Major transformations of airlines are common, and frequently disappointing. They are common for good reason: the industry is structurally difficult. Unit revenues have declined an average of 2 percent per year over the past 20 years as a result of intensifying competition and commoditization. The battle to reduce costs has continually run up against the substantial bargaining power of both labor unions and suppliers, along with the market whims of fuel prices.
The report is available from the Mckinsey website.