Questions and Answers of Transportation A Global Supply Chain Perspective

▪▪ Distinguish among direct operating costs, indirect operating costs, and nonoperating costs and revenues
▪▪ Recognize some of the common rules and regulations used by air carriers in conjunction with fare actions
▪▪ Summarize several promotional fare actions initiated by air carriers
▪▪ Describe the four basic types of airline passenger fares
▪▪ Deﬁne elasticity coefficient, elastic demand, inelastic demand, and determinants of elasticity
▪▪ Distinguish between a change in demand and a change in the quantity demanded
▪▪ List the determinants of demand, and explain how each can affect the position of the demand curve
▪▪ Describe the trend in domestic passenger airfares during the three decades after World War II, and discuss some of the reasons for this trend
10. What are the differences between code sharing and an interactive marketing agreement?What is the primary purpose of the hub-and-spoke system vs. the point-topoint system? Why are such systems
9. How do economies of scope differ from economies of scale? What are computerized reservations systems? How have they become an important marketing tool? Discuss the importance of travel agents in
8. What is meant by selling present products to new target groups? Discuss the newer target markets in terms of their marketing potential and the marketing mix needed to service their individual
7. Under the consumer-oriented marketing concept of the 1970s and 1980s, market research has played an important role. Why? What is meant by market segments and target marketing? How can an airline
6. Why did the number of travel agencies increase so signiﬁcantly during the 1980s?What are some advantages to the consumer of using a travel agent? To the airline?What are some disadvantages to
5. What are the basic factors that affect price? What is promotion? Give some examples of how promotion is used to inform, persuade, and remind. What are the three basic types of airline sales
4. It can be said that price was an inactive element in the marketing mix before deregulation. Why? Do you think that the carriers would prefer to compete on the basis of the other three Ps alone, as
3. How would you deﬁne the airline product? How is it different from other products?In what sense do airlines basically sell the same products? What are some unique characteristics of the airline
2. Briefly describe the uncontrollable variables in the marketing process. Why are they uncontrollable? How might they conflict with marketing plans? Give an example.
1. Deﬁne marketing. What is meant by the production-oriented period in airline marketing?The sales-oriented period? The consumer-oriented period?
▪▪ Discuss some of the postderegulation marketing strategies used by the major carriers
▪▪ Give several examples of three different intensive growth strategies
▪▪ Explain what is meant by the consumer-oriented marketing concept and how it relates to market segmentation
▪▪ Describe what is meant by controllable marketing decision variables (marketing mix) and the so-called uncontrollable variables
▪▪ Explain what is meant by the marketing concept and how it has changed over the years
▪▪ Deﬁne marketing, and discuss its importance to carriers in providing air transportation services
5. W hat are judgmental forecasts? Give several examples of forecasts by expert opinion.What are some of the advantages of using expert opinions or sales force observations?What are poll forecasts,
4. How do time-series or trend analysis methods differ from causal models? Deﬁne trend, cyclical variation, seasonal variation, and irregular variation. What is the purpose of smoothing the data?
3. W hat is meant by a causal, or model, forecast? Deﬁne dependent and independent variables and correlation. What are the three characteristics that variables must have to be used in building a
2. Describe how forecasts can be used by ﬁrms for analysis, planning, and control purposes.
1. How does forecasting differ from planning? What is the purpose of forecasting? Give an example of a short-term and a long-term forecast.
▪▪ Explain why judgmental forecasts are often used in conjunction with the other methods of forecasting
▪▪ Describe what is meant by smoothing the variations
▪▪ Explain what is meant by trends, cyclical variations, seasonal changes, and irregular fluctuations
▪▪ Describe why causal models are considered the most sophisticated type of forecasting method used today
▪▪ Compare three basic methods of forecasting
▪▪ Discuss the importance of forecasting in relation to analysis, planning, and control
12. Describe the relationship between the following marketing departments: marketing services, services planning, sales planning, and sales and services. Which department would the pricing and
11. What is an overhaul work report? How have major carriers’ jet overhauls changed since the early 1960s? Give several reasons air carriers have increased contract maintenance in recent years.
10. W hat is the primary role of the E & M administration? Most carriers divide their stations into various classes of maintenance service. Describe the classes. Distinguish between routine scheduled
9. Describe the four major departments under flight operations. What is the role of flight dispatch? Briefly describe the flight-crew functions from the time they report to the airport until they
8 . Which major administration would the following staff departments fall under:telecommunications, corporate insurance, accounts payable, facilities and airport planning, investigation and security,
7. How does the organizational chart of a new-entrant or low-cost carrier compare to a legacy or established airline? What are the main advantages and disadvantages to this type of organization?
6. What is an organizational chart? What is its purpose? The organizational charts shown in this chapter are fairly comprehensive and reflect the organizational plan for a major carrier. Suppose that
5. Distinguish between line and staff responsibilities. Why are line workers referred to as volume-related? How did staff organizations get started?
4. What is an organization plan? Describe the eight principles of organization discussed in this chapter. Why are they so important to the management of airlines?
3. Why is planning such an important management function within an airline? Who plans? Deﬁne management by objectives. What is a policy and procedures manual? How does a procedure differ from a
2. How does decision making differ at the various levels of management?“Sometimes no decision is a decision.” Discuss. It has been said that management decision making was easier before
1. Deﬁne management. What is meant by the different levels of management? How are they distinguishable? Which titles do we normally ﬁnd at each level of management?
▪▪ Identify the “new” corporate structure used at newentrant and low-cost carriers.
▪▪ List several major departments under each of the line administrations, and discuss their individual roles
▪▪ Identify the three line administrations found in a typical air carrier, and describe their primary responsibilities
▪▪ List several major departments under each administration, and discuss their individual roles
▪▪ Identify the typical staff administrations in a major carrier, and describe their primary responsibilities
▪▪ Explain what is meant by a line-and-staff organization
▪▪ Describe the principles of organization planning that are of particular signiﬁcance to the air carriers
▪▪ Describe the basic functions of management
▪▪ Discuss the different levels of management, and explain each level’s role
▪▪ Deﬁne management and organization
11. Why can’t airlines ﬁne-tune capacity to match demand? Deﬁne no-shows. When load factors approach 80 percent or higher, we can expect some passengers to be turned away. Why? What is
10. Deﬁne load factor. What is the relationship between load factor and costs per unit?Explain. Why have load factors increased in recent years? Why are all public transportation modes subject to
9. Why has the airline industry been subject to greater government regulation than other oligopolistic industries?
8. Many industries are sensitive to fluctuations in the economy. How does the airline industry differ? How is it different to furlough employees in the airline industry versus the automobile or
7. What is the competitive advantage of schedule frequency? How does it lead to excess capacity? Describe the effect of excess capacity on pricing.
6. What are the three major operating expenses of airlines? Why are they so high? How have they changed over the years? Why are labor costs such a competitive advantage for start-up airlines over
5. Give some examples of how government (particularly the federal government) has assisted the industry ﬁnancially over the years. Why is there such a high technological turnover in the industry?
4. Why are the carriers so mutually dependent? How have pricing practices changed since the prederegulation days? What was the major form of competition in the prederegulation era? Discuss some of
3. Why has there been a tendency toward mergers in oligopolistic industries over the years? What are some of the reasons air carriers have merged? What do you think the structure of the airline
2. Deﬁne economies of scale. How do they apply to the major carriers? When can economies of scale turn into diseconomies of scale? Give several examples of economies of scale in the airline
1. Why is the airline industry considered oligopolistic? What are some of the barriers to becoming a certiﬁcated carrier today? Compare the barriers today with those before deregulation. How has
▪▪ Explain the signiﬁcance of load factors in relation to costs and services offered
▪▪ Describe the economic characteristics unique to the airlines
▪▪ Explain how the industry is moving toward oligopolistic pricing
▪▪ Discuss the concept of mutual dependence as it relates to the air carriers
▪▪ Describe the effects of mergers on the airline industry
▪▪ Deﬁne economies of scale, and discuss how they relate to the airline industry
▪▪ Identify several of the barriers to entry into the airline industry
▪▪ Explain how the number of carriers, and their market share, has changed since deregulation
▪▪ Describe the general characteristics of oligopolies
7. Do you think airlines in the United States will continue to merge? If so, how will the industry respond? If not, what do you think will happen to the industry?
6. Highlight the industry’s performance, in terms of trafﬁc and ﬁnances, during the 1960s, 1970s, and 1990s. Describe the cyclical nature of the airline industry in terms of proﬁtability.
5. Who is responsible for ﬁnancial and trafﬁc data collection within the Department of Transportation? Describe the role of this government bureau. What is the Interline Trafﬁc
4. What is the main purpose of certification? In the United States, what are the different types of certification? Explain the different phases. What is CSET? What is ATOS?
3. Describe the role of the major and national carriers. Identify some of the carriers in each category. How did the regional carriers get started? Describe a typical regional carrier in terms of its
2. Explain how the certiﬁcated airline industry has changed since deregulation in terms of expansion, consolidation, and concentration. Describe several innovations pioneered by the major air
1. How did the trunk and local-service carriers evolve? What was the role of the supplemental carriers? Discuss some of the problems faced by the industry in the three decades preceding deregulation.
▪▪ Highlight the signiﬁcant trafﬁc and ﬁnancial statistics during the period 1960–2009, and demonstrate the cyclical nature of the airline industry
▪▪ Describe the airline certiﬁcation process and DOT reporting requirements
▪▪ Explain the role of the regional carriers in the air transport system
▪▪ Discuss some of the innovations pioneered by the major air carriers in the early 1980s that had a profound effect on the structure of the industry
▪▪ Compare and contrast the major and national carriers at the time of deregulation and during the subsequent years, in terms of expansion, consolidation, and concentration
▪▪ Describe some of the problems faced by the CAB and the air carriers prior to deregulation
▪▪ Deﬁne trunk, supplemental, and local-service carriers, and describe their role in the prederegulation era
10. H ow many active private pilots were there in the United States at the end of 2010?It’s been said that “personal flying is just a rich man’s sport.” Do you agree? Disagree?Why?
9. Why did the general aviation aircraft manufacturers concentrate on developing aircraft to meet the needs of the business market as early as the 1950s? What are some of the factors that have caused
8. Why is the general aviation support industry like a three-legged milk stool? Discuss the important interrelationship among manufacturers, the service industry, and users.Name six general aviation
7. Describe some of the steps that have been taken by the general aviation community to reverse the downward trend in aircraft sales.
6. What are the primary services provided by the FAA to general aviation pilots?
5. Approximately how many airports are there in the United States? How many publicuse airports? Approximately how many airports in the United States are served by the certiﬁcated and
4. Discuss the signiﬁcance of the General Aviation Revitalization Act. How have the manufacturers responded in recent years?
3. Discuss some of the factors that led to the decline in general aviation aircraft sales in the postderegulation period. What was the primary reason for the light-aircraft manufacturers
2. List the primary-use categories. Distinguish between business and corporate use. What is the primary role of NBAA? AOPA? Deﬁne aerial application, aerial observation, and aerial other. What is

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