Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Term Paper:
Not only are they crucial for the movement of people, but they are crucial for the rapid movement of time-sensitive goods. Therefore the government has an interest in the survival of the industry. Government can and has involved itself through monetary policy in sustaining or resuscitating struggling airlines in order to maintain the overall strength of the industry.
Taxation is another area where governments affect the industry. This again relates to the tight margins, as taxation represents a key expense for airlines. Changes in the tax regime directly affect airlines' after tax profits. The government can encourage or discourage the industry based on its taxation policies. The IATA believes the airline industry to be more heavily taxed than some of its substitutes, and has an entire program to deal with the issue of taxation, highlighting taxation's relevance to the industry.
Another way in which fiscal policy can impact the industry is through management of interest rates. The government obviously doesn't just take the airline industry into consideration when setting rates, but those rates do have a profound impact. As many airlines use credit to start or expand their operation, the availability of credit has a direct impact on capacity and the intensity of competition in the industry.
Lastly, fiscal and monetary policy helps to shape the state of the economy. Because airlines are so heavily dependent on a healthy economy to stimulate demand and allow them to secure profits, government policies that impact the strength of the economy are of utmost importance to the airline industry.
Wage inequality is another economic issue in the airline industry. Amongst airlines and even within the same airline, there are a wide range of salaries earned by airline staff, from pilots to service staff. Because the airline industry is largely standardized in terms of its equipment and operations, the skills airline staff develop are easily transferable to other airlines. Thus, wage inequality drives turnover. This turnover then drives safety and service levels as staff make the adjustment from one airline to another, and new staff are brought in to replace those who have left the industry.
Furthermore, wage inequality between the executive ranks and the workers is significant in the airline industry. For example, at a time when American Airlines sought to halt wage increases to its workers in 2007 in order to maintain the company's hard-won profitability, it managed to pay out $250 million in combined compensation to its executives. Much of this came in the form of stock options, which does not have the same bottom-line hit that cash salaries do, but nonetheless this type of activity breeds a large amount of employee skepticism.
The airline industry operates on razor-thin margins, and this makes it susceptible to virtually any economic factor imaginable. The industry is highly competitive despite high barriers to entry and highly cyclical in terms of its ability to generate profits. With few exceptions (such as Southwest), very few airlines have been able to manage externalities well. Were it not for the perceived importance of the industry to the global transportation infrastructure, the industry would likely not have been sustained to the degree it has by government. Yet despite the difficult economics of the industry, new competitors consistently enter the field in the hopes of carving out some of the profits that can be had during economic upswings.
Pearce, Brian. (2008). Financial Forecast. IATA. Retrieved June 29, 2008 at http://www.iata.org/NR/rdonlyres/DA8ACB38-676F-4DB1-A2AC-F5BCEF74CB2C/0/Industry_Outlook_Briefing_March08.pdf
No author. (2008). The Industry Handbook: The Airline Industry. Investopedia. Retrieved June 29, 2008 at http://www.investopedia.com/features/industryhandbook/airline.asp
Flint, Perry. (2008). 2008 Forecast: Will the Luck Hold? Air Transport World. Retrieved June 29, 2008 at http://www.atwonline.com/channels/dataAirlineEconomics/article.html?articleID=2174
No author. (2008). Chief Characteristic of the Airline Business. Air Transport Association. Retrieved June 29, 2008 at http://members.airlines.org/about/d.aspx?nid=7955
McDonald, Marc. (2007). American Airlines to Halt Worker Pay Raises, Even as CEO Pockets Millions. Beggars Can Be Choosers. Retrieved June 29, 2008 at http://www.beggarscanbechoosers.com/2007/10/american-airlines-fights-to-halt-worker.html
Blaylock, Garrick & Kadiyali, Vrinda & Simon, Daniel H. (2005). The Impact of 9/11 Airport Security Measures on Demand for Air Travel. Cornell University. Retrieved June 29, 2008 at http://aem.cornell.edu/faculty_sites/gb78/wp/airport_security_022305.pdf
Posner, Richard. (2008). Why is Airline Service so Bad? Becker-Posner Blog. Retrieved June 29, 2008 at http://www.becker-posner-blog.com/archives/2008/04/why_is_airline.html
No author. (2007). Aviation Charges. IATA. Retrieved June 29, 2008 at http://www1.iata.org/whatwedo/airport-ans/charges/taxation.htm
Posner, Richard. (2008). Why is Airline Service so Bad? Becker-Posner Blog.
No author. (2008). The Industry Handbook: The Airline Industry. Investopedia.
Pearce, Brian. (2008). Financial Forecast. IATA.
Blaylock, Garrick & Kadiyali, Vrinda & Simon, Daniel H. (2005). The Impact of 9/11 Airport Security Measures on Demand for Air Travel.
No author. (2007). Aviation Charges. IATA.
McDonald, Marc. (2007). American Airlines to Halt Worker Pay Raises, Even as CEO Pockets Millions. Beggars Can Be Choosers.[continue]
"Economic Profile Of The Airline" (2008, June 29) Retrieved December 9, 2016, from http://www.paperdue.com/essay/economic-profile-of-the-airline-29121
"Economic Profile Of The Airline" 29 June 2008. Web.9 December. 2016. <http://www.paperdue.com/essay/economic-profile-of-the-airline-29121>
"Economic Profile Of The Airline", 29 June 2008, Accessed.9 December. 2016, http://www.paperdue.com/essay/economic-profile-of-the-airline-29121
Furthermore, existing vulnerabilities of the airline industry are not taken into consideration until a disaster occurs. Lastly, the September 11th Security Fee introduced by the Department of Homeland Security was considered by many "as a beneficial trade off for their personal safety eventually," having as a direct consequence a rise of the airline industry. Bibliography Gregory Mankiw (2004) Principles of Economics, 3e, Mankiw InnovativeThinker. (2007) Economic Profile of the Airline Industry. Retrieved
In 1998 for instance the U.S. embassy in Nairobi was blown by a car comb killing at least 200 people mostly Kenyan, it also happened in 2002 where suicide bombers killed 15 people in an Israel owned paradise hotel in Kikambala Mombasa where terrorists reportedly shot a missile at an Israel airline at the airport in Mombasa. These were the most serious attacks on the foreign interests in Kenya
Airline Industry Analysis This report aims to present a summary of findings for a research study regarding the airline industry. The objective of this project was to first, gain new experience in the analysis process of an entire industry from an economic and business perspective as well as an environmental and social viewpoint. Secondly, the research attempts to provide direction for potential employment opportunities within the various aspects of the direct
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4). The return on this modest investment was impressive: "We saw that mobile is five-to-ten times more effective than online advertising" (Butcher, 2009, para. 4). The contest also increased visitors to the company's WAP site (Butcher, 2009). 7. Description of Location The same location will be used for the envisioned marketing campaign as the "Back for a while" initiative which targeted Hispanic males and females ranging in age from 27 to 45
By the turn of the century, though, these low-costs carriers had become profitable or at least had significantly reduced their losses due in large part to concomitant increases by major carriers that were increasing their prices in response to decreasing yields and higher energy prices (Doganis 2001). By and large, passenger traffic across the board increased significantly prior to September 11, 2001 and all signs indicated it was continue to