Airline Industry and the Economy Essay Example | Topics and Well Written Essays - 2250 words

Airline Industry and the Economy - Essay ExampleThe shape of the economy is fixed by its fiscal and monetary policies, market regulations, corking and export markets, degree of stability and competition, factor endowment fund and social ahead capital. Fiscal and monetary policies involve government expenditures, money translate, interest rates, currency supercede and inflation rates, and the operation of the banking system. The objectives of fiscal and monetary measures argon to keep government from deficit spending and give up stability in money supply, interest rates, prices and the banking system. Once these conditions are emplaced and government spends within limits to bend big(p) external debt, capital credit is available for industries, purchasing power is strong and the economy produces a unsubtle range of goods for the export market. As for market regulation, some of its cornerstones are the efforts to maintain a healthy vestibular sense between competition and coop eration and to discourage monopoly and oligopoly. The reason is that where competition is completely unregulated and trade monopolies or oligopolies are allowed to operate, the large enterprises are likely to devour the smaller ones.Factor endowment relates to the supply of land and capital and the size and health of the workforce, while social ahead capital has to do with the availability and quality of power, water, converse systems, housing and transportation. The economy will have difficulty taking off if land and capital are hard to come by and labor supply could not meet the demand of industries in footing of skilled and able-bodied workforce. The economic engine will likewise sputter if water and power supply is unreliable, housing is scarce and expensive, and communication and transportation systems are inefficient. In the transport sector, the airline pains is the or so sensitive to economic ups-and-downs and the most vulnerable to natural and man-made disasters, terror ist acts, wars and extreme weather events. This was once over again demonstrated in 2001 when air travel worldwide grounded to a halt in the aftermath of 9/11. Flag carriers Swissair of Switzerland and Sabena of Brazil folded up, while several US airlines placed themselves in bankruptcy proceedings to avoid complete collapse. From 2001 until 2005, the airline industry worldwide suffered losses reaching $43 billion, which was equivalent to the combined capitalisation of 13 US airlines in todays terms. Even British Airways, the worlds biggest international airline, was unable to pay shareholder dividends for quatern years, had to trim 5,800 jobs and to introduce pay cuts to managers. In the US, the government came to the rescue of the distressed airline industry by allotting a $15-billion bailout fund. The industry used the assistance to hire back some 10,000 workers that were laid off at the height of the crisis, which was the primary concern of the state. In the absence of such ec onomic upheavals, the main concerns of the airline industry are the costs of aircraft acquisition and maintenance, fuel and salaries. These are the direct operating costs of airlines,