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Written by Mandie Boden
University of PhoenixÃ¯Â¿Â½
The United States airline companies are enigmas, they are a giant industry that has billions of dollars in equipment and gross revenue, they employ thousands of people, but the airline companies can be toppled by the equivelant of a feather when the economy takes a turn for the worse. The United States Airline companies even in the best of times have a thin measure of profit. Now is not the best of times in our economy. Airlines have many things working against profit even in a stable economy; however in a recession those problems such as price elasticity, monetary and fiscal policies, externalities, and wage inequality are exacerbated. Price elasticity of supply and demand shift with what is affecting the country; monetary and fiscal policies increase the pressure on the industry, externalities such as the weather, all the way to September 11th, and our current state of the economy affect the success of the airline business.
To top off these monumental issues, the workers are those that suffer the most, bearing the brunt of the problems, wage equality, cut backs and closing of flights affect the people working for this vital industry. The United States Airline industry plays a significant part in the stability of our economy as it is said to make up approximately 8% of the American Gross Domestic Product in 2004 (MIT). Now this is a bit of a catch because as the airline industry helps with the stability of the economy, the airline companies have a fragile balance kept in place by the stability of the economy.
Price elasticity of supply and demand in the airline industry is a lesson in polar opposites.