Aviation in Crisis

Abstract

Aviation was always in crisis. The air transport industry, even prior to 11 September 2001, although seemingly a glamorous, exciting and prosperous business, never enjoyed sustained periods of profitability. Even among the large carriers, a short bout of profitability would inevitably be followed by a period of downturn in real income. It is simply that this fluctuation in fortune is an ineluctable characteristic of air transport, whose fortunes are dictated by rigid regulation, competition and technological change. If a sustained analysis were to be made of air transport, plain economic theory would no longer be the exclusive discipline for consideration. Rather, all relevant factors have to be taken in context and emerging issues should be analyzed as possible threats to the economic well-being of the air transport industry. This book not only addresses issues in a rigid post-September 2001 context but also analyzes issues past and present, with the intent of looking at the future. It takes into consideration four major areas which were in crisis but have been greatly affected by the events of September 2001. These areas relate to crises in the commercial, security, insurance and environmental protection fields. Of these the first and fourth areas are inextricably intertwined, as aircraft noise regulations in various states have a direct impact on aircraft financing, which in turn is linked to demand for air services. A drop in demand for air services would essentially mean that the demand for the lease or purchase of new aircraft would drop. When this occurs, air transport enterprises would be more inclined to cut costs and therefore concentrate on using the aircraft already at hand, upgrading them to conform to the more demanding noise and emissions regulatory standards. It therefore becomes necessary to view all these factors separately, in the multitude of issues they provide, with a view to understanding the course which the air transport industry would be taking in the future.