Aviation Supply Research Articles

Engine option in aircraft purchase: Company strategies and policy implications

Airlines select an aircraft’s engine simultaneously while purchasing the aircraft. Usually, an aircraft model has multiple engine options, but recently the number of engine options has been decreasing. We develop a three-echelon supply chain model including engine manufacturers, aircraft manufacturers, and airlines to analyze the engine options in airlines’ new aircraft purchases. We show that given an airline’s existing fleet composition, larger fleet size and higher aircraft production efficiency would make it more likely to choose multiple engine options. In contrast, higher production costs and engine substitutability would lead to a shift to a single engine or hinder the airline’s fleet expansion. In the model, we highlight the impact of MRO (Maintenance, Repair, Overhaul) costs with economies of scale on airline engine option decisions as well. In particular, our theoretical findings suggest that the airline would buy more aircraft that are the majority types in their existing fleets, thus crowding out the minority ones. Our findings provide a reasonable explanation for the homogeneity of engine options and provide policy implications regarding airline expansion and aviation supply chain development.

3D printing and blockchain: aeronautical manufacturing in the digital era

ABSTRACT This research highlights the incorporation of 3D printing and blockchain technology into aeronautical manufacturing and certification procedures with an aim to increase operational efficiency. The integration of 3D printing allows for streamlined production, while the immutable features of blockchain provide traceability and certification advantages, thus offering the potential for transformative impacts within the aviation supply chain. This study primarily focuses on investigating the implications and multiple benefits of this integration into the aviation industry. Furthermore, given the absence of economic assessments priorly conducted on this integration, the study also includes a mathematical formulation that provides a quantifiable measure of the achievable return on investment. Two distinct case studies provide real data as evidence supporting the efficacy of this proposed integrated model. The outcome suggests a new paradigm for the supply chain ecosystem, leading to operational improvements and economic benefits.

Air transport capacity and tourism demand: A panel cointegration approach with cross-sectionally augmented autoregressive distributed lag (CS-ARDL) model

This research aims to quantify the effect of air transport capacity on tourism demand by examining their long-term (cointegrating) relationship, accounting for cross-sectional dependence and endogeneity. Panel time series data from 2008Q1 to 2019Q4 for international tourist arrivals from 16 main origins to six Australian states are investigated. The study finds 1% increase in Available-Seat-Kilometers, seat capacity, or flight frequency can result in 0.4%–0.7% increase in tourist arrivals to Australia, adding to the body of evidence that shows a non-negligible aviation-led generative effect on tourism demand. The study finds ignoring cross-sectional dependence can result in significantly different, and potentially incorrect, coefficient estimates. Although using pre-COVID data, the results are useful in highlighting the likely aviation supply—tourism demand relations under reasonably well-performing market conditions. For greater tourism demand, findings call for more liberal international air services agreements, and direct/indirect air route development subsidies with minimum commitment of several years.

Green Commercial Aviation Supply Chain—A European Path to Environmental Sustainability

The last century has witnessed European commercial aviation flourishing at the cost of environmental degradation by boosting greenhouse gas and CO2 emissions in the atmosphere. However, the outcry for net-zero emissions compels the sector’s supply chain to a minimum 55% reduction of greenhouse gas emissions below the 1990 level by 2030 and zero CO2 emissions by 2050. This study examines a European environmental sustainability path toward a green commercial aviation supply chain. Driven by literature and a review of related documents, two propositions were advanced to orient perspectives on the relationship between pollution and the commercial aviation supply chain and actions being taken toward environmental sustainability. In semi-structured interviews, seventeen aerospace associates endorsed pollution sources in the commercial aviation supply chain during the four stages of the aircraft life cycle, including extracting the raw materials, manufacturing, ground and flight operations, and end-of-service. They recommended transitioning into green commercial aviation through the widespread deployment of innovative technologies, from modifying airframes to changing aviation fuel, utilizing alternative propulsion systems, adopting circular manufacturing, and improving air traffic management.

Statistical process control implementations within the aviation industry

In 1931, Walter Shewhart introduced his work in statistical process control (SPC) through his book, Economic Control of Quality of Manufactured Product. A common confusion in the use of SPC is that it does not fit every business or industry. Since Shewhart's work was published, various companies and industries have implemented such practices as a method to control their manufacturing quality of products, service quality, and design quality. In 2017, a supply chain quality organization from a well-known business jet manufacturer discovered that vendors of its supply base were posting ostensibly statistical process control charts on metric walls in their facilities. The charts were not error-free. Out-of-date data placed on the charts, the preponderance appeared to be weeks or months old, and incorrect use of control and specification limits indicated there might be a gap. The purpose of this research was to discover why businesses in the aviation industry are not taking advantage of SPC practices and methodologies. To identify the potential barriers inhibiting the deployment or growth of SPC implementations in the aviation industry, data was gathered from a survey of original equipment manufacturers (OEM) and members of the aviation supply base. The major challenges or barriers to implementing SPC in the aviation supply base were recognized as leadership commitment, cultural mindset and behaviors, understanding the benefits of SPC, and a lack of knowledge.

Synthetic control methods for policy analysis: Evaluating the effect of the European Emission Trading System on aviation supply

In this paper, we provide a novel application of synthetic control methods by offering two major modifications to the existing methodological framework. We provide the first complete ex-post evaluation of the causal impact of carbon pricing on aviation supply, expressed in terms of airline output (i.e., number of seats supplied at the airline-route level). We investigated the policy change in the European Union Emission Trading System (EU ETS), the first large greenhouse gas emissions trading scheme in the world. We distinguish between low-cost, regional and full service airlines, short and medium/long-haul routes, routes towards (or from) hub airports versus non-hub airports, monopolistic versus non-monopolistic routes. The analysis shows that the EU ETS does not have a substantial impact on the average aircraft size, while it has caused a reduction of total airline seat capacity and flight frequency, with the percentage of airline seat capacity reduction reaching above 20% at its peak. The overall effect of the policy has a remarkable impact on low-cost and regional airlines, short-haul routes, spoke–spoke markets and monopolistic routes. Our results are the first empirical confirmation to the theoretical prediction in the aviation literature that emission charges will reduce flight frequency and increase load factors while having no effect on aircraft size.

Aviation supply and demand in the São Paulo and Rio de Janeiro systems evolution: An exploratory study

Aim/purpose – Multiple factors affect a passenger’s origin and destination airport choice. This study explores some of the leading indicators associated with performance in cities with more than one airport. Two important Multi-Airport Systems (MAS) in Brazil were the object of this study: São Paulo (Congonhas and Guarulhos) and Rio de Janeiro (Santos Dumont and Galeão), the most significant demand-generating centers in the country and the most critical distribution centers of flights from South America. Design/methodology/approach – Using public databases presenting the evolution of supply and demand from 2013 to 2018, the evolution of flights, and the sales by airlines in the same period, we estimated a linear model using panel data on a multiple linear regression with fixed effects. Findings – One of the results observed is that competition between airlines positively affects prices for consumers, the industry, and tourism, which is vital for the country. Research implications/limitations – The limitation of the findings is the lack of current data. Originality/value/contribution – In filling the gap in the literature on the evolution of supply and demand in the Brazilian aviation market, the study evaluates some of the leading indicators associated with performance in cities with more than one airport. Keywords: aviation supply and demand, evolution, Brazil, São Paulo, Rio de Janeiro, airports. JEL Classification: R40, R41, R10, O54, C19.

A study on aviation supply chain network controllability and control effect based on the topological structure.

The present paper focuses on the controllability of the aviation supply chain network and establishes the judgment criterion for structural controllability of the aviation supply chain network. We determine the control effect by applying the control input to different nodes in the aviation supply chain network. These control nodes include the core enterprises of the aviation supply chain network, the upstream suppliers, and the downstream distributors. It is observed that the control effect is better when the control input is applied to the upstream suppliers of the aviation supply chain network than to the core enterprises of the aviation supply chain network. It is also more desirable to apply the control input to the core enterprises than to the distributors. That is, the control effect is the weakest when the control input is applied to the distributors, whereas the effect is best on application of the control to the upstream suppliers in the supply chain (that is, by choosing the upstream suppliers as the controlled nodes in the aviation supply chain network).

The Application of a Multi-Attribute Group Decision Making Model Based on Linguistic Extended VIKOR for Quantifying Risks in a Supply Chain Under a Fuzzy Environment

In this research, the quantification of supply chain risk has been investigated from the perspectives of the buyer. The objective of this research article is to investigate numerous risks that affect the aviation supply chain (ASC) performance and to develop a proposed framework to measure the overall supply chain risk index by considering the importance of each risk. Aviation industry is at higher level of risks, that's why the researchers have identified the most serious 10 supply chain risks (SCRs) in this industry. In order to tackle with this key problem, an indexing system for comprehensive risk evaluation has been developed, which captures the ratings and weights for risk factors, namely occurrence probability, severity of impact, and ease of mitigation, encountered by a holistic supply chain in a given scenario. In this context, to quantify the risks in a supply chain, the researchers have formulated as a fuzzy multi-attribute group decision making (FMAGDM) model, based on fuzzy FMEA and extended VIKOR methods to analyze the most feasible solution according to the selected risk parameters as per situation. The results of the present study depicted that disruption risk, financial risk, and legal/political regulations are the most significant and typical risk (ASC). A practical case study in an aviation sector of Pakistan is piloted to check the practicability of the suggested methodology. Finally, the effectiveness of the proposed model has been discussed by ranking risk alternatives in descending order. In order to check the robustness of results, a sensitivity analysis has been conducted.

Pricing Carbon in the Aviation Sector: Supply Effects of the European Emissions Trading System

We examine the causal impact of carbon pricing on aviation supply exploiting a policy change in the European Emissions Trading system (EU ETS). Our econometric approach is based on a matched differences-in-differences strategy. We find that low-cost airlines end up supplying 7% fewer seats than the counterfactual. When we restrict the estimation to routes on which intermodal competition may exist, the reduction in seats is 23% greater than the counterfactual and the change is persistent in time. Finally, network airlines are found to increase the average size of their aircrafts as a result of the EU ETS.

Business models in business aviation – An empirical analysis with a focus on Air Charter Companies

The paper contributes to the research on business models in business aviation by presenting the results of an empirical analysis focusing on air charter companies. Combining the Canvas concept with cluster analysis, we use data from more than seventy air charter operators from five world regions. The cluster analysis produced three clusters of companies which were large full-range business aviation supply groups, medium sized business aviation firms, and small business aircraft operators. The findings confirmed the diversity of the sector and indicated the presence of more business models. Our findings also call for the development of sector specific research tools and methodologies aimed at business models in business aviation to comprehensively answer the question how the sector works.

Evaluation of assemblability during aero engine preliminary design

Despite the constant growth of global air traffic, the competition amongst airlines and their aviation supply chains intensifies. In the future, stricter environmental regulations as well as economic goals will only be met by new aircrafts and aero engines. In order to evaluate the life-cycle related cost at an early stage in the product design process, it is essential to assess the manufacturability and assemblability during preliminary design. Through the assessment of assemblability, major cost drivers can be identified in order to optimize the overall production cost. In this paper, a method to assess the assemblability of different preliminary design variants is introduced. To achieve this, 2D cross sections of actual aero engines are translated into 3D preliminary design models. Finally, an evaluation of the assemblability of different design variants of low pressure turbine modules is conducted.

Social Network Theory and Management of the Sub-supply Network in Complex Sectors

Studies on complex product development have seen different improvement approaches to achieve shorter product development lead times and higher return on investment. Complex product development still lack on the ‘better, faster and cheaper’ paradigm for efficient communication and information exchange flow process. This paper aims at understanding how the critical interdependent techniques are managed in the sub-supply network of a complex sector such as Business Aviation Industry. Thus, the aim is to envisage the best practice approach for technical communication networks among these systems-design teams and also how the bottlenecks existing could be effectively and efficiently addressed to enhance collaborative industrial supply-chain management network competitive advantage.This paper employing social network theory propose information flow process toward enhancing an industrial sustainable competitive advantage. From a methodological point of view, the research is based on a single case study, a questionnaire was used to collect data for the level of communication network from Business Aviation supply chain network.The outcome of the research highlights how communication in the sub-supply network significantly influences the attention the teams pay to the organization of the critical interdependent techniques. Moreover this research identifies an effective and efficient communication is sees as the driver for effective organization management, which need enhancement for industrial competitive advantage. Finally, the research carried-out undoubtedly gives a considerable contribution in understanding critical and complex issues in the relationships in sub-supplying in Business Aviation Industry.The outcome could be further developed by extending the interviews to the businesses involved in the sub-supply chain.

Additive manufacturing’s impact and future in the aviation industry

Additive manufacturing (AM) is a technology that has the potential to change the future of aviation supply chains and how the aviation industry designs, manufactures and repairs aircraft in the future. The purpose of this research was to shed light on the current and future states of AM in the aviation industry. From focus groups with nearly 50 aviation professionals from aircraft original equipment manufacturers (OEMs), suppliers, maintenance repair overhaul providers, and AM service providers and AM production firms, we found that the adoption of AM will be triggered by the accumulated AM experience in the industry, the stability of AM technology and the development of new aircraft generations. For AM to be finally adopted, aircraft OEMs must actively manage several success factors and monitor numerous control factors identified and discussed in this research. AM will supplement traditional manufacturing processes at least in the short to midterm, likely grow exponentially and offer benefits for players in the aviation supply chain.

Using DEA models to jointly estimate service quality perception and profitability – Evidence from international airports

With increasing competition between airports and a growing share of non-aeronautical revenues, particularly at large international hubs, perceived quality and consumer satisfaction have not only become a key focus of management but potentially the most important tool to achieve or maintain a competitive advantage. However, in the long run stakeholders aim for profit maximisation and it has been shown for other parts of the aviation supply chain that quality does significantly impact on profitability. In this paper we aim to investigate whether perceived airport quality has an impact on airport profit margins. We further apply two-stage Data Envelopment Analysis (DEA) models to estimate a single efficiency measure that combines the potentially conflicting indicators of perceived service quality and profitability for the airport context. We also identify determinants of the jointly estimated single quality/profitability measure.

The aviation value chain: Economic returns and policy issues

The airline industry is the central part of the commercial aviation value and supply chain. Nevertheless, it has the lowest profit margin and return on investment compared to other sectors in the chain. This leads to the question whether the airline industry is sustainable in the long run, the so called ‘empty core’ problem. This paper discusses the returns in the aviation supply chain and provides several policy recommendations that might be considered to improve the long-run sustainability of the airline sector and the aviation supply chain as a whole. These include i) recognising the role of airline charges for ancillary products and services, which enables airlines to generate revenues to cover fixed costs in the presence of intense competition that drives the price of the core airline product to marginal cost, ii) reconsidering risk allocation between airlines and airports to eliminate pro-cyclical airport pricing required by some regulators or airline-airport agreements, iii) considering allowing airlines to internalise certain externalities, and iv) increasing vertical competition in distribution channels.

Full Throttle: Reforming Canada's Aviation Policy

Federal government policies are a major cause of high costs throughout the aviation supply chain, often leading Canadians to waste time and money by seeking lower fares at nearby US airports, or not travel at all. High fuel taxes and onerous foreign ownership and airline-specific policies are harming the competitiveness of airlines. Meanwhile, airports have been transformed from the rundown state they were in when operated by the federal government to become world leaders in customer service and quality. However, Canada’s airports are now handicapped by federal government policies that result in otherwise higher costs for travelers. If Canadians are to have the most economically efficient aviation system possible – crucial for such a geographically vast country – the federal government should enact a comprehensive set of policy reforms across the aviation sector. The federal and provincial governments should reduce, or eliminate, remaining aviation fuel taxes. The federal government should also gradually loosen foreign ownership restrictions on Canadian airlines, eliminate both company-specific burdens and protection for Air Canada, and attempt to renegotiate open skies agreements with the United States and the European Union to open the right to operate on domestic routes to all international airlines. Twenty years ago, Canada was a global leader in moving airports from government to private operation. While the federal government still owns the major airports proper, it signed operating leases with not-for-profit airport authorities. These airport authorities make long-term commitments that the looming end of leases may soon jeopardize, necessitating Ottawa to take action soon. The federal government should sell its remaining interest in the leases at airports it owns either to the not-for-profit airport authorities that currently operate them or to for-profit corporations. Such sales could make investors, airlines, travelers, and taxpayers all better off.Rather than regulating privately owned airports, government policy should focus on increasing competition in the sector. For example, if the City of Toronto approves the extension of the runway at the Billy Bishop Toronto City Island Airport and allows jets of all types that meet noise requirements to operate there, that would benefit travelers by enhancing competition locally and beyond.Ottawa should treat airports and airlines like regular businesses, remove sector-specific taxes and ownership and operation regulations, and let our Canadian aviation companies compete on the world stage.

Traceable Air Baggage Handling System Based on RFID Tags in the Airport

The RFID is not only a feasible, novel, and cost-effective candidate for daily object identification but it is also considered as a significant tool to provide traceable visibility along different stages of the aviation supply chain. In the air baggage handing application, the RFID tags are used to enhance the ability for baggage tracking, dispatching and conveyance so as to improve the management efficiency and the users’ satisfaction. We surveyed current related work and introduce the IATA RP1740c protocol used for the standard to recognize the baggage tags. One distributed aviation baggage traceable application is designed based on the RFID networks. We describe the RFID-based baggage tracking experiment in the BCIA (Beijing Capital International Airport). In this experiment the tags are sealed in the printed baggage label and the RFID readers are fixed in the certain interested positions of the BHS in the Terminal 2. We measure the accurate recognition rate and monitor the baggage’s real-time situation on the monitor’s screen. Through the analysis of the measured results within two months we emphasize the advantage of the adoption of RFID tags in this high noisy BHS environment. The economical benefits achieved by the extensive deployment of RFID in the baggage handing system are also outlined.

Analyzing convergence alternatives across existing SAP solutions

Further data are presented on the efficacy of our SAP process‐oriented research methodology, which focuses on analyzing collaboration across multiple overlapping SAP solutions. Looks at three SAP projects currently being implemented in the US Navy. The projects focus on aviation weapon system program management, aviation supply and maintenance, and naval maritime maintenance. Collaboration was complex and difficult to achieve, given the scope of the project but desirable if it was cost‐effective. The research hypothesis was that development and execution of a methodology for analyzing the gaps and overlaps across multiple SAP software instances to assess collaboration or convergence potential were possible. It was concluded that collaboration was not cost‐effective, and that the three projects should be merged into two SAP solutions (both solutions were version 4.6c of the R/3 software). Results did not provide a general approach for merging SAP projects, but an analytical approach that could be used to analyze convergence possibilities for stand‐alone SAP solutions is provided. It is not believed that a general approach is achievable. There are millions of configuration possibilities and many unique project characteristics. Hence the analytical approach is somewhat general but general convergence principles are beyond the scope of this research.

International Comparisons of Australia's Infrastructure Performance

International benchmarking has played a key role in the reform of Australia's infrastructure industries by promoting indirect or yardstick competition, in highlighting the need for further reform and building a consensus for implementing necessary changes. The international benchmarking of infrastructure performance by the Bureau of Industry Economics (BIE) between 1991 and 1996 did much to focus attention on the need for change. The BIE examined the performance of eight infrastructure industries relative to international best practice: electricity, rail freight, telecommunications, the waterfront, road freight, coastal shipping, aviation and gas supply. Performance comparisons concentrated on indicators of price, service quality, labour productivity and capital productivity. This paper reviews and summarises the performance comparisons the BIE undertook over the last three years of its infrastructure benchmarking program. The BIE international benchmarking program provides a useful role model for other countries wanting to seriously pursue reform of their infrastructure industries.