Discussion 3
Two major recessions have plagued the world this millennium. The Great Recession of 2008 was, at the time, the worst recession since the Great Depression of the 1930s. Many people lost their jobs and houses while others became uncertain about their financial future. Unfortunately, the pandemic-caused recession of 2020 was deeper and more damaging to the retail and services sectors including the airline industry. Use the theory of supply and demand to predict the effect of the 2020 recession on airline demand (the willingness and ability of people to purchase airline tickets), supply (the willingness and ability of airlines to provide flights), and price (the average price of an airline ticket).
Data Source
The federal government collects and makes an immense amount of data on the US economy available to the public, including large airline datasets. Having made your predictions or hypotheses, use the US airline industry data from the US Bureau of Transportation Statistics (BTS) to see if the industry reacted as you expected.
To obtain the data to test your predictions (hypotheses), find a BTS customizable data table following these steps: 1) Google Bureau of Transportation Statistics, 2) use the search box for Air Traffic, 3) select U.S. Air Carrier Traffic Statistics which will return a customizable table. (Note: The BTS occasionally changes the presentation of the data which affects the steps needed to find data. It may be necessary to modify this search slightly.)
Customize your data by selecting:
1. From 2019 until the end of the recession or to an endpoint of your interest
2. Domestic
3. Scheduled
4. Passengers, then select the statistics of interest (scroll to the bottom for selection criteria).
Prices
Prices are, of course, another piece of this puzzle. BTS provides a table of national fares. To find this data, use the BTS search box for Air Fares. Locate National Level Fares Since 1995. Again, the BTS occasionally changes the database names and files, so you may need to modify this search.
Discussion
Post your findings and explain your initial predictions.
Would either the supply and/or demand curves shift?
What is the predicted effect on the quantity of air travel and on the average price?
Illustrate your predictions with a supply and demand graph. Graphs are relatively easy to draw in MS Word; use INSERT/Shapes from the menu.
Then discuss whether the data supports your predictions for average airline price and quantity. Graph the chosen data with line graphs in MS Excel. The graphs can be copied and pasted into MS Word. You may wish to attach the Word document as your initial posting. A few airline terms will be helpful.
o Airline quantity supplied is usually measured in Available Seat Miles (ASM).
o Measures of the quantity demanded are Revenue Passenger Miles (RPM) and Enplanements.
Discussion 4
Choose one element of an archetypal low-cost-carrier business model from the list below. Explain how it reduces cost compared with a large international network airline. Why do global network carriers not incorporate this element into their business model?
Low-cost carrier business model characteristics (IATA, 2006):
Primarily point-to-point operations.
Serving short-haul routes, often to/from regional or secondary airports.
A strong focus on price-sensitive traffic, mostly leisure passengers.
Typically one service class only, with no (or limited) customer loyalty programs.
Limited passenger services, with additional charges for some services (e.g. onboard catering).
Low average fares, with a strong focus on price competition.
Different fares offered, related to aircraft load factors and/or length of time before departure.
A very high proportion of bookings made through the Internet.
High aircraft utilization rates, with short turnaround times between operations.
A fleet consisting of just one or two types of aircraft.
Private-sector companies.
A simple management and overhead structure with a lean strategic decision-making process
Reference
International Air Transport Association. (2006, July). Airline cost performance: IATA economic briefing (PDF)(IATA).
Discussion 5
As the CEO, what market structure would you prefer to operate under?
As a consumer, which market structure do you prefer?
Explain your choices.
Discussion 6
In the early 2000s, DHL expanded its worldwide air express package delivery service to the US market in direct competition with UPS and FedEx. After several years and more than one billion dollars in losses, DHL admitted defeat in 2008 withdrawing from most US markets while shedding some 15,000 US jobs. More than a decade later, Amazon Prime has entered the FedEx-UPS duopoly.
For this discussion forum, choose two of the following stakeholder groups, preferably with opposing views, and explain from their perspective why you oppose or support the entry of Amazon Prime into the US express package delivery
Use the order calculator below and get started! Contact our live support team for any assistance or inquiry.
[order_calculator]