Economic Impact on Aviation Industry

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The economic situation has proven to have impacted the airline industries in many ways. For instance, changes in price of an airline industry may also change the demand and elasticity of the services offered by the airline company. In this regard, the outlook of the airline industry can still be considered to have strong growth in spite of changing economic conditions. For airlines, the economic situation for prices, wage inequality and even monetary aspects will hold many challenges and only those airlines which continue to tackle their costs and enhance their services will remain in the market. The rapid development of the global trade in terms of goods and services as well as the foreign direct investments has also influence the way…show more content…
The factors that affect the airline industry are the choice of the consumers and the capacity to meet the rise in demand, because of their low price. For instance, the existence of low-cost airline also affects the current market of the airline industries. Like the existence of Air Asia. Air Asia is a pioneer when it comes to low-cost traveling and the first industry in the region to implement ticketless travel and unassigned seats. Nonetheless, as of February 5, 2009, Air Asia has implemented allocated seating for their guests across all their flights which include Thai Air Asia and Indonesia Air Asia. The main base of Air Asia is the Low Cost Carrier Terminal located at the Kuala Lumpur International Airport. The company aims on enabling more people to travel by air by providing them hassle-free, no frills and low-cost airline services. Accordingly, the advent of aviation deregulation has been able to provide opportunities to different airline industries and started low-fares operations in 1990. Because of this, low cost carriers has been developed in Asia since 2000 and industries like Air Asia has been able to grab this opportunities. Accordingly, low-cost carrier model is very applicable in the global market (Klemperer, 1995), even though deregulated market are most appropriate for its faster spread. It can
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