LGAV 3100 Final Exam

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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


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