Assess the Use of Accounting Information in Decision Making in the Aviation Industry

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Table of Contents
Table of Contents 1
Introduction. Decisions and Accounting. 2
Aircraft development. 6
Airport Receivables & passenger fees collection. 8
Airlines Bodies participation. How ARC uses Ratio analysis to protect members 10
Fuel hedging - Cost saving or Gamble? 13
Collective bargaining, financial statements on the bargaining table. 15
In-house or Outsource services – Caribbean Airlines Case - M&E & Revenue Accounting 16
How do Airlines use CM and CVP? 19
Fleet change and fleet type 24
Critical Analysis; what does the accounting information mean – Low cost airlines 26
Bibliography 28
Appendices 29
1. The Aviation industry 29
2. IATA enhancement Financing services 29
3. Airline Reporting Corporation, Carrier
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a. Understandable - information in such a way that it will be understandable to users.
b. Relevance - must assist a user in the context of making a decision
c. Consistency - consistent treatment of similar items and application of accounting policies
d. Comparability - compare similar companies in the same industry group.
e. Reliability - information that is presented is truthful, accurate, complete and capable of being verified
f. Objectivity - information is prepared and reported in a "neutral" way.

Aircraft development.

When we think of aviation, an aircraft flying high is the first picture that comes to mind and what not a better place to start an assessment of accounting information for decision making.
Aircraft development is a major cost investment with cost running into the billions of US dollars. The current major aircraft manufactures are Boeing Corporation, Airbus and Bombardier. This process involves capital budgeting accounting that provides decisions of whether the development project will be feasible. However what is going to highlighted here is the importance of analysis of financial statements, are on development projects.
Lets go back into the early 1970’s and assess how poor financial analysis on the development of the Lockheed Tristar three engine wide body aircraft by Lockheed Corp and Roll-Royce Plc lead to the demise of an aircraft that in its era was technologically ahead of it’s time. It

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