The Airline Industry and the Economy

1750- to 2,450-word paper on the airline industry and how it has been affected by the economy.

Include:

- industry's price elasticity of supply and demand
- negative or positive externalities the industry produces
- how wage inequality is measured and if it is present in the industry
- monetary and/or fiscal policies that have affected the industry

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...g profitable, the main focus of the industry is to maximize the cost of the flight revenue to the customer. Peak load pricing technique is the biggest strategic pricing mechanism that encourages an increase in the cost of tickets relates to a customer ordering a ticket close to there departing date.

Airline industry and Wage Inequality

If we look at the history of airline industry we can find that wage inequality has been the biggest problem in this industry. But due to different regulation and correction in laws, the wage related problems in the industry is seems to be improving. After various complains of wage inequality in the industry many states have introduced a living wage ordinance to control wage inequality in there region. The main reason for this wage inequality was the cost cutting pressure on the airline industry due to increasing competition and due to this we can find a good correlation between the wage inequality and the high turnover in the industry. The correct way to find out the wage inequality is to find out and analyze the wage and standard of living of the airline employees. To tackle the living wage inequality the living wage ordinances are determined by the cost of living of the airline employees at there respective places. If we look at the statistic produced by the Association of Community Organization for Reform Now in year 2004 we can find that, approximately 78% of employees at the San Francisco Airport made under $10 per hour to fulfill there way of living. But after implementation of the living wage ordinance in the year 2004 in San Francisco and 99 other cities, an increment in the wage of almost 33% was permitted by the legislation. But this increment had no impact as the employees were not benefited from the wage increase, because in cities such as San Francisco the cost of living was high as compared to the increment and the wage of the employees. When this was found out the legislation again correct the increment and a new ordinance was implemented. But still at present the airline employees in the San Francisco airport make more than the living wage, this is still far below the wage earned by those in other industries in the Bay Area, i.e. the wage inequality still persists.

Airline Industry and Externalities

There are two type of externalities one is positive that have a positive impact on the industry and the other is the negative externality that has a negative impact on the industry. These to the negative and positive externalities play a important role in deciding the supply and demand for the industry. As it is known that the airline industry is directly proportional to the market conditions, it is greatly affected by all types of externality i.e. the ...