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1. Low-cost-airlines continue to enter the airline market, especially in Asia. Use the Five Forces Model to analyze the effect of new LCCs on airline industry competition, prices, and profitability.

2. One of the most challenging tasks for the airline manager is matching demand and supply (capacity). What characteristics of air travel demand make this so difficult?

3. Airline passengers are broadly segmented by purpose of travel. Characterize the two major segments by price elasticity of demand. What is the implication for the price each segment will pay for air travel?

4. Define economies of scale. Are economies of scale evident in the airline industry? What is the implication for market entry?

5. Explain how higher utilization of assets such as aircraft, gates, and pilots lowers the cost per available seat mile (CASM) or cost per available seat kilometer (CASK).

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