Airbus Global Market Forecast (GMF) and the Boeing Current Market Outlook (CMO) airlines require forecasting to drive airline growth. Holidays, weather seasons, growth of tourism in certain areas or countries, previous year demand and supply rate, economic level, and prospected economy growth of the nation, and prospected investment deals are the major factors considered in the GMF and CMO forecasting. The Asia Pacific travel market is expected to grow, and will supply of airplanes is needed to fulfill the expected growth in demand and attain about $3.8 trillion single-market (Intelligent Aerospace, 2019). The value of tourism is expected to rise by 7.3% to 968 billion, and economic growth is forecasted to increase, requiring expansion plans and capacity growth. Moreover, the forecasting is dependent on expenses where fuel bill is expected to rise by 22.1% of the expenses to 23.7% in 2019. Also, annual passenger carrying is projected to rise by 4%, serving as a good opportunity to increase supply (Davies, 2019).
Boeing projects about $6.8 trillion in the next 20 years and improve the supply of new airplanes to 44, 040, and a global commercial fleet of 50, 660. Moreover, cargo and human transportation are expected to grow and make the airline traffic to increase by 5.2% in the next 20 years (Boeing, 2019). In 2019, Boeing also forecasted $ 8.7 trillion in a 20 years’ market for the military and aerospace industry. Commercial airplanes are projected to make $3.1 trillion (Inteligent Aerospace, 2019). On the other hand, Airbus forecasts that there will be 4.3% annually grow, which requires 39, 200 new airlines as per the 2019-2038 GMF, and a cumulative growth of $ 4.9 trillion by 2038. It plans that flight operations will need 550,000 new pilots and have a $1.4trillion cumulative, aircraft operations services will give $2.4 trillion, while passenger experience will result in a $1.1 trillion cumulative amount by 2038 (Airbus, 2019).
Delegate your assignment to our experts and they will do the rest.
Customer satisfaction influences the air transport demand and supply since when the customers are optimally satisfied with the services, have comfortability, affordable prices, security, and convenience of flying, the demand goes high. When this demand rises, the firms have to increase their supply to cater to the growing demand and balance out the demand to continue satisfying the customers by increasing aircraft and having frequent flying. If the high demand resulting from customer satisfaction and quality serves is not fully catered for, the supply will not be sufficient for the population and will customers may opt other flying firms (Monahan, 2016). Moreover, holidays like end years GMF and CMO are associated with high traveling rates which make the demand of customers to be high to the extent of exceeding the available supply by being fully booked and some customers missing out flying chances. Tourism destinations and seasons such as winter influence the traffic flow rate to nations that customers want to fly to, which makes the demand to be higher compared to areas with low tourist sites and when customers have favorable weather in their home country. Quality of services and security makes the demand for flights in the firms to be high, which makes the firms to improve and maintain the quality serves to supply the demand. If the quality of serves is low, the demand will also be low, making the available supply to be low than the equilibrium balance of the demand and supply ( Baye, Prince, & Squalli, 2006 .
The two companies conduct substantial investment to create an annual forecast since the forecasts provide information that influences the companies’ investment rate from investors, its performance, reputation, and attracts better working deals. Moreover, the forecasts act as a forward driver of the firms since the forecasts have goals, targets, and associated plans to attain those forecasts, thus, supporting the positive growth of the firms. Through forecasting, the companies are able to estimate their financial and staffing needs with expected demand and supply in order to optimally perform in the coming period. Manufacturers are able to see the forecasted estimates and plan how many aircraft might be needed to optimally balance the demand the supply and even contract the flying firms for the supply of all equipment, aircraft, and resources needed to attain the forecasted estimate (Airbus, 2019). Engine and airframe manufacturers, airport capability to avail enough services and resources, and any other information needed to be air-related services like navigation require the estimates information also to plan their new year performance to prevent pulling the air company from attaining its targets.
The purchasing power or demand is depended in the on the purchasing prices and quality of services which determine the total quantity of services that the customers are willing to obtain at those prices. Rising of prices than average during normal times can lower the level of demand, making the variations to occur on the demand curve in response to ( Baye, Prince, & Squalli, 2006). the prices. However, the shift in demand in the firms occurs when season times reach, making the curve to shift to the right and increase demand. Moreover, advertisement and positive reputation increase demand while a scandal of the flight services can bring the demand down. The competition from other airlines companies also affects the pricing and the demand of the companies.
Moreover, the expected growth needs increased supply to maintain and sustain the growth. Changing the fleet is also required to maintain the quality of services and deliver the best services that will use the demand for the services. The high and unfulfilled demand during peak times will be fulfilled by the increased airplanes and create a sustainable supply-demand for the growth of the air companies (Monahan, 2016). Moreover, the large economies of scale of the forecasted growth will result in lower market prices, which will raise the demand, which has equivalent supply. From the forecasts, the manufacturers, staffing, and partnering firms can know how much they need to work supply to articles for the attainment of their supplies and demand balancing.
References
Airbus. (2019). Global Services Forecast . Retrieved from Airbus: https://services.airbus.com/en/global-services-forecast.html
Baye, M. R., Prince, J., & Squalli, J. (2006). Managerial economics and business strategy (Vol. 5). New York, NY: McGraw-Hill.
Boeing. (2019). Commercial Market Outlook, 2019 – 2038 . Retrieved from Boeing: http://www.boeing.com/commercial/market/commercial-market-outlook/
Davies, P. (2019, December 11). Optimistic forecast for airlines after tough 2019 . Retrieved from Travelweekly: http://www.travelweekly.co.uk/articles/352026/optimistic-forecast-for-airlines-after-tough-2019
Intelligent Aerospace. (2019, June 17). Boeing forecasts $8.7 trillion aerospace and defense market through 2028 . Retrieved from Intelligent Aerospace: https://www.intelligent-aerospace.com/paris-air-show/article/14034931/boeing-forecasts-87-trillion-aerospace-and-defense-market-through-2028
Monahan, K. M. (2016). Aircraft demand forecasting.
