The Price Elasticity Of Demand For Airport Costs

The performance as well as stability of the government in relation to the policies influencing business has great implications on the operations of Flight Centre Organization in the case of Australia. For instance, in the case of 2000, the introduction of tax on services and products affected the operations of Flight Centre because of incorporation of the tax of about 10 percent in their prices. This is critical in the determination of new pricing mechanisms with the aim of enhancing revenues and profits at the end of the financial year. Instability reduces the operations of the organization due to insecurity of the passengers and investors as they seek to address and

The sector employs more than 3 million people. Prior to the 1990’s, the air transport industry in Europe had been traditionally highly regulated and dominated by national carriers and state owned airports. Since then a single market for aviation has been created. The single market has seen the removal of all commercial restrictions for airlines flying within Europe. These include restrictions on routes, number of flights and the setting of prices.

Some governments provide subsidies that provide an unfair advantage and prices lower than market conditions which affects the functioning of airline industries directly and Global

Airports are the heart of travel for many to conveniently travel from one location to another, whether the distance was 50 miles or internationally. With the advancements in technology, it has provided the ability for individuals to have access to parts of the world that once only been available to a select few. With such technological advances, our society will not be able to rewind back to

The National Plan of Integrated Airport Systems (NPIAS) forever changed the way airports were classified when it was unveiled in 1982 (Wells, 2011). The aviation industry had grown significantly since deregulation went into effect, and a new system needed to be put in place that would distinguish airports with incredible growth and expansion from those that served niche markets or flight training (Wells). Under the NPIAS, airports were broken down into three major categories: commercial services airports, reliever airports, and general aviation airports (Wells). The following paragraphs describe the three categories of airports that were created by the NPIAS, and conclude with an airport that fits into that particular category today.

Discussion 2, Barriers to Entry. Analyze the major barriers for entry and exit into the airline industry. Explain how each barrier can foster either monopoly or oligopoly. What barriers, if any, do you feel give rise to monopoly that will allow the government to become involved to protect consumers?

As the research data was collected, especially with the case study comparative analysis’ between the Texas airports, the statistical occurrences began to detail flight/economic improvements, not only at Love Field, but also at Austin, DFW, Houston, and San Antonio. As seen by the data below all the major airports saw an increase in airline ridership, flights and overall operations.

This results in unused capacity and stronger competition. Therefore it might be difficult for the smaller companies to survive.

Furthermore, in this article will be discussed the main issues related to the possibility of increasing airport taxes to be determined by the Hong Kong authority. As Hong Kong International Airport (HKIA) is one of the busiest airports and the government cannot possibly build new airport due to the area limitation of Hong Kong, the authority will build an additional runway (3rd runway), and it will impact to the airport operational costs. Finally, the Hong Kong Government will raise taxes to the airlines, and it will be a problem for HK Express as the only low-fare airline in Hong Kong.

Although there is no doubt that the presence of an airport has greater positive impacts on a surrounding community from an economic standpoint, the presence of an airport, much like any large industrial complex, unfortunately impacts the community and surrounding natural environment in what many consider a negative manner. These effects are a result of activity whose sources is the airport itself and of vehicles, as well as both aircraft and ground vehicles, which travel to and from the airport (Alexander T. Wells, 2004).

Another emerging trend in the past five years has involved the progress made on open skies agreements between the United States and other countries. Open skies agreements serve to liberalize Orlando International Airport transport markets between the two signing countries or parties in the agreement. These agreements remove government restrictions, such as limits to the number of flights any one airline is allowed to operate per week between countries. The removal of these limitations has opened some routes up to increased competition, by allowing Orlando International Airport to fly more frequently and making these routes more accessible. Orlando International Airport could not previously justify the capital expense of operating on routes with limited flights are now able to profit on routes with high demand.

A drop in fares has been the best result of the Airline Deregulation Act of 1978. It has been the impetus for the increase in the number of flights, which in turn has spurred a drive for greater safety in airlines. But with the current airline market, this development has given us one negative. Since ticket prices have dropped to new lows, the realities of an industry which operates on such economies of scale dictates that only a few competitors have the capacity to operate within the market. This is not the desired effect of either political side on this issue, but it is an economic necessity with the environment that has been created, very similar to that of public utilities and phone companies.

In the long run however, if there is persistent low demand, there can be job reductions in the airline industry and even the number of planes can be changed. So there is inelastic price elasticity of supply in the short run. This leads the airlines to reduce rates they charge to passengers when there is a lean season. In the long term the price elasticity of supply is elastic. The long term in this industry is defined as the time taken to reduce the fleet of planes and the time taken to re structure the workforce.

Fiscal policies of the government can have significant impact on the industry’s performance. Governments generally impose high taxes on airline industry, which is passed on to the customers in the form of higher air fares, alternatively airlines reduce the number of staff is cut down costs. An example is United Kingdom, when the UK government imposed high taxes on the aviation industry, the number of cargo operators reduced sharply in order to reduce costs (My-Efficient-Planet, 2010).

A survey completed by the Government Accounting Office of the 50 busiest commercial airports, accounting for 80% of air carrier operations in 1998 revealed that noise, water, and air quality were the top three concerns. About 90% of the management of these airports thought that balancing environmental concerns with airport operations was much more or somewhat more difficult than it was in 1989. Because 13 of these facilities were at or above capacity with another four considered to be at capacity in