Economic problems are significantly affecting the airlines and the situation is likely to improve to a modest degree. Airlines have been buffeted by the global economic meltdown and the escalating cost of fuel. The business aviation market has experienced a similar retraction. The net result is a heavy impact on the training and simulation market, which depends largely on these two sectors.
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“The hike in prices of fuel will steer the gravitation toward more fuel efficient aircraft, and consequently drive the need for simulators configured for these aircraft types,” says Frost & Sullivan Industry Manager Wayne Plucker. “The Boeing 787 and the Airbus A350 that are in the pipeline promise 20 percent more fuel efficiency, and airlines are expected to opt for these aircraft to cut operating costs.”
Airlines’ chronic lack of sustained profitability restricts training budgets, resulting in funding only for required recurrent training. The airlines exist in a “feast or famine” environment. During the past ten years, they have earned record profits twice and endured record losses twice. Airlines had traditionally rolled all their expenses into their ticket prices. In pursuit of a positive cash flow, they now add fuel surcharges, baggage fees, seat selection fees, and several others. They have cut meals and most other services. Fleet availability and costs of operation restrict live in-flight training to the absolutely necessary flights.
“Simulators will become increasingly sophisticated and technically advanced,” says Wayne Plucker. “This will raise cost per simulator and reduce the number of new simulators purchased.”
Airlines will be reluctant to purchase new simulators and they will operate their existing simulators continuously, with limited downtime for maintenance.
Interest in becoming a pilot will continue to be lower than in the past, resulting in reduced initial training pilot numbers and revenue. Keeping up with new curriculum requirements will drive up the cost of both initial and recurring training.
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Analysis of the Commercial Flight Training and Simulation Market
Corporate Communications – North America