The results of such events are larger than average declines in profit compared to higher profit margin industries. This fact can be seen in the annual reports published by the Air Transport Association. In 1978 net profit for the industry was 1,196,537,000. This profit dropped sharply over the next four years to (733,435,000) . This decrease in profit was due to the government deregulation of the industry in the 80's. Another example is the industry's incapability of dealing with rising fuel cost during Desert Storm. Profits went from 1,811,267,000 in 1989 to (2,444,460,000) by 1992. Yet another example is the drop in passengers due to the terrorist attacks. The industry's profits dropped from 6,998,931,000 in 2000 to (10,063,889,000) in 2002 . However there are companies such as Southwest who have managed to stay profitable through even the worst times. These companies have done this by maximizing revenue.
Southwest and other profitable companies have achieved their profibility through maximization of revenue. There are several ways to increase revenue. The easiest of which is to increase passenger load factor . Southwest flew at a 68.1 percent load factor in 2001 . Non-profitable companies such as United Airlines and U.S. Air Ways flew at less than 50 percent load factor. The passenger load factor is extremely important since "75 percent of U.S. airline industry's revenue comes form passengers" according to the Air Transportation Association. Of that 75 percent "nearly 80 percent comes from domestic travel". For this reason airlines should focus more on domestic travel. Southwest currently offers no foreign departure. U.S Air Ways on the other hand fly's to almost as many foreign destinations as it does domestic destinations. Another way that airlines can increase revenue is by finding a niche in the market. Southwest does this by targeting price consciences travelers. By finding a niche in the market companies are able to keep ongoing relationships with customers by serving the target markets needs better than the competitor does.
