Maybe the answer to all economic problems in this world will be solved by sending more foreign aid. Doesn't that make sense? No, it really doesn't. How come the same conservative Americans who believe that ending poverty in the United States shouldn't be done by the government do believe that this is how other countries' poverty should be ended. We shouldn't be hypocritical people. Giving free money often has negative affects that most people don't see. They feel great about having given money to someone in need (a wonderful thought), but don't realize that they might not be doing as much as they could.
In most cases, education coupled with the free market will drastically bring about good changes in a countries economy. This increase in a countries' economy can bring about real change for its people. Again, I want to stress the importance of the free market. Free market economies are generally strong economies with low levels of poverty. Even devastating poverty in most countries of developed free market economies (particularly those which are industrialized) is much different than poverty of the many African countries that come to mind. Businesses and a strong workforce will bring about a true change. Revenue increases means that job increases will occur, so developed countries must be willing to find businesses that have good products in developing nations.
As far as aviation is concerned, the biggest issue with these nations is that they employ pilots from developed nations to fill the necessary roles.The way to help developing nations will be to educate the people, so that countries can fill their own needs. This means that we must be willing to aid people from these nations get education. This is one of the biggest benefits that we in developed nations have. Education is a gift that we can give to people. It is my hope that people will help pay for kids education in jobs such as aviation, making sure that they go back to their home countries to work. This means that high paying piloting jobs will inject cash flow into the country of origin, while helping the poor work themselves out of poverty. Education within the free market is the key to helping end poverty. Again, I'm not saying we should stop attempting to help, but maybe we should change how we help. Let's provide education where jobs are actually available.
Thursday, May 29, 2014
Sunday, May 18, 2014
A Pilot's Pay
Most people in the general populous believe that piloting airliners from point a to point b, grants them incredibly large sums of money that they can then spend on all the best kinds of vacations on their many days off. This isn't the complete reality. There are pilots who make incredibly high sums of money, and an argument can be made that they are rich. However, even those pilots that make those high sums of money have worked incredibly hard to enjoy the cash that they get. Later on, I will explain why that is. My main concern here is to enlighten people of the difficulties that pilots face today when it comes to making a decent living.
First off, getting hired by an airline is the number one way that a pilot can make a living from the ratings he or she has achieved. However, this is not always easy to accomplish. The airline industry ebbs and flows greatly. There are years where everyone needs to hire new pilots, and other years the need is just not truly there. I was given a union contract information page made for American Airlines pilots which compares different airline's salaries and other items of interests. One of the pieces of information given is pilot retirement rates at American Airlines. The projections of retirement is exponentially increasing for the next few years. This is because many pilots are now reaching 65, the mandatory retirement age. That is good news for me, because when I enter the field, looking for a job, there will be about 560 retirements occurring. This means that I will have more of a chance to get a job for a major carrier without going to a regional airline first.
As I made mention just above, it is important to go to a major carrier if possible as quickly as possible. This is because a first officer (right seat) of a regional airline's aircraft (these are airlines that operate under major carriers names but are not actually the same airline- their liveries are United Express, American Eagle, ect.) might only make about $20,000 dollars a year. That isn't much money, even for a single person, especially when one considers that the costs of learning how to fly is about $15,000 dollars yearly! Not only does one need the flight, but a college degree as well! If someone can avoid these wages by getting a job with American Airlines as a first officer flying their smallest planes, they are paid approximately $85,415 yearly. A captain of the same class of aircraft makes about $125,603.
If a pilot wants to make more money, he must fly bigger planes. That's how it works in this world. That is partially because it takes so much work to gain ratings on larger aircraft. Aircraft weighing over 12,500 pounds require type ratings (licenses specific to each aircraft). This means that extra work must be put in to learn larger aircraft (and those aircraft may take more work to fly). The captain of a 777 for American Airlines makes $234,661 this year. That is a lot of money. Those pilot's are usually the older pilots who have ranked up. Hours gives pilots prestige and choice to fly when and where and what they like. So, not every pilot is getting paid this incredible sum. Next time you fly from Podunk, Kansas to a hub, remember that your pilots might not being making a whole lot, and thank them for their fine landing.
First off, getting hired by an airline is the number one way that a pilot can make a living from the ratings he or she has achieved. However, this is not always easy to accomplish. The airline industry ebbs and flows greatly. There are years where everyone needs to hire new pilots, and other years the need is just not truly there. I was given a union contract information page made for American Airlines pilots which compares different airline's salaries and other items of interests. One of the pieces of information given is pilot retirement rates at American Airlines. The projections of retirement is exponentially increasing for the next few years. This is because many pilots are now reaching 65, the mandatory retirement age. That is good news for me, because when I enter the field, looking for a job, there will be about 560 retirements occurring. This means that I will have more of a chance to get a job for a major carrier without going to a regional airline first.
As I made mention just above, it is important to go to a major carrier if possible as quickly as possible. This is because a first officer (right seat) of a regional airline's aircraft (these are airlines that operate under major carriers names but are not actually the same airline- their liveries are United Express, American Eagle, ect.) might only make about $20,000 dollars a year. That isn't much money, even for a single person, especially when one considers that the costs of learning how to fly is about $15,000 dollars yearly! Not only does one need the flight, but a college degree as well! If someone can avoid these wages by getting a job with American Airlines as a first officer flying their smallest planes, they are paid approximately $85,415 yearly. A captain of the same class of aircraft makes about $125,603.
If a pilot wants to make more money, he must fly bigger planes. That's how it works in this world. That is partially because it takes so much work to gain ratings on larger aircraft. Aircraft weighing over 12,500 pounds require type ratings (licenses specific to each aircraft). This means that extra work must be put in to learn larger aircraft (and those aircraft may take more work to fly). The captain of a 777 for American Airlines makes $234,661 this year. That is a lot of money. Those pilot's are usually the older pilots who have ranked up. Hours gives pilots prestige and choice to fly when and where and what they like. So, not every pilot is getting paid this incredible sum. Next time you fly from Podunk, Kansas to a hub, remember that your pilots might not being making a whole lot, and thank them for their fine landing.
Wednesday, March 26, 2014
Airline Costs and Passenger Costs
The entire system of economics is based upon the trading of objects in order for each individual to benefit in the trade. Today, these trades are made with money. Everywhere you look there are costs. Airline's have to spend huge amounts of money in many different aspects. Passengers have to pay high prices for many tickets, but might might be paying twice the price as the man or woman in the seat next to him. Why is this? The economics of the aviation industry, specifically in the airline business are extremely complicated. However, they can still be dissected.
First off, airlines have huge operating costs. In order to operate an airline, a huge number of employees are absolutely required. We already discussed regulation in the last blog, and that requires huge amounts of money to be spent on checking and double checking aircraft. Airlines must spend millions of dollars on airplanes (for which they must get loans) and in order to fly those planes, spend a high amount of money on jet fuel. A new 737-800 costs 90.5 million dollars, which obviously means that the average aviation enthusiast can decide to start a large airline.Twenty-seven percent of an airline's costs come from the hiring of flight related activities (a relatively small number when considering that is the main goal of an airline). Sixteen percent of an airlines expenses go to all of the work required to move passengers when not in flight (such as loading baggage and checking people in).
Now, consider a large airline such as United. It carries about 45,413 passengers a day to a huge number of varying locations. That means an incredibly large number of employees, planes, fuel, and more. The daily costs of large airline operation is larger than one can really imagine. So, why are ticket prices so high? To turn a profit, airlines must get higher revenue than their costs and that means that a whole lot of money must be brought in daily. Tickets must start at a base price that makes sure an airline can at least brake even. High demand for tickets to a certain location causes prices to be increased. If airlines offer a sale, demand is increased because price is decreased. Also, as the supply of seats gets lessened (closer to the date of the flight), then ticket prices increase. The constant changes of ticket prices online reflect the constant change in demand and supply. After all the revenue is brought in, most airlines only have a one to two percent profit margin, meaning that a huge quantity of tickets must be sold in order to generate profit.
First off, airlines have huge operating costs. In order to operate an airline, a huge number of employees are absolutely required. We already discussed regulation in the last blog, and that requires huge amounts of money to be spent on checking and double checking aircraft. Airlines must spend millions of dollars on airplanes (for which they must get loans) and in order to fly those planes, spend a high amount of money on jet fuel. A new 737-800 costs 90.5 million dollars, which obviously means that the average aviation enthusiast can decide to start a large airline.Twenty-seven percent of an airline's costs come from the hiring of flight related activities (a relatively small number when considering that is the main goal of an airline). Sixteen percent of an airlines expenses go to all of the work required to move passengers when not in flight (such as loading baggage and checking people in).
Now, consider a large airline such as United. It carries about 45,413 passengers a day to a huge number of varying locations. That means an incredibly large number of employees, planes, fuel, and more. The daily costs of large airline operation is larger than one can really imagine. So, why are ticket prices so high? To turn a profit, airlines must get higher revenue than their costs and that means that a whole lot of money must be brought in daily. Tickets must start at a base price that makes sure an airline can at least brake even. High demand for tickets to a certain location causes prices to be increased. If airlines offer a sale, demand is increased because price is decreased. Also, as the supply of seats gets lessened (closer to the date of the flight), then ticket prices increase. The constant changes of ticket prices online reflect the constant change in demand and supply. After all the revenue is brought in, most airlines only have a one to two percent profit margin, meaning that a huge quantity of tickets must be sold in order to generate profit.
Tuesday, February 25, 2014
Government Regulation In the Aviation Industry
Multiple sectors of flight are regulated by the United States federal government. The agency which is in charge of virtually all aspects of government regulation is the Federal Aviation Administration (FAA). Every government regulation on airlines, pilots, and airports flows through them. The most notable regulation imposed on flights are those related to safety. The government has decided what people are allowed to fly airplanes and receive ratings for their work (allowing them to fly certain planes and so on). These rules are imposed in order to protect consumers of airline tickets, as well as to protect the general aviation community. Before 2009, a captain was required to hold an airline transport pilot rating with a minimum of 1500 flight hours (simulator time included) and the first officer only a commercial rating with 200 flight hours. In 2009 a Colgan Dash 8 Q400 flying a United Connections flight went down in Buffalo. The National Transportation Security Board deemed the crash due to pilot error and inexperience. Due to this, all airline pilots (first officer and captain) were required to gain the airline transport pilot rating. Today, this has effected the industry, as many pilots cannot gain the hours they need through a job as they could in the past. The government has had to make exceptions, allowing pilots of certain flight schools (such as Embry Riddle) to gain their rating with only 1000 hours. This is because there are not enough pilots to meet the demands. These changes made in Washington affect many aspects of aviation economics.
Pilot maximum flight hours in a day are also regulated by the FAA. Just last year, these hours were decreased, drastically effecting the entire industry as more pilot's must be hired. This increases costs of tickets and may decrease the amount of tickets bought.
Also, the most notable government involvement in the aviation organization is its employment of air traffic controllers. All air traffic control members are government employees. All airspace is created by the FAA and thus anyone who flies is being controlled by laws created by the US government. If a pilot flies into a class Bravo airspace and contacts approach, he is talking to the government, via an air traffic controller and he is following the government's mandates for airspace. This is not an exceptionally surprising regulation, as all rules governing the roads are also government mandated. However, rules and regulations governing the air are not created by state or local governments but specifically the federal government, keeping things universal whether a pilot is flying over California, Colorado, or Maine. This is direct government involvement of a sector of business, far more than might be expected from a free market economy.
Other regulations involve certain amounts of checks that must be done on equipment and planes in certain time intervals. Also, rules based on what is allowed to be on-board of an aircraft (including cell phone usage) is all mandated by the FAA. Recently, the Federal Aviation Administration had meetings discussing the allowance of technology such as laptops being used throughout an entire flight. The government administration chose to allow passengers to keep electronics on during all phases of flight, assuming that their wireless radios were turned off at all times. It is not Lan, British Airways, or United that chooses what you can use on a flight so much as it is your government. The government has a large amount of power in the world of the aircraft.
Pilot maximum flight hours in a day are also regulated by the FAA. Just last year, these hours were decreased, drastically effecting the entire industry as more pilot's must be hired. This increases costs of tickets and may decrease the amount of tickets bought.
Also, the most notable government involvement in the aviation organization is its employment of air traffic controllers. All air traffic control members are government employees. All airspace is created by the FAA and thus anyone who flies is being controlled by laws created by the US government. If a pilot flies into a class Bravo airspace and contacts approach, he is talking to the government, via an air traffic controller and he is following the government's mandates for airspace. This is not an exceptionally surprising regulation, as all rules governing the roads are also government mandated. However, rules and regulations governing the air are not created by state or local governments but specifically the federal government, keeping things universal whether a pilot is flying over California, Colorado, or Maine. This is direct government involvement of a sector of business, far more than might be expected from a free market economy.
Other regulations involve certain amounts of checks that must be done on equipment and planes in certain time intervals. Also, rules based on what is allowed to be on-board of an aircraft (including cell phone usage) is all mandated by the FAA. Recently, the Federal Aviation Administration had meetings discussing the allowance of technology such as laptops being used throughout an entire flight. The government administration chose to allow passengers to keep electronics on during all phases of flight, assuming that their wireless radios were turned off at all times. It is not Lan, British Airways, or United that chooses what you can use on a flight so much as it is your government. The government has a large amount of power in the world of the aircraft.
Tuesday, February 11, 2014
A Bit About Me
Hello all you who are reading this. I'm almost 100 percent positive that you must be from my class, in which case I need to give you some very important details you might not otherwise know. I don't always share these things with you. First, my name is Levi Keagy. Secondly, I like airplanes. I also like the Denver Broncos Football Club quite a bit, my home state being Colorado. I used to live in the jungle and enjoyed driving dirt bikes and swimming in huge rivers. I am also a heavy consumer of Coca Cola, and enjoy one quite frequently. Thanks for taking your hard earned time to read this.
During this economics class, I will be studying the different economics that drive airline ticket prices and wages. I will also study the ways that various airlines choose to save money in order to turn a profit, and why this task can be so difficult.
During this economics class, I will be studying the different economics that drive airline ticket prices and wages. I will also study the ways that various airlines choose to save money in order to turn a profit, and why this task can be so difficult.
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