Purchase Solution

Government policy to rescue Airlines Industry

Not what you're looking for?

Ask Custom Question

I need help applying economic concepts to this situation:

Suppose you are an advisor to the U.S. Department of Justice, the agency with responsibilities that include, among others, the power to approve or disapprove proposed business mergers in the United States. You are faced with the following problem: The U.S. airline industry was staggered by the attacks, and the impact on travel and travel costs still continues . Major carriers, including United Airlines, U.S. Airways, and just recently, Delta and Northwest, have filed bankruptcy, and others are expected to follow. In addition to diminished demand for travel, the cost of running an airline continues to rise as the costs of greater security and increased fuel prices (driven at least partially by worldwide unrest) reflect in an airline's operating costs.

What policy towards the airlines should you pursue?
Should you try and convince government leaders to provide additional outright grants to airlines beyond those already granted?
What about loans or loan guarantees?
Should you stand back and let the market determine which airlines stand or fall? Should you encourage mergers, and, if so, based on what criteria?

Purchase this Solution

Solution Summary

This discusses the government policy to rescue Airlines Industry

Solution Preview

What policy towards the airlines should you pursue?
I would pursue those policy which leads to the good health of the airline industry. Right now the situation of airline industry is not good. The players are suffering heavy losses and overall external environment to the industry is also not encouraging. Thus I will try and convince the leaders to provide additional grants so that they can face and survive these turbulent times. Loan gurantees and or loan at susidised ...

Purchase this Solution


Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.