Pan American World Airlines Case Analysis

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After the first successful flight of an aircraft in 1903, passenger air travel evolved into one of the most innovative and convenient forms of transportation to date. In the early twentieth century, the commencement of passenger airlines swept the nation, attracting thousands of customers and companies to the newly formed industry. Over time, more airlines joined the unique and thriving business, building one of the most iconic industries in the world. Nearing the twenty-first century, the industry displayed signs of deterioration, with carriers constantly entering and leaving the market. Nonetheless, the purpose of this paper is to analyze the fluctuating variable costs and slowing economy that have severely impacted the airline industry, resulting with the impending loss of airlines and difficult market entry. Pan American World Airlines, the largest international air carrier in the United States, ceased operations in December of 1991 after nearly sixty-four years of service. Rapidly increasing oil costs along with a diminishing passenger demand forced the company into bankruptcy. Similar scenarios occurred in the…show more content…
However, increasing global demand, supply, inflation, and taxes for oil spiked the price per gallon of jet fuel to nearly double the cost during the turn of the century. From 1990 to 2008, the price per gallon of jet fuel skyrocketed from $0.55 to $3.85, increasing by nearly 600%. While many carriers failed to overcome such change, financially stable airlines were forced to boost fares, limit services, and implement additional fees for travelers. At the pinnacle of fuel costs in 2008, American Airlines was the first major carrier in the United States to execute a checked baggage fee, with other carriers quick to follow. Correspondingly, high fuel costs obliterated approximately half of domestic carriers across the United

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