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Microeconomics concepts applied to the Boeing Company case

Microeconomics concepts applied to the Boeing Company case

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  • The EU can use the money it collects from other countries' airlines EU's unilateral assertiveness on the aviation carbon tax All airlines in and out of Europe will have to pay for their greenhouse gas emissionsEU has given all the airlines a long lead time (around 1 year) so that the emissions can be calculated
  • In 2006, Airbus' new A380 entered service with an oil consumption less than one fifth of the Boeing 747. With the help of the carbon tax on airlines, the A380 will be much more competitive than the Boeing 747For example, considering China as one of the strategic market for the world's two big planemakers, it coordinates purchases centrally and regularly places orders with Airbus and Boeing in batches of 100 or moreChinese domestic air traffic quadrupled in the last decade and is expected to keep growing at more than 7 percent a year up to 2030Boeing predicts China will be the second-biggest market for new aircraft behind the United States between 2011 and 2030 China last year delayed the final signing of a deal for 10 A380 superjumbos worth $4 billion for Hong Kong Airlines in a signal of its displeasure over the EU plans, and in the mid-1990sBeijing banned its airlines from joining the ETS without its permission, and threatened to take unspecified measures to defend itself against the scheme, which levies charges for carbon emissions on flights in and out of EuropeThe strategic markets such as China, India, Russia and US for the world's two big planemakers – Airbus and Boeing.They coordinate purchases centrally and regularly place orders with Airbus and Boeing in batches of 100 or more.Boeing predicts China will be the second-biggest market for new aircraft behind the United States between 2011 and 2030.China last year delayed the final signing of a deal for 10 A380 superjumbos worth $4 billion for Hong Kong Airlines in a signal of its displeasure over the EU plansBeijing banned its airlines from joining the ETS without its permissionUS giant Boeing said it had 25 orders of its flagship plane, the 787 Dreamliner, cancelled by airlinesBoeing decided to join forces with their arch rival Airbus against the EU scheme in fear of reduction of further sales
  • Boeing, together with Airbus, signed a deal with Brazil's Embraer to work on the development of drop-in, affordable aviation biofuels. Boeing and Embraer are already collaborating on how to establish a sustainable aviation biofuels industry in Brazil and exploring new technology pathways to broaden biofuel sourcing and availability. Boeing and Airbus are also active around the globe in helping to establish regional supply chains, while the three manufacturers have all supported numerous biofuel flights since global fuel standards bodies granted their approval for commercial use in 2011.
  • Demand curve is ELASTICThe demand curve shifts to the left because the airlines demand for new orders would reduce. The carbon tax means more operational costs for international airlines, which will inevitably trickle down to decrease in demand of new aircraftse.g. The airlines will have an option not to go for high-end aircrafts such as 747 DreamlinerSupply Curve is INELASTICBoeing supply wont change to a great extent by the carbon tax levied on airlinesTax IncidenceAirlines will have to pay the carbon tax which will result in hike in airline tickets, which the passengers will have to bear
  • Introducing fuel-efficient new airplanes – such as the 787 Dreamliner, the 747-8 and the 737 Max – with significantly smaller carbon footprints than the airplanes they replace.Developing air traffic management solutions that offer substantial near-term environmental improvementsAdvancing renewable energy sources, such as sustainable biofuels, fuel cells and solar cellsTargeting 25 percent cuts in greenhouse gas emissions intensity and hazardous waste and 25 percent increases in energy efficiency and recycling rates by 2012, even as our business growsLeading and aligning the aerospace industry on environmental-improvement opportunities

Transcript

  • 1. Apurva Samant Presenters  Aditya Sharma Amritha Chottakurien  Avik Chandra Ashish Ghatke
  • 2. Boeing Commercial Boeing 7- Revenues series family of Design, revenue in airplanes lead assemble and 2011: $68.7 the industry support billion commercial jetliners World’s largest provider of World’s largest commercial and designer and military satellites; manufacturer of largest NASAmilitary transports, Approximately 70% of contractor tankers, fighters Boeing commercial and helicopters airplane sales (by value) go to customers outside of the United States The Boeing Company is an American multinational aerospace and defence corporation
  • 3.  What is the European Union carbon charge? Facts ◦ Pay for excess greenhouse gas emissions ◦ Officially in effect on Jan 1, 2012 ◦ Given long lead time to calculate emission ◦ Carbon charge of €12 per tonne Why has the EU levied this tax? ◦ To subsidize its own aviation industry or its aircraft manufacturing sector ◦ To address its sovereign debt crisis ◦ To develop low-carbon industries
  • 4.  How is Boeing involved? Facts ◦ Largest global aircraft manufacturers ◦ Competes for jet orders worth $100 billion a year ◦ Dominant share in the large passenger jet market ◦ Boeing’s sales affected When did Boeing get involved? ◦ Strategic markets for planemakers – India, China, Russia, US ◦ Boeing received orders in batches of 100 or more ◦ China delayed the final signing of a deal for 10 A380 superjumbo ◦ Boeing’s 25 flagship orders cancelled
  • 5.  What is Boeing currently doing? Facts ◦ Boeing joins arch rival Airbus in EU carbon trading complaint ◦ Boeing, together with Airbus, signed a deal with Brazils Embraer
  • 6. SPrice Pe Pe’ D2 D1 Q (Demand of Aircrafts) Qe’ Qe
  • 7.  Demand curve is ELASTIC Supply Curve is INELASTIC Tax Incidence oHike in airline tickets, which the passengers will have to bear
  • 8.  Pioneering environmentally progressive technology ◦ Introducing fuel-efficient new airplanes ◦ Developing air traffic management solutions ◦ Advancing renewable energy sources, such as sustainable bio fuels, fuel cells and solar cells Relentlessly reducing our environmental footprint Strengthening the Industry’s environmental focus