Chapter 7: Airlines

What is a no frills carrier is known for?

charges fares that are lower than that of a full-service air carrier, except passengers receive limited snacks and drinks , example southwest

Why do business people pay more for airline travel?

they have to keep more rigid schedules

Air carriers face _____ competition from other air carriers for either freight or passengers.

very intense

What major factor is the main determinant in air cargo pricing?

weight

Air carriers face _____ competition from surface modes for either freight or passengers.

A limited amount

The traffic manager for WLG, Inc is evaluating transportation modes for shipment of the company's products. WLG's components division produces electronic assemblies according to buyer's specifications. The typical product is high-value--in the range of $30,000 to $50,000, small--less than 8 inches square, very fragile, insurance costs are $1750 per day for each item, and the shipment distance is 2,500 miles. Which mode of transportation would be most appropriate?

Air

Which government agency specifies acceptable flight operations and the hours of service for pilot?

Federal Aviation Administration (FAA)

Each of the modes of transportation have a market niche in terms of the commodity transported by the mode. Describe the characteristics of the commodities transported by air carriers.

Mail, clothing, communication products, photography equipment, automobiles and jewelry

The Transportwriter.com corporation owns four corporate aircraft of various sizes which they use to transport executives to various company locations, and as well as documents and small freight between the company headquarters and its production facilities. What type of carrier is Transportwriter?

Private

Which event marked the beginning of the modern airline industry?

The U.S. Post Office's examination in 1908 of the feasibility of air mail service

Explain the early development of air transportation in the United States.

The beginning of the airline industry began with the US Post Office examination. This was due to the feasibility of providing air mail service and passenger transportation began to grow

Deregulation of the airlines, in 1978, led to expectations that the number of carriers would increase. What has been the actual result of deregulation regarding the number of carriers in the market?

The number of carriers did not increase initially but has remained steady of late

Define and discuss the length of haul and capacity of air carriers. How does this relate to intermodal competition?

Under 800 miles Air carriers face limited competition Can face high time-sensitive moments and long distances easily Heavy capacity with a long distance to travel

What is the primary method of service competition between air carriers?

frequency and timing

Which cost element of the U.S. scheduled airlines accounts for the largest portion of operating costs?

fuel

Which of the following commodities would be most likely to be shipped on an air carrier?

high-value and time-sensitive goods

Air carrier revenues are concentrated in which group of carriers?

major, national, regional

What are the revenue classifications of the U.S. based for-hire air carriers? Define, describe and discuss with examples.

major-$1 bill or more in annual revenues, examples-delta, united, southwest national-100 mil - 1bil in annual revenue examples-frontier, jet blue, midwest regional-less than 100mil in annual revenue examples-americas eagle, Atlantic coast, skywest

. Which is the best reason for the increase in airline intramodal competition since deregulation in 1978?

new air carriers entering given markets

What does the operating ratio measure?

operating expense divided by operating income

There are two ratios which are used to measure airline performance. One measures efficiency while the other measures equipment utilization. Define both, describe how they are computed and what factors they measure.

operating ratio-measures the portion of operating revenue that goes to operating expenses, only revenue and expenses generated from passenger and freight transportation are considered (operating expenses/operating revenue)*100 load factor-measures the percentage of a plane's capacity that is utilized, (number of passengers/total number of seats)*100

Most airline revenues arise from:

passenger travel

Which is the best reason for the relatively low proportion of fixed costs in the cost structure of the air carriers?

public investment in the airway and airport

Mountain Airline has annual operating revenues of less than $75 million with hubs in Denver and Salt Lake City. This airline would be classified in which air carrier category?

regional carrier

Air freight transportation is attractive to shippers because of the lower packaging costs associated with the transport of cargo. Which air transportation characteristics allow reduced packaging by shippers?

relatively smooth ride and automated ground handling systems

What is the primary advantage of air transportation?

service competition: frequency and timing, advertising-promote on time travel and their amenities on flight, no-frills

What is the major advantage of air freight? How does this relate to logistics principals discussed earlier?

speed and reliability

The airlines utilize technology to offer faster and more efficient service for their customers. One application of technology, developed by the airlines, is a paperless system called the Fast Flow Program. What is the Fast Flow Program designed to do?

speed the processing of air freight cargo through customs processing

Shippers using air cargo transport may have to pay an over-dimensional charge. The charge is assessed by the carrier to gain a more appropriate revenue in which situation?

when the cargo shipped does not weigh much but takes up a lot of space