Many airlines found themselves in dire straits during the decade of the 2000s. This is attributed to both internal changes within the industry and external events such as the September 11, 2001 terrorist attacks on the World Trade Center and the rise in the price of oil, as noted by academic Peter W. Jones of the Economic Development Institute. Those airlines that have survived through this turmoil now face a rocky road to recovery that includes a number of substantial challenges.
Airlines must carefully manage the amount of cash they have to support themselves to avoid going bankrupt. These cash reserves can be heavily drawn upon and drained in the event of another external shock, such as the aftermath of the 9/11 terrorist attacks, which caused a worldwide slump in air travel. According to Global Times, airlines in 2009 were in a more positive position in terms of cash reserves than in 2001, with airlines reserving 13 percent of their revenues in case of an emergency. However, the Director General of the International Air Transport Association (IATA), Giovanni Bisignani, has warned that even these cash reserves may not last if the airline industry continues to have a slow, drawn-out recovery.
The need to protect its passengers from threats such as further terrorist attacks has necessitated that airlines the world over increase the level of security that they employ. All this extra security is costing the industry some $5.6 billion per year, according to "USA Today" in 2007. The airline industry needs a way to pay for all of this, and these costs therefore have been borne out by airline passengers through extra fees and other charges, something that's not pleasing frequent airline users. The airline industry is seeking ways to provide security to passengers without passing these extra charges to its customers. As reported in "USA Today," one suggestion by the IATA involves persuading governments to handle these security measures by spreading the costs through the tax-paying citizens of each country.
Climate change is very much a concern for many governments throughout the world in 2010. According to "USA Today," some governments have targeted the airline industry in a bid to cut down on the carbon emissions that cause climate change. The United Kingdom, for instance, has placed a tax on aircraft arriving and departing from the country, adding up to some $2 billion in tax to travelers per year. The airline industry must come up with more money to pay these new taxes, or else convince worldwide governments that such taxes are unjust.
- Photo Credit airline related image by Albert Lozano from Fotolia.com
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