Economic analysis of the airline industry

The Airline industry provides a very unique service to its customers. It transports people with a high level of convenience and efficiency that cannot not be provided by any other industry or substitute. Airline companies pride themselves on the way they treat their customer during the flight. They have things such as food, drinks, entertainment, and a welcoming staff.

Economic analysis of the airline industry

Get Full Essay Get access to this section to get all help you need with your essay and educational issues. Costly because of the funding provided by the government, recent layoffs; which has a hand in rising inflation, dealing with negative externalities and high security risks; necessary because the ease and speed of air travel is needed to keep countries productive and competitive.

It is a key component to the economy. Many businesses rely on air transportation as well as consumers and individuals employed within the industry. Without this form of accelerated transportation, production necessary for economic growth would decelerate. Businesses would not be able to meet supply demands.

The slump in the demand for airline travel has been caused by events such as terrorist activity; war related issues as well as infectious disease outbreaks such as SARS Leary, Even before these issues, the airline industry faced financial struggles after the enactment of de-regulation which caused an increase in competition.

Labor Supply and Demand Wages in the airline industry have been an issue for many years because they continue to fluctuate up and down depending on current events such as bankruptcies, increased competition, a decline in air travel and terrorist activity.

Higher wages in the airline industry could be attributed to the presence of a Union. When unions are present, representatives are able to negotiate higher wages for employees as well has initiate strikes and withhold labor until a desirable wage is offered.

Because the industry is currently turning a profit, due to an increase in the demand for airline travel, union leaders are in a better position to negotiate better wages for airline employees.

The unions are only able to do so much. Eventually, wages of airline workers will and have been cut. If an airline is bankrupt, the goal of the airline is to save the business and do what is in the best interest of share holders, at the workers expense.

Benefits have been cut as well.

Demand & supply analysis for airline industry

An increase in the demand and supply for airline personnel has affected the equilibrium wage. Air travel is on the rise, so the industry offers higher wages to attract quality applicants. Because wages have slightly increased, the labor supply and demand curve shifted to the right.

Supply and Demand Supply and demand can be measured by the market for air travel, that is, supply and demand can be measured based on how and what air travel is used for such as business or leisure. Use of air travel is also impacted by the distance that needs to be traveled.

The demand for air travel should be slightly higher for people needing to travel longer distances. After Septemberthere was a long stretch in which the supply exceeded the demand for air travel, causing a surplus. To compensate for lack of demand, prices were cut and jobs were eliminated.

The idea was to increase the demand for air travel by decreasing fares. Currently, prices are on the rise again as the demand for air travel increases Reed, The airline industry is highly responsive to economic cycles.

Just as most network, airlines are now expected to turn an operating profit, most lost substantial sums in the last several years; The U.S. airline industry remains in the midst of an historic restructuring.

Economic analysis of the airline industry

Economic Analysis of the Airline Industry Tisha Smith Axia College of UOP ECO Economic Theory George Harris March 18, Economic Analysis of the Airline Industry Introduction The airline industry is one that is both costly and necessary to the economy. Airline Industry Overview Framework • Market • Product • Customer • Compeon • Companies • Economics – Revenues – Cost • Externals Global Market • Airlines operang more than 23, aircra, providing service to over airports.

Brand name recognition and frequent fliers point also play a role in the airline industry. An airline with a strong brand name and incentives can often lure a customer even if its prices are higher. IATA Economics presents analysis of economic and policy developments affecting the financial performance of the global airline industry IATA - Economics & Analysis r-bridal.com homepage.

Economic Analysis of the Airline Industry Essay Sample The airline industry is one that is both costly and necessary to the economy. Costly because of the funding provided by the government, recent layoffs; which has a hand in rising inflation, dealing with negative externalities and high security risks; necessary because the ease and speed of air travel is needed to keep countries productive and competitive.

Economic analysis of the airline industry
Economic Analysis of the Airline Industry | Essay Example