Air transport was primarily considered as a dream, just like some science fiction movies. Subsequently, air transportation and its factors are in constant advancements, and companies compete to thrive in what is expected of them in the future. An essential look into the future market forecast is a significant addition to the companies quest for advancement. Airbus understands this forecast as the Global Market Forecast and the present trends in the market utilizes deviousness of how factors of demand and supply concepts can influence the operations in aviation industry. Thus, this forecast uses regions, markets, and growth in predicting the expectations of the aviation industry in the prospect. Otherwise, the annual predictions are based on first-hand and chronological data.
The forecast is significant in manufactures as it dictates the number of products they need to manufacture in the future considering their future market needs. According to Adam (2009), “the law of supply and demand is considered one of the fundamental principles governing an economy.” Therefore, this theory expounds on a state where if supply decreases, the prices will shoot up and vice versa. Similarly, the forecast is essential to the enormous aviation industry. In particular, Airbus and Boeing combine historical and present fleet statistics with cycle forecast to include conversions, repairs history, expected replacement, and fleet age do design a good projective supply forecast. Airbus (2017) admits the presence of 18,890 passenger crafts and 19, 130 Boeing aircraft, which the company expects to double by 2036. As much as this number is predictable to duple, the resources needed to operate the influx must be increased as well, which is affected by the need and demand for supply.
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Several factors affect Airbus and Boeing growth in the market. These factors are limited market influences, affluence of travel, and economic activities. Some of these factors are easy to quantify; others cannot be measured. According to Boeing (2017), when factors that cannot be quantified are present, a company must harness other information sources to design meaningful forecast. Subsequently, Global Market Forecast GMF is an essential factor that Airbus and Boeing believe can drive their growth. GMF helps an aviation industry to define its traffic flows. According to Airbus (2017), “journeys which just a generation ago would have taken weeks can now be achieved in a day or even less.” Therefore, these journeys are facilitated by air transport.
Some factors affect the demand curve. In Airbus and Boeing, this factor is the number of employees a company hires. According to Boeing (2017), the number of employees influences the “economic activity, ease of travel, and local market factors.” One of the most notable influences of employees on-demand curve is its influence on income trends. For instance, if a Boeing increases the number of its employees, the number of its productions will increase, which would lead to a decline in the demands. Otherwise, there are demands that influence supply, and they include the factors of open-air services, countries agreement, emerging technologies, domestic market regulations, airline networks, and business-model innovations ( Doganis, 2010 ). Boeing (2017) categorizes these models as not “related to macroeconomic trends or related directly to ease of travel.” This concept leads to a connection between it and the microeconomic theory of demand and supply. These include factors like emerging markets and certain regional changes that impact the levels of travels.
There are market factors, such as middle-class’ growth that affect the local market. According to Baye & Prince (2017), “A variable other than the price of a good or service which influences the demand.” Therefore, these factors are considered as demand shifters. Subsequently, Airbus’ GMF is driven by the type of travelers. This situation means that if the population of the middle class grows, the vacation travelers increase, which increases the number of business travelers as well. Boeing’s CMO forces the company to develop planes that can fill the gaps in the specific regions. For instance, the middle east has reported the growth of wide-body planes because of the amenities it offers for the appeal of a business traveler. The situation is different from the middle east, where the demand for ultra-low-cost planes is high. Therefore, this concept is essential in connection with the microeconomic theory of supply and demand, as presented in Baye and Prince.
As much as there are several numbers of factors that affect supply and demand in the aviation field, forecast helps in providing semi-objective analysis on essential variables in the industry. Forecast’s attempt to lead to profitability is significant in assisting Airbus and Boeing avoid risks that have little chances of better returns. The fact that many airlines struggle every day to make returns should be a driving factor in Boeing’s analysis of its risks. Otherwise, the elements of maintenance and employee recruitments and satisfaction as highlighted should be manageable and lead to foreseeable profits.
References
Adam, G. (2009, Jul 10). Economic Theory - Supply and Demand . Retrieved Sep 20, 2017, from Science 2.0: http://www.science20.com/gerhard_adam/blog/economic_theory_%E2%80%93_supply_and_demand
Airbus. (2017). Global Market Forcast. Blagnac Cedex: Airbus. Retrieved Sep 2017, from http://www.aircraft.airbus.com/market/global-market-forecast-2017-2036/
Baye, M. R., & Prince, J. T. (2017). Managerial Economics and Business Strategy (9th ed.). New York, MY: McGraw-Hill Education.
Boeing. (2017). Current Market Outlook. Seattle: Boeing. Retrieved Sep 2017, from http://www.boeing.com/resources/boeingdotcom/commercial/market/current-market-outlook-2017/assets/downloads/2017-cmo-compressed_091917.pdf
Doganis, R. (2010). Flying Off Course (4th ed.). New York: Routledge.
