Culminating project week 2.pdf - ECONOMIC FACTOR EVIDENCE 1...

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ECONOMIC FACTOR: EVIDENCE: 1. Oil Prices The extent to which the declining fuel cost affects profitability in the airline industry depends on the proportion of fuel cost in the total airline industry's revenues. In 2014, jet fuel costs accounted for almost 27% of the airline industry's revenue, while the profit margin was 2.7%. If there is an immediate pass-through of fuel costs savings to the airline industry, the 6.4% decline in jet fuel costs would result in the profit margin improving from 2.7% to almost 4.4% (0.27*0.064 + 0.027). 2. Cargo Freight Industry After the global financial crisis, international trade seemed to go through a structural change. Businesses started to shorter their supply chain and started on-shoring production and protectionism took over in a the airline industry. Since then, international trade has only grown at half pace, which has clearly limited the opportunity for air cargo. 3. European Aviation Safety Agency The safety regime that underpins everything, from parts, planes, pilots to maintenance is
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