JEREZ_AMSYAR_CH6.docx - 1 Jerez Amsyar 2390191 BSAB415(Airline Management Q How might a struggling airline raise needed cash to support its operations

JEREZ_AMSYAR_CH6.docx - 1 Jerez Amsyar 2390191...

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1 Jerez Amsyar 2390191 BSAB415 (Airline Management) Q) How might a struggling airline raise needed cash to support its operations and/or growth? A struggling airline can increase its anciliary / non-aeronautical revenues to help them regain profitability. For instance baggage and in-flight service fees are widely used by almost all airlines in the world. On the other hand, strategies such as fuel hedging may help airline save money on expensive fuel in order to reduce cost and maintain profitability.
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2 Q) How do the factors in the airline profit equation interact? Operating Profit = Revenue – Operating expenses - High Yield is not desirable if ALF is too low; in general, Yield is a poor indicator of airline profitability - Low Unit Cost is of little value if Revenues are weak - High ALF will not tell us that profitability is high, it could also mean that fares are low Airline profit maximizing strategy is to increase revenues, decrease costs, but the above terms are interrelated.
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  • Fall '16
  • Kelly Lawton
  • Economics, Avianca, Yield management

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