The objective of this and the other written assignments in the course is to show how the 

managerial economic theory and tools presented in Baye are applied to a current airline industry 

problem. For this assignment, the objective is to develop an appreciation for the methods used by 

the two largest commercial aircraft manufacturers, Airbus (http://www.airbus.com) and Boeing

(http://www.boeing.com/), to forecast demand for air travel and the market for commercial 

aircraft over the next twenty years. Fortunately, both make their forecasts available to the public. 

For this assignment, you are to review the Airbus Global Market Forecast and the Boeing 

Current Market Outlook. These reports are available on the Boeing and Airbus websites. The 

location of the forecasts varies from year to year but each can be accessed by a search within the 

website or from the site map. In your review, concentrate on the factors (independent variables) 

that Airbus and Boeing employ to estimate the demand for air travel growth and how these are 

used to generate regional estimates for specific aircraft types. First, look for sections in the 

reports that provide an overview of the forecast methodology. Regression analysis is used 

extensively, but the technical details are not provided or important for this assignment. An 

appreciation for how the estimates are generated is sufficient. After you look over the entire 

reports – they’re lengthy, it is not necessary to read all sections – choose a region of the world 

for more detailed study.

First, briefly explain how Airbus and Boeing develop their 20-year forecasts. Note the factors 

that influence projected air travel growth; some factors affect the demand curves while others 

influence supply. Be certain to distinguish between the two. The connection between the 

microeconomic theory of supply and demand as presented in Baye and Doganis should be 

explicit. Then explain the forecasts for growth in the chosen world region. Provide some 

perspective to forecast growth in the rest of the world. 

The paper should be approximately three pages not including a cover page, reference list, and 

any appendices you may wish to include. Both forecasts provide a wealth of detail that could 

support a much longer paper, but the objective is an overview similar to an executive summary 

for one world region, not an in-depth analysis. Managers are often tasked with analyzing 

business environments or specific problems for senior management review. Senior managers are 

usually pressed for time and value concise evaluation and recommendation. Discerning and 

summarizing the critical facts succinctly is difficult. More is not necessarily better; the page limit 

is intended to foster this skill. 

APA style is required including a title page and reference listing. You may have only a few 

references, but these must be cited in both the main body of the paper and in a separate reference 

list. An abstract and table of contents are not required. The sample APA paper at the Purdue 

Online Writing Laboratory provides an excellent overview of the APA style. Even if you believe 

you have a good handle on APA format, a review is highly recommended. Be certain to include 

APA elements such as running head, page numbers, headings, source citations, introduction, and 

conclusion in your paper.