Air Carrier

Only available on StudyMode
  • Download(s) : 1999
  • Published : May 7, 2011
Open Document
Text Preview
AIR CARRIERS

Question 1:  What is the major advantage of air carriers?  How does this advantage impact the inventory levels of those firms using air transportation?  Explain how this advantage relates to the choice of modes when choosing between air carrier and other modes of freight and passengers transport.

SPEED

 How does this advantage impact the inventory levels of those firms using air transportation?

Lower inventory cost Lower related logistics cost Higher variable cost

 Explain how this advantage relates to the choice of modes when choosing between air carrier and other modes of freight quality of carriers • High availability of Transit Time/ Speed of Service service Limitation of the actual systems of tracks and rails • Routes, traffic lanes, Shorten the transit • High speed of service (for both and time passengers transport passenger and freight)

• High-valued products Type of freight

• Heavy-weight • High-volume • High-density • Low-value commodities

• High-value cargo • Perishable • Time-sensitive • Temperature controlled goods

4 / …

Question 2:  What is the role of government in air transportation? Include both economic and safety regulations.  How have regulation changes in USA affected the competition between the air carriers.

Economic regulations:
Price regulation Rate-ofRate-of-Return regulation Entry and Exit regulation

Safety regulations:
Licensing personnel Certification of aircraft equipment

How have regulation changes in USA affected the competition between the air carriers.

Question 3:  Discuss the length of haul and carrying capacity of the air carriers.  Explain how they both favor and hinder air carriers from a competitive standpoint.

Discuss the length of haul and carrying capacity of the air carriers.  Avg. freight haul length = 1400 miles (2003)  Avg. passenger haul length = 1000 miles (2003)  Average Capacities Wide-body, 4-engine jets + Passengers: avg. of 375 + Cargo: avg. of 90-100 tons + Combined: reduces cargo capacity to about 50 tons Regular-body, 4-engine jets + Passengers: average of 290 + Cargo: 35-40 tons + Combined: reduces cargo capacity to about 20 tons

 Explain how they both favor and hinder air carriers from a competitive standpoint.

Favor Hinder

Question 4:  What is the cost structure of the air industry?  How does it compare with other modes? modes?  How does this affect pricing, particularly for passengers? pricing,

Fixed costs: 20% of total operating costs Equipment: + Types of vehicles and terminals (airports). + The air carriers’ terminals are financed by a government entity + The carriers pay for the use of the airport through “landing fees”. Technology: + Airlines have capitalized on new equipment technology to improve their operating efficiency and to expand capacity.

 Variable costs: 80% of total operating cost •Fuel: Roughly about 10% of operating costs The planes' consumption of fuel per hour

Model B747 DC-10 B 727 DC-9

Seats 367 286 148 101

Fuel (Gallon/Hour) 3,411 2,405 1,289 826

 Variable costs: 80% of total operating cost •Fuel: Roughly about 10% of operating costs The planes' consumption of fuel per hour

 Variable costs: 80% of total operating cost •Fuel: Roughly about 10% of operating costs The planes' consumption of fuel per hour
Replacing smaller planes on low-demand routes

Increase in fuel costs

Using more fuelefficient planes

Eliminating service completely on other routes Commuter lines have provided substitute service on the routes abandoned by major and nation carriers

 Labor: Represents over 1/3rd of total operating expenses Airlines industry needs many different skills of employment to + Operate the planes: pilots, copilots, flight engineers + Serve the passengers: flight attendants + Provide the necessary maintenance and servicing of the planes: mechanics and ground crews + Office personnel and management Employment has...
tracking img