What are the revenue classifications of the U.S. based for-hire air carriers? Define and describe at least two of these classifications with examples. Solution of Airline Certification U.S. scheduled airlines are classified by the government on the basis of the amount of revenue generated from operations. These classifications are major, national and regional. All airlines hold two certificates from the federal government: a fitness certificate and an operating certificate. The Department of Transportation (DOT) issues fitness certificates - called certificates of public convenience and necessity - under it\'s statutory authority. Basically, the certificate establishes that the carrier has the financing and the management in place to provide scheduled service. The certificate typically authorizes both passenger and cargo service. Some airlines, however, obtain only cargo-service authority. Commuter airlines that use aircraft with a seating capacity of 60 or fewer seats or a maximum payload capacity of no more than 18,000 pounds can operate under the alternative authority of Part 298 of DOT\'s economic regulations. Operating certificates, on the other hand, are issued by the Federal Aviation Administration (FAA) under Part 121 of the Federal Aviation Regulations (FARs), which spell out numerous requirements for operating aircraft with 10 or more seats. The requirements cover such things as the training of flight crews and aircraft maintenance programs. All majors, nationals and regional\'s operate with a Part 121 certificate. Majors Major airlines generate operating revenues of more than $1 billion annually. Previously called trunk carriers, they generally provide nationwide, and in some cases, worldwide service. There are many major U.S. passenger airlines such as: Alaska, American, American Eagle, Continental, Delta, Northwest, Southwest, United and US Airways. In addition, some cargo airlines are classified as majors like: FedEx and United Parcel Service. Nationals National carriers are scheduled airlines with annual operating revenues between $100 million and $1 billion. Many of the airlines in this category serve particular regions of the country, although some provide long-haul and even international service. Among the nationals are some of the former local service lines that, prior to deregulation, were licensed by the Civil Aeronautics Board (CAB) to operate between major cities and smaller communities surrounding them. Also in this category are some of the former supplemental carriers, previously licensed by the CAB to operate unscheduled charter service, which supplemented the capacity of the trunk carriers. Like the majors, nationals operate mostly medium- and large-sized jets. They are subject to DOT fitness requirements, as well as the FAA Part 121 operating requirements. Some of the nationals you may have heard of in the past include companies like Aloha, Atlas Air, Emery Worldwide, Evergreen, Hawaiian, Midwest Express and Polar .

1. What are the revenue classifications of the U.S. based for-hire air carriers? Define and describe
at least two of these classifications with examples.
Solution
of Airline Certification
U.S. scheduled airlines are classified by the government on the basis of the amount of revenue
generated from operations. These classifications are major, national and regional.
All airlines hold two certificates from the federal government: a fitness certificate and an
operating certificate. The Department of Transportation (DOT) issues fitness certificates - called
certificates of public convenience and necessity - under it's statutory authority. Basically, the
certificate establishes that the carrier has the financing and the management in place to provide
scheduled service. The certificate typically authorizes both passenger and cargo service. Some
airlines, however, obtain only cargo-service authority. Commuter airlines that use aircraft with a
seating capacity of 60 or fewer seats or a maximum payload capacity of no more than 18,000
pounds can operate under the alternative authority of Part 298 of DOT's economic regulations.
Operating certificates, on the other hand, are issued by the Federal Aviation Administration
(FAA) under Part 121 of the Federal Aviation Regulations (FARs), which spell out numerous
requirements for operating aircraft with 10 or more seats. The requirements cover such things as
the training of flight crews and aircraft maintenance programs. All majors, nationals and
regional's operate with a Part 121 certificate.
Majors
Major airlines generate operating revenues of more than $1 billion annually. Previously called
trunk carriers, they generally provide nationwide, and in some cases, worldwide service. There
are many major U.S. passenger airlines such as: Alaska, American, American Eagle, Continental,
Delta, Northwest, Southwest, United and US Airways. In addition, some cargo airlines are
classified as majors like: FedEx and United Parcel Service.
Nationals
National carriers are scheduled airlines with annual operating revenues between $100 million
and $1 billion. Many of the airlines in this category serve particular regions of the country,
although some provide long-haul and even international service. Among the nationals are some
of the former local service lines that, prior to deregulation, were licensed by the Civil
Aeronautics Board (CAB) to operate between major cities and smaller communities surrounding
them. Also in this category are some of the former supplemental carriers, previously licensed by
the CAB to operate unscheduled charter service, which supplemented the capacity of the trunk

2. carriers.
Like the majors, nationals operate mostly medium- and large-sized jets. They are subject to DOT
fitness requirements, as well as the FAA Part 121 operating requirements. Some of the nationals
you may have heard of in the past include companies like Aloha, Atlas Air, Emery Worldwide,
Evergreen, Hawaiian, Midwest Express and Polar Air Cargo.
Regional's
As their name implies, regional carriers are airlines whose service, for the most part, is limited to
a single region of the country, transporting travelers between the major cities of their region and
smaller, surrounding communities. This has been one of the fastest growing and most profitable
segments of the industry since deregulation.
Regional carriers are divided into three sub-groups: large, medium and small. Large regionals are
scheduled carriers with operating revenues of $20 million to $100 million. Most of their aircraft
seat more than 60 passengers, so they hold DOT fitness certificates from DOT and must comply
with FAA Part 121 operating requirements.
Medium regional's follow the same market-niche strategy as the large regional's and operate
many of the same type aircraft. Their distinction is simply that they operate on a smaller scale,
with operating revenues under $20 million.
Small regional's, sometimes called commuters, represent the largest segment of the regional
airline business. There is no official revenue definition of a small regional. What distinguishes
them as a group, more than anything else, is the size of the aircraft they operate. All have less
than 61 seats, which means they do not require a fitness certificate from DOT; DOT only
requires that they register their service and make certain annual reports to the department under
Section 298 of the DOT economic regulations.
Cargo Carriers
Within the categories of major, national and regional airlines are, not only passenger carriers, but
cargo carriers as well. While much of the cargo that moves by air is carried in the bellies of
passenger jets or in combination aircraft where the main deck is divided into two sections, one
for cargo and one for passengers; other aircraft in use by principally all cargo carriers, called
freighters, carry nothing but freight.
Freighters are, most often, passenger jets that have been stripped of their seats to maximize
cargo-carrying capacity. In addition, their decks are reinforced to accommodate heavier loads,
and they typically have other cargo-handling features, such as rollers, built into the floors, extra-
large doors, and hinged nose and tail sections.
DOT has a special fitness review procedure for all-cargo carriers, but most of the large ones hold
a certificate of public convenience and necessity. Among the largest cargo carriers are companies
that began in the small package and overnight document-delivery business. These are the

3. integrated carriers, so called because they offer door-to-door service, combining the services of
the traditional airline and the freight forwarder.
How Major Airlines are Structured
Line Personnel
These include everyone directly involved in producing or selling an airline's services - the
mechanics, who maintain the planes; the pilots, who fly them; the flight attendants, who serve
passengers and perform various inflight safety functions; the reservation clerks, airport check-in
and gate personnel, who book and process the passengers; ramp-service agents, security guards,
etc. Line personnel generally fall into three broad categories: engineering and maintenance, flight
operations, and sales and marketing. These three divisions form the heart of an airline and
generally account for 85 percent of an airline's employees.
Operations
This department is responsible for operating an airline's fleet of aircraft safely and efficiently. It
schedules the aircraft and flight crews and it develops and administers all policies and procedures
necessary to maintain safety and meet all FAA operating requirements. It is in charge of all
flight-crew training, both initial and recurrent training for pilots and flight attendants, and it
establishes the procedures crews are to follow before, during and after each flight to ensure
safety.
Dispatchers also are part of flight operations. Their job is to release flights for takeoff, following
a review of all factors affecting a flight. These include the weather, routes the flight may follow,
fuel requirements and both the amount and distribution of weight onboard the aircraft. Weight
must be distributed evenly aboard an aircraft for it to fly safely.
Maintenance
Maintenance accounts for approximately 11 percent of an airline's employees and 10-15 percent
of its operating expenses. Maintenance programs keep aircraft in safe, working order; ensure
passenger comfort; preserve the airline's valuable physical assets (its aircraft); and ensure
maximum utilization of those assets, by keeping planes in excellent condition. An airplane costs
its owner money every minute of every day, but makes money only when it is flying with freight
and/or passengers aboard. Therefore, it is vital to an airline's financial success that aircraft are
properly maintained
Airlines typically have one facility for major maintenance work and aircraft modifications, called
the maintenance base; larger airlines sometimes have more than one maintenance base. Smaller
maintenance facilities are maintained at an airline's hubs or primary airports, where aircraft are
likely to be parked overnight. Called major maintenance stations, these facilities perform routine
maintenance and stock a large supply of spare parts.
A third level of inspection and repair capability is maintained at airports, where a carrier has

4. extensive operations, although less than at its hubs. These maintenance facilities generally are
called maintenance stations.
Sales and Marketing
This division encompasses such activities as pricing, scheduling, advertising, ticket and cargo
sales, reservations and customer service, including food service. While all of them are important,
pricing and scheduling in particular can make or break an airline, and both have become more
complicated since deregulation. As explained in the next chapter, airline prices change frequently
in response to supply and demand and to changes in the prices of competitors? fares. Schedules
change less often, but far more often than when the government regulated the industry. Airlines
use sophisticated computer reservation systems to advertise their own fares and schedules to
travel agents and to keep track of the fares and schedules of competitors. Travel agents, who sell
approximately 80 percent of all airline tickets, use the same systems to book reservations and
print tickets for travelers. More information about airline pricing and scheduling can be found in
Chapter 4.