AERT 3000 Study Guide

Someone choosing to fly on a full-service airline will always want to fly with such full-service airlines, and will not be willing to give up some amenities for the right price. (True or false)

False

By definition in the slides, a 'National Airline' in the United States typically has annual operating revenues of ________.

100 million to 1 billion dollars

LCCs often fly out of secondary airport because they tend to have -------------

Less conjestion

Lower landing fees

Some characteristics of the Full Service Network Carriers include:

attractive to business travelers as well as leisure travelers

Large fleets with several types of aircraft

Multiple cabin classes

Michael Porter’s three generic strategies for competitive advantage include

Differentiation

Focus

Cost Leadership

Airlines are highly profitable and are not greatly affected by external factors. (True or false)

False

Regional airlines, typically - 

carry traffic from smaller communities and connect them to larger areas

use small aircraft to serve passengers

could operate independently or under the brand of another airline

focus their services on a region

Which business strategy is most associated with ultra-low-cost carriers (ULCCs)?

Cost Leadership

Based upon schedule availability, what are the different types of airlines?

Scheduled

Charter

Some pros of the Hub and Spoke network system include -

Adding a new spoke city adds many new O&D possibilities

Convenient for passengers

Minimizes required number of flight segments

Aviation is responsible for _________ of global carbon emissions.

2-4%

A SWOT analysis looks at a company's _____________ factors.

Internal and external

What are the different types of airline networks?

Hub and Spoke

Point 2 Point

Linear

Hybrid

Typically, Low Cost Carriers do not use hub and spoke operations because of the higher costs associated with those type of operations, and LLCs' overall business model is not supported by such operations. (True or false)

True

In Porters Five Forces, he describes those forces in two dimensions - ________ or ________.

Vertical or Horizontal

Some pros of the Point to Point (P2P) network include:

High utilization of assets

Fast - Nothing better than non-stop service from O to D

Fewer conflicts - A delay at city C does not affect A to B

A PESTEL Analysis looks at factors which are _________ to the company

External

Some characteristics of Low Cost Carriers include:

Often one booking class & mostly short- or medium-haul

Targeted to price-sensitive passengers 

Usually point to point route structure

Often non-refundable, simple, and unbundled tickets

Which type of accident is the  NTSB required to investigate

The collision of a dump truck and a school bus

An explosion of a gas pipeline which destroys a neighborhood of homes

The collision of a speed boat and the Staten Island Ferry

The collision of a motor boat and a sail boat

The crash of a Cessna 172

An explosion of a gas pipeline which destroys a neighborhood of homes

The collision of a speed boat and the Staten Island Ferry

The crash of a Cessna 172

According to the Airmail Act of 1925, airlines were paid for carrying airmail based upon _________.

Both weight and zones

Which of the following does not fall under the Department of Transportation

The Federal Aviation Agency

The Coast Guard

The Maritime Administration

Pipeline and Hazardous Materials Safety Administration

The Coast Guard

By granting more airlines permission to operate across the North Atlantic in 1945, the CAB effectively broke _______ monopoly in international air travel.

Pan Am's

A ptovision of the Airmail Act of 1930 gave the Postmaster General the authority to consolidate or extend airmail routes that were in effect based on his own judgement. (True or False)

True

The purpose of the Independant Safety Board Act was the removal of the NTSB from the Department of Transportation, theus separating it from any political influence. (True or False)

True

In 1945, the CAB granted _____ airlines permission to operate across the North Atlantic.

3

One major result of the Airmail Act of 1934 is that it ________________.

prohibited aircraft manufacturers from having a stake in airlinesp

In 1940, Roosevelt gave the CAB the responsibility to ___________.

economically regulate the airlines

Investigate Accidents

The Civil Aeronautics Act of 1938 created the ___________.

Civil Aeronautics Authority

The Fair Treatment for Experienced Pilots Act of 2007 allows airline pilots to fy until they reach the age of ______.

65

Which was the first piece of federal legislation to deal with the licensing of aircraft and airmen

The Air Commerce Act of 1926

One of the driving forces for the 1958 Federal Aviation Act was:

A series of mid-air collisions involving airliners

A major provision of the Federal Aviation Act of 1958 was the creation of the NTSB. (True or False)

True

What precipitated the passage of the Federal Aviation Act of 1958?

Several mid-air collisions

According to the Airmail Act of 1934, who would be responsible for setting airmail rates and making payments?

Interstate Commerce Commission

The NTSB only investigates aircraft accidents. (True or False)

False

Which is not a step in the investigation of an accident by the NTSB

Preliminary report to Sec Trans

The 1978 Airline Deregulation Act allowed US based airlines to set their own fares and routes so as to encourage the development of a competitive domestic market. (True or false)

True

Which of the following is not an argument against the move for deregulation?

Destructive and predatory price competition which ultimately results in industry concentration

Adverse impacts on airline employees

Loss of overall airport revenue

Possible worsening of the industry’s excellent safety record

Loss of overall airport revenue

One of the results of the 1978 Deregulation Act was that there was a move for airlines to merge. (True or false)

True

Some of the good results of airline deregulation include __________.

The development of better aircraft.

Lower airfares

The advent of frequent flier programs

Increased employment by the airlines

More open sky agreements with foreign countries

Increased air travel

Increased aviation safety

The key issue in favor of deregulation is:

The desirability of free competition in the industry

The 1978 Airline Deregulation Act allowed US based airlines to set their own fares and routes so as to encourage the development of a competitive domestic market. (True or false)

True

Another result of deregulation that occurred in the early to mid 80s was:

b) The dramatic growth of code sharing agreements between regional and major airlines

d) All of the above

a) The increased use by the airlines of the hub and spoke system

e) a and b above only

c) The advent of several intrastate airlines

e) a and b above only

Airline regulations governing market access, frequency, capacity and fares unnecessarily restricted competition and prevented consumers from enjoying the benefit of a competitive market. (True or false)

True

In response to the Airline Deregulation Act, most carriers reconfigured their networks into point-to-point operations. (True or false)

False

Unbundling of fares is an important strategy of the airlines because ________.

Airlines can avoid portion of certain federal taxes

People tend to buy tickets based upon the lowest fares.

The provisions of the Deregulation act of 1978 apply to both domestic and international aviation. (True or false)

False

The Montreal Convention of 1999 replaced the _________.

Warsaw convention

The Warsaw Convention of 1929 originally limited passenger liability on international flights to __________.

$8300

The fundamental issues that a bilateral agreement cover are __________.

The governments role in determining fares

The routes the carriers can serve

The number of carriers that each government can designate to provide service between the two countries.

Which of the following were among the principles adopted to guide the Paris Convention of 1919.

Right of use by aircraft of all public airports. Landing fees should be imposed without discrimination

Necessity of a permanent international aeronautical commission

Convention does not affect the rights and duties of belligerents or neutrals in time of war

Obligation to give effect to the provisions by its domestic legislation

Provisions for military, naval and state aircraft when they are in government service

Right of transit without landing for international traffic and the right to compel landing of such traffic if needed

Mutual indemnity to cover damage

Bilateral agreements vary, but they all cover which of the following fundamental issues?

The number of carriers the each government can designate to provide service between the companies

The government’s role in approving fares

The routes the carrier can serve

The Warsaw Convention of 1929 provided that an air carrier was liable for damages in the event of:

Loss resulting in the delay in the transportation of passengers, baggage or merchandise

Destruction or loss of or damage to baggage or goods

Death or injury of the passenger

Which are goals of the International Civil Aviation Organization?

Ensure the safe and orderly growth of international civil aviation throughout the world.

Encourage the development of airways, airports and air navigation facilities for international civil aviation.

Avoid discrimination between contracting states.

ICAO is headquartered in ___________.

Montreal

The Chicago Convention of 1944 specifically stated that it superseded the __________ Conventions.

Havana and Paris

A carrier may pick up passengers from a state other than their own and deliver to a third state, also not its own is which freedom of the air?

Fifth

There are presently nine freedoms of the air.  The Chicago Conference of 1944 only approved the first ________.

Two

What is the upper limit of sovereign airspace?

NO agreed upon limit

The Bermuda agreement of 1946 was a bilateral agreement between which two countries?

The US and Great Britan

Hijacking was a major concern of the Tokyo Convention. (True or false)

False

ICAO was specifically charged with  ____________.

the collection and publication of information on international air services

establishing an air transport committee

establishing an air navigation commission

the reporting of infractions

the adoption of international standards and practices.

The Tokyo Convetion of 1963 was the first act by the international community to combat unlawful acts to civil aviation. (true or false)

true

The airline industry is a:

Oligopily

Airline deregulation removed the high barriers of entry to the airlines. (True or false)

False

Mergers have to be careful so as not to violate certain US laws.  The most common laws that affect mergers are:

The clayton and sherman anti-trust act

Which of the following are other characteristics of the airlines?

Governmental financial assistance

Sensitivity to economic fluctuations

High labor and fuel expenses

Excess capacity and lower marginal costs

High technological turnover

Close government regulation

The competitive advantage of schedule frequency

What are the characteristics of an Oligopoly?

Few sellers of a similar product

Mutual dependence

Substantial economics of scale

High barriers to entry

Price rigidity and non-price competition

Growth through merger

What are some of the factors that create high barriers of entry for new airlines?

Established airlines have a larger network, thus increasing service is a smaller percentage of its overall costs

Availability of gates at airports

Name recognition makes it more likely that the established airline will attract more people.

Economics of scale means that as the size of an operation increases, the average cost of its product also increases. (True or false)

False

In the pre-deregulation world, what were the reasons for airlines to merge.

Acquire the entire route structure

Avoid the possibility of bankruptcy

Solve the problem of seasonality

Eliminate competition

Mutual dependence means that with only a few competitors in the market, it matters a great deal to each company what their rivals do. (True or false)

True

Price rigidity and non-price competition means that in oligopolies, companies are more comfortable keeping their prices the same and competing by using other services that they provide. (True or false)

True

What effect does high technological turnover have on the airlines?

Much capital is needed to sustain the rapid re-equipment cycle

Employees require retraining on new equipment

It forces them to undertake a re-equipment cycle every eight years

The competitive advantage of schedule frequency simply means the more flights that an airline operates between city pairs, the more people will fly with that company. (True or false)

True