Eco 305 - Eco 305 Airlineresearch G Francis T Airline...

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Eco 305 – Airlineresearch G Francis T Airline Research Final ECO 305 My chosen industry for this research paper is the airline industry. The first airline was a German airship that was founded on November 16, 1909. In the mid 19th century Americans attempted to start an airline focusing from New York to California. During this time period airlines were used to carry bags or mails and packages, however Ford Motor Company constructed a plane to carry people and became the first successful to carry 12 passengers. Over the years the airline company has expanded and developed greatly. This research paper will explain this industries elasticity of supply and demand, the negative and positive the industry produces. It will also discuss how wage inequalities are measured, in addition to monetary and/or fiscal policies that have affected the industry. If one takes into consideration that large well-known airline companies such as American Airlines, Delta or Continental were initially the only carrier for customers to fly on then they would be able to set the price that would generate the highest amount of revenue possible. Now what would happen if a start-up airline offers a lower rate or some other benefit? The question of customer preferences now comes into play. Everyone is attempting to save money especially with how the economy is right now, so this no longer is a question of if people will try the new airline, it is a question of how many people will try the new airline? This question could of course be answered in a few different ways and would depend on a few factors. Loyalty can play a big role in this question, because how many people are actually loyal anymore. I read that those who were brand loyal to a certain airline for what ever it may be are now not as loyal and are choosing to go with who offers the better rates right now because of how our economy is doing. If the new airline can sustain low prices, a good reputation, and quality services for a lengthy time frame, they will increasingly draw a larger market share. Now obviously as the number of airlines increase, so does the pressure of decreasing ticket prices in order to attract a greater market. Many times this can lead to “cutthroat competition”. http://www2.units.it/~orts/ricerca/papers/CPU_Toulouse_03.pdf This practice is the result of airlines trying to “under price” each other in order to attract more customers. For example Jet Blue offered not only great low prices but in addition advertises the extra leg room that other airlines only have in
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Eco 305 - Eco 305 Airlineresearch G Francis T Airline...

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