The objective of this and the other written assignments in the course is to show how the managerial economic theory and tools presented in your textbook are applied to current airline industry problems.
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
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 either supply or demand.
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 the connection with the microeconomic theory of supply and demand as presented in Baye and Prince. You must show how the factors fit in the more general theory of supply and demand. Your paper should be a synthesis of the GMF and CMO; that is, combine the elements of both forecasts rather than discussing Airbus’ GMF and then Boeing’s CMO separately.
Every academic and most business reports should include an introduction and conclusion. At a minimum, the introduction should tell the reader the objective of the paper and the topics covered. The conclusion should summarize the most important elements of the paper demonstrating that the objective has been met.
Both forecasts provide a wealth of detail that could support a much longer paper, but the goal is to demonstrate how the theory of supply and demand is employed to develop these forecasts, 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.
Format
There is no maximum or minimum number of pages, but three to four pages, not including a cover page, reference list, and any appendices you may wish to include, should be sufficient. You may have only a few references, but these must be cited in the main body of the paper and included in a separate reference list. An abstract and table of contents are not required.
Current APA style is required for this assignment. Required elements of APA style elements are a running head, page numbers, title page, APA section headings, source citations, and reference list. An abstract and table of contents are not required.