Chinese Competitor to Boeing and Airbus

     In late 2015, COMAC, or the Commercial Aircraft Corporation of China, finished and presented its first large airliner aircraft that was home built and is supposed to compete against Boeing and Airbus. “China rolled out its first homegrown large passenger jet off the production line in Shanghai, vowing to challenge the dominance of Airbus and Boeing in the global commercial aviation market. With a flying range of up to 5,555 kilometers (3,451 miles), it is designed to compete head-to-head with its Airbus and Boeing rivals” (Jiang, 2015). This aircraft is trying to gain FAA certification so it could be flown in the United States, but COMAC is having a lot of problems with receiving this certification. They had problems with another aircraft that is making it harder to try to get FAA certification for the C919.

Chances are rising that the COMAC C919 will be largely limited to the Chinese market, as the manufacturer works toward local airworthiness certification while seeing no sure path to the desired FAA endorsement of the type. The problem emerged in 2011 and is still unresolved. Delays in COMAC's earlier program, the ARJ21 regional jet, are holding up FAA recognition of the certification competence of the Civil Aviation Administration of China (CAAC). That casts doubt on the FAA's eventual acceptance of the CAAC's current work on C919 and therefore the Chinese type certificate. Without Western airworthiness endorsement, the C919 cannot be sold in main commercial aircraft markets outside of China. (Perrett, 2013)

I think because of this, the COMAC C919 might have some issues getting FAA certification especially at first. I think not only the problems that were encountered with the ARJ21 regional jet, but the fact that COMAC is a new company and is just releasing its first large passenger aircraft is another factor as to why they haven’t received FAA certification. It might take some time, but maybe after some years, if the aircraft proves to be safe and can meet the standards for FAA certification, it could potentially be certified. “The FAA enjoys a good working relationship with CAAC and we continue to work together to develop a path to work towards certification of the derivative model of the ARJ-21 and, possibly, the C919. The FAA said it could certify an airplane after it enters service if it can be shown to comply with all relevant airworthiness and manufacturing standards” (Govindasamy & Miller, 2015). I think that it is possible that it could get certification, but it won’t be anytime soon because of how new the company and the aircraft are.

     If the C919 were to receive FAA certification, I think most of the challenges will come with public perception. A lot of people might relate this to the cheaply China made products that they purchase. A lot of people do not think that high of products that are made in China. I think another problem that comes with this is that people in China are not even sure if they support the new aircraft. “Chinese public reactions have seemed mixed online. While many express pride and support in an indigenous jetliner, others sound skeptical about the safety of an entirely made-in-China plane” (Jiang, 2015). If their own people are not sure that this aircraft is going to be safe, then how could other countries believe this. Safety is a big thing and it could be really hard for people to board an aircraft that is brand new. “Flyers want to fly on planes with a track record for safety, reliability and comfort. It takes decades to build that track record” (Zhang, 2015). I think for the public, the FAA will make sure that this aircraft is safe and has built the safety and reliability that the public wants to have. I think if the C919 were to receive FAA certification, this could pose problems if carriers decide to buy the COMAC C919 because the public may not want to fly on it which can lead to the loss of their customers. Another problem I see if the aircraft gets FAA certification is that if the C919 is cheaper than Boeing or Airbus, carriers may decide to purchase the C919. This could then lead to problems with not only their customers, but also the people they do business with. If a carrier has a good relationship with one of the manufacturers, but decides to stop buying with them, they could lose that relationship even if they decide to come back. They may lose the benefits that they had before. 

     COMAC was formed May 11, 2008 with its headquarters in Shanghai. “Commercial Aircraft Corporation of China, Ltd. (COMAC) is a state-owned limited liability company, which is formed with the approval of the State Council. COMAC functions as the main vehicle in implementing large passenger aircraft programs in China” (Introduction: About Us, n.d.).  COMAC has a mission of building large passenger aircraft that are cost effective but still safe and comfortable for their passengers.

    

     COMAC has manufactured two aircraft so far since being formed in 2008. “The C919 is COMAC’s second aircraft since the company was formed in 2008 by the merger of eight Chinese government-owned entities” (Zhang, 2015). These two aircraft are not the only aircraft that COMAC is thinking about producing.

Although the C919's maiden flight is at least a year away, its manufacturer, the state-owned Commercial Aircraft Corporation of China (COMAC), has already made no secret of its future plans to make another, wide-body airliner. The Communist government also wants to use the C919 as a springboard to develop a nationwide aviation industry, boasting the involvement of more than 200 companies, 36 universities and hundreds of thousands of personnel in the plane's development. (Jiang, 2015)

Not only do they plan on expanding on the types of aircraft they are making, but they also plan on upgrading their first aircraft they manufactured. “COMAC plans to eventually upgrade the ARJ-21 so it's closer in performance to regional jets made by Embraer (EMBR3.SA), Mitsubishi Aircraft (8058.T) and Bombardier (BBDb.TO)” (Govindasamy & Miller, 2015). COMAC plans on staying around and manufacturing many aircraft.

     I think if this aircraft were to receive FAA certification, I don’t think that other companies would enter the market as competitors to Boeing and Airbus. If COMAC were to get certified, it would take them a long time to actually become true competitors to Airbus and Boeing. These two companies have a record of their safety and reliability and the public knows they have been around for a lot longer. They have been around longer where the public would probably rather give up their control to a company that has years of records and data on their safety and reliability than a new company that doesn’t. COMAC doesn’t have a reputation yet to provide proof to the public of how safe their aircraft really is or could be. “COMAC will not only have to deal with its lack of a reputation in the industry — it will also have to overcome the stigma of being a newcomer” (Zhang, 2015). This can be a tough thing to overcome and if they do, it’s going to be a long battle especially if no other companies join the market. They will always be the newcomer and behind a lot of years in experience and reputation. I think that there is a lot of money, time, and effort that goes into joining this kind of industry where the competition is so high due to public perceptions, that many companies do not have all the resources to support themselves for a long period of time to be a competitor.

     One response I found was from John Leahy who is the chief operating officer of Airbus. “John Leahy said he believes COMAC will emerge as a serious competitor in the mainstream commercial aviation market over the next 20 years. ‘If you ask, are we worried about competitors in the next 10 years? The answer is no, not really. In 20 years, it's almost a certainty’” (Harjani, 2014). Another thing I found was that Airbus and Boeing were launching new versions of their A320 and the 737. “The C919's competitiveness in non-Chinese markets has long been questioned, especially since 2010-11, when Airbus and Boeing launched new versions of the A320 and 737 with engines the same as or similar to the CFM Leap 1 on COMAC's aircraft” (Perrett, 2013). I am not sure if Airbus and Boeing were launching new versions due to the introduction of the C919.

References

Govindasamy, S., & Miller, M. (2015, October 21). Exclusive: China-Made Regional Jet Set For Delivery, But No U.S. Certification. Retrieved from Reuters: http://www.reuters.com/article/us-china-aircraft-arj21-exclusive-idUSKCN0SF2XN20151021

Harjani, A. (2014, February 12). You May Fly On a Made-In-China Aircraft Sooner Than You Think. Retrieved from CNBC: http://www.cnbc.com/2014/02/12/you-may-fly-on-a-made-in-china-aircraft-sooner-than-you-think.html

Introduction: About Us. (n.d.). Retrieved from COMAC: http://english.comac.cc/aboutus/introduction/

Jiang, S. (2015, November 2). China to Take on Boeing, Airbus With Homegrown C919 Passenger Jet. Retrieved from CNN: http://www.cnn.com/2015/11/02/asia/china-new-c919-passenger-jet/

Perrett, B. (2013, December 16). C919 May Be Largely Limited To Chinese Market. Retrieved from Aviation Week Network: http://aviationweek.com/awin/c919-may-be-largely-limited-chinese-market

Zhang, B. (2015, November 3). China’s Answer to Airbus and Boeing Has Arrived. Retrieved from Business Insider : http://www.businessinsider.co.id/chinas-answer-to-airbus-and-boeing-has-arrived-2015-11/#.VvaxZ_krLIU

Flying Cheap: Professionalism in the Regional Industry

     Throughout the regional airline industry there is a debate about pilot shortages. There are people who believe there isn’t a pilot shortage, but that pilots are not being paid enough to live and pay the bills that they are discouraged from flying and then there are the people who believe there is a pilot shortage because there are going to be a lot more pilots that are retiring compared to the number of new pilots that come in. There is a lot of debate about which argument is right and which one isn’t. After the Colgan accident in 2009, the 1,500-hour flight rule was implemented. With that came some of the arguments as to what is causing a pilot shortage. “The regional airline industry Thursday blamed a key safety requirement stemming from a deadly 2009 plane crash in Clarence Center for creating a pilot shortage, only to encounter members of Congress from both parties who criticized the industry for not paying its beginning pilots enough” (Zremski, 2014). There are some differences in opinions based on which side of the seat you are sitting in. The airlines feel there is a pilot shortage while Congress feels there is a problem with pilots’ pay.  “Remarkably, regional crews apparently don’t realize this because ALPA denies any pilot shortage exists. Instead, it says there is a pay shortage” (CAPA, 2015). ALPA denies there is a pilot shortage, but instead blames it on the pay shortage of these pilots. Pilots are underpaid when they first start out working. “The ranking Democrat on the subcommittee, Rep. Richard R. Larsen of Washington state, said the regional airline industry offers its beginning pilots ‘poverty wages’” (Zremski, 2014).

     The problem with becoming a new pilot in the working world is that you pay so much for your education and pilot training, that it is hard to afford anything when you are finished and just starting to work. “The cost of their four-year education plus flight training can be more than USD 125,000. Few could rationalize the expenditure for a USD 20,000-a-year starting salary, forcing many to drop out” (CAPA, 2015). This is a huge problem because people cannot afford to live once they graduate college on these starting wages. They cannot afford to pay student loans off and pay their bills. The Colgan accident that occurred in 2009 looked at many different factors. One of the factors was that the first officer was traveling all night before her flight. She didn’t have a crash pad because she couldn’t afford it. She wasn’t making enough money to be able to live in the area or rent a crash pad. “‘If you don’t have the quantity piece in there, they’re going to pay food stamp-level wages to these young pilots,’ Kuwik said, noting that the co-pilot of Flight 3407 – who, investigators said, made critical errors in the cockpit – made $16,000 a year and as a result lived with her family in Seattle even though her job was based in Newark, N.J.” (Zremski, 2014). This is a serious issue because it discourages interested pilots from pursuing this career. It can put a lot of strain and stress on beginning pilots because they are not making enough money to afford to live. For the first officer in the Colgan accident who did a lot of traveling, that can really affect someone and how they perform. From reading the accident report, she was becoming sick and was exhausted once she got to work.

     On the other hand, there is the argument that there is a pilot shortage. “Between 2015 and 2022, according to industry estimates, more than 14,000 pilots will retire” (CAPA, 2015). This is a large number of pilots that are set to retire within a seven-year span. After the Colgan accident, there was a 1,500-hour rule that got implemented. This required that pilots needed at least 1,500 hours before they could be hired in to companies. This required aspiring pilots to do a lot more training which costed more money. “Smaller airlines are having trouble hiring enough pilots because of a recently implemented safety rule requiring newly hired co-pilots to have 1,500 hours of flight experience or its equivalent” (Zremski, 2014). The 1,500-hour rule is said to play a part in why there is a pilot shortage. There are not a lot of pilots at this moment who are qualified to be hired in because they do not have the 1,500 hours. One regional airline, Republic explains some of the reasons why they are struggling to be able to recruit and acquire new pilots.

One, a change in federal law now requires pilots to have at least 1,500 hours of flying time before they can work for an airline (there are some exceptions to the hour requirement). Second, airlines need more pilots to fly the same schedule after the Federal Aviation Administration changed the rules on the amount of hours pilots can work and the amount of rest they must get. “The new limits became effective on January 1, 2014, and immediately had the effect of reducing pilot productivity 5-7%, further exacerbating the growing pilot shortage,” Republic said. (Maxon, 2015)

The fact that pilots need more hours of flight experience and cannot work as many hours as before limits the amount of pilots that you can choose from while needing more pilots to work for a company. This creates that issue of everyone needing more pilots, but there is a select few who meet the requirements. This leaves some companies short pilots because the amount of people they have to choose from is so slim.

     I think that both of these arguments are part of the problem. I think that the pay shortage and the starting pay for pilots discourages pilots from pursuing this as a career causing a pilot shortage. I think that the amount of money that people pay in order to go to college, get a degree, and take flight lessons and training is way too expensive compared to what one would make when starting out. This causes things to happen such as in the Colgan accident where people will have to travel too far to work causing them to become fatigued since people cannot afford to live close to work. It also provides problems because people who are interested may see this as something where they cannot afford to live once they start working. Although they can make it work once they move up, it takes time to do that and they may not have that amount of time to be able to support themselves. I think that both of these issues play a factor especially because of the 1,500-hour rule. Pilots now require more training and more flight experience that it takes them longer and costs them more money to even become qualified for a job. This can be quite discouraging to people and they may pick a different career to go into.

     The new regulations of the 1,500-hour rule make regional airlines concerned with their hiring pool because it really limits the options of possible candidates they can choose from. “The fact is, I could hire a guy tomorrow with 1,501 hours but he might not be the best candidate because he’d built that time towing banners over Miami Beach and has no experience flying in the north. At the same time, I can’t hire an F-18 pilot with 700 hours. The result is that we are short of pilots and there is a bunch of qualified people out there who became suddenly unemployable because of this rule” (CAPA, 2015). The problem isn’t always the amount of hours or experience. Sometimes people are just not meant to be pilots or are not exactly qualified even with the certain amount of hours. I think regional pilots are concerned because they feel they do not have enough pilots. “There simply aren’t enough pilots in the regionals to satisfy the expected demand” (CAPA, 2015). They have a lot of demand to keep up with, but because of the 1,500-hour rule and the rules on how many hours a pilot can work, they do not have the right amount of people, so each company needs to hire new employees, but there are few who reach the 1,500-hour requirement. I think some possible solutions are that students get more funding to be able to afford college and training. This can help with people being able to afford to pay for the amount of training and experience they need. Another solution may be to decrease the price of flight training to make it a little more affordable. This can help in the future for those that may have loans to pay back since they won’t have as must to pay off.

     One organization that represents the manufacturers of the regional airline industry is the Regional Airline Association. “RAA represents North American regional airlines, and the manufacturers of products and services supporting the regional airline industry, before the Congress, DOT, FAA and other federal agencies” (Aviation Association , 2010). This is a big organization in helping out the regional airlines besides ALPA. “The RAA serves as an important support network connecting regional airlines, industry business partners, and government regulators in bolstering the industry; as well as promoting regional airline interests in a changing business and policy environment” (Regional Airline Association, 2015). 

     Professionalism is how someone presents themselves at work. This involves how a person dresses; how a person talks to their managers, their colleagues, and their customers; how a person treats other people; how a person responds to different situations; or even how a person admits their mistakes when they happen. It is important to be trustworthy and honest and to always show the most respect. It is also really important to be positive.

     Two ways in which lack of professionalism was demonstrated in the Colgan accident was when the two pilots were not keeping a sterile cockpit. The first officer was complaining about work and talking about how she didn’t feel too well. Her ears and head were hurting and she just wanted to get on the ground and into a hotel since she wouldn’t have to pay for it. She was barely making any money and couldn’t afford to live close to her home base in Newark, NJ or to pay for a crash pad. Another way that there was a lack of professionalism was with management. Management was not checking the backgrounds on their employees. The pilot and the copilot both had disapprovals for some of their training. This is a big issue especially because the pilot had a lot of issues with not being able to pass his check rides and having to retake them and never mentioned this to Colgan. Management should have done a background check and noticed that he never reported these disapprovals. They should make sure their pilots are properly trained and are being honest about things especially if they were receiving unsatisfactory grades on their check rides.

     I think that for the copilot who got sick and was tired from traveling was affected by the pay of the regional airlines. She moved back home to Seattle, Washington to live with her parents because she couldn’t afford to live in the area or to pay for a crash pad. The night before the Colgan accident, she was traveling all night in order to make her start time for her first flight in the morning. When the flight got canceled, she was napping in the crew room. I think that the traveling and commuting to work can get to people and start to make them sick and fatigue their body. I think this led to some lack of professionalism because this made her violate the sterile cockpit rule when she was complaining about work and how she didn’t feel well. I think that first year pilot pay can affect professionalism in the workplace because people may not put in the extra effort when they are barely making enough money to live.

     Two specific ways that I plan on maintaining and expanding my level of professionalism once I am employed in a job is to be sure that I treat everyone fairly and show respect to everyone. This includes my bosses, my managers, supervisors, colleagues, customers, and even those who may clean the office or drop packages or mail off. I know that everyone tends to work with people they do not like, but it is very important to be respectful and set that aside in the workplace. Especially if one is a manager, it is really important to treat everyone fairly and give everyone the opportunities they deserve. It is also important to give everyone help when they need it, even if you do not want to. In the end, if you help other people, they may want to help you out too. If a manager never does anything for their employees, they may have the mindset of never wanting to help their manager out. It is best to always provide a helping hand even if someone doesn’t return the favor. Another way I can expand my professionalism is to always be honest and admit any mistakes I may make. I know it is hard for people to admit their mistakes, especially when it may affect the company, but it is really important to be honest from the start. This can prevent things from getting worse if no one knows something wrong happened. Honesty is always the way to go about things even if it may affect you or others. Sometimes honesty can help you keep your job or provide other benefits because management respects your ability to be honest.

References

Aviation Association . (2010). Retrieved from Aviation Entrepreneurs : http://morethanflight.com/library/aviationassociations.html

CAPA. (2015, April 1). U.S. Regional Airline Restructuring Part I: Is Consolidation Inevitable – Or Essential? Retrieved from CAPA: Centre For Aviation : http://centreforaviation.com/analysis/us-regional-airline-restructuring-part-i-is-consolidation-inevitable--or-essential-217004

CAPA. (2015, April 8). US Regional Airline Restructuring Part 2. Towards an Independent Regional Force; & Regulatory Change. Retrieved from CAPA: Centre for Aviation: http://centreforaviation.com/analysis/us-regional-airline-restructuring-part-2-towards-an-independent-regional-force--regulatory-change-217922

Maxon, T. (2015, July 27). A Regional Airline’s Pilot Shortage is Going to Mean Problems for the Big Airlines. Retrieved from Dallas Morning News : http://aviationblog.dallasnews.com/2015/07/a-regional-airlines-pilot-shortage-is-going-to-mean-problems-for-the-big-airlines.html/

Regional Airline Association. (2015). Retrieved from RAA: Regional Airline Association: http://www.raa.org/

Zremski, J. (2014, April 30). Lawmakers Bristle as Airline Industry Blames Safety Rule for Pilot Shortage. Retrieved from The Buffalo News: http://www.buffalonews.com/city-region/washington-politics/lawmakers-bristle-as-airline-industry-blames-safety-rule-for-pilot-shortage-20140430

Commercial Space

     Space tourism began a while ago in about the mid-1900s. There were the Apollo missions that started in the late 1960s, but space tourism wasn’t as widely popular then as it is today. It wasn’t until about the late 1900s that it really started to pick up. On October 30 1984, “President Ronald Reagan signs the Commercial Space Launch Act, which mandates that citizens who wish to launch a commercial rocket must be licensed” (Wyckoff, 2010). On April 28, 2001, “Dennis Tito becomes humanity's first paying space tourist, launching from Baikonur aboard a Russian Soyuz bound for International Space Station Alpha. MirCorp and Space Adventures helped organize the trip with Russian Aviation and Space Agency” (Space Tourism - The Story So Far , n.d.). Dennis Tito paid about $20 million in order to ride into space. In May 2002, Mark Shuttleworth from South Africa, who also paid about $20 million in order to take a trip to the International Space Station, returns from his trip. On June 21, 2004, “SpaceShipOne makes its first trip to space, becoming the first manned, privately owned craft to do so. It flies past 328,000 feet, which is the boundary of space” (Wyckoff, 2010). The SpaceShipOne won the Ansari X Prize in late 2004. The pilot of this space ship was Mike Melvill. This all began the start of space tourism. In September of 2004, “British entrepreneur Richard Branson announces that his Virgin company plans to launch commercial space flights over the next few years. It has sold more than 300 seats at $200,000 each” (Wyckoff, 2010).

     The problem with space tourism is that space travel is very expensive. Some people may have the couple hundred thousand to millions of dollars to pay for a flight to space, but many cannot so the potential passenger population is very limited. Many companies are trying to find ways to make it cheaper for people to go to space. Another reason why space travel is not cheap is because once the space ship cannot be reused. “The main problem with the Soyuz is that none of it is reusable; even the small passenger capsule that returns to Earth is not reused. Ironically, the Space Shuttle is the most expensive launch vehicle in the world (estimates range from US$350 to US$500 million per flight), even though it has reusable parts” (Sawaya, 2004). This is a lot of money that companies spend on flights, so it is going to be very costly for any passengers that wish to go on board a flight. Not only is space travel expensive, but safety is another concern. This is safety in regards to peoples’ lives and especially their health. “Major health issues for these explorers have included weakened bones and muscles, poor vision, nausea and insomnia. In addition to all these risks, untrained tourists will almost certainly face a wider array of “health problems that you haven't had to deal with in space before” (Courage, 2014) People who have been trained and have good health come back with some health problems, so those that are tourists and may not be in as good as health may experience worse things.

     Under the Commerical Space Launch Act of 1984, space travel started to be overseen and regulated. This act “authorizes the Department of Transportation (DOT) and, through delegations, the Federal Aviation Administration's (FAA) Office of Commercial Space Transportation (AST), to oversee, authorize, and regulate both launches and reentries of launch and reentry vehicles, and the operation of launch and reentry sites when carried out by U.S. citizens or within the United States” (Office of Commercial Space Transportation, 2015). Space tourism follows Title 14 Code of Federal Regulations Chapter III, Parts 400 to 460. In December 2006, there was a final rule for “Human Space Flight Requirements for Crew and Space Flight Participants” (Federal Aviation Administration , 2015). This was a result of the Commercial Space Launch Amendment Act of 2004. This final rule gives regulations for training, qualifications of the crew, and what kind of consent needs to be given by the crew and participants. They need to be aware of any associated risks that come with space travel. I think that this is something that can be more regulated, but it is hard for the FAA to do that since they do not know a lot about it. Because the FAA doesn’t have a lot of regulations on space travel, they kind of are in a spot where they are waiting for things to happen so they can create new regulations. For now, “Congress requires that passengers be informed of the risks. In turn, passengers would have to provide written consent before takeoff that they understand and are aware of the risks” (Superville, 2005). This can be something that really turns people away from this because of the dangers and safety issues that can result and the little regulation that is enforced.

     I think that maybe at one point in time, space travel could be accessible to the general public, but there needs to be a lot of changes in the existing program. I think that the companies who do space travel need to find ways for tickets to be cheaper because right now, majority of people cannot afford to pay the couple hundred thousand to travel to space. Not only this, but they have yet to have one of these trips take off and complete a mission. I think that with time, the technology that will be used to allow these trips to be safer will be really expensive and they will not be able to afford to lower ticket prices. I think that because space ships are not reusable, this adds another really expensive cost to companies that also decreases the chances for ticket prices to drop. I think this is going to be a very small market if it does actually start to do space travel missions because there are a select few who have the money to spend and are willing to spend it on this. I think that there needs to be more research done that helps inform the interested population about the health issues so people know exactly what they are getting into. I think that some people are okay with signing the consent form, but more individuals may become interested if they have more knowledge about their safety and health and how they can be affected when traveling into space.

     Qualifications to work in the space tourism industry are that pilots “must have an FAA pilot certificate and be able to show that they know how to operate the vehicle. Student or sport pilot licenses would not qualify” (Superville, 2005). They also need to be trained to be able to make sure that their vehicle will not pose any harm to the public. The crew needs to have a medical certificate that has been issued within one year of when they are taking flight. They also have to be checked and approved that they are in a good mental and physical state that ensures they can make decisions and perform any roles that require safety. Other requirements for people who are not pilots is that they need a “bachelor’s degree from an accredited institution in engineering, biological science, physical science, computer science or mathematics” (NASA, 2015). They also need to have at least three years of experience professionally or have at least 1,000 hours of pilot in command for a jet aircraft. They also need to pass a physical for long term astronauts that is given by NASA.

References

Courage, K. H. (2014, February 18). Can Space Tourism Companies Keep Their Customers Safe and Healthy? Retrieved from Scientific American : http://www.scientificamerican.com/article/can-space-tourism-companies-keep-customers-safe-healthy/

Federal Aviation Administration . (2015, December 15). Human Space Flight Requirements for Crew and Space Flight Participants; Final Rule. Retrieved from Federal Register : https://www.gpo.gov/fdsys/pkg/FR-2006-12-15/pdf/E6-21193.pdf

NASA. (2015, December ). Astronaut Candidate Program . Retrieved from NASA : http://astronauts.nasa.gov/content/broch00.htm

Office of Commercial Space Transportation. (2015, October 26). Retrieved from Federal Aviation Administration : http://www.faa.gov/about/office_org/headquarters_offices/ast/regulations/

Sawaya, D. B. (2004, March). Space tourism: Is it safe? Retrieved from Observer: http://www.oecdobserver.org/news/archivestory.php/aid/1242/Space_tourism:_Is_it_safe_.html

Space Tourism - The Story So Far . (n.d.). Retrieved from Space Future: http://www.spacefuture.com/tourism/timeline.shtml

Superville, D. (2005, December 30). Gov't Issues Proposed Space Tourism Rules. Retrieved from Space: http://www.space.com/1904-gov-issues-proposed-space-tourism-rules.html

Wyckoff, W. B. (2010, October 21). The History Of Space Tourism. Retrieved from NPR: http://www.npr.org/templates/story/story.php?storyId=110998144

Global Airlines Issues

     Emirates, Etihad, and Qatar are some foreign long-haul carriers that received government subsidies. “The issue is the $42 billion in subsidies and other unfair advantages that Qatar and the UAE have provided to their state-owned airlines. The three Middle Eastern carriers are said to have received $12 billion in interest-free loans and shareholder advances — and $8.8 billion in interest savings from government loan guarantees and interest free loans.” (Zhang, 2015). Emirates started operations in 1985 and is based in Dubai, United Arab Emirates; Etihad started operations in 2003 and is based in United Arab Emirates; and Qatar started operating in 1994 and is based out of Doha, Qatar. These airlines “are configured for long-haul international flying only” (Zhang, 2015). The US is part of the Open Skies agreement that basically allows the skies to be open and free to other nations that have signed this agreement without the government intervening. The problem is that Emirates, Etihad, and Qatar have government subsidies that help them out and they are taking on “flights coming from outside the carrier's home market” (Zhang, 2015). These foreign carriers would be making a lot of money if they are allowed to fly transatlantic routes from other places that are not from their home base. If these foreign carriers start taking international routes, the United States major airlines such as American, Delta, and United could lose a lot of money which would then could lead to personnel cuts. The help these carriers get from the government allows them to expand their fleet and grow as a company a lot faster.

     Although US carriers are not really subsidized by the government, that doesn’t mean they haven’t been at one point. “The US could subsidize its airlines, as it partially does through Essential Air Services and as it did after 9/11, delivering USD 5 billion in direct grants and USD 10 billion in loan guarantees” (CAPA, 2014). Also the three Legacy Airlines: American, United, and Delta, are said to have been subsidized because they have all filed for Chapter 11 bankruptcy and the government helps them get rid of their debts. The issue is that the United States airlines use this money to help themselves get out of debt to be able to provide service to their customers. “Although United, Delta, and American are now profitable, they've achieved it by scrimping, making do with old equipment and being highly disciplined in the way they spend money” (Zhang, 2015). Emirates, Etihad, and Qatar use their money they receive from the government to expand their fleet and provide new and lavish aircraft and airports for their customers.

     Long-haul foreign carriers have been able to purchase aircraft at below market interest rates that are unavailable to the US carriers because the US Export-Import Bank allows foreign airlines to get cheaper financing when buying wide-bodied aircraft. Boeing is one of the major companies that uses the Export-Import Bank. “The bank now guarantees about 15 percent of Boeing's commercial aircraft sales -- basically it backs loans to customers outside the U.S.” (Crawford, 2015). The Export-Import Bank is used to help provide funding to foreign carriers that may not be able to get a private fund so they can buy aircraft. “In one specific example, the Ex-Im financing for one airline was nearly 3 percent lower than the market rate. That adds up to a subsidy of $20 million per plane. Those subsidized jets are then used on international routes directly against U.S. airlines, which purchase their planes at market rates” (Simon, 2014). The US carriers such as American, Delta, and United have to buy their aircraft at market rates which costs them more money. The foreign carriers buy these aircraft for cheaper prices which allows them to sell their tickets for cheaper prices and then compete against US carriers. This provides an unfair advantage especially because they are receiving government subsidies to help fund them.

     After looking at everything, I feel that the global playing field is unfair. The three Gulf carriers are being funded by their government to buy new and nicer aircraft that allow them to take on more international flights. Because they have a bigger and nicer fleet and cheaper prices, they are taking away business from other carriers who are using older equipment. “At Dulles International here in Washington, the three U.S. airlines have seen a 14.3% decrease in passengers since Emirates entered the market” (Britton, 2015). Since Emirates, Etihad, and Qatar received government funding, they do not need to make a profit in order to stay in service like United, American, and Delta have to do. When times get tough and the business slows down due to the economy, the United States carriers still need to make money to pay their bills and keep their business from going into debt. They still have the opportunity to fly people around because they offer cheaper flights. Not only are these Gulf carriers taking away business from US and other carriers, they also are not following the Open Skies Agreement. “This state-driven aviation mercantilism is wholly contrary to U.S. Open Skies policy and the agreements themselves and demands a vigorous response from the U.S. government” (Britton, 2015). 

References

Britton, R. (2015, October 14). Subsidized Gulf Airlines Are Damaging Airlines Globally, Not Just in the U.S. Retrieved from Huffpost Business: http://www.huffingtonpost.com/rob-britton/subsidized-gulf-airlines-_1_b_8294892.html

CAPA. (2014, November 5). US Airline Attacks on Gulf Carriers: More Rhetoric Than Consistency - But It Makes For Good Politics. Retrieved from CAPA Centre For Aviation: http://centreforaviation.com/analysis/us-airline-attacks-on-gulf-carriers-more-rhetoric-than-consistency---but-it-makes-for-good-politics-192138

Crawford, J. (2015, October 26). ​Boeing CEO: Losing Export-Import Bank "Means Loss of Jobs". Retrieved from CBS News: http://www.cbsnews.com/news/boeing-ceo-losing-export-import-bank-means-loss-of-jobs/

Simon, M. (2014, August 8). The Ex-Im Bank is Hurting My Business. Retrieved from Chicago Business: http://www.chicagobusiness.com/article/20140808/OPINION/140809833/the-ex-im-bank-is-hurting-my-business

Zhang, B. (2015, July 28). The Middle East's 3 Best Airlines Have Infuriated Their US Competitors . Retrieved from Business Insider: http://www.businessinsider.com/middle-eastern-us-airlines-dispute-future-of-air-travel-2015-7