Question

in 300 words talking about the expenses and the costs that the air industry is facing in today's era.

Answer 1

Airline industry in the contemporary time facing various challenging issues in cost and expenses due to external environmental pressure. One of the major cost of airline industry is aviation turbine fuel which determined by global price index. We have seen that the geopolitical scenario drive the price of crude oil due to strategic nature and limited suppliers of petroleum producer. The increase in strife between west and Russia, turbulence in gulf countries, ISIS menace and political instability of Venezuela has driven fuel price to higher level. The increasing dynamics and paradox of geopolitical scenario is the measure reason for hike in fuel price. The burden of this has to be shared by the airline industry and they have to burn more cash for this. The increase in input cost can correlated to increase in fare price of airline but in reality it is different. The keep throat competition in the industry has forced all airline to keep their price level low so that they can remain relevant in the market. They are spending huge money to acquire customer and offering them various bundle to increase the occupancy rate.

Occupancy rate in the individual flight also not increasing again due to low demand which also catapulted to geopolitical scenario. World economy has slow down hence job opportunities for people are low hence having lower disposable income have seriously hurt the operation of airline industry. Their per passenger average revenue is decreasing and cost is increasing due to above discussed things. Easy finance is also not available to them due to weaken global economy and not positive investor sentiments. Everything that are related to cost and expenses are increasing and airline industry is in tumultuous time for its survival.