This document summarizes a research paper about the pros and cons of outsourcing from an air carrier's perspective. The paper analyzes reasons why airlines may outsource such as cost reduction. It also examines the transaction cost economics framework for evaluating outsourcing decisions. While outsourcing can reduce costs and allow airlines to focus on core functions, it may also reduce employee loyalty and oversight of critical maintenance activities. The paper concludes that outsourcing is useful for airlines but requires careful review to balance advantages and disadvantages.
This document provides an overview and summary of the IATA Operational Safety Audit (IOSA) program. It discusses the background and goals of IOSA, which aims to standardize airline audits globally. The document outlines the IOSA audit process, including preparation, on-site audits conducted by accredited organizations, potential findings, corrective actions, and registration. It also proposes an action plan for the company to achieve IOSA registration by a target date.
- Saudi Arabian Airlines has provided services to disabled passengers since 1992 and established a Special Needs Unit in 1997 to study and address the needs of disabled travelers.
- The unit has received several awards for its services and meals tailored for special needs. It offers dedicated services and facilities at airports, including special meals, treatments, and materials in alternate formats.
- The presentation proposes new ideas like participating in disability-related events, introducing a loyalty program for disabled travelers called "Friends of Alfursan," and providing flight crew training to improve awareness and assistance.
- The overall purpose is to continuously improve the air travel experience for disabled passengers in Saudi Arabia.
Passengers can experience a seamless and luxurious travel experience in the Lufthansa terminal at Los Angeles International Airport (LAX). The terminal offers a comfortable and opulent ambiance thanks to its exquisite design and high-end services. A wide range of luxury eating alternatives that cater to different preferences and provide exceptional culinary delights are available to passengers. Exclusive lounges are also available in the terminal for travellers to unwind in before takeoff. With attentive workers on hand to meet travellers' needs, the terminal exudes the famous customer service of Lufthansa. The Lufthansa terminal at LAX guarantees a first-class experience for picky travellers from check-in to boarding.
The document defines the nine Freedoms of the Air, which refer to the rights of airlines to conduct commercial flight activities between countries. The Freedoms include the rights to: overfly another country without landing (1st); make technical stops without loading/unloading passengers or cargo (2nd); carry passengers/cargo from one's home country to another (3rd); carry passengers/cargo from another country to one's home country (4th); carry passengers/cargo between two other countries as part of a flight originating or ending in the home country (5th); carry passengers/cargo between two other countries with a stop in the home country (6th); carry passengers/cargo between two other countries without stopping
Paranormal phenomena at Los Rodeos Airport Tenerife in 1977Erasmus+
1) On March 27, 1977 at Los Rodeos Airport in Tenerife, Spain, a KLM Boeing 747 collided with a Pan Am Boeing 747 on the runway, killing 583 people in the worst aviation disaster in history.
2) The planes were trying to take off from the foggy airport, which was full due to another plane bombing earlier that day. In the poor visibility, the KLM plane started its takeoff without clearance and collided with the Pan Am plane, which was still taxiing down the runway.
3) All 248 people on the KLM plane and 335 of the 380 people on the Pan Am plane were killed on impact or in the fires that followed. The crash
This presentation introduces readers to airline industry's two most common networks. It also compares the features of the two and highlights scenarios when one may be more profitable than the other.
The presentation explores how the Duopoly of Boeing & Airbus rules the Aircraft Manufacturing Market, The competitive Rivalry among these two companies, Porter's Five Forces acting on this industry
This document provides an overview and summary of the IATA Operational Safety Audit (IOSA) program. It discusses the background and goals of IOSA, which aims to standardize airline audits globally. The document outlines the IOSA audit process, including preparation, on-site audits conducted by accredited organizations, potential findings, corrective actions, and registration. It also proposes an action plan for the company to achieve IOSA registration by a target date.
- Saudi Arabian Airlines has provided services to disabled passengers since 1992 and established a Special Needs Unit in 1997 to study and address the needs of disabled travelers.
- The unit has received several awards for its services and meals tailored for special needs. It offers dedicated services and facilities at airports, including special meals, treatments, and materials in alternate formats.
- The presentation proposes new ideas like participating in disability-related events, introducing a loyalty program for disabled travelers called "Friends of Alfursan," and providing flight crew training to improve awareness and assistance.
- The overall purpose is to continuously improve the air travel experience for disabled passengers in Saudi Arabia.
Passengers can experience a seamless and luxurious travel experience in the Lufthansa terminal at Los Angeles International Airport (LAX). The terminal offers a comfortable and opulent ambiance thanks to its exquisite design and high-end services. A wide range of luxury eating alternatives that cater to different preferences and provide exceptional culinary delights are available to passengers. Exclusive lounges are also available in the terminal for travellers to unwind in before takeoff. With attentive workers on hand to meet travellers' needs, the terminal exudes the famous customer service of Lufthansa. The Lufthansa terminal at LAX guarantees a first-class experience for picky travellers from check-in to boarding.
The document defines the nine Freedoms of the Air, which refer to the rights of airlines to conduct commercial flight activities between countries. The Freedoms include the rights to: overfly another country without landing (1st); make technical stops without loading/unloading passengers or cargo (2nd); carry passengers/cargo from one's home country to another (3rd); carry passengers/cargo from another country to one's home country (4th); carry passengers/cargo between two other countries as part of a flight originating or ending in the home country (5th); carry passengers/cargo between two other countries with a stop in the home country (6th); carry passengers/cargo between two other countries without stopping
Paranormal phenomena at Los Rodeos Airport Tenerife in 1977Erasmus+
1) On March 27, 1977 at Los Rodeos Airport in Tenerife, Spain, a KLM Boeing 747 collided with a Pan Am Boeing 747 on the runway, killing 583 people in the worst aviation disaster in history.
2) The planes were trying to take off from the foggy airport, which was full due to another plane bombing earlier that day. In the poor visibility, the KLM plane started its takeoff without clearance and collided with the Pan Am plane, which was still taxiing down the runway.
3) All 248 people on the KLM plane and 335 of the 380 people on the Pan Am plane were killed on impact or in the fires that followed. The crash
This presentation introduces readers to airline industry's two most common networks. It also compares the features of the two and highlights scenarios when one may be more profitable than the other.
The presentation explores how the Duopoly of Boeing & Airbus rules the Aircraft Manufacturing Market, The competitive Rivalry among these two companies, Porter's Five Forces acting on this industry
This document provides an overview of FedEx Corporation, including its mission, history, operations, competitive advantages, and recommendations. FedEx is a global shipping company that offers transportation, e-commerce, and business services. It operates major hubs around the world and has grown significantly since its founding in 1971 through strategic acquisitions and innovations in technology. While the company engages in some ethical practices around sustainability and disaster relief, it has also faced issues with overcharging customers. The document recommends that FedEx continue focusing on cost savings, customer service, and innovation to maintain its competitive edge.
This document provides an overview of the International Air Transport Association (IATA) and their Dangerous Goods Regulations (DGR) manual. IATA was formed in 1945 and represents over 200 airlines. Their main aims are to provide safe and secure air transportation. The DGR defines dangerous goods and provides classification, packaging, labeling and handling requirements to safely transport dangerous goods by air. It is based on United Nations recommendations and ICAO technical instructions. The DGR aims to minimize risks to health, safety, property and the environment from dangerous goods transported by air.
In this slidecast, you will find some financial news about a company called Air France KLM. Results, statistics and tables will give you a better view about their financial status.
The aviation industry in India is the 9th largest market globally and is poised to become the 3rd largest by 2020. It carried over 162 million domestic and international passengers in 2017 through over 85 international airlines and 5 Indian carriers connecting over 40 countries. The industry faces challenges like rising fuel costs and congestion but prospects are strong with the emergence of low-cost carriers, modernization of airports, and encouraging private investment in infrastructure.
JetBlue is considering going public and needs to determine an appropriate offering price per share. There are advantages like raising capital but also disadvantages like increased disclosure requirements to going public. Two approaches are used to value JetBlue's shares: comparable company multiples which yield prices of $10.70-$19.76 per share, and discounted cash flow analysis which results in $26 per share. Considering these analyses, the team recommends an IPO price of $22 per share to raise sufficient capital without being too high and hindering future capital raising.
Shared aircraft spares holdings or pooling: To increase air carrier operation...Mersie Amha Melke
This document discusses shared aircraft spare parts holdings or pooling to decrease operational costs for air carriers. It provides background on how maintenance costs, including availability of spare parts, represent a significant portion of airline operating expenses. The document then reviews different methods airlines use to maintain spare parts, including individual stocking, commercial pooling with third parties, and cooperative pooling between airlines. It analyzes how cooperative pooling may allow for shorter lead times and more effective inventory usage while avoiding large capital costs of individual stocking. The document concludes by discussing modeling of spare part availability and how cooperative pooling is shown to be an optimal choice according to previous research models.
Running head: MANAGEMENT
1
MANAGEMENT
2
Operations Management in Airline Industry
Name
Course
Tutor
College
Date
Airline industry has a positive impact on the people’s way of living. It has now become a very essential service hard to picture how life would be without it. It has changed on the way people operate in the world of business because now time taken to travel long distances is very short. It is now possible to do business in some areas which were considered to be remote way back. It provides the necessary transportation network in the whole world therefore its acknowledged for the success of businesses and growth of the tourism industry (ATAG, 2005).
Aviation industry is a major source of employment and by paying taxes it contributes much to the economy. It has been experiencing a considerable growth in the last decades. Its approximately above seventy-fold as the time the first airliner flew (ATAG, 2005). That huge growth experienced is due to many factors. One of them is increase in disposable income which has led to improved living standards in the world.
The growth is also as a result of improved aviation laws and open- sky negotiations between different governments. It has led to discovery of new markets making travel affordable and easier. Increased demand due to high levels of confidence in air travel as a proved safe means of travel has also contributed to the enormous growth.
Due to increased competition, airfares have reduced therefore low cost in traveling. Globalization has also played major role as the distance traveled has increased since people are doing business everywhere due to stable political and social climate. These factors are expected to improve further thus increased no of traffic in air travel. It is now to the companies in the industry to utilize the advantage of the available opportunities and improve in the management of their work.
Most of the airlines are owned by the government but now there is an emerging trend of movement to commercial, independent public companies. This has led to increased number of commercial companies thus increased pressure on management in increased profits, reduction of cost and revenue increment.
The operators in this industry survive in a very competitive and dynamic environment. First this industry was created for the service of delivering mails. There has been massive evolution into very complicated operations of transport to passengers and cargo. All these improvements come with a very complex operating strategies and a lot of competition.
To attain a considerable growth, it is important for the airline companies to study the conditions prevailing in the market. This industry involves very high investment costs, operation in a geographically dispersed market and tough huddles imposed by the regulator. Therefore this has led to huge investment in operations techniques and information.
The industry has been divided into different sectors. They include ope.
Operations research with case study on gm and fordChhatrapal Surve
Operations research techniques have many applications in business and industry. Some key applications include:
1. Scheduling flights and crews for airlines in an optimal way.
2. Using optimization to help General Motors decide on strategic directions for their OnStar program and analyze the emerging telematics market.
3. Helping General Motors in the 1980s-1990s analyze manufacturing productivity and throughput at their factories to address bottlenecks and production issues.
This summary provides the key points from the document in 3 sentences:
Code sharing agreements between domestic and international airlines can benefit the domestic airline by increasing its revenue passenger miles (RPMs), passenger load factor (PLF), and market share. Having multiple code sharing partnerships with international carriers may provide greater benefits to domestic airlines than a single partnership. However, equity investment alone by an international carrier in a domestic airline may not lead to increased RPMs, PLF, or market share for the domestic airline.
Airline Strategy From Network Management To Business ModelsJoe Andelija
- There are different approaches to airline strategy, including network management, business models, and strategic alliances.
- Airline operations rely heavily on network management and the ability to leverage network effects through factors like hub dominance, partnerships, and brand strength.
- Business models are influenced by the extent to which airlines can benefit from network effects, and different models impact aircraft selection and operational concepts.
This document describes a study that uses a system dynamics model to analyze the life cycle costs of an airline's aging aircraft fleet. The model aims to determine the average age of the fleet that will minimize long-term costs. It reviews literature on cost analysis using system dynamics modeling and maintenance costs for aging aircraft. The framework model makes assumptions about fleet composition and calculates variables like maintenance costs and fleet age. Simulation results show the total costs and average fleet ages over time for different desired average fleet ages. The model can help airlines identify policies to reduce costs by optimizing the average age of their fleets.
This document is a 34-page paper exploring operational efficiency within airlines. It begins by discussing how an airline's strategy, geographic area, and organizational structure can impact efficiency. It then examines various factors that influence efficiency, including turnaround times, maintenance scheduling, fleet age, and dispatch issues. The document considers different types of route structures and their relative efficiencies. It also notes potential pitfalls in how airlines analyze and interpret efficiency.
This document analyzes the business portfolio of Airbus Group. It discusses how Airbus Group segments its business into three reportable segments: Airbus, Airbus Helicopters, and Airbus Defence and Space. However, the document argues that alternative segmentation methods may provide a more accurate picture by considering factors like product similarities, competition, and synergies across business units. The analysis explores using portfolio tools like the BCG matrix to evaluate Airbus Group's portfolio balance but notes these need to account for operational and financial synergies between business units. It also discusses how the unique characteristics of the aerospace industry, including heavy R&D costs and government involvement, impact business strategies.
In what way can we see that JetBlue made an entrance in an industry from the old mass production paradigm and still were able to take advantage of the ideas of the new ICT paradigm? How JetBlue make flying easier for a whole new customer segment (the low-cost segment) through focus on efficiency and new technology.
This document discusses implementing lean philosophy in aircraft maintenance to eliminate waste. It first reviews literature on lean implementation in various industries. It then describes the problem environment of aircraft maintenance processes and provides an overview of lean philosophies, including defining value-adding, non-value-adding and necessary but non-value adding activities. It presents a case study of an aircraft industry in India and discusses observed non-value adding activities like frequent inspections increasing service time and long set-up times of components. Finally, it proposes using value stream mapping to visualize the current process and identify sources of waste to guide improving the future state.
This document discusses implementing lean philosophy in aircraft maintenance to eliminate waste. It reviews literature on applying lean principles in manufacturing. The author proposes using value stream mapping to visualize non-value added activities in a maintenance organization's processes. A case study of an aircraft industry applying lean is described. The paper concludes lean implementation can optimize maintenance operations with minimal investment.
Today, most of the organizations quite advanced in involving multiple applications of strategic management.
In this paper I have tried to describe an effective and working Ryanair’s competitive strategy, approach and factors have accounted for Ryanair’s success. I also analyzed what are Ryanair’s distinctive capabilities and how they are implementing various strategies to attract and retain customers.
The aviation industry has experienced soaring passenger traffic, requiring airports to dramatically develop their operations to accommodate more volume. Managing airport complexities is challenging, involving safety, security, resources, assets, and more. A recent study explored the "Smart Airport" concept of heavily interconnecting technical and operational know-how. It analyzed perspectives of technology, business optimization and revenues, and improved passenger experience. Effective information technology governance is important for seamless travel, requiring shared decision-making and well-designed processes formally communicated. Airports are moving from centralized structures with decentralized information technology to decentralized structures with centralized information technology.
This document discusses the political, economic, and competitive factors that have impacted the European airline industry. It analyzes how deregulation, wars, and terrorism have changed the industry politically. Economically, it explores how recessions and rising oil prices have affected profits. Competitively, it examines the low-cost business model of carriers like Ryanair and EasyJet and how they have gained significant market share through low fares. The future prospects discussed maintaining cost advantages for low-cost carriers while major airlines will face challenges competing on price.
This document discusses foreign outsourcing and offshoring among multinational enterprises in Nigeria. It explores the concepts and theories of foreign outsourcing and offshoring, including transaction cost economics theory, core competency theory, and agency theory. The document concludes that foreign outsourcing and offshoring can provide benefits (blessings) like reduced costs, but may also have drawbacks (curses) such as job losses. Future research should include more participants and sectors to generalize findings.
This document provides an overview of FedEx Corporation, including its mission, history, operations, competitive advantages, and recommendations. FedEx is a global shipping company that offers transportation, e-commerce, and business services. It operates major hubs around the world and has grown significantly since its founding in 1971 through strategic acquisitions and innovations in technology. While the company engages in some ethical practices around sustainability and disaster relief, it has also faced issues with overcharging customers. The document recommends that FedEx continue focusing on cost savings, customer service, and innovation to maintain its competitive edge.
This document provides an overview of the International Air Transport Association (IATA) and their Dangerous Goods Regulations (DGR) manual. IATA was formed in 1945 and represents over 200 airlines. Their main aims are to provide safe and secure air transportation. The DGR defines dangerous goods and provides classification, packaging, labeling and handling requirements to safely transport dangerous goods by air. It is based on United Nations recommendations and ICAO technical instructions. The DGR aims to minimize risks to health, safety, property and the environment from dangerous goods transported by air.
In this slidecast, you will find some financial news about a company called Air France KLM. Results, statistics and tables will give you a better view about their financial status.
The aviation industry in India is the 9th largest market globally and is poised to become the 3rd largest by 2020. It carried over 162 million domestic and international passengers in 2017 through over 85 international airlines and 5 Indian carriers connecting over 40 countries. The industry faces challenges like rising fuel costs and congestion but prospects are strong with the emergence of low-cost carriers, modernization of airports, and encouraging private investment in infrastructure.
JetBlue is considering going public and needs to determine an appropriate offering price per share. There are advantages like raising capital but also disadvantages like increased disclosure requirements to going public. Two approaches are used to value JetBlue's shares: comparable company multiples which yield prices of $10.70-$19.76 per share, and discounted cash flow analysis which results in $26 per share. Considering these analyses, the team recommends an IPO price of $22 per share to raise sufficient capital without being too high and hindering future capital raising.
Shared aircraft spares holdings or pooling: To increase air carrier operation...Mersie Amha Melke
This document discusses shared aircraft spare parts holdings or pooling to decrease operational costs for air carriers. It provides background on how maintenance costs, including availability of spare parts, represent a significant portion of airline operating expenses. The document then reviews different methods airlines use to maintain spare parts, including individual stocking, commercial pooling with third parties, and cooperative pooling between airlines. It analyzes how cooperative pooling may allow for shorter lead times and more effective inventory usage while avoiding large capital costs of individual stocking. The document concludes by discussing modeling of spare part availability and how cooperative pooling is shown to be an optimal choice according to previous research models.
Running head: MANAGEMENT
1
MANAGEMENT
2
Operations Management in Airline Industry
Name
Course
Tutor
College
Date
Airline industry has a positive impact on the people’s way of living. It has now become a very essential service hard to picture how life would be without it. It has changed on the way people operate in the world of business because now time taken to travel long distances is very short. It is now possible to do business in some areas which were considered to be remote way back. It provides the necessary transportation network in the whole world therefore its acknowledged for the success of businesses and growth of the tourism industry (ATAG, 2005).
Aviation industry is a major source of employment and by paying taxes it contributes much to the economy. It has been experiencing a considerable growth in the last decades. Its approximately above seventy-fold as the time the first airliner flew (ATAG, 2005). That huge growth experienced is due to many factors. One of them is increase in disposable income which has led to improved living standards in the world.
The growth is also as a result of improved aviation laws and open- sky negotiations between different governments. It has led to discovery of new markets making travel affordable and easier. Increased demand due to high levels of confidence in air travel as a proved safe means of travel has also contributed to the enormous growth.
Due to increased competition, airfares have reduced therefore low cost in traveling. Globalization has also played major role as the distance traveled has increased since people are doing business everywhere due to stable political and social climate. These factors are expected to improve further thus increased no of traffic in air travel. It is now to the companies in the industry to utilize the advantage of the available opportunities and improve in the management of their work.
Most of the airlines are owned by the government but now there is an emerging trend of movement to commercial, independent public companies. This has led to increased number of commercial companies thus increased pressure on management in increased profits, reduction of cost and revenue increment.
The operators in this industry survive in a very competitive and dynamic environment. First this industry was created for the service of delivering mails. There has been massive evolution into very complicated operations of transport to passengers and cargo. All these improvements come with a very complex operating strategies and a lot of competition.
To attain a considerable growth, it is important for the airline companies to study the conditions prevailing in the market. This industry involves very high investment costs, operation in a geographically dispersed market and tough huddles imposed by the regulator. Therefore this has led to huge investment in operations techniques and information.
The industry has been divided into different sectors. They include ope.
Operations research with case study on gm and fordChhatrapal Surve
Operations research techniques have many applications in business and industry. Some key applications include:
1. Scheduling flights and crews for airlines in an optimal way.
2. Using optimization to help General Motors decide on strategic directions for their OnStar program and analyze the emerging telematics market.
3. Helping General Motors in the 1980s-1990s analyze manufacturing productivity and throughput at their factories to address bottlenecks and production issues.
This summary provides the key points from the document in 3 sentences:
Code sharing agreements between domestic and international airlines can benefit the domestic airline by increasing its revenue passenger miles (RPMs), passenger load factor (PLF), and market share. Having multiple code sharing partnerships with international carriers may provide greater benefits to domestic airlines than a single partnership. However, equity investment alone by an international carrier in a domestic airline may not lead to increased RPMs, PLF, or market share for the domestic airline.
Airline Strategy From Network Management To Business ModelsJoe Andelija
- There are different approaches to airline strategy, including network management, business models, and strategic alliances.
- Airline operations rely heavily on network management and the ability to leverage network effects through factors like hub dominance, partnerships, and brand strength.
- Business models are influenced by the extent to which airlines can benefit from network effects, and different models impact aircraft selection and operational concepts.
This document describes a study that uses a system dynamics model to analyze the life cycle costs of an airline's aging aircraft fleet. The model aims to determine the average age of the fleet that will minimize long-term costs. It reviews literature on cost analysis using system dynamics modeling and maintenance costs for aging aircraft. The framework model makes assumptions about fleet composition and calculates variables like maintenance costs and fleet age. Simulation results show the total costs and average fleet ages over time for different desired average fleet ages. The model can help airlines identify policies to reduce costs by optimizing the average age of their fleets.
This document is a 34-page paper exploring operational efficiency within airlines. It begins by discussing how an airline's strategy, geographic area, and organizational structure can impact efficiency. It then examines various factors that influence efficiency, including turnaround times, maintenance scheduling, fleet age, and dispatch issues. The document considers different types of route structures and their relative efficiencies. It also notes potential pitfalls in how airlines analyze and interpret efficiency.
This document analyzes the business portfolio of Airbus Group. It discusses how Airbus Group segments its business into three reportable segments: Airbus, Airbus Helicopters, and Airbus Defence and Space. However, the document argues that alternative segmentation methods may provide a more accurate picture by considering factors like product similarities, competition, and synergies across business units. The analysis explores using portfolio tools like the BCG matrix to evaluate Airbus Group's portfolio balance but notes these need to account for operational and financial synergies between business units. It also discusses how the unique characteristics of the aerospace industry, including heavy R&D costs and government involvement, impact business strategies.
In what way can we see that JetBlue made an entrance in an industry from the old mass production paradigm and still were able to take advantage of the ideas of the new ICT paradigm? How JetBlue make flying easier for a whole new customer segment (the low-cost segment) through focus on efficiency and new technology.
This document discusses implementing lean philosophy in aircraft maintenance to eliminate waste. It first reviews literature on lean implementation in various industries. It then describes the problem environment of aircraft maintenance processes and provides an overview of lean philosophies, including defining value-adding, non-value-adding and necessary but non-value adding activities. It presents a case study of an aircraft industry in India and discusses observed non-value adding activities like frequent inspections increasing service time and long set-up times of components. Finally, it proposes using value stream mapping to visualize the current process and identify sources of waste to guide improving the future state.
This document discusses implementing lean philosophy in aircraft maintenance to eliminate waste. It reviews literature on applying lean principles in manufacturing. The author proposes using value stream mapping to visualize non-value added activities in a maintenance organization's processes. A case study of an aircraft industry applying lean is described. The paper concludes lean implementation can optimize maintenance operations with minimal investment.
Today, most of the organizations quite advanced in involving multiple applications of strategic management.
In this paper I have tried to describe an effective and working Ryanair’s competitive strategy, approach and factors have accounted for Ryanair’s success. I also analyzed what are Ryanair’s distinctive capabilities and how they are implementing various strategies to attract and retain customers.
The aviation industry has experienced soaring passenger traffic, requiring airports to dramatically develop their operations to accommodate more volume. Managing airport complexities is challenging, involving safety, security, resources, assets, and more. A recent study explored the "Smart Airport" concept of heavily interconnecting technical and operational know-how. It analyzed perspectives of technology, business optimization and revenues, and improved passenger experience. Effective information technology governance is important for seamless travel, requiring shared decision-making and well-designed processes formally communicated. Airports are moving from centralized structures with decentralized information technology to decentralized structures with centralized information technology.
This document discusses the political, economic, and competitive factors that have impacted the European airline industry. It analyzes how deregulation, wars, and terrorism have changed the industry politically. Economically, it explores how recessions and rising oil prices have affected profits. Competitively, it examines the low-cost business model of carriers like Ryanair and EasyJet and how they have gained significant market share through low fares. The future prospects discussed maintaining cost advantages for low-cost carriers while major airlines will face challenges competing on price.
This document discusses foreign outsourcing and offshoring among multinational enterprises in Nigeria. It explores the concepts and theories of foreign outsourcing and offshoring, including transaction cost economics theory, core competency theory, and agency theory. The document concludes that foreign outsourcing and offshoring can provide benefits (blessings) like reduced costs, but may also have drawbacks (curses) such as job losses. Future research should include more participants and sectors to generalize findings.
Porter's Five Forces analysis is used to analyze the airline industry. The key forces are:
1) Bargaining power of buyers is low as there are many buyers and low switching costs between airlines.
2) Bargaining power of suppliers is low since there are few airplane manufacturers and airlines cannot easily switch suppliers.
3) Threat of new entry is low given the large capital required and brand recognition of existing airlines.
4) Threat of substitutes is medium as other transportation is slower but cheaper for some routes.
5) Rivalry among existing players is high due to similar offerings and inability to leave the industry easily.
JetBlue Airways was founded in 2000 by David Neeleman with a vision of providing low fares and high quality customer service. In 2008, after several leadership changes, JetBlue implemented new strategies like reducing capacity, raising fares, improving services for business travelers, and forming strategic partnerships. These strategies aligned with addressing industry challenges like high fuel costs and competition. The document discusses JetBlue's strategies and financial performance from 2003-2007, which supported replacing top management to help the company rebuild its reputation and develop innovative strategies for continued success.
In an effort to be more competitive, aerospace companies have to embrace a more integrated
and concurrent approach to their operational processes. The aim is to meet the key
requirements of being more cost effective, lean and agile while delivering consistently high
quality performance in their operational practices
This document discusses the reorganization of Air France-KLM's sales processes in the Gulf region. It provides background information on Air France-KLM and the airline industry. It then states the problem that Air France-KLM faces intense competition from Gulf carriers who receive government support. The objectives of the research are to examine Air France-KLM's operations in the Gulf region and analyze their initiatives, opportunities, and challenges. The document outlines the scope and organization of the upcoming study.
Similar to Outsourcing: An air carrier's perspective on its' pros and cons (20)
The document discusses how automation has impacted flight crews' group processes. It defines the key components of a flight crew's group process, including communication, decision-making, team formation/management, and situation awareness/workload management. It then analyzes how automation has both positively and negatively affected these group processes. Specifically, it notes that while automation has reduced workload, it has also introduced new types of errors related to overreliance on automated systems and reduced vigilance. Automation can impact hierarchical decision-making and reduce individual pilots' active control of the aircraft. Overall, the document examines how automation has changed the cognitive demands on pilots from an emphasis on probabilistic judgment to a focus on system consistency and monitoring.
The document discusses the Air MIDAS software, which is a human performance modeling tool used to analyze human-machine systems. It was developed jointly by NASA and San Jose State University for aviation applications. Air MIDAS uses a first principles model of human behavior that incorporates perceptual, cognitive, and motor systems. It represents humans' working memory and knowledge and can simulate procedural tasks. The software provides a symbolic operator model and updateable world representation to model human-machine interactions and outcomes.
Fuel tank enhancements as a means to decrease risk of fuel tank explosion on ...Mersie Amha Melke
The document discusses fuel tank explosions on commercial passenger aircraft and the FAA's final rule to address this safety issue. It summarizes 9 accidents between 1966-2008 involving fuel tank explosions, noting common factors were the presence of flammable vapor, an ignition source, and oxygen. The rule requires fuel tank designs on new aircraft to prevent explosions by eliminating one of these factors. It aims to address the risk identified in past accidents but excludes some older and cargo aircraft.
Before flight activities rarely seen by the general public-FYI this type of Space Transportaion System (STS) have been retired very recently for the transitional Russian STS.
1) FADEC systems use digital controls and computers to precisely regulate factors like fuel flow and engine speed, allowing consistent engine performance. HUMS monitors helicopter components for faults or reduced lifespan.
2) FADEC systems have wiring to sensors, actuators, and the aircraft to allow the electronic engine control unit to compute and relay control signals. HUMS includes onboard and ground equipment to analyze vibration and performance data.
3) FADEC and HUMS provide benefits like reduced maintenance, lower costs, increased safety and reliability compared to older mechanical controls. HUMS requires cooperation across organizations for its maintenance approach.
This document discusses crew resource management (CRM) training and the potential for a "boomerang effect", where some trainees have a negative reaction to the training. It outlines how CRM training aims to improve communication, decision-making and teamwork among flight crews. However, lack of organizational support for CRM, weaknesses in instructor training, and issues with simulating realistic group dynamics can trigger a boomerang effect in some individuals. Management commitment before and after training, as well as high quality instruction and simulations, are needed to minimize negative responses and maximize the benefits of CRM training.
The document discusses the design process of helicopter rotor blades. It covers the structural loads on rotor blades, available materials for manufacturing, examples of materials used in existing helicopter blades, and design considerations. Composite materials are now commonly used instead of metals due to advantages in strength, stiffness, corrosion resistance, and reduced fatigue cracking allowing for unlimited operational lifetimes. The rotor blade design process requires analyzing loads, material selection, aerodynamics, and costs while meeting regulatory requirements.
The document provides background information on the V-22 Osprey tiltrotor aircraft. It discusses the Osprey's development history dating back to concepts in the 1930s. It also outlines the Osprey's mission requirements from the US Marine Corps, Navy, and Air Force, including troop and cargo transport capabilities. The document further examines the Osprey's systems and various challenges faced during its demanding development process.
The document discusses Saharan dust transport and its relationship to hurricanes in the North Atlantic Ocean. It notes that the largest source of Saharan dust is the Bodele region of Chad. Saharan dust is transported seasonally to the North Atlantic and its deposition varies seasonally. Long-term observations show that Saharan dust generally impedes hurricane intensification in the North Atlantic, but some hurricanes have still intensified despite the presence of Saharan dust, indicating the relationship is case-dependent.
Outsourcing: An air carrier's perspective on its' pros and cons
1. OUTSOURCING: AN AIR CARRIER’S PERSPECTIVE ON ITS’ PROS AND
CONS
by
Mersie Amha Melke
An Aircraft Maintenance Management Research Paper
Submitted to the Extended Campus
in Partial Fulfillment of the Requirements of
Master of Aeronautical Science
ASCI 609
Embry-Riddle Aeronautical University
Worldwide Online
March 2010
2. ABSTRACT
Researcher: Mersie Amha Melke
Title: Outsourcing: An Air Carrier’s Perspective on
its’ Pros and Cons
Institution: Embry-Riddle Aeronautical University
Degree: Master of Aeronautical Science
Year: 2010
Outsourcing is one of many business strategies used by
industries to save cost, focus on business functions and
increase productivity amongst several other business-
oriented targets. Commercial aviation is one of the
industries using this business strategy. However, the
unique regulatory and operating environment effective on
the air carrier industry makes it susceptible to challenges
not common to other industries. Thus, outsourcing is not
necessarily efficient for air carriers’ goals such as cost
cutting. In this paper, the author will analyze the
advantages and disadvantages of outsourcing from an air
carrier’s perspective.
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3. Table of Contents
Page
INTRODUCTION 1
REASONS FOR OUTSOURCING IN THE AIRLINE INDUSTRY 2
DETERMINATION OF THE PROS AND CONS OF OUTSOURCING 5
CONCLUSION 9
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4. INTRODUCTION
The word outsource is a merger between two words, out
and source. This word refers to the activity of obtaining
services, goods, consulting etc or a combination of these
from organizations that are not under the managerial
hierarchy of the obtaining company. Several authors have
defined outsourcing in various ways. One example could be
the definition given by Varadarajan (2009, p.1) which
states, “Outsourcing refers to the practice of a firm
entrusting to an external entity the performance of an
activity that was performed erstwhile in-house.”
In today’s competitive business world, all industries
function to minimize costs and maximize profit. In the
process of doing so, these industries come up with a
variety of potential proposals that might achieve this. One
of these proposed solutions is outsourcing. The outsourcing
of jobs to call center workers in India and other countries
with cheaper work force is a real world example. However, a
detailed study is necessary before branding outsourcing as
a true solution for any kind of business.
Consequently, one of the industries that could
potentially benefit from this type of business strategy is
the airline industry. This industry is cyclical in nature
(Wells & Wensveen, 2005). However, the equipment necessary
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for the functioning of the industry like airplanes is
uniquely regulated and expensive. Therefore, outsourcing
activities should accommodate such kinds of uniqueness.
Thus, this paper will analyze a customized version of
outsourcing to the airline industry, in order to get the
air carrier’s perspective of this business strategy. The
analysis shall focus on the pros and cons of outsourcing on
the industry.
REASONS FOR OUTSOURCING IN THE AIRLINE INDUSTRY
Perhaps the foremost reason for outsourcing is cost
reduction. Cost saving is the main advantage of outsourcing
because most repetitive jobs can be performed by
specialized providers. Consequently, companies can save on
salaries and other benefits and enjoy the economies of
scale that can be achieved by the contracting company,
which does one kind of work for many airlines (Ghobrial,
2005).
Here, the term economies of scale refer to the
decrease in a firm’s long run average cost as the size of
its operations increases (Wells & Wensveen, 2004).
Subcontractors that get the outsourced jobs usually have
advantages like greater specialization of resources, more
efficient utilization of equipment, reduced unit cost
inputs, opportunities of utilization of by-products and
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growth of auxiliary facilities as compared to the
outsourcing air carrier (Wells & Wensveen, 2004).
Legacy carriers(those air carriers that have endured
through the 1979 deregulation age until now) have found
their markets increasingly open to both international
rivals and new entrants such as low-cost operators
(Morrell, 2005). Industry liberalization as well as growing
competition that has accompanied a world-wide lowering of
economic and trade barriers has impacted airline business
as well (Rieple & Helm, 2008). However, as Pilling (2002)
has pointed out, this process seems to be happening rather
later in the airline industry probably because airline
operations are still influenced by government intervention.
Commercial aircraft need to undergo a series of
maintenance checks to remain airworthy. These maintenance
activities are on either the aircraft or the component of
the aircraft. In addition, these activities call for air
carrier proficiency in maintenance capacity and capability.
For many years, airlines have retained maintenance, repair
and overhaul (MRO) capabilities as a core activity that is
best managed and controlled by the airline itself. In many
cases, there has been over-capacity and excessive inventory
(Al-Kaabi, Potter & Naim, 2007). Outsourcing may give
access to the best available service in terms of capacity
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and cost. It also provides the flexibility of avoiding the
air carrier’s problems of capacity or capability (Al-Kaabi,
Potter, Naim, 2007).
Another relevant reason for outsourcing in the airline
industry is the drive to focus on core functions of the
business thus increasing productivity. Outsourcing is a
management approach by which an organization delegates some
non-core functions to specialized service providers
(Franceschini, Galetto, Pignatelli & Varetto, 2003). By
outsourcing, companies can focus their efforts on core
businesses, medium or long-term targets and diversification
opportunities (Franceschini et al., 2003).
The core function of airlines is to make profit by
selling airline seats in their various routes of flight.
Theoretically, all the accompanying work of airline seat
sales like, maintenance of the aircraft, advertising of the
seats, market research for new routes etc are non-core
activities. Before its bankruptcy, Pan Am was on the verge
of outsourcing its global network, applications
development, data center operations, personal computer
support, and maintenance of all equipment worldwide in
order to achieve the concept of focusing on core business
functions (Ghobrial, 2005).
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A third reason could be to realize an air carrier’s
goals to break in to a market. When air carriers set up
ticket offices or regional offices, the presence of locals
in the payroll will help in understanding and fine-tuning
the air carriers’ working procedure. This way the air
carrier will make positive advances in its business, which
may be impossible with out a local presence.
DETERMINATION OF THE PROS AND CONS OF OUTSOURCING
A number of theoretical frameworks are available to
examine the benefits of outsourcing. One model is
Transaction Cost Economics (TCE). Another term for TCE is
new institutional economics (Rieple & Helm, 2008). TCE,
which bases on five principles is fundamentally concerned
with the question of whether it is advantageous, in terms
of cost, for transactions to occur within the hierarchy of
an organization or externally in the open market (Rieple &
Helm, 2008).
Rieple & Helm (2008) assert that the picture that
emerges from using the five principles of the TCE theory
show the true nature of advantages and disadvantages of an
outsourcing decision. A concise definition of these
principles follows. One principle is the concept of
opportunism, which is the potential risk of seizure of key
assets by outside suppliers. Another relevant concept is
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that of asset-specificity which refers to the degree to
which an asset is valuable in the context of a specific
transaction; this is relevant because of its interplay with
opportunism.
Frequency of use, the third principle, implies that an
organization’s hierarchy should only accommodate
transactions that are in frequent use. Examples could be
heavy maintenance activity of aircraft components rarely
done. Another principle is that of bounded rationality
which refers to the degree of difficulty in forming
transactional contracts because of the limitations of
managers’ knowledge and perceptions. This might lead to
signing of a deal, which is to the disadvantage of the air
carrier.
Environmental uncertainty is the fifth principle of
the TCE theory. Environmental uncertainty increases the
problems arising from bounded rationality. Contemporary
business environment has proved to be highly uncertain. For
instance banks, the foundation of other businesses,
declared bankruptcy, which depicts a volatile environment.
Consequently, this principle also plays a role in the
determination of the pros and cons of outsourcing. In
addition, these five dimensions interact to predict whether
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in-house or outsourced business strategies would better
address the air carrier’s activities.
Although the TCE model examines the decision of
outsourcing from cost efficiency perspective, additional
analysis is necessary to determine its advantage or
disadvantage. In making outsourcing decisions, airlines
ought to consider such factors as the quality assurance of
the work, from a regulatory standpoint, the turn-time, and
the reliability together with cost (Ghobrial, 2005).
From a regulatory point of view, air carrier’s are
responsible for the oversight of maintenance of their
aircraft, even if they have given the job to a third party
maintenance organization that is FAA certified. A potential
source of this mandate could be the recommendations of the
national transportation safety board (NTSB) accident report
regarding the ValuJet airlines DC-9 crash in May of 1996.
The NTSB had stated the following regarding maintenance
outsourcing in its report for this accident,
The safety board recognizes that air carriers can
successfully subcontract many of the functional areas
of their operations; however, it is the safety board’s
position that air carriers engaging in subcontracting
remain responsible for the safety of their operations
and the airworthiness of their airplanes, and
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therefore must properly oversee their outside
contractors ………… An air carrier cannot delegate its
responsibility for safety of its operations and
maintenance to its subcontractors (NTSB, 1997; pp.
122-123).
In addition, despite the apparent economic advantages
of outsourcing, there appears to be some concerns about the
impacts of outsourcing on airline employees’ loyalty and
pride; and sometimes, safety of operations. Outsourcing has
complicated the situation even further by eliminating
functions previously performed by airline employees
(Ghobrial, 2005). Although many airlines attempted to re-
locate their employees within the organization or to be re-
hired by the outsourcing company, many employees have
indeed lost their jobs or accepted jobs with the
outsourcing companies at lower salaries (Ghobrial, 2005).
Ghobrial (2005) also asserts the following about
employee satisfaction and consequent disadvantage of
outsourcing.
Airline employees understand the value of their jobs
for their airlines’ image and competition with other
carriers. This attitude might be different for
employees of outsourcing company. Because most
outsourced functions are performed by the contracting
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company for many airlines with employees being paid
relatively low salaries, one would not expect them to
value their services to the airlines nor would they
demonstrate loyalty and pride.
Apparently, this is a non-quantifiable area of the possible
disadvantages of outsourcing. However, the fact that it is
not measurable does not hinder it from affecting the
outcome of an air carrier’s decision to outsource its work.
CONCLUSION
Commercial aviation is an increasingly competitive
industry. In addition, it is subject to regulations that
impose constraints on its business strategies. Outsourcing
is a potential business strategy used in other industries
for cost efficiency amongst other advantages. This paper
had tried to analyze, the advantages and disadvantages from
an air carrier’s perspective.
On a positive note, outsourcing cuts costs, increases
productivity by letting the air carrier focus its resources
on its core business. In addition, strategic plans of air
carriers’ to expand in to new markets can be realized by
outsourcing activities that would give them access to the
local market from the perspective of the locals themselves.
On the contrary, outsourcing can also erode the
loyalty, pride and other immeasurable assets an air carrier
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gets from its employees. Despite their unique character,
these qualities of an employee can affect the productivity
of an air carrier and indirectly affect its cost
efficiency. In addition, outsourcing exposes an air carrier
to business agreements that could potentially damage it
from the perspective of product delivery, product quality
and product or service monopoly. Consequently, the dynamic
nature of the industry makes it vulnerable to business
dealings that may change with time.
Evaluating the above summarized pros and cons of
outsourcing; one may assert that outsourcing is a business
decision that is necessary to excel at the demanding
requirements of commercial aviation. However, concurrent
with this assertion, checking this business decision from
different angles mentioned in this paper is necessary. In
addition, recurrent review of the business decision to
gather the continuous advantages is important. With out
these checks, one can be sure that the decision to
outsource is lacking in details, and this poverty of detail
could potentially reverse the desired advantages and end up
damaging the air carrier.
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REFERENCES
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decision model for airlines' MRO activities. Journal
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Franceschini, F., Galetto, M., Pignatelli, A. & Varetto,
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approach. Benchmarking, 10(3), 246.
Ghobrial, A., (2005). Outsourcing in the airline industry:
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Morrell, P., (2005). Airlines within airlines: an analysis
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Journal of Air Transport Management 11(5), 303–312.
National Transportation Safety Board (1997, August 19).
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Pilling, M., (2002). Drive to outsource. Airline Business
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Rieple, A. & Helm, C., (2008). Outsourcing for competitive
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Journal of Air Transport Management 14(5), 280-285.
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Wells, A.T. & Wensveen, J.G., (2004). Air transportation: A
management perspective. Belmont, CA: Brookes/Cole –
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