LGAV 3100 Final Exam
Pricing tactics or adjustments can be broadly categorized as either "fare actions" (changes in price) or
"rule actions" (changes in rules or restrictions)
During the 1980s, airline-labor negotiations were dominated by management as a...
'Take it, or leave it' attitude
Air frieght forwarders
(A) Are middlemen between shippers and airlines & (B) consolidate shipments
Liberalization of international air transportation agreements were hampered in the 1980s due to
(A) Come foreign-flag carriers had not incentive to expand service into U.S. territory, (B) U.S. domestic industry instability, & (C) various U.S. carrier infighting over negotiations to acquire market share
Liberalization of international air transportation agreements were hampered in teh 1980s due to
(A) Come foreign-flag carriers had not incentive to expand service into US territory, (B) US domestic industry instability, & (C)Various US Carrier infighting over negotiations to acquire market share
During the post deregulation era, unions were weak because of
(A) Conflicting interests & (B) Negative perceptions
Price levels are determined by
(A) Demand & (B) Production and marketing costs
Airline management was driven by government regulation to ____ during deregulation
(A) Financial market demands & (B) competition
During the 1970s, most of the world experienced severe
(A) Inflation, (B) Recession & (C) Price Increases
Because the airlines face intense competition, they have begun focusing their energy in
(A) Qualitative service, (B) Quantitative service, & (C) Image enhancement
The RLA applies to which industries?
(A) Railroad & (C) Airline
The Bermuda Agreement of 1946
(A) Set up a comprehensive procedure for determining airline rates between the U.S. and U.K. & (B) Placed IATA in charge of rate making
In 1926, the RLA was put into effect. What were the purposes of the RLA?
(A) To prevent service interruption & (C) To assist in the settlement of disputes
Airlines are beginning to spend more money on marketing because since deregulation
(A) passengers are price sensitive & (B) Passenger loyalty no longer exists
Cabotage is
(A) the exclusive right of a country to control air traffic within its own boarders & (B) a foreign operator carrying passengers between two domestic points of another country.
Code-Sharing can
(A)Make service on a route economically viable and (B)stimulate traffic by providing more frequent service
It is difficult for U.S. carriers to establish hubs in foreign countries and vice versa because...
(A)Many nations prohibit cabotage & (B) Fifth-freedom rights limit a carrier's flight frequency and competitive advantage against local traffic
Demand for products transported by air is
(B) Infrequent & Seasonal
Which of the following organizations acted as a separate ground operator to help airlines provide a comprehensive express service?
(B) REA & (D) General Air Express
One unique characteristics airlines have that is unlike other oligopolistic industries is
(B) Regulate the number of mergers to keep monopolies from forming & (C) Prohibit transactions that would substantially lessen competition
The Deregulation Act of 1978 required both the Sherman and Clayton Antitrust Act tests be used to
(B) Regulate the number of mergers to keep monopolies from forming & (C) Prohibit transactions that would substantially lessen competition
Bilateral agreements are
(B)designed to establish operating and traffic rights of U.S. airlines over foreign routes & (C) Usually provide standards for customs duties and inspection fees
Labor and fuel costs generally represent about ______% of a carrier's operating expenses
50%
_____ actions refer to direct changes to ticket prices
Fare
_________ actions refer to direct changes to ticket prices
Fare
Many carriers are renaming their expanded business class as
First class
The Paris Convention of 1919 established
Full and absolute sovereignty of each state over the air above its territories
Mergers offer airlines the advantages of
Increased market share and greater economies of scale
Pickup and delivery service is usually performed by
Independent local truckers
Disposable income, consumer spending, and gross national product are examples of
Independent variables
Prior to WWII, international routes were negotiated by
Individual carriers
A major goal of promotion is to
Inform the target market that services are available
A major goal of promotion is to
Inform the target market that services are availiable
What are the three types of air-cargo carriers?
Integrated, combination, all-cargo
___________was the international counterpart of the Airline Deregulation Act of 1978 to support competition.
International Air Transportation Completion Act
Business-class service is targeted primarily to
International travelers
The ATC strike of 1981 is an example of this type of variation
Irreggular
Managing "Generation Y" poses a potential provlem for airlines because Generation Y...
Is expectation-driven and outspoken ((this is a stupid answer but the right one))
Speed package service
Is handled like passenger baggage and must be picked up at baggage-claim
Advantages of using expert opinions in forecasting include
It is fast and expensive
During regulation, airlines had little incentive to combat excessive union demands because
Labor costs could eventually be passed down to passenger fares
To achieve economies of scale, carriers utilize the principle of
Labor specializtion
Which government department first controlled the air mail service?
Post Office Department
Economic deregulation (1979-1981) resulted in the marketing factor _____ increasing in importance to become the dominant marketing tool for influencing demand.
Price
Economic dereugulation (1979-1981) resulted in the marketing factor ______ increasing in importance to become the dominiatn marketing tool for influencing deamnd
Price
In the late 1960 and early 1970s, scheduled carriers diverted from their two-class fare structure ot a new pricing structure to
Price different demand elasticities differently
The four P's of the Marketing Mix are:
Product, Price, Promotion, and Place
A change in the "price" determinant of demand would typically result in a change in
Quantity demanded
The phase-out of stage 2 aircraft has increased the costs of entry to the airline industry by
Reducing the supply of used aircraft
The business cycle
Represents the fluctuation in economic activity
the principle of Yield/Inventory Management holds that profits are maximized only when
Revenues are maximized
Which of the following is the single largest deterrent to entry at hub airports?
Risk of being unable to recover financial overlays
____ actions refer to changes in restrictions that accompany ticket prices
Rule
This group of people often has the best insight into developing trends
Sales representatives
The "shot-gun" approach during the ____ period was marketing strategy aimed at convincing passengers to change their mode of transportation
Sales-Oriented
This type of variation reflects weather and social trends
Seasonal
An airline is classified as a "luxury" carrier based on
Service amentities
If Herb Kheller, CEO of Southwest Airlines needs to know the estimated staffing requirements for next months, which type of forecast would he use?
Short term
Freehand lines and averaging are methods used in
Smoothing
During the late 1970s and early 1980s, liberal markets demonstrated ________ traffic growth rate compared to regulated markets
Stronger
During the late 1970s and early 1980s, liberal markets demonstrated __________ traffic growth compared to regulated markets
Stronger
The large wage concessions granted by unions in the 1980s were used by management to
Subsidize fare wars
Continental airlines Chairman Frank Lorenzo reduced wage costs by
Temporarily going out of business
The U.S. was granted several fifth-freedom rights to service other countries; however, foreign governments could only designate carriers to serve only a few specified U.S. cities
True
While IATA and ICAO both administrate international agreements, both organizations work completely independently of one another. T/F
True
Low-cost carriers generate revenue based on
Volume
Over _____% of all travel agencies are automated
90%
After deregulation, common carriers engaged in numerous mergers decreasing the total number of common carriers. Commuter airlines, however, followed a dissimilar pattern by reducing the code sharing agreements with majors
False
An airline's labor force is usually represented by one union
False
Discounts are given for traffic traveling in southern and/or western directions
False
Forecasting was used during the mid 1960s to accurately predict the continued expansion of aviation industry into the 1970s
False
Historical data retrieved before September 2001 can still be used for forecasting, but the irregular fluctuations of that period must be accounted for when making industry predictions
False
In order for a casual forecast to be meaningful, there needs to be a cause-and-effect relationship between both variables
False
Over time, air cargo transportation has outperformed expectations by surpassing passenger revenues
False
Some analysts believe that several large and strong air carriers must be eliminated before prices stabilize and carriers use nonprice competition
False
Before airlines begin their market research, they much determine
Which routes to service
The airlines as a service industry are much quicker to recover than other industries because spending on air travel is discretionary
false
If a price set below the market-clearing equilibrium level ("too low") then the quantity demanded will be _____ the quantity supplied, resulting in a ________ of the product/service
higher than, shortage
All-cargo airlines offer
point-to-point service
The two main "determinants of demand" are ______ and ______
price, non-price
Air mail grew more rapidly after the government turned operations over to private contractors
true
Forecasting is used to help managers
Analyze, plan, and control
Majority in interest clauses deter new entrant competition with established air carriers because they
Are exclusive-use agreements current airline operators hold to restrict new entry
Specific commodity rates apply to special shipments that
Are high-volume
During airline regulation, labor-management relations can be described by..
Arms-length dealing
The pursuit of open skies policy was facilitated by
A strong industry
Airline load factors represent the relationship between
ASMs & RPMs
Airline load factors represent the relationship between
ASMs and RPMs
Three types of air cargo service include:
Air express, Air frieght, & Air mail
Air freight rates are effected by
All of the above (Characteristics and volume of shipments; Direction of travel; Capacity restraints)
Which of the following activities are included in marketing
All of the above (Promotion; Price setting; Product R&D; Forecasting)
"promotional fares" are typically offered
All of the above (With some kind of restriction; Where load factors are below the optimal level; to supplement the normal fare schedule)
Which of the following descriptions of air cargo is true?
All of the above (it is a premium-cost transportation mode; most air cargo aircraft were designed primarily for passenger transportation; passenger airlines do not invest heavily in freight transportation because of past losses operating freighter aircraft; fast air transportation allows companies to hold fewer inventories)
Which of the following activities are included in marketing?
All of them (Forecasting; Product R&D; Price setting; Promotion)
During 1982-85, unions were unable to use the threat of a strike as leverage because
Carriers were able effectively use liquidation and shutdowns
During 1982-85, unions were unable to use the threat of strike as leverage because
Carriers were able effectively use liquidation and shutdowns
Excess capacity and a shortage of customers changed the marketing concept to the _______ approach
Consumer-oriented
"joint fares" are single fares that cover or apply to trasnportation
Over the lines or routes of two or more carriers
_____ are key to determinig the forecasting model to use
Data
Which of the following established minimum wages and maximum hours for pilots across the industry through industry wide bargaining
Decision 83
Which of the following established minimum wages and maximum hours for pilots across the industry through industry wide bargaining?
Decision 83
A(n) ____ in price will generally cause a(n) _____ in total revenue under very "inelastic" demand
Decrease, decrease
A(n) ____ in price will generally cause a(n) ____ in total revenue under very "elastic" demand
Decrease, increase
RPMs and passenger revues are examples of
Dependent Variables
What will airlines experience when costs per unit begin to rise?
Diseconomies of scale
Integrated Carriers offer
Door-to-Door
Which two primary factors influence freight growth?
Economy & rate levels
In the airline industry, marginal cost pricing is derived from
Excess capacity and perishable inventory
Distribution problems of commodities shipped by air include
Expensive, custom packaging
Older cariers operate at a disadvantage to new entrants in regards to
Labor: Old carriers must operate under union contracts
Economies of scope award competitive advantages to
Large carriers
If demand is very "inelastic" a relatively _____ change in price would lead to a relatively _____ change in demand
Large, small
If demand is very "inelastic," a relatively _____ change in price would lead to a relatively _____ change in demand.
Large, small
Most union pay scales are based on
Longevity of service
Although airlines desire high load factors, a trade off to be considered is
Lower service convenience
If a price is set above the market-clearing equilibrium level ("too high") , then the quanitity demanded will be ______ the quanitity supplied, resulting in a ___________ of the product/service
Lower than, Suprlus
If a price is set above the market clearing equilibrium level ("too high"), then the quanity demanded will be _____ the quanitity supplied, resulting in a ________ of the product/service
Lower than, suprlus
What is the most significant human resources challenge airlines will face in the 21st century?
Making human resource strategies adaptive
________ is the process of selling existing products to new markets
Market Development
__________ the process of selling existing products to new markets
Market Development
By offering promotional fares & varied classes of service, airlines are implementing the strategy of
Market penetration
The three factors influencing the development of airline alliances are:
Marketing advantages, nationality and ownership rules, and competition
___________ describes the process by which the marketing mix is changed
Marketing strategy
The objective of "yield" or "Inventory" management is to ______ ______ by _____ ______
Maximize profit, maximizing revenue
The primary task of NMB is to
Mediate
Major carriers are classified as _________ carriers
Mid-range
Three categories of airline costs include Direct Operating, Indirect Operating, and....
Non-operating
Which of the following are advantages to containerizing air freight?
None of the above (Transportation rates and packaging costs are higher; Shipments arrive in separate units; Pilferage is increased)
The four basic types of passenger fares are
Normal, common, joint, promotional
Container rates
Offers lower rates for containerized shipments
A firm displays economies of scale when
There is a decrease in long-term average costs as the size of operations increase
When airlines began integrating passenger and freight operations, they purchased aircraft specifically designed to carry freight. What was unique about new the 707 freighter and 727-QC?
They had removable passenger seats so the plane could be flown at night as an air frieghter
_____ shows a dependent variable as a function of time
Time-series analysis
IATA's principle purpose is
To address fares and route structures not dealt by the Chicago conference
Combination carriers
Transport passengers and cargo, offer point-to-point service
Air carriers with the lowest costs have the most significant competitive advantage because airline customers value low prices above all other carrier selection factors
True
Airlines have outpaced all other industries in the rate of increase in capital spending because of technological advances and re-equipment cycles
True
Although airlines offer assembly and distribution service, they generally do not provide both services for the same shipment
True
GA profits correlate closely to business aircraft sales
True
If mediation fails, parties can seek voluntary arbitration. An arbitrated decision is legally binding to both parites
True
Since deregulation, the objectives of airline unions and managements have changed because of competition
True
Some end-to end mergers may have facilitated completion by building a broader, more competitive network
True
Some end-to-end mergers may have facilitated completion by building a broader, more competitive network
True
The U.S was granted several fifth-freedom rights to service other countries; however, foreign governments could only designate carriers to serve only a few specified U.S. cities T/F
True
