A Note on the US Airline Industry
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Case Code: BSTR139 Case Length: 24 Pages Period: 2001 - 2004 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.500 Organization: Varied Industry: Airlines Countries: USA Themes: Corporate Restructuring |
Abstract Case Intro 1 Case Intro 2 Excerpts
Early History
In 1903, the Wright brothers undertook the first successful flight in history. This marked the origin of the airline industry. In the early 1900s, planes in the US were mainly used to transport mail between places and were operated by the US Postal Service. With the service becoming popular, the Postal Department began giving out contracts to private airline companies to transport mail. The Kelly Airmail Act, 1925, provided private airlines with the opportunity to function as mail carriers, by allowing them to take part in a competitive bidding system. These private carriers, through the airmail revenue, could then expand into carrying other forms of cargo, including passengers.
To augment their revenues from carrying mail, some of the airline companies began offering their services to passengers as well. Although people were initially wary of flying, the trend soon caught on and proved very profitable. Keeping in mind the increased air traffic, the US government passed the Air Commerce Act in 1926, which allowed Federal regulation of air traffic. In 1927, Charles Lindbergh, who was a mail pilot, successfully completed a solo flight across the Atlantic, sparking a massive interest in flying among the general public. With an increasing number of people showing a willingness to fly, several air transport companies began to be set up. (In the late 1920s and early 1930s, the parent organizations of American, United, Delta, and Pan Am were set up.)...
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