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AIRLINK INTERNATIONAL AVIATION COLLEGEDomestic Road, Pasay City
__________________________________________
A COMPARATIVE STUDY BETWEEN AIRBUSAND BOEING COMPANY
YEAR 2000-2011
__________________________________________
IN PARTIAL FULFILLMENTOF THE RESOURCEMENT IN AE411
RESEARCH METHODS AND TECHNIQUES
BY
BHATTA, SAMIPPOUDEL, ANUJ
2012
TABLE OF CONTENTS
ACKNOWLEDGEMENT
Chapter Page
I THE PROBLEM AND ITS SETTING
Introduction 1
Background of the Study 3
Statement of the problem 6
Assumption and hypothesis 10
Significance of the study 10
Definition of terms 12
Scope and Delimitations 13
Conceptual Framework 17
II REVIEW OF RELATED LITERATURE AND
STUDIES 18
Airbus vs. Boeing revisited 18
Airbus vs. Boeing: Strategic management 20
Airbus vs. Boeing (2010) 22
Airbus vs. Boeing: contrasting views of the
future 28
WTO delivers verdict on Airbus vs. Boeing 29
Airbus Vs. Boeing The Case Study -Jimmy
Jones 36
Airbus leads Boeing in aircraft orders in the
first half-Madrid 40
Airbus vs. Boeing: The subsidy wars 45
Airbus vs. Boeing as the transatlantic spat
escalates 46
III RESEARCH METHODOLOGY
Methods of Research 65
Sampling design 66
Method of collecting data 72
Validation of questionnaires 77
Data gathering procedures 79
Statistical treatment of data 83
Analysis of variance 91
ACKNOWLEDGEMENT
This thesis proposal is written primarily in accordance with
the partial fulfillment of the resourcement in AE411 (Research
methods and techniques) of Bachelor of Science in Aerospace
Engineering at Airlink International Aviation College, Domestic
Road, Pasay City. And is an outcome of our knowledge in major
subjects in the past. This proposal is expected to meet the
requirement of the aerospace engineering students as guide for
detail knowledge in the comparative study between Boeing and
Airbus Company.
This thesis proposal is made possible through the help and
support from everyone, including: parents, teachers, family,
friends, and in essence, all sentient beings. Especially, please
allow us to dedicate our acknowledgment of gratitude toward the
following significant advisors and contributors:
First and foremost, we would like to thank our professor Mr.
Francis Deslate for his most support and encouragement. He
kindly read our paper and offered invaluable detailed advices on
grammar, organization, and the theme of the paper. The co-
operation is much indeed appreciated. Secondly, we would like to
thank our friend Mr. Rajiv Rimal for the smoothes and co-
operation during the period of our research and who gave the
time to read our thesis proposal and to provide valuable
advices.Finally; we sincerely like to thank our parents, family,
professors and friends, who provide the advice and support. The
product of this research paper would not be possible without all
of them.
And above all, to the Almighty God, who never cease in
loving us and for the continued guidance and protection.
CHAPTER 1
THE PROBLEM AND ITS SETTING
Introduction
The commercial airplane manufacturing industry is
dominated by two large players, Boeing and Airbus. They operate
in a very competitive environment and the strategies of one
strongly impact the business of the other.
For almost 40 years, the Boeing 747 or Jumbo Jet, the
largest airplane in the world, has enjoyed a monopoly and has
brought in large profits for Boeing. Roughly 10 years ago, Airbus
decided to look into to the possibility of manufacturing an even
larger and more efficient plane.
In a short span of 100 years, we have gone from making a
few test flights to orbiting celestial bodies, from sliding along
sand dunes to spanning oceans, from performing feats of isolated
daring to depending on aviation in our everyday lives. Speeds
have increased a thousand fold, as have altitude and range
capability.
Ahead lay risks and rewards as vast as space itself. We
have the promise of new airliners that fly with greater fuel
efficiency, of huge air freighters that move the nation's goods, of
an expanding general aviation fleet, and of the peaceful uses of
space for exploration and research.
The aerospace industry includes those firms engaged in
research, development, and manufacture of all of the following:
aerospace systems, including manned and unmanned aircraft;
missiles, space-launch vehicles, and spacecraft; propulsion,
guidance, and control units for all of the foregoing; and a variety
of airborne and ground-based equipment essential to the testing,
operation, and maintenance of flight vehicles.
As the 21st century began, approximately two-thirds of the
aerospace industry's output was bought by the federal
government. During the past two decades, this figure has ranged
as high as 74 percent. At the same time, the aerospace industry
is the world's largest producer of civil aircraft and equipment.
Roughly 6 out of every 10 transports operating the world's civil
airlines are of U.S. manufacture, and in addition, the industry
turns out several thousand civil helicopters and general aviation
planes yearly.
These facts underline the unique status of the aerospace
industry. Its role as principal developer and producer of defense,
space, and other government-required systems in large measure
dictates the industry's size, structure, and product line. Because
it operates under federal government procurement policies and
practices, the industry is subject to controls markedly different
from those of the commercial marketplace. But the aerospace
industry is also a commercial entity, and it must compete in the
civil market for economic and human resources with other
industries less fettered by government constraints. Its dual
nature as government and commercial supplier makes the
aerospace industry particularly important to the national interest.
Its technological capabilities influence national security, foreign
policy, the space program, and other national goals. Also, the
efficacy of the national air transportation system depends to
considerable degree on the quality and performance of
equipment produced for the airlines and the airways operators.
The principal civil aviation product is the airline transport.
The traditional and obvious difficulty in this area is the fact that
sales depend on the financial health of another industry - the
world's airlines. The need for new jetliners is evident. The world
transport fleet is aging, and the older, less efficient aircraft must
be replaced.
Before World War II, more than two dozen companies were
in the business of designing and building large commercial
airliners - large at that time meaning 20 seats or more - almost
all for airlines in their home countries. Today, the number of
prime manufacturers of large airliners - and that now means 100-
plus seats - is down to two: Boeing and Airbus.
Since deregulation in the late 1970s, the trend has been
toward less and less differentiation within the airline industry as
the airlines have competed more and more on the basis price and
schedule and as some of the oldest and proudest names in the
industry have disappeared through merger or bankruptcy. In
making their purchasing decisions, the airlines, in turn, have
increasingly focused on a single factor: which of the various
aircraft available to them in a few distinct categories is the low-
cost solution to the task of carrying a certain number of
passengers a certain distance? Each of the two major competitors
strives to enter new markets ahead of the other by developing
new and more cost-efficient aircraft, and each one tries to defend
its markets in the absence of any natural barriers on the strength
of being the low-cost producer.
As Airbus and Boeing continue to compete, they are forced
to develop new products and services that are attractive to an
existing and potential customer base. Both manufacturers are
going head-to-head on development of new aircraft technology
that will revolutionize the future of air transportation.
Although the cost of developing new airplanes is enormous,
the cost of not moving ahead is greater. A company's ability to
maintain its position as a global aerospace manufacturer depends
fundamentally on its capitalizing on new market opportunities. In
instances in which the market is limited or the barriers to entry
are prohibitively high for one company, international
collaboration may be the wave of the future.
This study will facilitate the potential investors from different
airliners to decide in which company they should invest by the
help of the assessment of each manufacturer’s competitiveness.
STATEMENT OF THE PROBLEM
Aircraft companies like BOEING and AIRBUS usually
designed new models of aircrafts to update and modernized the
usability of the aircrafts used in commercial flights for them to
serve the passengers better with ultimate satisfaction. Every
models released and available in the market ensures its viability
to serve its purpose and objectives with the international
community and airline industry who are their target markets and
usual customers.
Airlines are interested to acquire such new aircrafts to
strengthen their competiveness with other airlines and serve
more passengers with additional routes and destinations in order
to have good income. The researcher had made interests in this
study with the objective of determining how much of these
aircrafts are bought every year to serve the capacity and needs
of the airlines operating within their routes.
The researcher will mainly compare the specifications and
features of two aircraft manufacturing companies, the BOEING
COMPANY and the AIRBUS Company for the period between year
2000 and 2011.
The researcher will further determine the quality features of
each designed model and features which are helpful in decision
making for the acquisition of each aircraft models of different
companies.
The researcher will also assess and evaluate the quality,
market competitiveness of BOEING and Airbus Companies in
order to guide the prospective airline investors in coming up with
a good and sound decision for their flight operations.
This study specifically aims to answer the following questions.
1. What are the design features and specifications of the
BOEING and AIRBUS Aircrafts?
2. How reliable are these aircrafts in terms of the following
ASPECTS?”
A. safety
B. efficiency
C. comfortability
D. Cost-effectiveness
E. Range and Durability
3. What are the factors OR ASPECTS OF THE PRODUCT
considered by potential airline investors in the acquisition of
a passenger aircraft?
4. Is there any significant difference in the buying behavior of
airline investors in terms of the following product features
and specifications? :
4.1 Product COST
4.2 Aircraft Design and usability
4.3 fuel consumption
4.4 Passenger capacity
4.5 Low – maintenance
4.6 Easy to operate
4.7 Eco-efficient
4.8 Operability
5. How competitive are the two aerospace manufacturing
companies in the following aspects?
5.1 Products
5.2 Outsourcing
5.3 Use of technology
5.4 Provision of engine Choices
5.5 Low- cost efficiency
6. Is there significance difference between the preferences of
potential investors form different airliners and the aspects
under the aerospace manufacturing companies that they
offer them?
ASSUMPTIONS AND HYPOTHESIS
1. Both of the aircraft manufacturing companies – Airbus and
Boeing – are competitive.
2. There is no significant difference between the preferences
of renowned airplane investors and the aspects that the two
aircraft manufacturing companies offer them.
SIGNIFICANCE OF THE STUDY
The findings of this study are expected to help the following
entities in the field of Aerospace:
1. To the Airline Industries – After the assessment of the
competitiveness of the two major manufacturing companies in the
world, the airliners that usually orders number of aircrafts will now
have an idea on what factors do they have to consider in choosing
the kind of aircraft and deciding where to order those kind of
aircrafts that they plan to buy for the improvement of the air
transportation that they offer to their customers.
2. To the Renowned Investors – This study will help the
potential airplane investors in choosing what kind of aircraft they
will purchase, and in which manufacturing company should they
buy the kind of aircraft that they want.
3. To the Aerospace Engineers – After this assessment, the
Aerospace Engineers will gain an additional knowledge on what
kind of aircraft will they make and should they produce to meet
the preferences of the investors who will probably be their
customers in the future.
4. To the Future Aerospace Engineering Students – All of
the secondary graduates who want to enter the world of aviation
will have the knowledge regarding the two major aircraft
manufacturing companies as well as the aircrafts that they
provide their customers.
5. To the Researcher – After finishing this study, the
researcher will be able to complete the requirements for the
subject AE411: Research Methods and Applications, and ultimately
pass the subject with flying colors..
6. To the Future Researchers – This study will serve as a
guide to the future researchers and this will vary as one of a great
source of information and reference in conducting their studies.
DEFINITION OF TERMS
Aerospace industry -an industry that deals with travel in and
above the Earth's atmosphere and with the production of vehicles
used in such travel
Aerospace manufacturing - involves the manufacturing of
engine components; landing gear, avionics systems, galley
equipment and other components needed onboard an aircraft.
Federal government - a system of government in which powers
and responsibilities are divided into national levels to address
national and regional needs.
Civil market- composed of the totality of voluntary social
relationships, civic and social organizations, and institutions that
form the basis of a functioning society, as distinct from the force-
backed structures of a state (regardless of that state's political
system) and the commercial institutions of the market. Together,
state, market and civil society constitute the entirety of a society,
and the relations between these three components determine the
character of a society and its structure.
Air transportation - the movement of passengers and cargo by
aircraft such as airplanes and helicopters. Air transportation has
become the primary means of common-carrier travelling.
Greatest efficiency and value are obtained when long distances
are travelled, high-value payloads are moved, immediate needs
must be met, or surface terrain prevents easy movement or
significantly raises transport costs. Although the time and cost
efficiencies obtained decrease as distance travelled is reduced,
air transport is often worthwhile even for relatively short
distances. Air transportation also provides a communication link,
which is sometimes vital, between the different groups of people
being served.
Civil aviation – is one of two major categories of flying,
representing all non-military aviation, both private and
commercial. Most of the countries in the world are members of
the International Civil Aviation Organization (ICAO) and work
together to establish common standards and recommended
practices for civil aviation through that agency.
Low-cost producer – is a company that can provide goods or
services at a low cost. In general, low-cost producers utilize
economies of scale in order to execute their strategy of low
prices. Consumers that are sensitive to price changes will more
likely shop at the stores that offer the lowest prices, if the good or
service is relatively homogeneous. Alternatively, low-cost
producers could even price the goods or services at the same
level as their competitors and maintain a wider margin.
Airbus- is an aircraft manufacturing subsidiary of EADS, a
European aerospace company. Based in Blagnac, France, near
Toulouse, and with significant activity across Europe, the
company produces around half of the world's jet airliners.
Boeing- is an American multinational aerospace and defense
corporation, founded in 1916 by William E. Boeing in Seattle,
Washington. Boeing has expanded over the years, merging with
McDonnell Douglas in 1997. Boeing Corporate headquarters has
been in Chicago, Illinois. It is among the largest global aircraft
manufacturers by revenue, orders and deliveries, and the third
largest aerospace and defense contractor in the world based on
defense-related revenue. Boeing is the largest exporter by value
in the United States.
Outsourcing - involving the contracting out of a business
function - commonly one previously performed in-house - to an
external provider. In this sense, two organizations may enter into
a contractual agreement involving an exchange of services and
payments.
SCOPE AND DELIMITATIONS OF THE STUDY
This study will basically focus on the competitiveness of the two
major aircraft manufacturing companies in the world: Airbus and
Boeing, and will it discuss several aspects like the products,
services, market, technological advancements, and efficiency. Its
main purpose is to provide renowned aircraft investor’s insights
as to the feasibility, stability, and profitability of the two
companies which could be used as bases in deciding in which
company they should invest. These renowned investors are
airliners, governmental military organizations, and corporate jet
investors.
The respondents of this study will also be the renowned investors
and this includes the different airliners, governmental
organizations, and corporate investors located Metro Manila.
CONCEPTUAL FRAMEWORK
OUTPUT
Proposed plan for the improvement of Airbus and Boeing’s Strategic Management Program by the help of the aircraft preference of investors and relevant information for the potential aircraft
PROCESS
SWOT Analysis
Interview
Survey
INPUT
- Airbus - Boeing- Aircraft
Investors (Military or Civil)
- Airliners- Airline
Organizations- Airline
Customers- Airbus Strategic
Management Program
- Boeing Strategic Management
FEED
BACK
OUTPUT
Proposed plan for the improvement of Airbus and Boeing’s Strategic Management Program by the help of the aircraft preference of investors and relevant information for the potential aircraft
PROCESS
SWOT Analysis
Interview
Survey
INPUT
- Airbus - Boeing- Aircraft
Investors (Military or Civil)
- Airliners- Airline
Organizations- Airline
Customers- Airbus Strategic
Management Program
- Boeing Strategic Management
CHAPTER 2
REVIEW OF RELATED LITERATURE AND STUDIES
This chapter presents reading materials which are related
and relevant to the current study. The following related literature
and studies were reviewed by the researcher to establish clear
perspective of the present study.
Airbus versus Boeing Revisited: International
Competition in the Aircraft Market (Douglas Irwin and
Nina Pavcnik - Hanover,NH, 2003)
One of the recurring trade disputes between the United
States and Europe concerns the rivalry between Airbus and
Boeing in the market for wide-body aircraft. Airbus first began
production of aircraft in the early 1970s with substantial financial
assistance from European governments. As Airbus succeeded in
making inroads into many of Boeing’s markets, Boeing alleged
that Airbus benefited from unfair subsidies and has pressured
U.S. trade authorities to counteract Europe’s financial support.
As a result, the United States and European Community signed
an agreement on trade in civil aircraft in 1992 that limited
government subsidies for aircraft production. This agreement,
however, has come under new strain as Airbus introduces the A-
380 super jumbo aircraft designed to compete directly against
the Boeing 747.
Competition in the wide-bodied aircraft industry has
attracted attention not just because of the controversy
surrounding the Airbus subsidies, but because of the industry’s
unusual market structure, in which economies of scale are
enormous relative to market demand. The aircraft sector
provides a textbook example of an industry in which trade policy
could affect the strategic interaction between a domestic and an
international rival and shift profits in favor of the domestic firm,
as proposed in Brander and Spencer’s (1985) canonical model of
strategic trade policy. Previous studies of the commercial
aircraft market, notably Baldwin and Krugman (1987), Klepper
(1990, 1994), and Neven and Seabright (1995), used calibrated
simulations to analyze the competitive interaction of Airbus and
Boeing. These simulations focused on Airbus’ impact on the
costs and profits of its competitors and on consumer surplus as a
way of evaluating the welfare effects of Airbus’s market
presence.
Airbus versus Boeing - Strategic Management Report
Sascha Mayer (2007) provided a Strategic Management
Report with detailed strategic analyses of the dominant civil
aircraft manufacturers Airbus and Boeing. The discussion main
part of the report is separated into internal and external
analyses, which are reasoned in greater detail and supported
with reasonable graphs and tables in the attached Appendices.
Finally, conclusions are drawn as to which is the more strategic
savvy and which company has the more sustainable enterprise;
and there is a recommendation given in which company a
potential investor should rather invest in.
Airbus and Boeing are having a neck-and-neck race in the
aircraft industry for jets over 100 seats between Airbus and
Boeing about the market leadership. After Airbus overtook its
rival the first time in 2001 in terms of aircraft order and delivery,
it stayed in front the last years until Boeing got back on top in
2006. The aircraft manufacturing industry is constantly growing,
a global market and had a size of US$ 63 billion revenues in
2006. It is characterized by high entry barriers and investment in
R&D and by a duopoly with Airbus and Boeing having a market
share of 86% for aircrafts over 100 seats.
At the moment Airbus is in weaker financial position than
its competitor. Boeing had an average year in 2006 with a
moderate and good profitability, whereas Airbus is not in the red,
but it is remarkable that the company had a bad year caused by
the production and delivery problems with the A380, connecting
with the delay compensations. In general, both Airbus and Boeing
experience a strong support by the parent companies, whereas
Boeing’s outstanding and tightened military division strongly
keeps the commercial airplane division on the ground and gives it
an edge.
In terms of product strategy the strength of the one is the
weakness of the other: Boeing found no real answer on the A380
as mega-jumbo, but is highly successful with its B787 in the mid-
size, long-range segment, where Airbus is lagging behind with its
try to catch up through the A350. The market opportunities for
both companies and strategies exist with increasing air traffic,
especially in Asia with its upcoming markets China and India. On
the other side increasing prices for raw materials or indirectly oil
price fluctuations, and the risk of a new external shocks are
threatening the performance.
Boeing vs. Airbus (2010)
The aircraft industry consists in the building and the
manufacture of aircrafts according to several standards and rules
from government bodies. There are two types of aviation: the
military and the civil. There is a high level of competitiveness
because only two builders, Boeing and Airbus, have the ability to
manufacture big aircrafts.
The military aviation industry uses aircrafts in order to
conduct warfare. We can find a high variety of aircrafts like
logistical cargo which provide supplies, or bombers, fighters, and
reconnaissance aircrafts. The aircraft industry provides different
models of aircrafts to answer each military need.
Civil aviation is the non military aviation (both private and
commercial). There are two major categories in this segment: the
scheduled air transport (all passenger and cargo flights operating
on regularly-scheduled routes); and the general aviation (other
private or commercial flights).
A lot of countries all over the word have become members of the
International Civil Aviation Organization in order to establish
standards and practices. We thus find four types of aircrafts. The
bestsellers are the mono-corridor aircrafts that represent about
60% of the sales. The second category is the long-haul which is
destined for specific travel: the Atlantic crossing. The very long-
haul represents the second most important market after the
mono-corridor and deals with flights between the continents.
Lastly, freighters like Boeing 747 or A 380 can transport more
than 400 passengers.
Boeing Versus Airbus: The Inside Story of the Greatest
International Competition in Business (John Newhouse,
2007, USA)
Common wisdom states that Boeing is a commercial airline
powerhouse, manufacturing the world's best planes with state of
the art manufacturing processes, led by a first rate management
staff. On the other side is Airbus, a bit-player whose survival has
only been sustained via state-supported welfare programs, whose
sponsors pour endless funds into this money-losing effort. John
Newhouse (2007) shows how both perceptions are erroneous.
Boeing is far from being the world-class company most perceive
it to be, and Airbus in fact makes some pretty good airplanes.
The issue of Boeing vs. Airbus is one with significant
consequences, and with a significant amount of interviewing and
research, Newhouse has written a fascinating and rewarding work
on this most important topic.
Newhouse notes that when Airbus outsold Boeing in 2004
and 2005, the root cause of this historic juxtaposition was that
Boeing's troubles were the result of a number of factors; from
their arrogance, a tendency to rest on their laurels, taking their
customers for granted, combined with a corporate culture
enmeshed in politics.
Boeing then realized the depths of its problems and
attempted to change its course. This combined with bad-luck and
mismanagement at Airbus, contributed to Airbus finding itself a
distant number two in 2006. So much so that Airbus NA President
Henri Courpron lamented that Airbus failed to manage being
number one. Airbus made the same mistake Boeing made earlier;
they got caught looking back, not ahead.
Newhouse notes that the success of Airbus was not that it is
inherently lucky or unlucky. Rather, Airbus was building very
good airplanes and doing in a less expensive manner than
Boeing, and with a much smaller workforce. Airbus basically took
pages from Boeing's playbook and beat them at their own game.
For years, Boeing has complained that government
subsidies gave Airbus an unfair advantage. Boeing has brought
this issue up with various US government officials and has also
taken this issue to the WTO. Newhouse notes that most of the
arguments on either side of the subsidies question were complex,
often more than a little contrived, and often unconvincing. It is
Newhouse's opinion that Boeing was mistaken in constantly
bringing up the subsidy issue, especially when the situation and
timing was irrelevant.
On the other side, Airbus has long contended that Boeing
receives similar government support, albeit in a different manner.
Airbus maintains that US technology flows back and forth
between the military and civilian sectors, with Boeing as the main
beneficiary.
The deregulation of the airline industry was a double-edged
sword, in that it caused huge growth and huge orders for Boeing
and Airbus. But mismanagement by the major carriers combined
with the low-cost of the LCC, created numerous headaches for
both Boeing and Airbus.
Newhouse also notes that legacy union rules have hurt the
major carriers and directly helped the LCC. Since the LCC are not
saddled with austere work rules, they are able to offer quicker
turnaround times on their flights, in addition to other secondary
benefits.
Newhouse also clarified some longstanding notions about
Boeing. First off, when most people think of Boeing, they tend to
think of a world class organization. Yet this is not the case.
Boeing, while it makes great airplanes, has not always been a
company without production problems. Similarly, most think that
the 747 is Boeing's most profitable aircraft. But according to
Newhouse, it is the 767-300 (extended-range version) which is
indeed Boeing's most profitable aircraft.
Overall, the story of Boeing vs. Airbus is a never ending and
ever changing battle of pure competition, combined with good
timing and good luck. This battle has been, as Newhouse aptly
describes a "seesaw battle between the world's two remaining
manufacturers of big airliners; mighty Boeing and the arriviste
Airbus, both massive corporations and emblems of national
pride".
Airbus Vs. Boeing - Contrasting Views for the Future
(Supratim, Majumdar, 2006, USA)
Since its inception, Boeing had been enjoying a virtual
monopoly in the commercial aircraft industry, but was threatened
by the advent of the European aerospace company, 'Airbus
S.A.S.’ (Airbus), in 1970. Since then, Airbus gradually achieved a
leadership position in the market by dint of its innovative
technologies and government funding. For the first time in 2003,
Airbus became the world's largest manufacturer of commercial
aircrafts.
The competition among the two companies, attained a new
dimension in 2000, when Airbus announced the development of
the world's biggest passenger plane - the A380. Airbus touted the
A380 as the future of commercial aviation, as it envisaged a huge
demand for larger aircrafts. In contrast, Boeing asserted, that
smaller and faster aircrafts would rule the market. In keeping
with this, Boeing announced its plans to develop the 7E7
Dreamliner.
Analysts felt that if the A380 failed, it would become a
burden as Airbus had invested billion dollars on this model. This
case study offers a discussion on the factors that have driven
Boeing and Airbus to adopt different strategies and whether
Airbus would proceed with the huge investment, amidst the
uncertainty in long-term demand. The case provides a detailed
account of the structure of the commercial aircraft industry and
the prevalent nature of competition.
WTO delivers verdict on Airbus vs Boeing
(GENEVA) - The World Trade Organization delivered a
crucial report Monday on the long-running EU-US battle over
subsidies to Boeingand Airbus that the European aircraft maker
said vindicated the EU complaint.
But Boeing quickly rejected that conclusion, saying the
report was a "sweeping rejection" of the European allegations of
illegal subsidies.
The WTO provided its confidential report dealing
with Airbus's charges against Boeing to the US and EU
governments.
Under WTO rules, the report is supposed to remain private
until its public release, expected in a few months.
But both Airbus and Boeing, as well as the EU, were quick to
claim victory in the seven-year dispute over multibillion-dollar
subsidies.
"We welcome the WTO panel's confirmation of its initial
findings regarding the support provided to Boeing by the US
government," EU trade spokesman John Clancy said in a
statement.
"This solid report sheds further light on the negative
consequences for the EU industry of these US subsidies and
provides a timely element of balance in this long-running
dispute," he added.
The United States criticized the EU for commenting on the
report and said it would provide its own "detailed views" on the
report when it is publicly released.
"Under WTO rules, the report remains confidential until it is
translated and released to all WTO members," Nefeterius
McPherson, a spokeswoman for US Trade Representative Ron
Kirk, said in an email.
"Despite that the EU has publicly commented on the report,
at this time we will simply say that the United States is confident
that the WTO will confirm the US view that European subsidies
to Airbus dwarf any subsidies that the United States provided
to Boeing."
McPherson noted the report would be made public after it
has been translated into French and Spanish. "The WTO has not
indicated how long this will take, but given the size and
complexity of this report, that process could take two or three
months," she said.
The report is the latest twist in the subsidies war. A WTO
ruling last June partially upheld Washington's parallel complaint
against subsidies for Airbus, the France-based aircraft unit of the
European Aeronautics Defence and Space Company (EADS).
The Geneva-based trade referee is already hearing an
appeal by both sides against the June ruling.
Airbus said the latest WTO report backed its allegations and
estimated it has lost at least $45 billion in sales due to the illegal
aid.
"Today's World Trade Organization decision
confirms Boeing has received massive and illegal government
subsidies for many decades, and they have had a significant and
ongoing negative effect on European industry," Airbus said.
While not giving the details of the ruling, the European
Commission said the probe found that Boeing's receipt of
research and development funding from US government bodies
had had "negative consequences" for Airbus.
"Airbus applauds the excellent result achieved by the
European Commission and the member states," said Rainer
Ohler, Airbus's head of public affairs.
"From today, Boeing can no longer pretend that it doesn't
benefit from generous and illegal state subsidies. It has been
doing so from the start and it's time to stop the denial," he said.
"The myth that Boeing doesn't receive government aid is
over and we hope this sets the tone for balanced and productive
negotiations going forward."
Boeing countered that the WTO had issued a "sweeping
rejection" of European Union claims it had received illegal
subsidies.
"Today's reports confirm the interim news from last
September that the WTO rejected almost all of Europe's claims
against the United States, including the vast majority of its R&D
(research and development) claims -- except for some $2.6
billion," Boeing said in a statement.
"This represents a sweeping rejection of the EU's claims."
"Nothing in today's reports even begins to compare to the $20
billion in illegal subsidies that the WTO found last June
that Airbus/EADS has received," Boeing said.
"The WTO's decisions confirm that European launch aid
stands alone as a massive illegal subsidy only available to Airbus,
which has seriously harmed Boeing, distorted competition in the
aerospace industry for decades, and resulted in the loss of tens of
thousands of good-paying US jobs," the Chicago-based aerospace
and defense giant said.
Airbus A380′s competitor – New Boeing 747-8 completes
first flight
Seattle (RPO). Almost 42 years after the original, the latest
version of the Boeing jumbo jet completed its first flight. The
passenger version of the 747-8 arrived on Sunday after a four
and a half hour test flight safely on the test track of the aircraft
manufacturer in Seattle.
The 747-8 Intercontinental has room for 467 passengers, 51
more than the old version. Manufacturer Boeing promises more
convenience to travelers and airlines lower fuel consumption.
Lufthansa has ordered 20 pieces and is the first airline that
places the new jumbo early next year in service.
The jumbo jet is in operation since 1969 and was due to its
distinctive shape to the famous model of the U.S. aircraft maker.
By 2005, it was also the world’s largest passenger aircraft. At that
time, the European competitor Airbus A380 double-decker
brought to the market, which offers space for 525 passengers.
The cargo version of the 747-8 series completed in early
February after a long delay its maiden flight.
Airbus versus Boeing Revisited: International Competition
in the Aircraft Market - By Douglas A. Irwin & Nina Pavcnik
This paper examines international competition in the
commercial aircraft industry. We estimate a discrete choice,
differentiated products demand system for wide-body aircraft and
examine the Airbus-Boeing rivalry under various assumptions on
firm conduct. We then use this structure to evaluate two trade
disputes between the United States and European Union. Our
results suggest that the aircraft prices increased by about 3
percent after the 1992 U.S. -- E.U. agreement on trade in civil
aircraft that limits subsidies. This price hike is consistent with a
7.5 percent increase in firms' marginal costs after the subsidy
cuts. We also simulate the impact of the future entry of the
Airbus A-380 super-jumbo aircraft on the demand for other wide-
bodied aircraft, notably the Boeing 747. We find that the A-380
could reduce the market share of the 747 by up to 14 percent in
the long range wide-body market segment (depending upon the
discounts offered on the A-380), but would reduce the market for
Airbus's existing wide-bodies by an even greater margin.
Airbus Vs. Boeing The Case Study -Jimmy Jones (University of
Phoenix)
The case “Boeing vs. Airbus: Two Decades of Trade
disputes” deals with the dispute that has existed between the US
aircraft giant and the European Aircraft manufacturing giant.
Boeing has 57,000 workers in Seattle and an additional
100,000 employees in the country. Boeing has also provided
600,000 employments nationally and it is considerd to be a big
force in US economy. Boeing attained its main competitor
McDonnell Douglas and merged as one in 1996.
Airbus is a European manufacturerof commercial airline and
its backed by four European countries. Airbus was originally a
minor contestant in the airline market and was believed as
improbable to face up to U.S. control. However, in early 2000
Airbus has tranfered itself to a major corporation from an
association. And in 2003 the company exceeds Boeing in delivery
of aircrafts.
Legal Issues:
To understand the problems in this case it is important to
mention 4 points about the airline manufacturing industry and
why only few competitors can exist in this market:
1) High Development costs involved in manufacturing aircrafts
2) Levels of breakeven that amount to a considerable
proportion of global demand
3) considerable familiarity of level curve necessary for
corporations to reach point of breakeven levels and
turnovers
4) Unstable demands due to factors like fuel pricing, inflation,
etc.
After the success of the Airbus, the US officials and
government criticized the heavy subsidies that Airbus had gained
from the four European countries: Germany, Spain, England, and
France.
Boeing vs. Airbus: Fighting the Last War -by Gary Clyde
Hufbauer, Peterson Institute for International Economics,
Op-ed in Handelsblatt
Generals are often chastised for fighting the last war, but
corporate CEOs are capable of the same folly. Boeing and Airbus
have sparred with one another since the 1970s—a private Thirty
Years War, so to speak. The battlefield today is entirely different
than in 1979, but the antagonists are the same. William Boeing
created his namesake company in 1916, the beginning of the
aviation age. From the get-go, Boeing was favored with federal
contracts, usually with a military flavor. The Airbus consortium
was launched in 1969 with generous public assistance from
Germany, France, Spain, and the United Kingdom, long after
Boeing had established a commanding lead in large civil aircraft.
European governments entertained two central goals for
the Airbus consortium: to maintain a strong presence in a
promising high-tech industry and to ensure competition in the
world market for large civil aircraft. Public assistance was
justified, so the Europeans argued, because Boeing (and a few
other firms) had been nourished for decades by military contracts
that fostered civil aircraft.
Since Airbus was created to compete with Boeing, it is
hardly surprising that the firms and their governments did battle
on both commercial and legal terrain. The commercial battle was
fierce enough. The order book for large aircraft is a roller coaster
all its own. In the 1970s and 1980s, US aircraft firms snared more
than three-quarters of world sales for large civil aircraft. In the
1990s, the popular A300 series, launched with public support, put
Airbus in the lead. In the 2000s, Boeing took steps to regain the
top spot with its 787 model, while Airbus stumbled badly with the
delayed debut of its A380.
Airbus leads Boeing in aircraft orders in the first half -
MADRID, 7 Jul. (EUROPA PRESS) –
Airbus has received orders for the manufacture of 640
aircraft in the first half, winning 534 orders between June and
July, with 777 new orders and 137 cancellations, compared with
171 new orders for its U.S. rival Boeing, which suffered up to 59
cancellations, according to statistics provided by both
manufacturers.
EADS matrix scored the first six months in deals worth U.S.
$ 122.732 million (85.533 million euros) thanks to the launch of
its new A320neo, which prompted Airbus orders until May when it
was Boeing that exceeded that of Europe.
Specifically, Airbus reported 571 orders through June of the
A320 valued at U.S. $ 48.535 million (33.824 million euros), but
faced 79 cancellations this model.
Also accounted for 54 A321 orders of $ 5383.8 million
(3,750 million), 11 A330-200 valued at 2208.8 million dollars
(1,538 million), three A330-200F by 610, $ 8 million (425.5 million
euros).
Also added orders for six A350-900 valued at 1605.6 million
(1118.5 million) and 37 A330-300 by 8232.5 million (5.735 million
euros) and closed orders for A380 for $ 750.6 million (524 million
euros).
Cancellations affected European manufacturer 10
‘superjumbo’ A380, 79 A320, 12 A330-200F, 24 A350-900, six
A319s, three A318s and two A330-200 on the backlog. Such
cancellations would of course leave to enter some 14.211 million
dollars (xxx million euros) to Airbus.
For its part, Boeing reached settlements amounting to
42,638.6 million (29,713.9 million euros). As of June completed
the sale of 104 737, amounting to 8923.2 million (6218.3 million),
four 747 worth 1277.2 million dollars (890 million euros), 13
aircraft of the 767 amounting to 2347.8 million dollars (1.636
million euros) and 70 of the 777 worth 19.887 million dollars (xxx
million).
Cancellations also affected its flagship model ‘Dreamliner’,
with 20 cancellations for the 787, which added to the 37 737′s
and two 777′s fail to enter supposed 8104.8 million (13.858
million euros).
Until June Boeing has made 22 deliveries, 181 of the 737
aircraft, nine 767s and 32 777, compared to 1258 of Airbus,
including 10 ‘superjumbo’, 46 A330/340 aircraft family and 202
single-aisle.
Airbus-celebrates-its-40th-anniversary-in-style-boeing-
outsold-and-overtaken-again
It has been announced by Airbus, that going into this year
2011 –in which it will celebrate its 40th anniversary – its sales
overtook its fierce rival Boeing with a total sales order book of
510 airplanes – this figure being an accumulation of all aircraft
types.
Airbus last week also celebrated its 10,000th aircraft sale
when it announced an almost 4 billion Euro order for its new re-
engined best selling product – the A320 – from the US company
with British roots, ‘Virgin America’.
This means that the European company surpassed Boeing
again with 52 % share of the 2010 world’s market for large
commercial aircraft.
With its order-book of 574 planes, Airbus more than doubled
2009’s numbers, the annual turnover for Airbus stands at circa 40
billion Euro which makes 2010 results much better than
expected.
Firm orders for the A380 the largest passenger aircraft in
the world - which curiously Airbus first proposed to build in
partnership with Boeing but which Boeing rejected – now number
240 from 18 customers – with 40 planes already in service.
This flagship of the European airplane manufacturer is
competing directly head-on with Boeing’s own new B747-800
which is still in flight testing mode.
The airline business is very fickle and buyers move with
their feet very quickly when it appears that one aircraft has even
the slightest of economic advantages over a competitor.
It seems that the market place is deciding in favour of the
A380 and that Boeing’s decision to compete head-on with an up-
graded version of an older plane – despite being re-winged and
re-engined - was the wrong one.
A recent order by Korean Airline Asiana for 6 of the jumbo
jets – with options for others shows that this will be a difficult
competition for Boeing to win.
This recent order –along with in as of yet unconfirmed order
from Japan for 15 of the A380 for Skymark airlines – is an
endorsement of the Airbus A380 as the most efficient plane to
meet demand on the world’s most heavily travelled routes –
namely those traversing the busy Asia-Pacific region.
Most respected and established long-haul international
airlines, the market leaders - those that matter the most – are
choosing the European product over the American one.
Berlin visitors – and many guests of ‘OTA-Berlin - the
intelligent Apartment Alternative to Hotels in Berlin’ arrive in
Berlin on Airbus aircraft at both Berlin airports.
Airbus vs Boeing: The Subsidy Wars (2005)
Authors: Sardhi Kumar Gonela & Sumit Kumar Chaudhuri
The competition between Airbus and Boeing has taken a
new course in 2005, when both have taken centre stage at the
World Trade Organisation (WTO) over the subsidies. The
European Union (EU) and the US filed suits with the WTO
accusing each other of the subsidies that they have given to
Airbus and Boeing respectively. The Airbus-Boeing dispute,
pending at the WTO, is a unique trade dispute as neither say that
they have not subsidised, instead both parties question the
amount the other has provided. Both defend the charges saying
that the aeroplane manufacturing is exorbitantly expensive and
highly risky, while The Economist maintains that both parties are
at fault, as neither of the companies requires subsidies in the first
place and capital markets finance far more risky projects.
Pedagogical Objectives:
To discuss the various challenges faced by European
economy in the wake of ageing population.
Airbus-Boeing dispute, Government and Business
Environment Case Study, International subsidies, subsidy, GATT
(General Agreement on Tariffs or Trade) and WTO (World Trade
Organisation), Subsidies in large civil aircraft industry, Boeing
and Airbus subsidy, Subsidies in US and EU (European Union),
Prohibited subsidies at WTO, Government aid to airplane
manufacturers, Boeing and Airbus allegations at WTO, Global
civil aircraft industry, Subsidies and world trade, Suits at WTO.
Airbus vs Boeing: as the transatlantic spat escalates, the
recriminations grow.
The A380 is finally flying and the B787 Dreamliner is due
late 2011 with a smaller footprint that could find favour in a tight
travel market. Boeing unveils its even bigger 747-8
Intercontinental. And China fields the diminutive ARJ21. Here's
David and Goliath.
ONE IS BIG AND FAT with all the polish of a portly dowager.
Critics describe her as a “dinosaur”. The other is sleek, pretty,
and quick, and capable of long outings, but derided as
incontrovertibly “plastic”.
Who would you pick for a snog or, in this case, a transpacific
flight? With the much-delayed rollout of the Airbus A380
behemoth, the gloves have come off as Boeing prepares for the
arrival of its very own, equally delayed, B787 Dreamliner.
What’s the fuss? Airbus has opted for a super size aeroplane
that will render the stalwart B747 all but obsolete, transporting a
vast scrum of bodies in one neat package. While offering 49
percent more room than a Boeing 747, the Airbus 380’s
operating costs are cited at around 15 to 20 percent lower per
seat.
Add to this claims of fewer emissions, less noise, and a seat
capacity stretching from the median 555 to a staggering 800
(double the heaving bottoms on a B747), and it’s small wonder
airline accountants are beaming. Airbus claims its plane is more
fuel efficient than a car. This shall be put to the test as fuel prices
remain irksomely unpredictable, having crossed a wallet-
thumping US$140 per barrel in the not too distant past.
The real test of the pudding is in the flying. On 4 November,
2010, a Qantas A380 suffered “catastrophic” engine failure over
Batam, Indonesia, as one of its Rolls-Royce Trent 900 engines
broke its casing, damaging the wing and forcing an emergency –
but safe – landing in Singapore. Qantas swiftly grounded its entire
A380 fleet and SIA ordered checks. Generating 72,000 pounds of
raw thrust this is among the most powerful engines in the world
designed for the largest airliner in the world. The spotlight has
swung on Rolls-Royce. As many as 20 of the 37 Airbus 380s
currently in the air are powered by the Trent 900. This is not the
first problem with the Trent 900 engine. Lufthansa had an issue
at Frankfurt and Singapore Airlines reported an incident at Paris.
Lufthansa, Qantas and SIA are the only three airlines with this
engine (GE is the other supplier). And, during ground testing in
August, 2010, a turbine issue caused an engine failure with the
Trent 1000 destined for the B787 assembly line.
Again, as global travel declines with a volatile global
economy and recession, airlines are rethinking their aircraft
orders. THAI Airways canned its ultra-longhaul A340-500
Bangkok-New York JFK service in July 2008 citing soaring fuel
costs that rendered both the route and the aircraft,
uneconomical. In June 2009 the airline announced it wished to
cancel an order for six A380s. It later pressed for a delayed
delivery after Airbus took umbrage.
Indeed, a depressed travel market could favour the B787,
which has the edge on fast-turnaround routes and a handy,
manageable size that will not resound with emptiness as pin-
stripers switch to video conferencing and leisure travellers turn to
TV. This, despite repeated delays and a late 2010 or early 2011
delivery to B-787 launch customer All Nippon Airways (ANA). This
could be put back further as an engine fire during testing means
parts of the electrical system need to be redesigned. On 15
December, 2009, the B787 gracefully took to the skies on
its maiden test flight, cut short by rain.
With around US$10 billion spent on its development by
Boeing, this composite material ultra-light fuel-efficient aircraft
hopes to revolutionise point-to-point services. Boeing says the
aircraft willreduce fuel consumption by 20 percent and
operating costs as a result by 15 percent. Small is now beautiful.
Contemplating a mammoth 150 wide-body aircraft replacement,
United Airlines has shied away from the B747 and the A380 to
explore smaller twin-engine aircraft announcing, on 8 December,
2009, its intention to purchase 25 Boeing 787 Dreamliner planes
and a further 25 A350 XWB aircraft.
UA has an option on a further 50 airplanes from each
manufacturer. By mid-July, at the Farnborough Air Show where
the B787 Dreamliner made its first international appearance,
Boeing already had 860 firm orders in. On paper at least, this has
to be a commercial coup.
Airbus dawdled long months on the assembly line. The
dinosaur was late. Singapore Airlines, the launch customer
received its first Airbus A380 in October 2007, a full year behind
schedule leading to question marks regarding customer loyalty,
final orders, and price reductions as compensation. (SIA's
inaugural flight was globally auctioned for various charities and
its first commercial route was Singapore-Sydney. Flights to Hong
Kong commenced July 2009, adding to long-haul points, London,
Tokyo and Paris.) The behemoth is in the air.
By mid-July, 2010, at the Farnborough Air Show, Boeing
already had 860 orders for the B787, a commercial coup
The SIA A380 carries just 471 passengers (not the sweaty
800 of journalistic scuttlebutt). In addition to 12 partitioned suites
in a grade beyond first class – where a double bed can be created
for passengers travelling together who might thus fully enjoy the
feel of Givenchy linen aloft – the 60 business class seats on the
upper deck recline fully flat and offer USB ports, in-seat power for
a laptop and a 39cm (15.4-inch) LCD video screen.
The seat width is 86cm or 34 inches with a forward-facing
configuration of 1-2-1 permitting aisle access from every seat.
SIA wants 25 planes. The first Emirates A380 arrived in late July
2008 and orders for a full complement of 58 superjumbo aircraft
by 2013 are in the pipeline. in June 2010 Emirates placed a
further order for 32 Airbus A380s valued at US$11.5 billion.
Qantas, the Australian national carrier received its first
aircraft late September 2008, two years off the original delivery
date. Virgin has announced holding back its purchase of six
A380s for four years until 2013, FedEx cancelled its order of 10
Airbus A380 aircraft, opting instead for the Boeing 777 freighter
version, and UPS has placed its order on hold. Kingfisher from
India has deferred delivery of five A380s. Yet Airbus has clung on
gamely. At the July 2008 Farnborough Air Show, Etihad weighed
in with a 55 aircraft order with Airbus including 10 new A380
planes.
The new Korean Air A380 shakes up Asian skies
dramatically with Hong Kong and Tokyo services (17 June, 2011)
offering a unique configuration – the entire upper deck the
preserve of executive travellers with 94 Prestige Sleeper seats.
The aircraft will also have the lowest number of seats in all, just
407, creating a lot more stretch space to banish DVT.
On the other side of the Atlantic, the Boeing 787
Dreamliner has had a fast take-off with sales. By June 2007 it
secured a tentative order for 50 aircraft from an aircraft leasing
company. In October 2007 British Airways announced one of its
biggest fleet orders in a decade with a mixed purchase of 12
Airbus A380 aircraft and 24 Boeing 787 Dreamliners. Said the BA
Chief Executive Willie Walsh: "These aircraft set the gold
standard when it comes to environmental performance." Yet, by
July 2009, an embattled BA, coping with a travel slump, had
announced it would hold back delivery of 12 Airbus A380s. By
early 2011, the B787 had about 840 orders on the books, the
bulk of them for the 787-8 version. The A380 had firm orders for
almost 250 aircraft.
Does physical size matter? The new, and
larger, Airbus wing design ensures future versions of the aircraft
can handle a total weight of up to 750 tons. This means the
US$280m A380 will achieve optimum cost-efficiency carrying
closer to 800 passengers. That’s a lot of beers and queues for the
toilets – on two floors. Not perhaps what passengers want to
hear. Of course, most airlines will opt for a more sensible seating
configuration. Singapore Airlines offers 471 seats and a standard
configuration is 555 seats. Assembly is a major production, one
dogged by technical glitches, including engineering delays as the
aircraft carries hundreds of kilometres of wire that have to be
painstakingly fed through various parts of the frame.
It is a beast of a carrier. Airports everywhere are quailing at
the prospect. Heathrow’s Terminal Three has undergone
expensive redesign to accommodate the Airbus A380 and
Emirates has introduced oversized ground equipment in Dubai at
its dedicated new Terminal 3, which offers five aerobridges to
suck out passengers from the Super Jumbo Airbus A380. The new
aircraft is a space guzzler. It needs more runway to clear the
ground, more taxiway for the sweep of its enormous 79m
wingspan, and boarding gates need re-jigging to deal with the
logistics of deplaning a swarm of passengers from a towering
double-decker. On 12 April, 2011 the wingtips of a taxiing Air
France A380 at New York’s JFK, struck the tail of a Delta
commuter Comair flight, spinning the smaller plane around.
The A380 coliseum has failed to materialise, disappointing
those who would love to toss all airline chefs to the lions
Boeing believes large capacity aircraft flying to big,
overcrowded, dispersal “hubs” are passé. Travellers want speed,
frequency, and direct connections. The B787
Dreamliner (formerly the B7E7) is the result of Boeing’s new
preoccupation. The aircraft is swift and fuel efficient, with a
cruising speed of Mach 0.85. It is smaller and can access regional
airports without fuss. It also has a range that can extend to
16,000km carrying about 280 passengers. The good news for
passengers is the B-787 is pressurised for a lower altitude and
with higher cabin humidity, which means you will not arrive at
the other end looking and feeling like a desiccated peanut.
Fast the aircraft may be but assembly has proved a
headache. After three announcements on production delays,
Boeing announced in early April 2008 that the plane would not be
certified and delivered until late 2009 to its first
customer, ANA (with 50 aircraft booked). Test flights were
scheduled for late 2009 with actual delivery to ANA pushed back
to later in 2010. The September 2008 Boeing machinists strike
didn't help the timeline either. Delivery has been pushed back
further after an engine fire during late 2010 testing. Parts of the
electrical system now have to be redesigned. The B787 delivery
delays have left customers and Boeing red-faced as Air India, Jet
Airways, Air New Zealand, Japan Airlines, and ANA consider
compensation. Qantas (65 planes booked in the first batch)
sought financial redress and in June 2009 cancelled an order for
15 B787s with deferred options on a further 15. The short-range
B787-3 is the worst affected and will turn up last, furthering the
woes of main customer All Nippon Airways. Taking advantage of
the melee, China Southern in April 2009 announced it wanted to
delay delivery of 13 of its B787 Dreamliner aircraft. However,
with the aircraft now airborne, all this could change in the face of
compelling economics.
The B787 has opted for a sweeping archways design and
light diodes in the ceiling that mimic the changing sky colours
As Boeing might ask, do you need to fly a football field
halfway across the world? Many airlines believe so. Some will put
in gyms, bars, casinos, shops, offices and even play areas – but
not for the Mile High Club, whose members will have to fend for
themselves in vast open spaces. The coliseum has failed to
materialise, disappointing those who would love to toss all airline
chefs to the lions, Christian or not. And while a lot of seats can be
crammed into an A380, not all airlines plan to do so.
The Boeing 787 cabin will offer a visually relaxing
“sweeping archways” design, window shades whose opacity can
be altered at the flick of a button, greater humidification of cabin
air, and a sky simulation effect through the use of colour
changing light-emitting diodes in the aircraft ceiling. Aisles will be
wider as will the seats. As with the bigger A380, the B787 is
a very quiet aircraft rated to produce just about a quarter of
the noise of a B747.
It is somewhat ironic that Boeing could have launched the
very first double-decker aircraft over three decades ago. Pressed
by visionary Pan Am founder Juan Trippe for large double decker
aircraft, Boeing responded by designing the widebody B747,
arguing that a two-storey aircraft would be plagued by far too
many limitations.
Today it is more than likely that there is a market for both
products, big and small. But the transatlantic diatribe continues
to escalate. Boeing asserts Airbus has competed, unfairly,
through backdoor European subsidies. Yet, Boeing itself has been
a major beneficiary of state and federal aid with Washington
State bending over backwards to ensure the B-787 plant stays
with them. Much of Boeing’s aircraft design has been a spin-off
from US military-sponsored research.
Meanwhile, rival Airbus keenly aware that Boeing may be
onto something, is also working on a smaller, more fuel-
efficient A350 to compete head-to-head with the B787. But in
early 2011, Boeing, returning to its BIG roots, unveiled the
immense B747-8 Intercontinental, stretching 76m (5.6m longer
than the B747-400) and a redesigned wing, cockpit and interiors
able to fit in 467 seats. Across the Atlantic, customers queuing up
for the A350 rollout include Virgin, Kingfisher, Vietnam Airlines,
and feisty AirAsia (which announced a staggering US$2.4 billion
order for ten A350 planes, the XWB version, at the 2009 Paris Air
Show).
The A350 remains mired in a redesign debate after several
potential buyers felt it compared poorly with the B787. As a
consequence, the A-350 roll-out will also be delayed, giving
Boeing a certain head start in the mid-size market. The new
Airbus A350 will eventually weigh in with a wider fuselage and
expanded wing size. The A350 XWB (or extra wide body) as it
will be termed, will extend the flight range to around 8,500
nautical miles. It will roll out in three versions, the A350-800, the
A350-900 and the A350-1000, that will seat from 270 to 375
passengers. Airbus says this will be one of the "quietest" aircraft,
with low emissions and 30 percent more fuel efficiency.
Now as the China dragon awakes, a new competitor plans to
streak across the horizon, bidding for a share of the small jet
market for the expected regional travel explosion. The Chinese
made ARJ21 (literally, the Advanced Regional Jet for the
21st Century) is taking shape in the Shanghai ACAC plant with a
dash of Boeing factory knowhow, huge dollops of government
subsidies and, more recently, a Bombardier stake.
By 1949, Boeing 377 Stratocruisers were plying the North
Atlantic with opulent living rooms for first class
The small ARJ21 will carry between 90 to 105 passengers
serving regional airports in China and beyond. It will be
particularly well adapted for short or high-altitude runways that
require extra power or a sharp rate of climb. The ARJ21 is
expected to take to gain CAAC certification in late 2009. In China
alone domestic airlines are expected to purchase almost 3,500
new aircraft by 2025.
Bombardier's 130-seat Bombardier C130 with a range of
1,800 nautical miles, crosses swords with various small jets
by Embraer.
Was big always beautiful? The prodigious and spectacularly
ill-starred 12-engine Dornier Do-X was the world’s biggest aircraft
in 1929, its hull accommodating a full three floors. The Wall
Street crash ended its career despite a problem-plagued round-
the-world PR stunt that took ten months to accomplish, achieving
little in the end. By 1949, double-decker Boeing 377
Stratocruisers were plying the North Atlantic with opulent digs,
and even living rooms, for first class passengers. No flat seat
hype then. The B377 used real beds. And there was the
memorable Howard Hughes “Spruce Goose” (H4 Hercules) that
took to the skies, briefly, in 1947. This extraordinary flying boat
arrived too late to aid in the war effort – its prime purpose – and
was relegated to museum attraction.
Barring the hugely successful B747, aviation history has not
been kind to passenger aircraft behemoths. Now, once again, we
shall have to wait and see.
Airbus A350 versus Boeing 787: differences and many
similarities
If you removed its name in the spec sheet, Airbus’ forthcoming
A350 XWB (eXtra Wide Body) passenger jet could easily be
confused with its primary rival, the Boeing 787 Dreamliner. It will
take a while before you can easily distinguish one from the other
once they are both regularly in the air.
The A350 will be made from 53 per cent carbon fiber; the
787 is 50 per cent carbon fiber. Both are long range and can fly in
excess of 8,000 miles without refueling. Somewhat bigger, the
A350 will have 270-440 seats to the 787’s is 210-330. Both come
in three models although the smallest 787 may be dropped.
The A350 promises 25 per cent fuel consumption
improvement from its “current long range nearest competitor (it’s
unclear what plane Airbus is comparing the A350 to on fuel
efficiency, but offers it as a replacement for “any [Boeing] 747
operator”); the 787 claims to deliver 15 per cent better fuel
efficiency over the similarly-sized (and aged) Boeing 767.
The 787 has 876 orders from 53 customers while the A350
has 505 from 32 customers (about what the 787 had at the same
stage in its development). The A350 windows are wider; the
787’s are taller.
It goes on and on like that. For the flyer, you say ToeMAYto,
I say ToeMAHto.
Of course, there are major differences.
One area in the A350 that will distinguish it from other
passengers jetliners, though, will be the cockpit which will have
six “very large LCD displays” comprising the flight information
center instead of the 10 found in the A380 super jumbojet (much
of the technology in the A350 was hatched in the A380). Solid
state electronics in the cockpit also reduce the need for the
hundreds of individual circuit breakers typically found in jetliners.
Another difference is that the A350 is still on paper. The first
one won’t roll off the line in Airbus’ new Toulouse, France final
assembly plant until 2011. Airbus expects to enter the A350 into
service in 2013, but if its experience is anything like Boeing’s
with the 787, add two years to that timetable. Some aviation
bloggers say there’s hints the schedule is already slipping.
With any luck, Boeing will ship the first 787 to customers in
the fourth quarter of this year.
Given the scale of investment, the effort to design jetliners
and competition in the same markets, it stands to reason they
are similar in both size and technology. But it doesn’t always
work that way: Airbus developed the huge and less successful
A380 while Boeing concentrated on the more modest 787.
Another major difference is that the biggest model, the
A350 1000, will carry up to 100 passengers more than the
biggest 787. Boeing’s answer to that is the 747-8
Intercontinental, a new model of the world’s first jumbojet.
The A350 will be a lot more expensive than the 787. It lists
for $225-$285 million; At $150-$205 million, the 787 is a relative
bargain. Those prices are usually discounted, but the starting
point for the conversation would clearly seem to favor Boeing
unless the A350 turns out to be that much better.
Buying something as sophisticated as jetliners, however, isn’t just
a head-on comparison of price performance. Years of deal making
includes courtships, politics and occasionally, bribes. Time and
sales wise, though, the A350 has to climb much higher to reach
cruising altitude than the 787 at this point.
One area where I think Airbus is considerably ahead of
Boeing is its web site. Airbus.com is more easier searched and
much more visually pleasing.
CHAPTER 3
METHODS OF RESEARCH AND PROCEDURES
METHOD OF RESEARCH
The researcher will be using the descriptive method of
research for this study. According to Thomson Wadsworth, its
main goal is to describe the data and characteristics about what
is being studied. The idea behind this type of research is to study
frequencies, averages, and other statistical calculations. Although
this research is highly accurate, it does not gather the causes
behind a situation. Since the present study is concerned with the
feasibility and profitability of the two leading aircraft
manufacturers in the world, Airbus and Boeing, the descriptive
method of research is the most appropriate method to use.
Likewise, Descriptive research is used to obtain information
concerning the current status of the phenomena to describe
"what exists" with respect to variables or conditions in a
situation. The methods involved range from the survey which
describes the status quo, the correlation study which investigates
the relationship between variables, to developmental studies
which seek to determine changes over time.
As for this research, the researcher will manage a survey to
a random sample of aviation personnel in the maintenance,
engineering, flight operations, administration, accounting and
planning department of Cebu Pacific Air, Philippine Airlines, Zest
Air, Southeast Asian Airlines, and Air Philippines in order to assess
the feasibility and profitability of Airbus and Boeing.
SAMPLING DESIGN
PARTICIPANTS OF THE STUDY
The research on the feasibility and profitability of Airbus and
Boeing is to be studied with some of the aviation personnel from
Cebu Pacific Air, Philippine Airlines, Zest Air, Southeast Asian
Airlines, and Air Philippines. Systematic Sampling is a statistical
method involving the selection of elements from an ordered
sampling frame. The most common form of systematic sampling
is an equal-probability method in which every kth element in the
frame is selected, where k, the sampling interval (sometimes
known as the ‘skip’), is calculated as:
Sample size (n) = population size (N) / k
Using this procedure each element in the population has a
known and equal probability of selection. This makes systematic
sampling functionally similar to simple random sampling. It is
however, much more efficient (if variance within systematic
sample is more than variance of population).
In systematic random sampling, the researchers first
randomly pick the first item or subject from the population. Then,
the researchers will select each nth subject from the list. The
procedure involved in systematic random sampling is very easy
and can be done manually and the results are representative of
the population unless certain characteristics of the population are
repeated for every nth individual which is highly unlikely.
The process of obtaining the systematic sample is much like
an arithmetic progression.
1. Starting number:
The researchers select an integer that must be less than the
total number of individuals in the population. This integer
will correspond to the first subject.
2. Interval:
The researchers pick another integer which will serve as the
constant difference between any two consecutive numbers
in the progression. The integer is typically selected so that
the researcher obtains the correct sample size.
Primary Sampling Unit (PSU) – The primary
sampling unit of the study is the entire population of
aviation personnel in maintenance, engineering, flight
operations, administration, accounting, and planning
department from the five (5) selected airlines in Metro
Manila which includes: Cebu Pacific Air, Philippine
Airlines, Zest Air, Southeast Asian Airlines, and Air
Philippines. The researcher has decided to select the
airlines that has been operating for more than ten (10)
years in Metro Manila to be considered in determining
the sample to lessen the chances of encountering
difficulties in answering the questionnaires.
Secondary Sampling Unit – The secondary sampling
unit of this study are the aviation personnel in
maintenance, engineering, flight operations,
administration, accounting and planning department
with the ages ranging from 25-55 years old. The
researcher considered the age of these respondents to
lessen the possibilities of encountering some
difficulties in answering the questionnaires that will be
given to them.
Final Sampling Unit – The final sampling unit of this
study are the officers in the administration,
accounting, and planning department from the five (5)
selected airlines. The researcher has chosen to
consider only those people as one of the elements to
be considered in getting the sample needed in this
study.
According to the Westfall Team, care must be taken when
using systematic sampling to ensure that the original population
list has not been ordered in a way that introduces any non-
random factors into the sampling. A computation will be done by
the researcher after gathering the relevant information and data.
After determining the total study population, the researcher
decided to get a sample size of 38 for a sampling fraction of 5%.
To get the sampling interval, the researcher divided the total
study population of the airlines with the sample size of 38. After
dividing it, the answer will be 20 which will serve as the sampling
interval size. This means that every 20th person in the study
population from the administration, accounting and planning
department will be included to be one of the respondents of the
study.
To get the desired sample size of 38, the researcher
multiplied the total population of officers in administration,
accounting and planning department with the desired sampling
fraction of 5 %. The solution for the desired sample size is shown
below:
763 (Total population of Administration,
Accounting and Planning Department officers)
X 5% (Desired Sampling Fraction)
38 (Desired Sample Size)
To get the sampling interval size, the researcher divided the
total population of Administration, Accounting, and Planning
Department officers with the desired sample size.
The solution for the sampling interval size is shown below:
k =total administration, accounting and planning
department officers
Desired sample size
= 763 / 38
= 20 (sampling interval size)
The table below shows the population and its percentage,
the sampling units that were considered, and the distribution of
the respondents showing the sample size.
Airline Population PopulationPercentage
Age(25-55 years old)
Administration, Accounting, and
Planning Department
Officers
Sample Size(5%)
Cebu Pacific Air
800 26.23% 400 200 10
Philippine Airlines
1400 45.9% 700 350 17
Zest Air400 13.11% 200 100 5
Southeast Asian
Airlines
200 6.56% 100 50 3
Air Philippines
250 8.19% 125 63 3
TOTAL 3,050 100% 1,525 763 38
Distribution of Respondents
METHOD OF COLLECTING DATA
INSTRUMENTATION
The researcher will arrange a set of questions for the
interview and questionnaire guides after reading, studying and
analyzing the sample questionnaires and interview guides from
related studies. The questions that will be kept in the
questionnaire guide as well as the questions that will be asked in
the interview will surely answer the specific questions under the
statement of the problem. The final output of the instruments
that will be used for the respondents will be submitted to the
researcher’s mentor for further corrections and clarifications.
To establish the findings of this study, interviews and
questionnaires were used as an instrument which was the means
of collecting basic information concerning the respondents. An
interview was conducted in Cebu Pacific Air, Philippine Airlines,
Zest Air, Southeast Asian Airline, and Air Philippines with its staff
and employees which served as the basic sources of the
information.
According to Bruce Straits, an interview is a conversation
between two or more people (the interviewer and the
interviewee) where questions are asked by the interviewer to
obtain information from the interviewee. In this study, the
researcher are the interviewers, and the employees from the five
(5) are the interviewees. A vigor interview will be conducted by
the researcher wherein he will ask a string of questions based on
his insights.
Interviews are among the most challenging and rewarding
forms of measurement. They require a personal sensitivity and
adaptability as well as the ability to stay within the bounds of the
designed protocol. The interviewer is really the "jack-of-all-
trades" in survey research. The interviewer's role is complex and
multifaceted.
The main advantage of face-to-face or direct
interviews is that the researcher can adapt the questions as
necessary, clarify doubt and ensure that the responses are
properly understood, by repeating or rephrasing the questions.
The researcher can also pick up nonverbal cues from the
respondent, any discomfort, stress and problems that the
respondent experiences can be detected through frowns, nervous
taping and other body language, unconsciously exhibited by any
person.
The interview guide may be modified between the
beginning and the end of the series. When a series of interviews
is conducted after administering the questionnaire, possibly on a
subgroup of the survey sample, the interview guide may also be
adapted for each individual respondent by taking account of
information already provided in the quantitative questionnaire.
For the research study entitled “Airbus and. Boeing: The
More Feasible and Profitable Investment”, the researcher
prepared an interview guide which provide themes or ideas that
can be asked by the interviewer to his respondents to elucidate
that particular subject area. Hence, the interview guide which will
be the instrument for this study will make sure that all the
aspects of the five (5) airlines as well as their employees will be
embarked upon and explicated by the interviewee.
The next instrument that will be used for this study is the
questionnaire method which will be distributed to the aviation
employees from the five (5) airlines to gather the needed data
and information regarding the competency of Airbus and Boeing.
The researcher will prepare a set of questions for the
questionnaire that will be administered to the respondents of the
study.
In this study, the researcher chose to use the Likert Scaling
for the questionnaires that will be given to the respondents. The
Likert Scale is an ordered, one-dimensional scale from which
respondents choose one option that best aligns with their view.
There are typically between four and seven options.
All options usually have labels, although sometimes only a
few are offered and the others are implied. A common form is an
assertion, with which the person may agree or disagree to
varying degrees. For the Likert Scaling, the researcher will use a
5- number option to answer the questionnaire. An illustration is
shown below to further explain the Likert Scale that will be used
and its corresponding equivalent:
RATING SCALE DESCRIPTION
1 Poor
2 Satisfactory
3 Good
4 Very Good
5 Excellent
VALIDATION OF QUESTIONNAIRES
The researcher will then pre-test the sample of the
questionnaires. For the development and validation of
questionnaires, the work entailed in reporting cases must be a
worthwhile contribution to well-designed studies that will not
make excessive demands on the time and goodwill of its
respondents. Therefore, questionnaires should be as brief,
simple, attractive, and user-friendly as possible.
The researcher will then check the questionnaire by the
guide of the following questions:
1. Does this questionnaire identify the variables of interest?
2. How will each of these variables be analyzed?
3. Is a questionnaire the most appropriate way of collecting
this data?
4. Will these questions enable the researcher to distinguish
between the rival hypothesis relating to the research
questions?
5. Has the questionnaire been piloted sufficiently (Usually 5-
10% of sample)?
6. What steps have been taken to measure the reliability and
validity of this questionnaire and are the measurements
sufficient?
7. Is the length of time to complete the questionnaire
acceptable? (In all but exceptional cases this should be 10-
15 minutes maximum.)
8. Will the respondent have access to all the information
required to complete the questionnaire? If not, are the steps
required to obtain that information acceptable?
9. Are any questions unnecessary, repetitive, or inappropriate?
10. Are filter questions clear and employed appropriately?
11. Are the sections/ questions in a logical order?
12. Is the layout compact, not crammed, and attractive?
13. Are closed responses and layout standardized
wherever possible?
14. Are all questions worded in a clear, concise, and
unambiguous manner?
15. Are the instructions meaningful and easy to follow?
After validating the questionnaire, the researcher will then
pick the respondents from the selected five (5) airlines using the
systematic sampling.
DATA GATHERING PROCEDURES
One of the processes that will be conducted by the
researcher is the interview. This will serve as a means to gather
all the relevant information and data for the study. By using the
interview guide, this will help the researcher to have a clear idea
on what problems should be addressed using the information to
be gathered by the interviews that will be conducted. This will
also give the researcher a clear idea on the significance of the
of that interview was made clear to the interviewees before he
meets them.
Furthermore, the researcher will inform all the interviewees
about the kind of questions that will be asked to them, as well as
the duration of the interview. After the interviewees give their
response with the letter of request, the researcher will now
arrange the meeting time by calling the respondents through
phone calls. The interviewee has the right to choose the place to
have the interview; therefore, their request of time, date, and
place should also be honored.
If the interviewee wishes to meet in person, the researcher
will pick a fairly public location, but one with few distractions. The
researcher will also let the respondents know how long he
expects the interview to take. If interviewees will feel most
comfortable being interviewed at their offices, where they are
psychologically at ease, their request will be honored.
After then, the researcher will wait for one week for his
letter‘s acknowledgement. While waiting for the interviewee‘s
response, the researcher will prepare for the actual interview by
reviewing the interview guide, as well as the background of the
study. During the actual interview, the researcher will make sure
that he will arrive on or before the time agreed for the meeting.
Then the interviewer will first introduce himself and purpose of
the interview.
While conducting an interview, the researcher can either
use a voice recorder for the review of the gathered information,
or he can simply take down notes about all the corresponding
answers of the interviewee to the queries. The interviewee will
also leave his contact information in case of additional
information or clarification. The interview guide which was made
by the researcher will be used during the interview point for him
not to miss any information that is needed for the study.
Intermittently, the interviewer will corroborate the voice
recorder from time to time and check if it is still working.
Afterwards, the interviewer will end the interview on an
affirmative note and will ask the interviewee for some additional
statements. Immediately after the interview, the interviewer
will verify the voice recorder and check through the notes taken
during the interview. And lastly, the researcher will also write
down his observations during the duration of the interview.
After conducting an interview, the researcher will now
continue with the next job which is the survey that will be
accomplished with the help of the aviation employees from the
selected five (5) airlines. The questionnaire will be given to 38
respondents for them to answer and fill it up. If the respondents
are done filling up the questionnaire, the researcher will now
conduct an interview with the aviation employees for the
assessment of their answers in the questionnaire.
They will be asked if all the items were comprehensible and
ambiguous to them; if the number of items were sufficient
enough to collect data about all aspects of the feasibility and
profitability of Airbus and Boeing, if questions were appealing and
not tedious; if all the items are objective and not prejudiced
except for a few unavoidable questions; if all items were
pertinent to the research problem; and if the questionnaire was
not too long.
The copies of questionnaire will be then distributed
personally by the researcher to the respondents. The researcher
will wait and allocate a maximum time of ten (10) minutes every
respondent.
STATISTICAL TREATMENT OF DATA
After collecting all the data from the questionnaire made by
the researcher, the following statistical formulas will be used:
Percentage Technique
This was used to determine the magnitude of the
respondents to the questionnaire.
The formula in a percentage technique is:
F
P= ----------- x 100
N
Where:
P = Percentage
F = Frequency
N = Total number of respondents
Weighted Mean
The weighted mean is a mean where there is some variation
in the relative contribution of individual data values to the mean.
Each data value (Xi) has a weight assigned to it (Wi). Data values
with larger weights contribute more to the weighted mean and
data values with smaller weights contribute less to the weighted
mean. (Childrens-Mercy.Org, Online) The weighted mean is
similar to an arithmetic mean (the most common type of
average), where instead of each of the data points contributing
equally to the final average, some data points contribute more
than others. The notion of weighted mean plays a role in
descriptive statistics and also occurs in a more general form in
several other areas of mathematics.
The weighted mean is computed according to the following
formula:
where:
are non-negative coefficients, called
"weights", that are ascribed to the corresponding
values
Only the relative values of the weights matter in
determining the value of the weighted mean. In other words, if
you multiply each weight by a positive value and recalculate
the weighted mean with new weights , then
the value remains the same. The greater the weight in
respect to other weights, the greater the contribution of the
corresponding datum into the resultant value of the
weighted mean. (Statistics, Online)
According to Steve Simon (2004), there are several reasons
why you might want to use a weighted mean.
Each individual data value might actually represent
a value that is used by multiple people in your
sample. The weight, then, is the number of people
associated with that particular value.
Some values in your data sample might be known
to be more variable (less precise) than other values.
You would place greater weight on those data
values known to have greater precision.
On the other hand, for the accuracy and preciseness of the
gathered data in this study, the researcher decided to gather
other useful means. With the usage of the same questionnaire
and instructions for the respondents, there are still some
tendencies that a sampling error might occur. In statistics,
sampling error or estimation error is the error caused by
observing a sample instead of the whole population. Sampling
error comprises the differences between the sample and the
population that are due solely to the particular units that happen
to have been selected.
The variability of a sampling error is measured by the
standard error. The standard error of the mean is designated as:
σM. It is the standard deviation of the sampling distribution of the
mean. The formula for the standard error of the mean is.
where σ is the standard deviation of the
original distribution and N is the sample size (the number of
scores each mean is based upon). This formula does not
assume a normal distribution. However, many of the uses of
the formula do assume a normal distribution. The formula
shows that the larger the sample size, the smaller the
standard error of the mean. More specifically, the size of the
standard error of the mean is inversely proportional to the
square root of the sample size.
In calculating the standard error of this study, the
researcher will use the GVF model for SESTAT (Scientists and
Engineers Statistical Data System). This model is formed for the
variance of the estimate as a quadratic function of the total, or:
where Y is the population total
and is the variance of an estimated total . and are
parameters of the model. (A comparable model found in GVF: A
Methodology for Estimating Standard Errors uses the relative
variance as the dependent variable.) For the SESTAT data, GVF
models were specified for the overall population and for separate
subgroups such as gender, race/ethnicity group, field of highest
degree, occupation, and combinations of these characteristics.
Calculating Predicted Standard Errors for Totals
Use the following equation to calculate a predicted standard
error for an estimated total:
where is the predicted standard error of the estimated total
, and and are estimated parameters obtained from the
appropriate parameter table.
Calculating Predicted Standard Errors for Percents
Use the following equation to calculate a predicted standard
error for an estimated percent:
where is the predicted standard error for a specific
estimated percentage, and is the estimated number of persons
in the base of the percentage. is an estimated parameter
obtained from the appropriate parameter table.
After calculating the standard errors of the mean, the
researchers will then assess the accuracy of the estimates. The
customary approach is to construct a confidence interval within
which one is sufficiently sure the true population value lies. The
standard error of a survey estimate measures the precision with
which an estimate from one sample approximates the true
population value, and thus can be used to construct a confidence
interval for a survey parameter to assess the accuracy of the
estimate. Let be an estimator of a parameter of interest with a
standard error . If the sample size is large, then an
approximate (1- )100 percent confidence interval for is
,
where is the upper /2 percentage point of the normal
distribution with mean zero and variance one.
If the process of selecting a sample from the population
were repeated many times and an estimate and its standard
error calculated for each sample, then:
Approximately 90 percent ( =0.10) of the intervals from
1.645 (= ) standard errors below the estimate to 1.645
standard errors above the estimate will include the true
population value.
Approximately 95 percent ( =0.05) of the intervals from
1.96 (= ) standard errors below the estimate to 1.96
standard errors above the estimate will include the true
population value.
Approximately 99 percent ( =0.01) of the intervals from
2.575 (= ) standard errors below the estimate to 2.575
standard errors above the estimate will include the true
population value.
After the assessment of the accuracy of estimates, the
researcher will use some statistical graphs to establish the
completion of the surveys that were done.
ANALYSIS OF VARIANCE
In this study, the researcher will also use the analysis of
variance to test the hypotheses about differences between the
means. In statistics, analysis of variance (ANOVA) is a collection
of statistical models, and their associated procedures, in which
the observed variance is partitioned into components due to
different explanatory variables. In its simplest form ANOVA gives
a statistical test of whether the means of several groups are all
equal, and therefore generalizes Student's two-sample t-test to
more than two groups. ANOVAs are helpful because they possess
a certain advantage over a two-sample t-test. Doing multiple two-
sample t-tests would result in a largely increased chance of
committing a type I error. For this reason, ANOVAs are useful in
comparing three or more means.
According to Research Consultation, an analysis of variance
(ANOVA) is an inferential statistic used to analyze data from an
experiment that has either multiple factors or more than two
levels of the independent variable. In dissertation data, the value
of any score on a variable may be due to one or more of these
three factors: your independent variable, the individual
differences of your subjects, and experimental error. Within even
the best-designed experiments, scores on a measure will vary
because your subjects are different from one another.
Measurement error, too, will vary, even if all your subjects are
exposed to the same treatment conditions.
Determining Statistical Significance with ANOVA
Total variability in experiment scores can be split into
"between-groups" and "within groups" variability. Between-
groups variability may be caused by the variation in the
independent variable, individual differences in the subjects,
experimental error, or a combination of any of these. Within-
groups variability is often referred to as random or error variance.
This variability is caused by individual differences between
subjects that are treated alike within groups and/or experimental
error.
The ANOVA statistic uses an F-ratio to determine the
statistical significance of the results. The F-ratio is simply the
ratio of between-groups variability to within-groups variability.
Once the researcher has obtained the F-ratio, just compare it to a
table of critical values in any statistics book to determine the
statistical significance of your results. Even better, most
statistical software packages will provide the p-value, so based
on the dissertation's preset alpha level, the researcher can
determine at a glance whether the results are significant.
A one-factor between-subjects ANOVA is used when it
involves only one factor with more than two levels and different
subjects in each of the experimental conditions. For example, say
the question asks how much light a subject needs to read a
sentence out of a book with 12-point font. The researcher has
three experimental conditions. One group of subjects is to read
the sentence in a room with no light at all. Another group of
subjects is to read the sentence in a room with a tea light candle
4 feet away. The third group of subjects is asked to read the
sentence in a room with a 60-watt light bulb placed 4 feet away.
After collecting the data, run an analysis using an ANOVA
and find that the F-ratio has a p-value of 0.03. As the researcher
have set the alpha level at 0.05, the result is significant.
However, this only supports the hypothesis that light is better
than no light. For meaningful findings, the researcher must see if
the experimental manipulations were significantly different from
each other.
In this study, the researcher will prepare an analysis of
variance for the questionnaire. The illustration below shows the
ANOVA for the questionnaire.
SCALE RANGE INTERPRETATION
5 4.5 - 5.00 Excellent
4 3.5 - 4.4 Very Good
3 2.5 - 3.4 Good
2 1.5 - 2.4 Satisfactory
1 0.5 – 1.4 Poor
Moreover, for the statistical treatment of data, the
researcher will use a pie chart for the completion of surveys, and
a bar graph for the answers of the respondents for the questions.