The Airline Industry Term Paper by Writer83

The Airline Industry
Description of the issue of regulation vs. deregulation in the airline industry
# 119291 | 2,026 words | 9 sources | MLA | 2010 | PK
Published on Apr 15, 2010 in Business (Industries) , Law (General) , Aviation, Aeronautics (General)

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This paper addresses how flying is often associated with crammed tumultuous travels and great uncertainty, and explains several characteristics of the airline industry that make it this way. The author concludes that while the airline industry should be deregulated as much as possible to allow the needed flexibility to operate effectively, there are some areas of the industry which must be regulated.

Special economic characteristics
An undifferentiated product
A highly perishable product
Ease of entry
Tendency to monopoly or oligopoly
Other economic characteristics

From the Paper:

"A major building block regarding competition and the impact it has on customers should be addressed first. E.g. if a well known airline like United Airlines is the only carrier for customers to fly, they can set a price for the tickets and would be able to generate the highest revenue possible with multiplying the number of seats available with the highest ticket prices would fill all the seats which would suggest elasticity of Demand which than would be covered quickly.
"If a new airline offered lower rate E the question is how many will try the new airline. The dependence of this answer is on very few factors like the response of a big airline to the new airline, Brand loyalty but most important current economic conditions. Another thing which is to be considered is the time. If the new airline can maintain a good reputation, quality service for a long time, low prices than they will automatically be having a larger market share. The case refers to this event as the Southwest Effect.
"As the number of airlines has increased over the years, so has the pressure of decreasing the ticket prices to have a greater market share. This leads to cutthroat competition. Airlines try to under price each other in order to attract more customers and have a greater market share. This tends to decrease the profit and many times, Red Ink. A business will finish if they continue to lose money. The congress in America realized that many of the airlines would finish unless some action was taken and this prompted the creation of the Civil Aeronautics Act in 1938."

Sample of Sources Used:

  • John Kay The Business of Economics; Oxford University Press, (1996) 222 pgs
  • Severin Borenstein Hubs and High Fares: Dominance and Market Power in the U.S. Airline Industry Journal article; Rand Journal of Economics, Vol. 20, 1989. Page 22.
  • Joseph A. Clougherty Globalization and the Autonomy of Domestic Competition Policy: An Empirical Test on the World Airline Industry Journal article; Journal of International Business Studies, Vol. 32. (2001)
  • Ellis J. Juan Aviation: The Politics and Economics of a Boom Magazine article; Foreign Policy, No. 109. (1997)
  • Daily Post Low-Fare US Airline Flies in for More Airbus Jets Newspaper article; (Liverpool, England). (2003)

Cite this Term Paper:

APA Format

The Airline Industry (2010, April 15) Retrieved June 03, 2023, from

MLA Format

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