Economics Airline Industry - 2595 Words

Part 1 The Characteristics Of The Airline Industry Preface Introduction The Primary Characteristics Competition Within The Airline Industry The Secondary Characteristics – The Tertiary and Quaternary Characteristics – Part 2 PESTEL Of The Airline Industry Conclusion References PART 1 The Characteristics Of The Airline Industry Preface Economics or Managing In The Global Environment, a subject everyone needs to be familiar with and most believe or think that they are, but at the end of the day, very few are competent and understand it’s deep meaning, intricacies and implications. These implications and meanings are for the Government, the people, the economy as well as for the observer ( a person observing the economy or industry in a†¦show more content†¦All airlines offer products and services of similar nature 4. Airlines enjoy substantial as well as major economies of scale 5. There is growth through merger 6. Airlines are mutually dependant on one an other 7. Price rigidity and non – price competition 8. Price Transparency and collusion Having said that, it is now amply clear that airlines, whether full service carriers or low cost, short haul or long haul operate in an oligopoly. Competition Within The Airline Industry A key characteristic of an oligopoly is limited competition, collusion and interdependence within firms. In recent times, we have seen sworn public enemies colluding privately. British Airways and Virgin Atlantic coming together to fix the passenger fee for ‘fuel surcharge’ to the flier. The first to investigate were the Office for Fair Trade and after much investigation, the trial broke down on 10 th May 2010 due to discovery of certain e-mails. Last month it was revealed that Virgin Atlantic and Cathay Pacific might have illegally co-ordinated prices for passenger flights between London Heathrow and Hong Kong’s Chep Lap Kok airport between 2002 and 2006. [3] Airlines compete in severa l other ways as well. Ticket prices fluctuate and the earlier you purchase, the cheaper it is. Frequencies and timings of flights differ over sectors. With regard to timings, British Airways have the BA 26 and the BA 28 leaving Hong Kong for London within 15 minutes of each other. Virgin leaves at the sameShow MoreRelatedAirline Industry and Its Economic Outline2890 Words   |  12 PagesAirline Industry and Its Economic Outline Frank L Mannino Jr. Axia College of University of Phoenix ECO/205 Economic Theory May 09, 2010 Airline Industry and Its Economic Outline The question can be is. How has the economy of the airline industry performed throughout the many decades it has been? In addition, what did the industry do as it has gone through many events that have challenged its survival? In this type of industry, we can say that it has seen their share of success in profitsRead MoreEconomic Profile: Airline Industry2794 Words   |  12 PagesEconomic Profile: Airline Industry Introduction The airline industry provides services for passenger and cargo transport. Over the years the airline industry has faired fairly decent. That is, until the September 11 tragedy in 2001. From 1995 through 2000, the airline industry earned about $23 billion then lost about $35 billion from 2001 through 2005 (McCabe, R., 2008). There are many factors that indicate the economic downfall of the airline industry after the September 11 incident. The purposeRead MoreEconomic Analysis of the Airline Industry2366 Words   |  10 Pagesec Economic Analysis of the Airline Industry Tisha Smith Axia College of UOP ECO 305 Economic Theory George Harris March 18, 2007 Economic Analysis of the Airline Industry Introduction The airline industry is one that is both costly and necessary to the economy. 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Through the civil law and regulation, state and local governments and the federal government substantially affect almost all industries. The civil law limits property rights, contractual obligations defines and establishes quality standards for goods and services through laws. Regulatory policy takes two general forms. Economic regulation controls the benefits, sets prices and determinesRead MoreCurrent Situation of Airline Industry1122 Words   |  5 PagesCurrent Situation of Airline Industry Since the airline industry was deregulated in the late 1970s, they shall hold the line on the number of planes they fly. The result is that the people by plane shall be more and more, and the fares shall become expensive. Because air transport is faster than other transportation methods, the people increasingly prefer to fly. 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