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Economic Chartacteristics of the Airlines - Research Paper Example

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Airlines act as transportation backbones that have a capacity to connect countries and continents all over the globe bringing together families,…
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Economic Chartacteristics of the Airlines
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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 ...Download file to see next pagesRead More
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