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Final Report - Acare
Final Report - Acare
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THE NEED<br />
for innovation<br />
II.<br />
challenges that need to be addressed and the<br />
mechanisms for addressing them appear to be<br />
lacking, or at least struggling.<br />
One area of innovation was an exception to<br />
this general slowing down of change. It was<br />
both possible and spectacularly successful –<br />
deregulation and the rise of the Low Cost<br />
Carriers. This was in no sense a technologically<br />
driven innovation but one driven by a different<br />
vision of the business and the market. The<br />
equipment was virtually unaltered but the<br />
consequences that flowed from a vision of<br />
a basic, no frills, pay-for-what-you-want<br />
airline operation were immense. The vision<br />
immediately appealed straight to the pocket<br />
books of the leisure traveller and they<br />
continue to book tickets on LCC in droves.<br />
In general, however, most change in the<br />
aviation world has been evolutionary rather<br />
than fundamental. This trend towards slowing<br />
system innovation has also been influenced<br />
by two other factors; regulation and<br />
defence shifts. Regulation (including safety<br />
regulation) will always be something of a<br />
brake on innovation. Changes in international<br />
regulation must be considered carefully and<br />
must recognise, although not necessarily be<br />
servants of, the business situation and the<br />
effect of change upon operators. Changes<br />
in regulation have to be technologically<br />
possible and may need to be applied over a<br />
period. This pattern is not usually conducive<br />
to the introduction of innovative ideas which,<br />
in the first consideration, must deal with<br />
the regulations then in force. Changing the<br />
regulations to accommodate an innovative<br />
concept will inevitably take time, create<br />
uncertainty of outcome and will slow the pace<br />
of innovation.<br />
Changes in the defence field have been<br />
profound in their effect on civil aviation.<br />
Defence aerospace manufacturers have<br />
commonly also been civil aerospace providers.<br />
There has been a natural and beneficial<br />
flow of technology application experience<br />
that has mainly been from defence to civil<br />
applications, especially around periods of<br />
wartime emergency. With the international<br />
changes to defence spending, both in quantum<br />
and focus, this steady flow of technology<br />
that crept, decade by decade, from defence<br />
into civil use is now nowhere near its former<br />
level of importance. Aerospace has become<br />
an importer of technology from a former<br />
position of being a great engine of technology<br />
development in the economy. This makes the<br />
exploration of novel concepts involving new<br />
technologies even less likely to occur.<br />
What this leaves is a pattern of air transport<br />
that seems a modernised version of the<br />
model that operated in the 1950’s. There is no<br />
fundamental difference between operations<br />
today and those of 50 and 60 years ago even<br />
though the challenges are new. They demand<br />
change. There is no benefit in change for the<br />
sake of change but it appears very difficult even<br />
to consider different models of innovation at<br />
the higher level i.e. above the changes that<br />
are still being made in components, materials,<br />
aircraft etc. Yet, by fragmenting innovation<br />
into separate sector responses, we are at the<br />
same time limiting its potential. Considering<br />
any of the major new challenges to aviation<br />
immediately highlights the need for cross sector<br />
collaboration in innovation.<br />
Without doubt, major innovative steps carry<br />
great risk. Individual items of investment<br />
continue to escalate in cost. Investment in their<br />
successors continues over many years, the cost<br />
of financing this and the slow rate of return<br />
on the investment places even the most certain<br />
of investments at some risk if anything should<br />
go wrong. The development programme for a<br />
major new airliner is estimated by the aviation<br />
press to be over €10B.<br />
As cross-sector solutions feature in facing the<br />
new challenges the position is even riskier.<br />
Technical, business and political risks increase<br />
sharply. Potential differences of alignment<br />
between the parties are clearly much greater<br />
and carry substantial risks for the project.<br />
For larger innovative concepts the risks are<br />
even further extended. The investment<br />
period is longer and allows other changes in<br />
the operating context to occur and perhaps<br />
to cause major changes in the strategic<br />
assessment of the groups concerned. These<br />
changes may not be confined to their own<br />
area of operations but may be global external<br />
changes over which they have no control<br />
but which have serious impact on their<br />
forecasts. In extreme cases the viability of the<br />
project may be prejudiced even though large<br />
investments may already have been made.<br />
3. The Pressing Need<br />
For all of these reasons, significant innovation<br />
involving multiple sectors is now effectively<br />
impossible to fund from within the firms or<br />
enterprises themselves. The risks of failure<br />
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