Air Carrier

Topics: Costs, Variable cost, Economics of production, Cost, Management accounting, Fixed cost / Pages: 5 (1127 words) / Published: May 7th, 2011
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 +

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