Air Transportation: A Management Perspective Summary
Chapter 1: Aviation Overview
In less than 100 years aviation has gone from basically nothing to a huge world industry that connects every corner of the world together. Virtually all major firms in the industry are part Aerospace Industries Association (AIA) or General Aviation Manufactures Association (GAMA). The Industry is heavily controlled by the government, but yet it still has to compete on a commercial marketplace. This makes the industry important to national interest, and vital to the world economy. Prior to the 1950's the industry was less sophisticated. There was no need for research and development because product lines were built for years. The economic profile is one of the worlds most important to this day. Today there are about six major firms, 1000 facilities backed by thousands of subcontractors, vendors and suppliers. The 1990's were difficult times for the aerospace companies. There were world conflicts and a recession was looming on the United States. Over the years there have been spikes in growth and decline. The aerospace industry is one of the world's largest employers. The industry employs a vast number of skilled workers ranging from scientists, engineers, technicians, and aviators to name a few. The products associated with aerospace industry are very sophisticated, complex, and costly. Most companies specialize in certain areas. Most are based in America, which helps drive the economy. Recently the U.S. Department of Defense has been postponing new research on weapons and avionic upgrades. Instead they are updating existing equipment to save money. The firms in the industry provide a variety of goods and services like legal assistance, advertising, accounting, and data of aerospace. The government in the form of NASA and Department of Defense are vital to aerospace industry. During the Post- Cold War period government aerospace sales consistently fell until 9/11. These DOD cutbacks lead to a great deal of unemployment in the industry. Companies keep key technical teams in place in hopes for future contracts. By 1990's the industry began to consolidate and companies either merged with other companies or were faced with bankruptcy. During the days of the Apollo program NASA increases in annual spending were the norm. The Challenger disaster resulted in greater congressional security, the Columbia disaster only added. There was also no more competition with the Russian space program. With the DOD shedding workers some move to the space sector. Telecommunications has helped sustain space industry in recent years. Also greater concern with environmental problems like global warming, ozone depletion, and climate charges have helped the space industry.
The U.S. civil aviation market has been one of the worlds largest outside of the Soviet Union. Most sales today are international. To start a commercial transport program an enormous amount of capital is required. Companies must also wait up to four years before deliveries begin and companies can generate income. Recently, since 1990's, 70% of sales have been to foreign companies. Air transport sales depend heavily on the health of another industry, the world's airlines. The 1990's brought the need for newer more efficient jet aircraft because most fleets were ageing. In earlier years of large commercial airline manufactures there were close to 24 different companies. Now it is down to two, Boeing and Airbus. Airbus is subsidized by France, Germany, and United Kingdom. In response to this Boeing and McDonald Douglas claimed that this was unfair and merged. Airbus in turn claimed Boeing and McDonald Douglas benefited from years of military contracts which offset research and development costs. The position to manufactures was very important to each with foreign aerospace market expanding rapidly. One major factor that affects commercial sales is economic growth. Economic growth causes more demands...
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