Question

In brief discuss current developments of the airline industry within the context of economics & elasticity perspective.

Answer 1

The elasticity of demand, externalities, wage inequality and financial, fiscal and federal policies have a profound impact on the airline industry. Market elasticity is solely based on current market conditions, the catastrophe of September 11th of the consumer had a devastating impact on the entire travel industry. It had an impact on fiscal and monetary policy, supply and demand, and generated national staffing issues. Wage inequality rates are rising due to legislation that has created a pay increase across the United States in participating cities.The airline industry is considered volatile because it is based on current market conditions and the market is constantly changing. Travel aim and available alternatives. Externalities continue to affect market elasticity. The phenomenon

The aviation industry is extremely volatile because it is highly dependent on the current conditions of the market. Over the years, incidents like recession, terrorist attacks, and oil prices have greatly influenced the market for airline tickets. Competition affects the price of airline tickets continuously because it offers more choices to the consumer. Existing alternatives are traveling by bus, car, or whenever possible avoiding travel. During turbulent times in our economy, consumers have resorted to all the designated substitutes. Demand elasticity is greatly affected by the travel intent of the consumer. Usually, airline passengers fly for business or pleasure.

The cost elasticity of demand in the airline industry is divided into two market groups and is known as both elastic and inelastic. A good example of how flexible demand applies to the aviation industry when it comes to pleasure travel. Pleasure travelers will be affected by the amount of travel they do on the basis of increased or decreased demand, influenced by lower prices with high demand or rising prices with low demand. Inverse, the business traveler would apply to this market's inelastic demand. This has been demonstrated by the increase or decrease in demand as well as the allocation of prices, which has little effect on the purchasing power of the business person