Chapter 3
Chapter 3 Airline Economics, Markets & Demand
Learning Objectives:
The student will know the following terminology:
• Airline System-Wide Measures
o Traffic / Revenue Passenger Miles (RPM)
▪ 4 types of traffic
o Yield
o Capacity/ Available Seat Miles (ASM)
o Unit Cost
o Load Factor = Passengers/ Capacity
▪ Average Leg Load Factor
▪ Average Network Load Factor
o Rejected Demand/Spill
• Basic Airline Profit Equation = Revenue - Cost
o Airline Profit Maximizing Strategies
• Air Transportation Markets
o Typical Air Passenger Trip
o Markets
▪ Opposite ( Parallel
▪ City-pair ( Region-pair
o Direct/ Connecting Flights
o Dichotomy of Demand and Supply
• Origin-Destination (O-D) Demand
o Factors affecting Volume of O-D Demand
o Quality of Service Factors
o Total Trip Time Model
o O-D Demand Models
▪ Linear/ Additive D = a – bP
▪ Multiplicative D = aPb where b ................
................
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