Question

The aviation industry is described as the most fickle industry on earth. Compare and contrast the financial history of the industry's operational costs to other industries. Discuss this impact on its success or failure.

Answer 1

Cost structure of Aviation industry :

Airlines cannot compete on price without reducing their costs and overheads. The aviation industry relies on airport services, the provision of aviation fuel, labor, etc. Moreover, there may be airlines, particularly the legacy carriers which could also be dependent on costly distributive networks. Generally, the aviation’ costs are divided into three categories; direct operating costs, indirect operating costs and overheads. The direct operating costs are incurred as a direct result of the operation of a specific service – for example, the fuel and oil consumed on a flight; The indirect operating costs are incurred for a whole period of time, such as an operating season, for example; pilot salaries must be paid, even if a specific service is cancelled, and; overhead costs are incurred for even longer periods, such as buildings, or the airline management’s salaries.

Comparing with other industries :

Comparing with the other industries aviation industry is much more complicated ad also much more costlier because of it's costs and margins. So in reality we can't compare aviation industry with any other industry because of various reasons. But we can compare aviation industry in the aspect of employee job opportunities and pay. When compared to other industries the employees in the aviation industry are much more trained and well paid too. But we can't exactly say that airline pilots get paid more, because the higher the risk you take the more you get paid for that job. Seriously the job of a pilot is full of risk and they have to stay alert during their whole day. So pay is obviously on the higher side when compared to the other industries. The costs of maintaining the fleet of airplanes is also very high, so does the profit margin too. So we can;t compare this with other industries in the cost and profit aspects too. So we can conclude that aviation industry can only be compared with other industries in only some aspects but not all the aspects.

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