Trident University International
Williams Anaab
Module 1 Case Assignment
(Airline Market)
MKT 501: Strategic Marketing
Dr. Cathy Cameron
24 November 2013

Introduction In recent years, affected by natural disasters, emergencies, oil price volatility, the international financial crisis and other factors, especially the oil price, that is the most major factor of the airline cost, and still increasing, made the airline industry’s production decline sharply.
The main source of profit for the airline industry are passenger and cargo revenue primarily, in addition, the fuel surcharges and exchange gains constitute the major part of its profits. According to these factors, airline companies will make an expectation development whether they can benefit or loss, and they will expect how much they will benefit or loss. However, the question that over the past 10 years, airline has lost $50bn, but it is less than the expected losses shows that the expect losses larger than actual losses

Key External Factors

The key external factors that affect the passenger airline industry are the economic growth, level of employment, disposable income, fuel prices, political stability, and trade regulations.

If there is slower economic growth the business activity decreases and business traveling decreases. Similarly, lower disposable incomes means people cut down on traveling and this affects the passenger airline industry. When there is political instability, people cut down on traveling to those areas. With fuel price increases, the costs go up leading to upward fares. The airline suffered the unstable oil prices’ negative effect, surge in oil prices lead to airlines’ cost increase sharply. When the oil prices fell sharply due to price volatility has led to airlines hedging done by the depth of lock-in. So many airlines substantial