Test 1

Question 6: Compare the role of ICAO and IATA? How are they similar? Different?

- ICAO major focus is technical aspect of aviation, setting up standards for orderly flow of air transport, made up of Assembly by individual countries. - IATA: focus more on economic, tariff coordination, fares, rates, and charges, made up of committee from individual airlines - Both are International Aviation Associations, not government Agency

Question 3: Brieftly describe the genesis of NSTB. What is the board's primary functions? What are some of its other function? What is included in a safety recommendation?A final report? Describe the accident experience of U.S scheduled air carriers and general aviation over the period 1973-85

- NTSB created by DOT Act of1966 as part of DOT, but 8 year later it became an independent agency. - The primary function of the board is to investigate civil aviation accident and issues related to accident, highway accident, All passenger train accident, marine accident, pipeline accident. -Other functions are: conduct special studies on safety problem, evaluate effectivenss o fgovt agencies involved in transportation safety; Evaluate the safeguards used in transporting hazardous materials; Review appeals from revoked or suspended certification - Safety recommendation: point out the person or party that needed to take action; describes the actions expected to be done; and state the safety needed to be satisfied - Final Report: contains analysis of actual finding conducted at NTSB Washington's headquarter. The result is a statement called " The probable cause of the accident" - Accident from 1973-1985: from 1967-1980: significant drop in airline accident. This trend ended in 1985 when there are 4 major fatal accidents happened in one year.

Question 2: What are the top five frustrations in aviation today? Describe each. What are additional areas of debates?

1. Fuel and oil 2. Pollution control 3. Personnel cutbacks 4. Global economic woes 5. Recurring safety lapse Other ares: • Cost of ANSP ( Air Navigation Service Provider) • Govt interfere • Environment • Infrastructure • Sercurity and Tax

: What was the primary purpose of the Civil Aeronautics Act of 1938? What does the following statement mean: " The Five memebrs of the CAA exercised quasi-judicial and quasi-legislative functions?" Describe 4 of the six functions of CAA. What was the significane of the reorganization plans of 1940s? Briefly describes five economic functions performed by CAB. Describe some of the features of the Federal Aviation Act of 1958?

-Civil Aeronautic Act of 1938: established CAA (Civil Aeronautic Autority) to move all the functions of regulating the aviation industry into one entity. CAA responsible for economic and safety regulation. Air Safety Board responsible for investigate accidents. Administrator responsible for development of aviation -The statement means CAA took control of expense and safety of the administrator and Air Safety Board and other executive power of appointment beside its own function. - 4 of the six functions of CAA: encourage development of civil aeronautics, promote development of air commerce and safety, preserve competition within commerce, mail service, and national defense, regulating airfares, prohibit discrimination and unfair advantages and destructive competitive practices -Significance of reorganization plan of 1940s is: Air Safety Board is replaced by CAA and economic regulation is vested in CAB (Civil Aeonautic Board). The administrator was placed under Department of Commerce. - 5 economics functions of CAB: -Establish requirement for certificates -Regulate passenger fares and cargo rates -establish rates for mail carried by airlines -Approve agreeement and consolidation between carriers. -Investigate or terminate unfair practices -Federal Aviation Act of 1958: FAA replaced CAA, CAB still regulate fares but transfer safety rule making to FAA. But has independent agency to improve and maintain safety standard of airline industry. Also standardize control and navigation system

Question 1: When was the first regular domestic air mail service provided? Who flew the mail in the years before 1925? What was the major significane of the Kelly Act? Of the Air Commerce Act? Who was the successful bidder on the Columbia route? What was the name of the aircraft specifically designed to carry mail in the Columbia route? What were six of the first 12 carriers of the newly established CAM routes

-First regular domestic air mail service provided on May 15, 1918 between NY and Washington DC. -The service was first conducted jointly by U.S War Department and U.S Post Office Department but later took over entirely by Post Office Department -Kelly Act: this is the first major legislation that affect the aviation industry, This Act allow Postman General to contract domestic air mail service with private companies through a competitive bidding system, set airmail rates and subsidies to the private companies. allow the expansion of commercial/private air carrier. -Air Commerce Act: brought the federal govt back into the aviation business as a regulator of commercial carriers created by the Kelly Act -Columbia routes was successfully bid by Boeing Airplane Company and National Air Transport -B-40 by Boeing was designed to carry mail in the Colombia route -6 of the first carriers of CAM routes: Colonial Airlines, Western Air Express, Northwest Airlines, Pacific Air Transport, Ford Air Transport, National Air Transport

Question 2: What roles did Walter Folger Brown play in developing the early CAM routes? What was the Spoils Conference? Which three carriers picked the north, central and south cross-country routes? What event prompted Senator Black to investigate air mail bidding practices? What was the significant of the Air Mail Act of 1934?

-Walter Brown was the Postmaster General in the 1920s. He disliked monopoly and wants stability in aviation industry. Therefore, he re-drew the air map of U.S an forced small operators out of business and award a large part of airmail business to his choice of Airlines -Spoil Conference: where Brown established 3 main mail routes- North, Central, and south route. -United got the North, Avco got the South. Western Air Express and Transcontinental Air Transport got the central -When Ludington Airlines, a smaller airlines, bid lower and lost to a bigger Airlines that bid higher. They came to Senator Black to tell the story. As a result, Black investigate the bidding system -Air Mail Act of 1934: reintroduced competitive bidding, authorize one-year contract subject for review before renewal. the first effort to regulate safety of the airlines. Makes the Secretary of Commerce responsible for equipment standard.. Interstate Commerce responsible for rates. This Act also barred also prior contract holders from bidding anew.

Question 1: List 4 stages of development impacting the airline industry and briefly describe how each has impacted the future direction of the industry

1. Regulation: • Strict govt control of airfare, routes and market entry • Regulation occurred due to strict ownership control of airfare, limited competition on selected route, limited market served, limited city-paring frequency, high airfares, govt bail-out for air carriers, incentive to achieve higher airline profitability 2. Liberaliztion: • Less govt control • Increased bilateral negotiations between countries • Expand to new market, diversification in the new products • Specialization in niche products 3. Deregulation: • No govt control • Free competition • Airfare decreased, safety and service increased 4. Re-regulation: • due to airlines merging • Regulate pricing to prevent predatory pricing • Railway Labor Act- Unions are not permitted to strike • Air traffic control updated→ decreased delay • Increase expansion, consolidation, and concentration

QUESTION 1: Describe aerospace industry, role of AIA and GAMA. Four factors of the industry that vital to U.S economy?

Aerospace industry includes those firms engaged in reseach, development, and manufactures of all the following: • Aerospace system (manned and unmanned aircrafts) • Missles • Space-launch vehicles • Spacecraft • Propulsion, guidance, and control units for all of the foregoing • Airborne and groundbased equipment essential for testing, operation, and maintaenance of flight vehicles AIA ( Aerospace Industries Association) is a trade asssociation represents the nation's manufacturers of commercial, military, and business aircraft, helicopters, aircraft engines, missiles, spacecrafts, and related component and equipment. GAMA ( General Aviation Manufacturers Association): trade association represents the intersts of manufacturers of light aircrafts and components parts. Aerospace industry is vital to U.S economy due to • Trade Balance: more exports for U.S, strong demand for Boeing airplanes • Employment: creates manufacturing jobs and high tech jobs, largest employers of all industries • R & D: long term effect on a nation's economic growth Impact on other industries: For every 100 aerospace jobs, it born 75 other non-aerospace jobs for other industries ( car, housing, public transportation

QUESTION 8: DEFINE air carrier, interstate air transportation, and air commerce. Both air carriers and general aviation "fly for compensation or hire". What distinguish the two?

Air carrier: any citizen of U.S who undertakes [] to engage in air transportation Interstate air transportation: the carriage by aircraft of person or property as a common carrier for compensation or hire. Air commerce: any interstate commerce or any operation or navigation of aircraft within the limit of any Federal airwat or any operation or nagivation of aircraft which directly affects / endanger safety in interstate air commerce. General aviation is different from air carrier because it is noncommercial and private use. General aviation is not considered a "common carrier" like air carrier.

QUESTIONS 9: Discuss the impact of the air transportation industry on the U.S economy in term of dollar expensitures and jobs

Aviation had hired thounsand of people into aviation as well as aviation-related industries such as hotel, restaurant, rental car, construction, manufacturing... Aviation final product are cargos and people delivered safely to the desired destination with an annual rate of 160 mil passengers. Aviation also support JIT shipping for more efficient supply chain, reduce excessive inventory. Aviation adds more value to the manufacturing process by cutting short time and distance for high-tech indsutries.

QUESTION 4:What are some of the causes and effects of the significant downsizing in the two major segments of the government market? Describe the outlook for the civil aviation market in the early 2000s

DOD Defense contract: Post Cold War leads to decrease in the defense industrial bases of U.S, Defense companies experience less government contracts, Aerospace sales to DOD declined significantly. Large employment decline as a result of defense cutback. The defense company, to deal with this, keep their key technical team in place to prepare for future contract when the economy is up again. Companies also focus on new design and manufacturing process, eliminate non-profitable business and invest in new ones. The industry experience major consolidation and teaming-up to perform R & D to bid on govt work. NASA: The Challenger Space shuttle disaster of 1985 and reduced spending on discretionary program result in downsizing of NASA as the same time Cold War ended. NASA budget don't show any real size of growth. Space projects are shifted to aeronautical project. U.S companies are seeking foreign opportunity Civil Aviation: In the first few years of 21th century when the economy is slowing down and going to a recession, followed by 9/11, Transport aircraft shipment declined.

8. What was some of the events leading up to the passage of the Airline Deregulation Act of 1978? Describe the position of the CAB regarding deregulation under the chairmanship of Afred E. Kahn. List some of the arguments against deregulation What is the overriding theme of the act? What are the major changes under the act?

Events leading up to the act: criticism on regulation prevent market force and competition, CAB regulating and pricing policy is inefficient when market increases. Arab : embargo of 1973 increases oil cost and fares leading to poor earning. -Under Chairlman Afred Kahn: CAB start reviewing application for new operating authority, CAB also much more receptive to route realignment and lower restrictions. -The overriding theme of the act was competition -The main purpose of the act was to remove government control over fares, routes and market entry (of new airlines) from commercial aviation.--> The CAB no longer regulate economic. → introduced Central Air Service Provison + all airlines has antitrust protection -Argument against deregulation: decrease in safety standard, crowded traffic route leading to decrease in service quality, impairment of air transport system regarding baggage handling, ticketing, destructive and predatory price competition, impact on airlines employee -

Question 2: Explain how the certificated airline industry has changed since deregulation in terms of expansion, consolidation, and concentration. Describe several innovations pioneed by the major air carriers in the early 1980s that radically changed the structure of the industry.

Expansion: competition increased and new airlines emerged as well as old airlines went out of business. Consolidation: Airlines that went out of business was bought by another airline, leading to major consolidation. Many of the top airlines no longer existed Concentration: concentration of business with a new cluster of "mega-carriers", with a number of small and mid-size airline being absorbed in the process Innovation pioneered: hub-and-spoke system, frequent-flyer program to establish brand loyalty, sophisticated reservation system (Skewed listings: Travel agent of an airline will typically get the booking information of that airline the fastest and Revenue Management)

Question 2: The FAA has its roots in which early piece of legislation? When was the FAA created as an agency? Describe some of FAA functions with regard to Air Traffic Control, aircraft and aviator certification, airport aid and certification, environmental protection, civil aviation sercutiry program, and engineering and development. How does the FAA interface with ICAO and NTSB

FAA has its root from the Air Commerce Act of 1926. -the Federal Aviation Act of 1958 created FAA as an agency -FAA functions: • Air Traffic Control: operation and maintenance of ATC. Employ staffs, engineer and technician to work at service stations • Aircraft and Aviation Certification: regulate training and testing of aircraft aviator and manufactor of aircraft. • Airport Aid and Certiifcation: expand and modernize airport to meet traffic demand. • Environmetal Protection: control noise and engine emission • Civil Aviation Secuirty program: prevent criminal act such as piracy, sabotage, extortion, and other crimes that affect safety. Require police officer to be at screening station and airports to have authorized-only security system • Engineering and Development: contract Engineering and Development project with industry, govt agencies , and universities. - FAA work with ICAO (International Civil Aviation Org) in establishing worldwide safety and security standards and procedures, import and export of aviation products, and foreign certification - FAA work with NTSB) (National Transporation Safety Board) in investiagation of major accidents.

Question 3:Discuss some of the factors that led to the decline in general aviation aircraft sales in the postderegulation period. What was the primary reason for the light-aircraft manufacturers discontinuing the production of single-engine piston aircraft?

General aviation aircraft sales declined in the postderegulation period because many factors: -More product liability lawsuit happening in the general aviation industry, fine increased and insurance increased. -airline deregulation decrease the use of business aircraft because new carriers competing to serve new markets and lower fares -As more airline increase their concentration at hub cities and more airline merging, service to small communities are dropped or severely cut due to decrease in competition -general aviation did not recover fast enough as the same rate the economy recover -Tax Reform Act: cut 10% investment tax credit and add luxury tax on plane → decline in aircraft sale -Light-aircraft manufactuerers discounting the production of single-engine piston aircraft because general aviation keeps introducing new models and increase in fractional ownership

Question 4: What are the six aviation regions of the world? Describe the regulatory trend associated with each regions?

North America • Canada: privatization of airlines • Low cost carriers • U.S: govt control of airports • Banrkupcy, debt • Merger • Stagnant domestic and increased international growth • Dehubbing/ de-peaking away from hub and spoke • Internet ticket sales • Simplified aircraft fleets Europe: • Liberaliztion • Low cost airlines • Increased alliance of airlines and airports • Competition from high-speed rails Asia Pacific: • Libteralization • Strong growth in China and India • Hongkong is the businest international route • No regional organization • Need for advanced navigational equipment Middle East • Stagnant growth due to gap in classes • Safety and security issue Africa: • low standard, small airlines , stagnant • oldest aircraft fleet • Vast majority of population do not travel • Separation of rich and poor Latin America/ Carribean • Regulation towards liberalization • Increase in passenger growth • Increased in competition as well as alliance • Need for management training and safety

Question 3: What are the top three costs for airline typically? In addition, list other typical airline operating expense. What is the name of the Index that produce such costs? How often is the index published?

TOP 3 COSTS FOR AIRLINE 1. Fuel and oil : 40% of operation cost, keep rising 2. Labor 3. Maintenance Other operating cost: • Ticketing • Sales • Promotion, Ads • Crews • Depreciation • Facility • Landing • Insurance • Food and Beverage • Rental/ ownership • Passenger commission • Utility ATA ( Air Transport Association) invented the PASSENGER AIRLINE COST INDEX every quarter to calculate airline cost

Quesiton 2: List the primary-use categories. Distinguish between business and corporate use. What is the primary role of NBAA? AOPA? Define aerial application, aerial observation, and aerial other. What is the significance of these segments of aviation to our economy? Give some examples? What type of aircraft falls into the "other flying" category?

The primary use category: Business Aviation, Personal flying, Instructional flying, Commerical and industrial aviation ( aerial observation, aerial application, aerial others, sightseeing and tour, air taxis, external loads and medical) Business aircraft use and corporate aircraft use are both not for compensation or hire but business aircraft use is used by an individual for the purpose of doing business (personally flown) while corporate aircraft use is for the purpose of transporting employees and property of a company, coporation, or organization NBAA ( National Business Aircraft Association): role to present business aviation before Congress and regulatory agencies. AOPA (Aircraft owner and Pilot Assocation): Represents the interest of owners of 70% active general aviation aircraft in the U.S before Congress, also provide variety of service to its members designed to enhance air safety. Aerial application: an use of aircraft for the purpose related to production of food, fiber, or health control measure, replacing farm implements or ground vehicles. Aerial application is widely used in agriculture to apply fertilizer, spread seeds, control pests, and harvest crops. Aerial application enhance resort operator business by controlling flying insects and disease. Aerial observation: use of aircraft for mapping, photograph, survey, patrol, fish spotting, seach and rescue, hunting, and highway traffic control. Planner, real estate developer, construction business, engineer, architecture use aerial observation in their business. Commercial fishing business also benefit from aerial observation because they can locate concentration of fish. Government can use aerial observation to check for electricity failure, police use to track traffic and accidents. Aerial others: use of aircraft for wildlife conservation, weather modification, and advertising. It's difficult to compute the value of these commercial aviation operator in dollars but they are very important to protection of natural disaster, land planning, disease and pest control Other flying category: aircraft used for R&D, testing, demonstration, and government purpose. 1/3 of aircraft in this categories are government aircraft designed for civilian use.

QUESTION 1: How did the trunk and local-service carriers evolve? What was the role of the supplemental carriers? Discuss some of the problems faced by the industry in the three decades preceding deregulation. How did the deregulation movement get started?

Trunk carriers originates from the original airlines that got certified by the CAB and operate on medium-to-long interstate route, ofeten referred as 401 Carriers Postwar period, CAB allows smaller carriers to become feeder route for trunk carrier even the trunks carriers didn't like this idea because they want to operate the feeder route too. CAB denied and said they will allow local service carriers to service small intrastate communities and will watch them closely. These service exempt from CAB economic regulation and charge lower fare Problems faced by industry: In 1950s and 1960s, there is overlapping between trunk carriers and local service carriers, CAB poorly coordinated flight schedule led to delays. Airlines also faced with suppressed routing and pricing options. In 1970s, Arab Oil embargo leads to higher fuel cost, together with inflation. Deregulation get started by the CAB created new policies, approve new route application, give a lot of discount to airlines, followed by enoucragement of Afred Kahn, The Airline deregulation Act is passed, slowly emilinating CAB functions.

QUESTION 6: List and briefly describe major factors affecting commercial transport sales. How does the cyclical nature of civil aviation affect aircraft manufacturing?

ctors affecting commercial transport sales • Economic growth: broadly influence demand for air transport because more people and business travel • Inflation: high inflation hinder investment and financing, as well as economic growth. Airlines facing higher cost and have to increase fare • Fleet capacity: Passenger load factor keeps a constant level after a period of decline in the early 2000s • Replacement Aircraft: Airlines have to replace their old aircrafts and upgrade to better ones periodically. • Airline profitability: in order to rasie capital, airlines needs to prove investors that they are profitable. • A cyclical industry: civil aviation market are generating in cycles of peaking and declining. Because aircraft are expensive to build, they are only made after the order is placed, which create a lag time. → aircrafts and airlines can miss a market peak time due to manufacturing lag time • Future trend in air transport: Transport deliveries are rising in the future as international economy grow.