Airline Industry

Airline Industry Description of the operation: Air travel remains a large and growing industry. It facilitates economic growth, world trade, international investment and tourism and is therefore central to the globalization taking place in many other industries. In the past decade, air travel has grown by 7% per year. Travel for both business and leisure purposes grew strongly worldwide. Scheduled airlines carried 1.5 billion passengers last year. In the leisure market, the availability of large aircraft such as the Boeing 747 made it convenient and affordable for people to travel further to new and exotic destinations. Governments in developing countries realized the benefits of tourism to their national economies and spurred the development of resorts and infrastructure to lure tourists from the prosperous countries. As the economies of developing countries grow, their own citizens are already becoming the new international tourists of the future. Business travel has also grown as companies become increasingly international in terms of their investments, their supply and production chains and their customers. The rapid growth of world trade in goods and services and international direct investment have also contributed to growth in business travel. To meet the requirements of their increasingly discerning customers, some airlines are having to invest heavily in the quality of service that they offer, both on the ground and in the air. Ticketless travel, new interactive entertainment systems, and more comfortable seating are just some of the product enhancements being introduced to attract and retain customers. Least of job duties as a manager: •

Analyze in detail the evolving low cost carrier business model, its strengths and weaknesses

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Examine the evolution of the industry, and gain an insight into the future airline business model

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Study lessons learned from successfully adapting airlines - see how they have managed to compete in the new marketplace, through examination of their models and strategies

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Work through synergies between your business and the leading practices of other successful carriers to identify where the opportunities lie

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Focus on cost management, revenue generation strategies and competitive techniques which have proven successful in today’s marketplace

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Explore new opportunities for innovation Enjoy most in: Managing Finances Because the last of the four areas is financial management, for which six factors are used. Unit revenue and unit cost are important by themselves, but their relationship is also important. Therefore, we have compared unit revenue and unit cost as well as the unit margins among the airlines. A measure of capacity to normalize these factors is used since the airlines fly all their available seats, not just those that are occupied. Better unit revenue may not be an advantage for an airline whose unit costs are out of line. Enjoy least in: Managing the Fleet In the area of fleet management, the same factors are used for this analysis as in the earlier study. Airplane utilization in hours per day deals with how well the companies' major assets (airplanes) are used as a group. The load factor relative to the industry average indicates how well the average individual airplane is used. Simply stated, the load factor is that proportion of an airplane's seats that are sold and actually filled at departure. Familiar with: Geographical differences and considerations in the evolving airline model. Challenges as the new manager:

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New opportunities of high tech innovations. Making a good and competitive technique. Choose the right employer for the right place. Study in detail the evolving low cost carrier business model.

Greatest challenge and why: Managing People We use two factors with respect to how well the airline manages its people. Productivity, in airline capacity per employee, is a measure of how effectively the employees work together in providing the physical service of getting passengers from one place to another. Morale is a measure of how committed employees are to providing good service to the airline's customers. As in the original study, productivity is measured in available seat miles per employee. Morale is measured using proxies since the original morale model is complex and requires information not currently available for the airlines being examined. In this case, lost bags per 1000 passengers and complaints per 100,000 enplanements derived from the Air Travel Consumer Report are used as indicators of how committed airline employees are to serving their customers. The activities that result in lost bags or in poor enough treatment of passengers that they file complaints are indicative of the morale of the airline employees. Labor-management relations (including strikes and threatened strikes) are one example of a driver of these effects.

(Airline Industry)

Submitted By: Krizia Mae M. Cabalatungan