AIRLINK INTERNATIONAL AVIATION COLLEGEDomestic Road, Pasay City

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A COMPARATIVE STUDY BETWEEN AIRBUSAND BOEING COMPANY

YEAR 2000-2011

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IN PARTIAL FULFILLMENTOF THE RESOURCEMENT IN AE411

RESEARCH METHODS AND TECHNIQUES

BY

BHATTA, SAMIPPOUDEL, ANUJ

2012

TABLE OF CONTENTS

ACKNOWLEDGEMENT

Chapter Page

I THE PROBLEM AND ITS SETTING

Introduction 1

Background of the Study 3

Statement of the problem 6

Assumption and hypothesis 10

Significance of the study 10

Definition of terms 12

Scope and Delimitations 13

Conceptual Framework 17

II REVIEW OF RELATED LITERATURE AND

STUDIES 18

Airbus vs. Boeing revisited 18

Airbus vs. Boeing: Strategic management 20

Airbus vs. Boeing (2010) 22

Airbus vs. Boeing: contrasting views of the

future 28

WTO delivers verdict on Airbus vs. Boeing 29

Airbus Vs. Boeing The Case Study -Jimmy

Jones 36

Airbus leads Boeing in aircraft orders in the

first half-Madrid 40

Airbus vs. Boeing: The subsidy wars 45

Airbus vs. Boeing as the transatlantic spat

escalates 46

III RESEARCH METHODOLOGY

Methods of Research 65

Sampling design 66

Method of collecting data 72

Validation of questionnaires 77

Data gathering procedures 79

Statistical treatment of data 83

Analysis of variance 91

ACKNOWLEDGEMENT

This thesis proposal is written primarily in accordance with

the partial fulfillment of the resourcement in AE411 (Research

methods and techniques) of Bachelor of Science in Aerospace

Engineering at Airlink International Aviation College, Domestic

Road, Pasay City. And is an outcome of our knowledge in major

subjects in the past. This proposal is expected to meet the

requirement of the aerospace engineering students as guide for

detail knowledge in the comparative study between Boeing and

Airbus Company.

This thesis proposal is made possible through the help and

support from everyone, including: parents, teachers, family,

friends, and in essence, all sentient beings. Especially, please

allow us to dedicate our acknowledgment of gratitude toward the

following significant advisors and contributors:

First and foremost, we would like to thank our professor Mr.

Francis Deslate for his most support and encouragement. He

kindly read our paper and offered invaluable detailed advices on

grammar, organization, and the theme of the paper. The co-

operation is much indeed appreciated. Secondly, we would like to

thank our friend Mr. Rajiv Rimal for the smoothes and co-

operation during the period of our research and who gave the

time to read our thesis proposal and to provide valuable

advices.Finally; we sincerely like to thank our parents, family,

professors and friends, who provide the advice and support. The

product of this research paper would not be possible without all

of them.

And above all, to the Almighty God, who never cease in

loving us and for the continued guidance and protection.

CHAPTER 1

THE PROBLEM AND ITS SETTING

Introduction

The commercial airplane manufacturing industry is

dominated by two large players, Boeing and Airbus. They operate

in a very competitive environment and the strategies of one

strongly impact the business of the other.

For almost 40 years, the Boeing 747 or Jumbo Jet, the

largest airplane in the world, has enjoyed a monopoly and has

brought in large profits for Boeing. Roughly 10 years ago, Airbus

decided to look into to the possibility of manufacturing an even

larger and more efficient plane.

In a short span of 100 years, we have gone from making a

few test flights to orbiting celestial bodies, from sliding along

sand dunes to spanning oceans, from performing feats of isolated

daring to depending on aviation in our everyday lives. Speeds

have increased a thousand fold, as have altitude and range

capability.

Ahead lay risks and rewards as vast as space itself. We

have the promise of new airliners that fly with greater fuel

efficiency, of huge air freighters that move the nation's goods, of

an expanding general aviation fleet, and of the peaceful uses of

space for exploration and research.

The aerospace industry includes those firms engaged in

research, development, and manufacture of all of the following:

aerospace systems, including manned and unmanned aircraft;

missiles, space-launch vehicles, and spacecraft; propulsion,

guidance, and control units for all of the foregoing; and a variety

of airborne and ground-based equipment essential to the testing,

operation, and maintenance of flight vehicles.

As the 21st century began, approximately two-thirds of the

aerospace industry's output was bought by the federal

government. During the past two decades, this figure has ranged

as high as 74 percent. At the same time, the aerospace industry

is the world's largest producer of civil aircraft and equipment.

Roughly 6 out of every 10 transports operating the world's civil

airlines are of U.S. manufacture, and in addition, the industry

turns out several thousand civil helicopters and general aviation

planes yearly.

These facts underline the unique status of the aerospace

industry. Its role as principal developer and producer of defense,

space, and other government-required systems in large measure

dictates the industry's size, structure, and product line. Because

it operates under federal government procurement policies and

practices, the industry is subject to controls markedly different

from those of the commercial marketplace. But the aerospace

industry is also a commercial entity, and it must compete in the

civil market for economic and human resources with other

industries less fettered by government constraints. Its dual

nature as government and commercial supplier makes the

aerospace industry particularly important to the national interest.

Its technological capabilities influence national security, foreign

policy, the space program, and other national goals. Also, the

efficacy of the national air transportation system depends to

considerable degree on the quality and performance of

equipment produced for the airlines and the airways operators.

The principal civil aviation product is the airline transport.

The traditional and obvious difficulty in this area is the fact that

sales depend on the financial health of another industry - the

world's airlines. The need for new jetliners is evident. The world

transport fleet is aging, and the older, less efficient aircraft must

be replaced.

Before World War II, more than two dozen companies were

in the business of designing and building large commercial

airliners - large at that time meaning 20 seats or more - almost

all for airlines in their home countries. Today, the number of

prime manufacturers of large airliners - and that now means 100-

plus seats - is down to two: Boeing and Airbus.

Since deregulation in the late 1970s, the trend has been

toward less and less differentiation within the airline industry as

the airlines have competed more and more on the basis price and

schedule and as some of the oldest and proudest names in the

industry have disappeared through merger or bankruptcy. In

making their purchasing decisions, the airlines, in turn, have

increasingly focused on a single factor: which of the various

aircraft available to them in a few distinct categories is the low-

cost solution to the task of carrying a certain number of

passengers a certain distance? Each of the two major competitors

strives to enter new markets ahead of the other by developing

new and more cost-efficient aircraft, and each one tries to defend

its markets in the absence of any natural barriers on the strength

of being the low-cost producer.

As Airbus and Boeing continue to compete, they are forced

to develop new products and services that are attractive to an

existing and potential customer base. Both manufacturers are

going head-to-head on development of new aircraft technology

that will revolutionize the future of air transportation.

Although the cost of developing new airplanes is enormous,

the cost of not moving ahead is greater. A company's ability to

maintain its position as a global aerospace manufacturer depends

fundamentally on its capitalizing on new market opportunities. In

instances in which the market is limited or the barriers to entry

are prohibitively high for one company, international

collaboration may be the wave of the future.

This study will facilitate the potential investors from different

airliners to decide in which company they should invest by the

help of the assessment of each manufacturer’s competitiveness.

STATEMENT OF THE PROBLEM

Aircraft companies like BOEING and AIRBUS usually

designed new models of aircrafts to update and modernized the

usability of the aircrafts used in commercial flights for them to

serve the passengers better with ultimate satisfaction. Every

models released and available in the market ensures its viability

to serve its purpose and objectives with the international

community and airline industry who are their target markets and

usual customers.

Airlines are interested to acquire such new aircrafts to

strengthen their competiveness with other airlines and serve

more passengers with additional routes and destinations in order

to have good income. The researcher had made interests in this

study with the objective of determining how much of these

aircrafts are bought every year to serve the capacity and needs

of the airlines operating within their routes.

The researcher will mainly compare the specifications and

features of two aircraft manufacturing companies, the BOEING

COMPANY and the AIRBUS Company for the period between year

2000 and 2011.

The researcher will further determine the quality features of

each designed model and features which are helpful in decision

making for the acquisition of each aircraft models of different

companies.

The researcher will also assess and evaluate the quality,

market competitiveness of BOEING and Airbus Companies in

order to guide the prospective airline investors in coming up with

a good and sound decision for their flight operations.

This study specifically aims to answer the following questions.

1. What are the design features and specifications of the

BOEING and AIRBUS Aircrafts?

2. How reliable are these aircrafts in terms of the following

ASPECTS?”

A. safety

B. efficiency

C. comfortability

D. Cost-effectiveness

E. Range and Durability

3. What are the factors OR ASPECTS OF THE PRODUCT

considered by potential airline investors in the acquisition of

a passenger aircraft?

4. Is there any significant difference in the buying behavior of

airline investors in terms of the following product features

and specifications? :

4.1 Product COST

4.2 Aircraft Design and usability

4.3 fuel consumption

4.4 Passenger capacity

4.5 Low – maintenance

4.6 Easy to operate

4.7 Eco-efficient

4.8 Operability

5. How competitive are the two aerospace manufacturing

companies in the following aspects?

5.1 Products

5.2 Outsourcing

5.3 Use of technology

5.4 Provision of engine Choices

5.5 Low- cost efficiency

6. Is there significance difference between the preferences of

potential investors form different airliners and the aspects

under the aerospace manufacturing companies that they

offer them?

ASSUMPTIONS AND HYPOTHESIS

1. Both of the aircraft manufacturing companies – Airbus and

Boeing – are competitive.

2. There is no significant difference between the preferences

of renowned airplane investors and the aspects that the two

aircraft manufacturing companies offer them.

SIGNIFICANCE OF THE STUDY

The findings of this study are expected to help the following

entities in the field of Aerospace:

1. To the Airline Industries – After the assessment of the

competitiveness of the two major manufacturing companies in the

world, the airliners that usually orders number of aircrafts will now

have an idea on what factors do they have to consider in choosing

the kind of aircraft and deciding where to order those kind of

aircrafts that they plan to buy for the improvement of the air

transportation that they offer to their customers.

2. To the Renowned Investors – This study will help the

potential airplane investors in choosing what kind of aircraft they

will purchase, and in which manufacturing company should they

buy the kind of aircraft that they want.

3. To the Aerospace Engineers – After this assessment, the

Aerospace Engineers will gain an additional knowledge on what

kind of aircraft will they make and should they produce to meet

the preferences of the investors who will probably be their

customers in the future.

4. To the Future Aerospace Engineering Students – All of

the secondary graduates who want to enter the world of aviation

will have the knowledge regarding the two major aircraft

manufacturing companies as well as the aircrafts that they

provide their customers.

5. To the Researcher – After finishing this study, the

researcher will be able to complete the requirements for the

subject AE411: Research Methods and Applications, and ultimately

pass the subject with flying colors..

6. To the Future Researchers – This study will serve as a

guide to the future researchers and this will vary as one of a great

source of information and reference in conducting their studies.

DEFINITION OF TERMS

Aerospace industry -an industry that deals with travel in and

above the Earth's atmosphere and with the production of vehicles

used in such travel

Aerospace manufacturing - involves the manufacturing of

engine components; landing gear, avionics systems, galley

equipment and other components needed onboard an aircraft.

Federal government - a system of government in which powers

and responsibilities are divided into national levels to address

national and regional needs.

Civil market- composed of the totality of voluntary social

relationships, civic and social organizations, and institutions that

form the basis of a functioning society, as distinct from the force-

backed structures of a state (regardless of that state's political

system) and the commercial institutions of the market. Together,

state, market and civil society constitute the entirety of a society,

and the relations between these three components determine the

character of a society and its structure.

Air transportation - the movement of passengers and cargo by

aircraft such as airplanes and helicopters. Air transportation has

become the primary means of common-carrier travelling.

Greatest efficiency and value are obtained when long distances

are travelled, high-value payloads are moved, immediate needs

must be met, or surface terrain prevents easy movement or

significantly raises transport costs. Although the time and cost

efficiencies obtained decrease as distance travelled is reduced,

air transport is often worthwhile even for relatively short

distances. Air transportation also provides a communication link,

which is sometimes vital, between the different groups of people

being served.

Civil aviation – is one of two major categories of flying,

representing all non-military aviation, both private and

commercial. Most of the countries in the world are members of

the International Civil Aviation Organization (ICAO) and work

together to establish common standards and recommended

practices for civil aviation through that agency.

Low-cost producer – is a company that can provide goods or

services at a low cost. In general, low-cost producers utilize

economies of scale in order to execute their strategy of low

prices. Consumers that are sensitive to price changes will more

likely shop at the stores that offer the lowest prices, if the good or

service is relatively homogeneous. Alternatively, low-cost

producers could even price the goods or services at the same

level as their competitors and maintain a wider margin.

Airbus- is an aircraft manufacturing subsidiary of EADS, a

European aerospace company. Based in Blagnac, France, near

Toulouse, and with significant activity across Europe, the

company produces around half of the world's jet airliners.

Boeing- is an American multinational aerospace and defense

corporation, founded in 1916 by William E. Boeing in Seattle,

Washington. Boeing has expanded over the years, merging with

McDonnell Douglas in 1997. Boeing Corporate headquarters has

been in Chicago, Illinois. It is among the largest global aircraft

manufacturers by revenue, orders and deliveries, and the third

largest aerospace and defense contractor in the world based on

defense-related revenue. Boeing is the largest exporter by value

in the United States.

Outsourcing - involving the contracting out of a business

function - commonly one previously performed in-house - to an

external provider. In this sense, two organizations may enter into

a contractual agreement involving an exchange of services and

payments.

SCOPE AND DELIMITATIONS OF THE STUDY

This study will basically focus on the competitiveness of the two

major aircraft manufacturing companies in the world: Airbus and

Boeing, and will it discuss several aspects like the products,

services, market, technological advancements, and efficiency. Its

main purpose is to provide renowned aircraft investor’s insights

as to the feasibility, stability, and profitability of the two

companies which could be used as bases in deciding in which

company they should invest. These renowned investors are

airliners, governmental military organizations, and corporate jet

investors.

The respondents of this study will also be the renowned investors

and this includes the different airliners, governmental

organizations, and corporate investors located Metro Manila.

CONCEPTUAL FRAMEWORK

OUTPUT

Proposed plan for the improvement of Airbus and Boeing’s Strategic Management Program by the help of the aircraft preference of investors and relevant information for the potential aircraft

PROCESS

SWOT Analysis

Interview

Survey

INPUT

- Airbus - Boeing- Aircraft

Investors (Military or Civil)

- Airliners- Airline

Organizations- Airline

Customers- Airbus Strategic

Management Program

- Boeing Strategic Management

FEED

BACK

OUTPUT

Proposed plan for the improvement of Airbus and Boeing’s Strategic Management Program by the help of the aircraft preference of investors and relevant information for the potential aircraft

PROCESS

SWOT Analysis

Interview

Survey

INPUT

- Airbus - Boeing- Aircraft

Investors (Military or Civil)

- Airliners- Airline

Organizations- Airline

Customers- Airbus Strategic

Management Program

- Boeing Strategic Management

CHAPTER 2

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents reading materials which are related

and relevant to the current study. The following related literature

and studies were reviewed by the researcher to establish clear

perspective of the present study.

Airbus versus Boeing Revisited: International

Competition in the Aircraft Market (Douglas Irwin and

Nina Pavcnik - Hanover,NH, 2003)

One of the recurring trade disputes between the United

States and Europe concerns the rivalry between Airbus and

Boeing in the market for wide-body aircraft. Airbus first began

production of aircraft in the early 1970s with substantial financial

assistance from European governments. As Airbus succeeded in

making inroads into many of Boeing’s markets, Boeing alleged

that Airbus benefited from unfair subsidies and has pressured

U.S. trade authorities to counteract Europe’s financial support.

As a result, the United States and European Community signed

an agreement on trade in civil aircraft in 1992 that limited

government subsidies for aircraft production. This agreement,

however, has come under new strain as Airbus introduces the A-

380 super jumbo aircraft designed to compete directly against

the Boeing 747.

Competition in the wide-bodied aircraft industry has

attracted attention not just because of the controversy

surrounding the Airbus subsidies, but because of the industry’s

unusual market structure, in which economies of scale are

enormous relative to market demand. The aircraft sector

provides a textbook example of an industry in which trade policy

could affect the strategic interaction between a domestic and an

international rival and shift profits in favor of the domestic firm,

as proposed in Brander and Spencer’s (1985) canonical model of

strategic trade policy. Previous studies of the commercial

aircraft market, notably Baldwin and Krugman (1987), Klepper

(1990, 1994), and Neven and Seabright (1995), used calibrated

simulations to analyze the competitive interaction of Airbus and

Boeing. These simulations focused on Airbus’ impact on the

costs and profits of its competitors and on consumer surplus as a

way of evaluating the welfare effects of Airbus’s market

presence.

Airbus versus Boeing - Strategic Management Report

Sascha Mayer (2007) provided a Strategic Management

Report with detailed strategic analyses of the dominant civil

aircraft manufacturers Airbus and Boeing. The discussion main

part of the report is separated into internal and external

analyses, which are reasoned in greater detail and supported

with reasonable graphs and tables in the attached Appendices.

Finally, conclusions are drawn as to which is the more strategic

savvy and which company has the more sustainable enterprise;

and there is a recommendation given in which company a

potential investor should rather invest in.

Airbus and Boeing are having a neck-and-neck race in the

aircraft industry for jets over 100 seats between Airbus and

Boeing about the market leadership. After Airbus overtook its

rival the first time in 2001 in terms of aircraft order and delivery,

it stayed in front the last years until Boeing got back on top in

2006. The aircraft manufacturing industry is constantly growing,

a global market and had a size of US$ 63 billion revenues in

2006. It is characterized by high entry barriers and investment in

R&D and by a duopoly with Airbus and Boeing having a market

share of 86% for aircrafts over 100 seats.

At the moment Airbus is in weaker financial position than

its competitor. Boeing had an average year in 2006 with a

moderate and good profitability, whereas Airbus is not in the red,

but it is remarkable that the company had a bad year caused by

the production and delivery problems with the A380, connecting

with the delay compensations. In general, both Airbus and Boeing

experience a strong support by the parent companies, whereas

Boeing’s outstanding and tightened military division strongly

keeps the commercial airplane division on the ground and gives it

an edge.

In terms of product strategy the strength of the one is the

weakness of the other: Boeing found no real answer on the A380

as mega-jumbo, but is highly successful with its B787 in the mid-

size, long-range segment, where Airbus is lagging behind with its

try to catch up through the A350. The market opportunities for

both companies and strategies exist with increasing air traffic,

especially in Asia with its upcoming markets China and India. On

the other side increasing prices for raw materials or indirectly oil

price fluctuations, and the risk of a new external shocks are

threatening the performance.

Boeing vs. Airbus (2010)

The aircraft industry consists in the building and the

manufacture of aircrafts according to several standards and rules

from government bodies. There are two types of aviation: the

military and the civil. There is a high level of competitiveness

because only two builders, Boeing and Airbus, have the ability to

manufacture big aircrafts.

The military aviation industry uses aircrafts in order to

conduct warfare. We can find a high variety of aircrafts like

logistical cargo which provide supplies, or bombers, fighters, and

reconnaissance aircrafts. The aircraft industry provides different

models of aircrafts to answer each military need.

Civil aviation is the non military aviation (both private and

commercial). There are two major categories in this segment: the

scheduled air transport (all passenger and cargo flights operating

on regularly-scheduled routes); and the general aviation (other

private or commercial flights).

A lot of countries all over the word have become members of the

International Civil Aviation Organization in order to establish

standards and practices. We thus find four types of aircrafts. The

bestsellers are the mono-corridor aircrafts that represent about

60% of the sales. The second category is the long-haul which is

destined for specific travel: the Atlantic crossing. The very long-

haul represents the second most important market after the

mono-corridor and deals with flights between the continents.

Lastly, freighters like Boeing 747 or A 380 can transport more

than 400 passengers.

Boeing Versus Airbus: The Inside Story of the Greatest

International Competition in Business (John Newhouse,

2007, USA)

Common wisdom states that Boeing is a commercial airline

powerhouse, manufacturing the world's best planes with state of

the art manufacturing processes, led by a first rate management

staff. On the other side is Airbus, a bit-player whose survival has

only been sustained via state-supported welfare programs, whose

sponsors pour endless funds into this money-losing effort. John

Newhouse (2007) shows how both perceptions are erroneous.

Boeing is far from being the world-class company most perceive

it to be, and Airbus in fact makes some pretty good airplanes.

The issue of Boeing vs. Airbus is one with significant

consequences, and with a significant amount of interviewing and

research, Newhouse has written a fascinating and rewarding work

on this most important topic.

Newhouse notes that when Airbus outsold Boeing in 2004

and 2005, the root cause of this historic juxtaposition was that

Boeing's troubles were the result of a number of factors; from

their arrogance, a tendency to rest on their laurels, taking their

customers for granted, combined with a corporate culture

enmeshed in politics.

Boeing then realized the depths of its problems and

attempted to change its course. This combined with bad-luck and

mismanagement at Airbus, contributed to Airbus finding itself a

distant number two in 2006. So much so that Airbus NA President

Henri Courpron lamented that Airbus failed to manage being

number one. Airbus made the same mistake Boeing made earlier;

they got caught looking back, not ahead.

Newhouse notes that the success of Airbus was not that it is

inherently lucky or unlucky. Rather, Airbus was building very

good airplanes and doing in a less expensive manner than

Boeing, and with a much smaller workforce. Airbus basically took

pages from Boeing's playbook and beat them at their own game.

For years, Boeing has complained that government

subsidies gave Airbus an unfair advantage. Boeing has brought

this issue up with various US government officials and has also

taken this issue to the WTO. Newhouse notes that most of the

arguments on either side of the subsidies question were complex,

often more than a little contrived, and often unconvincing. It is

Newhouse's opinion that Boeing was mistaken in constantly

bringing up the subsidy issue, especially when the situation and

timing was irrelevant.

On the other side, Airbus has long contended that Boeing

receives similar government support, albeit in a different manner.

Airbus maintains that US technology flows back and forth

between the military and civilian sectors, with Boeing as the main

beneficiary.

The deregulation of the airline industry was a double-edged

sword, in that it caused huge growth and huge orders for Boeing

and Airbus. But mismanagement by the major carriers combined

with the low-cost of the LCC, created numerous headaches for

both Boeing and Airbus.

Newhouse also notes that legacy union rules have hurt the

major carriers and directly helped the LCC. Since the LCC are not

saddled with austere work rules, they are able to offer quicker

turnaround times on their flights, in addition to other secondary

benefits.

Newhouse also clarified some longstanding notions about

Boeing. First off, when most people think of Boeing, they tend to

think of a world class organization. Yet this is not the case.

Boeing, while it makes great airplanes, has not always been a

company without production problems. Similarly, most think that

the 747 is Boeing's most profitable aircraft. But according to

Newhouse, it is the 767-300 (extended-range version) which is

indeed Boeing's most profitable aircraft.

Overall, the story of Boeing vs. Airbus is a never ending and

ever changing battle of pure competition, combined with good

timing and good luck. This battle has been, as Newhouse aptly

describes a "seesaw battle between the world's two remaining

manufacturers of big airliners; mighty Boeing and the arriviste

Airbus, both massive corporations and emblems of national

pride".

Airbus Vs. Boeing - Contrasting Views for the Future

(Supratim, Majumdar, 2006, USA)

Since its inception, Boeing had been enjoying a virtual

monopoly in the commercial aircraft industry, but was threatened

by the advent of the European aerospace company, 'Airbus

S.A.S.’ (Airbus), in 1970. Since then, Airbus gradually achieved a

leadership position in the market by dint of its innovative

technologies and government funding. For the first time in 2003,

Airbus became the world's largest manufacturer of commercial

aircrafts.

The competition among the two companies, attained a new

dimension in 2000, when Airbus announced the development of

the world's biggest passenger plane - the A380. Airbus touted the

A380 as the future of commercial aviation, as it envisaged a huge

demand for larger aircrafts. In contrast, Boeing asserted, that

smaller and faster aircrafts would rule the market. In keeping

with this, Boeing announced its plans to develop the 7E7

Dreamliner.

Analysts felt that if the A380 failed, it would become a

burden as Airbus had invested billion dollars on this model. This

case study offers a discussion on the factors that have driven

Boeing and Airbus to adopt different strategies and whether

Airbus would proceed with the huge investment, amidst the

uncertainty in long-term demand. The case provides a detailed

account of the structure of the commercial aircraft industry and

the prevalent nature of competition.

WTO delivers verdict on Airbus vs Boeing

(GENEVA) - The World Trade Organization delivered a

crucial report Monday on the long-running EU-US battle over

subsidies to Boeingand Airbus that the European aircraft maker

said vindicated the EU complaint.

But Boeing quickly rejected that conclusion, saying the

report was a "sweeping rejection" of the European allegations of

illegal subsidies.

The WTO provided its confidential report dealing

with Airbus's charges against Boeing to the US and EU

governments.

Under WTO rules, the report is supposed to remain private

until its public release, expected in a few months.

But both Airbus and Boeing, as well as the EU, were quick to

claim victory in the seven-year dispute over multibillion-dollar

subsidies.

"We welcome the WTO panel's confirmation of its initial

findings regarding the support provided to Boeing by the US

government," EU trade spokesman John Clancy said in a

statement.

"This solid report sheds further light on the negative

consequences for the EU industry of these US subsidies and

provides a timely element of balance in this long-running

dispute," he added.

The United States criticized the EU for commenting on the

report and said it would provide its own "detailed views" on the

report when it is publicly released.

"Under WTO rules, the report remains confidential until it is

translated and released to all WTO members," Nefeterius

McPherson, a spokeswoman for US Trade Representative Ron

Kirk, said in an email.

"Despite that the EU has publicly commented on the report,

at this time we will simply say that the United States is confident

that the WTO will confirm the US view that European subsidies

to Airbus dwarf any subsidies that the United States provided

to Boeing."

McPherson noted the report would be made public after it

has been translated into French and Spanish. "The WTO has not

indicated how long this will take, but given the size and

complexity of this report, that process could take two or three

months," she said.

The report is the latest twist in the subsidies war. A WTO

ruling last June partially upheld Washington's parallel complaint

against subsidies for Airbus, the France-based aircraft unit of the

European Aeronautics Defence and Space Company (EADS).

The Geneva-based trade referee is already hearing an

appeal by both sides against the June ruling.

Airbus said the latest WTO report backed its allegations and

estimated it has lost at least $45 billion in sales due to the illegal

aid.

"Today's World Trade Organization decision

confirms Boeing has received massive and illegal government

subsidies for many decades, and they have had a significant and

ongoing negative effect on European industry," Airbus said.

While not giving the details of the ruling, the European

Commission said the probe found that Boeing's receipt of

research and development funding from US government bodies

had had "negative consequences" for Airbus.

"Airbus applauds the excellent result achieved by the

European Commission and the member states," said Rainer

Ohler, Airbus's head of public affairs.

"From today, Boeing can no longer pretend that it doesn't

benefit from generous and illegal state subsidies. It has been

doing so from the start and it's time to stop the denial," he said.

"The myth that Boeing doesn't receive government aid is

over and we hope this sets the tone for balanced and productive

negotiations going forward."

Boeing countered that the WTO had issued a "sweeping

rejection" of European Union claims it had received illegal

subsidies.

"Today's reports confirm the interim news from last

September that the WTO rejected almost all of Europe's claims

against the United States, including the vast majority of its R&D

(research and development) claims -- except for some $2.6

billion," Boeing said in a statement.

"This represents a sweeping rejection of the EU's claims."

"Nothing in today's reports even begins to compare to the $20

billion in illegal subsidies that the WTO found last June

that Airbus/EADS has received," Boeing said.

"The WTO's decisions confirm that European launch aid

stands alone as a massive illegal subsidy only available to Airbus,

which has seriously harmed Boeing, distorted competition in the

aerospace industry for decades, and resulted in the loss of tens of

thousands of good-paying US jobs," the Chicago-based aerospace

and defense giant said.

Airbus A380′s competitor – New Boeing 747-8 completes

first flight

Seattle (RPO). Almost 42 years after the original, the latest

version of the Boeing jumbo jet completed its first flight. The

passenger version of the 747-8 arrived on Sunday after a four

and a half hour test flight safely on the test track of the aircraft

manufacturer in Seattle.

The 747-8 Intercontinental has room for 467 passengers, 51

more than the old version. Manufacturer Boeing promises more

convenience to travelers and airlines lower fuel consumption.

Lufthansa has ordered 20 pieces and is the first airline that

places the new jumbo early next year in service.

The jumbo jet is in operation since 1969 and was due to its

distinctive shape to the famous model of the U.S. aircraft maker.

By 2005, it was also the world’s largest passenger aircraft. At that

time, the European competitor Airbus A380 double-decker

brought to the market, which offers space for 525 passengers.

The cargo version of the 747-8 series completed in early

February after a long delay its maiden flight.

Airbus versus Boeing Revisited: International Competition

in the Aircraft Market - By Douglas A. Irwin & Nina Pavcnik

This paper examines international competition in the

commercial aircraft industry. We estimate a discrete choice,

differentiated products demand system for wide-body aircraft and

examine the Airbus-Boeing rivalry under various assumptions on

firm conduct. We then use this structure to evaluate two trade

disputes between the United States and European Union. Our

results suggest that the aircraft prices increased by about 3

percent after the 1992 U.S. -- E.U. agreement on trade in civil

aircraft that limits subsidies. This price hike is consistent with a

7.5 percent increase in firms' marginal costs after the subsidy

cuts. We also simulate the impact of the future entry of the

Airbus A-380 super-jumbo aircraft on the demand for other wide-

bodied aircraft, notably the Boeing 747. We find that the A-380

could reduce the market share of the 747 by up to 14 percent in

the long range wide-body market segment (depending upon the

discounts offered on the A-380), but would reduce the market for

Airbus's existing wide-bodies by an even greater margin.

Airbus Vs. Boeing The Case Study -Jimmy Jones (University of

Phoenix) 

The case “Boeing vs. Airbus: Two Decades of Trade

disputes” deals with the dispute that has existed between the US

aircraft giant and the European Aircraft manufacturing giant.

Boeing has 57,000 workers in Seattle and an additional

100,000 employees in the country. Boeing has also provided

600,000 employments nationally and it is considerd to be a big

force in US economy. Boeing attained its main competitor

McDonnell Douglas and merged as one in 1996.

Airbus is a European manufacturerof commercial airline and

its backed by four European countries. Airbus was originally a

minor contestant in the airline market and was believed as

improbable to face up to U.S. control. However, in early 2000

Airbus has tranfered itself to a major corporation from an

association. And in 2003 the company exceeds Boeing in delivery

of aircrafts.

Legal Issues:

To understand the problems in this case it is important to

mention 4 points about the airline manufacturing industry and

why only few competitors can exist in this market:

1) High Development costs involved in manufacturing aircrafts 

2) Levels of breakeven that amount to a considerable

proportion of global demand

3) considerable familiarity of level curve necessary for

corporations to reach point of breakeven levels and

turnovers

4) Unstable demands due to factors like fuel pricing, inflation,

etc.

After the success of the Airbus, the US officials and

government criticized the heavy subsidies that Airbus had gained

from the four European countries: Germany, Spain, England, and

France.

Boeing vs. Airbus: Fighting the Last War -by Gary Clyde

Hufbauer, Peterson Institute for International Economics,

Op-ed in Handelsblatt

Generals are often chastised for fighting the last war, but

corporate CEOs are capable of the same folly. Boeing and Airbus

have sparred with one another since the 1970s—a private Thirty

Years War, so to speak. The battlefield today is entirely different

than in 1979, but the antagonists are the same. William Boeing

created his namesake company in 1916, the beginning of the

aviation age. From the get-go, Boeing was favored with federal

contracts, usually with a military flavor. The Airbus consortium

was launched in 1969 with generous public assistance from

Germany, France, Spain, and the United Kingdom, long after

Boeing had established a commanding lead in large civil aircraft.

European governments entertained two central goals for

the Airbus consortium: to maintain a strong presence in a

promising high-tech industry and to ensure competition in the

world market for large civil aircraft. Public assistance was

justified, so the Europeans argued, because Boeing (and a few

other firms) had been nourished for decades by military contracts

that fostered civil aircraft.

Since Airbus was created to compete with Boeing, it is

hardly surprising that the firms and their governments did battle

on both commercial and legal terrain. The commercial battle was

fierce enough. The order book for large aircraft is a roller coaster

all its own. In the 1970s and 1980s, US aircraft firms snared more

than three-quarters of world sales for large civil aircraft. In the

1990s, the popular A300 series, launched with public support, put

Airbus in the lead. In the 2000s, Boeing took steps to regain the

top spot with its 787 model, while Airbus stumbled badly with the

delayed debut of its A380. 

Airbus leads Boeing in aircraft orders in the first half -

MADRID, 7 Jul. (EUROPA PRESS) –

Airbus has received orders for the manufacture of 640

aircraft in the first half, winning 534 orders between June and

July, with 777 new orders and 137 cancellations, compared with

171 new orders for its U.S. rival Boeing, which suffered up to 59

cancellations, according to statistics provided by both

manufacturers.

EADS matrix scored the first six months in deals worth U.S.

$ 122.732 million (85.533 million euros) thanks to the launch of

its new A320neo, which prompted Airbus orders until May when it

was Boeing that exceeded that of Europe.

Specifically, Airbus reported 571 orders through June of the

A320 valued at U.S. $ 48.535 million (33.824 million euros), but

faced 79 cancellations this model.

Also accounted for 54 A321 orders of $ 5383.8 million

(3,750 million), 11 A330-200 valued at 2208.8 million dollars

(1,538 million), three A330-200F by 610, $ 8 million (425.5 million

euros).

Also added orders for six A350-900 valued at 1605.6 million

(1118.5 million) and 37 A330-300 by 8232.5 million (5.735 million

euros) and closed orders for A380 for $ 750.6 million (524 million

euros).

Cancellations affected European manufacturer 10

‘superjumbo’ A380, 79 A320, 12 A330-200F, 24 A350-900, six

A319s, three A318s and two A330-200 on the backlog. Such

cancellations would of course leave to enter some 14.211 million

dollars (xxx million euros) to Airbus.

For its part, Boeing reached settlements amounting to

42,638.6 million (29,713.9 million euros). As of June completed

the sale of 104 737, amounting to 8923.2 million (6218.3 million),

four 747 worth 1277.2 million dollars (890 million euros), 13

aircraft of the 767 amounting to 2347.8 million dollars (1.636

million euros) and 70 of the 777 worth 19.887 million dollars (xxx

million).

Cancellations also affected its flagship model ‘Dreamliner’,

with 20 cancellations for the 787, which added to the 37 737′s

and two 777′s fail to enter supposed 8104.8 million (13.858

million euros).

Until June Boeing has made 22 deliveries, 181 of the 737

aircraft, nine 767s and 32 777, compared to 1258 of Airbus,

including 10 ‘superjumbo’, 46 A330/340 aircraft family and 202

single-aisle.

Airbus-celebrates-its-40th-anniversary-in-style-boeing-

outsold-and-overtaken-again

It has been announced by Airbus, that going into this year

2011 –in which it will celebrate its 40th anniversary –  its sales

overtook its fierce rival Boeing with a total sales order book of

510 airplanes – this figure being an accumulation of all aircraft

types.

Airbus last week also celebrated its 10,000th aircraft sale

when it announced an almost 4 billion Euro order for its new re-

engined best selling product – the A320 – from the US company

with British roots,  ‘Virgin America’.

This means that the European company surpassed Boeing

again with 52 % share of the 2010 world’s market for large

commercial aircraft.

With its order-book of 574 planes, Airbus more than doubled

2009’s numbers, the annual turnover for Airbus stands at circa 40

billion Euro which makes 2010 results much better than

expected.

Firm orders for the A380 the largest passenger aircraft in

the world  - which curiously Airbus first proposed to build in

partnership with Boeing but which Boeing rejected –  now number

240 from 18 customers – with 40 planes already in service.

This flagship of the European airplane manufacturer is

competing directly head-on with Boeing’s own new B747-800

which is still in flight testing mode.

The airline business is very fickle and buyers move with

their feet very quickly when it appears that one aircraft has even

the slightest of economic advantages over a competitor.

It seems that the market place is deciding in favour of the

A380 and that Boeing’s decision to compete head-on with an  up-

graded version of an older plane – despite being re-winged and

re-engined - was the wrong one.

A recent order by Korean Airline Asiana for 6 of the jumbo

jets – with options for others shows that this will be a difficult

competition for Boeing to win.

This recent order –along with in as of yet unconfirmed order

from Japan for 15 of the A380 for Skymark airlines – is an

endorsement of the Airbus A380 as the most efficient plane to

meet demand on the world’s most heavily travelled routes –

namely those traversing the busy Asia-Pacific region.

Most respected and established long-haul international

airlines, the market leaders - those that matter the most – are

choosing the European product over the American one.

Berlin visitors – and many guests of ‘OTA-Berlin - the

intelligent Apartment Alternative to Hotels in Berlin’ arrive in

Berlin on Airbus aircraft at both Berlin airports.

Airbus vs Boeing: The Subsidy Wars (2005)

Authors: Sardhi Kumar Gonela & Sumit Kumar Chaudhuri

The competition between Airbus and Boeing has taken a

new course in 2005, when both have taken centre stage at the

World Trade Organisation (WTO) over the subsidies. The

European Union (EU) and the US filed suits with the WTO

accusing each other of the subsidies that they have given to

Airbus and Boeing respectively. The Airbus-Boeing dispute,

pending at the WTO, is a unique trade dispute as neither say that

they have not subsidised, instead both parties question the

amount the other has provided. Both defend the charges saying

that the aeroplane manufacturing is exorbitantly expensive and

highly risky, while The Economist maintains that both parties are

at fault, as neither of the companies requires subsidies in the first

place and capital markets finance far more risky projects.

Pedagogical Objectives:

To discuss the various challenges faced by European

economy in the wake of ageing population.

 Airbus-Boeing dispute, Government and Business

Environment Case Study, International subsidies, subsidy, GATT

(General Agreement on Tariffs or Trade) and WTO (World Trade

Organisation), Subsidies in large civil aircraft industry, Boeing

and Airbus subsidy, Subsidies in US and EU (European Union),

Prohibited subsidies at WTO, Government aid to airplane

manufacturers, Boeing and Airbus allegations at WTO, Global

civil aircraft industry, Subsidies and world trade, Suits at WTO.

Airbus vs Boeing: as the transatlantic spat escalates, the

recriminations grow.

The A380 is finally flying and the B787 Dreamliner is due

late 2011 with a smaller footprint that could find favour in a tight

travel market. Boeing unveils its even bigger 747-8

Intercontinental. And China fields the diminutive ARJ21. Here's

David and Goliath.

ONE IS BIG AND FAT with all the polish of a portly dowager.

Critics describe her as a “dinosaur”. The other is sleek, pretty,

and quick, and capable of long outings, but derided as

incontrovertibly “plastic”.

Who would you pick for a snog or, in this case, a transpacific

flight? With the much-delayed rollout of the Airbus A380

behemoth, the gloves have come off as Boeing prepares for the

arrival of its very own, equally delayed, B787 Dreamliner.

What’s the fuss? Airbus has opted for a super size aeroplane

that will render the stalwart B747 all but obsolete, transporting a

vast scrum of bodies in one neat package. While offering 49

percent more room than a Boeing 747, the Airbus 380’s

operating costs are cited at around 15 to 20 percent lower per

seat.

Add to this claims of fewer emissions, less noise, and a seat

capacity stretching from the median 555 to a staggering 800

(double the heaving bottoms on a B747), and it’s small wonder

airline accountants are beaming. Airbus claims its plane is more

fuel efficient than a car. This shall be put to the test as fuel prices

remain irksomely unpredictable, having crossed a wallet-

thumping US$140 per barrel in the not too distant past.

The real test of the pudding is in the flying. On 4 November,

2010, a Qantas A380 suffered “catastrophic” engine failure over

Batam, Indonesia, as one of its Rolls-Royce Trent 900 engines

broke its casing, damaging the wing and forcing an emergency –

but safe – landing in Singapore. Qantas swiftly grounded its entire

A380 fleet and SIA ordered checks. Generating 72,000 pounds of

raw thrust this is among the most powerful engines in the world

designed for the largest airliner in the world. The spotlight has

swung on Rolls-Royce. As many as 20 of the 37 Airbus 380s

currently in the air are powered by the Trent 900. This is not the

first problem with the Trent 900 engine. Lufthansa had an issue

at Frankfurt and Singapore Airlines reported an incident at Paris.

Lufthansa, Qantas and SIA are the only three airlines with this

engine (GE is the other supplier). And, during ground testing in

August, 2010, a turbine issue caused an engine failure with the

Trent 1000 destined for the B787 assembly line.

Again, as global travel declines with a volatile global

economy and recession, airlines are rethinking their aircraft

orders. THAI Airways canned its ultra-longhaul A340-500

Bangkok-New York JFK service in July 2008 citing soaring fuel

costs that rendered both the route and the aircraft,

uneconomical. In June 2009 the airline announced it wished to

cancel an order for six A380s. It later pressed for a delayed

delivery after Airbus took umbrage.

Indeed, a depressed travel market could favour the B787,

which has the edge on fast-turnaround routes and a handy,

manageable size that will not resound with emptiness as pin-

stripers switch to video conferencing and leisure travellers turn to

TV. This, despite repeated delays and a late 2010 or early 2011

delivery to B-787 launch customer All Nippon Airways (ANA). This

could be put back further as an engine fire during testing means

parts of the electrical system need to be redesigned. On 15

December, 2009, the B787 gracefully took to the skies on

its maiden test flight, cut short by rain.

With around US$10 billion spent on its development by

Boeing, this composite material ultra-light fuel-efficient aircraft

hopes to revolutionise point-to-point services. Boeing says the

aircraft willreduce fuel consumption by 20 percent and

operating costs as a result by 15 percent. Small is now beautiful.

Contemplating a mammoth 150 wide-body aircraft replacement,

United Airlines has shied away from the B747 and the A380 to

explore smaller twin-engine aircraft announcing, on 8 December,

2009, its intention to purchase 25 Boeing 787 Dreamliner planes

and a further 25 A350 XWB aircraft.

UA has an option on a further 50 airplanes from each

manufacturer. By mid-July, at the Farnborough Air Show where

the B787 Dreamliner made its first international appearance,

Boeing already had 860 firm orders in. On paper at least, this has

to be a commercial coup.

Airbus dawdled long months on the assembly line. The

dinosaur was late. Singapore Airlines, the launch customer

received its first Airbus A380 in October 2007, a full year behind

schedule leading to question marks regarding customer loyalty,

final orders, and price reductions as compensation. (SIA's

inaugural flight was globally auctioned for various charities and

its first commercial route was Singapore-Sydney. Flights to Hong

Kong commenced July 2009, adding to long-haul points, London,

Tokyo and Paris.) The behemoth is in the air.

By mid-July, 2010, at the Farnborough Air Show, Boeing

already had 860 orders for the B787, a commercial coup

The SIA A380 carries just 471 passengers (not the sweaty

800 of journalistic scuttlebutt). In addition to 12 partitioned suites

in a grade beyond first class – where a double bed can be created

for passengers travelling together who might thus fully enjoy the

feel of Givenchy linen aloft – the 60 business class seats on the

upper deck recline fully flat and offer USB ports, in-seat power for

a laptop and a 39cm (15.4-inch) LCD video screen.

The seat width is 86cm or 34 inches with a forward-facing

configuration of 1-2-1 permitting aisle access from every seat.

SIA wants 25 planes. The first Emirates A380 arrived in late July

2008 and orders for a full complement of 58 superjumbo aircraft

by 2013 are in the pipeline. in June 2010 Emirates placed a

further order for 32 Airbus A380s valued at US$11.5 billion.

Qantas, the Australian national carrier received its first

aircraft late September 2008, two years off the original delivery

date. Virgin has announced holding back its purchase of six

A380s for four years until 2013, FedEx cancelled its order of 10

Airbus A380 aircraft, opting instead for the Boeing 777 freighter

version, and UPS has placed its order on hold. Kingfisher from

India has deferred delivery of five A380s. Yet Airbus has clung on

gamely. At the July 2008 Farnborough Air Show, Etihad weighed

in with a 55 aircraft order with Airbus including 10 new A380

planes.

The new Korean Air A380 shakes up Asian skies

dramatically with Hong Kong and Tokyo services (17 June, 2011)

offering a unique configuration – the entire upper deck the

preserve of executive travellers with 94 Prestige Sleeper seats.

The aircraft will also have the lowest number of seats in all, just

407, creating a lot more stretch space to banish DVT.

On the other side of the Atlantic, the Boeing 787

Dreamliner has had a fast take-off with sales. By June 2007 it

secured a tentative order for 50 aircraft from an aircraft leasing

company. In October 2007 British Airways announced one of its

biggest fleet orders in a decade with a mixed purchase of 12

Airbus A380 aircraft and 24 Boeing 787 Dreamliners. Said the BA

Chief Executive Willie Walsh: "These aircraft set the gold

standard when it comes to environmental performance." Yet, by

July 2009, an embattled BA, coping with a travel slump, had

announced it would hold back delivery of 12 Airbus A380s. By

early 2011, the B787 had about 840 orders on the books, the

bulk of them for the 787-8 version. The A380 had firm orders for

almost 250 aircraft.

Does physical size matter? The new, and

larger, Airbus wing design ensures future versions of the aircraft

can handle a total weight of up to 750 tons. This means the

US$280m A380 will achieve optimum cost-efficiency carrying

closer to 800 passengers. That’s a lot of beers and queues for the

toilets – on two floors. Not perhaps what passengers want to

hear. Of course, most airlines will opt for a more sensible seating

configuration. Singapore Airlines offers 471 seats and a standard

configuration is 555 seats. Assembly is a major production, one

dogged by technical glitches, including engineering delays as the

aircraft carries hundreds of kilometres of wire that have to be

painstakingly fed through various parts of the frame.

It is a beast of a carrier. Airports everywhere are quailing at

the prospect. Heathrow’s Terminal Three has undergone

expensive redesign to accommodate the Airbus A380 and

Emirates has introduced oversized ground equipment in Dubai at

its dedicated new Terminal 3, which offers five aerobridges to

suck out passengers from the Super Jumbo Airbus A380. The new

aircraft is a space guzzler. It needs more runway to clear the

ground, more taxiway for the sweep of its enormous 79m

wingspan, and boarding gates need re-jigging to deal with the

logistics of deplaning a swarm of passengers from a towering

double-decker. On 12 April, 2011 the wingtips of a taxiing Air

France A380 at New York’s JFK, struck the tail of a Delta

commuter Comair flight, spinning the smaller plane around.

The A380 coliseum has failed to materialise, disappointing

those who would love to toss all airline chefs to the lions

Boeing believes large capacity aircraft flying to big,

overcrowded, dispersal “hubs” are passé. Travellers want speed,

frequency, and direct connections. The B787

Dreamliner (formerly the B7E7) is the result of Boeing’s new

preoccupation. The aircraft is swift and fuel efficient, with a

cruising speed of Mach 0.85. It is smaller and can access regional

airports without fuss. It also has a range that can extend to

16,000km carrying about 280 passengers. The good news for

passengers is the B-787 is pressurised for a lower altitude and

with higher cabin humidity, which means you will not arrive at

the other end looking and feeling like a desiccated peanut.

Fast the aircraft may be but assembly has proved a

headache. After three announcements on production delays,

Boeing announced in early April 2008 that the plane would not be

certified and delivered until late 2009 to its first

customer, ANA (with 50 aircraft booked). Test flights were

scheduled for late 2009 with actual delivery to ANA pushed back

to later in 2010. The September 2008 Boeing machinists strike

didn't help the timeline either. Delivery has been pushed back

further after an engine fire during late 2010 testing. Parts of the

electrical system now have to be redesigned. The B787 delivery

delays have left customers and Boeing red-faced as Air India, Jet

Airways, Air New Zealand, Japan Airlines, and ANA consider

compensation. Qantas (65 planes booked in the first batch)

sought financial redress and in June 2009 cancelled an order for

15 B787s with deferred options on a further 15. The short-range

B787-3 is the worst affected and will turn up last, furthering the

woes of main customer All Nippon Airways. Taking advantage of

the melee, China Southern in April 2009 announced it wanted to

delay delivery of 13 of its B787 Dreamliner aircraft. However,

with the aircraft now airborne, all this could change in the face of

compelling economics.

The B787 has opted for a sweeping archways design and

light diodes in the ceiling that mimic the changing sky colours

As Boeing might ask, do you need to fly a football field

halfway across the world? Many airlines believe so. Some will put

in gyms, bars, casinos, shops, offices and even play areas – but

not for the Mile High Club, whose members will have to fend for

themselves in vast open spaces. The coliseum has failed to

materialise, disappointing those who would love to toss all airline

chefs to the lions, Christian or not. And while a lot of seats can be

crammed into an A380, not all airlines plan to do so.

The Boeing 787 cabin will offer a visually relaxing

“sweeping archways” design, window shades whose opacity can

be altered at the flick of a button, greater humidification of cabin

air, and a sky simulation effect through the use of colour

changing light-emitting diodes in the aircraft ceiling. Aisles will be

wider as will the seats. As with the bigger A380, the B787 is

a very quiet aircraft rated to produce just about a quarter of

the noise of a B747.

It is somewhat ironic that Boeing could have launched the

very first double-decker aircraft over three decades ago. Pressed

by visionary Pan Am founder Juan Trippe for large double decker

aircraft, Boeing responded by designing the widebody B747,

arguing that a two-storey aircraft would be plagued by far too

many limitations.

Today it is more than likely that there is a market for both

products, big and small. But the transatlantic diatribe continues

to escalate. Boeing asserts Airbus has competed, unfairly,

through backdoor European subsidies. Yet, Boeing itself has been

a major beneficiary of state and federal aid with Washington

State bending over backwards to ensure the B-787 plant stays

with them. Much of Boeing’s aircraft design has been a spin-off

from US military-sponsored research.

Meanwhile, rival Airbus keenly aware that Boeing may be

onto something, is also working on a smaller, more fuel-

efficient A350 to compete head-to-head with the B787. But in

early 2011, Boeing, returning to its BIG roots, unveiled the

immense B747-8 Intercontinental, stretching 76m (5.6m longer

than the B747-400) and a redesigned wing, cockpit and interiors

able to fit in 467 seats. Across the Atlantic, customers queuing up

for the A350 rollout include Virgin, Kingfisher, Vietnam Airlines,

and feisty AirAsia (which announced a staggering US$2.4 billion

order for ten A350 planes, the XWB version, at the 2009 Paris Air

Show).

The A350 remains mired in a redesign debate after several

potential buyers felt it compared poorly with the B787. As a

consequence, the A-350 roll-out will also be delayed, giving

Boeing a certain head start in the mid-size market. The new

Airbus A350 will eventually weigh in with a wider fuselage and

expanded wing size. The A350 XWB (or extra wide body) as it

will be termed, will extend the flight range to around 8,500

nautical miles. It will roll out in three versions, the A350-800, the

A350-900 and the A350-1000, that will seat from 270 to 375

passengers. Airbus says this will be one of the "quietest" aircraft,

with low emissions and 30 percent more fuel efficiency.

Now as the China dragon awakes, a new competitor plans to

streak across the horizon, bidding for a share of the small jet

market for the expected regional travel explosion. The Chinese

made ARJ21 (literally, the Advanced Regional Jet for the

21st Century) is taking shape in the Shanghai ACAC plant with a

dash of Boeing factory knowhow, huge dollops of government

subsidies and, more recently, a Bombardier stake.

By 1949, Boeing 377 Stratocruisers were plying the North

Atlantic with opulent living rooms for first class

The small ARJ21 will carry between 90 to 105 passengers

serving regional airports in China and beyond. It will be

particularly well adapted for short or high-altitude runways that

require extra power or a sharp rate of climb. The ARJ21 is

expected to take to gain CAAC certification in late 2009. In China

alone domestic airlines are expected to purchase almost 3,500

new aircraft by 2025.

Bombardier's 130-seat Bombardier C130 with a range of

1,800 nautical miles, crosses swords with various small jets

by Embraer.

Was big always beautiful? The prodigious and spectacularly

ill-starred 12-engine Dornier Do-X was the world’s biggest aircraft

in 1929, its hull accommodating a full three floors. The Wall

Street crash ended its career despite a problem-plagued round-

the-world PR stunt that took ten months to accomplish, achieving

little in the end. By 1949, double-decker Boeing 377

Stratocruisers were plying the North Atlantic with opulent digs,

and even living rooms, for first class passengers. No flat seat

hype then. The B377 used real beds. And there was the

memorable Howard Hughes “Spruce Goose” (H4 Hercules) that

took to the skies, briefly, in 1947. This extraordinary flying boat

arrived too late to aid in the war effort – its prime purpose – and

was relegated to museum attraction.

Barring the hugely successful B747, aviation history has not

been kind to passenger aircraft behemoths. Now, once again, we

shall have to wait and see.

Airbus A350 versus Boeing 787: differences and many

similarities

If you removed its name in the spec sheet, Airbus’ forthcoming

A350 XWB (eXtra Wide Body) passenger jet could easily be

confused with its primary rival, the Boeing 787 Dreamliner. It will

take a while before you can easily distinguish one from the other

once they are both regularly in the air.

The A350 will be made from 53 per cent carbon fiber; the

787 is 50 per cent carbon fiber. Both are long range and can fly in

excess of 8,000 miles without refueling. Somewhat bigger, the

A350 will have 270-440 seats to the 787’s is 210-330. Both come

in three models although the smallest 787 may be dropped.

The A350 promises 25 per cent fuel consumption

improvement from its “current long range nearest competitor (it’s

unclear what plane Airbus is comparing the A350 to on fuel

efficiency, but offers it as a replacement for “any [Boeing] 747

operator”); the 787 claims to deliver 15 per cent better fuel

efficiency over the similarly-sized (and aged) Boeing 767.

The 787 has 876 orders from 53 customers while the A350

has 505 from 32 customers (about what the 787 had at the same

stage in its development). The A350 windows are wider; the

787’s are taller.

It goes on and on like that. For the flyer, you say ToeMAYto,

I say ToeMAHto.

Of course, there are major differences.

One area in the A350 that will distinguish it from other

passengers jetliners, though, will be the cockpit which will have

six “very large LCD displays” comprising the flight information

center instead of the 10 found in the A380 super jumbojet (much

of the technology in the A350 was hatched in the A380). Solid

state electronics in the cockpit also reduce the need for the

hundreds of individual circuit breakers typically found in jetliners.

Another difference is that the A350 is still on paper. The first

one won’t roll off the line in Airbus’ new Toulouse, France final

assembly plant until 2011. Airbus expects to enter the A350 into

service in 2013, but if its experience is anything like Boeing’s

with the 787, add two years to that timetable. Some aviation

bloggers say there’s hints the schedule is already slipping.

With any luck, Boeing will ship the first 787 to customers in

the fourth quarter of this year.

Given the scale of investment, the effort to design jetliners

and competition in the same markets, it stands to reason they

are similar in both size and technology. But it doesn’t always

work that way: Airbus developed the huge and less successful

A380 while Boeing concentrated on the more modest 787.

Another major difference is that the biggest model, the

A350 1000, will carry up to 100 passengers more than the

biggest 787. Boeing’s answer to that is the 747-8

Intercontinental, a new model of the world’s first jumbojet.

The A350 will be a lot more expensive than the 787. It lists

for $225-$285 million; At $150-$205 million, the 787 is a relative

bargain. Those prices are usually discounted, but the starting

point for the conversation would clearly seem to favor Boeing

unless the A350 turns out to be that much better.

Buying something as sophisticated as jetliners, however, isn’t just

a head-on comparison of price performance. Years of deal making

includes courtships, politics and occasionally, bribes. Time and

sales wise, though, the A350 has to climb much higher to reach

cruising altitude than the 787 at this point.

One area where I think Airbus is considerably ahead of

Boeing is its web site. Airbus.com is more easier searched and

much more visually pleasing.

CHAPTER 3

METHODS OF RESEARCH AND PROCEDURES

METHOD OF RESEARCH

The researcher will be using the descriptive method of

research for this study. According to Thomson Wadsworth, its

main goal is to describe the data and characteristics about what

is being studied. The idea behind this type of research is to study

frequencies, averages, and other statistical calculations. Although

this research is highly accurate, it does not gather the causes

behind a situation. Since the present study is concerned with the

feasibility and profitability of the two leading aircraft

manufacturers in the world, Airbus and Boeing, the descriptive

method of research is the most appropriate method to use.

Likewise, Descriptive research is used to obtain information

concerning the current status of the phenomena to describe

"what exists" with respect to variables or conditions in a

situation. The methods involved range from the survey which

describes the status quo, the correlation study which investigates

the relationship between variables, to developmental studies

which seek to determine changes over time.

As for this research, the researcher will manage a survey to

a random sample of aviation personnel in the maintenance,

engineering, flight operations, administration, accounting and

planning department of Cebu Pacific Air, Philippine Airlines, Zest

Air, Southeast Asian Airlines, and Air Philippines in order to assess

the feasibility and profitability of Airbus and Boeing.

SAMPLING DESIGN

PARTICIPANTS OF THE STUDY

The research on the feasibility and profitability of Airbus and

Boeing is to be studied with some of the aviation personnel from

Cebu Pacific Air, Philippine Airlines, Zest Air, Southeast Asian

Airlines, and Air Philippines. Systematic Sampling is a statistical

method involving the selection of elements from an ordered

sampling frame. The most common form of systematic sampling

is an equal-probability method in which every kth element in the

frame is selected, where k, the sampling interval (sometimes

known as the ‘skip’), is calculated as:

Sample size (n) = population size (N) / k

Using this procedure each element in the population has a

known and equal probability of selection. This makes systematic

sampling functionally similar to simple random sampling. It is

however, much more efficient (if variance within systematic

sample is more than variance of population).

In systematic random sampling, the researchers first

randomly pick the first item or subject from the population. Then,

the researchers will select each nth subject from the list. The

procedure involved in systematic random sampling is very easy

and can be done manually and the results are representative of

the population unless certain characteristics of the population are

repeated for every nth individual which is highly unlikely.

The process of obtaining the systematic sample is much like

an arithmetic progression.

1. Starting number:

The researchers select an integer that must be less than the

total number of individuals in the population. This integer

will correspond to the first subject.

2. Interval:

The researchers pick another integer which will serve as the

constant difference between any two consecutive numbers

in the progression. The integer is typically selected so that

the researcher obtains the correct sample size.

Primary Sampling Unit (PSU) – The primary

sampling unit of the study is the entire population of

aviation personnel in maintenance, engineering, flight

operations, administration, accounting, and planning

department from the five (5) selected airlines in Metro

Manila which includes: Cebu Pacific Air, Philippine

Airlines, Zest Air, Southeast Asian Airlines, and Air

Philippines. The researcher has decided to select the

airlines that has been operating for more than ten (10)

years in Metro Manila to be considered in determining

the sample to lessen the chances of encountering

difficulties in answering the questionnaires.

Secondary Sampling Unit – The secondary sampling

unit of this study are the aviation personnel in

maintenance, engineering, flight operations,

administration, accounting and planning department

with the ages ranging from 25-55 years old. The

researcher considered the age of these respondents to

lessen the possibilities of encountering some

difficulties in answering the questionnaires that will be

given to them.

Final Sampling Unit – The final sampling unit of this

study are the officers in the administration,

accounting, and planning department from the five (5)

selected airlines. The researcher has chosen to

consider only those people as one of the elements to

be considered in getting the sample needed in this

study.

According to the Westfall Team, care must be taken when

using systematic sampling to ensure that the original population

list has not been ordered in a way that introduces any non-

random factors into the sampling. A computation will be done by

the researcher after gathering the relevant information and data.

After determining the total study population, the researcher

decided to get a sample size of 38 for a sampling fraction of 5%.

To get the sampling interval, the researcher divided the total

study population of the airlines with the sample size of 38. After

dividing it, the answer will be 20 which will serve as the sampling

interval size. This means that every 20th person in the study

population from the administration, accounting and planning

department will be included to be one of the respondents of the

study.

To get the desired sample size of 38, the researcher

multiplied the total population of officers in administration,

accounting and planning department with the desired sampling

fraction of 5 %. The solution for the desired sample size is shown

below:

763 (Total population of Administration,

Accounting and Planning Department officers)

X 5% (Desired Sampling Fraction)

38 (Desired Sample Size)

To get the sampling interval size, the researcher divided the

total population of Administration, Accounting, and Planning

Department officers with the desired sample size.

The solution for the sampling interval size is shown below:

k =total administration, accounting and planning

department officers

Desired sample size

= 763 / 38

= 20 (sampling interval size)

The table below shows the population and its percentage,

the sampling units that were considered, and the distribution of

the respondents showing the sample size.

Airline Population PopulationPercentage

Age(25-55 years old)

Administration, Accounting, and

Planning Department

Officers

Sample Size(5%)

Cebu Pacific Air

800 26.23% 400 200 10

Philippine Airlines

1400 45.9% 700 350 17

Zest Air400 13.11% 200 100 5

Southeast Asian

Airlines

200 6.56% 100 50 3

Air Philippines

250 8.19% 125 63 3

TOTAL 3,050 100% 1,525 763 38

Distribution of Respondents

METHOD OF COLLECTING DATA

INSTRUMENTATION

The researcher will arrange a set of questions for the

interview and questionnaire guides after reading, studying and

analyzing the sample questionnaires and interview guides from

related studies. The questions that will be kept in the

questionnaire guide as well as the questions that will be asked in

the interview will surely answer the specific questions under the

statement of the problem. The final output of the instruments

that will be used for the respondents will be submitted to the

researcher’s mentor for further corrections and clarifications.

To establish the findings of this study, interviews and

questionnaires were used as an instrument which was the means

of collecting basic information concerning the respondents. An

interview was conducted in Cebu Pacific Air, Philippine Airlines,

Zest Air, Southeast Asian Airline, and Air Philippines with its staff

and employees which served as the basic sources of the

information.

According to Bruce Straits, an interview is a conversation

between two or more people (the interviewer and the

interviewee) where questions are asked by the interviewer to

obtain information from the interviewee. In this study, the

researcher are the interviewers, and the employees from the five

(5) are the interviewees. A vigor interview will be conducted by

the researcher wherein he will ask a string of questions based on

his insights.

Interviews are among the most challenging and rewarding

forms of measurement. They require a personal sensitivity and

adaptability as well as the ability to stay within the bounds of the

designed protocol. The interviewer is really the "jack-of-all-

trades" in survey research. The interviewer's role is complex and

multifaceted.

The main advantage of face-to-face or direct

interviews is that the researcher can adapt the questions as

necessary, clarify doubt and ensure that the responses are

properly understood, by repeating or rephrasing the questions.

The researcher can also pick up nonverbal cues from the

respondent, any discomfort, stress and problems that the

respondent experiences can be detected through frowns, nervous

taping and other body language, unconsciously exhibited by any

person.

The interview guide may be modified between the

beginning and the end of the series. When a series of interviews

is conducted after administering the questionnaire, possibly on a

subgroup of the survey sample, the interview guide may also be

adapted for each individual respondent by taking account of

information already provided in the quantitative questionnaire.

For the research study entitled “Airbus and. Boeing: The

More Feasible and Profitable Investment”, the researcher

prepared an interview guide which provide themes or ideas that

can be asked by the interviewer to his respondents to elucidate

that particular subject area. Hence, the interview guide which will

be the instrument for this study will make sure that all the

aspects of the five (5) airlines as well as their employees will be

embarked upon and explicated by the interviewee.

The next instrument that will be used for this study is the

questionnaire method which will be distributed to the aviation

employees from the five (5) airlines to gather the needed data

and information regarding the competency of Airbus and Boeing.

The researcher will prepare a set of questions for the

questionnaire that will be administered to the respondents of the

study.

In this study, the researcher chose to use the Likert Scaling

for the questionnaires that will be given to the respondents. The

Likert Scale is an ordered, one-dimensional scale from which

respondents choose one option that best aligns with their view.

There are typically between four and seven options.

All options usually have labels, although sometimes only a

few are offered and the others are implied. A common form is an

assertion, with which the person may agree or disagree to

varying degrees. For the Likert Scaling, the researcher will use a

5- number option to answer the questionnaire. An illustration is

shown below to further explain the Likert Scale that will be used

and its corresponding equivalent:

RATING SCALE DESCRIPTION

1 Poor

2 Satisfactory

3 Good

4 Very Good

5 Excellent

VALIDATION OF QUESTIONNAIRES

The researcher will then pre-test the sample of the

questionnaires. For the development and validation of

questionnaires, the work entailed in reporting cases must be a

worthwhile contribution to well-designed studies that will not

make excessive demands on the time and goodwill of its

respondents. Therefore, questionnaires should be as brief,

simple, attractive, and user-friendly as possible.

The researcher will then check the questionnaire by the

guide of the following questions:

1. Does this questionnaire identify the variables of interest?

2. How will each of these variables be analyzed?

3. Is a questionnaire the most appropriate way of collecting

this data?

4. Will these questions enable the researcher to distinguish

between the rival hypothesis relating to the research

questions?

5. Has the questionnaire been piloted sufficiently (Usually 5-

10% of sample)?

6. What steps have been taken to measure the reliability and

validity of this questionnaire and are the measurements

sufficient?

7. Is the length of time to complete the questionnaire

acceptable? (In all but exceptional cases this should be 10-

15 minutes maximum.)

8. Will the respondent have access to all the information

required to complete the questionnaire? If not, are the steps

required to obtain that information acceptable?

9. Are any questions unnecessary, repetitive, or inappropriate?

10. Are filter questions clear and employed appropriately?

11. Are the sections/ questions in a logical order?

12. Is the layout compact, not crammed, and attractive?

13. Are closed responses and layout standardized

wherever possible?

14. Are all questions worded in a clear, concise, and

unambiguous manner?

15. Are the instructions meaningful and easy to follow?

After validating the questionnaire, the researcher will then

pick the respondents from the selected five (5) airlines using the

systematic sampling.

DATA GATHERING PROCEDURES

One of the processes that will be conducted by the

researcher is the interview. This will serve as a means to gather

all the relevant information and data for the study. By using the

interview guide, this will help the researcher to have a clear idea

on what problems should be addressed using the information to

be gathered by the interviews that will be conducted. This will

also give the researcher a clear idea on the significance of the

of that interview was made clear to the interviewees before he

meets them.

Furthermore, the researcher will inform all the interviewees

about the kind of questions that will be asked to them, as well as

the duration of the interview. After the interviewees give their

response with the letter of request, the researcher will now

arrange the meeting time by calling the respondents through

phone calls. The interviewee has the right to choose the place to

have the interview; therefore, their request of time, date, and

place should also be honored.

If the interviewee wishes to meet in person, the researcher

will pick a fairly public location, but one with few distractions. The

researcher will also let the respondents know how long he

expects the interview to take. If interviewees will feel most

comfortable being interviewed at their offices, where they are

psychologically at ease, their request will be honored.

After then, the researcher will wait for one week for his

letter‘s acknowledgement. While waiting for the interviewee‘s

response, the researcher will prepare for the actual interview by

reviewing the interview guide, as well as the background of the

study. During the actual interview, the researcher will make sure

that he will arrive on or before the time agreed for the meeting.

Then the interviewer will first introduce himself and purpose of

the interview.

While conducting an interview, the researcher can either

use a voice recorder for the review of the gathered information,

or he can simply take down notes about all the corresponding

answers of the interviewee to the queries. The interviewee will

also leave his contact information in case of additional

information or clarification. The interview guide which was made

by the researcher will be used during the interview point for him

not to miss any information that is needed for the study.

Intermittently, the interviewer will corroborate the voice

recorder from time to time and check if it is still working.

Afterwards, the interviewer will end the interview on an

affirmative note and will ask the interviewee for some additional

statements. Immediately after the interview, the interviewer

will verify the voice recorder and check through the notes taken

during the interview. And lastly, the researcher will also write

down his observations during the duration of the interview.

After conducting an interview, the researcher will now

continue with the next job which is the survey that will be

accomplished with the help of the aviation employees from the

selected five (5) airlines. The questionnaire will be given to 38

respondents for them to answer and fill it up. If the respondents

are done filling up the questionnaire, the researcher will now

conduct an interview with the aviation employees for the

assessment of their answers in the questionnaire.

They will be asked if all the items were comprehensible and

ambiguous to them; if the number of items were sufficient

enough to collect data about all aspects of the feasibility and

profitability of Airbus and Boeing, if questions were appealing and

not tedious; if all the items are objective and not prejudiced

except for a few unavoidable questions; if all items were

pertinent to the research problem; and if the questionnaire was

not too long.

The copies of questionnaire will be then distributed

personally by the researcher to the respondents. The researcher

will wait and allocate a maximum time of ten (10) minutes every

respondent.

STATISTICAL TREATMENT OF DATA

After collecting all the data from the questionnaire made by

the researcher, the following statistical formulas will be used:

Percentage Technique

This was used to determine the magnitude of the

respondents to the questionnaire.

The formula in a percentage technique is:

F

P= ----------- x 100

N

Where:

P = Percentage

F = Frequency

N = Total number of respondents

Weighted Mean

The weighted mean is a mean where there is some variation

in the relative contribution of individual data values to the mean.

Each data value (Xi) has a weight assigned to it (Wi). Data values

with larger weights contribute more to the weighted mean and

data values with smaller weights contribute less to the weighted

mean. (Childrens-Mercy.Org, Online) The weighted mean is

similar to an arithmetic mean (the most common type of

average), where instead of each of the data points contributing

equally to the final average, some data points contribute more

than others. The notion of weighted mean plays a role in

descriptive statistics and also occurs in a more general form in

several other areas of mathematics.

The weighted mean is computed according to the following

formula:

where:

are non-negative coefficients, called

"weights", that are ascribed to the corresponding

values

Only the relative values of the weights matter in

determining the value of the weighted mean. In other words, if

you multiply each weight by a positive value and recalculate

the weighted mean with new weights , then

the value remains the same. The greater the weight in

respect to other weights, the greater the contribution of the

corresponding datum into the resultant value of the

weighted mean. (Statistics, Online)

According to Steve Simon (2004), there are several reasons

why you might want to use a weighted mean.

Each individual data value might actually represent

a value that is used by multiple people in your

sample. The weight, then, is the number of people

associated with that particular value.

Some values in your data sample might be known

to be more variable (less precise) than other values.

You would place greater weight on those data

values known to have greater precision.

On the other hand, for the accuracy and preciseness of the

gathered data in this study, the researcher decided to gather

other useful means. With the usage of the same questionnaire

and instructions for the respondents, there are still some

tendencies that a sampling error might occur. In statistics,

sampling error or estimation error is the error caused by

observing a sample instead of the whole population. Sampling

error comprises the differences between the sample and the

population that are due solely to the particular units that happen

to have been selected.

The variability of a sampling error is measured by the

standard error. The standard error of the mean is designated as:

σM. It is the standard deviation of the sampling distribution of the

mean. The formula for the standard error of the mean is.

where σ is the standard deviation of the

original distribution and N is the sample size (the number of

scores each mean is based upon). This formula does not

assume a normal distribution. However, many of the uses of

the formula do assume a normal distribution. The formula

shows that the larger the sample size, the smaller the

standard error of the mean. More specifically, the size of the

standard error of the mean is inversely proportional to the

square root of the sample size.

In calculating the standard error of this study, the

researcher will use the GVF model for SESTAT (Scientists and

Engineers Statistical Data System). This model is formed for the

variance of the estimate as a quadratic function of the total, or:

where Y is the population total

and is the variance of an estimated total . and are

parameters of the model. (A comparable model found in GVF: A

Methodology for Estimating Standard Errors uses the relative

variance as the dependent variable.) For the SESTAT data, GVF

models were specified for the overall population and for separate

subgroups such as gender, race/ethnicity group, field of highest

degree, occupation, and combinations of these characteristics.

Calculating Predicted Standard Errors for Totals

Use the following equation to calculate a predicted standard

error for an estimated total:

where is the predicted standard error of the estimated total

, and and are estimated parameters obtained from the

appropriate parameter table.

Calculating Predicted Standard Errors for Percents

Use the following equation to calculate a predicted standard

error for an estimated percent:

where is the predicted standard error for a specific

estimated percentage, and is the estimated number of persons

in the base of the percentage. is an estimated parameter

obtained from the appropriate parameter table.

After calculating the standard errors of the mean, the

researchers will then assess the accuracy of the estimates. The

customary approach is to construct a confidence interval within

which one is sufficiently sure the true population value lies. The

standard error of a survey estimate measures the precision with

which an estimate from one sample approximates the true

population value, and thus can be used to construct a confidence

interval for a survey parameter to assess the accuracy of the

estimate. Let be an estimator of a parameter of interest with a

standard error . If the sample size is large, then an

approximate (1- )100 percent confidence interval for is

,

where is the upper /2 percentage point of the normal

distribution with mean zero and variance one.

If the process of selecting a sample from the population

were repeated many times and an estimate and its standard

error calculated for each sample, then:

Approximately 90 percent ( =0.10) of the intervals from

1.645 (= ) standard errors below the estimate to 1.645

standard errors above the estimate will include the true

population value.

Approximately 95 percent ( =0.05) of the intervals from

1.96 (= ) standard errors below the estimate to 1.96

standard errors above the estimate will include the true

population value.

Approximately 99 percent ( =0.01) of the intervals from

2.575 (= ) standard errors below the estimate to 2.575

standard errors above the estimate will include the true

population value.

After the assessment of the accuracy of estimates, the

researcher will use some statistical graphs to establish the

completion of the surveys that were done.

ANALYSIS OF VARIANCE

In this study, the researcher will also use the analysis of

variance to test the hypotheses about differences between the

means. In statistics, analysis of variance (ANOVA) is a collection

of statistical models, and their associated procedures, in which

the observed variance is partitioned into components due to

different explanatory variables. In its simplest form ANOVA gives

a statistical test of whether the means of several groups are all

equal, and therefore generalizes Student's two-sample t-test to

more than two groups. ANOVAs are helpful because they possess

a certain advantage over a two-sample t-test. Doing multiple two-

sample t-tests would result in a largely increased chance of

committing a type I error. For this reason, ANOVAs are useful in

comparing three or more means.

According to Research Consultation, an analysis of variance

(ANOVA) is an inferential statistic used to analyze data from an

experiment that has either multiple factors or more than two

levels of the independent variable. In dissertation data, the value

of any score on a variable may be due to one or more of these

three factors: your independent variable, the individual

differences of your subjects, and experimental error. Within even

the best-designed experiments, scores on a measure will vary

because your subjects are different from one another.

Measurement error, too, will vary, even if all your subjects are

exposed to the same treatment conditions.

Determining Statistical Significance with ANOVA

Total variability in experiment scores can be split into

"between-groups" and "within groups" variability. Between-

groups variability may be caused by the variation in the

independent variable, individual differences in the subjects,

experimental error, or a combination of any of these. Within-

groups variability is often referred to as random or error variance.

This variability is caused by individual differences between

subjects that are treated alike within groups and/or experimental

error.

The ANOVA statistic uses an F-ratio to determine the

statistical significance of the results. The F-ratio is simply the

ratio of between-groups variability to within-groups variability.

Once the researcher has obtained the F-ratio, just compare it to a

table of critical values in any statistics book to determine the

statistical significance of your results. Even better, most

statistical software packages will provide the p-value, so based

on the dissertation's preset alpha level, the researcher can

determine at a glance whether the results are significant.

A one-factor between-subjects ANOVA is used when it

involves only one factor with more than two levels and different

subjects in each of the experimental conditions. For example, say

the question asks how much light a subject needs to read a

sentence out of a book with 12-point font. The researcher has

three experimental conditions. One group of subjects is to read

the sentence in a room with no light at all. Another group of

subjects is to read the sentence in a room with a tea light candle

4 feet away. The third group of subjects is asked to read the

sentence in a room with a 60-watt light bulb placed 4 feet away.

After collecting the data, run an analysis using an ANOVA

and find that the F-ratio has a p-value of 0.03. As the researcher

have set the alpha level at 0.05, the result is significant.

However, this only supports the hypothesis that light is better

than no light. For meaningful findings, the researcher must see if

the experimental manipulations were significantly different from

each other.

In this study, the researcher will prepare an analysis of

variance for the questionnaire. The illustration below shows the

ANOVA for the questionnaire.

SCALE RANGE INTERPRETATION

5 4.5 - 5.00 Excellent

4 3.5 - 4.4 Very Good

3 2.5 - 3.4 Good

2 1.5 - 2.4 Satisfactory

1 0.5 – 1.4 Poor

Moreover, for the statistical treatment of data, the

researcher will use a pie chart for the completion of surveys, and

a bar graph for the answers of the respondents for the questions.