Ashford 4: - Week 3 - Discussion 2

Accounting
Tutor: None Selected Time limit: 1 Day

We’ve all experienced (or heard about) the challenges that the airlines have been facing. Identify three factors that are affecting airline company’s ability to break even.

Oct 7th, 2015

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Factors affecting airline company's ability to break even

  1. Employees wages and salaries - This depends on the contract that exists between the airline and their respective unions. Wages can be termed as fixed or variable cost. Take pilots for example, they are paid a fixed amount regardless of the distant they travel each month (Fixed cost) while flight attendants are paid according the hours they put in(variable cost)
  2. Fuel cost - Seen as both fixed and variable cost. When an airplane changes the route it travels continuously, the fuel consumption will vary thus, variable cost. But sometime planes have fixed scheduled and this require a given amount of fuel regardless if the plane is empty or full of passengers.
  3. Airplane prices - Regardless of the mileage covered by plane or the number of passenger in the plane when it makes it flights, once a plane has been purchased this investment is largely a fixed cost.
Please let me know if you need any clarification. I'm always happy to answer your questions.
Oct 8th, 2015

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Oct 7th, 2015
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