Introduction The report will be assessing and evaluating how deregulation and the growth of low cost carriers have affected global competition and market trends in the types of products offered to customers in air travel. The report will identify the key roles of the low cost carriers and how they are affecting the global competition and the market trends by introducing their means and methods over the bigger airline industry. It will also be witnessed in the report how the airlines have come a long way from the past till now and how the industry is on a constant change due to needs and demands put up by the customers which currently is being handled by the low cost carriers in some ways.
The Internet Industry Few inventions have changed how people live and experience the world as much as the invention of the airplane. During both World Wars, government subsidies and demands for new airplanes vastly improved techniques for their design and construction.
Over time, air travel has become so commonplace that it would be hard to imagine life without it. The airline industry, therefore, certainly has progressed. It has also altered the way in which people live and conduct business by shortening travel time and altering our concept of distance, making it possible for us to visit and conduct business in places once considered remote.
The airline industry exists in an intensely competitive market. In recent years, there has been an industry-wide shakedown, which will have far-reaching effects on the industry's trend towards expanding domestic and international services.
In the past, the airline industry was at least partly government owned. This is still true in many countries, but in the U. The airline industry can be separated into four categories by the U.
Department of Transportation DOT: Cargo - These are airlines generally transport goods. Airport capacity, route structures, technology and costs to lease or buy the physical aircraft are significant in the airline industry.
Other large issues are: Weather - Weather is variable and unpredictable. Extreme heat, cold, fog and snow can shut down airports and cancel flights, which costs an airline money. Fuel makes up a significant portion of an airline's total costs, although efficiency among different carriers can vary widely.
Short haul airlines typically get lower fuel efficiency because take-offs and landings consume high amounts of jet fuel. An estimate of the amount of money already received for passenger ticket sales and cargo transportation that is yet to be provided.
It is important to find out this figure so you can remove it from quoted revenue figures unless they specifically state that ATL was excluded. This indicator, compiled monthly by the Air Transport Association ATAmeasures the percentage of available seating capacity that is filled with passengers.
Analysts state that once the airline load factor exceeds its break-even point, then more and more revenue will trickle down to the bottom line. Keep in mind that during holidays and summer vacations load factor can be significantly higher, therefore, it is important to compare the figures against the same period from the previous year.
Analyst Insight Airlines also earn revenue from transporting cargo, selling frequent flier miles to other companies and up-selling in flight services. But the largest proportion of revenue is derived from regular and business passengers. For this reason, it is important that you take consumer and business confidence into account on top of the regular factors that one should consider like earnings growth and debt load.
For more about the consumer confidence survey, see Economic Indicators: Business travelers are important to airlines because they are more likely to travel several times throughout the year and they tend to purchase the upgraded services that have higher margins for the airline.
On the other hand, leisure travelers are less likely to purchase these premium services and are typically very price sensitive. In times of economic uncertainty or sharp decline in consumer confidence, you can expect the number of leisure travelers to decline.
It is also important to look at the geographic areas that an airline targets. Obviously, more market share is better for a particular market, but it is also important to stay diversified.
Try to find out the destination to which the majority of an airline's flights are traveling.
For example, an airline that sends a high number of flights to the Caribbean might see a dramatic drop in profits if the outlook for leisure travelers looks poor. A final key area to keep a close eye on is costs.
The airline industry is extremely sensitive to costs such as fuel, labor and borrowing costs.
If you notice a trend of rising fuel costs, you should factor that into your analysis of a company. Fuel prices tend to fluctuate on a monthly basis, so paying close attention to these costs is crucial.
At first glance, you might think that the airline industry is pretty tough to break into, but don't be fooled.Impacts Of Various Factors On The Airline Industry Economics Essay.
Print Reference this An increase in business inventories means that products are not being moved fast enough in the market indicating the economy is in a declining state, resulting in a weaker currency (Business inventories).
Yields of the airline industry are. - Airline Industry The airline industry is extremely influenced by the elasticity of demand, externalities, wage inequality, monetary policies, and fiscal policies. The elasticity of demand is impacted solely on the current market .
There are many factors impacted on the recent poor financial performance of traditional airlines, including the effects of 9/11, the global economic recession, the increasing growth of low cost airlines that operate under a different business model, and the recent surge in .
The low cost carrier’s airline industry is having a huge impact on the global airline industry. The table below highlights how the market is migrating to a new business model: customer behavior is changing.
The airline industry has had many affects from the economy. This paper will explain how the economy has affected the airline industry by explaining the shifts and price elasticity of the supply and demand; as well as provide information about the 3/5(1). The Effects of the Economy on the Airline Industry Steven Phillips Axia College ECO Economic Theory Ali Boloorian September 7, The Effects of the Economy on the Airline Industry The Airline Industry is affected by many variables of the economy.