An essay on the airline industry and the need for minimization of costs

Obviously, more market share is better for a particular market, but it is also important to stay diversified.

Which major expenses affect airline companies?

Other large issues are: Historically, the airline industry continues to be brutally competitive, even though the business of flying people all over the world and country has become an integral part of human life.

Some of the worst times for airlines have been when oil prices spiked up. When fuel prices decline, this is punished as the market price of fuel is less than what they are paying. 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.

Extreme heat, cold, fog and snow can shut down airports and cancel flights, which costs an airline money. Falling costs and rising revenue are desirable for any type of business. Analyst Insight Airlines also earn revenue from transporting cargo, selling frequent flier miles to other companies and up-selling in flight services.

Some of the lesser expenses for airlines are maintenance, parts and labor, handling luggage, airport fees, taxesmarketing, promotions, travel agent commissions and passenger expenses.

The Internet has also created greater price transparency, reducing margins. When determining this you should consider time, money, personal preference and convenience in the air travel industry.

Highly competitive industries generally earn low returns because the cost of competition is high. For this reason, analysts pay more attention to fuel costs in the near-term. If borrowing is cheap, then the likelihood of more airliners entering the industry is higher.

But the largest proportion of revenue is derived from regular and business passengers. Two-thirds of the costs of flying an airplane are fixed, so changes in fuel costs can swing a flight from profit to loss depending on how many people are on the flight.

The cost of flying continues to trend lower. Labor costs are largely fixed in the short-term, while fuel costs can swing wildly based on the price of oil. The airline industry exists in an intensely competitive market.

Over time, air travel has become so commonplace that it would be hard to imagine life without it. The major expenses that affect companies in the airline industry are labor and fuel costs.

A final key area to keep a close eye on is costs. The airline supply business is mainly dominated by Boeing and Airbus. Since growing profits is difficult, companies are forced to cut costs to be more profitable.

By Brian Beers Updated April 30, — 3: This can spell disaster when times get tough in the economy. Department of Transportation DOT: What is the likelihood that someone will drive or take a train to his or her destination?

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.

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. Airport capacity, route structures, technology and costs to lease or buy the physical aircraft are significant in the airline industry.begun to install automatic ordering machines that eliminate the need to order from a human being.

This chapter studies costs and cost minimization. In this chapter, we will introduce concepts that The sum total of the explicit costs and the implicit costs represents what the airline sacrifices when it makes the decision to fly one of. Operating costs and capacity in the airline industry processes, customers, channels, markets, and so on) create the need for activities, and activities create the need for resources.

Accordingly, the technique uses a two-stage procedure to assign resource costs to cost objects. marketing variance and expected idle passenger capacity in. Comparison of Airline Industry Structure (Regulation/Pre vs Deregulation/Post The servicing of particular markets is essential in the nature of the airline industry.

Airlines need to offer routes between markets that are desired The costs of operations for an airline are a limit to how low airfares can be. Costs include maintenance. American Airlines' variable and fixed costs. Print Reference this. Published: 23rd March this will reduce the profitability of the Airline industry, as airlines will need to keep lowering prices in order to remain competitive, leading to a decrease in profit margins and economic growth.

The Industry Handbook: The Airline Industry

If you are the original writer of this essay and. THE FIRM'S OWN COSTS. The airline industry incurs heavy costs in terms of maintenance, operations, and employees. So the pricing of tickets is in such a way that they can at least cover the costs and also at the same time generate profit for the firm.

Need help with your essay? Take a look at what our essay writing service can do for. Airline Industry Essay Examples. 31 total results. An Introduction to the Analysis of Yield Management The Importance of the Airline Industry in the Economy and a Look into Popular Airlines in the United Sates An Essay on the Airline Industry and the Need for Minimization of Costs.

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An essay on the airline industry and the need for minimization of costs
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