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Impacts Of Various Factors On The Airline Industry Economics Essay

Business inventories refers to the level of stored supplies and warehouse stored commodities and is a reflection of product supply and demand. An increase in business inventories means that products are not being moved fast enough in the market indicating the economy is in a declining state, resulting in a weaker currency (Business inventories ).
The Commerce Department says businesses inventories rose 0.9 percent in January. Sales increased 2 percent, the seventh consecutive gain and the largest since March. Healthy gains in sales and inventory restocking should translate into continued strong orders for U.S. factories.
The string of increases in inventories pushed stockpiles to $1.45 trillion in January. That’s a level that economists consider to be healthy for this stage of the recovery. It’s 10.1 percent higher than the recent low of $1.32 trillion reached in September 2009 (CRUTSINGER, 2011).
The industrial production and related capacity utilization indicators reflect changes in overall economic activity, and therefore gross domestic product (GDP). When these results are released They will show percentage changes on month-to-month and year-over-year levels, shedding light on short-term rates of change and business cycle growth, respectively (Barnes).
To show this report below is the Federal Reserve graph for raw capacity and Industrial Production. Notice how at the start of 2000, when the China PNTR (trade agreement) kicked in, both literally level off to flat land. When I see this graph I think what has happened to American’s industries is an absolute crime. Total capacity growth has been zero for the past year, with mining increasing 0.3% and utilities increasing 1.5% (oak, 2011). The author of this report shows how low US production has been starting in the year 2000
In the aviation industry key indicators are inflation, unemployment, and the business cycle.
Inflation affects both the business cycle and unemployment. There is an inverse relationship between rate of inflation and rate of unemployment. This relationship involves a trade off that is paid a higher rate of inflation to reduce the unemployment and for reducing the inflation, price in terms of a higher rate of unemployment has to be borne (Ahuja, 2007). Yields of the airline industry are decreased with an alarming rate because of Inflation, which will affect the financial state of the airline industry and will result into a low employment position in the industry.
Inflation is causing an increase in the price of goods and services and decrease in the purchasing power of the customers. Inflation will cause an increase in the cost of the fuel and it will result into an increase in the prices of tickets and cancellation of routes in the airline industry. Demand in the airline industry is reduced significantly. Increase in the price of the fuel will cause an increase in the overall costs of the airline industry (U.S. Airline Industry Headed toward ‘Catastrophe’ at Current Oil Prices, 2006).
Changes in the employment and interest rates also relate to the business cycle or economic cycle. Business cycle is a pattern of different periods of economic growth and a declining period in an industry (Dwivendi, 2006). Inflation will force the industry towards fiscal decline and it will cause financial instability in the industry.
Unemployment in the airline industry will affect the quality of the services because new people will not be hired due to financial instability in the industry. To provide better services to its customers, it is necessary for the company that skilled employees should be there. But unemployment position will cause a poor service and low demand in the industry. Unemployment will force the industry towards the recession period.
Business cycle- Airline industry has a long-term business cycle and it causes low profit and return to its shareholders. In expansion and boom cycle of business, both the output and employment increase till the full employment of resources and production at the highest possible level (Ahuja, 2007). This period is followed by the depression period and then by revival period. In second stage, level of employment will be decreased and the situation of unemployment will appear at a large scale in the industry.
Currently, fuel prices are increasing and hitting the airline industry badly. Airline industry is in the crisis situation and it has caused cuts and curtailment in different airlines. Business model of the industry is not working with the fuel prices and the current level of capacity (oil crisis in the Airline industry, 2008). Airline industry is operating in a deregulated environment where firms themselves decide prices and routes in a given market condition, which is causing problems for the industry. To show how bad the airlines have suffered through current economic conditions here is a chart that denotes aircraft type to be grounded aswell as job cuts to remain afloat:

Factors That Influence Household And Individual Food Consumption Economics Essay

This paper identifies the factors that influence the household and individual food consumption. Since food is the most important item of the consumption basket, an analysis of the changes in food consumption pattern over time has a special significance which is the most important component for low and middle income groups. Food expenditure pattern is an excellent indicator of economic well being of people. Economic Development is not only brings about significant changes in the socio-economic and cultural life of a habitant population but it also influences the levels of living in the long run. India, a rapid developing and agrarian dominant economy has been bringing many changes in the socio economic life of her population since independence.
Keyword -Expenditure, Consumption Patterns, Food Consumption and Household Consumer Expenditure, Factors affecting food consumption pattern.
Introduction: The analysis of changing food consumption pattern over time would help in designing appropriate policies related to food production and distribution .Increasing number of working women, rise in per capita income, changing lifestyles and increasing level of affluence in the middle income group have also brought about changes in food habits. Rapid urbanization and sociological changes like the desire on the part of the housewives to spend less time in kitchen, the increased value for leisure, weakening of family ties, increased impact of television and its advertisement as well as changing life styles of the families, have brought about the changes in food consumption pattern. Since food is the most important item of the consumption basket, an analysis of the changes in food consumption pattern over time has a special significance which is the most important component for low and middle income groups. Food expenditure pattern is an excellent indicator of economic well being of people. If the society is wealthy proportionately high expenditure will be made on secondary necessities, comfort, luxury products and conspicuous consumption. On the other, if the society is at subsistence level, people will spend proportionately more on food. Engel’s law also states that the poorer the family, the greater is the proportion of its total income devoted to provision of food.
Economic Development is not only brings about significant changes in the socio-economic and cultural life of a habitant population but it also influences the levels of living in the long run. India, a rapid developing and agrarian dominant economy has been bringing many changes in the socio economic life of her population since independence. Due to variations in natural resources endowments; physical and climatic conditions; economic factors like income, prices and the extent of magnetization; demographic factors like household size and degree of urbanization and cultural factors are likely to influence consumption expenditure pattern. Such diverse socio-economic, demographic and cultural factors are reflected in the inequality in the distribution of consumption expenditure as it is revealed by the national sample survey organization data on consumption expenditure in India.
Food consumption has been a subject of research all over the world. It is especially meaningful in developing countries where food expenditure accounts for a relatively large share of household income. Studies on food consumption shed light on food related nutritional policies. They provide estimates of how food consumption is affected by change in prices, income and taxation policies ( Dune and Edkins 2005)
The studies on food consumption pattern or expenditure pattern are very important as it is related to poverty and standard of our society. Food being the foremost basic need gets the priority in the expenditure of people, especially the poor classes. It is necessary to study the change in food consumption pattern under the changing situation of liberalization, privatization and globalization.
After liberalization began in 1991, though much attention has been paid to the reduction in head count ratio, less priority have been accorded to the magnitude and pattern of food consumption. Ray and Lancaster (2005) have recently shown that the link had weakened to the extent that the official poverty line in India today is quite out of step with that based on the household minimum calorie requirements. This necessitates an analysis on the magnitude and trend in food consumption, especially cereals, over the reform period in India, in view of their strong implications for food and nutrition securities. This study provides evidence on the magnitude and patterns in food consumption status of both rural and urban population.
There is a strong indication that improvement in the levels of living might not have been distributed well and certain pockets of the states might have remained impoverished in spite of their overall growth. While studies abound on the consumption expenditure among rural and urban households for various expenditure classes at macro level, very few studies have been done at micro level to explain the rural – urban differences in the consumption pattern.
Per capita income and food consumption both are the indicators of human development but food consumption is a better indicator of human welfare. India’s faster economic growth over 1990s has raised per capita income (expenditure) and has significantly impacted its food consumption patterns by causing a change in the structure of food consumption patterns observed earlier during pre-reforms period. This raises the relevance of looking at the composition of India’s food consumption basket. Changes in the composition of food consumption expenditure during the 1990s, including the shift from cereals to non-cereal items against the background of a decline in food expenditure share, occurred right across the growth spectrum and raise the issue of the nutritional implications of food items particularly during post-reforms period.
Purpose: The purpose of this study of the literature was to determine which factors influence household and individual food consumption.
Literature Review: Numerous studies have been made in recent years on the trends of poverty, inequality and level of living in Indian states during the 1990s. Some have highlighted the reduction in poverty (Sundaram and Tendulkar 2003; Bhanumurthy and Mitra 2004), while some others have expressed anguish over the rising economic inequality (Deaton and Dreze, 2002; Sen and Himanshu, 2004; Krishna, 2004).There is a common feeling that although there has been some overall improvement in the average levels of living of people across the majority of states, those who were already on a better footing could reap the advantages of the economic reforms in the 90‟s and experience faster growth, while there was no tangible improvement for the poorest few. Again, the rural -urban expenditure gap, believed to have widened overtime, needs meticulous scrutiny.
Campbell (1960) conducted a survey and had given a comparison between older persons and younger persons at identical income level. Younger people, at all income level, spend more on clothing, furniture and miscellaneous items than older people but less on medical care. David (1962) studies revealed that the size of the family and frequency of purchasing durables, kinds of durable purchased and the substitution of durables for commercial services hampers the consumption pattern of households. Chatterjee (1962) on the basis on NSS consumption expenditure data for rural and urban areas and six zones has been estimated for elasticities on expenditures on food.
Gupta(1968) has compared the differences in overall consumption patterns in the state of UP and Tamil Nadu for the reason of their known and distinct economic , social and cultural differences .The study has concluded that there exist significant differences in consumer expenditure on various categories of item in those states in general as well as also between rural and urban regions in each of two states.
Kwang (1972) had analyzed the effect of income as well as other economic and social demographic characteristics on household’s consumption expenditure significantly among different groups. Chatterjee