It takes a number of things to go right for any business to succeed... but throw aviation into the mix and a business has two routes; Sink or barely float. In today's world, that seems to be the reality of business in the aviation world. There are a number of legacy airlines that continue to stay afloat, barely breaking even from year to year. For every successful aviation business, however, there are a half-dozen, if not more, that sink.
The joke throughout the aviation world is a simple question with an even simpler answer, "How do you make a small fortune in aviation? Start with a very large fortune." Even those that invest everything they have into aviation can fail, and there is a trail of corporate and commercial aviation headstones to prove it. In 2011, an article was published stating that, since 1990, there were 189 airlines that had filed for bankruptcy. While many of the airlines on the list are no longer in existence, airlines including Delta, American, and Northwest survived their financial issues and survived bankruptcy. Trans World Airlines was not so lucky. After filing for bankruptcy in 1992 and 1995 and recovering from those, their planes were finally stripped of the trademark and TWA was bought by American (Johnson, 2001). In one article, TWA was compared to Marilyn Monroe, "an American icon done in by powerful men who wanted a piece of its magic. Glamorous, tragic, gone before its time." In theory, TWA should have strived and stood the tests of time. They were a company that had been around since 1930 after the merger of Transcontinental Air Transport and Western Air Express and had survived two previous bankruptcies in a span of 10 years. The problem with TWA was there were no lessons learned, and if there were lessons learned, they were profited from and then thrown out when used to the max.
While there are a number of companies that have failed over they last century, there are a number of companies that have survived. In my opinion, a prime example of a company that seems to be doing things right is Southwest Airlines. Their business model has relied on consistency, innovation, employee satisfaction, and customer service. While other commercial airlines have chosen to brand themselves, investing in varying aircraft models, one thing that Southwest chose to do is stay with Boeing's 737 (with the exception of operating a handful of 727s in the 70s and 80s). Southwest is committed to low-cost tickets and, while they may not flash all the benefits and perks other airlines advertise, they are still going strong. Not only do they offer low-cost fares, when other airlines started charging fees for baggage, Southwest chose not to. In addition to making decisions like these, Southwest took a huge chance on financial hedges which helped the company mitigate the costs of fuel. By doing this, it kept Southwest ahead of the curve on fuel while other companies struggled to manage the costs. This also keeps Southwest one of the front-runners in the industry, only behind Delta as the second-largest domestic airline in 2012.
There are a lot of factors that play into what it takes for any company to survive in todays economy. For a company in the aviation community, it is even more difficult because what would appear to be a cornering of the market by the big names like Delta and American. Regardless, companies still strive and survive or fall flat.
References
Associated Press. (29 November, 2011). American joins long list of airline bankruptcies. Retrieved from: http://www.boston.com/business/articles/2011/11/29/american_joins_long_list_of_airline_bankruptcies/
Grant, E. (October 2005). TWA- death of a legend. Retrieved from: http://www.stlmag.com/St-Louis-Magazine/October-2005/TWA-Death-Of-A-Legend/
Johnson, T, & Kahn, K. (10 January, 2001). AMR takes TWA abroad. Retrieved from: http://money.cnn.com/2001/01/10/deals/amr_twa/
Mouawad, J. (20 November, 2010). Pushing 40, Southwest is still playing the rebel. Retrieved from: http://www.nytimes.com/2010/11/21/business/21south.html?pagewanted=all&_r=0
I liked the piece you wrote about southwest business model and how their business model relied on innovation, employee satisfaction, consistency, and customer service. When i was looking at Southwest i found an article reporting that they were celebrating their 39th year in a row reporting a profit although Delta may have been ahead of them in 2012 while i was comparing their financial statement in 2008 Delta was reporting losses while SW was reporting gains.
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