Homework SYST 461/SYST660/OR750
Chapter 3: Airline Economics
SHORT SENTENCES. TO THE POINT WRITE LEGIBLY.
1) Airline strategies
Given the following airline profit strategies
Cutting Fares/Yields
Increasing Fares/Yields
Increase Flights (ASMs)
Decrease Flights (ASMs)
Improve Passenger Service Quality
Reduce Passenger Service Quality
a. Which strategy would be favorable for an O-D market pair with Price Elasticity of
Demand of -0.8? Explain?
b. Which strategy would be favorable for an O-D market pair with Price Elasticity of
Demand of -1.2? Explain?
2) Compute Market Statistics from data table for IAD-BOS Network:
a. Total Itineraries IAD to BOS (4)
b. Total Direct Flights IAD-BOS (2)
c. Total Network Flights IAD-BOS (6)
d. Total Pax IAD-BOS (75+50+75+50)
e. Total Seats IAD-BOS (100+70+100+70)
f. RPM Direct Flights
g. ASM Direct Flights
h. RPM IAD-BOS Network (Direct + Connecting)
i. ASM IAD-BOS Network (Direct + Connecting)
j. Average Leg Load Factor IAD-BOS Network (Avg (0.75, 0.75, 50/70, 50/70, 50/70,
50/70))
k. Network Load Factor IAD-BOS Network (RPM/ASM)
l. Airline A Frequency Share IAD-BOS, Airline B Frequency Share IAD-BOS (2/4, 2/4)
m. Airline A Market Share IAD-BOS, Airline B Frequency Share IAD-BOS
(75+75/75+75+50+50), (50+50/75+75+50+50)
Assume IAD- BOS= 450 nm, IAD-JFK= 300nm, JFK-BOS = 200
1
Iti
n
Origi
n
Desti
natio
n
Hub
Segment 1
Airline/ Sched
Flight # Dep
1
2
IAD
IAD
BOS
BOS
3
4
4
5
IAD
JFK
IAD
IAD
6
7
IAD
JFK
Segment 2
Airline Sche
/
d
Flight Dep
#
Sched
Arr
Seat
s
Pa
x
NULL
JFK
A123
B9871
08:00
08:00
09:30
08:55
100
70
75
50
B9651
JFK
BOS
BOS
BOS
NULL
NULL
NULL
JFK
B9871
B9651
A456
B9872
08:00
09:45
12:00
12:00
08:55
10:50
13:40
02:55
70
70
100
70
20
15
75
50
B9652
JFK
BOS
NULL
NULL
B9872
B9652
12:00
13:45
02:55
14:50
70
70
18
50
Sche
d Arr
Seat
s
Pa
x
09:4
5
10:5
0
70
50
13:4
5
14:5
0
70
50
3) In the interview with Charlie Rose, Bob Crandall (Former CEO for AAL) is asked the question: are
“we” better off after airline deregulation? SHORT SENTENCES. TO THE POINT WRITE LEGIBLY.
a. What is Crandall’s answer
b. What is the tradeoff that Crandall describes?
c. What is your opinion on this tradeoff. Is it currently fair?
2