accounting for interim reports
been reversed, sizable reduction starting. Based on the data from ATA, between December 31, 2000 and December 31, 2002, the airlines fleet has shrunk to 298 aircraft. Although in the beginning most of the reduced aircraft was focused on the least efficient units, later on more and more new efficient aircrafts have been removed from the fleet. Reducing the aircraft utilization is another strategy widely used by airline industry. Many aircraft now operate four flights per day instead of five. Reducing the capital budget, especially reducing the rate of new orders for new aircraft is another strategy used by airline industry. Other strategic measures reducing the capital budget, especially reducing the rate of besides these methods, the airline industry also have taken other strategic measures such as reduced in-flight food service, closed reservation centers, eliminating stations and so on.
U.S. Travel Forecast
Year 2000 2001 2002F 2003F
U.S. Travel Expenditures ($bil) 563.6 520.7 531.9 575.7
Travel-Generated Employment (thou) 7,847 7,394 7,320 7,612
Domestic Person-Trips (mil) 997.6 962.3 965.0 991.6
International Visitors (mil) 50.9 44.5 46.2 49.9
Financing
Conclusion
September 11, 2001 has changed the situation of airline industry dramatically.
The airline industry has taken aggressive cost-cutting method to reduce the cost in every
potential area. However the plunging revenue and new additional cost associated with
security impact adversely the airline industry and offset all these efforts. So the airline
industry is still facing steep losses and in a hard time due to plunging revenue caused by
weak demand. To attract the passengers back, the airlines lose pricing power, thus leading
to lowest fares in two decades.