PT.garuda indonesia Essay Example | Topics and Well Written Essays - 1750 words

PT.garuda indonesia - Essay Example In the year 1990, the country has around 10 airlines where in the year 2005, the number has increased to more than 30. Some of the leading airlines include Indonesia Air Asia, Garuda Indonesia, Lion Air, Merpati Nusantara Airlines, Wings Air, Mandala Air, Batavia Air etc. 1.2 Background of PT. Garuda Indonesia Garuda Indonesia is a leading airline organization. The airline’s first flight started off in the year 1949. Despite of financial downturn in 2007, the airline company has been able to secure considerable profitability in the years 2007, 2008 and 2009. Part B 2.0 Factors Affecting Demand and Supply (theories & applications) 2.1 Factors Affecting Demand There are several factors affecting the demand side of the airline industry. Factors like price, quality, number of buyers, number of suppliers, income, expected future price, demographics, population growth, seasonality etc. In this segment, four factors have been discussed in this sector to describe the impact of the sam e on the airline industry. 2.1.1 Price The following is the demand curve showing the movement of demand against price movements. Figure: Demand Curve (Source: Stanford, n.d.) As the price of the product would increase the demand is supposed to decrease, while the demand would increase with the declining price. In the decreasing airfares will increase the demand. In case, the airline companies decide to decrease the airfares, they are expected to experience less demand than before as more and more travelers would prefer to travel by train and other transportation mediums rather than taking the expensive flights. In this case, the movement will happen along the demand curve. The figure 1.1 diagram shows what would happen to the demand of any product or service incase of price variation when all other influential variables are held constant. 2.1.2 Number of Buyers Number of Buyers is a significant factor to determine the demand in the airline industry. When the number of customers woul d increase, the quantity demanded would increase leading to increased market demand (Mankiw, 2008, p. 71). However, if the number of customers decreases in this industry, the demand would decline. For an instance, after the tragic incident of 9/11, the airline industry has experienced a decline in the number of air travelers due to some security related issues. So, if the number of buyers increases, the demand curve would shift rightwards. As more customers would want to buy the tickets, the quantity demanded would increase incorporating a shift in the demand curve in the rightward direction, from d1 to d2. As the quantity demanded would increase at a fixed price, the demand expected to increase keeping the price point constant. If the quantity demanded is less, then the demand graph is going to shift leftwards. In simple terms, as the number of customers would increase for the airline industry, the demand curve is expected to experience shift in its position. 2.1.3 Income The deman d curve wo