Airlines

The US airline industry consists of about 3,000 companies with combined annual revenue of about $120 billion. Major airlines include American, Delta, United, and Continental, and the air operations of cargo and courier companies, such as FedEx and UPS. The industry is highly concentrated: almost 90 percent of revenue comes from the top 12 companies.

COMPETITIVE LANDSCAPE

Airlines depend highly on the health of the US economy, which affects air travel by business and consumer passengers. Because many costs are fixed, the profitability of individual companies is determined by efficient operations and on favorable fuel and labor costs. Small airlines can compete by servicing local or regional routes.

PRODUCTS, OPERATIONS & TECHNOLOGY

Airlines carry passengers, cargo, and mail, or have specialized functions, such as medical air transport or oil platform servicing. Flights may be scheduled or nonscheduled (charter). About 70 percent of industry revenue comes from scheduled passenger traffic, 10 percent from carrying cargo and express mail, 4 percent from charter flights, and 1 percent from hauling US mail. Other revenue comes from providing maintenance, servicing, training, and reservations. Some airlines carry only cargo, using specially equipped planes. Some major airlines, including United, Northwest, and American, have large cargo operations that contribute 5 to 10 percent of revenue. For smaller passenger airlines, cargo may contribute more than 10 percent of revenue.

The basic operations of airlines include acquiring and maintaining airplanes, acquiring and operating airport facilities, acquiring ...