United Airlines in an effort to emerge from bankruptcy has begun to reduce the number of flights it makes to the U.S. Glenn Tilton, United Airlines' chairman, president, and chief executive officer said, “fundamental changes in our industry, including ongoing high fuel costs, intense pricing pressure, and continuing overcapacity, demand that we take aggressive steps now in implementing this plan to ensure that United remains competitive.” The business world today is ever-changing and in order to stay in the game businesses will have to make some very important decisions. United Airlines found it necessary to begin downsizing, and some companies may find that they need to completely restructure.
I found this article pretty interesting because it relates to a blog that I did earlier in the semester. My blog was about Aron Ralston, the man that cut off his arm that was trapped by a rock to save his life. Aron found that it was more important to live without an arm than to die ensnared by a large boulder. United Airlines is much like Aron in the fact that they were going no where but down. So in an effort to save their life (business) they had to start cutting costs somewhere. United chose to cut the size of their fleet and to reduce their U.S. flights. Was this a good decision? Well, if the benefits outweigh the costs I believe that it was.
1 comment:
The airlines do not get much direct financial support from the government. What they do get is airports built for them - which is an indirect subsidy.
Having said that, they probably should get quite a bit of support. The history of passenger transportation is that no one can make money at it in the long-run. This is a good sign that fixed costs are too high to be recouped.
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