National Air Space Issues - Essay Example

Air companies began ordering aircraft that are fuel-efficient but fuel prices are decreasing. This has created the dilemma of whether the companies should cancel their orders because their older aircraft can still operate at a profit. The airlines will however not cancel the contracts because of legal, social, and economic reasons.

Social responsibility and its associated benefits are one of the reasons for upholding the contracts. Even though the new aircraft will be costly to the companies, the efficient fuel consumption will ensure environmental health with a positive impact on the human population, beyond aircraft users, and economic activities that affect people. Such a responsibility is likely to generate a competitive advantage. In addition, Greenberg, McKone-Sweet, & Wilson (150) explain that premium customers are likely to offset the social cost of service delivery and this will manage the cost implications of the orders on the airline companies. The identified fuel efficiency will also reduce costs in the long term and increase long-term profitability. Legal obligations and consequences of breach of contract will also motivate the airline companies to uphold the orders and two possible remedies to breach of contract explain this. The companies will still be forced to make the purchases under the doctrine of specific performance and this will mean wasted time and money in judicial processes. Cancelling the contracts will also lead to monetary expenses in damages should the companies be allowed to cancel the contracts but this would still be costly (Schaffer, Agusti, & Dhooge, 108).

Upholding contracts for new aircraft offers advantages such as competitive advantage due to social responsibility, increased profitability due to fuel efficiency, and the ability to raise prices among premium customers without reducing utility. Cancelling the contracts would however have legal implications into unnecessary financial losses.