Aircraft Construction in Emerging Markets

A utility value analysis of the countries India and China


Essay, 2020

16 Pages, Grade: 1,3

Anonymous


Excerpt

List of contents

List of contents

List of figures

List of tables

List of abbreviations

1 Introduction
1.1 Aim
1.2 Approach

2 Essentials
2.1 Aircraft construction industry
2.2 Future challenges for the aircraft construction industry

3 Competencies in aircraft construction
3.1 India
3.2 China

4 Risks in aircraft constructions
4.1 India
4.2 China

5 Utility Value Analysis

6 Conclusion

List of references

List of figures

Figure 1: Tier Supply Chain P.

Figure 2: Positioning Analysis P.

List of tables

Table 1: Utility Value Analysis

List of abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1 Introduction

Quite a few people are fascinated by the grace of an ascending jumbo jet. Man-made, the aircraft weighing tons takes off with apparent lightness and brings us safely to our destination. Improved, enlarged and made safer in 100 years, millions of people use it daily to get from A to B. In only 8 hours from Frankfurt to New York or Mumbai, it makes it easier not only for tourists to travel, but also for business people from multinational companies to reach other continents in a very short time. Especially in the globalized world in which we live, it is not possible more can be dispensed with. The gradual removal of trade barriers and thus The emergence of large domestic markets further enlarges this economic network and leads to new suppliers being found and production being outsourced. This happens especially in an industry with such a large value chain as in aircraft construction.

1.1 Aim

The analysis of the aircraft construction programs in India and China is intended to show in which country and in which areas there is probably the greatest development potential for international competition in the medium term. This development potential will be illustrated with the help of a utility value analysis.

1.2 Approach

In the first step, both the objectives and the procedure are explained. The second step is an introduction to the basics of aircraft construction. In the third step the competences and risks of the countries India and China are presented. The fourth and last step is a utility value analysis of both countries.

2 Essentials

2.1 Aircraft construction industry

The aircraft construction industry is a very lengthy industry. You have to deal with enormous time spans, which makes a long-term strategy and planning indispensable. For example, the development of an aircraft takes about 10 years, the flight operation about 30 years, but can be extended for another 10 years after a conversion. Research and development (R&D) departments are also not spared from this outsourcing. Foreign representations are built to investigate the needs of customers and, if necessary, react to them by optimizing production (Cf. Kuemmerle 1997: p. 62)

Due to demographic changes, global passenger numbers are expected to grow by 4% per year over the next 10 years, which will also have a significant impact on airline demand for aircraft (Cf. Biermann 2007: p. 235). But these changes are not only attributed to the civil aviation sector. It also has a large effect on freight transport, which with increasing economic power and population makes an expansion of the cargo fleet indispensable. How to go Forecasts of annual growth rates of around 5-6% until 2025 (Cf. Biermann 2007: p. 241).

Another sector is military aircraft construction. However, it is often available in many countries of course under secrecy and it is difficult to get information about future strategies to come. However, it often goes hand in hand with civil aircraft construction. The best-known aircraft manufacturers all cover both the civil and military segments.

In the technical literature, the aircraft construction companies are often referred to as "Original Equipment Manufacturers (OEMs)". These are defined as buyers of hardware components, which they integrate into their products and later resell under their name. When considering the different components of an aircraft, it quickly becomes clear, however, that this is high-tech construct of know-how, which is a mutual exchange of preliminary products is indispensable. These precursors are used here, as in of the automotive industry, divided into different priorities. These priorities are divided into ranks which is expressed as Tier-1, Tier-2 and Tier-3. Tier-1 corresponds to the primary product. In aircraft construction we consider Tier-1 products as the component integration of drive systems, avionics and aircraft structures denote. Tier-2 sub-products are the production of propulsion systems, such as turbines or power supply, and avionics systems, which include flight control, communication and navigation. In addition, the manufacture of structures such as the fuselage, wings and landing gear must also be included. The group of Tier 3 pre-products includes sub-components such as the hydraulic system, rotors and aluminium sheets. The categorization does not have to be the same for every OEM, as some products cannot be clearly defined. (Cf. Supply Chain Excellence 2016: p.6).

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Tier Supply Chain

Source: www.ecosio.com (2019)

2.2 Future challenges for the aircraft construction industry

Innovations are designed to make flight operations more cost-effective for airlines, which are increasingly facing competition from low-cost carriers. The fuel consumption of aircraft is to be reduced by using new materials, such as plastic fibre, for the construction of the aircraft structure. This method is being used more and more frequently for the latest aircraft models. For example, the overall structure of the currently largest passenger aircraft, the Airbus A380, is made of more than 20% plastic fibre. To increase this proportion even further, Boeing developed the "Dreamliner" Boeing 787 and at the same time Airbus developed the A350 from even more than 50% plastic fibre, making it one of the most ecological wide-bodied aircraft in the world (Cf. Busse/Middendorf 2013: p. 23).

To stay with the environment, in times of global warming attention should also be paid to aircraft emissions. A considerable amount of CO2 is emitted during flight in the form of contrails. So in order to maintain the image of the climate-friendly aircraft manufacturer among the population, they would not be badly placed to try to reduce their emissions through innovations in this area as well. However, emissions are not the only problem that significantly affects the environment. The noise of take-offs and landings is increasingly leading to legal action by local residents who are trying to ban night flights or forcing to change an approach path. But there are not only airlines that try to cover the low-cost segment. Some of them also advertise with quality standards and high comfort during the flight. So in this area, it is necessary to try to find out the preferences of the passengers and take them into account when building aircraft. Nevertheless, probably the most important feature of an aircraft is safety.

3 Competencies in aircraft construction

3.1 India

Before the competencies of the Indian aircraft construction industry can be discussed, its structure must first be explained. The Defence, Research and Development Organization (DRDO) which has been in existence in India since 1958, is responsible for research and development of military missiles (Cf. Michael 2012: p. 10). DRDO reports directly to the Ministry of Defence, so the Indian Minister of Defence also assumes the task of management. The DRDO includes numerous research institutions, such as the Aeronautical Development Establishment (ADA), and electronics manufacturers, such as Bharat Electronics Limited (BEL), which, in addition to developing flight control systems, is also a major supplier to the U.S. aircraft manufacturer Boeing. The assembly of the airplanes is carried out by the state enterprise "Hindustan Aeronautics Limited” (HAL), which was founded in 1940 for the production of military aircraft for the Royal Indian Air Force in Bangalore. The turnover of HAL in its fiscal year 2019-2020 was the equivalent of 3 billion US $ and the number of employees in 2019 was 28.345 (Cf. Hindustan Aeronautics Ltd 2019-2020: p. 3-4). HAL produces mainly in the military sector, where Indian engineers enjoy a high level of experience. Indian aircraft construction is where most scientists and engineers work, compared to the rest of the BRICS countries. The quality standards of the production compared to the West are on a good way and for the know-how in the field of information technology the Indian specialists are famous all over the world. Another advantage is the English language, which is still one of the two official languages due to British colonization. This facilitates the appearance in international trade and is an enormous advantage over Russia. The wage level in India is known to be very low, which makes India a popular location for outsourcing. It is noticeable that the Indian aircraft construction industry is almost exclusively related to the military sector. However, the Indian aircraft manufacturer already has independent production of the "Dhruv" combat helicopter, which can be converted and used for various civil or military purposes.

3.2 China

In 2008, the entire defence and aircraft construction industry, with a total capital of $78 billion, was combined into a single group called the Aviation Industry Corporation (AVIC) (Cf. Pritchard 2012: p. 13). Parts of the company still exist from the times of the Korean War, and after numerous restructurings and renaming, the entire structures have now been integrated under this parent company. AVIC is headquartered in Beijing and the company employs approximately 446,000 people, more than Airbus and Boeing combined. Also in 2008, AVIC's subsidiary "Commercial Aircraft Corporation of China” (CO- MAC) was founded for the development and production of its own Chinese passenger aircraft. AVIC provided approx. 3 billion US-$ of seed capital for this purpose. COMAC's prestige project was to bring the first certified Chinese passenger aircraft to the market. The first regional aircraft is called COMAC ARJ21 and can carry 75 to 90 passengers. The first aircraft in this series are already in operation in Chinese airspace. A second project is the medium range aircraft called COMAC C919, which can carry 170 to 190 passengers. In terms of size, it is to become a direct competitor to the Boeing 737 and the Airbus A320. By 2016, 235 orders had already been placed for this aircraft type. The production of its own passenger aircraft shows that a high level of technology is already available (Cf. Michael 2012: p. 13). However, a lot of know-how will have come to China from Western aircraft manufacturers. For example, a long-time Airbus employee reports that a few years ago an Airbus A320 disappeared in China after its delivery. Since the Chinese state buys aircraft in China and then "distributes" them to the Chinese airlines, but this machine never went into service, it is now suspected that it was completely dismantled for reengineering purposes in order to benefit from the know-how.

[...]

Excerpt out of 16 pages

Details

Title
Aircraft Construction in Emerging Markets
Subtitle
A utility value analysis of the countries India and China
College
Hamburg School of Business Administration gGmbH
Grade
1,3
Year
2020
Pages
16
Catalog Number
V1004830
ISBN (eBook)
9783346384348
ISBN (Book)
9783346384355
Language
English
Tags
aircraft, construction, emerging, markets, india, china
Quote paper
Anonymous, 2020, Aircraft Construction in Emerging Markets, Munich, GRIN Verlag, https://www.grin.com/document/1004830

Comments

  • No comments yet.
Read the ebook
Title: Aircraft Construction in Emerging Markets



Upload papers

Your term paper / thesis:

- Publication as eBook and book
- High royalties for the sales
- Completely free - with ISBN
- It only takes five minutes
- Every paper finds readers

Publish now - it's free