Airport Managment

The midterm question is what do you think the most important factors are when discussing airline pricing and demand? I figured I would start out talking about what demand really is. Demand is defined as the various amounts of a product or service that consumers are willing and able to purchase at various prices over a particular time period. .After taking two economic classes that definition is permanently engrained in my memory. A demand schedule is a tabular portrayal of demand and reflects the relationship between the price or fare—which I believe is an important factor when discussing airline pricing and demand—and the estimated number of passengers who would be willing and able to purchase a ticket at each of these prices.

A common characteristic of demand is that as price falls, the quantity demanded rises; alternatively, as price

Indirect operating costs are all those costs that will remain unaffected by a change of aircraft type because they are not directly dependent on aircraft operations, including expenses that are passenger related rather than aircraft related and general and administrative costs. Examples are: station and ground expenses, passenger service costs, reservations, sales and promotional costs, and general and administrative costs.

Applying normal pricing strategies and objectives to the airlines is complicated, because carriers don’t charge only one price for their services. They offer an array of fares designed to appeal to both price-sensitive leisure travelers and less price-sensitive business travelers. Other complications for airline services are the predictable seasonal pattern of demand, especially for leisure travel, the influence of override commissions that many airlines pay to travel agencies, the dynamic nature of airline schedules and strong relationship that exists between schedule frequency and passenger demand, and the tendency for individual carrier pricing strategies and objectives to vary by market and over time.

increases, the corresponding quantity demanded falls. There is an inverse relationship between price and quantity demanded, which is depicted on all demand curves. This inverse relationship has been labeled the law of demand. The law of demand is based on the principle that people buy more at a low price than they do at a high price. It is really very elementary.

I believe the passenger fare structure is one of the most important factors when discussing ai

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