Title 2021 ASRJC H1 Econs Prelim QP.pdf ✅

1 © ASRJC 8823/JC2 Prelim /2021 [Turn Over ECONOMICS 8823/01 Paper 1 31 August 2021 Additional Materials: Answer Booklet 3 hours READ THESE INSTRUCTIONS FIRST An answer booklet will be provided with this question paper. You should follow the instructions on the front cover of the answer booklet. If you need additional answer booklet ask the invigilator for a continuation booklet. Please start your answer to each question on a fresh page of the answer booklet. Answer all questions. The number of marks is given in brackets [ ] at the end of each question or part question. Name: ________________________________ Class: 21 / _____ This document consists of 9 printed pages and 3 blank page(s). ANDERSON SERANGOON JUNIOR COLLEGE JC2 PRELIMINARY EXAMINATION Higher 1
2 © ASRJC 8823/JC2 Prelim /2021 [Turn Over Answer all questions Question 1: Managing the Air Travel Market Figure 1: Vietnam air traffic volume, 2015 – 2019 *domestic pax refers to number of passengers on domestic flights, international pax refers to number of passengers on international flights, in millions Source: Hanoitimes, 1 November 2019 Extract 1: Why Does Vietnam Have So Many Start Up Airlines? Prior to COVID-19 bringing the aviation industry to a halt, Vietnam’s aviation market was on the rise. The country had seen 20% growth over the past five years; growth that new start-ups were looking to capitalise on. The Vietnamese domestic market is lucrative and includes the Hanoi to Ho Chi Minh City route, the fourth-busiest domestic route in the world. Vietnam itself is also very much on the up. The nation’s GDP has gone up by a whopping 225% over the past decade, and Vietnam continues to be one of the world’s fastest-growing economies. The aviation market in the country is growing for several reasons, including higher tourism levels, which necessitates more carriers to cope with demand. Additionally, restrictive foreign investment regulations make foreign entries into the Vietnamese air market unfeasible.
3 © ASRJC 8823/JC2 Prelim /2021 [Turn Over The aviation market in Vietnam is dominated by two airlines – Vietnam Airlines and VietJet – which make up a 75% share of the market. However, with high growth on the horizon and clear room for competition, new airlines have emerged. Vietravel is one such recent addition. The company is one of Asia’s leading travel operators and is now trying its hand at aviation. The carrier received its license before the COVID-19 pandemic but may be waiting a long time before acquiring a flight permit. Source: Simple Flying, December 2020 Extract 2: Vietnam Airlines wants caps removed on domestic ticket prices National flag carrier Vietnam Airlines has proposed that price caps on domestic air tickets be removed to allow carriers more pricing flexibility. The current price ceiling makes it difficult for airlines to diversify their prices, increase profits during certain periods of time like peak seasons, and in turn lower prices on some routes, Le Hong Ha, Deputy General Director of Vietnam Airlines, said at a tourism forum. Vietnam should abolish the domestic price ceiling, and allow market forces to decide prices. "The aviation market is already operating like a free market, so airlines should be allowed to freely adjust prices based on supply and demand," Ha said. The Civil Aviation Authority of Vietnam (CAAV) supports the proposal, as Vietnam is one of the few countries in the world still having a price cap, said Vo Huy Cuong, deputy head of the authority. The CAAV has proposed removal of the price cap every time amendments or supplements are made to the Civil Aviation Law. However, these were not approved because the National Assembly felt it was necessary to protect the interest of many classes of civilians travelling by air, he said. If this regulation is not amended, airlines will focus on operating and developing international routes rather than domestic ones, he added. In mid-2018, many airlines requested the government to raise domestic price caps because they were losing money on many routes after cost of fuel and labor increased, but this was not approved either. Currently, air tickets on routes under 500 km operated to promote socio-economic development have a maximum price of VND1.6 million (US$69). Source: VN Express International, December 2019 Extract 3: The Growth in Greenhouse Gas Emissions from Commercial Aviation While our collective use of automobiles, our production of electricity, and the industrial and agricultural sectors each exceed the climate change impact of commercial aviation, passenger air travel is producing the highest and fastest growth of individual emissions, despite a significant improvement in efficiency of aircraft and flight operations over the last 60 years. CO2 is the largest component of aircraft emissions, accounting for approximately 70% of the exhaust. The gas mixes in the atmosphere with the same direct warming effect that occurs when it is emitted from other fossil fuel combustion sources. The Environmental Protection Agency issued a Finding in August of 2016 that aircraft greenhouse gas emissions “cause or contribute to air pollution that may reasonably be anticipated to endanger public health and welfare.” The growth of demand for passenger and freight traffic is a central barrier to controlling commercial aviation emissions. Source: Environmental and Energy Study Institute, October 2019