The Impact Of Domestic Aviation Industry On The Domestic Airline Industry

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According to Liu (2012), the U.S has the biggest economy in the world and its 17% proportion of the global GDP is testament to that. The U.S economy is comprised of various sectors and one of the most vital sectors is the aviation industry, which falls under the transportation and logistics sector and is a major source of growth for the U.S economy in terms of revenue, capacity building and human development. This highlights the importance of the domestic aviation industry, and any factors that affect this industry are bound to have effects on the entire economy. The study aims to understand how changes in fuel prices, especially increases, have an impact on the domestic airline industry. The impact of the fuel price can be identified in various aspects such as the jet fuel consumption capacities, customer levels, profit margins and the growth of the airline industry. However, for this study, an analysis of how fuel price increases have impacted on the domestic airline industry in terms of operating income will be conducted. In order to do so, I will employ a regression model with a dependent variable (operating income for the domestic airline industry) and an independent variable (fuel prices) in the period between 2005 and 2014. I believe that the research will provide the necessary information to better understand the aviation industry as a whole and the relationship between fuel prices and the industry. The information can also be used by government agencies in a
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