Final answer:
Airlines can achieve greater efficiency by increasing cabin space to accommodate more passengers, thus reducing fixed costs per passenger, and by managing fuel costs through fuel-efficient designs and operations. Price adjustments and advertising expenses also play roles but require careful balance to avoid negative impacts on demand.
Step-by-step explanation:
To achieve greater efficiency without compromising profitability, airlines with high fixed costs can take specific strategic actions. One of these is to increase the number of passengers per flight. This approach allows the fixed costs to be spread across more passengers, reducing the fixed cost per passenger, and can be facilitated by increasing cabin space in airplanes as HighFlyer Airlines plans to do. Another method involves reducing fuel costs, which can be achieved through fuel-efficient aircraft designs, better flight planning, and operations. While increasing ticket prices might seem like a straightforward solution, it could lead to decreased demand if prices exceed what customers are willing to pay. Lastly, cutting advertising expenses could save money but at the risk of reducing brand visibility and thus potentially lowering sales. An efficient balance between visibility and cost savings must be found.
Regarding the impact of fuel price changes, if the price of jet fuel decreases significantly, airlines may experience reduced operating costs, potentially leading to lower ticket prices and higher demand, which increases the quantity of air travel. Conversely, a significant fuel price increase would likely result in higher operating costs, with airlines then facing the choice between raising ticket prices or facing reduced profitability, which could reduce the quantity of air travel demanded.