Define economies of scale. Are economies of scale evident in the airline industry? What is the implication for market entry?
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?
Explain how higher utilization of assets such as aircraft, gates, and pilots lowers the cost per available seat mile (CASM) or cost per available seat kilometer (CASK).
The airline industry, despite continued rapid growth, has been only marginally profitable over the last 50 years. What characteristics of the industry result in the lack of satisfactory profits?
Characterize the demand for air travel over time; that is, by time of day, day of the week, season, and business cycle.