The airline industry is extremely influenced by the elasticity of demand, externalities, wage inequality, monetary policies, and fiscal policies. The elasticity of demand is impacted solely on the current market conditions, and the consumer’s reason for travel. The September 11th tragedy has had a very damaging affect on the airline industry. It has impacted the fiscal and monetary policies, supply and demand, and it has created many problems worldwide with employment. The airline industry is perceived as being unpredictable because it is relies on the current market, and the market is always changing. Incidents such as inflation, oil prices and terrorist attacks seriously influenced the demand for airline tickets throughout the years. Competition from other airlines consistently affects the price of airline tickets because it allows the customer other companies to choose from. Alternatives are to travel by train, car, or avoiding travel whenever possible, and consumers have resorted to all of these substitutes during unstable times in our economy. The elasticity of demand is very much affected by the customer's purpose for travel. Airline customers usually fly for business or pleasure.
Airlines use a method of combining their income and inventory costs to establish ticket prices. While it is essential for this industry to focus on being profitable, the main focus is to increase the cost of the flight revenue. One huge factor that increases the cost of tickets is when the customer orders there tickets close to their departing date, when people wait to buy their tickets, the airline industry sees this as a risk. And since they need to make up for unsold seats, buying your...
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· The Baltimore Sun. (2008). Demand for jet fuel strains supply system -- Economy, Business and Finance, Volusia County, September 11, 2001 Attacks -- baltimoresun.com from http://www.baltimoresun.com/business/bal-bz.jetfuel11aug11,0,4909483.story
· Enberg, D (2005, Sept, 15). Why Do Airlines Go Bankrupt?. Retrieved May 17, 2008, from http://www.slate.com/id/2126383/
· Zabin, C. (1999, December). Retrieved May 18, 2008, from Living Wages at the Port of Oakland: http://www.iir.berkeley.edu/livingwage/pdf/portoak.pdf
· (2001). Transportation Security Fees. Retrieved May 18, 2008, from Transportation Security Administration Web site: http://www.tsa.gov/research/fees/passenger_fee.shtm
· FRBSF. (2002, January 18). Economic Letter. Retrieved May 18, 2008, from FRBSF: http://www.frbsf.org/publications/economics/letter/2002/el2002-01.pdf
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