Dr Fred Prata of the Norwegian Institute for Air Research, has developed a new technology called AVOID (Airborne Volcanic Object Identifier and Detector). Click here for article.
The system uses infrared technology which is placed onto aircrafts, and allows pilots and flight control to receive images of ash clouds. Corrections to the plane’s flight path can then be made. This has the potential to minimise future disturbance to planes from volcanic ash clouds.
There was no commercial interest in the system until ash from Iceland’s volcano caused extensive disruption of European airspace in April and May, at an estimated cost to airlines of more than $1.7bn.
AVOID will initially be trialed by EasyJet airline, who announced the disruption cost the company an estimated £50-75m, or half of its expected profit. They have agreed with Mr Prata to spend £1m testing the technology. It will be assessed on an A340 test aircraft owned by Airbus and then, if the results are favorable, fitted to a dozen EasyJet planes.
On the ground, information from aircraft with the technology would be collected to build an image of the volcanic ash cloud using real-time data. Clear areas of airspace can then remain open that would otherwise be closed during a volcanic eruption, minimizing disruptions.
The goal is not for EasyJet to gain commercial advantage over other airlines, but rather to make AVOID an industry standard. The system does help individual pilots to avoid ash, but the main benefit would be in installing AVOID on hundreds of aircraft in order to build an accurate ash map for the whole of Europe.
Let’s look at this for fun…A list of the top ten airlines in the world by fleet size.
The total is 4,230. Generously multiply this by 7 to estimate roughly how many planes we have flying around, and we get 29, 610. If the present value of the royalty was $1,000 per plane the royalties would be $29, 610, 000. Compare this to the estimated losses of $1.7bn. With regards to our previous posts on patents, it is clear that the network externalities dominate the patent revenues. Here, the positive network externalities of AVOID are only beneficial to their full extent if everyone adopts (or a critical mass) this technology.
Not all network externalities are positive however. Take, for example, the case of the Indian transportation system - a topic we'll discuss later ... maybe. Click here for article.
Not all network externalities are positive however. Take, for example, the case of the Indian transportation system - a topic we'll discuss later ... maybe. Click here for article.
For a little refresher on network externalities see:
Intermediate Microeconomics, Hal R. Varian, Norton (Ch 35)
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