Aviation IndustryAviation Industry

Aviation IndustryAviation Industry

Learning Objectives :

• History of the aviation industry

• Understand the commercial planes configurations

• Define airline industry terminology

Aviation historyAviation history

• By 1917, seventeen regularly operating airlines in Europe, Africa, Australia, and South America

• Some airlines from that era that are still operating include: Royal Dutch Airlines (KLM), SABENA World Airlines, Lufthansa, and Qantas. Americans viewed air travel as a dangerous sport, not a safe means of transportation.

Aviation HistoryAviation History

• By the 1920's governments started to form national airlines through combining a few private airlines. One such case is the British government who formed Imperial Airways.

Aviation IndustryAviation Industry

• described as building and flying aircraft.

Two sectors :-

a) Military :- aircraft flown by a nation’s air force and other branches of its military

Aviation IndustryAviation Industry

b) Civil :- divided into domestic service and international service

i) Domestic :- flight must start and end within the borders of the same country e.g. Malaysia, USA, India, Australia

ii) International :- flight starts in one country and ends in another e.g. SIN-LAX

Airline growthAirline growth

• Surplus of military planes left after World War I, were converted to civilian use

• In 1919, bombers were being converted in Europe to form over twenty small new airlines

• First regular international airline service was started by one of those. The company setup by Henry and Maurice Farman used old Farman bombers to make weekly flights between Paris and Brussels.

Airline InnovationsAirline Innovations

• Needed both larger, faster and safer airplanes

• Many improvements were made, e.g. cockpit instruments, altimeters, airspeed indicators were installed in aircrafts in the 1930s that many believe it was the most innovative period in aviation history

Airlines’ Regulatory BodiesAirlines’ Regulatory Bodies

1) Federal Aviation Administration (FAA) controls’ operations, licenses pilots, inspects aircraft, and overseas

maintenance2) International Air Transport Association

(IATA)association made up of most of the world’s airlines, sets standards for civil aviation

Air Service and RoutesAir Service and Routes

1) Scheduled service :- business or for vacation travel operating regularly as per fixed schedule, advertised times regardless of number of passengers

2) Chartered service :- tour operator/s chartered the whole plane or flight for

a round trip e.g. Singapore-Tasmania- Singapore

Air Service and RoutesAir Service and Routes

3) Privately owned jet :- business travellers (usually senior executives) fly on a corporate jet that their company owns, e.g. Donald Trump’s (Private Jet B727-23) owns NYC Plaza hotel and Atlantic City’s Taj Mahal Casino etc.

• Wholly or fractional ownership may be less expensive than frequently buying first or business class seats for their executives

Types of flights and journeysTypes of flights and journeys

1) NonStop:- from origin to destination with no intermediate stops

2) Direct :- flight from origin to destination with one or more intermediate stops but still on the same aircraft

3) Connection :- passengers must change planes at the stopover city

Hubs and Spokes networkHubs and Spokes network

• Precise timing of arriving flights to offer a seamless onward transfer to departing flights and to maximise the number of attainable connections for incoming passengers and to keep at the same time the connecting times within defined and acceptable limits.

AircraftAircraft

Two types of jet aircrafts :-1) Narrow-body jet :- diameter of 3 to 4

metres, a single-aisle, seats arranged 4 to 6 seats, largest narrow-body jet carries about 280 passengers

e.g. B727, B737, B757, A320

AircraftAircraft

2) Wide-body jet (jumbo jets) :- large airliner with fuselage diameter of about 6 metres and twin aisles, accommodate 200 to 600 passengers

e.g. B747, B767, B777, A380

ConfigurationConfiguration

1) the way seating is arranged within the aircraft, e.g. 3-4-3, 3-3

2) normally, narrow-bodied jet with one aisle, has two seats per row or 3-3

(common sight)

3) wide-body jet, has two aisles and normally comes with 3-4-3

Yield ManagementYield Management

• Also known as revenue management

• Average amount of revenue earned per airline passenger divided by total number of passengers miles flown

• Computer-assisted process that, by assessing supply and demand, enables airlines to arrive at pricing that yields maximum load factors and revenue

Yield ManagementYield Management

• Equals profit

• Everything an airline does to make costs and revenues break even

• Manipulate the variables to make as much profit as possible

Budget Airline HistoryBudget Airline History

• Rollin King and Herb Kelleher developed the original concept back in 1971; a ticketless airline (Southwest Airlines) reducing frills and aiming squarely at offering the lowest possible prices

• RyanAir through profit warnings and drifting balance sheet, decided to follow the same business model therefore, cutting the frills and focusing on the functionality.

Budget AirlinesBudget Airlines

• The factors above contributed to the airlines' relative successes, the most pivotal development was EasyJet's (Switzerland) pricing model

• market deregulation in 1997, the practices laid down by these EasyJet and RyanAir (UK) were adopted by many other budget operators both in the UK, throughout Europe and the world.

Budget AirlinesBudget Airlines

• In SE Asia it started about 3 years ago

• Air Asia started in Malaysia followed by many others, e.g. ValuAir, Tiger Airlines, Jetstar, Phuket Airlines, Jet Airway and Air Sahara, Adam Air etc.

Budget Airlines’ DefinitionBudget Airlines’ Definition

Generally, budget airlines practice the followings:-

• don't issue tickets• don't do connections• short check in times• promote and sell journey 'legs' separately• one class, budget• sell direct to the public• don't have free meals or entertainment

Codes and JargonCodes and Jargon

• To promote efficiency and conciseness in the transfer of information, the travel industry has developed a system of standardized codes

Code SharingCode Sharing

• Allow one carrier to sell seats on another carrier’s flights at a preagreed price e.g. SQ and NW with a four-digit flight no.

• SQ relying on NW to reach out to US cities

• NW relying on SQ to reach out to Asia and Australasia

City CodesCity Codes

• IATA assigns and administers all the three-letter location identifiers used by the airlines worldwide, e.g.,

• Bangkok :- BKK

• Los Angeles :- LAX

• New York :- JFK

• Singapore :- SIN

Classes of ServiceClasses of Service

• First Class (P or F class)

• Business Class (J class)

• Economy Class (Y class)

Major Airlines with IATA call Major Airlines with IATA call codescodes

• Singapore Airlines (SQ)

• Malaysia Airlines (MH)

• Emirates Airlines (EK)

• Qantas/British Airways (QF/BA)

Major airlines with IATA call Major airlines with IATA call codescodes

• Japan Airlines (JL)

• Thai Airways (TG)

• SilkAir (MI)

Computer Reservation System Computer Reservation System (CRS)(CRS)

• Major systems are called host systems

• Sellers of a computer system are called vendors

• Travel businesses that lease access to a system are called subscribers

Computer Reservation System Computer Reservation System (CRS)(CRS)

• Airlines that do not host a system but want their information displayed are called cohosts.

• Cohosts pay to have their information displayed in the host’s computer system. Some of the low-fare carriers have chosen not to participate in the systems

Computer Reservation System Computer Reservation System (CRS)(CRS)

• Sabre (USA)

• Apollo/Galileo (UA/European Airlines) Owned by Travelport which bought Apollo and Worldspan)

• Worldspan (UK)

• Amadeus (Europe) founded by Air France, Lufthansa, Iberia, and SAS

• Abacus (Singapore)

The Airline ReservationThe Airline Reservation

• Flight itineraries

• Effective/discontinued

• Frequency codes

• Minimum connecting times

• Seat availability

• Confirmation

• Wait Lists

Methods of distributionMethods of distribution

• Airports, city ticket offices (CTOs) and telephone networks

• Travel agencies

• The Internet

• Post Office (Air Asia)

• SMS (Air Asia)

Commonly used termsCommonly used terms

• Commercial flight :- seats sold by an airline to the general public

• Gateway :- city and/or airport that serves an airline as its departure/arrival point for international travel

Commonly used termsCommonly used terms

• Frequent-flyer programs (FFPs) :- initiated by American Airlines in the late 1970s and quickly copies by almost every airline, frequent-flyer programs (FFPs) reward their members for the number of miles flown on an airline and its affiliates, e.g. Krisflyer, Mileage Plus, World Perks, Enrich, Royal Orchid Plus etc.

SummarySummary

• The aviation industry has evolved from an infant stage to a very competitive environment with an emerging of budget airlines.

• The different types of commercial planes that are in the market and various common terms that are used in the day-to-day running of the aviation industry.