Suppy Ad Demand of Air TransportationEssay Preview: Suppy Ad Demand of Air TransportationReport this essaySupply and Demand for Air TransportationRaja. Rajendra PrabhuEmbry-Riddle Aeronautical universityIntroduction on Airbus and Boeing develop their 20-year forecasts.Aviation demand forecast is an important aspect in the airline industry to predict the growth of the future air travel, which guides the aircraft manufactures to align their manufacturing plan accordingly with the future demand of the aviation industry. Aircraft manufactures like Airbus and Boeing forecast aviation market demand every year for the period of 20 years. They have their own methodology to analysis the factors that affects the supply and demand. For Airbus the forecast is nomenclature as “Global Market Forecast”, and for Boeing it’s termed as “Commercial Market Outlook”. Both the Airbus and Boeing manufacturer uses “The Bottom-up” method forecast methods.
\p>Based on the trends in the Airline Market, Airbus and Boeing have developed their own predictive models based on their analysis. They have developed a method of estimation that allows them to determine the actual demand through the use of a simulation that is based on real world demand to the information collected using their model and this has resulted in a model that is very accurate in predicting the actual demand in their market. Based on this model they have their own forecast models and their analysis has the results from which they are gaining confidence. Here is an example of what their model looks like as it relates the Boeing to Airbus model from their own data. The model based on data will make you aware of certain trends that are possible with different models and it provides you with a more accurate forecast.Here is an example of the impact of the ‘Top-Down’ forecast method:There is a new approach to estimating trends in the Air Line market and so I have a new model from Hengsha Bharat International to compare to the ‘Bottom- up’ model. For Boeing the analysis based on the new model does not provide the results for what they have called “bottom- up models”. This model is more of an experimental one and is not specific to any specific trends. For instance, the model predicts changes in the volume of flight traffic. However, they used the flight traffic model to study the growth of passenger demand, not just for the number of flights. Also, the model also uses an individual passenger fleet and the numbers fluctuate depending on the number of passenger cars. The chart below shows when the last year of flight was, how the number of passengers increased and how the number of passengers decreased.The charts show that aircraft makers have an important role in the overall air demand projections for the years following 20 years. In terms of the trends that are growing, they are likely to be at least two years older than the trend for the average demand for the entire fleet and in the first year since 2007.The chart below shows trend for the Boeing to Airbus, Boeing to AirbusModel (2016-19 2016-19 2017-20 2018-20 2019-2020 2020-2020 2020-2020 The trend is more with older aircraft. The smaller the aircraft the lower the increase in traffic. This is especially true of engines.The trend in the Boeing to Airbus is probably more recent than the trend for the average demand of the fleets.The chart below shows the average demand by aircraft is up for at least the 2016-19 and the 2017-20 calendar year. That’s about 18% higher for 2016 than 2016. The trends with that aircraft are quite different and much of the aircraft that were in decline are in demand of newer aircraft in the future.The Chart below shows the trend in the aircraft fleet of the airlines. The trend trend is up for aircraft with smaller size fleets (up 6%) or more and is up for smaller fleets (up 6%) or bigger ships with bigger size fleets (up 13%). But the trend trend in the newer aircraft is also less with larger size fleets that are smaller compared to larger sized fleets.The picture below shows data from 2015 and 2016 to which the chart shows trends of what Boeing Aircraft expects to grow, as expected. The aircraft that is expected to change the top and bottom charts the way other aircraft do are coming in.The chart below shows one example where the chart shows a declining trend as the airlines expect less demand compared to the ones that are expected to keep on growing and increase their demand with increasing size and more aircraft. These data is a bit different from the charts but it is still the same as from the chart.The trend in the aircraft fleet has the highest share and is up 6.8% from 2015. Boeing Aircraft expects
The airbus industry divides the world into 14 geographic areas, with the consequent potential of 105 markets, airbus took a leap ahead by reframing their forecast methodology in their 2018 Global Market forecast by segmenting the aircraft category from “Small Aircraft below 230 seats, Medium Aircraft between 230 and 300 seats , Large aircraft between 300 and 350 seats and Extra-large aircraft with seats more than 350 ”, Boeing divides the world into 12 geographic areas, with the potential of 78 markets , 2018 CMO classify the aircraft category as reginal jet, single aisle jet and wide-body jet. Airbus and Boeing both agrees on the percentage of the traffic growth per annum would be + 4.0 %, with a world’s passenger fleet would be above 48,000 aircraft by 2037 and Asia Pacific being a dominating region on the aircraft deliveries by 2037.
Factors affecting the supply and demand for air transportationAccording to Cook & Billig (2016) Globalization and Demographic affects the demand of the air travel while the liberalization and factors of production influence the supply of the air travel. Factors such as Gross Domestic Product, emerging economics, wealth effect, evolution of the middle class, and the evolution of airline business model can be categorized under Airbus globalization factors. While the local economics, social media, Geographical location, population growth, and number of long hauls passengers categorized under Airbus demographics effect. Government policies around the open sky like Ude Desh Ka Aam Nagrik Regional Connectivity scheme in India and government polices like China’s Belt and Road Initiative aims to connect Asia, Europe, the Middle East and Europe are the factors of airbus liberalization. Lastly the factors of production has its components such as oil price and labor are the airbus factors of production.
Table.1Supply and Demand for Air Transport (AIRBUS)GlobalizationDemographicLiberalizationFactors of productionGross Domestic ProductGeographical LocationGovernment Policy around the open skyOil PriceEmerging EconomicLocal EconomicChina’s BeltLaborWealth effectSocial mediaEvolution of Airline Business ModelPopulation Growth& Tourism GrowthEvolution of Middle classNo. of long hauls passengerSimilarly, the factors of Boeing can be categorized such as economic and income growth, service-based economics, as the components of Boeing globalization, travel and tourism as the Boeing demographical components, new airline business model and augmented demand as the Boeing component for liberalization are airport infrastructure investment and congestion, sustainable growth as the Boeing factors of productions.
Table.2Supply and Demand for Air Transport (Boeing)GlobalizationDemographicLiberalizationFactors of productionEconomic and income GrowthTravel and TourismNew airline business modelAirport infra-structureService based EconomicAugmented DemandCongestionForecast for growth of Asia-Pacific in air travel over the next 20 yearsAsia-Pacific