MGMT 420 Discussion 5.2.docx - 5.2 Discussion Demand and Capacity Please provide a comparison between Delta and American Airlines regarding concerns of

MGMT 420 Discussion 5.2.docx - 5.2 Discussion Demand and...

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5.2 - Discussion: Demand and Capacity Please provide a comparison between Delta and American Airlines regarding concerns of capacity growth exceeding demand. Both American and Delta Airlines face concerns over whether capacity growth will exceed demand, resulting in lower passenger revenue per available seat mile ("PRASM"), and ultimately decreased revenue overall. Both Airlines cite capacity exceeding demand as a factor in their reduced revenue last year in comparison to previous years. In Delta Airlines annual report the write “industry capacity growth outpacing passenger demand” In the pacific they cite “lower international fuel surcharges and yield declines resulting from industry capacity growth between the U.S. and China” (2017). Boeing describes the considerations for whether capacity vs. demand is balanced as whether indicators are within their “nominal ranges (defined as 25th to 75th percentile of year- over year variations)” (Mack, Jiang, & Peterson, 2013). That is a fairly large range within which
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