Question: Part 1: 1. What is the major advantage of air carriers? How does this advantage impact the inventory levels of those firms using air transportation? Explain how this advantage relates to the choice of modes when choosing between air carriage and other modes of freight and passenger transport.
2. Discuss the length of haul and carrying capacity of the air carriers. Explain how they both favor and hinder air carriers from a competitive standpoint.
3. How does fuel cost and efficiency affect both air carrier costs and pricing?
4. What is the cost structure of the air industry? How does it compare with other modes? How does this affect pricing, particularly for passengers? Be sure your answers include examples from either advertising or the internet.
Part II: 1.The typical pipeline company has high fixed costs. What economic factors account for this situation? What advantages and disadvantages does their cost structure represent?
2. The economic and market position of the pipeline has been described as mature and stable with little likelihood of significant growth in the near future. Do you agree? Why or Why not?
3. Water carriers played a dominant role in the transportation system of the United States in the 18th and 19th centuries. Why has their relative position declined during the 20th century? Are they still an important component of the total transportation system? Why or why not?
4. What would be the impact of higher fuel charges on the water carrier industry? Provide a rationale for raising their user charges.
5. Intermodal competition is more intense than intramodal competition for water carriers. Why?