Air Transport - Supply & Demand

Paper Summary:

This paper takes a look at the two classifications of US airlines; legacy carriers with hub-and-spoke systems and newer low-cost airlines with point-to-point models. According to the paper, with only moderate changes in growth and spending predicted, legacy airlines are in big trouble. The paper reviews the problems that legacy airlines are facing.

Outline:
Introduction
Supply-Side Problems
Demand-Side Problems
Solution and Recommendations
Conclusions

From the Paper:

"In addition to the influence of economic conditions, the airline industry is characterized by other very complex demand dynamics, depending on travel distance, type of traveler, and domestic and international flights, to name a few of the many factors that determine the degree of price elasticity or inelasticity (Air travel demand elasticities: Concepts, issues and measurement). For long-haul international business travel, demand is not sensitive to fare changes because there are few close substitutes. On the other hand, long-haul domestic business travelers have much higher elasticities than international business travelers. Telecommunications has become more acceptable as a substitute in domestic markets due to common culture, laws, contracts, etc. International leisure travelers are more likely to either postpone their trips in response to higher fares or seek locations that are not as expensive. Currently, the dollar is weak against many international currencies, serving to make many destinations unappealing price- sensitive leisure travel."

Sample of Sources Used:

• Airline. Retrieved November1, 2006 from Web site: http://airline.biography.ms/
• Air travel demand elasticities: Concepts, issues and measurement. Retrieved November6, 2005 from Web site: http://www.fin.gc.ca/consultresp/Airtravel/airtravStdy_3e.html
• American cancels some flights on fuel costs (2005, September 30). Associated Press. Retrieved November1, 2006 from Web site: http://news.yahoo.com/s/ap/20050930/ap_on_bi_ge/airlines_jet_fuel
• America's airlines, flying on empty (2005, September 6). The Economist. Retrieved November1, 2006 from Web site: http://www.economist.com/agenda/displayStory.cfm?Story_ID=4399993
• Bonsor, K. How airlines work. Retrieved November1, 2006 from Web site: http://travel.howstuffworks.com/airline3.htm

More papers on Air Transport - Supply & Demand:

• Term Paper # 92495 : "Bilateral Air Transport Agreements"
• Article Review # 115103 : "Gasoline Supply, Demand and Price Changes"
• Essay # 69615 : "Supply and Demand in the Air Passenger Market"

APA Citation:

MLA Citation: