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The Impact of Aviation on the U. S. Economy

The Impact of Aviation on the U. S. Economy. Holly Kunz Rebecca Vredenburgh Methodist University. Overview. Civil Airline Industry General Aviation Industry Military Aviation Three Major Contributions to U.S. Economy Next Gen Impact of Economy on Aviation.

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The Impact of Aviation on the U. S. Economy

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  1. The Impact of Aviation on the U. S. Economy Holly Kunz Rebecca VredenburghMethodist University

  2. Overview • Civil Airline Industry • General Aviation Industry • Military Aviation • Three Major Contributions to U.S. Economy • Next Gen • Impact of Economy on Aviation

  3. U.S. Civil Airline Industry Facts • Consists of 100 certified passenger airlines • Conducts over 11 million passenger flight departures each year • Carries over one-third of the world’s air traffic • Earns over $160 million in revenue annually

  4. General Aviation • Direct Contributions to U.S. Economy • New & Used Aircraft • Operations & maintenance • Catering • Information & periodicals

  5. General Aviation • Economic 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 costs • airports are deficit spending or being forced to close

  6. General Aviation • Indirect Contributions • aluminum manufacturing • i.e. 2005 general aviation spent $2,922 in mining. • radar arrays used for weather services • computers used for general aviation aircraft maintenance tracking • fabrics and other materials used in seating • the production and transport of fuel

  7. Military Aviation • Army 79,000-helicopters • Navy 55,000 • Air Force 34,600-greatest opportunities with aviation • Marines 32,700 • 70, 612 troops in transportation careers • Contracted companies, i.e. Boeing & Lockheed Martin • unmanned aircraft systems, fighter, and bomber aircraft

  8. What are Aviations Contributions to the U.S. Economy? Creates Jobs Facilitates Domestic and International Trade Drives Technology and Innovation

  9. 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 Americans • General aviation- 1.2 million Americans • Military Aviation- 690K Americans

  10. Contribution #2Domestic and International Trade

  11. Domestic and International Trade • Aviation is Essential for Global Business • It facilitates Economic Growth and World Trade • In 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)

  12. Contribution #3Technology and Innovation

  13. Why is Aviation Technology Important for our Economy? • Technology is needed to : • reduce inefficiency (delays) • decrease noise • increase passenger safety • reduce 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).

  14. The Need to Stay on the Cutting Edge 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)

  15. The FAA and Next Gen The 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”

  16. 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.

  17. 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 lost Aircraft can fly on more direct routes (save on fuel costs by reducing travel time)

  18. 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.

  19. 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

  20. Effects of Economy on Aviation • Fuel costs • 2006 fuel costs surpassed labor costs For 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

  21. Effects of the Economy on Aviation

  22. 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‟sEconomy.com (August 2008)

  23. Aviation & September 11, 2001 • American 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

  24. 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

  25. References • http://www.technologyreview.com/energy/27026/?a=f • References • AV Scholars. (n.d.). Military Services. Retrieved April 22, 2011, from AV Scholars.com: • http://www.avscholars.com/Military_Services/aviation_military_services.htm • Air Transport Association. (2011). Retrieved 2011 йил 2-4 from • http://www.airlines.org/Environment/ClimateChange/Pages/21stCenturyAviation-ACommitmenttoTechnology,EnergyandClimateSolutions.aspx • Air Transport Association. (n.d.). Airline Energy Q&A. Retrieved 04 15, 2011, from Air • Transport Association: http://www.airlines.org/ /Fuels101/Pages/AirlineEnergyQA.aspx • Air Transportation Association. (n.d.). Economic Energy Impact. Retrieved April 20, 2011, • from Aviation and the Economy:http://www.airlines.org/Economics/AviationEconomy/Pages/ • EconomicImpact.aspx • Bureau of Labor Statistics. (n.d.). Job Opportunities in the Armed Forces. Retrieved April 22, • 2011, from United States Department of Labor: • http://www.bls.gov/oco/ocos249.htm • Boeing. (n.d.). Defense Space and Security. Retrieved April 22, 2011, from Boeing: • http://www.boeing.com/bds/military_aircraft/ • Carlini, M. (2011). Aviation's Role in the US Economy.

  26. References Continued • Economics, A. O. (2011). The Economic Climb-Out for U.S. Airlines Global Competitiveness • and Long-Term Viability. Air Transport Association. • Embry-Riddle Aeronautical University News Center. (n.d.). Retrieved 2011 йил 3-April from • Embry-Riddle Aeronautical University: http://news.erau.edu/media-resources/ • facts-figures/enrollment/index.html • Demerjian, D. (2009, June 13). General Aviation Sounds Mayday as Fat Cats Ditch Their Jets. • Retrieved April 22, 2011, from Wired: • http://www.wired.com/cars/coolwheels/news/2009/05/corporatejets0513 • Fox News. (2006, August 4). www.Foxnews.com. Retrieved April 11, 2011, from • www.Foxnews.com: http://www.foxnews.com/story/0,2933,207121,00.html • Global Airline Industry Program. (n.d.). Retrieved 2011 йил 13-April from • http://web.mit.edu/airlines/analysis/analysis_airline_industry.html • National Business Aviation Association. (2009, march 30). GENERAL AVIATION INDUSTRY • HURTING DURING ECONOMIC DOWNTURN . Retrieved april 17, 2011, from National • Business Aviation Association: http://www.nbaa.org/advocacy/issues/economic-downturn/recession.php • Merge Global. (May 2006) General Aviations Contributions to the US Economy. Retrieved • April 21, 2011, from General Aviation Manufacterers Association: • http://www.ok.gov/OAC/documents/General%20Aviation%20Contribution%20to%20the%20US%20Economy%20(GAMA).pdf • Military.com. (2002, July 10). Enlistment Still Down Despite 9/11 . Retrieved April 22, 2011, • from Military.com: http://www.military.com/NewContent/0,13190,FL_enlist_071102,00.html • Stoller, G. (2011, April 11). Airlines moving fares higher again. Retrieved April 11, 2011, • from www.mydesert.com: http://www.mydesert.com/article/20110411/BUSINESS/104110303/0/ • 7daysarchives/Airlines-moving-fares-higher-again?odyssey=nav|head • Reeves, F. (2002, September 8). Business News. Retrieved April 20, 2011, from Post-Gazette • Web site: http://www.post-gazette.com/businessnews/20020908911usair2.asp • (2008). The Economic and Social Benefits of Air Transport . Geneva: Air Transport Action • Group. • (2011). The FAA's NextGen Implementation Plan. Federal Aviation Administration

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