Managerial Economics Week 6 Individual Work 1 Assignment

Managerial Economics Week 6 Individual Work 1 - Assignment Example However, the decision may be affecting passengers and the public. The policy of increasing charges luggage fees can increase revenues for airlines. U.S. airlines collected more than a billion dollars in baggage fees for overweight bags, or extra bags in 2008. The revenue was an increase of 148 percent from the previous year. From a managerial perspective, the decision by U.S airways to charge $25 luggage fees for first checked bags was the best decision for the airline. Fluctuating oil prices are a major constraint and limiting resources that affect decisions of most managers. Given the high operation costs for maintaining an airline firm in the market decision such as developing luggage fees may become beneficial to the airline. Managers in US airline decided to charge luggage fees as one of the best alternative to solve the problem of increased costs of oil and operational costs for the air travel. Airlines are companies meaning they need to make decisions that boost their revenues. Increases in revenues enable airlines to remain competitive in the industry. The increase in oil prices is an evident phenomenon all over the world. The world economy is also unstable. Volatility in oil prices and world economic downturn are some of the biggest challenges the airline industry has to face today. Increased o il prices and security costs are major reasons explaining operational losses for many passenger airline companies. It is because of such costs that airline companies such as US airway decide to implement revenue generating fees for services that traditionally were part of the air ticket prices. The fact that charging luggage fees in enraging passengers a lot raises many questions, for example, should the U.S. airway and other airline firms continue charging luggage fees or should they include the fees in the ticket price? While most passengers accepted