Industry Research Project

Introduction

The aviation industry is particularly susceptible to external economic factors because it affects and depends on a substantial number of industries . Also , because the industry involves operating between bs , then economic factors from other parts of the world other than the domestic market also affect it . Issues such as fiscal policies (both within and without the countries of destination , wage inequality and positive and negative externalities have a way of changing operations within this industry

How shifts and price elasticity of supply and demand affect the aviation industry p

Supply and demand price elasticity of airline carriers may vary depending on the nature of the industry . For new and emerging industries such as the Indian aviation sector , then price elasticity of demand and supply is near perfect . The number of carriers being added into their markets are largely affected by the nature of demand for the commodity the country underwent rapid economic growth in the late nineties thus setting the stage for a shift in the country 's business arena . Many people within India had a renewed need for utilizing aviation services because of internationalizing their businesses . This demand for the commodity led to rapid expansion within the sector and increasing numbers of carriers (Keller Buttler , 2000

However in traditionally developed countries such as the US , supply has exceeded demand . Consequently , air tickets go for much lower prices than they should . Besides that , aircrafts are reducing their capacity to cope with decreasing demand for the service They are even trying to cut down on labor costs so as to cope with this low demand in the service . This also makes it very difficult for new entrants to do well in the industry and severely impedes their success (Doganis , 2002

Effect of positive and negative externalities

One of the major positive externalities that one has to consider when examining the aviation industry is its effect on the economy . Many experts have asserted that the aviation industry has numerous effects on the GDP of the country under consideration . For instance , a carrier provides employment to a substantial percentage of its country 's unemployed . This means that the aviation industry reduces unemployment rates . Also , it boosts the tourism sector and the hospitality industry in general

The aviation industry has the capability of exposing a certain country to new markets . The overall effect of this is an increase in the following

Trade improvement

Business efficiency

Increasing number and quality of growth sectors

Boosts investments

Improves other aspects of the economy

It should be noted that there are some negative externalities as well . Top on this list is environmental emission . The aviation industry utilizes the highest amount of fuel in the transport sector . Consequently , it is also responsible for the rising amount of carbon emissions into the atmosphere . This is the reason why many governments have passed laws intended on regulating the quantity of emissions emanating from aircrafts . The UK has been very keen on these factors , as they have passed stringent laws to curb...