One of the most challenging tasks for the airline manager

TWO HOUR DEADLINE!!!

MBAA 523

4 Questions (Short-Answer) (Answers must be well-written and free of grammatical errors)

1. One of the most challenging tasks for the airline manager is matching demand and supply (capacity). What characteristics of air travel demand make this so difficult?

2. 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?

3. In response to the worldwide recession that began in 2008, airlines cut capacity by reducing frequency, dropping some routes, and grounding aircraft. Would you expect total costs (both operating and non-operating) to drop by the same percentage as capacity? Why?

4. Discuss one aspect of the low-cost-carrier business model, such as Ryanair’s, that provides a sustainable cost advantage over a large network carrier, for example, British Airways.