Airline Industry

You are viewing a wiki page. You are welcome to edit.


The first recorded flight of a human being took place in 1783 when French inventors Joseph and Etienne Montgolfier inflated a large balloon with hot air, reaching an altitude of 6,000 feet. Advancements in aeronautics, the science of flight, soon led to the development of successful glider designs. Two brothers, Orville Wright and Wilbur Wright, became convinced that the typical glider wing structure was fundamentally flawed. They built a wind tunnel to test the flow of air over a variety of new designs. At the same time, they developed specifications for an internal combustion engine powerful enough to lift its own weight and the weight of a plane. They consulted marine engineering texts and constructed a propeller for their plane. By the time the Wright brothers made their historic first flight on December 17, 1903, near Kitty Hawk, North Carolina, they embodied the basic structural components - engineering, manufacturing, ground crew, and pilots - of today’s airline industry.

The Douglas DC-3, which first entered service in 1936, is credited with changing commercial air travel from a novelty to a practical means of transportation. Thousands were built during World War II and many are still flying.

Technological advances followed rapidly. Spurred in part by the growing certainty of war in Europe, designers sought faster, more maneuverable, and more stable aircraft. Attempts to develop commercial air transport largely ended, however, with the outbreak of World War I. Efforts were now directed at developing the airplane’s military potential. By the end of the war, planes could reach speeds nearing 200 miles per hour and could climb as high as 30,000 feet, while operating for many hours in the air. By 1919, a U.S. Navy plane made the first transatlantic flight of nearly 3,400 miles. Nonetheless, commercial use of the airplane would remain limited for some years after the war. Airplanes were not yet large enough or reliable enough to carry passengers at a profit, and they were not yet able to fly in bad weather.

In 1919, companies in Germany, France, and England, with support from their governments and using converted surplus warplanes, began civil airline services. In the United States, civil airplanes were chiefly the props of stunt flyers and daredevils. However, the passage of the Kelly Air Mail Act of 1925, in which the transport of mail was turned over to private contractors, gave the airline industry the boost it needed. A series of technological advances in airplane and airplane engine design during the 1920s and 1930s gave a further boost to the airline industry.

Increasing numbers of people were flying on commercial airplanes. The Air Commerce Act, passed in 1926, established licensing requirements for pilots and airlines, while creating an airway network with lights and radio beacons. This provided not only for greater safety in the air, but also for greater consumer confidence in the young airline industry. Then, on May 21, 1927, Charles Lindbergh completed the first nonstop flight from New York to Paris and set off a boom in aviation and air travel. Within six years, the United States boasted the busiest airport in the world, at Newark, New Jersey. Companies, such as Boeing, Douglas, and Lockheed, began devoting themselves to the manufacture and design of aircraft.

In the 1930s, many of the small airlines from the decade before had merged to form what would become known as the Big Four airline companies: American, United, Trans World (TWA), and Eastern. By the end of the 1930s, the U.S. companies carried 30 million people per year. World War II interrupted the growth of the commercial airlines. All available resources and research were directed toward the war and to winning dominance in the air over the powerful German Luftwaffe. The development of the jet engine, a turbine engine more powerful than the internal combustion engine, occurred during this time. The jet engine had a dramatic impact on the commercial airline industry.

Following the war, the industry underwent a rapid expansion. Planes could now carry larger numbers of people and transport far heavier payloads, with shorter travel times and fewer refueling stops. In the United States, the Federal Aviation Agency, later called the Federal Aviation Administration (FAA), regulated the technical aspects of the airline industry, performing safety inspections of the aircraft, creating specifications for airport and runway design, and establishing a system of air traffic control to help maintain the safety of the increasingly crowded skies. The Civil Aeronautics Board regulated the economic aspects of the industry, dictating which routes each airline was allowed to fly and what fares they could charge their passengers.

In 1952, British European Airways was the first to add commercial jet service and became the first foreign company to make a successful entry in the U.S. market. U.S. airlines were far slower to adopt jet planes into their fleets. It was not until 1959 that Boeing introduced its 707. But by the middle of the next decade, the United States dominated the international airways. By the end of the decade, manufacturers were building jumbo jet airplanes, such as the Boeing 747 and McDonnell-Douglas’s DC-10, capable of carrying from 300 to nearly 500 people per flight. These planes reached speeds of up to 625 miles per hour. In 1976, the supersonic Concorde was introduced. It was designed to fly at 1,350 miles per hour, and flew until 2003, when its commercial flights ended.

Larger planes meant lower prices, and lower prices meant more passengers than ever before. Meanwhile, airplanes had long been put to other uses. Alongside the commercial airline industry, the general aviation industry included roughly 80 percent of all registered aircraft in the United States. Manufacturers such as Cessna and Piper created smaller, usually piston-engine planes, for such purposes as pilot training, aerial sports such as skydiving, and private pleasure flying. Later, the jet engine was adapted for general aviation use in executive and business transport services. Private mail and package delivery companies such as Federal Express and United Parcel Service began to build fleets of their own.

Pilots reviewing the flight checklist before take-off.

Until 1978, the airline industry was strictly regulated by the Civil Aeronautics Board. Air travel was largely dominated by a handful of giant companies. In an effort to increase competition within the industry, the Airline Deregulation Act of 1978 removed these controls. The airline industry entered a chaotic period in which many airlines failed, while others merged and many new ones appeared. Ticket fares decreased for some larger, more frequently traveled destinations. But for smaller destinations, fares rose drastically. Nonetheless, the industry underwent an explosion in the number of passengers flying each year.

As the industry entered the 1990s, a more profitable hub-and-spoke system began to emerge in which airlines based their operations in one or more cities. However, an economic downturn, coupled with the enormous competition of the last decade, took its toll on the airlines. The sudden end of the Cold War meant an end to unlimited government defense spending, causing a crisis among aircraft manufacturers. In the industry itself, fewer and fewer jobs were being created, and many were being lost.

The end of the recession, however, brought renewed prosperity to the airlines and increases in the numbers of people traveling. Airlines focused more on services such as electronic ticketing, frequent flyer programs, and in-flight telephones and video players to increase their attractiveness to customers. Another trend was the formation of partnerships between U.S. and foreign companies, allowing them to extend the routes they could offer to their customers. Many aircraft manufacturers began to enter other areas of manufacturing and technology to replace revenues lost to the shrinking defense budget.

The economy slipped into recession again in 2001, hitting the airline industry hard, primarily because of drastically lower numbers of business travelers. Then, the terrorist attacks of September 11 put the industry in real crisis. The attacks shut down air transport completely for four days and then new security measures and regulations were immediately instituted. Airlines were forced to reduce flight capacity and cut schedules. To persuade passengers to fly again, they had to offer cheaper fares. As a result, the industry reported losses of nearly $10 billion at the end of 2001. Close to 100,000 jobs were lost. In response, Congress passed the Air Transportation Safety and System Stabilization Act to help the airline industry deal with the financial ramifications of the terrorism. The bill provided direct cash grants, loan guarantees, compensation for increased insurance costs, and limits to liability for third-party damages resulting from terrorist acts. The U.S. Department of Labor predicts that increasing business and leisure travel and an improved economy will help the airline industry gradually rebound over the next decade.


The aviation industry may be divided along three lines: commercial, general, and military. Commercial aviation includes the airlines, air taxi and charter operations, airplane rental, and aerial applications. Commercial aviation is further broken down according to the size of the company. National carriers are airlines that earn between $100 million and $1 billion per year. Regional carriers have revenues of less than $100 million each year. Other commercial uses for aircraft include forest fire containment, crop dusting, and aerial signage. Helicopters are used for police, emergency, rescue, and passenger services, and for traffic reporting. There are 540 commercial service airports in the United States.

General aviation encompasses personal and instructional flights and business and executive aircraft. General aviation also includes smaller crafts, such as ultra-lights. Most of the airplane activity in the United States occurs in general aviation. General aviation aircraft fly over 29 million hours, nearly two times the commercial airline flight hours, and carry 166 million passengers each year. There are approximately 2,764 general aviation airports in the United States, but general aviation craft fly into and out of most of the country’s more than 18,000 airports. Airports range in size from a single unpaved landing strip to complex sites of 20,000 acres or more.

Large airports have often been compared to cities. Each has its own police force, fire department and emergency rescue service, retail stores and restaurants, maintenance crews, warehouses for cargo, and even its own transportation system. A large airport may employ thousands of people. Many airports are managed by fixed-base operators (FBO). The FBO is often responsible for the entire operation of the airport, including its management, fueling, hangar, and repair facilities. A feature at many airports is the control tower. Air traffic controllers regulate the flow of traffic into and out of the airport. Additional air traffic control centers are spaced along the airways, linking the entire system. Other important features of larger, international airports and airports located near the country’s borders are the customs and immigration departments.

More than 100 airlines make use of these airports. The typical organizational structure of an airline includes operations, maintenance, marketing, and finance divisions. The operations division manages the day-to-day activities of the airline, overseeing the pilots and flight attendants, the flight dispatchers, flight scheduling, and ground crews. The maintenance division handles the avionics and mechanics of the airplane, performing daily inspections, and routine repairs and maintenance, such as filling the tires with air and fueling. The marketing department sells the airline’s services as well as creates new programs, services, and advertisements to attract customers. It also takes ticket reservations and purchases. The finance division is concerned with maintaining a smooth cash flow to ensure the airline’s continued success. Other areas of an airline may include an interior design staff to develop the passenger areas of a plane and clothing designers to design the uniforms of the pilots, flight attendants, check-in personnel, and others.

Airlines carry more than just people. Transportation of cargo, from single packages to shipments such as 25-ton printing presses, complete oil well towers, and heavy construction equipment, is an important source of income. The use of airplanes to transport fresh fruits, vegetables, and seafood has had a great impact on the variety of foods available for people to eat. Other industries, such as the auto industry, transport parts and components by air so that they arrive at their factories just when they are needed. An added source of revenues is transportation of mail and packages, which may contribute as much as 15 percent to a major carrier’s earnings. There are now many companies that specialize in mail transport, some with their own fleets of airplanes. A typical airplane carries a variety of cargo, along with its passengers and crew.

An important component of the airline industry is the aircraft manufacturer. The major carrier aircraft manufacturers in the United States are Boeing Aircraft Company and Lockheed Martin. They also build aircraft, weapons, vehicles, and components for the military and the U.S. space program. Much of their work involves the research and development of new technologies. Many features of the modern airplane were first developed for the military or the space program and were later adapted for commercial aircraft. A typical aircraft manufacturer employs people from nearly every field, from physicists, biologists, engineers, technicians, and mathematicians to accountants, lawyers, writers, and artists, as well as traditional manufacturing personnel. Many other manufacturers provide essential aircraft components and electronics.

A number of manufacturers concentrate on supplying aircraft to the general aviation industry. Major general aviation manufacturers include New Piper Aircraft, Cessna Aircraft Company, Raytheon Aircraft Company, Learjet, and Gulfstream Aerospace Corporation. Still other manufacturers build helicopters. The growing popularity of ultra-light aircraft, many of which are built by the purchaser from a kit, has created still more manufacturing opportunities. The popularity of skydiving also has increased the need for such equipment as parachutes and safety harnesses.

The Federal Aviation Administration oversees the airline industry, performing a number of important functions. Aircraft and airports must meet rigid specifications for safety, performance, noise, and pollution standards. Routine inspections of each aircraft alert airlines to faults in their aircraft and keep unsafe airplanes from the sky. The FAA establishes training and licensing requirement for pilots, instructors, and other workers. The FAA also hires, trains, and assigns air traffic controllers to manage the traffic flow above airports and across the country. Most of the current air traffic control system in the United States has been in place since the 1960s. As its computers and other components have aged, and even become obsolete, the FAA has begun to rebuild the system, sponsoring research and development into new components that will be able to regulate air traffic for many years to come. The FAA also governs the design, construction, and operations of airports. Everyone who flies remains subject to the FAA’s rules and regulations.


The airline industry suffered during 2001, due to reduced air travel and a struggling economy in the early part of the year and then because of the terrorist attacks in the fall. Airline industry losses for 2001 were nearly the same as during the Gulf War in the 1990s when the United States experienced somewhat similar economic and political conditions. The Air Transportation Safety and System Stabilization Act (dubbed “the airline bill”) has kept some airlines from bankruptcy, but the industry needs air travel to return to its pre-terrorism volume. Many major airlines implemented cost-cutting measures, including employee layoffs. Some airlines are talking to unions to renegotiate wages and cut other costs. Smaller airlines that were already operating at lower costs, such as Southwest Airlines, JetBlue Airways, and Frontier Airlines, have fared better and remained profitable despite the recession.

Aviation experts predict that the airline industry will continue to suffer over the short term then begin to see a slow recovery as passengers get back on board.

While the airline bill took care of the carriers, it didn’t offer any help to the almost 100,000 laid-off workers. Some airlines did not offer severance packages. Some options being considered include requiring airlines to pay severance as a precondition of receiving government aid or loan guarantees. This would help only those who are eligible for severance under the stipulations of their union contracts. About 55 percent of airline employees are not covered by union contract.

Terrorism has also affected aircraft manufacturing. In recent years, the industry has been hurt by a decreased defense budget. However, the Defense Appropriations Bill for fiscal year 2005 provided $416.2 billion in new discretionary spending authority for the Department of Defense. The budget includes spending for weapons; aircraft; shipbuilding; ballistic missile defense; intelligence, surveillance, and reconnaissance, military personnel pay raises and medical programs; troop readiness and sustainment programs; and other programs.

Manufacturers that serve commercial airlines are laying off workers and some may close plants because new aircraft orders have been stopped or delayed. General aviation manufacturers were also affected, although the number of active general aviation aircraft was expected to remain about the same as in past years.

Many small airports have gone out of business in recent years, and many more are expected to fail, especially those unable to keep up with advancements in technology as they become standard in FAA regulations. As the industry developed the hub-and-spoke services, some airports have seen dramatic decreases in air traffic; others, particularly larger airports, have seen a boom in the number of flights and passengers they handle each year. These airports will continue to require large numbers of employees. Airport employees will have to undergo security checks and complete more rigorous training in order to comply with new government safety and security regulations.

The FAA is in the process of completing its transition to a new air traffic control system. Many of its computers, state-of-the-art in the 1960s, are less powerful than most personal computers today. With more and more airlines adopting global positioning system (GPS) equipment, the need for tight air traffic control will be eliminated. The role of the air traffic controller will be reduced to provide assistance during potentially dangerous and emergency situations. Strong growth will be seen in the number of jobs related to computer development and operation.

Words to Know

Air Commerce Act of 1926: Established licensing requirements for pilots and airlines along with other safety and regulatory measures, giving consumers more confidence in commercial aviation.

Airframe: The parts of an aircraft other than the engine, such as wings, fuselage, landing gear, etc.

Avionics: From the words aviation and electronics, this is the application of electronics to the operation of aircraft, spacecraft, and missiles.

FAA: Federal Aviation Administration, a federal agency.

GPS: Global Positioning System, which allows airplanes to use computers and satellites to determine the fastest and most efficient flight paths; slowly eliminating the need for tight air traffic control.

Kelly Air Mail Act of 1925: Legislation that turned the transportation of mail over to private contractors, providing a watershed opportunity for commercial aviation.

NTSB: National Transportation Safety Board, a federal agency.

For More Information

To read The Airline Handbook, visit the ATAA Web site.

Air Transport Association of America (ATAA)

1301 Pennsylvania Avenue, NW, Suite 1100

Washington, DC 20004-1707

Tel: 202-626-4000


For information on licensing, careers, and aviation, contact

Federal Aviation Administration

800 Independence Avenue, SW, Room 810

Washington, DC 20591-0001

Tel: 202-366-4000

For information on career pamphlets, books, lists of schools, and scholarships, contact

General Aviation Manufacturers Association

1400 K Street, NW, Suite 801

Washington, DC 20005-2403

Tel: 202-393-1500

For information on careers, lists of schools, and scholarships, contact

National Air Transportation Association

4226 King Street

Alexandria, VA 22302-1507

Tel: 800-808-6282

For information on regional airlines operating in the United States that employ pilots, flight attendants, mechanics, agents, and other personnel, contact

Regional Airline Association

2025 M Street, NW

Washington, DC 20036-3309

Tel: 202-367-1170



See Also

Aerospace Industry; Defense Industry; Military Services Industry; Space Exploration; Transportation Industry; Travel and Tourism Industry; Agricultural Pilot; Air Traffic Controller; Aircraft Mechanic; Airplane Dispatcher; Avionics Engineer and Technician; Flight Attendant; Helicopter Pilot; Pilot; Reservation and Ticket Agent

Add new comment