Supplier´s perspective on commercial air transport avionics business practices

In the period of the late 1980s and early 90s, airlines found themselves in a precarious double-whammy position: overcapitalized and unable to make a profit. They couldn´t fill the seats of the airplanes they had, let alone the airplanes they had on order. Because of this, a shift in buying habits occurred at the airlines as the bottom line became the primary driver of decision-making, This has driven the industry ever since. Unfortunately, many of the business practices that have been ingrained in the industry have not shifted accordingly. Many value added functions are provided through software, but while the customers, in the best case situation, are willing to pay the nonrecurring cost to develop this software-and possibly allow a small profit, they seem not willing to enter into a discussion of its true value. This adherence to cost-based pricing as opposed to value-based pricing is a serious threat to the delicate supplier-customer balance