Airbus and Boeing publish annual forecasts for the global growth of air transportation and the market for commercial aircraft over the next twenty years. Fortunately, both make their forecasts available to the public.
The objective of this assignment is to demonstrate how Airbus and Boeing employ the theory of supply and demand in the development of their forecasts.
Assignment details/requirements are provided in the following sections.
The Airbus Global Market Forecast (GMF) and the Boeing Current Market Outlook (CMO) are available on the Airbus and Boeing 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 sitemap.
In your review of the forecasts, concentrate on the factors (“shifters” or independent variables) that Airbus and Boeing employ to estimate the supply and demand for global air travel (Note this is supply and demand for passenger and cargo transportation, not for Airbus and Boeing aircraft). Compile an extensive, though not exhaustive, list of the most important factors categorized by supply or demand. Suggestion: Before reading the GMF and CMO, you may wish to make a list f the supply and demand shifters from your textbook. Then, as you read, list the specific factors affecting the supply and demand for air transportation under the appropriate shifter. You should find one or more factors for each shifter.
For this assignment, assume that you are a financial analyst for a major airline. You’ve been given this assignment in support of the airline planning group that is updating your airline’s strategic plan. The team leader will use your report to ensure that all-important factors affecting the long-run supply and demand for air transportation are considered in the plan. The team leader has no detailed knowledge of the Airbus GMF or Boeing CMO. Ask yourself if you have provided all of the information he or she will need,
Every academic and most business reports should include an introduction and conclusion. At a minimum, the introduction should briefly describe the subject of the paper, tell the reader the objective, and the topics covered. The conclusion should summarize the most important elements of the paper demonstrating that the objective has been met.
After the introduction, your paper should provide an overview of the forecasts and explain their use by the manufacturers and the broader aviation industry. Consider why Airbus and Boeing make a substantial investment in developing these annual forecasts. Next, discuss the most important factors that Airbus and Boeing believe will drive air travel growth; some factors affect the demand curves while others influence supply. Be certain to distinguish between the two. Explain how each factor fits within the microeconomic theory of supply and demand as presented in Baye and Prince and how the demand or supply curve is affected, i.e, does it shift left or right?
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