Frontier Airlines
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Case Code: BSTR441 Case Length: 18 Pages Period: 2005-2006 Pub Date: 2013 Teaching Note: Available |
Price: Rs.400 Organization: Frontier Airlines Industry: Aviation Countries: US Themes: Competitive Strategy, Strategic Management |
Abstract Case Intro 1 Case Intro 2 Excerpts
The Airline Industry
The year 1903 marked the birth of the airline industry with the Wright brothers' first successful flight in North Carolina. In the early years of aviation, however, the public did not consider travel by plane a reasonable option due to the perceived risk associated with it. In 1927, Charles Lindbergh created huge public interest in flying after completing a solo flight across the Atlantic Ocean. This public interest spurred the development of a variety of air transport holding companies, including Aviation Corporation, which eventually grew to become American Airlines. As the aviation industry developed, however, major safety issues surfaced, culminating in several major in-air collisions in the 1950s.
In the wake of these collisions, Congress enacted the Federal Aviation Act (“Act”) and created an aviation regulatory body, the Federal Aviation Administration (“FAA”), to improve the safety of civil aviation.
The Act and the FAA constituted only a small portion of the government's regulation of the airline industry. In fact, until 1978, the United States government even went as far as to regulate many economic aspects of the industry, such as fares, routes, and schedules.
Proponents of regulation argued that the regulation was necessary to force carriers to fly routes with low traffic and profit in addition to those with high traffic and profit. The regulation also prevented cutthroat competition, which proponents claimed would cause airlines to cut corners on safety and maintenance in an effort to reduce costs. Federal regulation was one way of assuring that the industry operated efficiently and with the greatest good for the greatest number of Americans, although perhaps at the price of subverting the free market....
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