http://www.canada.com/vancouversun/news/business/story.html?id=bb60e317-df17-4be4-b07a-af79cdabbaf0

Summary:

The International Air Transport Association has reported that there has been “alarming” drop in passengers last month all around the world except Latin America. This decline is because of the high fuel prices and the decline in the global economy. This kind of drop in passengers has not happened since the SARS scare in 2003.Latin America saw an increase of 1.7 percent year over year while everyone else in the world saw a 2.9 percent year over year decrease. North American airliners saw a decline of 0.9 per cent during September after a trend of gradual increase of five percent in the previous months. Air Canada has similar troubles as their overall traffic has dropped by five percent last month.

The Operation of a Market: The Concept of Supply and Demand:

This chapter focuses on the concept of Supply and Demand. As you can read from the article, the demand for people who want to travel via airlines has decreased last month. There are several reasons for this. One of these reasons is because of the fact that due to the increase of gas prices, the prices of airline tickets has also increased. The increase in price has deterred people to travel via airplanes. People are either trying to find a cheaper alternative or wait until the gas prices has gone down a bit. Another reason is because of the fact that the global economy is doing so poorly, people are hesitant to spend their money and rather save their money just in case.

Reflection:

Its unfortunate that these two events(poor global economy and rising gas prices) happened at the same time. I predict that this trend of decreasing amount of passengers will continue until the global economy is on solid ground again and when gas prices also go down. Unfortunately it looks like that is not going to happen in the foreseeable future. The airline industry is going to suffer incredible due to this and there is very little that they can do about it. If this continues, they might reduce the amount of airplanes traffic and this in turn will layoff hundreds of jobs in the flight industry.

Link : http://thechronicleherald.ca/Business/1078463.html

Summary

Air Canada has decided to close their flight attendant base in Halifax as a way to counter the increasingly high fuel prices. This decision will result in 187 flight attendants losing their jobs. However Halifax Local 4090 believes that the base is effective and that Air Canada is making a grave mistake. They believe by closing down this base that it will increase costs the the airline and it will jeopardize reliable air service in Halifax. Air Canada's justification on this move is that there would be additional layovers and more flight attendants would be deadheading (flight attendants taking up seats to travel to and from work)

Introductory Concept - Opportunity Cost

Opportunity cost is the cost of passing up the next best alternative choice when making a decision. The opportunity cost in this article is when "deadheading" happens. Air Canada has to have enough flight attendants in Halifax so that they can have flights going in or out of Halifax at any given time. Having this many flight attendants stationed out or in of Halifax airport will definitely have many flight attendants deadheading. Air Canada will be losing approximately $1000 dollars for every seat that is being taken up by a flight attendant.

Personal Reflection

It is very unfortunate that 187 flight attendants will be losing their jobs because of this decision by Air Canada. If fuel prices were skyrocketing, then these jobs wouldn't have been lost. I find it hard to blame Air Canada because it was a business decision based on the facts that this base is no longer profitable. What could Air Canada have done instead? I do not think that they was another solution where they did not have to fire those flight attendants and still make a profit, you can only have one.