for about 11 percent of [[greenhouse gas]]es emitted by the U.S. transportation sector. [[Boeing]] estimates that biofuels could reduce flight-related greenhouse-gas emissions by 60 to 80 percent. The solution would be blending algae fuels with existing jet fuel: <ref>[http://www.washingtonpost.com/wp-dyn/content/article/2008/01/03/AR2008010303907.html A Promising Oil Alternative: Algae Energy - washingtonpost.com<!-- Bot generated title -->]</ref>
* Boeing and [[Air New Zealand]] are collaborating with leading Brazilian biofuels maker [[Tecbio]] and [[Aquaflow Bionomic]] of New Zealand and other jet biofuel developers around the world.
* [[Virgin Atlantic]] and [[Virgin Green Fund]] are looking into the technology as part of a biofuels initiative. <ref>[http://seattletimes.nwsource.com/html/boeingaerospace/2003858756_boeingenergy30.html Boeing/aerospace | To go green in jet fuel, Boeing looks at algae | Seattle Times Newspaper<!-- Bot generated title -->]</ref>
==Call signs==
Each operator of a scheduled or charter flight uses a [[List of airline call signs|airline call sign]] when communicating with airports or air traffic control centers. Most of these call-signs are derived from the airline's trade name, but for reasons of history, marketing, or the need to reduce ambiguity in spoken English (so that pilots do not mistakenly make navigational decisions based on instructions issued to a different aircraft), some airlines and air forces use call-signs less obviously connected with their trading name. For example, British Airways uses a ''Speedbird'' call-sign, named after the logo of its predecessor, [[British Overseas Airways Corporation|BOAC]], while [[America West]] used ''Cactus'' reflecting that company's home in the state of Arizona and to differentiate itself from numerous other airlines using ''America'' and ''West'' in their call signs.
==Airline personnel==
The various types of airline personnel include:
* [[Flight crew]]s, responsible for the operation of the aircraft. Flight crew members include:
** [[Aviator|Pilots]] ([[Captain (civil aviation)|Captain]] and [[First Officer]]: some older aircraft also require a [[Flight Engineer]])
** [[Flight attendant]]s, (led by a [[purser]] on larger aircraft)
** [[Sky marshal|in-flight security personnel]] on some airlines (most notably [[El Al]])
* [[Groundcrew]], responsible for operations at airports. Ground crew members include:
** Aerospace and avionics engineers responsible for certifying the aircraft for flight and management of aircraft maintenance
*** [[Aerospace]] engineers, responsible for airframe, powerplant and electrical systems maintenance
*** [[Avionics]] engineers responsible for avionics and instruments maintenance
** [[Airframe]] and [[powerplant]] technicians
** [[Electric System]] technicians, responsible for maintenance of electrical systems
** [[Avionics]] technicians, responsible for maintenance of avionics
** [[Flight dispatcher]]s
** [[Baggage handler]]s
** [[Rampers]]
** [[Gate agents]]
** [[Ticket agents]]
** [[Passenger service agents]] (such as [[airline lounge]] employees)
* [[Reservations agents]], usually (but not always) at facilities outside the airport.
Airlines follow a [[corporation|corporate]] structure where each broad area of operations (such as maintenance, flight operations,
and passenger service) is supervised by a vice president. Larger airlines often appoint vice presidents to oversee each of the
airline's hubs as well. Airlines employ [[lawyers]] to deal with regulatory procedures and other administrative tasks.{{Fact|date=September 2007}}
==Industry Trends==
[[Image:Air-India-building.jpg|right|thumb|upright|The headquarters of [[Air India]] in [[Mumbai]], [[India]].]]
The pattern of ownership has gone from government owned or supported to independent, for-profit public companies. This occurs as regulators permit greater freedom and non-government ownership, in steps that are usually decades apart. This pattern is not seen for all airlines in all regions. {{Or|date=May 2008}}
The overall trend of demand has been consistently increasing. In the 1950s and 1960s, annual growth rates of 15% or more were common. Annual growth of 5-6% persisted through the 1980s and 1990s{{Fact|date=February 2007}}. Growth rates are not consistent in all regions, but countries with a de-regulated airline industry have more competition and greater pricing freedom. This results in lower fares and sometimes dramatic spurts in traffic growth. The [[United States|U.S.]], [[Australia]], [[Canada]], [[Japan]], [[Brazil]], [[Mexico]],[[India]] and other markets exhibit this trend. The industry has been observed to be cyclical in its financial performance. Four or five years of poor earnings precede five or six years of improvement. But profitability even in the good years is generally low, in the range of 2-3% net profit after interest and tax. In times of profit, airlines lease new generations of airplanes and upgrade services in response to higher demand. Since 1980, the industry has not earned back the cost of capital during the best of times. Conversely, in bad times losses can be dramatically worse. [[Warren Buffett]] once said that despite all the money that has been invested in all airlines, the net profit is less than zero. He believes it is one of the hardest businesses to manage.{{Fact|date=May 2008}}
As in many mature industries, consolidation is a trend. Airline groupings may consist of limited bilateral partnerships, long-term, multi-faceted alliances between carriers, equity arrangements, [[Mergers and acquisitions|mergers]], or [[takeover]]s. Since governments often restrict ownership and merger between companies in different countries, most consolidation takes place within a country. In the U.S., over 200 airlines have merged, been taken over, or gone out of business since deregulation in 1978. Many international airline managers are lobbying their governments to permit greater consolidation to achieve higher economy and efficiency.
==See also==
{{Aviation portal}}
* [[Air ferry]]
* [[Air safety]]
* [[Airline timetable]]
* [[Airliners.net]]
* [[Airport security]]
* [[Beyond rights]]
* [[Cargo airline]]
* [[Charter airline]]
* [[Federal Aviation Administration]]
* [[Flight planning]]
* [[FlightAware]]
* [[Government contract flight]]
* [[IATA]] – industry standards organization
* [[Low-cost carrier]]
* [[Red-eye flight]]
* [[Regional airline]]
* [[Transportation Security Administration]]
==Airline related lists==
* [[List of accidents and incidents on commercial airliners]]
* [[List of airline mergers and acquisitions]]
* [[List of airlines]]
* [[List of defunct airlines]]
* [[List of hub airports]]
* [[List of largest airlines]]
* [[List of low-cost airlines]]
* [[Flag carrier|List of national airlines]]
* [[Timeline of airline bankruptcies]]
* [[Special Service Request (SSR) Codes]]
==External links==
* [http://www.pbs.org/kcet/chasingthesun/ Chasing the Sun] - History of commercial aviation, from PBS
* [http://www.zinnov.com/presentation/Global_Aviation-Markets-An_Ananlysis.pdf Global Aviation Markets] Whitepaper on global markets for airlines
* [http://www.aqr.aero/ Airline Quality Rating]
* [http://www.airlineempires.net/content/view/112/88/ Airline History Slideshow] - The history of bankrupt airlines put to music.
* [http://video.marketwatch.com/market/business/travel/airlines/airline-industry.htm?cpg=1 Airline Industry Video and Audio on MarketWatch]
==Notes==
{{reflist|2}}
==References==
#"A history of the world's airlines", [[R. E. G. Davies|R.E.G. Davies]], Oxford U.P, 1964
#"The airline encyclopedia, 1909-2000.” Myron J. Smith, Scarecrow Press, 2002
#"Flying Off Course: The Economics of International Airlines," 3rd edition. Rigas Doganis, Routledge, New York, 2002.
#"The Airline Business in the 21st Century." Rigas Doganis, Routledge, New York, 2001.
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