Microeconomics Assignment on the US Airline Industry

1
MICROECONOMICS ASSIGNMENT

2
Table of contents
1.0 Introduction..........................................................................................................................3
2.0 Overview of the airline industry of the USA.......................................................................3
3.0 Market structure of the airline industry................................................................................4
4.0 Externalities of the industry.................................................................................................6
5.0 Conclusion............................................................................................................................6
Reference....................................................................................................................................8

3
1.0 Introduction
This study is a secondary research regarding the types and features of an industry in the USA.
The airline industry of the USA has been a major innovator and leader in the global civil
aviation industry of the world. Therefore, this industry has been selected for the analysis of
this paper. The US airline industry is one of the busiest airline industries of the world as it
handles around 1000000 passengers in a year. Apart from that, there are 12 airports in the
USA that is included in the list of the top 30 busiest airports of the world. The citizens of the
USA prefer airlines as a means of transportation from one city to another over the other
means of transport such as railways and roadways. The large distances between different
parts of the country have made a perfect platform for the airline industry of the USA (Goetz
& Sutton, 2017). The objective of this study is to discuss the features and the structure of the
industry in detail. The data and information collected for the analysis of the study have been
collected from different secondary sources such as from the website of the Federal Reserve
and different airlines companies.
2.0 Overview of the airline industry of the USA
US airline industry and the civil aviation industry is very vast having around 100 registered
airline companies that serve 67 international airports of the country. This industry is also the
biggest in the world in terms of the number of flights that departures annually. According to
the figures of the year 2017, there were around 11 million flights that operated from different
locations of the country. The industry of the USA also has a vast experience in carrying a lot
of passengers in one go. There are more than 13 airline companies operating in the industry
that uses bigger aircraft such as Boeing 747 to transport passengers from one point of the
country to the other. Williams (2017) highlighted that 1 third of the overall global passenger
is handled by the US industry. The number of passengers and the hence the industry is
increasing at great speed. While the total number of passengers that flew in the year 2006 was
745 million, it increased to 891 million in the year 2014 (DOI Executive Aviation Board,
2018). The experts estimate that the industry is expected to expand at a greater pace due to
the improved business connectivity of the USA with the emerging nations of the world.
The total revenue that was generated by the operation of the industry in the year 2017 was
$160 billion making it the biggest national airline industry in the world. Advancement in
technology and reduction in the price of fuel have further reduced the cost of operation of the