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Airline

Airline Industry

Axia College of University of Phoenix

March 06, 2009

Airline Industry

The airline industry has several factors that affect it which include the fiscal and monetary policies, price elasticity, and wage inequality. All of these factors have a role in how the airline industry operates. Supply and demand also can affect the airline industry. After the September attacks the airline industry has suffered because people no longer trusted the airline to be safe. People stopped traveling by plane causing the airline industry to lose business even go bankrupt. Inflation, fuel prices, increasing interest rates, and oil demand have also affected the industry since they rely on fuel and a more steady economy to run their business. Airlines compete more for business because the economy is in a downfall, so they decrease fares to attract customers and add services at lower costs to lure people into using their airlines.

The monetary policy is important within the airline industry. It is used to regulate the money flow and interest rate in order to have an effect on the economy. The goal of this is to make economic activities even with the objectives of politics. The Bank of Canada and the Federal Reserve of the United States, appointed by the government, administer the monetary policy. The fiscal policy is also used by the government. It is a policy that was made on the amount of money spent by the government to obtain goods and services and how the expenditures are financed.

When the September attack happened there was a steep decline in the demand for the airline industry. The impact of the monetary and fiscal policies of the airlines was also affected after the attacks. The employees of this industry experienced layoffs that were huge on the national scale. The decrease in the industry also resulted in declines in several other industries like other transportation industries. The steep decline in the airline industry was very...