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Aviation Systems: Management of the Integrated Aviation Value Chain Springer Texts in Business and Economics For further volumes: http://www.springer.com/series/10099 . Andreas Wittmer l Thomas Bieger Roland Mu¨ller Editors Aviation Systems Management of the Integrated Aviation Value Chain Editors Dr. Andreas Wittmer Prof. Dr. Thomas Bieger Prof. Dr. Roland Mu¨ller University of St. Gallen University of St. Gallen Institute for Public Services and Tourism Center for Aviation Competence Dufourstraße 40a Dufourstraße 40a 9000 St. Gallen 9000 St. Gallen Switzerland Switzerland [email protected] [email protected] [email protected] ISBN 978-3-642-20079-3 e-ISBN 978-3-642-20080-9 DOI 10.1007/978-3-642-20080-9 Springer Heidelberg Dordrecht London New York Library of Congress Control Number: 2011935634 # Springer-Verlag Berlin Heidelberg 2011 This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable to prosecution under the German Copyright Law. The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Printed on acid-free paper Springer is part of Springer Science+Business Media (www.springer.com) Editorial Aviation Systems Globalisation has led to a strongly growing demand in international air transport. This growth was furtherfuelled by the deregulation of the airline sector. Politicians, business leaders, but also individual and institutional customers needed a deeper understanding of the aviation sector. An increasing number of textbooks about the airline sector offer insights into the industry’s economics and its management. This book targets industry managers as well as policymakers and institutional customers of the sector, and in particular students in the field of transport and tourism. It provides an overview on the aviation sector with a special focus on value creation and strategies based on industrial economics. The consequent application of a system view makes it unique in its field. The book draws on the rich tradition of integrated management approaches and the use of system models in management research and teaching in tourism at the University of St. Gallen. The system view and the use of system models help to understand interrelated and interdependent devel- opments, like the consequences of technical progress on regulation and demand. The authors were fortunate enough to be able to draw on research results of many years at the Institute for Public Services and Tourism and the Center of Aviation Competence at the University of St. Gallen. Therefore, the authors would like to thank all colleagues who contributed to this book by discussions, research contributions, and administrative support, and especially the co-authors Philipp Boksberger, Bert Urfer, Robert Weinert and Jan Vespermann. Special thanks go to our assistants Catherine Baudenbacher, MarlisVernier, Nicole Denk and Margareta Brugger and the language editors Michael Tschapka and Christine Kern who helped to finish this book. St. Gallen, 1 July 2011 Andreas Wittmer Thomas Bieger Roland Mu¨ller v . Contents 1 Aviation Systems: Management Summary ............................... 1 Andreas Wittmer 2 Fundamentals and Structure of Aviation Systems ...................... 5 Andreas Wittmer and Thomas Bieger 3 The Environment of Aviation ............................................ 39 Andreas Wittmer and Jan Vespermann Part I The Supply Side of Aviation 4 From the Aviation Value Chain to the Aviation System ............... 61 Thomas Bieger and Andreas Wittmer 5 Airline Strategy: From Network Management to Business Models ........................................................... 77 Thomas Bieger and Andreas Wittmer 6 Managing Airport Infrastructure ....................................... 103 Bert Urfer and Robert Weinert Part II The Demand Side of Aviation 7 Marketing in Aviation ................................................... 135 Andreas Wittmer and Thomas Bieger 8 Passenger Behaviour ..................................................... 157 Philipp Boksberger vii viii Contents 9 Risk, Safety and Security ................................................ 171 Philipp Boksberger Part III Steering and Controlling the System of Aviation 10 Aviation Governance ................................................... 185 Roland Mu¨ller 11 Risk Management in Aviation ......................................... 201 Roland Mu¨ller 12 Authorities and Regulations in Aviation .............................. 215 Roland Mu¨ller About the Editors Dr. oec. HSG Andreas Wittmer (1973) is Managing Director of the Center for Aviation Competence and Vice Director of the Institute for Systemic Management and Public Governance at the University of St. Gallen, where he also holds lectures. He is a guest professor at several international universities in the fields of Aviation Management and Economics. He is President of the Swiss Aerospace Cluster and works as a freelance aircraft accident investigator for the Aircraft Accident Investi- gation Office of Switzerland. ix x About the Editors Prof. Dr. rer. pol. Thomas Bieger (1961) has been a full Professor of Business Administration specializing in Tourism since 1999 and is the Director of the Institute for Systemic Management and Public Governance at the University of St. Gallen. He is President of the University of St. Gallen and Chairman of CEMS (Community of European Management Schools). He has held guest professorships at several international universities and was active in the boards of several different companies. Prof. Dr. iur. Roland Mu¨ller is a Professor of Private, Commercial and Aviation Law and President of the Center for Aviation Competence at the University of St. Gallen. He is an attorney and notary public in a law firm and serves in several boards as member or chairman. Furthermore, he is senior partner at the University of St. Gallen’s Center for Corporate Governance. Contributors Andreas Wittmer Center for Aviation Competence, University of St. Gallen, Mo¨rschwil, Switzerland, [email protected] Bert Urfer Avireal, Zu¨rich, Switzerland Jan Vespermann Lufhansa, Frankfurt, Germany Philipp Boksberger HTW, Chur, Switzerland Robert Weinert Wu¨rth & Partner, Zu¨rich, Switzerland Roland Mu¨ller Center for Aviation Competence, University of St. Gallen, Staad, Switzerland, [email protected] Thomas Bieger Institute for Public Services and Tourism, Center for Aviation Competence, University of St. Gallen, St. Gallen, Switzerland, [email protected] xi . List of Figures Fig. 1.1 The aviation system ................................................ 2 Fig. 2.1 Swissair routes in the 1940s ....................................... 13 Fig. 2.2 Swissair routes in the 1980s ....................................... 13 Fig. 2.3 World air traffic flow in the year 2000 ............................ 24 Fig. 2.4 World air traffic flow forecast by the year 2020 .................. 24 Fig. 2.5 The aviation industry value chain ................................. 25 Fig. 2.6 The aviation industry system ...................................... 26 Fig. 2.7 Influence of external shocks on air travel in the long term ....... 29 Fig. 2.8 The aviation system ............................................... 35 Fig. 2.9 Airline key figures. SLF seat load factor, ASK average seat kilometre, RASK revenue per average seat kilometre, CASK costs per average seat kilometre, RPK revenue passenger kilometre, ARP airport reference point ....................................... 36 Fig. 3.1 The aviation system ............................................... 40 Fig. 3.2 Development of airplanes’ fuel consumption over time ......... 44 Fig. 3.3 Economic importance of aviation ................................. 46 Fig. 3.4 Economic impacts of aviation ..................................... 47 Fig. 3.5 System of economic effects of regional airports .................. 47 Fig. 3.6 The economic effects of aviation ................................. 50 Fig. 3.7 Sustainability framework .......................................... 55 Fig. 4.1 Weighted return on invested capital minus the cost of capital by sector . .................................................. 63 Fig. 4.2 The aviation service chain ........................................ 64 Fig. 4.3 Runways Zurich Airport .......................................... 69 Fig. 4.4 Total passengers (1988–2008) .................................... 69 Fig. 4.5 Total movements (1988–2008) .................................... 70 Fig. 4.6 The aviation system ............................................... 74 Fig. 5.1 Fields of strategic advantages ..................................... 79 Fig. 5.2 Net effects arise through “hubbing” .............................. 86 xiii xiv List of Figures Fig. 5.3 Natural monopoly ................................................. 87 Fig. 5.4 Hub economies .................................................... 88 Fig. 5.5 Hub diseconomies ................................................
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