Apa style research paper effect of us national economy on us flight school economy

Effect of US National Economy

EFFECT OF US NATIONAL ECONOMY ON US FLIGHT SCHOOL ECONOMY

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(11, March, 2011)

Effect of US National Economy 2

Effect of US national economy on US flight school economy

Abstract

The U.S based flight school s are part of the world’s most advanced aviation training

institutions due to the better training facilities and schedules that they posses, The part 141 flight

school is amongst these institutions. Therefore, the economy of part 141 flight school needs a

high level of stability to maintain the world standards.

This study adopts a survey to explore the effects of US national economy on the aviation

training with the US based part 141 training school economies as the main case. Content analysis

of various US economy related literature has been explored to establish the effects. The results

of the paper shows that the economy of the aviation training schools is cyclical with the US

national economy since the Aviation school economy is a subset of the National economy. The

effects are due to the role of government in the US economy which is crucial when it comes to

decision-making in regard to the monetary and the fiscal policies. The government takes the

necessary initiatives which ensure the growth and stability of the United State’s economy and

hence the economy of the aviation schools. (Soekkha, 1997, Wood, 1947, Sheehan, 2003, Rima,

2000, Wald, Fay, 2011, Forsyth, 2005 & Gleich, 2011).

In the analysis, the US national economy affects the aviation training economy through

the use of the economic tools such as the money supply, the tax rates, and the credit control,

amongst other strategies; it adjusts the rate of economic growth. For the most part, the national

economy also balances the private business concerns in order to enhance its general growth and

prevents monopolies.


The US government renders a number of direct financial assistance services in the form

of providing support for the aviation training, aid for research and the development programs,

and funds for the students’ study loans as well as the general aviation infrastructure in general.

Therefore the aviation training school economy is cyclical with the national economy. However,

the aviation industry in general is countercyclical with the US national economy. (Aud, Et al,

2010)

Introduction

Statement of Null Hypothesis: The National Economy has no effect on the aviation

education industry.

Overview of how the National Economy is defined.

The national economic Performance Measures are the tools that are used to define the

national economy. The performance of national economy can be analyzed by considering the

three areas of production, employment, and national purchasing power, this can be achieved

through the examining the selected time series with data covering a period of time which is

pertinent to each of these areas. The time series forms the principal indicators of the economy’s

performance.

Production

The Gross Domestic Product (GDP) is the measure of economic performance, in

reference to the overall production.

Nominal Gross Domestic Product (GDPN): The measure of production with respect to

the current prices.

Real Gross Domestic Product (GDPR): A measure of production in respect to the prices

of a base year. Real GDP is used in the determination of the performance of the economy on the


production front, because GDPN is not a reliable indicator of production. For instance, While

GDPN is measured in current currency thus it is indicating what is happening to the production

and the prices over that particular time, GDPR is measured in dollars of a base year thus

indicating the variation in production alone because the output is measured in the currency of a

given year, or constant currency.

The Percent Change in the Real Gross Domestic Product (GDPC): it is the measure of

the rate of growth in terms real production for a given year. GDPC the provides the rate of

growth in real production from year to year.

Unemployment

The rate of unemployment is used to measure the economic performance with respect to

the overall employment. The information on Unemployment is used to measure the economic

stability. Unemployment Civilian Labor Force (CVLF) is the pool of labor, which is comprised

of civilians who are either working or seeking work, in the nation’s labor markets.

Unemployment (UNEM) is the subset of the Civilian Labor Force, and it represents people who

are unemployed and still search of work. (Colbert, 2004).

Purchasing Power

The economy is defined in terms of its performance by the rate of change in the Consumer

Price Index with respect to the purchasing power.

The Percent Change in the Consumer Price Index: it is the measure of price stability and

the stability of the purchasing power of a given economy. The Purchasing power is inversely

related to the prices. As overall prices tend to increase, the purchasing power of income tends to

decreases. The CPIC is the year-to year percentage change in the Consumer Price Index.


The qualification used to qualify a school for use in this report.

According to Kudimi, (2008). Choosing a flight training school for use in this report

involves careful research under the consideration of several factors;

a) Level of the aviation school.

The level of the aviation school varies from the state-to-state or country depending on the

economic strength. Therefore it was practical to obtain the levels of multiple schools. There are

two training levels, the Federal Aviation Administrators (FAA) and the CAA. (Bowles, 2000)

The school requirements.

School requirements were Compared, the coursework and training, the entrance

requirement and the certification with various regulations.

b) The school’s reputation

The period that the school has been in business, the rate of enrollment and the

completion. Does the school offer financing, on-campus housing, and so forth? In connection to

financing there is a wide range of financing options, there is a loan scheme which is designed for

the each student in most aviation training schools. Generally, Meeting the expense in the flight

training can be through the bank loans, the student’s loans, the government grants and the

scholarships. Therefore, the students may have to arrange the financing from the multiple

sources. This ensures a student’s ability to complete the training. (Price & Forrest, 2008)

c)The Staff


The training schools to be considered must have enough and qualified staffs, some

aviation training schools have a high instructor to the student ratio and therefore did not qualify.

Qualifying schools had Experienced Heads of Sections, who were backed by teams of competent

lecturers with vast experience in their respective fields. This was necessary in order to keep in

tandem with the global aviation standards as set out by the International Civil Aviation

Organization, the staff must continually evaluate and upgrade the courses’ content material and

the training facilities for the benefits of the aviation industry in general and the students in

particular. (Wensveen, 2007).

d) Training equipment

The training equipment must include ATC Simulators for both radar and the procedural

courses in Aerodrome, the approach and area Control. The Communications Operations Section

must be well equipped with the AMS and the AFS laboratories.

Engineering courses in the aviation training school must be conducted using the most

modern equipment available from the digital techniques and microprocessors to new ILS, VOR,

DME, the Primary/ Secondary Radar and the Computer equipment. (Mark, 2007)

National Economy Review 6.

National Unemployment rates

GDP

Table 1

Table 1

Table 1
Production, Unemployment, in the United States Economy, 1990-2010


YEAR GDPN* GDPR* GDP CVLF UNEM UNER
C

1980 1,039.7 3,578.0 0.2 82,771 4,093 4.9
0 0

1981 1,128.6 3,697.7 3.3 84,382 5,016 5.9
0 0

1982 1,240.4 3,898.4 5.4 7,034 4,882 5.6
0 0

1983 1,385.5 4,123.4 5.8 89,429 4,365 4.9
0 0

1984 1,501.0 4,099.0 0.6 91,949 5,156 5.6
0 0

1985 1,635.2 4,084.4 0.4 93,775 7,929 8.5
0 0

1986 1,823.9 4,311.7 5.6 96,158 7,406 7.7
0 0

1987 2,031.4 4,511.8 4.6 99,009 6,991 7.1
0 0

1988 2,295.9 4,760.6 5.5 2,251 6,202 6.1
0 0

1989 2,566.4 4,912.1 3.2 10 6,137 5.8
0 0 4,962

1990 2,795.6 4,900.9 0.2 106,94 7,637 7.1
0 0 0

1991 3,131.3 5,021.0 2.5 108,67 8,273 7.6
0 0 0

1992 3,259.2 4,919.3 2 110,20 10,678 9.7
0 0 4

1993 3,534.9 5,132.3 4.3 111,55 10,717 9.6
0 0 0

1994 3,932.7 5,505.2 7.3 113,54 8,539 7.5


C

0 0 4

1995 4,213.0 5,717.1 3.8 115,46 8,312 7.2
0 0 1

1996 4,452.9 5,912.4 3.4 117,83 8,237 7
0 0 4

1997 4,742.5 6,113.3 3.4 119,86 7,425 6.2
0 0 5

1998 5,108.3 6,368.4 4.2 121,66 6,701 5.5
0 0 9

1999 5,489.1 6,591.8 3.5 123,86 6,528 5.3
0 0 9

2000 5,803.2 6,707.9 1.8 125,84 7,047 5.6
0 0 0

2001 5,986.2 6,676.4 -0.5 126,34 8,628 6.8
0 0 6

2002 6,318.9 6,880.0 3 128,10 9,613 7.5
0 0 5

2003 6,642.3 7,062.6 2.7 129,20 8,940 6.9
0 0 0

2004 7,054.3 7,347.7 4 131,05 7,996 6.1
0 0 6

2005 7,400.5 7,543.8 2.7 132,30 7,404 5.6
0 0 4

2006 7,813.2 7,813.2 3.6 133,94 7,236 5.4
0 0 3

2007 8,318.4 8,159.5 4.4 136,29 6,739 4.9
0 0 7

2008 8,781.5 8,508.9 4.3 137,67 6,210 4.5
0 0 3


C

2009 9,274.3 8,859.0 4.1 139,36 5,880 4.2
0 0 8

2010 9,824.6 9,191.4 3.8 140,86 5,655 4
0 0 3

GDPN = Nominal Gross Domestic Product in billions of current dollars;
GDPR = Real Gross Domestic Product in billions of chained 1996 dollars;
GDPC = Gross Domestic Product, percent change from preceding year, based on chained 1996
dollars. All production data are
Seasonally adjusted annual rates.
CVLF = Civilian labor force, thousands of persons 16 years of age and over;
UNEM = Unemployment, thousands of persons 16 years of age and over;
UNER = Unemployment rate, unemployment as a percent of the civilian labor force. All lab or
force and unemployment figures are based on seasonally adjusted monthly data.
Definitions of the cycles that have occurred in this time frame.

Overview of the Aviation Flight Training Economy ranging from 1990 to 2010

Student enrolment and graduation rate at the US Aviation Academy.
1991

1992

1993

1994

1995

1996

1997

1998

1999

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011
College of Applie 219 202 186 452 402 395 334 306 63 129 78 65 50 18 32 30 7 28
Aviation d
College
Total
Accepte 102 89 73 100 83 79 95 73 5 43 88 51 42 23 11 6 13 25
d
Enrolle 77 72 61 88 64 63 75 63 23 31 53 42 31 23 27 19 25 24
d
Applie 53 64 54 68 50 52 63 52 35 64 54 68 60 52 63 52 36 52
d
Accepted 29 32 23 23 23 31 18 50 26 42 37 52 55 40 50 48 29 50
Aeronautical
Enrolle 26 30 20 20 21 29 18 40 25 40 36 50 50 40 50 45 26 40
Science d
Aeronautic Applie 13 16 22 19 26 20 23 27 13 14 44 45 59 64 55 68 15 85
al d
Accepte 13 15 20 15 25 15 20 27 13 14 40 40 45 50 50 60 15 40
Systems d
Enrolle 13 5 10 20 15 17 27 10 12 32 30 45 45 45 48 13 35 39
d
Appli 14 8 13 15 14 14 18 21 68 36 32 24 92 36 29 26 41 68
Aeronautics ed
Accept 14 8 12 14 12 13 15 21 47 32 27 23 40 33 26 23 40 47
ed


1991

1992

1993

1994

1995

1996

1997

1998

1999

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011
Enroll 14 8 12 10 10 12 12 14 38 25 27 20 35 31 22 21 39 35
ed
Appli 7 4 17 45 28 49 57 63 77 52 59 68 57 48 49 60 84 65
Aerospace ed
Accepte 7 4 15 40 25 45 50 47 50 49 50 46 51 48 45 52 59 56
Electronics d
Enrolle 5 4 15 40 20 42 49 45 42 45 47 45 49 42 45 48 50 41
d
Appli 98 82 82 66 46 60 42 37 54 84 47 36 61 75 66 79 85 80
Air Traffic ed
Accepte 61 54 60 41 39 56 40 36 50 64 47 36 50 47 53 63 62 65
Management d
Enrolle 60 53 58 40 38 48 40 35 45 51 46 35 50 45 46 51 49 51
d
Appli 92 75 76 59 42 48 38 52 60 62 56 59 73 64 72 82 61 51
Airway ed
Science
Accepte 50 63 65 59 42 48 38 50 57 62 54 57 60 61 59 62 59 51
d
Enrolle 48 56 60 57 41 48 35 45 52 59 53 55 59 60 56 57 56 50
d
Appli 52 39 36 27 16 20 15 19 7 4 4 7 4 80 82 50 51 56
Applied ed
Accepte 52 39 36 27 16 20 15 19 7 4 4 7 4 60 60 50 51 55
Meteorology d
Enrolle 48 39 32 27 15 15 15 18 6 4 4 6 4 55 59 49 50 52
d
Applie 28 35 21 26 22 25 18 26 60 53 83 92 88 95 84 95 66 86
Aviation d
Science
Accepte 25 35 21 26 22 25 18 26 30 35 40 40 45 60 60 60 61 65
Maintenance d
Enrolle 25 32 21 25 22 21 15 24 30 32 35 32 45 50 55 60 59 55
d
Applie 23 24 18 18 19 22 31 18 38 57 84 73 66 60 74 65 73 67
Avionics d
Accepte 23 24 18 18 19 21 29 18 38 40 45 62 55 54 55 60 40 60
Engineering d
Enrolle 23 24 17 15 19 21 26 18 33 36 39 53 51 52 51 53 40 52
Technology d
Applie 14 14 7 9 7 4 5 8 22 35 44 74 75 65 66 68 60 67
Safety d
Science
Accepte 14 13 7 8 7 4 5 8 22 35 42 50 55 65 66 68 60 67
d
Enrolle 14 13 6 8 7 4 5 8 19 34 42 49 54 55 62 66 60 65
d
Applie 23 37 36 39 31 14 67 51 49 54 45 42 56 43 45 43 38 36
Aviation d
Accepte 23 37 36 39 31 14 30 30 32 35 30 32 35 34 38 35 38 36
Management d
Enrolle 21 32 35 32 30 13 26 29 30 33 30 31 32 34 35 32 37 34
d


Outside factors

Student loan/grant availability

During the period most of the years in the 1980s and the 1990s, the United States

Government was faced with a large deficit. The issue of how to reduce this deficit was a

centerpiece of the discussions amongst the economists and the policymakers for more almost 20

years. In the nominal terms, this deficit grew from approximately $53.7 billion in 1980 to $173.0

billion by 1990 it peaked at $297.5 billion by the year 1992. For the period 1993-1997, the

deficit grew steadily smaller. After almost 28 years of deficit, in 1998, for the first time, the

United States budget recorded a substantial surplus of approximately $43.8 billions. For the

consecutive 2 years that succeeded this surplus, the United States budget surplus increased

further, to a high of approximately $119.2 in1999 and consequently to $218.6 in 2000. This rise

in the surplus accounted for the 1.3 percent of nominal GDP in 1999 and the 2.2 percent in 2000,

its largest share of GDP.

These dramatic changes are attributable to an increase in tax receipts from the U.S

expanding economy, however a decline in the expenditures which might be partly due to the

Balanced Budget Act of 1996.The U.S Government budget surplus remained throughout the

projection period, which accounted for 1.4 percent of GDP by the end of the Year 2011. There

are numerous shifts in the composition of the economy over the 2000–10 periods. Transfer

payments are rose to a 51.4-percent share of U.S expenditures up to 2010, this continuing

historical trend also accounted for the 37.1 percent of U.S Government expenditures in 1990 and

42.6% witnessed in 2000. The primary contributor underlying the growth of transfers is the

combined effect of the sectors such as the aviation industry.


Outside Factors

Student loan/grant availability

The figure below shows the distribution of the resources in the U.S and the variation of

the grants (in terms of students tuition and fees) given to the colleges in relation to the Federal

government and the states’ share.

Source: U.S. Government Accountability Office (2010)


The public community college system including the flight schools in the country receives

some level of state support. The survey results as reported by the Education Commission of the

States in showed that majority of the states used funding formulas in the determination of the

amount to be appropriated for the community colleges as a whole, the amount that should be

distributed to the colleges, or both. The states uses the primary elements used in its formulas,

these include; enrollment, space utilization, and the comparison with the peer institutions. The

Community colleges receive less funding for the noncredit academic and occupational training

programs than for the credit programs due to two main reasons. First, is that less than half of all

the states, according to the national surveys conducted under the Education Commission of the

States and National Council for the Continuing Education and Training, have their funding for

the non-credit programs at the community colleges. Secondly, most of the states which provide

the funding for the non-credit programs are based on the numbers of the full-time equivalent

students that provide the funding at the lower rates. Which is generally 50 -75 percent of the rate

that is provided for the credit programs. The survey responses showed that the states can often

provide the lower levels of funding for the courses offered without the college credit in three

areas; the basic skills; noncredit occupational, the professional, and the technical training; and

contract training.

States contribute the largest share of funding for public colleges and student loans

compared with other public and the private funding sources. The State funding policies generally

differ according to the programs. However, the states provide less funding to support the colleges

offering non-credit education and training programs. The overall share of the federal funding to

the aviation training schools has been stable, but comparatively small. The level of the federal


funding that each aviation training school receives depends on its participation in a number of

the grant programs and it may flow directly to schools or indirectly through grants to the states or

through other entities. The State funding is a major source of revenue for the flight colleges for

years. Data collected from the National Center for Education Statistics shows that the share of

revenue from the state governments tended to remain relatively stable for a range between 40

and 45 percent of all revenue from the period 1992-93 through 2000-01. The states provide about

double the amounts received from the student tuition and fees and the local governments, which

forms the other largest revenue sources for the public colleges.

All the public college system in the country receives some level of states’ support.

Survey results reported from the Education Commission of the States in 2000 shows that nearly

29 states make use of the funding formulas in determining the amount that should be

appropriated for colleges involved in training and the amount to be distributed to each college.

The primary elements that are used in the states’ calculation formulas were; enrollment, the

space utilization, and the comparison within the peer institutions. The training colleges receive

less funding for the noncredit academic and the occupational training programs when compared

with those offering the credit programs because of the following reasons; First, less than half of

all states and the major funding sources for the noncredit programs at the community colleges,

this according to the data from the National Council for Continuing Education and Training,

Secondly, the states that provide funding for noncredit programs bases on the numbers of full-

time equivalent students, these states provide funding at a very lower rate–generally ranging

from 50 to 75 percent of the rates that are provided for the credit programs.


The states often provided the lower levels of funding for those courses that are offered without

the college credit in three areas; the basic skills, the noncredit occupational, professional, and the

technical training; and contract training.

The federal share of public college funding was fairly stable over the time, but relatively

small as compared with other funding sources. Excluding the federal student financial aid, the

federal funding provided nearly 5% of the total public college revenue for the period between

1992-93 and 2000-01. The revenue is provided through a number of the federal programs which

are operated by various agencies, including the Departments of Education and Labor. However,

the information pertaining to the extent to which the public colleges receive the federal funding

for each of the programs offered is limited at the federal level. Other sources of funds are

provided directly from the federal agencies to training schools. States determine whether the

training colleges or other entities can receive funding. In such like cases, there are no clear

federal requirements to enable monitoring and reporting of the information back to the federal

agency. The Department of Labor is sometimes charged with distribution of the state-based

grants.

The Government regulations

Part 141 Flight Schools

The government has a lot of regulations governing the Part 141 flight schools, these

include; the requirements which are given a great deal of direction from the FAA. It involves a

rigid structure and a clear outline of what the trainees do in each session. These training colleges

have very structured lessons and several checks rides that a trainee has to go through before

completing the flight training.


The general government regulations for an aviation training school include the

following;

(a) A pilot training school must meet the following prerequisites, for it to receive initial approval

for examining authority:

• The school should complete the application to the examining authority on a form and in a

manner as prescribed by the Administrator.

• The school must be a holder of the pilot school certificate and conform to the rating

issued under this part.

• The school must have conformed to the rating in which the examining authority is sought

for at least 24 consecutive months on the calendar that proceeds the month of application

for the examining authority.

• The training course for which the examining authority is requested may not be a course

that is approved if it does not meet the minimum ground and the flight training time

requirements.

• Within the 24 months before the date of application to the examining authority, the

school must meet the following requirements;

(i) The school must have completed the training for at least 10 students in the training course in

which the examining authority is sought and the trainees must have been recommended at a pilot,

the flight instructor, or ground instructor certificate or rating.

(ii) The greater percentage of the students must have passed the required practical or knowledge

test, or any combination thereof as pertains to; the pilot, flight instructor, or ground instructor

certificate or rating, with the test given by; An FAA inspector, An examiner who is not an

employee of the school.


(b) The pilot school must conform to the following to retain the approval of its examining

authority;

• It must complete the application for the renewal of its examining authority on a form and

in a manner as prescribed by the Administrator.

• It must maintain the pilot school certificate and ratings issued.

• The school must hold the rating for the period over which the continued examining

authority for at least 24 months period in precedence to the month of application for

renewal of the examining authority.

• The training course for which the continued examining authority is requested for must

meet the minimum ground and the flight training time requirements.

Definitions of the cycles that have occurred in this time frame

Overview of how the data was collected, analyzed and compiled

In conducting my work, I administered the Web-based survey to several, regionally

accredited aviation, training institutions including both part 141 and 61flight training institutions

throughout the country; conducted the telephone interviews to college experts and relevant

aviation associations. I also obtained data from the Departments of Education and aviation

Services, and Labor, and reviewed existing data and literature in order to gather information on

aviation training economy, the aviation colleges and flight training schools particularly the US

aviation training academy, their policies and the funding sources that support both the students’

academic preparation through students loans and the workforce development at these institutions.

I relied a lot on the findings of studies which are regarded to be the most authoritative by the

researchers and the experts in the field of aviation. The knowledge from the social science


analysis was applied in examining each of the studies to assess the validity and the reliability of

the selected results which have been used as evidence in this research paper. I examined the

examined the descriptive information obtained from the National Center for Education Statistics;

the letters of permission for the survey were issued by the American Association of Community

Colleges and the Association for Career and Technical Education according to the generally

accepted government auditing standards.

In order to document the academic preparations and workforce training programs offered

by the aviation training colleges and the part 141 flight training schools, the students they serve,

the effects of the aviation training economy on the U.S National economy, as well as to obtain

information on the state policies and federal funds the institutions involved in the aviation

training, I conducted a Web-based survey of several accredited aviation training institutions in

the country, this survey received a 71 percent response rate. I sent the survey questions to the

key holders of the Aviation training schools’ Data System, and requested for their coordination

of the responses the training officials who are most knowledgeable on the particular issues that

as raised in the survey. I did not independently verify the accuracy in the self-reported

information that was provided by these responses, I therefore took a series of steps, from the

survey design, through the data analysis and the interpretation process, to minimize some of the

potential errors. Analyzed the survey data in the descriptive statistics of the Aviation training

schools and the part 141 Flight school.

To identify the potential questions, I chose to conduct numerous researchers and also the

officials at organizations relevant to the aviation training colleges and the flight schools,

including; the Association for Career and Aviation training, the Community College Research

Center, the National Association of Manufacturers, and lastly the US Chamber of Commerce. In


the discussions that ensured, I focused on (1) the general categories of the programs offered by

the Aviation training colleges and the flight schools (2) various measurements of the effects of

the Aviation training economy on the national economy; and (3) limitations of government

agencies on the aviation training programs .

I took several steps in maximizing the response rates by sending the follow -up email

messages to the respondents I various aviation training colleges. The email messages contained

the basic instructions for completing the survey and the contact information to which the

questions were to be submitted. To establish the funding schemes in aviation training I surveyed

the colleges to determine the level of the federal support through each of the institutions

categories. My results, however, are not comprehensive because only 71 percent of colleges

responded to my survey, and of those colleges, between 22 and 41 percent of respondents were

not able to provide the data for the individual students’ loans/ funding sources.

I supplemented my survey data with the information from state officials and aviation

colleges and flight training schools in various US states. I chose the states basing on the

recommendations that considered several factors such as funding sources, outcome tracking,

contribution to the national economy, and the geographic location. I interviewed a variety of the

officials from state on the aviation industry the government agencies in order to understand the

unique interplay between the aviation training school economy and the US national economy, the

National development programs and policies at the state and local levels geared towards

economical growth.


Effect of US national economy on US flight school economy

The national economy affects the enrolment of the students in the flight schools programs.

The figure below shows the enrolment in different programs in different flight schools across the

country.

Source: ERAU DATA Fact Book. (2010)

Effects of national economy on aviation education industry

It has been seen that, this industry has been experiencing a trend under which weaker

economies, security fears as well as other matters. The industry’s profitability is closely tied to

trade as well as economic growth. In 1990s, the industry suffered much [not only due to world


recession, but the intake was further depressed by the Gulf war. In addition, the number of

travelers dropped. This problem was accelerated by airlines over ordering aircrafts in the boom

years of late 1980s. This rendered most of aviation education graduates jobless. Since then, the

aviation education industry had reorganized the need for gradual change to ensure their survival

as well as prosperity. It has tried to cut costs aggressively, for the reduction of capacity growth as

well as increasing load factors.

For the industry to meet its increasingly discerning customers, it has invested more in the

service quality, both on the ground as well as in the air. This is based on a number of factors that

have led the industry to become more efficient. Some of such forces are based on the ruling that

was made that; governments need not to subsidize their loss making industries.

On the other hand, it has been noticed that, civilian aviation is the main part of

transportation system of the United States, and contributes much to the national economic

prosperity. The American public has vested much interest in the aviation strength. Aviation

education industry differs much from other industries; however, it has been extensively over seen

and regulated by public agencies. Even though the times of tight federal economic controls

ended with the implementation of the implementation of airline deregulation act, federal

agencies have continued to have oversight responsibilities for aviation safety, in addition, the

public still expects the government to pay special attention to faring on of the aviation education

industry.

It has been shown that, the education as well as training of civilian aviation careers has

been seen as one activity in recent years that carries the government legacy. The developments in

the transportation regulations in 1930s were due to economic scenes that were far much

catastrophic. In addition, the great depression influenced the American philosophy that the very


basis of the U.S, economic systems, which lead to the attack of the concept of competition. On

the other hand, it is true that, the economic fortune reversal resulted to airlines tumultuous

periods of recession.

National Economy VS Aviation Flight Training Economy

Analysis of How the National Economy Affects the Aviation Flight Training Economy

National economy has much effects on the on the aviation straining economy. The

growth in national economy has lead to the great deal for pilots all over the world in the current

times. This is among the reason that is making students from foreign countries to come to the

U.S, for their training completion. There has been a very big surprise to see established flight

schools that have been training large number of students, may it be foreign or domestic or even

both.

The flight training market has slowed down; this does not require a genius to observe

that. Individuals are not yet ready to travel, this is based on the fact that, individuals are held up

with economic responsibilities to their homes as well as their families. This in one way or the

other has slowed down the market for air transport companies. On the other hand, the pilots of

regional airlines are struggling much with low paid jobs, as they continue to struggle to stay with

the company through lay-offs along with furloughs. The need for new pilots across the United

States of America has dwindled to something that does not exist. Nevertheless, there has been a

light of hope to the training economy. Foreign airlines have started hiring pilots from the United

States, and put them to work in their mother countries. It is true that, the aviation market is much

global, as an effect, American individuals working abroad get a lot of benefits, that even working

domestically are not available, for instance, taxes. They do not have to pay taxes anymore. This

is a very great incentive by itself, however, that is not all at all at all. It has been proved that,


foreign airlines pay much better as compared to their American counterparts. It has been shown

that, some of them either gives house allowance or provide pilots with places they can live. This

is not the bad idea as longer as their families does not need them at home as per that time.

On the other hand, the baby boomer generation are all preparing to go home for

retirement in the next ten years or so, this will pose an environment that posses the great need

for pilots, air traffic controllers, F.A.A personnel, as well as the NTSB investigators and business

managers, all across the United States.

It has been proved that, many foreign pilots are coming to the United States due to the

presence of recruiters in their home countries. They are just shipped to the United States in a

hurry so that they might spend their money on flight training, and in that case, that are really

assisting the economy of the United States currently. They are brining money to the shores of the

United States, and spend it in Americas business. Just as by looking at the hotels in which they

are staying in, restaurants in which they are eating from. On top of all these, the flight schools in

which they are trained in are all doing decently well. This in one way or the other has helped in

the creation of jobs for the Americans, as well as maintaining Americans in jobs. Though to this,

there exist draw backs. At the moment the foreign pilots’ ends up completing their trai9ning,

they are free to go back to their countries as well as families. After returning to their countries,

they will be put on entry-level positions in the airlines in their home countries, and as an effect,

they usually start building the valuable experience, that one fine day, they will make them

valuable assets to any company that will be ready. (McDavid& Echaore-McDavid, 2009).

At this point, is the juncture at which the American airlines come back into play? As

stated earlier most of their airline workforce is ready to retire, and once they have to retire, they

will be then looking for pilots who are much experienced to fill their ranks, as an effect, they will


be looking overseas for the pilots having higher levels of experience as well as skills required.

This is based on the fact that, t6he local flight training has all but stopped. The United State then

in one way or the other will need pilots, and the American will be having such well paying jobs.

This is based on the fact that, there will be now other cultures sharing the country. So for

America to stay competitive, they need to start encouraging training their own pilots for the

future generation.

Cycles of the Aviation Flight Training Economy

In most fighting’s having started raising their prices or charging additional fees for these

services from each individual student. This will then make them loose credibility from the

market. This tends leads to fewer students. This in one way or the other needs fewer students,

and as an effect, continue with cycle till the time that the businesses will close again. The trend

has been showing that, North America heads the league concerning the number of pilots that will

be needed in the next two decades. As a matter of fact, though the economy might not be good at

the moment, aviation employment is always cyclic and tomorrow’s prospects are still

outstanding. Just as it takes time to be trained as a pilot and gain adequate experience, now is the

best to be trained as a pilot during low times. This ensures that by the time economy recovers,

and airlines start employing individuals, one will be ready to take advantage of the next boom. It

will not be only that one is entering the new carrier with all benefits of prestige as well as great

job satisfaction, but also have the opportunity of earning great money. At the same time, there

will be more than enough jobs to choose from.

It has been shown that, aviation industry is highly cyclical, as it much sensitive to the

economic cycle. During economic hardships, very few individuals engage in travelling as

compared to good economic times. NewMyer (2010) acknowledges that this has been proved to


be true in both leisure as well as business sections. Such like characteristic is exempted by the

fortunes of the fortunes of the industry in 2007, 2008 as well as 2009. 2007 is described as the

best year by those in the aviation business. Both the civil and military sectors benefited from

budging order books. This year was the first year that at the same time, upturn in both military

and civil sectors occurred. This booming business was attributed to the booming global growth,

which ended up supporting demand for both passengers as well as cargo services. At the same

time, there was a buoyant corporate profit which leads to higher demands for business jets and

business travel in general. There was also a higher demand of military equipments due to

conflicts in countries like Afghanistan along with Iraq. Concerning the buoyant of the 2007,

Boeing enjoyed a record year for new orders, which surpassed the records in previous years. At

the same time, Airbus range of airliners also had a bumper year in terms of new orders. It has

been described that that the soaring fuel prices as an opportunity which would speed up the

orders of aircrafts that consumes lesser fuel.

On the other hand, analysts describe the situation as being the worst in the past decades.

Analysts believe that, by after 2010, there will be a sharp drop that will be seen in deliveries.

This is based on the fact that, after every regular recession.

Cycles of National Economy

It is somehow surprising that the housing component of GDP tends to be a very solid

contributor to GDP growth during recovery process. From time immemorial, residential

investments has been controlling only about 5% of GDP, which is very smaller share, putting in

mind the consumption component which is about 70%. In addition, a smaller component like

residential investments at times punch their weight, which is much evident at the time, is

measured by the use of growth rates other than levels. This means that, though residential


investments are a small component of GDP levels, it has the capability of contributing

substantially to the growth rates of GDP at a very shortest time possible. Figure 1 illustrates the

link between residential investment and the business cycle for the past 35 years.

By excluding the recent recession, residential investments has been contributing to at

least 50 basis points to the growth of GDP within two years. This indicates that, though

residential investment is not a major element of GDP growth, its growth is of much help during

economic recovery. However, after the official end of recession, one and a half years down the

line, residential investment has yet to make sensible contribution to the growth of GDP. And in

fact, in the present times, it is making negative contribution to GDP growth. To some extent, this

has to be expected. This is based on the reasons like dramatic fall in housing prices during

recession which creates a glut of existing home, either already on or waiting to be put on the

market after an increase in price stabilization. This inventory of existing homes substantially

dampens the urge for the construction of new homes.

These in one way or the other imply that, the year after recession, there is no continuous

recovery. However, it gives a suggestion that, the residential investment contribution, is likely to

be much smaller than normal, or, it might be delayed substantially. Under any circumstance, it

holds water remembering that, residential investment is not the only expenditure element of

GDP. As earlier noted, consumption is the largest component of GDP, and as such, it has higher

probability of contributing significantly to the growth of GDP. On the other hand, such growth

that is driven by consumption can also be hindered by residential investment indirectly, through

its effect on the employment of construction workers. This forms a group having current

unemployment rate of over 20%, hence unlikely to be in a mood of spending.


Aviation impact on national economy

Measures of Economic Impacts

It is possible to make use of the direct and the indirect expenditures to estimate the

induced effects of those expenditures on the U.S. economy. Using those identified expenditures,

the impacts can be analyzed in terms of the induced or the secondary expenditures and both the

direct and the induced earnings and jobs creation.

Output: This is the total value of the goods and services produced.

Earnings: This forms the wages and the salaries, other labor income and the proprietors’ income

paid to all employed persons who deliver the final demand output and the services.

Jobs: The aviation schools trainees and releases a number of people to provide the civil aviation

services, manufacture the aircrafts and the aircraft engines or work in other industries that are

indirectly affected by the activities in the aviation industry. The table 1 below provides a

summary of impacts of aviation.

spending Earnings/Jobs
Primary Expenditures of the airlines The Earnings /the jobs of the aviation

Direct and other aviation firms industry and firms employees with the

payments over $ 1500.
Primary Expenditures of the hotel that The Earnings /the jobs of the aviation

Indirect are involved in the aviation related hotels/the restaurants

industries which are over $ employees and the owners in ranges

1500. over $ 1500.
Secondary Expenditures of the industries Earning/the jobs of the employees and

intermediate supporting the airlines or the the owners of the supporting industries

hotels resulting from the that results from the primary

primary expenditures. expenditures.


Secondary Increased household The personal earnings/jobs throughout

Induced consumption of the persons the economy as a result of the

gaining income from the household consumption of those

primary and the secondary gaining the income from the primary

economic impacts. and the secondary impacts.

• The Primary Direct Impacts: the activities of the firms which provide the aviation services,

such as the airlines, FBO’s, aircraft manufacturers, the flight schools, and the ATC.

• The Primary Indirect Impacts: the activities of firms serving aviation visitors

• The Secondary Impacts

• The Intermediate: the activities of the suppliers to firms providing the aviation services or

serving aviation visitors.

• Activity generated by households who derive income from the primary and secondary

impacts

These activities include;

Spending (Economic Activity)

• The total expenditures by all the economic units

• Same counted multiple times: for example pax airline manufacturer

Aviation increases the individual Earnings; this can be achieved through;

• Personal income generated

• Not subject to double counting

• Comparable to GDP

Aviation school economy influences the economy by improving the labor quality as well as the

provision of the Jobs.


Aviation and the growth of the potential GDP can be analyzed in terms of the following

perspectives;

• Aviation as the input to Production

• Aviation as the stimulus to innovation

Aviation as the input to Production

• Aviation Infrastructure as social overhead (public) capital

• Studies examine relationship between GDP (output) and inputs including

a) The Aviation schools economy which enhances the labor to the aviation industry.

b) The Private capital

c) The Public capital.

This study placed great emphasis on the aviation production function which comprises the

aviation activity variables (e.g. the passengers and the freight enplaned) at the National-level

production functions. (Wells & Chadbourne, 1987).

• The national economy with more aviation activity has higher output.

• Freight effect is stronger and more statistically significant than the passenger effect.

Aviation as the stimulus to innovation

• Aviation through the flight schools initiates the impacts of improvement which helps to

do things in a better way.

• The ultimate value rests on the combining the improved transport with other things.

• Innovation helps to do old things in a new way.

• Do new things.

• The “companion innovations” by the users of transportation systems drives the growth

and economic benefit.


Aviation Contribution to GDP in the United States

Source: Federal Aviation Administration. (2010).

Emerging Trends from the data analysis above

Demand for the aviation services is a consequence of the vibrant and the growing economy. The

Figure 2 above illustrates the closeness in the Relationship between the overall economic growth

(in real GDP) and the ensuing demand for air travel services (in revenue Passenger miles). The


national economic growth is counter cyclic with aviation economy and hence the Training school

economy in terms of the demand and provision of the services, so does the demand for air

transportation. However, the economic uncertainties cause the contractions and slowdowns

which have the pronounced effect on the level of the activities and the financial Performance of

the civil aviation industry. The civil aviation’s industrial growth, as measured by the real air

transportation GDP, tends to be much more volatile than that of the overall economy, as shown

in Figure 2. By 2007, on average, the civil aviation industry had experienced a real growth rate

of over 7 percent with a standard deviation of 7.1 percent, while the U.S. economy has been

growing around 3 percent with a standard deviation of 1.8 percent. This industry has

demonstrated both the exuberant growth and the precipitous drops. For example, in 1983, after

the recession that occurred in the period 1981-1982, the industry expanded by over 22 percent,

this was followed by three years of nearly zero growth in the real terms (Figure 2).These are

some of the highly volatile trends that can occur in future, although the magnitude of growth and

decline has lessened.

The Civil aviation is one of the integral parts of the U.S. economy. It is the key catalyst

for the United States economic growth and has profound influence on the quality of life of many

other populations around the globe. It integrates the world economy and helps in the promotion

of the international exchange of people, the products,

Investment and the general ideas. To a very large extent, the civil aviation has enabled small

community and the rural populations to enter the mainstream of global commerce through the

linkages such as the communities with worldwide population, the manufacturing, and some of

the cultural centers. The Civil aviation products and the services generates the most significant


economic surplus for the U.S. trade accounts and are in the forefront in the development and the

use of advanced technologies.

Fundamentally, the civil aviation influences nearly every aspect of the population’s lives,

and its success to a great degree, shapes the American society and the U.S. economy in the

coming decades. The ability of aviation school training to foster economic growth and engender

the social mobility is not, however, guaranteed. The economic and the personal cost of the delays

caused by constrained airport and airway capacity and the reduced the aviation system efficiency

reached unacceptable levels due to inefficiency manpower. The latest economic downturn and

the decline in the aviation activities following the tragic events of September 11, 2001, the

aviation economy provides a temporary relief from the growing problems of congestion and

delay. It has by no means eliminated the problems. The training in aviation is expected to

provide thorough intervention in the problems facing the aviation industry; the costs of the

delays when not checked will continue to rise, thereby causing harm to the U.S economy, the

competitiveness of the related industries’ economy, and all who rely on the aviation in the

conduct of their business and the personal affairs. The additional investment in the nation’s

aviation training infrastructure will facilitate the National economic growth.

This study provides insight into the contribution of civil aviation to the U.S. economy, as

well as the economic and employment costs of congestion and delay to the nation and its

citizens. Analyzing the Federal Aviation Administration’s (FAA) Operational Evolution Plan

(OEP), which consists of air traffic initiatives aimed at slowing the growth in congestion and

delay, as well as a variety of potential runway investments, this study reveals the essential role

that increased airport capacity and modernization of the air traffic system play in managing the

growth of these problems and points to the need for additional efforts to reduce them.


The study’s findings are based on the econometric models which captures the detailed

workings of the U.S. economy. The framework of the study ensured that the consistency between

its results and those of the U.S. national system of economic accounts.

Taking the base year of 2000, the study estimates (in year 2000 constant dollars) the total cost of

the flight delays to the passengers and airline operators of scheduled commercial passenger

airline services in the United States for 2000, 2007, and 2010, and the benefits of the increased

capacity for the two forecast years. This study considers the national benefits of making the

additional capacity-enhancing the investments in the aviation infrastructure. It involves the

examination of the positive economic impacts of reducing the delays by training the flight staff

on the means of increasing the capacity, thereby concluding that the early investments are more

effective in resolving the capacity and the delay problems, this result into the significant gains

for the United States and its population.

Impacts of the Aviation economy on the National economy

For the purposes of this study, the aviation school training economy impacts include:

• The scheduled and unscheduled commercial passenger and cargo operations (including

cargo-only transportation)

• The General aviation (including business aviation and air taxi)

• The related manufacturers, servicing, and support (including the pilot and maintenance

technician training)

• The supply chains this have indirect impacts)

• The effects of the income generated (induced impacts) directly and indirectly by civil

Aviation.


• The direct, indirect, and induced impacts of the related industries, such as the travel and

the tourism, for which the air transportation provides an enabling function. (Jay, 2011)

In the United States, the population and the businesses have become reliant on the

advantages and the cost effectiveness of the air transportation. Similar to the Internet and new

labor saving technologies, the growth and maturation in the aviation industry, and particularly

the civil air transport, is truly a modern economic advancement. During the turbulent economic

times, the aviation activities remain a unique link for commercial activities which contributes to

the revitalization of the economy. According the data results of the Figure. 3 above, the

economic impacts of the U.S. civil aviation on the overall U.S. economy is evident, Almost all

the states in the United States depends on the aviation economy, this is in line with the current

trends in the civil aviation industry. The most current official economic data available is for

calendar year 2010. Reports on this year should update with 2010 data. The success of the civil

aviation industry may be more closely related to the overall U.S. business cycle than many other

industries since aviation is the major contributor to the National economic growth. During the

worst national economic crisis, the aviation industry shows the responsiveness and the flexibility

due to its ability to adopt the most innovative resource-saving techniques and the adjustment of

its business models to the changing economic circumstances of the businesses and the consumers

from the United States and abroad. This research paper also reviewed some of these trends and

the emerging techniques of the U.S. civil aviation industry.


Conclusion

The counter cyclic nature of the aviation industry provides a leveling ground for both the

Flight schools and the national economy, during the challenging times, the civil air transport

industry provides the economic benefits for the U.S. and the global economy. In an environment

of the decreasing barriers to the trade, the U.S. civil aviation industry remains one of the most

unique engines for the innovations and the effective technological progress, it provides the

infrastructure which keeps the nation at a competitive level. This research report found that, once

all the impacts are fully accounted for, the civil aviation represents the 5.6 percent of the United

States economy. United States aviation training and flight school economy in general contributes

to the economic growth and strengthens the ties to the local and the global markets for all the

regions in the nation. In the aviation industry, the total output of the civil-aviation-related goods

and the services amounted to $1.3 trillion in 2007 and this generated nearly 12 million jobs, with

accumulated earnings of approximately $401 billion. For the specific areas of civil aviation, such

as air cargo, they have contributed to very effective networking and the collaboration between

the companies far and wide. (Bednarek& Bednarek, 2003.)

Following the economic trends, the recovery in the wake of the recession period of

2008-2009 presented a lot of challenges for the aviation industry, aviation related training and

the U.S. economy as a whole. There is evidence which shows that the capacity reductions that

are made by the airlines and the airports in the wake of the high fuel prices can allow the

industry to better the situation, but the continued fall in the revenues and the demand will force

the aviation industry to continue with the process of innovation and become leaner and more

responsive to the market and the accumulating cost conditions. For instance the cost of fuel will

remain a continuing concern for the airlines and the activities that are affected by air


transportation, such as the aviation training and the tourism sector; this influence is propagated to

influence the prospects for all other sectors of the economy. As in the past century, the role of the

air transportation continues to grow for the U.S. and the global economies.

The economic impacts of the civil aviation have been quantified in this report

summarizes all the benefits that are accrued from the aviation activities which forms the most

vital and rapidly changing industry. This industry through its activities contributes positively to

the U.S. trade balance, thereby creating very high-paying jobs, which keeps the national

economy viable and connects to all other economic subdivisions by creating the commercial

opportunities. Since the role of air transportation is crucial, there is continued evolution and

becomes even more intertwined with the way of life, thereby creating a stable and an efficient

economic system that continues to be vital, even more essential, component in a very strong and

healthy American national economy in the 21st century.(Colton & Bruchey,1987)


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