Homework aviation
Airline Operations
Assignment Chapter 7 Part 1
1. Why is the airline industry considered oligopolistic? What are some of the barriers to becoming a certificated carrier today? Compare the barriers today with those before deregulation. How has the number of carriers, and their market share, changed since deregulation?
2. Define economies of scale, scope, and density. How do they apply to the major carriers? When can economies of scale turn into diseconomies of scale? Give several examples of economies of scale in the airline industry today.
3. Why has there been a tendency toward mergers in oligopolistic industries over the years? What are some of the reasons air carriers have merged? What do you think the structure of the airline industry will be like in 2015?
4. Give some examples of how government (particularly the federal government) has assisted the industry financially over the years. Why is there such a high technological turnover in the industry? When one carrier acquires new flight equipment, why do the other competing lines have to do the same?
5. What are the three major operating expenses of airlines? Why are they so high? How have they changed over the years? Why are labor costs such a competitive advantage for start-up airlines over more established carriers?
Airline Operations
Assignment Chapter 7 Part 2
1. What is the competitive advantage of schedule frequency? How does it lead to excess capacity? Describe the effect of excess capacity on pricing.
2. Many industries are sensitive to fluctuations in the economy. How does the airline industry differ? How is it different to furlough employees in the airline industry versus the automobile or soft-drink industry?
3. Why has the airline industry been subject to greater government regulation than other oligopolistic industries?
4. Define load factor. What is the relationship between load factor and costs per unit? Explain. Why have load factors increased in recent years? Why are all public transportation modes subject to traffic peaks and valleys? How do positioning flights affect load factors?
5. Why can’t airlines fine-tune capacity to match demand? Define no-shows. When load factors approach 80 percent or higher, we can expect some passengers to be turned away. Why? What is overbooking? Off-peak pricing?