Report question about AMR-US Airways Assignment Example | Topics and Well Written Essays - 750 words

Report question about AMR-US Airways - Assignment Example give the axe volatility is bad for the skyways because it reduces airline revenues, trust fund revenues, and access of passengers to the national aviation system. The domestic passenger traffic, reduces by 9% overall. Some airlines in the US decrease of 25%. These decreases declined the revenue of airports, prompting the airports to cut their operating costs, and hold the capital improvement projects. Price fluctuation in like manner led to airports to reduce their airline capacity causing some of the passengers to lose access to the services of commercial air. This is due to increase fares in the passenger market. Smaller airports with fewer flight options, has the largest component part decrease in their nonstop destinations as well as their reduction in capacity. Therefore, when the price of fuel fluctuates, Trust Fund revenues allow foring fall, thereby modify to a decrease in the funds non-committed balance (Lehman, 67). The Cost per ASM is computed by calculating the operating cost by the gettable Seat Miles that an online provides each year, this will vary with capacity. A quick analysis of the ASM from the company shows that the overall capacity has increased since. This explains the reducing Cost of ASM. On the other hand, the operating expenses have increased sharply since. Therefore, CASM for the 3month ending 2013/06/30 The Revenue Seat Miles is the distance an airplane flies times the passengers seat available for the passengers (Ones, 76). RSM is normally referred as the available seat miles. Therefore, the operating Cost per Mile is calculated as The difference between the two numbers is calculated as 926 The US Airways The count operating cost in the 2nd quarter was recorded in $3.4m, this was a one percent increase compared to the previous year. The operating Cost per available seat mile was recorded are 12.88 cents. This was down 2 % on a 4.2% rise in the airlines ASM. When spec ial items like profit and fuel share are excluded, the airlines CASM becomes 8.21 cents. The 8.21 cents is a 0.4% decrease in CASM compared to the previous year. The merger will benefit the firms because it would generate it would raise more than half a billion dollars to the consumers and firms as well. Additionally, the merger will provide an effective competitor to some of the leading companies in the industry (Ones, 76). This will reduce competition by sidelining the market from creating competitive and new flight options for the passengers (Nutriment, 88). Consequently, the merger would allow for in cutting of services and raises the domestic fares. Also, the merger would be beneficial to the firm because it would result to a more competitive airline industry thereby giving the passengers more choices (Lehman, 67). Also, the merger would bring about the most competitive development in the airline industry. It is in the same dimension that FTC allowed UA-CO merger. However, th e FTC is discouraging AA-US merger because the merger would reduce the legacy carrier number from 4 to 3. This would increase the chances of coordinated professionalism among the airlines. This will lead to higher fees, fare, and diminished services. Therefore, blocking the merging of the two airlines will loosen the competition. This will prolong the cycle of the crisis to the passengers detriment, to the US airways, and also to the employees