The Future of Airlines

With oil prices rising to more than US$110 and fears of recession in developed economies, the future looks bleak for the global airline industry. However, air transport is very much needed and it is difficult to imagine a world without airlines. The global airline industry has had to endure hard times in the past and the cyclical nature of the business often means that losses that are generated in difficult times have to be recouped when economic conditions are more favourable. Thus, airlines are for the longer term investors. However, it is unlikely that the price of oil will make it possible to reduce operating costs substantially and this means that the global airline industry is expected to change in the future. New energy efficient aircrafts and the idea of transnational airlines point to some of the changes that can be expected. This brief essay presents a discussion about the future of global airlines with the analysis making use of the scenario planning and PEST analysis methods.