...how the significance of economic factors can be seen to have influenced firms’ conduct and/or financial performance. Apply and reflect on economic ideas and theories. Demonstrate some specific examples of how economics can help us to understand the behaviour or well-being of firms as well as, if you wish, the limitation of economics. So that to end, you are being assessed less on coverage but more on application. How Economic Factors Affect the Aviation Industry Introduction The aviation industry is particularly susceptible to external economic factors because it affects and depends on a substantial number of industries. Also, because the industry involves operating between borders, then economic factors from other parts of the world other than the domestic market also affect it. Issues such as fiscal policies (both within and without the countries of destination), wage inequality and positive and negative externalities have a way of changing operations within this industry. How shifts and price elasticity of supply and demand affect the aviation industry Supply and demand price elasticity of airline carriers may vary depending on the nature of the industry. For new and emerging industries such as the Indian aviation sector, then price elasticity of demand and supply is near perfect. The number of transporters being added into their markets are largely affected by the nature of demand for the commodity the country underwent rapid economic growth in the late nineties...
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...Managerial Economics Term Paper DEMAND IN THE DOMESTIC AIRLINE INDUSTRY OF INDIA Submitted by: Akshata Shirodkar ePGP-02-002 This term paper explores the rational economics behind the demand and its affect on dynamic pricing in the domestic airline industry in India, where both of these vary often with time and units available. Based on the learning gained during microeconomics course, this paper analyses the current pricing strategies and norms practiced by the airline industry. Managerial Economics Term Paper Demand in the Domestic Airline Industry of India CONTENTS 1. INDUSTRY OVERVIEW ............................................................................................................................................... 3 1.1 MARKET SHARE ................................................................................................................................... 3 1.2 INDUSTRY GROWTH ............................................................................................................................ 4 1.3 CAPACITY VS DEMAND ........................................................................................................................ 5 2. AIRLINE INDUSTRY CUSTOMERS ............................................................................................................................... 5 2.1 CUSTOMER SEGMENTS ..............................................................................................................
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...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...
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...Ryanair Strategic Analysis Introduction Ryanair is one of the biggest airlines of Europe that offers the lowest fares, and has set up 729 courses from 32 bases. It is the largest airline globally with regard to passengers internationally, but not in terms of profits. A significant growth has continued since its inception Ryanair, which was approved by the European aviation industry liberalization in 1997 for him. The Stansted Airport in London his main base but the headquarters of the company are located in Ireland at Dublin Airport. In the year 2009, The Michael O'Leary leader of the body began to provide technology for mobile phones in their plane. This allows passengers to use their phones on airplanes, but at higher cost. Ryanair has tried to buy Aer Lingus twice, in 2006 and 2008, but failed both times. This paper discusses the Ryanair's sustainability strategy and how it impacted the company in the near-term future. Ryan air's Current Strategy The purpose of Ryan Air is to establish itself as the leading low-fare airline in Europe, willing to travel by improving and strengthening the offers by starting its low fares services. Ryanair aims to offer preferential tariffs to develop expanded traffic, while at the same time maintaining the relentless focus on cost containment and operational efficiency. Ryanair offers cornerstone of a sense, therefore, the elimination of the smallest of all obligations of the host of tourist services to Ryanair, despite the tariff...
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...Ryanair – The low fares airline: Whither now? Main Problems Ryanair’s growth rate is affected by macroeconomic factors such as the recession, as seen in 2010 when Ryanair saw a 200% increase in profit and traffic growth, as the low fares became attractive for those suffering from the current climate. Uncertainty still remains regarding the economic climate; problems would arise if it continued, as passengers would reduce spending restricting the company’s passenger volume growth. If the economic climate was to grow, business and leisure passengers may choose to pay more and travel with a full service airline, this could consequently result in demand for low-cost flights to drop. One of the greatest concerns is fuel prices the ability to estimate future costs are limited due to unforeseen natural disasters and conflicts. Rising oil prices have had an impact on Ryanair, in 2008 Ryanair’s profit before tax was £439 million which fell down to £181 million the following year due to an increase in fuel costs by £100 million. As Ryanair’s declaration of ‘no fuel surcharge ever’, and its reliance on low fares limit its capacity to pass on increased fuel prices will inevitable result in low profits or ticket prices will have to rise. Ryanair faces stiff competition in Europe from a number of airlines including, BritishAirways, WizzAir, SkyEurope and EasyJet. In this competitive market airlines will need to adopt new strategies to avoid losing market share. Rivalry among existing...
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...Economic Analysis on Budget Airline—Taking Ryanair as an example . 1. Introduction Ryanair Ltd. is a pioneered Irish low-cost airline, located in Dublin, Ireland. In 2013, Ryanair was both the largest European airline by scheduled passengers carried, and the busiest international airline by passenger numbers, according to its annual report in 2013. From its official website, data shows that Ryanair operates more than 1,600 daily flights from 72 bases, connecting 184 destinations in 30 countries and operating a fleet of more than 300 new Boeing 737-800 aircraft. The latest news about Ryanair could be found on its corporate website (http://corporate.ryanair.com), saying that “Ryanair has recently announced firm orders for a further 280 new Boeing 737 aircraft, as well as options for 100 more Boeing 737 MAX 200s, which will enable Ryanair to lower fares and grow traffic from 90m this year to over 150m p.a. in 2024. Ryanair currently has a team of more than 9,500 highly skilled aviation professionals, and has an industry leading 30-year safety record”. It is a very typical case for economic analysis. The tragic news about the wreckage of Airasia QZ8501 hit the world on 28th Dec 2014, which put the budget airline in the front of the storm again since it is not the first news about airline crash in 2014. Budget airline is elastic in terms of the speed to repose to the demand change and it makes efforts to sell out its all seat using differentiated...
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...MALAYSIA AIRLINES SYSTEM AND AIRASIA AIRLINES COLLABORATION TAKES PLACE. TABLE OF CONTENTS QUESTIONS 1:- Analyze the current situation facing MAS and AIRASIA using the internal and external strategic environmental analysis model. Discuss what aspects and why did their collaboration take place? INTRODUCTION Various industries, specifically in airline business are attempting to improve their services to draw new passengers and travellers and to retain old passengers and travellers, and this objective is part of their business as well as their marketing model. In order to adjust with the stiff competition in the airlines business, airlines industries tend to come up with various businesses models and model to be competitive. Additionally, because of increasing competition among substitute industries, firms like AIRASIA, AIRASIA X and MAS. Airlines adopt strategic model to marketing and expend their market reach as well give better and satisfying service delivery to their target market. To sustain the market position as well as advantage business market model to management and marketing are being developed and utilized. MAS, AirAsia share swap not a win-win deal From its inception, it has not been plain sailing for the planned share swap between two of the country's most bitter airline rivals — Malaysia Airlines (MAS) and AirAsia — given the many issues involved...
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...RUNNING HEAD: THE AIRLINE INDUSTRY The Airline Industry Name College Table of contents Abstract 3 Introduction: 4 Products and services: 4 Organization: 4 Major players in the airline industry: 5 Economic impact of the airline industry: 8 Employment within the industry: 9 Key trends in the airline industry: 9 - Economic forces: 9 - Technological forces: 11 - Socio-cultural forces and political-legal forces / Government Regulations 13 Logistics and supply chain factors 14 Porter’s Five Forces Analysis: 16 Strategies used by airlines: 17 Expected Entrants: 18 Conclusion and Recommendations: 18 List of Abbreviations 20 Appendix: 20 References 21 Abstract The US airline industry is one of the key sectors of the country’s economy. Employing over ten million people, it contributes up to half a trillion dollars in annual revenues (about 5% of the US GDP). In recent years, the industry has been faced with major challenges arising from its external environment. Some of these include rising fuel prices and the global economic recession. As a result, growth in the industry has significantly slowed down with the ATA estimating that by the end of 2008 the industry had lost between $9 and $24 billion. With high intensity of industry rivalry, high supplier bargaining power, low threat from new entrants, low threat of substitution, and low buyer bargaining power; the industry’s attractiveness can be described as moderate. To be successful...
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...Ryanair – The low fares airline: Whither now? Main Problems Ryanair’s growth rate is affected by macroeconomic factors such as the recession, as seen in 2010 when Ryanair saw a 200% increase in profit and traffic growth, as the low fares became attractive for those suffering from the current climate. Uncertainty still remains regarding the economic climate; problems would arise if it continued, as passengers would reduce spending restricting the company’s passenger volume growth. If the economic climate was to grow, business and leisure passengers may choose to pay more and travel with a full service airline, this could consequently result in demand for low-cost flights to drop. One of the greatest concerns is fuel prices the ability to estimate future costs are limited due to unforeseen natural disasters and conflicts. Rising oil prices have had an impact on Ryanair, in 2008 Ryanair’s profit before tax was £439 million which fell down to £181 million the following year due to an increase in fuel costs by £100 million. As Ryanair’s declaration of ‘no fuel surcharge ever’, and its reliance on low fares limit its capacity to pass on increased fuel prices will inevitable result in low profits or ticket prices will have to rise. Ryanair faces stiff competition in Europe from a number of airlines including, BritishAirways, WizzAir, SkyEurope and EasyJet. In this competitive market airlines will need to adopt new strategies to avoid losing market share. Rivalry among existing...
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...analysis model. Discuss what aspects and why did their collaboration take place. Answer Background to AirAsia A ‘no-frills’ airline is defined as one “That uses charter and/or scheduled flights to offer bargain-basement fares. Budget airlines usually land at and take-off from secondary airports, do not provide in-flight meals or refreshments, and may not even offer numbered seat allocation. Their ticket prices are fixed and non-refundable in case of a cancellation or no-show”. AirAsia is one of the fastest growing airline companies in the world, with a reputation as a low-cost, ‘no frills’ airline. It was originally a government owned business; yet, due to heavy debt, it was bought by former Time Warner executive Tony Fernandes in 2001, and this is where the real story begins. Their vision, under the slogan "Now Everyone Can Fly", is “To be the largest low cost airline in Asia and serving the 3 billion people who are currently underserved with poor connectivity and high fares”,(ii) and their mission is, under the banner of 'Affordable Airfares', “To attain the lowest cost so that everyone can fly with AirAsia,” without any compromise to Flight Safety Standards, as well as, creating a worldwide recognizable brand with a ‘family’ atmosphere within working conditions for employees. (iii) These statements clearly show AirAsia’s value. Cost advantages through operational effectiveness and efficiency coupled with strong brand marketing, go straight to the customer. ...
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...External Environment analysis Summary There have been turbulent times for the Australian airline industry. It has been confronted with the marked decline in international tourism in the aftermath of the September 2001 terrorist attacks in the US and, more recently traffic loss attributable to war in Iraq and severe acute respiratory syndrome (SARS) outbreaks in part of Asia and Canada. And off course, the global financial crises in 2008. While the domestic airline industry is largely deregulated, Australia’s international airline industry remains quite deregulated at the commonwealth level, as it is subject to the detailed capacity controls of airline service agreements (ASAs) that underpin the industry. These agreements control the amount of airline seat capacity which may be deployed on scheduled services over individual country to country routes; they are general of treaty status and are enforceable in international law. In another move to free up the international side of the industry, the Commonwealth adopted a policy of allowing more than one Australian owned international airline to operate scheduled services to and from Australia. However the September 2001 failure of the Ansett Airlines group brought an end to Ansett International's short-lived operations. Although Qantas is once again the only Australian flag carrier, Virgin Blue has signalled its interest in operating in some international markets in Australia's immediate region, such as the trans-Tasman market...
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...1. Introduction Today’s world cannot be imagined with airline industry as this is moving industry is providing pace in the transportation of good and passengers with different types of benefits. These benefits are being offered to many other industries and societies as well. Due to its fast service facilities, this industry is playing a critical role in the development of world economy. It is to be believed that the concepts of internationalization and globalization have been possible to execute due to the immense service facilities from the airline industry. By means of this industry, many business organizations around the globe have been able to meet their objectives. This report is carried out to analysis the both micro and macro environments of the Emirates Airlines with the help of different framework so that the standing of this company can found out in the industry in comparison with the other competitors. To have clear understanding of its current position, discussion will be made on the STP strategy of the company along with current CSR strategy of the company. On the basis of the finding from these analysis, strategic planning will be developed for the company along with some recommendation will be produced for the company to get the best out from the current CSR strategy. 2.0 Marketing Audit of Emirates To have clear idea about the effectiveness of current marketing strategy of the organization, the most effective ways is to do the situational analysis. Here...
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...in establishing own business by renting out condominiums in Hawaii. Then he established his own travel agency and began chartering flights from Salt Lake City to the islands. He was co-founder with June Morris of charter airline Morris Air, a low-fare airline. From 1984 to 1988, he was an Executive Vice President of Morris Air. From 1988 to 1994, he was the President of Morris Air Corporation. In 1993, Morris Air was then acquired by Southwest Airlines for $129 million. For 5 years, he worked on the Executive Planning Committee at Southwest Airlines. By 1994, he left Southwest Airlines after signing a five year noncompeting agreement. With his experience of aviation, he established a company named Open Skies which a touch screen airline reservation and check-in systems company that acquired by Hewlett Packard in 1999. At the same time, acted as a consultant to another start-up airline, WestJet. The BlueJet was founded by entrepreneur David Neeleman in August 1998 in Delaware under the name of “Newair”. JetBlue is David Neeleman’s third successful launch in the aviation business. As an ex-Southwest executive, he established JetBlue as a low cost airline company. His main goal was to bring people back to air travel by offering high quality service with low...
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...THE AIRLINE INDUSTRY: Trends, Challenges, Strategies John Wensveen, Ph.D. Dean, School of Aviation Dowling College New York, USA www.dowling.edu President, Airline Visions www.airlinevisions.com The University of Sydney Faculty of Economics and Business Leadership and Policy Seminar Series Sydney, Australia 23 February 2010 Presentation Objectives • Provide background on the global industry • Present a regional analysis • Discuss current and future evolvement of the industry (trends) • Discuss challenges and strategies impacting the industry • Discuss the new breed of airlines • Discuss why airlines fail and how to achieve success Background Section 3 Stages of Development Impacting the Airline Industry • • • • Regulation Liberalization Deregulation “Re-regulation” Phases of Industry Restructuring (resulting from Deregulation / Liberalization) • Expansion • Consolidation • Concentration Past, Present and Future Trends The Global Airline Industry 2012 2010 2008 Time 2006 2004 2002 2000 1998 Survive Adapt Recover Rethink State of Industry “Scenarios” • • • • • SARS 9/11 War Financial Crisis of 2008, 2009, 2010… What to prepare for… – – – – Globalization Change in international political landscape Distribution of natural resources (oil, gas, water) Internal conflicts (shifts in power) and unintended consequences and unintended consequences of good intentions Public and international perception War Terrorism Continued financial issues – – –...
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...International Business & Economics Research Journal – December 2005 Volume 4, Number 12 AirAsia In The Malaysian Domestic Airline Market: Empirical Analysis Of Strategy Mok Kim Man, (Email: mkimman@ums.edu.my),Universiti Malaysia - Sabah, Malaysia Jainurin Bin Justine, (Email: Jainurin@ums.edu.my), Universiti Malaysia - Sabah, Malaysia ABSTRACT This paper will examine the results of the strategic actions of AirAsia in the Malaysian domestic airline market. Firstly, the paper will provide a general background of the airline industry, in particular the Malaysian domestic airline market and a summary of an analysis of the industry using Michael Porter’s Five Forces Analysis. Secondly, the paper will provide a brief background of AirAsia and Malaysia Airlines. Thirdly, the paper will analyse the results of AirAsia’s strategy vis-àvis operating and financial performance. Finally, the paper will conclude a summary of AirAsia’s achievement of the past and present and prospect for the future. INDUSTRY BACKGROUND Airline Industry The airline industry is very competitive with existing airlines having to compete with each other as well as with new entrants from time to time. For every success such as Singapore Airlines and Southwest Airlines, there are plenty of failures such as Pan Am, TWA, Swissair, Sabena, Ansett, People Express, Go, Buzz and so on. Major Characteristics There are three major characteristics of the airline industry namely its product nature, its expenditure...
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