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Here are some of these characteristics.
The high levels of capital intensities are associated with airlines. The range of various equipment required to run an airline cannot be compared to the budgeting of a regular size office. We have basic equipment like the ticketing computers, scanning equipment, and other necessities ranging all the way to the planes themselves and the maintenance equipment (Gordon, n.d.). The industry then proves to be a capital-intensive business when you keep in mind the cost of all these fundamental airline equipment. Therefore, most airliners will end up procuring this equipment through loans or even hiring them from other companies.
Airlines are also characterized by a high level of labor intensity. For a standard airliner to function well, it will need to hire a number of highly skilled personnel to make it work. This skilled personnel is inclusive of the pilots, flight attenders, plane mechanics and engineers, baggage handlers, security officers, the catering department, managers, accountants and this list has also included lawyers of late (COMPANY BRIEF: Airlines, 2008). All these laborers, as they might be termed as, require to be paid, and as we all know, skill does not come cheap. This character associated with airlines has a great economic implication in the industry.
Airlines are also characterized by their nature to be seasonal. This translates to just that, ‘seasons’. It is known that most of the worlds’ masses travel a lot particularly during the summer season. This is because most of them are going on vacations, which create what can be termed as a ‘good season’ in the airline industry (Borenstein, 2011). The winter season, on the other hand, does not involve a lot of traveling leading to a notable decrease in the market of the airline industry. These seasons create an
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It is realized that proper leadership coupled with good business strategies has enabled the airline to become one of the greatest players. Despite the turbulent nature of the industry, Continental has managed to pull through these challenges and gain a very respectable position and maintain a large customer base.
United States offers an expansive market with numerous niche sub-markets which have many Americans who prefer commercial air travel mainly because of time and cost related factors. Low profit margins and stunted growth are the duplicated scenarios in the American airline industry but one notable airline, Southwest Airlines, has defeated the odds in this arena to succeed even where all the rest seem to have failed.
Allegiant Airline is a company based in America; owned by Allegiant Travel Co., however, before acquiring the name Allegiant Airline, the company formerly went by the name WestJet Express when its founders started it.
Furthermore, the hub-and-spoke system as well as costly reservation system along with price wars and heated competition all made it difficult to fragment the network of airlines. However, owing to deregulation and the resultant fall in fares the industry saw an influx of a host of new entrants, including Southwestern Airlines (Inkpen 1).
According to the report Delta Air Lines pays their employees in home currency, whereas the other expenses like supplies, rent and landing fees are paid in local currency. Again fuel which is a major expense in airlines industry is paid in dollars. The main challenge for the company is to adjust the income and expenses while operating in different currencies.
The quality of the product should always be of high standard. The financial activities of the company should be checked from time to time so that any fraud committed can be easily detected. Let us look at two companies Enron and WorldCom that have collapsed due to mismanagement of funds.
The author of the paper comments on the services provided by Smart Airlines. Namely, it is mentioned that Smart Airlines will be a national carrier whose mission is to connect the United States and the rest of the globe. Besides, the middle-sized carrier will operate with profit while utilizing flight safety, as well as customer satisfaction with the quality of services.
‘Emirates’ is an airline which is based in Dubai, United Arab Emirates (UAE). It is the largest international carrier in the world. ‘Emirates’ is also recognized for the biggest airline in terms of fleet size passengers’ carried and revenue in the Middle East.
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