The airlines have been experiencing significant financial difficulties.There are several causes for the financial problems faced by the U.S. airline industry.Although the events of September 11 had effects throughout our economy, the effects on the airline industry were direct and far-reaching.Even after the industry resumed flying, passenger traffic was slow to recover because of public anxiety over security.The events of 9/11 were not the only cause for financial troubles in the airline industry.A major problem facing U.S. airlines is their high fixed costs.

The high costs reduce the flexibility required to be competitive and successful.Many airlines are stuck with union contracts they can no longer afford.These serious problems are forcing the industry bankrupt and are not promising with the long-term direction of the industry.United Airlines contributes to this because all-time industry highs trace back to a bidding war that was started by United.

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Fixed costs are mentioned in this article.With the heavy fixed costs in the airline industry, there is no way in the long-term that the industry can survive with these levels.These fixed costs might include security costs, insurance costs, depreciation expense, full-time employees (salaries), leases, debt service, interest expense, rent, or occupancy costs.The aircraft itself is the single biggest fixed cost.Supplier relationships and union agreements also build in a lot of costs that are extremely difficult to manage in short-term situations.

If I were in a position to bring about a resolution to these problems, I would require several actions be taken.In order to reduce costs, I would take capacity out of the system and park airplanes.I read an article that said for every 20% of aircraft taken out of the system, you save 10%.Sacrifices must be made during this time of hardship.I might reduce some employees from