• Compare the cost of delay for operating a Boeing 737-800 with an Airbus A320 and explains the reasons for the difference in cost.
With the tasks of calculating the cost of delay for a Boeing 737-800 and compare it with the Airbus A320, there are certain procedures must follow. But firstly what is the definition of delay, and base on the report it says that various definitions may be used when considering aeronautical delays. For the purpose of the Study, the default definition adopted is that of the off-block/on-block time of an aircraft relative to the operator’s published schedule. The decision to consider delays relative to published schedule was primarily made because it is by far the easiest to quantify, and is the most commonly adopted metric in the industry. However, delay is measured relative to the last filed flight plan.
Costs of delay are calculated at the tactical and strategic levels for different aircraft types and different cost scenarios, then at the higher, European network level.
For an aircraft to be delayed at the ground or airborne means losing revenue in g...
This article will be used in the body of the essay referencing to the delay of
According to the International Air Transport Association, 2001 was only the second year in the history of civil aviation in which international traffic declined. Overall, it is believed that the IATA membership of airlines collectively lost more than US$12 billion during this time (Dixon, 2002).
As airline industry is a competitive marketplace, the airline companies use new technologies to improve their efficiency and decrease the overhead costs, including ‘advanced aircraft engine technology, IT solutions, and mobile technology’ (Cederholm 2014). The technology changes including technology improvement, new innovation and disruptive technology. The disruptive technology need to meet the characteristics of ‘simplicity, convenience, accessibility and affordability’ (Christensen 1995). The technology changes would bring both opportunities and threats to airline companies. Since Labour cost and fuel costs occupy 50% of most airlines operating cost (Groot 2014). Therefore, if new technologies could be disruptive in the two aspects, there will be important changes to current airline
A switch from premium overnight services to lower – margin deferred services and ground delivery services is an advantage to Airborne Express. With existing assets including trucks, tracking systems, regional hubs and sorting facilities, they only need minor initial investments to develop fully these kinds of services. They should use these assets wisely and effectively.
Airline and travel industry profitability has been strapped by a series of events starting with a recession in business travel after the dotcom bust, followed by 9/11, the SARS epidemic, the Iraq wars, rising aviation turbine fuel prices, and the challenge from low-cost carriers. (Narayan Pandit, 2005) The fallout from rising fuel prices has been so extreme that any efficiency gains that airlines attempted to make could not make up for structural problems where labor costs remained high and low cost competition had continued to drive down yields or average fares at leading hub airports. In the last decade, US airlines alone had a yearly average of net losses of $9.1 billion (Coombs, 2011).
Boeing/Airbus Case Analysis Competition in the Commercial Aircraft Business. With only a few large companies across the globe (Boeing, MD, and Airbus), the commercial aircraft industry essentially exhibits the qualities of an oligopolistic competition with intense rivalry. Here is an analysis of competition in the commercial aircraft business using Porter’s Five Forces. Figure 1: Porter’s Five Forces Applied to Aircraft Industry. Barrier to entry: - High barriers to entry, to a certain extent, help understand the risks involved in operating in the aircraft industry.
Boeing is the world’s leading aerospace company and the largest manufacturer of commercial jetliners and military aircraft combined. Boeing also manufactures rotorcraft, electronic and defense systems, missiles, satellites, launch vehicles, advanced information and communication systems. (Boeing, 2008) With a diversified range of products, Boeing is organized into two business units: Boeing Commercial Airplanes and Boeing Integrated Defense Systems. Supporting these units are Boeing Capital Corporation, the Shared Services Group, and Boeing Engineering, Operations & Technology. Boeing has an Executive Council which comprises the leaders of the just mentioned groups, but also other departments within the organization to provide leadership and planning. (Boeing, 2008)
Weather conditions- Sometimes the bad weather conditions become the huge problem for the aircrafts as they are not able to operate in bad conditions by which they get losses.
Boeing Company was founded in 1916 and it operated in three major groups of businesses with a total of six subsidiaries: commercial airplanes, integrated defense systems subsidiaries which include aircraft weapon systems, network systems, support systems, and launch and orbital systems and Boeing Capital Corporation. Boeing announced a launch of new jetliner names Dreamliner. Boeing 787: The Dreamliner is a long-range, mid-sized and twin engine support jetliner. In 1997 Boeing experienced a downfall in the airliner market due to high fuel and labor cost, union strife, increasingly high fixed cost of airplanes and very strong competition in the market. Boeing was trying to regain the recognition
In general the average total cost curve at least in the short run is U-shaped, which indicates that the average total costs decline over a certain range of increasing output and then increase again until they reached their minimum. () The differentiation between short-run and long-run is not linked to a certain time period but related to the existence of fixed input factors. In the short-run there is some kind of input that is fixed and therefore cannot easily be changed without excessive investment. In the long-run every input is variable and no fixed factors exist. () Because of economies of scale, network airlines have an inherent cost advantage over smaller ones. This is a major reason why there are very few small airlines in the industry and why there is continual consolidation.
Gaining a substantial market power in the commercial aviation industry allows for significant impact on technological development, economic growth, employment, and national prestige (Carbaugh & Olienyk 2004). In 2010, more than any manufacturer sector, the value of aerospace industry shipment in the US accounted for more than $171 billion of civil aircraft and a trade surplus of more than $43 billion (Harrison 2011). Like any other industry, large commercial airplane industry gets affected by macro, endogenous, and exogenous factors. Several factors may influence the industry i...
The International Air Transport Association (IATA). 2014. Airline Cost Performance. IATA Economics Briefing. [report] IATA, p. 31.
Several weaknesses in airline operations were identified as the causes of the RM1.3 billion loss. These included esclating fuel prices, increased maintenance and repair costs, staff costs, low yield per available seat kilometer ("ASK") via poor yield management and an inefficient route network.
Boeing 787 Dreamliner was first announced to the public in January 2003 with approximated costs of five billion dollars , since the sales of the aircraft were high it was supposed to enter commercial service during 2008 but the building up of aircraft seemed more anticipated than expected , since the management decided to use composite materials as an alternative for traditional metals as composite materials are lighter , stronger , cheaper and also resistance to wild variety of chemical agents including acid rain and salt spray as these are the conditions under which metals suffer , Boeing also shared their views in development of air craft with suppliers which effected in a project significantly more anticipated than expected . More than three years later after the project exceeded the estimated budget at last 787 entered commercial service in September 2011.
Golden, D., Smith, D. and Deighan, M. (2014). Airline The Strategy Simulation. [online] Schools.interpretive.com. Available at: http://schools.interpretive.com/fsui/data.php?token=0&c=filedl&id=ugohfu/mnmxohy_nugohfu&z=1398582366830 [Accessed 27 Apr. 2014].