Economic on Air Transport Management
CONTENT
4.0 Introduction 1
4.1 Aviation as Oligopolies 2 4.1.1 Number of Carriers and Market Share 2 4.1.2 High Barriers to Entry 4 4.1.3 Economic of Scale 6 4.1.4 Growth through Merger 9 4.1.5 Mutual Dependence 10 4.1.6 Price Rigidity and Non-price Competition 11
4.2 Government Financial Assistance 13
4.3 Technology Cycle 19 4.3.1 High Technology Turnover 19 4.3.2 EUROPEAN RESEARCH STRATEGIES FOR THE FUTURE 22 4.3.3 Clean Sky Joint Technology Initiative Research 23 Program by the European Commission 4. Human Resource and Fuel Consumption 28 4.4.1 Human Resource 28 4.4.2 Fuel Consumption 31
4.5 Competitive Advantages 33 4.5.1 Linkages between these Features and Airlines 34 Competitive Advantage 2. Porter’s 5 Force Analysis in Airline Industry 37
4.6 Sensitivity to Economy Fluctuations 38
Bibliographic 40
Chapter 4: Economic Characteristics of the Airlines
4. Introduction Economists usually describe the certificated airline industry as closely approximating an oligopolistic market structure. An oligopoly is an industry composed of a few firms producing either similar or differentiated products. Oligopolistic industries normally are characterized by high barriers to entry. There usually take the form of substantial capital requirement, the need for the technical and technological know-how, and control of patent right, and so forth. In addition to few sellers, a similar product, and high obstacles to entry, oligopolistic industries tend to share several other characteristics such as: a) Substantial Economic of Scale By economy of scale, economists mean decreases in a firm’s long-term average cost s the size of its operations increases. Firms industries typically require large-scale production
4.0 Introduction 1
4.1 Aviation as Oligopolies 2 4.1.1 Number of Carriers and Market Share 2 4.1.2 High Barriers to Entry 4 4.1.3 Economic of Scale 6 4.1.4 Growth through Merger 9 4.1.5 Mutual Dependence 10 4.1.6 Price Rigidity and Non-price Competition 11
4.2 Government Financial Assistance 13
4.3 Technology Cycle 19 4.3.1 High Technology Turnover 19 4.3.2 EUROPEAN RESEARCH STRATEGIES FOR THE FUTURE 22 4.3.3 Clean Sky Joint Technology Initiative Research 23 Program by the European Commission 4. Human Resource and Fuel Consumption 28 4.4.1 Human Resource 28 4.4.2 Fuel Consumption 31
4.5 Competitive Advantages 33 4.5.1 Linkages between these Features and Airlines 34 Competitive Advantage 2. Porter’s 5 Force Analysis in Airline Industry 37
4.6 Sensitivity to Economy Fluctuations 38
Bibliographic 40
Chapter 4: Economic Characteristics of the Airlines
4. Introduction Economists usually describe the certificated airline industry as closely approximating an oligopolistic market structure. An oligopoly is an industry composed of a few firms producing either similar or differentiated products. Oligopolistic industries normally are characterized by high barriers to entry. There usually take the form of substantial capital requirement, the need for the technical and technological know-how, and control of patent right, and so forth. In addition to few sellers, a similar product, and high obstacles to entry, oligopolistic industries tend to share several other characteristics such as: a) Substantial Economic of Scale By economy of scale, economists mean decreases in a firm’s long-term average cost s the size of its operations increases. Firms industries typically require large-scale production