ABSTRACT

We will get additional customers. . . We are fully booked for the next three years, where is the problem? Airbus will one day launch an A380neo and will one day launch an A380 stretch.

F. Bregier, CEO Airbus

Business organizations make decisions on a daily basis, focusing on anything from day-to-day operational issues to long-term strategic planning. The

majority of business failures, or lack of corporate success, can be attributed to poorly made decisions without proper evaluation of the future outcomes. Understanding of decision theory can help managers make better decisions. Generally, all business decisions involve some degree of risk, and there is no guarantee of a positive outcome. The decision to build a new aircraft, to develop a new jet engine, or to construct a mega airport begins years before the first phase actually happens. In 1956, the British government began research into the development of a supersonic aircraft for commercial services (Hooks et al., 2009). The high fuel consumption created a significant price premium for Concorde’s success. The aircraft became very expensive to operate, and as a result did not gain interest among the airline companies. The Arab Oil Embargo of 1973 created a steep rise in fuel prices and Concorde looked less attractive. While carrying a full load, Concorde achieved 15.8 passenger miles per gallon (PMPG) of fuel, compared to the Boeing 747’s 46.4 PMPG, the Boeing 707’s 33.3 PMPG, and the McDonnell Douglas DC-10’s 53.6 PMPG.1 Concorde failed to gain support among traveling public, and, as a result, the 2003 decommissioning of the Concorde represented the end of supersonic commercial transport.2