# data[].attributes.body
Demand & Supply:
Good analysis. Please include diagram on Demand & Supply

Elasticity:
Which type of Elasticity of Demand? Please include explanation on Elasticity for above. Thanks.

Oligopoly:
Please explain meaning of Oligopoly. Include the features to show that industry is oligopolistic.

# data[].attributes.headline
Price elasticity of different types of flights

# data[].attributes.subject
Price elasticity of different types of flights

# data[].attributes.body
This graph illustrates the price elasticity of demand of the airline industry.
When the demand is more price elastic, a decrease in price will bring about a larger proportionate increase in quantity.
From the graph it can be seen that there is a movement from P2 to P1  resulting in the movement from Q2 to Q1. However there is a larger proportionate movement from P2 to P3 which resulted in a larger movement from Q2 to Q3.
Therefore as seen in the graph, the demand in the airline industry is price elastic and consumers are very responsive to the price change.

# data[].attributes.attachment_link.readable_text
Warren Buffett got burned with an airline investment in the 1990s. He blamed the industry's notorious low profitability on the "kamikaze pricing tactics of certain carriers" and vowed to not invest in this "death trap" sector again. In fact, he joked that he was an "aeroholic" and that he'd set up a toll-free number for himself that he could call to be talked out of any such temptations.

Apparently the toll-free number didn't work. Berkshire Hathaway's latest 13F filings and other news releases show that Buffett invested at least $1.2 billion in the four largest U.S. airlines, taking a 4.16% stake in American Airlines, smaller stakes in United and Delta, and an undisclosed stake in Southwest Airlines. What could have changed his mind?

The industry was indeed unprofitable for decades. But times have changed. Industry observers have noted that since 2010, "The airline industry is profitable again - really profitable." Some of that profit is the result of innovative pricing models. But two important structural changes have taken place. The first is that multiple mergers, aided by intense lobbying efforts, have made the industry a lot more concentrated, and hence "more oligopolistic." (The Department of Justice Antitrust Division is currently investigating the four largest carriers, and a lawsuit by airline travelers is pending.)

The second structural change is that, largely unnoticed by the public and under the regulatory radar, a small set of large institutional investors have acquired significant stakes in competing airlines. BlackRock, Vanguard, State Street, and PRIMECAP are among the top seven shareholders for all four major U.S. airlines. Fidelity is among the top seven shareholders for three of them and is the tenth-largest shareholder of the fourth. Even before Buffett's investment, the major U.S. airlines had one thing in common: their largest investors.

These stakes aren't "small minority stakes" - the top six owners of each airline hold up to 40% of the vote share. This is more than enough according to conventional measures to completely control a company. Warren Buffett's common ownership stakes come on top of those created by the existing investors.

What's the significance? Such "common ownership" links have been shown to cause increased prices and reduced seat capacity, just as consolidation by mergers would do - it doesn't matter whether you merge two firms or simply buy the shares of both of them. Similar effects have been shown in the U.S. commercial banking industry.

Common owners don't need to explicitly tell their portfolio firms, " I'd like to see them boost their fares but also cut capacity" (although some of them do). In fact, not saying anything about competition might be precisely how common owners cause higher prices. The alternative to the ownership structures we see today would be owners not having stakes across the industry. One example would be activist hedge funds, which are known to push for and successfully implement product market strategies that increase the market share of a target firm at the expense of its competitors.

However, market share is zero-sum: An increase in market share of one firm must come at the expense of a competitor. It would therefore be absurd to expect that a common owner of multiple firms in the industry similarly encourages each one of them to steal market share from the other firms in the investor's portfolio. So even if Warren Buffett promises to remain a quiet ("passive") investor, basic economic theory and existing empirical results indicate that his involvement in the industry is likely to help lessen competition between airlines and further improve their profitability.

Given the huge extent of common ownership in the U.S. airline industry, it is not surprising that the price wars of the 1990s have ended and that profits are on the rise. The result is an industry that has become "investable." In contrast to his reputation, Buffett didn't "pick stocks" in this case so much as pick an industry.

The next 13F filings will show whether the stakes he has accumulated are large enough to help further consolidate the industry without triggering involvement by antitrust authorities. The market reaction supports that interpretation: The airlines' stock prices took off when the news broke about Buffett's common ownership investment. Rather than competing to deliver better service at lower prices, all four airlines are soaring together.

# data[].attributes.attachment_link.entities[].name
Department of Justice Antitrust Division

# data[].attributes.attachment_link.title
Warren Buffett Is Betting the Airline Oligopoly Is Here to Stay

# data[].attributes.attachment_link.description
Warren Buffett got burned with an airline investment in the 1990s. He blamed the industry's notorious low profitability on the "kamikaze pricing tactics of certain carriers" and vowed to not invest in this "death trap" sector again.

# data[].attributes.attachment_link.readable_text
[BENGALURU] US airfares are expected to fall in 2017 amid overcapacity and stiff competition between budget carriers and legacy airlines, according to an American Express report on the travel industry.

Short-haul economy fares are expected to drop 3 per cent, while long-haul business class fares may see a 1.5 per cent decline in the United States, the American Express Global Business Travel report said.

However, higher ancillary fees will help offset lower fares in North America as airlines continue to look for new revenue sources, the report added.

For months, lower fuel costs have allowed airlines to add flights that would have been unprofitable when oil prices were high. With seats for sale growing faster than the pool of passengers to buy them, fares for US flights have fallen.

In particular, budget carriers such as Spirit Airlines Co have added cheap service at the hubs of larger rivals and are now adding routes from medium-sized airports.

Top carriers American Airlines Group Inc and United Continental Holdings Inc plan to fight back by marketing cheap but higher-restriction fares, which partially explains why 2017 may see more price drops.

Airfares in Europe and much of Asia Pacific are expected to stay flat, with slight increases depending on route and fare class in the Apac region. In Europe, fares would continue to be impacted by weak economy and security concerns.

US hotel rates are estimated to increase 3.6 per cent next year.

Hotel rates in Europe are expected to rise marginally, while they could vary in the Apac region as strong demand in China and India could be hurt by a rise in inventory, according to the report.

REUTERS

# data[].attributes.attachment_link.title
Overcapacity, competition to weigh on US airfares in 2017: report

# data[].attributes.attachment_link.description
THE BUSINESS TIMES Transport - [BENGALURU] US airfares are expected to fall in 2017 amid overcapacity and stiff competition between budget carriers and legacy airlines, according to an American Express report on the travel industry.. Read more at The Business Times.

# data[].attributes.attachment_link.readable_text
Senior Vice President, Global Aviation Practice for Marsh UK

Notwithstanding favorable growth predictions, the global airline industry operates in a complex and ever-changing environment, one with the potential to be adversely affected by a wide variety of unexpected regulatory changes and external events, such as security fears, natural catastrophes and infectious disease. The resilience of air travel to bounce back from these shocks is a reflection of global and sometimes regional economic conditions.

Although the aviation industry continues to grow rapidly, consistent and healthy profitability is often difficult to achieve due to operating models constantly having to adapt to change. Low-cost commercial airlines have performed best in recent years, and now control some 25 percent of the global market, with continuous expansion into emerging markets. Profit margins, however, remain constrained to less than 3 percent overall.

Given this unpredictable and volatile business environment, the way that commercial airlines react to these growth trends will determine their performance over the coming years.

Can the Growing Demand Be Met?

Between now and 2035, to meet the growing demand in air traffic, Boeing predicts that there will be a need for 617,000 commercial airline pilots.

To put the scale of this into perspective, there are currently only around 130,000 commercial pilots in the world. Today, 76 percent of airlines are saying they will hire more pilots by 2017.

If we look at a specific region like the U.S., airlines are facing what threatens to be their most serious pilot shortage since the 1960s, with annual demand being predicted to outstrip supply in the near future.

In fact, the issue is already causing problems among smaller regional airlines. For example, Republic Airways, which operates for Delta, United Express and American Eagle, recently filed for bankruptcy, which it in part blamed on a lack of pilots. Other U.S. domestic airlines are also cutting routes due to pilot shortages. The problem looks set to continue and eventually spread to the bigger operators that may also be forced to terminate routes and flights.

The problem isn't just in the U.S., however; the high demand for pilots is a global trend. In particular, the Asia Pacific region has the largest projected increase in pilot demand, with 248,000 new pilots thought to be required by 2034 to sustain growth. Europe will require 104,000, the Middle East 58,000 and Latin America 51,000.

Current Supply of Pilots is Decreasing

With globalization, demand for commercial flights is increasing so rapidly that it is now beginning to outweigh the resources available to deal with the growth. Across the globe, various plans are being put in place to try to facilitate and cope with this need.

Many major airlines are increasing the number of flights scheduled and the size of their airline fleets. The key concern for the aviation industry is whether there are enough pilots available to feed this capacity. While the demand for pilots is increasing, the number of available pilots is decreasing for several reasons:

An aging population. Considering that the average age of U.S. commercial airline pilots is 50, a significant number will soon be retiring around the same time as demand is set to increase.

Decreased military flight training, high civilian instruction costs and an increase in mandated hours. The combined effects of decreased military flight training, high civilian instruction costs and an increase in mandated hours for airline pilots in certain countries have made being an airline pilot more restrictive and less attractive.

Greater pressure on wages, particularly for regional and low-cost airlines. Consolidation among the larger commercial airlines has also given them more negotiating power over the regional and low-cost airlines, making it harder for these smaller airlines to raise wages. As a result, commercial airlines are now in much greater competition with other industries in terms of career opportunities, pay and benefits.

Competing for Talent: How the Right Employee Benefits Can Help

Due to the increasing demand for pilots and a growing lack of suitable candidates, airlines need to develop strategies to ensure they attract and retain the right crew.

Conducting pay reviews is perhaps the most obvious method of attracting and retaining pilots. Given that the cost of flight training is considered to be a deterrent for young talent, potential employees are more likely to be attracted to airlines that offer generous packages covering these costs.

Airlines could also seek to improve working conditions, taking steps to ensure that the corporate culture promotes a better work-life balance for employees. For example, longer rest periods, more regular schedules and revisions in the number of hours that pilots are required to fly annually could all have positive effects.

Another way airlines can set themselves apart from the competition is to provide an enhanced employee benefits package. Given the unique challenges faced by pilots, most airlines recognize that they need to provide specialized aviation employee benefits coverage, as opposed to some of the more generic employee benefits packages available. Such niche coverage typically falls into four key areas: personal accident, term life, emergency medical expense and loss of license.

Company Positioning in a Candidate-led Market

The aviation industry is coming under increasing pressure to match the growing demand for pilots with enough supply. As this race for the best talent intensifies, airlines will be forced to fundamentally rethink their people strategies.

Given that they operate within an often harsh and volatile economic environment, airlines will need to explore a variety of creative approaches beyond simply raising salaries to attract and retain crew. Certainly one approach is to put in place an aviation employee benefits program that distinguishes an airline from its competitors.

# data[].attributes.attachment_link.title
Tomorrow's Airlines: In Crisis or Ready for Take-off?

# data[].attributes.attachment_link.description
Senior Vice President, Global Aviation Practice for Marsh UK Notwithstanding favorable growth predictions, the global airline industry operates in a complex and ever-changing environment, one with the potential to be adversely affected by a wide variety of unexpected regulatory changes and external events, such as security fears, natural catastrophes and infectious disease.

# data[].attributes.body
This graph illustrates the demand and supply of the pilots in the airline industry.
The shift in demand(increase) is caused by globalisation, increasing the need of commercial flights. The shift in supply(decrease) is caused by the reduced amount of available pilots left in the airline industry.

These two shifts would increase the price equilibrium of the airline pilots which is their salary. Indicating that the salary of the airline pilots would increase due to the increase in demand.

# data[].attributes.body
The airline industry undergoes oligopoly, where only a few sellers that provide similar products or services but differ in branding and promotion methods. Oligopoly occurs when the top 4 firms of the industry earns generally more than 60% of the total sales.  There is also a substantial barrier to entry, discouraging potential competitors to enter the industry. This 2 characteristics are applicable to the airline industry.

This article reports that the American airline industry has significantly shifted to an "oligopolistic" market due to 2 major changes in the market.

The first change would be that multiple horizontal merges have taken place in the industry. This would equate to a smaller number of large firms supplying most of the output in the airline market industry. Thus, the industry has become more oligopolistic due to multiple horizontal mergers. This first change is further aided by the lobbying efforts made by the airline corporations.

The second change would be that large institutional investors are investing in the four major airlines in the States, namely American Airlines, Delta Air Lines, Southwest Airlines and United Airlines. This investments have resulted in increased prices and reduced seat capacity. The effects are similar as to what happens with consolidation mergers. This has thus made the industry more oligopolistic.

# data[].attributes.body
This article mainly talks about the growing demand for airline pilots as well as the lack of supply of pilots.

To meet the demand for air travel, an estimate of around 617,000 commercial airline pilots would be needed by 2035. However, currently there are only around 130,000 commercial pilots in the world and 76% of airlines say they more pilots would be hired by 2017.

The problem of shortage of pilots are threatening airlines as this shortage is the most serious one since the 1960s. Shortage of pilots have also caused smaller regional airlines to file for bankruptcy. Other domestic airlines in the united states have also cut routes due to the shortage of pilots.

Even outside of the U.S, there are high demand for with the Asia-Pacific region demanding 248,000 new pilots by 2034 in order to sustain growth. Europe will require 104,000, the Middle East 58,000 and Latin America 51,000.

Globalization has caused the increase in the need of commercial flights as well as pilots and this has start to outweigh the resources available.
While the demand for pilots are increasing the number of pilots that are available are decreasing due to reasons like an ageing population.

# data[].attributes.body
This article reports that US airfares are expected to fall in 2017 as a result of overcapacity and stiff competition between budget airlines and legacy airlines. Short-haul economy fares and long-haul economy fares are expected to drop 3 per cent and 1.5 per cent respectively.

Due to the lower costs of fuel, cost of production has fallen and there is an increase in the quantity of fuel supplied resulting in airlines increasing the number of flights, which causes a shift in the supply curve to the right in the airline market. With seats for sale growing faster than the pool of passengers to buy them, airfares for US flights have fallen resulting in an increase in demand for flights. This explains how overcapacity has contributed to the drop in prices of US airfares.

Moreover, budget airlines such as Spirit Airlines Co have further lowered the price of their services, hence increasing competition in the airline industry. As a result, top airlines in the US such as American Airlines Group Inc and United Continental Holdings Inc have no choice but to market their services at lower prices in order to keep up with the stiff competition in the airline market. Price elasticity measures the responsiveness of the quantity demanded of a good or service to a change in its price. The greater the amount of substitutes available to consumers, the more price elastic the demand for a good or service. Since there are a plethora of airline companies for consumers to choose from, the airline industry is considered price elastic.  Therefore, since the airline industry is price elastic, the quantity demanded for flights is very responsive to a change in price of airfares. This explains why the drop in airfares results in an increase in quantity demanded for flights.