Question

Please use the economics knowledge you have learned so far to analyze the case below. You can propose your own questions and then answer them. Remember, there is no absolutely correct answer to this exercise. Its purpose is to provide you an opportunity to demonstrate your ability to think like an economist by applying economic principles to interpret the logic of a real-world phenomenon.

The Fortunes of Delta Airlines Follow the Business Cycle

Delta Airlines has grown into the world’s largest airline, earning more than $40 billion in revenue worldwide in 2015. Delta’s fortunes and the fortunes of the other U.S. airlines are dependent on the ups and downs of the business cycle. During the recession of 2007–2009, Delta had to cut ticket prices and suffered a $1.2 billion loss in 2009. By 2015, with GDP steadily growing during the economic expansion, Delta earned a record profit. Many business analysts consider Delta the best managed of the four large airlines. In 2015, the company purchased part of China Eastern Airlines. By expanding overseas, Delta sought to insulate itself to some extent from the fluctuations of the business cycle.

Answer 1

question: can delta airline completely insulate itself from economic fluctuation?

ANS:

As per the data statistics given above in the case, it shows a positive correlation with the economic condition of the country as in economic slowdown the demand for the airlines ticket slows down leading to reduction in the profit of the airliens whereas in economic booom pertiod , the profit of thr Delta airlines boost up and in normal situation it climbs up.Therefore it is affected by the demand behavior of the us people or the people affected by the recession 2008 hence to broaden its control i t can somewhat manage the risk faced or since it brought the china airline also, it gopt coverage to large no . of people so that its risk or loss are minimised, but not zero.HENCE in any ways the airline cannot be completely free from the economic fluctuation of the world, as we are now living in dynamic and a globalised wolrd whrere the interest and the goals of many countries are interdependent.