The Airline Industry

Paper Summary:

The paper discusses the elasticity of supply and demand, positive and negative externalities, wage inequalities and monetary and fiscal policies. The paper then evaluates how the economy affects the success of this industry and identifies the economic influences that can affect the industry in a negative way.

Outline:
Introduction
Elasticity of Supply and Demand
Positive and Negative Externalities
Wage Inequality
How the Economy Affects the Airlines
Economic Influences which Can Affect the Industry in a Negative Way

From the Paper:

"This paper covers the airline industry in the United States, with some of the lessons learned since the start of deregulation in the 1970's to today. The airline's overall economics have changed significantly, from a government-controlled oligopoly to a free-for-all in which different airlines choose different economic strategies. Government regulation still plays a key economic role by limiting the participation of foreign investors and airlines, as well as the control on 'fifth freedoms,' which will be dealt with in this paper.
"It is this author's contention that the current airline industry is still in a state of disequilibrium which will be addressed through mergers and bankruptcies, and that a multi-tier service offering and consumer group segmentation will continue to drive competitors' strategies in different directions."

Sample of Sources Used:

• Business Week. "Why GE Is Keeping Loser Airlines Aloft ." Business Week 7 February 2005: n.p.
• Francisco, Federal Reserve Bank of San. Competition and Regulation in the Airline Industry. Economic Report. San Francisco: Federal Reserve, 2002.
• Gittell, JH, Cameron, K, Lim, S and Rivas, V. "Relationships, Layoffs and Organizational REsiliance." The Journal of Applied Behavioral Science (2006): 300-329.
• Mackinac. Price Elasticity of Demand. Economic. Mackinac: Mackinac Center for Public Policy, 1997.
• Mandaro, L. "Southwest surges on traffic comeback." CBS Marketwatch 18 October 2007: n.p.

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