Final answer:
All options listed are sources of economies of scale in the airline industry; they all contribute to a reduced average cost as production levels increase. These include specialization, division of labor, bulk purchasing of aircraft, and hub and spoke operations.
Step-by-step explanation:
The question asks which of the following is NOT a source of economies of scale in the airline industry: a) higher labor productivity due to specialization, b) lower aircraft price due to quantity purchased, c) higher productivity due to division of labor, d) lower operating costs due to hub and spoke operations. Among the options provided, all are sources of economies of scale.
Specialization and division of labor allow for businesses to benefit from economies of scale as the level of production increases. As production goes up, the average cost of producing each unit declines. Using the example of an airplane manufacturing industry, economies of scale are achieved up to a certain level of output, beyond which diseconomies of scale can occur.
Furthermore, purchasing in larger quantities, such as aircraft, can lead to a decrease in price due to bulk buying, which is another aspect of economies of scale. Additionally, adopting the hub and spoke model in operations can lower operating costs by consolidating activities in certain locations, leading to improved efficiencies and further contributing to economies of scale.