Transportation Management

Operators’ biggest concern will continue to be rising prices. By 2020, wages are expected to climb by 2.7% annually, reaching $195.30 billion, slightly lagging behind revenue growth. Businesses must keep hiring until they reach their pre-recession levels to meet client needs (Singh & Raj, 2021). However, the large proportion of unionized workers in the sector will significantly cost the industry. Airlines have become inventive with surcharges to increase revenue since passengers are discouraged from purchasing tickets when the basic fare is too expensive. The industry will continue to tack on fees for baggage and other services to cushion revenues in the face of growing fuel prices. Over the past ten years, industry reorganization has been common due to rising costs (particularly gasoline) and erratic demand.

This industry’s principal cost, accounting for around 45.5% of sales, is acquiring raw materials, including fuel, food, clothing, and other comparable goods. Jet fuel is most likely the highest material expense for the airline business. Due to the high cost of jet fuel, industry costs are extremely susceptible to changes in crude oil prices (Lam et al., 2018). Over the previous five years, the revenue spent on acquisitions has increased. While the cost of gasoline and diesel decreased dramatically in 2014 and 2015, all fuel costs increased (Singh & Raj, 2021). Spending on other things has been fairly stable over the preceding five years.

21.8% of the budget, or expenditures on wages, are made annually. Depending on the kind and age of the aircraft, a flight crew typically consists of a pilot, co-pilot, flight engineer, and flight attendant. Non-scheduled charter flights are more expensive than regularly scheduled flights because locating crew in less convenient locations is more expensive, and companies cannot benefit from volume savings (Singh & Raj, 2021). Pilot pay, on average, is much greater in industrialized nations than in developing nations. The high incidence of unionization among employees in the aviation sector raises labor costs. Over the previous five years, the wage cost fraction of overall income has decreased.

Aircraft rental is a substantial expense for the industry because the majority of airlines either own, lease, or operate both types of aircraft. Due to their small size and the expensive aircraft cost, charter companies often choose to lease rather than buy aircraft. Most of these leases provide a purchase option at the end of the term, saving business owners money on depreciation (Caetano & Alves, 2019). Due to growing competition in the aircraft manufacturing sector and the availability of reasonably priced jets, businesses are increasingly opting to buy their aircraft rather than lease them. This industry must also pay for additional expenses, including utilities, management, marketing and advertising, insurance, and legal fees. Despite the widespread use of online check-in, ticketing, and other comparable systems significantly lessen the strain on office employees (Singh & Raj, 2021). administrative expenditures continue to climb every year. Over the past five years, advertising spending has exploded as the level of competition around the world has increased.

In conclusion, despite continuing to face pressure, it is anticipated that the price of oil will increase over the next five years. The possibility of a relaxation of export restrictions by the US government to maintain high production levels in the US may stimulate upstream businesses. Additionally, it is anticipated that OPEC will continue to produce at high levels, ensuring a steady oil supply on international markets.

References

Caetano, M., & Alves, C. J. P. (2019). Innovation system in air transport management. JISTEM-Journal of Information Systems and Technology Management, 16.

Lam, J. S. L., Cullinane, K. P. B., & Lee, P. T. W. (2018). The 21st-century Maritime Silk Road: challenges and opportunities for transport management and practice. Transport reviews, 38(4), 413–415.

Singh, A. K., & Raj, M. (2021). Automated Intelligent IoT-Based Traffic Lights in Transport Management System. In Intelligent Data Communication Technologies and Internet of Things (pp. 261–266). Springer, Singapore.