Chapter 11

Question 1

What is Demand?

Answer 1

Amounts of a good or service that people want and are readily able to buy

Question 2

Determinants of demand for air travel:

Answer 2

Pax preference

of pax in a particular market

Financial status of pax

Competitors’ prices

Passenger expectations

Question 3

Elastic Demand

Answer 3

Demand fluctuates highly with price changes

Question 4

Inelastic demand

Answer 4

Demand is independent of price

Question 5

Determinants of elasticity:

Answer 5

Competition
Travel distance
Business vs pleasure
When to travel

Question 6

What are the different types of pax fares?

Answer 6

Normal
Promotional
Joint
Common

Question 7

Inventory Managment

Answer 7

Sell as many seats possible at the highest possible price

Seats available early at low prices, increase as departure date approaches

Question 8

Describe the pricing process:

Answer 8

Submit prices to airline tariff publishing company 3 times daily

Released to all other airlines

Question 9

Examples of Direct Operating Costs:

Answer 9

Flight ops

Maintenance

Depreciation

Question 10

Examples of indirect operating costs:

Answer 10

Ground services

Pax service costs

Reservations

Administrative costs

Question 11

Fixed Costs:

Answer 11

Direct operating costs. Sunk costs

Question 12

Variable Costs:

Answer 12

Costs that increase with level of output

Question 13

What is pricing?

Answer 13

The cost of a good or service that is provided