MBAA 523 Advanced Aviation Economics – midterm

Examination: Midterm

Question 1

Online Travel Agencies (OTA) such as Expedia, Priceline, Opodo, and Orbitz make airline ticket price comparison fast and easy? Use the Five Forces Model to analyze the effect of OTAs on airline industry competition, prices, and profitability. What is the implication for industry profitability?

question 2

Discuss the factors that drive global airline supply and demand.

question 3

Airline passengers are broadly segmented by purpose of travel. Characterize the two major segments by price elasticity of demand. What is the implication for the price each segment will pay for air travel?

question 4

An airline loses money on one of its routes but has decided to continue to provide service. Could this decision be economically rational in the short-run? In the long-run?

question 5

Explain how higher utilization of assets such as aircraft, gates, and pilots lowers the cost per available seat mile (CASM) or cost per available seat kilometer (CASK).