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Essay / Research Paper Abstract
This 7 page paper presents an economic profile of the airline industry, discussing how different factors impact on the airline industry. The factors discussed include shifts and price elasticity of supply and demand, positive and negative externalities, wage inequality as well as monetary and fiscal policies. The bibliography cites 5 sources.
Page Count:
7 pages (~225 words per page)
File: TS14_TEecairline.rtf
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Unformatted sample text from the term paper:
last few years. The economy and leisure segment is highly elastic while the business segment is not as elastic as demand does not fall to the same extent as the
economy passengers when the prices increase. Prices have a great influence, but so do other factors, such as disposal income, which is also impacted by monetary and fiscal policies,
increasing interest rates may result in a decrease in demand for air travel as the levels of disposable income drop. There are also other influences, liberalisation has increased competition and
reduced abnormal profits, but other events, such as terrorism have also acted as a deterrent. Overall, the airlines have to deal with a large number of influences, many of which
are external to the actual operations. Text Traditionally the airline industry has been one where there are low profit margins and an industry where some sections of the market
have been very price sensitive. Some segments of the industry may be seen as offering a highly elastic product, where a small change in price can result in a big
shift in demand, if the price increases then the demand will decrease at a greater rate, if the price decreases then there will be a disproportional increase in demand, increasing
the overall revenues. In the last few decades there has been an increase in the demand for air travel, this is due to falling process and social acceptance. For
this we can look at supply and demand and elasticity. One reason that air flight has become more popular has been due to the lower prices associated with travel.
Any demand curve will be impacted by the level of cost in proportion to their disposable income. The lower the cost in relationship to the disposable income the more affordable
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