Up until the mid-2010s, the Association of European Airlines (AEA) represented 24 established European airlines, mostly national

Question:

Up until the mid-2010s, the Association of European Airlines (AEA) represented 24 established European airlines, mostly national flag carriers such as Air France–KLM, Lufthansa, Finnair, and SAS, but also some cargo specialists such as TNT and Cargolux.
The AEA continuously surveyed its members and published reports and statistics about its members’ passenger and cargo traffic and capacity and operating performance. Although the members of the AEA did not represent the whole European airline industry, the AEA statistics were a useful source of information about the state of the industry. In this chapter we described developments in the European airline industry during the period 1995–2016. Table 2.1 is a selection of statistics illustrating the developments in the industry during a sub-period, the years 2004–2014.
Revenue passenger kilometres (RPK) is the number of passengers transported times the average number of kilometres flown. Load factors are defined as the ratio of realized RPKs and available seat kilometres (ASK). Use the preceding information to answer the following questions about whether and how competition in the European airline industry changed between 2004 and 2014:
1 Evaluate how the rivalry among existing firms developed during the period.
2 Consider the consolidated statistics of two large European airlines. Evaluate the influence of fuel prices on the profitability of the airlines’ passenger business between 2004 and 2014. If fuel prices had not increased after 2004, what would have been the pre-interest breakeven load factor during the following years (assuming all other factors constant)? What does this imply about the European airline industry?
3 During the period examined, some airlines started to charge fuel surcharges to their customers.
For example, in late 2007 KLM started to charge its customers €25 on European flights and €70 on intercontinental flights. Other airlines introduced similar surcharges. How do such practices affect your answer to question 2? image text in transcribed