Aircraft | Year of First Service | Development Costs (USD) Constant 2004 Dollars |
Douglas DC-3 | 1936 | 4.3 Million |
Douglas DC-6 | 1946 | 144 Million |
Boeing 707 | 1958 | 1.3 Billion |
Boeing 747 | 1970 | 3.7 Billion |
Boeing 777 | 1995 | 7.0 Billion |
Airbus A380 | 2007 | 14.4 Billion |
Boeing 787 | 2012 | 13.4 Billion |
Source: Adapted from Bowen, J. (2010) The Economic Geography of Air Transportation: Space, Time, and the Freedom of the Sky. London: Routledge.
Development costs involve a series of costs related to the research and development efforts that goes into a new product, such as marketing, design and engineering. For a complex product such as an aircraft, the design and engineering aspects are very costly since they involve the creation of new engineering techniques and technologies for the materials, parts and their assembly. Further, parts and aircrafts are subject to the testing and approval of regulatory agencies before a new aircraft generation is allowed to be commercialized. Even after adjusting for inflation, the development costs for new airliners have skyrocketed with each generation at least having double the development costs. This reflects the growing complexity of aircrafts and the regulatory environment in which they are operating