Slow Recovery for Airlines

Mouawad, Jad. "After Losses, Airlines Battle Back to Profit, a Fare and a Fee at a Time." New York Times 19 10 2011, B4. Print.  

After September 11, 2001, 41 airlines filed for bankruptcy. The airline industry had a hard fall and is still trying to recover from their losses. An article, It All Adds Up – Airlines Battle Back to Profit, a Fare and a Fee at a Time, in The New York Times by Jad Mouawad talks about the airline industry and its current struggles. Airlines are now cutting back on service, free meals, leg room, and so much more. Most airlines are also charging for checked baggage. But, it seems like there is a fee for everything now on airlines. The percentage of fares of revenue from passenger has gone down to 71 percent in 2010 from 88 percent in 1990. A lot of people are complaining but Delta’s chairman and chief executive, Richard H. Anderson, defends the industry by pointing out that they are not the only ones charging for special services. He mentions how rental car companies charge for GPS systems and hotels charge for Wi-Fi and other services.

Many comforts have been taken away from airline passengers due to economic downturn. I agree that airlines should be charging the fees they charge for extra services. Meals are not necessary on most flights and the people who want a meal can purchase one on the plane or before they get on and eat on the plane. Leg room has also been reduced significantly. Airlines want to fit more people in less airplanes and this is their way of doing that. If someone wants more leg room they can also pay for it. People need to fly and they will have to pay for these extra services not available for free.

What I don’t agree on is that if they are going to charge extra for things that also bring on more expenses, they should do so without rising fare costs. The fare rate should be what it needs to be and not be changed. The reason airlines are charging these extra fees is to cut back on giving certain services to the people who don’t want or don’t need the extra services. Now if a person wants something extra they can pay for it and the expense will be for that one passenger not everyone on the plane. But, the problem many people are running into is that airlines are charging these extra fees and still rising fares. They should stick to doing one thing or another and not both. I believe this goes for every industry not just airlines. If you order food to be delivered to you a fuel surcharge is for sure noted on your receipt. Again, this is fine if the fuel surcharge fluctuates with the cost of fuel but it does not. In most cases the fuel surcharge was increased with the increase of fuel and now that the fuel has gone down the surcharge has not decrease or gone away. The same thing can be said to be happening in the airline industry. Airlines have found another revenue outlet and they are not going to stop charging these fees and rising fares if not necessary.

Apple’s iPhone 4S

Wingfield, Nick. "Apple's Profit Gains 54%, but iPhone Sales Fall Short of Expectations." New York Time 19 10 2011, B3. Print.

Nick Wingfield writes about the introduction of the new iPhone 4S by apple in his article, Apple’s Profits Gains 54%, but iPhone Sales Fall Short of Expectations, in The New York Times on October 19, 2011. The article talks about how the new iPhone 4S did not sell as much as was expected and sales were down in the third quarter. These results caused a seven percent decline in apple shares. Many people were delaying their purchase of a new phone in order to get the new iPhone. But, many of these people were disappointed in the new product. Consumers were expecting an iPhone 5 not an iPhone 4S. Apple’s explanation is that this new iPhone 4S sold more than four million the first weekend it came out, this is more than double the sales of past iPhones. Revenues have gone up from previous years but what hurt Apple the most was that they did not reach expectations. People were very excited to get the new iPhone 4S and they were expecting a lot.

Sometimes surprises like this are good and other times they just back fire on companies. Customers were expecting an iPhone 5 to come out and what they got was an iPhone 4S. Yes it’s new and better but not that much different from the iPhone 4. Apple believed that this would get customers on track with them. Apple assumed that most people that have the iPhone 4 are still on their two year contract and it won’t be until next year before they will get a new phone. Therefore, Apple decided to come out with the iPhone 4S and leave the iPhone 5 for a time closer to iPhone 4 users’ contract renewal. The idea behind Apple is reasonable but customers did not agree. A lot of people are upset and the decline in Apple shares is evidence.

On the other hand, the iPad have had a tremendous success. Apple has sold more than 40 million iPads since they came out 18 months ago. Their Mac notebook computers are also doing well in the market. A big competition for Apple in the phone industry is Google with its Android operating systems. Android has 43.4 percent of the market while Apple has only 18.2 percent. There is a big contrast between the two competitors. Apple, on the contrary, is expecting its sells to go up in this holiday quarter. But, all we can do right now is wait and see how the customers react during this quarter. Overall, if Apple would have came out with the iPhone 5 instead of iPhone 4S, sales could have been drastically different. The perceived value of getting an iPhone 4S if you already have an iPhone 4 went down. These people might as well wait for the iPhone 5.