Quick Links Exchange rates play a key role in shifting supply and demand for travel to a given destination The Euro is falling compared to the dollar So what exactly will result from the Euro's continued decline? US legacy carriers are in the best position One of the most fascinating things about the commercial aviation industry is the level of interaction that supply and demand for air travel have with global macroeconomic conditions. On the supply side, airline profits are overwhelmingly driven by fuel prices, with costs rising significantly during times in which fuel prices are high and dropping significantly when they are lower. Other supply-side factors that have a major impact on airline operations include labor market conditions and raw material availabilities, as many rare-Earth minerals are crucial components of modern aircraft construction, especially when it comes to their advanced electronics .
Get all the latest aviation news from Simple Flying! On the demand side, air travel is often subject to large-scale economic conditions that force consumers to make decisions regarding air travel. When leisure travelers have less money in their paychecks at the end of each month, either due to inflation or wage stagnation, they are less likely to book an expensive vacation, and, as a result, airlines will experience a significant decline in demand when economic conditions are weak. Furthermore, when businesses are not doing well, either due to economic conditions or other f.