Holly KunzRebecca VredenburghMethodist University
The Impact of Aviation on the U. S. Economy
Overview
Civil Airline IndustryGeneral Aviation IndustryMilitary AviationThree Major Contributions to U.S. EconomyNext GenImpact of Economy on Aviation
U.S. Civil Airline Industry Facts
Consists of 100 certified passenger airlinesConducts over 11 million passenger flight
departures each yearCarries over one-third of the world’s air
trafficEarns over $160 million in revenue annually
General AviationDirect Contributions to U.S. Economy
New & Used AircraftOperations & maintenanceCateringInformation & periodicals
General AviationEconomic downturn
General Aviation Manufacturers Association has laid off over 12,000 workers
aviation manufacturers have filed bankruptcy and closed their doors, i.e. Adam Aircraft and Eclipse Aviation
rising fuel costsairports are deficit spending or being forced
to close
General AviationIndirect Contributions
aluminum manufacturingi.e. 2005 general aviation spent $2,922 in mining.
radar arrays used for weather servicescomputers used for general aviation aircraft
maintenance trackingfabrics and other materials used in seating the production and transport of fuel
Military AviationArmy 79,000-helicoptersNavy 55,000Air Force 34,600-greatest opportunities
with aviationMarines 32,700
70, 612 troops in transportation careers
Contracted companies, i.e. Boeing & Lockheed Martinunmanned aircraft systems, fighter, and bomber
aircraft
What are Aviations Contributions to the U.S. Economy?
Creates Jobs
Facilitates Domestic and International Trade
Drives Technology and Innovation
Contribution #1 Jobs
As of November 2010, the U.S unemployment rate was 9.8%
Without the pool of aviation jobs, the rate would be 14%
Civil aviation-11 million AmericansGeneral aviation- 1.2 million AmericansMilitary Aviation- 690K Americans
Contribution #2Domestic and International Trade
Domestic and International Trade
Aviation is Essential for Global BusinessIt facilitates Economic Growth and World
TradeIn 2009, the value of all goods
transported by air represented 35% of the world’s international trade
The total global impact from aviation was $35 trillion or 7.5% of the world GDP (continuously moving upward)
Contribution #3Technology and Innovation
Why is Aviation Technology Important for our Economy?
Technology is needed to :reduce inefficiency (delays)decrease noiseincrease passenger safetyreduce the carbon footprint on the environment.
Due to rising costs surrounding fuel consumption, aircraft manufacturers and technological experts are racing to come up with climate and cost-friendly alternatives to jet fuel (solar powered aircraft).
Experts around the world are also developing lighter, more aerodynamic aircraft (will use less fuel).
The need for faster, more fuel economic jets.Honda’s new business jet is built of composite materials featuring a unique over the wire engine mount. It helps cut fuel consumption while allowing greater speeds. (Uses 20% less fuel that comparable size jets and at a faster speed)
The Need to Stay on the Cutting Edge
The FAA and Next GenThe Problem?
“Flight Delay is a serious and widespread problem in the United States. Increasing flight delays place a significant strain on the U.S. air travel system and cost airline, passengers, and society billions of dollars each year… In addition to these direct costs imposed on the airline industry and its customers, flight delays have indirect effects on the U.S. Economy. Specifically, inefficiency in the air transportation sector increases the cost of doing business for other sectors, making the associated business less productive”
What is Next Gen?
- the transformation of the US national airspace system. It represents an evolution
from a ground-based system of air traffic control to a satellite-based system of air
traffic management. This evolution is vital to meeting future demand, to avoid
gridlock in the sky and our nations airports.
Radar vs. ADS-B Used since WWIIMulti-million dollar High cost radar sitesCoverage frequently lostAircraft fly longer routes than usual to stay in coverage area
Ground based-transceivers less costly (huge savings for FAA and economy)Coverage never lostAircraft can fly on more direct routes (save on fuel costs by reducing travel time)
How will Next Gen improve Economy?
When fully implemented, Next Gen will safely allow more aircraft to fly more
closely together on more direct routes, reducing delays, and providing unprecedented benefits for the
environment and the economy through reductions in carbon emissions, fuel
consumption, and noise.
By 2018, Next Gen is estimated to reduce delays by 35%, and reduce CO2 admissions by 14 M Tons. The benefit to the US Economy: $23 Billion
Effects of Economy on AviationFuel costs
2006 fuel costs surpassed labor costsFor every $1 increase there is a $17 billion
increase in expenses per year
2011 $3 per gallon = $54 billion for airlines = increased
ticket prices/baggage fees/meal fees
Effects of the Economy on Aviation
Baggage Fees by Airline 2010Airlines ranked by year-to-date baggage fee revenue, dollars in thousands (000)
Rank 1Q 2Q 3Q4Q (May
9 release) Year-to-date1 Delta Air Lines 217,773 255,950 259,473 733,1962 American Airlines 128,539 152,059 151,175 431,7733 US Airways 120,720 135,601 131,806 388,1274 Continental Airlines 76,603 91,031 90,494 258,1285 United Airlines 71,145 84,824 83,872 239,8416 AirTran Airways 35,005 39,204 38,139 112,3487 Alaska Airlines 21,166 25,394 34,430 80,9908 Spirit Air Lines 16,033 16,811 22,939 55,7839 Frontier Airlines 13,872 15,470 14,725 44,067
10 JetBlue Airways 13,763 14,012 15,494 43,26911 Allegiant Air 14,826 14,437 13,747 43,01012 Hawaiian Airlines 11,672 13,523 15,060 40,25513 Virgin America 7,328 9,124 10,177 26,62914 Southwest Airlines 6,872 7,923 7,729 22,52415 Republic Airlines 6,418 6,366 5,193 17,97716 Horizon Air 762 5,293 6,702 12,75717 Sun Country Airlines 3,971 2,406 3,059 9,43618 Mesa Airlines 539 731 980 2,25019 Continental Micronesia 585 813 773 2,17120 USA 3000 Airlines 954 819 391 2,163
All Airlines 768,546 891,791 906,358 2,566,695
Source: Bureau of Transportation Statistics, Schedule P-12
Effects of the Economy on Aviation
“Aviation is the glue that keeps the global economy together. Without widely accessible and well-priced air travel, the global economy will quickly become less global.”
— Dr. Mark Zandi, Chief Economist & Co-Founder, Moody‟s Economy.com (August 2008)
Aviation & September 11, 2001American Airlines
Airport closure
“retired part of its fleet, pared unprofitable routes and slashed about 23 percent of its work force” (Reeves, 2002)
Chief Executive Officer David Siegel Smaller aircraft, cut pay, filed Chapter 11
bankruptcy
American Airlines cont.Expunged $600 million in debt
Qualified for $900 million in federal loans
Received $200 million from private investors
2002 American Airlines competed with JetBlue & Southwest
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