Essays on Ownership Structure Of Airlines Assignment

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21/04/2008IntroductionAirlines are used in transportation services for passengers or freight. The Airline should acquire a license or recognized certificate of operation to be allowed to carry out these services. The Airlines have got their own aircrafts or they lease the aircraft to carry out these services. Some form partnership with other airlines to enable them carries these services effectively. Some airlines have services of carrying mail passengers or cargo. In airline services, it can be categorized as being intercontinental, intercontinental, or domestic and can operate on scheduled services or charter. Intercontinental airline services carry out their services from one continent to another.

Intercontinental services operate mainly within the continent while the domestic type operates within the country. Schedules airlines operate on fixed timetable from one destination to another. Some examples of scheduled largest airlines in the world are southwest Airlines, America airlines, Delta airlines, United Airlines, Lufthansa airlines. An International Associations between the airlines have been formed to assist the airline companies to have uniform charges and also to achieve lawful competition. Example of this association is the International Air Transport Association formed in 1945.

It has over 240 members with more than 140 nations throughout the continents. The international associations have divided the globe in three categories. South, Central and North AmericaEurope, Middle East and AfricaAsia, Australia, New Zealand and the island of the Pacific Ocean. We shall look at different types of ownership structure among aviation industry in different countries. The Spain Airline IndustryThe airline industry has grown since it was inoculated. The freedom it has on decentralized way of management has changed the way the airline operates. The structure in the Spain has made it achieve its goals.

The aircraft carry passengers and cargo on the scheduled and charter flighty domestically and internationally. The airline contributes to Spain economic growth in both passenger and cargo services. Spain carrier provides almost 50% of scheduled services and 94% of charter services between the country and the rest of the world like United States, Europe, and the Pacific Rim. (John, 2006)In the market, the demand is seasonal with peak month air traffic being roughly twice that of low demand the market also affects the economy of Spain airline industry.

Small traffic increase or decrease can result in dramatic increase in profit or losses. The airline cost structures are affected by size of aircraft with smaller aircraft costing more per seat than larger aircraft. The long distances are more cheaply compared to shorter distances and the cost per passenger declines as the percentage of seats available is filled. (John, 2006)The fare in Spain airlines depends on demand. It also depends on responsiveness to the price of air travel as first class passenger, businessmen, leisure passenger and infrequent travelers. There is also discount accord to the fare with the first two tickets being more expensive while the last is the lowest unrestricted fare. The airline here is also characterized by regional affiliates and international alliances.

This development accounts two factors, that is, consumer preferences and profitability. It seems that consumer prefers larger carrier, which serves many points, than smaller carrier. They also prefer large air carrier which can take them anywhere in the country. Domestic ownership restricts the foreigner to own more than 25% of the voting stock of domestic airlines.

(John, 2006)

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