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air transportation (week-3) -

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This document discusses the US government market for aviation and aerospace technologies. It notes that government contracts help companies maintain technology, increase productivity, eliminate unprofitable lines of business, add new capabilities, and balance military and commercial work. It also discusses opportunities to transfer defense technologies to commercial applications like avionics, air traffic control, aircraft maintenance, upgrades, and various civil applications. The document outlines challenges in the civil aviation market like high development costs, limited order volumes for passenger jets, and the importance of international strategies for manufacturers. It analyzes various factors affecting aircraft sales like economic growth, inflation, fleet capacity, replacement needs, and airline profitability.

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AVM 202 Introduction to Aviation Air Transportation (Week-3) Dr.Hakk脹 Doankaya 1
The US Goverment Market Contracts for maintaining technology Increase productivity and competitiveness Eliminate less profitable lines of business Add new capabilities Balance military and commercial work 2
The US Goverment Market Defense business move to commercial business; Application of technology to commercial avionics Air traffic controls system a/c maintenance a/c up grades 3
The US Goverment Market Civil Business Opportunities: Highway traffic management Potential hybrid car market Hazardous waste and weapon disposal Environmental sensing High speed data transmission Space satellite communication 4
The US Goverment Market Civil Business Opportunities: Law enforcement a/c surveillance Smart computer-linked police cars Biosensing of drugs and bomb making chemicals Tv satellite services Software conversion Factory automation Light rail system Cellular telephone system 5
The US Goverment Market NASA : Zero growth Recognize importance of space programs from technical, environmental and commercial standpoint 6
Civil Aviation Market National market is vital International market is compelling Invesments for new programs $5 billion (development and tooling cost- commercial transport program) 4 years wait for deliveries and revenue 7
Civil Aviation Market Commercial passenger jets order volume is limited and low 400-600 a/c must be sold for break-even point % 40 general aviation a/c sales: $55 billion International strategies is important for civil a/ c manufacture 8
Air Transport Need for new jetliners is evident Fleets older, less efficient; need replaced Economy: 1990- recession; lost $ 13 billion 1999-peak-profit 2001- slow down Earlier over 20 big companies Now is two: Boing, Airbus 9
Air Transport Cost of developing new a/c is higher Generation of a/c successor a/c is higher Uncertainities of the marketplace Spiral cost of development New a/c risky venture 10
Challenges in Air Transport Long distance, more passenger, low cost Developing new cost efficient a/c Composite materials less fuel cost The cost of development is high The cost of no development is higher 11
Challenges in Air Transport International collaboration is key strategy Joint programs Offset programs Strengthen foreign industry Know-how sharing 12
Factors Affecting Sales % 40 commercial jets US Airliners After 1997: Order and sales increased 256 to 620 Civil aviation has history of cycles 13
Factors Affecting Sales Economic Growth : Influences the demand Companies build on Service new outputs Unemployment declines Business travels increase Income rises, leisure travel increases Air traffic inresases : Every % 1 increase in growth 3 % increase in air traffic 14
Factors Affecting Sales Inflation : Escalate labor Escalate fuel costs Prices get higher : Interest rates get higher Business declines Air traffic declines Profits decline Aircraft financing becomes prohibitive Long term programs inrease 15
Factors Affecting Sales Fleet Capacity : The passengers load is used to measure ailine capacity utilization High load factors improve airline revenues Purchase or lease planes Fleet capacities increasing 16
Factors Affecting Sales Replacement Aircraft : To increase capacity To replace older a/c (less efficient models) Aviation regulations : Necessities Low stage noise level US, 1999 3000 a/c grounded There is a constant demand for replacements 17
Factors Affecting Sales Airline Profitibility : Small models : $ 25 million Jumbo jets : $ 140 million Need to raise capital in the finacial market Show to investors that they are profitiable US Airways filed for bankruptcy Over % 90 of the passengers flies on discount fares or low-cost airlines Stock pricess get low Only source of funds is debt market Not easy business 18
Factors Affecting Sales A Cyclical Industry : Since 1970, five peaks in orders for three years period Since 1960, six peaks in deliveries Decline is usually deep (% 50) Growth and recession together One year lag between order and delivery Two years to double the production rate Inbalance between demand and supply Lack or excess capacity 19
Factors Affecting Sales 20
Factors Affecting Sales Future Trends : Economic growth and low inflation Nevertheles cycles, deliviries rising for the past 40 years Deliviries will continue to climb (will double in 2020 and 2030s) Will depend on international economic growth 21
General Aviation The highest shipment in 1978 The lowest shipment in 1994 High : A/c prices Interest rates Operating costs Product liability costs Downward cycle Change in : Life style Tax laws Foreign competition 22
General Aviation Broad structural change from bankruptcies, collaborations, joint ventures 1994 General Aviation Revitalization Act : Limited product liability for older a/c Small business jets : Fuel efficiency Requirement of considerable ground support : Facilities, terminals, offices Shuttles, trucks Energy Personnel... 23
General Aviation Hub airports will be established Efficient use of time will be driving factor Big carriers will fly only high load factored centers (hihg density markets) Regional airlines will grow to satisfy regional needs 24
Related Products and Services Technology is simply knowledge It is transferable Aerospace industry has pursued a program of technology transfer Increase in sales : $ 3 billion to $ 28 billion To transfer technology: Medical instrumentation Hospital management Mas transportation Public safety Environmental protection Energy 25
Contribution to the Economy No one questions aviations importance as an essential form of transportation Quick, efficient, safe Aviations final products are passengers and cargo In 2004, scheduled : 698 million passengers 2.8 billion ton miles of cargo 9 million departures Unscheduled : 11 million passengers 6 billion ton miles of cargo 400 thousands departures 26
Contribution to the Economy Increase will continue In 1970, with economic derequlation of airlines, Just In Time (JIT) shipping facilitated : Expanded services at lower costs Shorthened production and development cycle times Eliminated excessive inventory in logistics chain Without air express service, business unable to realize JIT 27
Contribution to the Economy Air Transport : Lower lead times Quicker customer response times Improved flexibility Reduced inventory Cost and time advantage Reliability Time definite quarantee Less complicated logistics chain : One stop shopping Door to door service Single vendor Seamless trucking, warehousing, distribution 28
Contribution to the Economy Economic impact types : Direct impacts (in 2000) : $ 343.7 billion (financial transactions for passengers, air cargo and provision of a/c) 4.2 million jobs Indirect impact : $ 254.9 billion (financial transactions linked to the use of aviation, off airport expenditures by travellers) 3.2 million jobs (supply chain related industry) 29
Contribution to the Economy Economic impact types : Induced impact : $ 903.5 billion (multiplier implications of direct and indirect impacts) 11.2 million jobs 30
Thank you Questions ? 31

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air transportation (week-3) -

  • 1. AVM 202 Introduction to Aviation Air Transportation (Week-3) Dr.Hakk脹 Doankaya 1
  • 2. The US Goverment Market Contracts for maintaining technology Increase productivity and competitiveness Eliminate less profitable lines of business Add new capabilities Balance military and commercial work 2
  • 3. The US Goverment Market Defense business move to commercial business; Application of technology to commercial avionics Air traffic controls system a/c maintenance a/c up grades 3
  • 4. The US Goverment Market Civil Business Opportunities: Highway traffic management Potential hybrid car market Hazardous waste and weapon disposal Environmental sensing High speed data transmission Space satellite communication 4
  • 5. The US Goverment Market Civil Business Opportunities: Law enforcement a/c surveillance Smart computer-linked police cars Biosensing of drugs and bomb making chemicals Tv satellite services Software conversion Factory automation Light rail system Cellular telephone system 5
  • 6. The US Goverment Market NASA : Zero growth Recognize importance of space programs from technical, environmental and commercial standpoint 6
  • 7. Civil Aviation Market National market is vital International market is compelling Invesments for new programs $5 billion (development and tooling cost- commercial transport program) 4 years wait for deliveries and revenue 7
  • 8. Civil Aviation Market Commercial passenger jets order volume is limited and low 400-600 a/c must be sold for break-even point % 40 general aviation a/c sales: $55 billion International strategies is important for civil a/ c manufacture 8
  • 9. Air Transport Need for new jetliners is evident Fleets older, less efficient; need replaced Economy: 1990- recession; lost $ 13 billion 1999-peak-profit 2001- slow down Earlier over 20 big companies Now is two: Boing, Airbus 9
  • 10. Air Transport Cost of developing new a/c is higher Generation of a/c successor a/c is higher Uncertainities of the marketplace Spiral cost of development New a/c risky venture 10
  • 11. Challenges in Air Transport Long distance, more passenger, low cost Developing new cost efficient a/c Composite materials less fuel cost The cost of development is high The cost of no development is higher 11
  • 12. Challenges in Air Transport International collaboration is key strategy Joint programs Offset programs Strengthen foreign industry Know-how sharing 12
  • 13. Factors Affecting Sales % 40 commercial jets US Airliners After 1997: Order and sales increased 256 to 620 Civil aviation has history of cycles 13
  • 14. Factors Affecting Sales Economic Growth : Influences the demand Companies build on Service new outputs Unemployment declines Business travels increase Income rises, leisure travel increases Air traffic inresases : Every % 1 increase in growth 3 % increase in air traffic 14
  • 15. Factors Affecting Sales Inflation : Escalate labor Escalate fuel costs Prices get higher : Interest rates get higher Business declines Air traffic declines Profits decline Aircraft financing becomes prohibitive Long term programs inrease 15
  • 16. Factors Affecting Sales Fleet Capacity : The passengers load is used to measure ailine capacity utilization High load factors improve airline revenues Purchase or lease planes Fleet capacities increasing 16
  • 17. Factors Affecting Sales Replacement Aircraft : To increase capacity To replace older a/c (less efficient models) Aviation regulations : Necessities Low stage noise level US, 1999 3000 a/c grounded There is a constant demand for replacements 17
  • 18. Factors Affecting Sales Airline Profitibility : Small models : $ 25 million Jumbo jets : $ 140 million Need to raise capital in the finacial market Show to investors that they are profitiable US Airways filed for bankruptcy Over % 90 of the passengers flies on discount fares or low-cost airlines Stock pricess get low Only source of funds is debt market Not easy business 18
  • 19. Factors Affecting Sales A Cyclical Industry : Since 1970, five peaks in orders for three years period Since 1960, six peaks in deliveries Decline is usually deep (% 50) Growth and recession together One year lag between order and delivery Two years to double the production rate Inbalance between demand and supply Lack or excess capacity 19
  • 21. Factors Affecting Sales Future Trends : Economic growth and low inflation Nevertheles cycles, deliviries rising for the past 40 years Deliviries will continue to climb (will double in 2020 and 2030s) Will depend on international economic growth 21
  • 22. General Aviation The highest shipment in 1978 The lowest shipment in 1994 High : A/c prices Interest rates Operating costs Product liability costs Downward cycle Change in : Life style Tax laws Foreign competition 22
  • 23. General Aviation Broad structural change from bankruptcies, collaborations, joint ventures 1994 General Aviation Revitalization Act : Limited product liability for older a/c Small business jets : Fuel efficiency Requirement of considerable ground support : Facilities, terminals, offices Shuttles, trucks Energy Personnel... 23
  • 24. General Aviation Hub airports will be established Efficient use of time will be driving factor Big carriers will fly only high load factored centers (hihg density markets) Regional airlines will grow to satisfy regional needs 24
  • 25. Related Products and Services Technology is simply knowledge It is transferable Aerospace industry has pursued a program of technology transfer Increase in sales : $ 3 billion to $ 28 billion To transfer technology: Medical instrumentation Hospital management Mas transportation Public safety Environmental protection Energy 25
  • 26. Contribution to the Economy No one questions aviations importance as an essential form of transportation Quick, efficient, safe Aviations final products are passengers and cargo In 2004, scheduled : 698 million passengers 2.8 billion ton miles of cargo 9 million departures Unscheduled : 11 million passengers 6 billion ton miles of cargo 400 thousands departures 26
  • 27. Contribution to the Economy Increase will continue In 1970, with economic derequlation of airlines, Just In Time (JIT) shipping facilitated : Expanded services at lower costs Shorthened production and development cycle times Eliminated excessive inventory in logistics chain Without air express service, business unable to realize JIT 27
  • 28. Contribution to the Economy Air Transport : Lower lead times Quicker customer response times Improved flexibility Reduced inventory Cost and time advantage Reliability Time definite quarantee Less complicated logistics chain : One stop shopping Door to door service Single vendor Seamless trucking, warehousing, distribution 28
  • 29. Contribution to the Economy Economic impact types : Direct impacts (in 2000) : $ 343.7 billion (financial transactions for passengers, air cargo and provision of a/c) 4.2 million jobs Indirect impact : $ 254.9 billion (financial transactions linked to the use of aviation, off airport expenditures by travellers) 3.2 million jobs (supply chain related industry) 29
  • 30. Contribution to the Economy Economic impact types : Induced impact : $ 903.5 billion (multiplier implications of direct and indirect impacts) 11.2 million jobs 30