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Impact of rising fuel prices

Introduction

In last few years over 30 airlines have filed bankruptcy due to the increased operating costs, sudden rise in oil prices has played a major role in this turmoil which have increased from $60 to $140 a barrel over a course of 18 months, just to name some Silver jet - which was a business airline, Oasis Hong Kong - which was a long haul budget carrier and well famous collapse of XL which left 85,000 passengers stranded at locations around the world (The Independent, IATA, & OPEC 2008).
Aim of this project is to identify who controls the oil supplies & what are the major factors which lead to increase or decrease of fuel prices, and this project will also analyse & measure the effects of rising fuel prices on aviation industry & consumers.

In this research project my core objectives will be:

 Who is responsible for sudden rise in oil prices?
 How to this downturn is effecting the employment for aviation industry?
 What are total financial losses and fuel bills for industry & selected airlines as well?
 How a consumer is affected?
 Recommendations.

The airlines I will be studying for this project are American Airlines, Ryan air & Jet Airways.

I have chosen this topic because of my personal interest and I have been carefully monitoring the fuel prices for a while and I have also kept close eye on aviation industry as well.

Methodology:

My primary source of data will include open questionnaires which will be directed towards the consumers who are directly affected by this turmoil in aviation industry; the age group I would be targeting is 25 to 45 middle class earning individuals, families who use to take holidays abroad and corporate travellers who use to fly in First or Business class. Financial information from American Airline, Ryan air & Jet Airways will be acquired through their websites. www.aa.com, www.ryanair.com & www.jetairways.com. I will also be interviewing staff from travel agency & international department at Chichester College.

Secondary sources I will be using are as follows:

 New York Mercantile Exchange (NYMEX) this is the commodity trading platform where oil contracts are traded on future or spot basis.
 Organisation for Petroleum Exporting Countries (OPEC) this is the organisation which controls the major oil supplies.
International Air Transport Administration (IATA) this organisation regulates and represents airlines around the world.

Action Plan:

Stages Actions Timescales Target Dates Monitoring
Research Proposal Identify the hypothesis and justify the choice.

Devise code of ethics & justify the methodology. Week 1-10. 05/12/2008 Keeping track of progress like meeting deadlines for the submission.

Literature Review Collect and analyse annual reports, quarterly reports from selected airlines, economic briefings form regulators and monitor crude oil prices which will be sourced from OPEC and NYMEX.

Design a questionnaire to collect primary data which will directed towards consumers. Carry out interviews with staff from travel agency and international department at Chichester College. Week 10-15. 16/01/2009 Making sure data is collected very carefully & then process efficiently & regularly consulting the mentor.

Methodology Collect & process raw data which is been obtained by questionnaires.

Source new data like new quarterly results from selected airlines and new economic briefings from industry regulators to keep the research data as accurate as possible. Week 15-20 27/02/2009 Checking accuracy of the data collected from questionnaires so a clear picture of the situation could be drawn.
Research Project Submission Combine & process all the data which have been collected over the course of stage 1, 2 & 3.

Prepare Harvard referencing, check if all the objectives have been achieved successfully & present the findings in a suitable manner. Week 20-30 15/05/2009 Most important at this stage would to process all the data in a suitable manner.

Code of Ethics:

1- What are the objectives of the dissertation / research project?

 Who is responsible for sudden rise in oil prices?
 How to this downturn is effecting the employment for this industry?
 What are total financial losses and fuel bills for industry & selected airlines as well?
 How a consumer is affected?
 Recommendations.

2- Is the primary data collected from human subjects or data that are identifiable with individuals?

Yes

3- What is the purpose of the primary data in the dissertation / research project?

To assess the buying behaviour of consumers regarding taking holidays abroad & how their buying behaviour have changed due to the recent financial turmoil.

4- What is/are the survey population(s)?

The survey population I would be targeting is 25 to 45 middle class earning individuals, families who use to take holidays abroad and corporate travellers who use to fly in First or Business class.

5- How big is the sample for each of the survey populations and how was this sample arrived at?

There would be two samples:
• First will have questions relating to families, couples & individuals taking holidays abroad.
• Second will include questions relating to corporate travellers & business organisations that use to fly or book first or business for their executives.

6- How will respondents be selected and recruited?

Respondents will be selected by their age group, the way use to travel like family holidaymakers or business travellers.

7- How will data be collected from each of the sample groups?

A questionnaire will be provided which will include mixture of open & closed questions.

8- How will data be stored and what will happen to the data at the end of the research?

All the data would be stored in a secured drawer and it will be processed and would be destroyed at the end of the research.

9- How will confidentiality be assured for respondents?

Data acquired would only be viewed by me, John Lockey, Hilary Hele and External Verifier.

10 - What steps are proposed to safeguard the anonymity of the respondents?

No personal information will be collected like names, address, phone, and where they work.

10- Are there any risks (physical or other, including reputational) to respondents that may result from taking part in this research?

No.

11- Will the proposed research involve any of the following?

• Vulnerable groups (e.g. children)? YES NO √

• Particularly sensitive topics? YES NO √

• Access to respondents via ‘gatekeepers'? YES NO √

• Use of deception? YES NO √

• Access to confidential personal data? YES √ NO

• Psychological stress, anxiety etc? YES NO √

• Intrusive interventions? YES NO

12- Are there any other ethical issues that may arise from the proposed research?

No.

Student supervisor
Signed:
(student) Ankit Yadav (supervisor) John Lockey
Date Date

(Source: University of Portsmouth (2007), Portsmouth Business School)

Research Project Summary:

Project Title:

“Assessing the impact of rising fuel prices on the aviation industry”.

Project Outline:
Objectives/Aims:

1- Who is responsible for the sudden rise of oil prices?
2- How to this downturn is effecting the employment for aviation industry?
3- What are total financial losses and fuel bills for industry & selected airlines as well?
4- How a consumer is affected?
5- Recommendations.

Methodology:

1- Primary research includes questionnaires & interviews.
2- Secondary research includes annual reports & economic briefings.

Results to date:

I have completed stage-1 out of 5 stages & moving forward to stage-2 which is literature review.

Future actions:

Completing stage 2, 3, 4 & 5
Gantt chart & action plan is also attached to show stage by stage development.

Bibliography:

International Air Transport Association (2008) “Fuel price Analysis”. [Online]. Montreal, www.iata.org. Available from: http://www.iata.org/whatwedo/economics/fuelmonitor/priceanalysis.htm [31st Oct 2008].

Organisation of the Petroleum Exporting Countries (2008) “OPEC Basket Price”. [Online]. Vienna, www.opec.org. Available from: http://www.opec.org/home/basket.aspx [10th Oct 2008].

Prosser, D, Hickman, M. (2008) “Warning: 30 airlines will go bust this year” [Online]. London, www.independent.co.uk. Available from: http://www.independent.co.uk/travel/news-and-advice/warning-30-airlines-will-go-bust-this-year-928774.html [10th Oct 2008].

University of Portsmouth (2007) “Portsmouth Business School Ethics”. [Online]. Portsmouth, Portsmouth Business School. Available from: http://www.port.ac.uk/departments/faculties/portsmouthbusinessschool/research/pbsethics/ [31st Oct 2008].


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