The Vicious Cycle: Growth and Declining Quality in the Us Airline Industry: Some Lessons for New Start-Ups

Posted: 17 Nov 2009

See all articles by Siobhan D Tiernan

Siobhan D Tiernan

affiliation not provided to SSRN

Dawna L Rhoades

Embry-Riddle Aeronautical University

Date Written: 2005

Abstract

The deregulation of the U.S. airline industry in1978 has led to the entrance of a large number of carriers into themarket.Over 200 of these carriers have not survived and ended up inbankruptcy or have merged with other carriers.The growth pattern and thecorresponding success or failure of an airline is the focus of thisinvestigation. People Express, Southwest Airlines, and Jet Blue are the carriers used inthis examination and represent a failed carrier, a successful carrier, and anew entrant, respectively.Each firm falls into the category of alow-fare, no frills carrier.While People Express took an aggressiveapproach to growth, Southwest took a very conservative approach. Jet Bluehas fallen somewhere in the middle. The lesson that may be learned from the comparison of these airlines is thatrapid, unrestrained growth may be a serious detriment to the company, and maylead to its downfall.Key indicators that must be considered by themanagement of start-up airlines include the ability to hire the "rightpeople" and to provide adequate training. These airlines market themselves as customer-oriented, and in order toachieve customer loyalty, they must be willing to acquire, train, and retainemployees who will strive toward this goal. (SRD)

Keywords: Southwest Airlines, JetBlue Airways, People Express, Customer service, Employee training, Firm growth, Firm performance, Growth strategies, Quality of services, Airline industry

Suggested Citation

Tiernan, Siobhan D and Rhoades, Dawna L, The Vicious Cycle: Growth and Declining Quality in the Us Airline Industry: Some Lessons for New Start-Ups (2005). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1507578

Siobhan D Tiernan (Contact Author)

affiliation not provided to SSRN

No Address Available

Dawna L Rhoades

Embry-Riddle Aeronautical University ( email )

600 South Clyde Morris Blvd.
Daytona Beach, FL 32114
United States

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