Sample Astronomy Paper on Air Transport Economics

Air Transport Economics

Introduction

Air transport as a major industry in its own category provides important inputs that extend to the wider economic progress for both developed and developing countries across the world. Recent studies have shown significant interactions between air transport and economic performance of nations, especially in areas of defense, which continue to be in a state of improvement (Carstensen, 2005, p. 17). Otherwise, the changes in global economic performances and the shifting modes of travel have implications on the economic performance of industries like air transport. However, it is also true to believe on the feedback loops since air transport has transformed global economic operation and the rate at which other related processes are conducted.

The feedback loops identified by different scholars in this context include direct economic impact and military performance of countries whose activities rely on air transport. Air transport economics retails around enhanced trade and personal mobility across different markets and military bases (Carstensen, 2005, p. 17). This study focuses on air transport economics, and uses government budgets on air transport to understand how UAE Defense Force runs its own air logistics. Based on the findings presented over the budgeting processes and the actual budgets, the study provides recommendations on the kind of support (if needed) UAE Defense Force should obtain from Commercial Air Logistic Company(Carstensen, 2005, p. 21).

 

 

Summary

The scrutiny of air transport economics is simplistic following the multi-dimensional and dynamisms of global performances (Kassel & University of Wyoming, 2007, p. 20). Air transport economic and air travel not only focus on the smaller sector of international commercial aviation but also on the wider scope of directional causality of global economy and other related sectors (Kassel & University of Wyoming, 2007, p. 21). For example, improvements in air transport demand better services, which can only be provided if both international and domestic airlines decide to invest in each other through alliances with an aim of forming global networks (Carstensen, 2000, p. 25). One particular case is where domestic and international air transport markets in EU has formed an alliance and today operates as a de facto market. Air transport facilitates migration of labor as well as enhancing movement of goods and services across markets, which have varying impacts on national economic growth and development (Kassel & University of Wyoming, 2007, p. 21).

The Economics of using Commercial Air Transport

Commercial air transport connects passengers and freight across different regions, which is the main contributor to economic growth (Sagers, 2002). Presently, businesses and consumers from various market segments continue to seek for the vibrant services of commercial air transport industries, which has led to global economic integration and revitalization (Sagers, 2002). The highlighted facts behind global commercial air transport as at the year 2012 included a general improvement in airspace carriage, increased visitor expenditure on goods and service, continuous manufacturing of civic aircrafts and creation of a positive trade balance.

The economic use of commercial air transport counts to its logistical planning and existence of rapid development, and acute application of technology (Fojt, 2006). Modern air transport widely applies the use of technology, which to a higher degree allows aircrafts to operate efficiently and safely under the varying conditions across the world (Stadlmeier, 1998, p. 55). Applying technology in air transportation makes air services available even to the poorest nations, and accessing the most advanced products from other parts of the world becomes much easier and cheaper than before. For example, the newly introduced ultra-long range aircraft has a highly improved rate of performance compared to other aircrafts. The new technologically incorporated aircraft is known for its ability to operate nonstop flights making it efficient for people, cargo and other items to be moved without any limitation (Stadlmeier, 1998, p. 59).

The increased use of technology in areas of air travel largely has an impact on the economic cost of operation, and the most specific contribution is the lower cost of air travel (Stadlmeier, 1998, p. 59). Therefore, the desires to use air transport for commercial purposes rest upon fuel efficiency, aerodynamic surfaces as well as having a lower cost of maintenance for the modular components. A reduction in costs of improving performance progressively allows airlines to operate at lower fares, and this improves the rate at which people use air transport as their routine means of transport. With an objective of operating at lower costs than before, the diffusion of technology in commercial air transport play important roles in improving peoples’ lives since it appears more economical to use air services now than before (Stadlmeier, 1998, p. 62).

Based on the findings of this study, the now new air services can result into varying changes in the structure of both regional and international economy due to the existing capabilities as presented by budgeting processes, which may lead to a different set of transaction expectations especially on the side of consumers of airline services (Loades, 2003, p. 81). The reactions from respective governments are also known to create new airline industries in different regions as a means of expanding the sector and improving or making the services offered more efficient and effective. With the creation of more airlines that are technologically incorporated, governments and private stakeholders find it easy to compete for the vast economic opportunities available throughout global markets (Loades, 2003, p. 82). This means working on an approach of “catalytic impact”, possibly to quantify some of the most difficult budget outcomes.

Studies have shown that with a 10% increase in supply of intercontinental flight, a country is in a position of reducing its transport budget by close to 4%, especially for firms located in urban areas (Loades, 2003, p. 82). Similarly, the use of “impact catalyst” would compel nations to liberalize their airlines, and as the case of Egypt, there could be increase in GDP from general air travel and tourism industry (Kategekwa, 2014, p. 39). The case presented shows strong relationships between air service liberators, growth in air traffic and positive economic impacts.

The Economics of the UAE Defense Force running its own Air Logistics aircraft

The changes in system of operations and war tactics compel governments across the world to consider the best approach that can be used to curb defense costs while maintaining their battle-winning efforts (Kassel & University of Wyoming, 2007, p. 21). Most governments work on specific plans of reducing the amount of expenditure on defense in order to balance national total budget or bring down the amount of national deficit (Kassel & University of Wyoming, 2007, p. 25). For example, by UAE Defense Force running its own Air Logistics aircraft, the response time in case of a crisis will be much higher than if the respective governments were operating on a leased transport aircraft program (Kassel & University of Wyoming, 2007, p. 24). Even though the US government is counted among the first nations to deploy and sustain full sized brigade force in addition to its airline enablers, the US’s decision to lease some of its aircrafts to UAE would only add to the total costs of monitoring and controlling national and international borders against threat or attack.

The UAE strategic defense and security Review gave an outline of how the government should investing in future operations of its armed forces, with little desires to operate on leased aircrafts (Kassel & University of Wyoming, 2007, p. 25). In this connection, UAE and respective governments are currently working on a plan to improve the performance of armed forces both nationally and internationally, and the 10-year budgeting plan with close to 160 billion dollars will help improve mobility and efficiency of army officers across the borders (Kassel & University of Wyoming, 2007, p. 27). Investing on defense force and other security personnel is a show of concern over security issues, and therefore the need to equip armed forces with new aircraft carriers and strike fighters remains general.

With the rising demand for better war equipment, governments are today turning to more economical aircrafts that can sustain war and produce good results (Kassel & University of Wyoming, 2007, p. 27). The introduction of Type 45 destroyer, astute class submarine and specific carrier programs has completely revolutionized the way armed forces operate. For example, instead of the normal vertical landing, these aircrafts make it possible for the Armed Forces to operate short take-offs. The short take-off time is much efficient, and reduces the amount of fuel burnt before take-off.

UAE security challenge is an issue that can only be sought through credible, fast and cost effective defense mechanism (Kaps & Phillips, 2004, p. 19). Presently, UAE experiences security challenges amounting to both internal and external threats following the continuous budgetary shortfalls especially within the defense force (Kaps & Phillips, 2004, p. 23). The fiscal shortcomings and the precipitated dramatic decline in global oil prices are some of the factors to widely consider since their exacerbation could possible lead to inability to develop absorptive capacity for effective control of secular enemies like Iraq and Iran (Kaps & Phillips, 2004, p. 23). The services of the largest GCC county and the entire Saudi Arabia contribute immensely to American economic well-being, and therefore viable defensive mechanisms much be put in place to prevent the aftermath of attacks (Sagers, 2006, p. 13). This means investing in efficient technologies that could be used to effectively monitor and control borders.

The use of aircrafts again becomes important in surveying, securing and controlling national borders while ensuring that the activities of traders and other economic participants go on smoothly (Parker School of Foreign & Comparative Law, 2007). The budgeting plan and its defense objectives for the UAE Armed Forces remain unaccomplished since the various funding needs are driven by increasing national and international challenges (Sagers, 2006, p. 13). For example, the $80 billion foreign donation given by the US government in late 1980s could not have addressed the funding challenges the oil countries in Middle East were facing, and therefore the observed decades of economic retrenchment affected the decision whether to purchase more Army Aircrafts or concentrate on improving the economic welfare of the growing population.

As much as most countries across the world improve the service of their armed forces through proper budgeting especially in areas of transportation, the emergency plan for UAE appears different (Parker School of Foreign & Comparative Law, 2007). UAE works on a collaborative funding, looking forward to the service of foreign donors and other allied nations (Klingaman, 1991). The extreme challenges UAE faces as far as budgeting to meet the needs of regional Armed Forces is concerned cannot be managed in these countries have not understood the importance of civic aviation or air travel (Parker School of Foreign & Comparative Law, 2007).

Advantages and Disadvantages of Leasing Over Owning Transport Aircrafts

Owning Transport Aircrafts

The primary decision to purchase and claim ownership of a transport aircraft is based on the anticipated level of usage (Fabbe-Costes, 2008, p. 30). The question as to whether the aircraft will be used to justify the reasons for its acquisition and ownership costs is considered important before going into purchase process (Fabbe-Costes, 2008, p. 34). While considering issues of finances, the amortization cost of acquiring ownership of transport aircraft is much lower compared to the cost of partial ownership. When a person or a company has full ownership of transport aircraft, it becomes easier to make decisions that may help reduce the cost of ownership. For example, deciding to hire a fully chartered aircraft to another party is easier that if the aircraft was being operated as a joint venture (Poist, Scheraga & Semeijn, 2001, p. 51). In the contexts of business operations, owning transport aircraft means that the owner retains eligibility for depreciation deductions while meeting the IRS regulations.

Owning transport aircrafts have disadvantages too, and this makes the decision to lease aircrafts valid (Poist, Scheraga & Semeijn, 2001, p. 56). Noted in this case is the time and energy commitments used by owners to maintain or manage the transport aircrafts such as the cost of hiring pilots, renting hangar space or other costs like maintaining scheduling as well as the cost of obtaining and renewing insurance (Poist, Scheraga & Semeijn, 2001, p. 60). Owners of most aircrafts do not have the knowledge to maintain or run these aircrafts, and therefore must again hire the services of managing companies and pilots. This increases the cost of operating aircrafts, which may prompt the decision to lease and seek for regular remittance (Poist, Scheraga & Semeijn, 2001, p. 60).

Leasing

As an advantage, leasing transport aircraft provides the same benefits just like full ownership without the part of financial commitments for purchase and maintenance (Poist, Scheraga & Semeijn, 2001, p. 58). Under operating lease, there are higher possibilities that the less or retains the initial title to the aircraft while under financial lease, the lessee stands the chance of purchasing the aircraft at the end of the lease period (Poist, Scheraga & Semeijn, 2001, p. 61). The amount at which the aircraft will finally be purchased by the lessee will be almost the same if the aircraft were bought on credit. On the side of disadvantage, leasing transport aircraft can be costly than owning (Fabbe, 2008). For instance, once leased, the lessee takes control of the various costs ranging from the cost of maintenance to the cost of upgrading aircraft systems. The lessee commits a lot of time and energy just like the owner to manage and maintain the transport aircraft. The costs, time and energy makes transport aircraft leasing more disadvantageous over initial ownership.

Recommendations for Use of Air Logistics

The decision as to whether UAE Defense Force should obtain Commercial Air Logistics company support remains an issues debatable. For the case of UAE, improving army performance will mean concentrating on the services of a third-party logistics company (Clarke, 2001, p. 21). Based on the findings of this research, engaging the services of air logistics company improves delivery process, makes the deliveries more efficient and cost effective since the logistics plan work on shorter routes of delivery. The air logistics company would work as the primary source of support for product and service delivery to military bases and to other regions where there are no conflicts (Clarke, 2001, p. 21).

The use of a third-party delivery would offer support to the shrinking armed force structure while improving the demands for armed force projections and sustenance (Clarke, 2001, p. 21). Some of the supports the air logistics company can offer to UAE defense force include warehouse management, Inventory management and scheduling, order fulfillment, radio frequency tracking repackaging and labeling of shipment as well as information technology support (Clarke, 2001, p. 21). All these services are known to improve the level of response and concentration UAE Defense force will give to challenging situations.

 

 

 

References

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