Most of the recent airline failures have involved smaller carriers. However, bankruptcies may become more prevalent among regional carriers over the next few years because airlines continue to make the same mistakes as earlier carriers. Start up carriers are inadequately capitalized. There ambitious growth plans are accompanied by high debt levels and their managers fail to stabilize labor cost before they spiral out of control, or lose their customer base due to unreliable service. The air travel industry is capital, labor and technology intensive.
Airlines are subject to intense competition.
To succeed, airlines must quickly employ any new process or procedure that can reduce costs. Distribution, the process of booking and ticketing passengers for airline travel, is changing with developments in computer, imaging and communications technology. In 1995, airlines began establishing home pages on the World Wide Web. Many of these sites are interactive. Travelers can use these sites to book fights and select seats.