Written Assignment 1: Estimating Regional Air Transportation Demand

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Written Assignment 1: Estimating Regional Air Transportation Demand

The objective of this and the written assignments in the course is to show how the

managerial economic theory and tools presented in Baye are applied to a current airline industry

problem. For this assignment, the objective is to develop an appreciation for the methods used by

the two largest commercial aircraft manufacturers, Airbus (http://www.airbus.com) and Boeing

(http://www.boeing.com/), to forecast demand for air travel and the market for commercial

aircraft over the next twenty years. Fortunately, both make their forecasts available to the public.

For this assignment, you are to review the Airbus Global Market Forecast and the Boeing

Current Market Outlook. These reports are available on the Boeing and Airbus websites. The

location of the forecasts varies from year to year but each can be accessed by a search within the

website or from the site map. In your review, concentrate on the factors (independent variables)

that Airbus and Boeing employ to estimate the demand for air travel growth and how these are

used to generate regional estimates for specific aircraft types. First, look for sections in the

reports that provide an overview of the forecast methodology. analysis is used

extensively, but the technical details are not provided or important for this assignment. An

appreciation for how the estimates are generated is sufficient. After you look over the entire

reports – they’re lengthy, it is not necessary to read all sections – choose a region of the world

for more detailed study.

First, briefly explain how Airbus and Boeing develop their 20-year forecasts. Note the factors

that influence projected air travel growth; some factors affect the demand curves while others

influence supply. Be certain to distinguish between the two. The connection between the

microeconomic theory of supply and demand as presented in Baye and Doganis should be

explicit. Then explain the forecasts for growth in the chosen world region. Provide some

perspective to forecast growth in the rest of the world.

The paper should be approximately three not including a cover , reference list, and

any appendices you may wish to include. Both forecasts provide a wealth of detail that could

support a much longer paper, but the objective is an overview similar to an executive summary

for one world region, not an in-depth analysis. Managers are often tasked with analyzing

business environments or specific problems for senior management review. Senior managers are

usually pressed for time and value concise evaluation and recommendation. Discerning and

summarizing the critical facts succinctly is difficult. More is not necessarily better; the limit

is intended to foster this skill.

APA style is required including a title and reference listing. You may have only a few

references, but these must be cited in both the main body of the paper and in a separate reference

list. An abstract and table of contents are not required. The sample APA paper at the Purdue

Online Writing Laboratory provides an excellent overview of the APA style. Even if you believe

you have a good handle on APA format, a review is highly recommended. Be certain to include

APA elements such as running head, numbers, headings, source citations, introduction, and

conclusion in your paper.