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Directorate of Distance Education NALSAR University of Law, Hyderabad Centre for Aerospace & Defence Laws (CADL) Directorate of Distance Education NALSAR University of Law, Hyderabad Course Material M.A. (AVIATION LAW AND AIR TRANSPORT MANAGEMENT) 1.2.7. AIRLINE MANAGEMENT Compiled by: Prof. (Dr.) V. Balakista Reddy Brigadier (Dr.) B. Chandrasekhar (For private circulation only) NALSAR University of Law, Hyderabad (Print 2019) (For private circulation only) Page | 2 COURSE STRUCTURE I. INTRODUCTION TO AIRLINE MANAGEMENT (09-70) 1.1. Introduction to Airline Management 1.1.1. Meaning and Concept 1.1.2. Characteristics of Air Transport Industry 1.1.3. Challenges of Airline Management 1.1.3 (a), (b) & (c) Case studies on Challenges of Airline Management 1.2. Organizational Structure of the Airline Industry 1.2.1. Basic Structure of the Airline Industry 1.2.2. Regional Carriers 1.2.2 (a) Case study on Code sharing 1.2.2 (b) Case study-Malaysian Airlines Organizational Structure 1.3. Airline Business and Marketing Strategies 1.3.1. Porter’s five forces and its application to Airline Industry 1.3.2. Strategic Groups in Airline Industry 1.3.2 (a) Case study on Marketing Strategy - Air Asia 1.3.2 (b) Case study on Differentiation Strategy- Virgin America Airlines 1.3.3. Focus Strategies 1.3.4. Airline Business Strategies: Common Mistakes 1.3.4 (a) Case study on Common Mistakes- the New Indian Airlines 1.3.4 (b) Case study on Risk management failure- KingFisher Airlines 1.4. Management of Airline Product Marketing 1.4.1. Theory of Product Analysis and its application to Airline Industry 1.4.2. Managing a Product Portfolio 1.4.3. Customer Service Related Features 1.4.4. Controlling Product Quality 1.4.5. Air freight product 1.4.5 (a) Case study on the South West Airlines – Product Marketing 1.4.5 (b) Case study on Customer Service Related features-Indigo Airlines II. AIRLINE REVENUE MANAGEMENT (73-152) 2.1. Introduction to Revenue Management in Airline Sector 2.1.1. Forecasting Demand in Airline Industry 2.1.2. Deregulation of the Airline Industry 2.1.3. Product Distribution 2.1.3 (a) Case study on Revenue Management- the Jet Airways Page | 3 2.2. Pricing and Seat Inventory Management 2.2.1. Airline Economics and Pricing Strategies 2.2.2. Consumer Decisions and Airline Travel Demand 2.2.3. Seat Inventory Management 2.2.4. Seat Inventory Control Problem 2.2.4 (a) Case study on Seat Inventory Management - Air Deccan 2.3. Aircraft Financing 2.3.1. Cape town Convention and Aircraft Equipment Protocol: Background 2.3.2. Leasing and Financing of Aircraft: A critical analysis 2.3.3. Advantages and Structures of Aircraft Leasing 2.3.3 (a) Case study on Air Craft Financing-TACA 2.3.3 (b) Case study on Leasing III. AIRLINE TERMINAL AND SERVICE QUALITY MANAGEMEN (155-218) 3.1. Customer Service Management 3.1.1. Customer Relationship Management in Airlines Sector 3.1.1 (a) Case study on e-CRM -Emirates Airlines 3.1.2. Passenger Management 3.1.3. Passengers with Special Needs – Management of Medical Condition 3.1.3 (a) Case study on Business aviation’s niches 3.1.3 (b) Case study on CSM- IndiGo Airlines 3.2. Human Resource Management in the Airline Industry 3.2.1. Building Airline Management Leadership 3.2.1 (a) Case study on ASIANA 2014 Aviation accident 3.2.2. Management of Ground Handling Staff 3.2.3. Management of Airline Crew Members 3.2.4. Fatigue Risk Management Systems 3.2.4 (a) Case study on HR Problems- Jet Airways 3.2.4 (b) Case study on HR Problems -Indian Airlines 3.3. Airline Schedule Planning and Development 3.3.1. Concept of Schedule Planning 3.3.2. Mission of Scheduling 3.3.3. Equipment Maintenance 3.3.4. Flight Operations and Crew Scheduling 3.3.5. Ground Operations and Facility Limitations Page | 4 3.3.6. Schedule Planning and Coordination 3.3.7. Equipment Assignment and Types of Schedules 3.3.8. Hub and Spoke Scheduling 3.3.9. Data Limitations in Airline Scheduling 3.3.9 (a) Case study on Airline Schedule Planning & Crew Management -the US Airlines 3.4. Airline Fleet Planning and Management 3.4.1. Factors in Fleet Planning 3.4.2. Design and Development: The manufacturer’s viewpoint 3.4.3. The Fleet Planning Process 3.4.4. The Decision to Upgrade or Replace 3.4.4 (a) Case study on Air Transport at Rwanda 3.4.4 (b) Case study on latest fleet upgradation SpiceJet Airlines IV. GLOBAL TRENDS IN AIRLINE MANAGEMENT (221-252) 4.1. Regulatory Bodies for Airline Management 4.1.1. International Air Transport Association (IATA) 4.1.2. International Civil Aviation Organization (ICAO) 4.1.3. ICAO’s Activities across Sustainable Development Agenda 4.1.4. ICAO’s Standards and Recommendatory Practices 4.1.4 (a) Case study on Aviation Trends 2019 4.2. Low Cost Carriers 4.3. Bilateral Air Transport Agreements 4.3.1. Evolution of Bilateral Negotiations 4.3.2. Relevant Provisions of Bilateral Air Transport(Services) Agreements 4.3.3. Emerging Trends 4.3.4. Multilateral Agreements 4.3.5. Open Skies 4.3.6. ICAO’s Approach to Liberalization 4.3.7. Air Services Agreement and General Agreement on Trade in Services (GATS) 4.3.7 (a) Case study on Air Service Development between Western Canada and Mexico V. AIRLINE MANAGEMENT IN INDIA (255-292) 5.1. Aircraft Leasing and Financing in India 5.1.1. Aircraft Leasing 5.1.2. Types of Lease Agreement 5.1.3. Economic characteristics of the Airline Industry Page | 5 5.1.3 (a) Case study on Aircraft Leasing 5.2. Liberalization in India 5.2.1. Concept of Landing Rights 5.2.2. Landing Rights for Domestic Operations 5.2.3. Landing Rights for International Operations: Role of ICAO 5.2.4. Landing rights for international operations-bilateral agreements 5.2.5. Major Challenges faced by Civil Aviation in India 5.2.6. Liberalization in Bilateral Agreements 5.2.7. Open Skies in India 5.2.7 (a) Case study on Liberalization 5.3. Airline Alliances, Mergers and Acquisition in India 5.3 (a) Case study on Air India joining Star Alliance 5.4. Competition Law in Airline Management 5.4.1. Competition in Slot Allocation 5.4.2. Abuse of Dominant Position 5.5. Operation of Code Sharing Agreements 5.5.1. Emergence of Code Sharing Agreements: An Legal Perspective 5.5.2. Frequent Flyer Programs and Code Sharing Alliances: Competition Concerns 5.5.3. Low Cost Carriers in India: Implications on Airline Competition 5.5.3 (a) Case study on LCC in India – Low cost carriers 5.5.4. Cartelization Concerns in Airline Industry Page | 6 MODULE I INTRODUCTION TO AIRLINE MANAGEMENT Page | 7 Page | 8 1.1 INTRODUCTION TO AIRLINE MANAGEMENT 1.1.1. MEANING AND CONCEPT The world air transport industry has developed to become a major element of the world economy due to its significant multiplier effect. Important factors in the industry's success have been the continuing efforts to ensure a high level of safety, security and technological upgradation to run it as a 'global business' with a system that provides the basic standards and procedures for a smooth air travel. Air Travel being a truly international business, the air transport industry requires common world-wide business practices Aviation provides the only transportation network across the globe and it is crucial for global business development and tourism enrichment. Air transportation is one of the most important services to offer both significant social and economic benefits. By serving tourism and trade, it contributes to economic growth. It also provides jobs and increases tax revenues. Air transportation is essential for the fast movement of people and cargo shipments around the world. Finally, air transportation improves the quality of people’s lives by broadening their leisure and cultural experiences. It gives a broad choice of holiday destinations around the world and is an affordable means to visit distant friends and relatives (ATAG 2005). The use of commercial aviation has grown significantly over the last few decades, estimated to be more than seventy-fold since the first jet airliner flew in 1949 (ATAG 2005). This rapid growth is attributed to a number of factors. First, rising disposable income and quality of life in many parts of the world have encouraged more people in these areas to travel and explore opportunities overseas. Second, deregulation of aviation laws, and bilateral and open-sky agreements between governments have opened new markets for airlines, which make travel easier and cheaper. Third, demand is increasing because of growing confidence in aviation as a safe mode of travel. Fourth, increased efficiency and increasing competition have reduced world airfares and the cost of travel. Finally, globalization has increased the average distance traveled, as people do business in countries which now have improved political and social environments. The impact of these factors is expected to continue, however, at different levels in different parts of the world. The number of air travelers and the volume of air cargo are expected to continue to grow, increasing the pressure on all the contributors to the air transportation service to take advantage of opportunities and efficiently manage their service. A major player in the air transportation industry is the airline. Current records indicate that there are more than 900 commercial airlines around the world, with a total fleet of nearly 22,000 aircraft (ICAO 2006). Commercial airlines serve nearly 1,670 airports through a route network of several million kilometers. These airlines transport close to 2 billion passengers annually and 40 percent of interregional exports of goods (by value).
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