Aviation Scenario in Today’s World With over 3000 jetliners on backlog and over 800 delivered in 2004, all signs indicate that we are just pass the high point of the jetliner “boom” in the classic boom/bust order cycle. But this has been a very unusual boom. For one thing, 2003 was expected to be a recovery year, not a peak year. With well over 650 orders it turned into a peak year although 2004 matched it with over 700 orders. And then to use an overused metaphor it just kept going like an Energizer Bunny—2005 has already passed 2004 in orders within a 7 month period and with major orders from the likes of Virgin Atlantic Airlines, Emirates, Qantas, Singapore Airlines and Gulf Air still expected to come, 2005 could well be the peak year for orders placed in Commercial Aviation History. Yet this cycle looks different. Airlines dint really queue up to place orders, rather manufacturing giants Airbus and Boeing pounded the pavement, aggressively selling aircrafts at a discount. In 2003, the leasing companies began to replace actual airlines in the order’s book—about 30% of the backlog now compromises lesser, who are essentially buying planes in the hope that the market will continue to grow. Jetliner pricing has been extremely soft with the list prices of both Boeing and Airbus remaining frozen from 2002-2004, the first time this has happened in a decade. In 2005 both manufacturer’s announced that they are raising list prices but list prices have become irrelevant. Anecdotal evidence suggests rampant discount pricing with rumors of as low prices as 80 million dollars for the Airbus 330s that were bought by North West Airlines which are listed at 240 million a piece. Boeing is not to far behind who sold one of their latest commercial offering the 777-300 ER at a rate 160 million dollars below list price to launch customers Air France. This largely premature and unprofitable upturn will result in future pain. There is terrific glut of narrow bodies arriving in the next few years [450 of those in the Indian market] which will likely result in a market downturn. 1 Two sides of a Large Coin Jetliner manufacturers have spent the last ten years debating the future of air transport. Airbus has maintained that strong passenger and freight growth rates, coupled with geographic concentration and airline alliance trends will mean greater demand for larger aircraft. Boeing by contrast believes that airline demand for flexibility, new airports and markets, plus the availability of new long range aircrafts, will lead to route fragmentation, which implies a move away from very large aircraft. Boeing 787 Dreamliner The 787-8 Dreamliner and 787-9 airplanes will carry 223-259 passengers in tri-class configurations on routes of 8,500 and 8,300 nautical miles (15,700 and 15,400 kilometers) respectively. A third 787 family members, the 787-3 Dreamliner, will accommodate nearly 296 passengers in a two-class configuration and be optimized for routes of 3,500 nautical miles (6,500 km). In addition to bringing big-jet ranges to mid-size airplanes, the 787 will provide airlines with unmatched fuel efficiency, resulting in exceptional environmental performance. The airplane will use 20 percent less fuel for comparable missions than any similarly sized airplane. It will also travel at speeds similar to today's fastest wide bodies, Mach 0.85. Airlines will enjoy approximately 45 percent more cargo revenue capacity. 2 Airbus 380-800 The A380 will carry more passengers over longer distances, allowing for projected passenger growth worldwide and helping to ease an increasingly congested environment. It will achieve this without increasing the number of air traffic movements and without negatively impacting the environment, thanks to significantly reduced noise and emissions levels. This 555-seat aircraft will deliver an unparalleled level of comfort while retaining all the benefits of commonality with Airbus’ other fly-by-wire aircraft Families. From the standpoint of late 2004, the answer remains undecided, but Boeing’s version appears more likely. While 747-400 freighter orders have been strong the backlog for the passenger versions of the current Jumbo jet is 8 aircrafts, a record low. Several key carriers most notably British Airways and United Airlines have converted some 747-400 orders to smaller 777s. While the Asian market is making a strong recovery most Asian carriers are ordering 300 seats 777 and 340s. But Airbus 380 has already received 150+ orders showing the variability of the market and airline needs. The market’s behavior is likely to be an indicator that Asian passenger routes are indeed fragmenting. An analysis of the equipment flown on Pacific routes indicates a trend away from the 747s towards the new mini-jumbos-A340s and 777s and the experience of the North Atlantic market over the last 20 years indicates that the carriers move away from large four engine planes as soon as lower cost equipment is available. In fact several key international airlines, most notably Delta, American, Continental Airlines, no longer have any 747s at all. But then again the major ones still have them and continue to see demand for both Long Range and Large capacity aircraft. Coming to my project on Airline Management, we all know that the words “Airline Management” is too vast a topic and is 3 very difficult to explain to any given individual especially since most of the information is classified. Hence I decided to take into account the physical and visible aspects of Airline Management and to present it an easy to understand manner without making much use of technical jargon, I have decided to take the award winning Virg in Atlantic Airlines to show the effective management frameworks with this Airline’s structure. Thus through Emirates Airline I will show the following management decisions that come into • Criteria for Purchasing Aircraft types • Ensuring the passenger satisfaction through comfortable seating • The various First, Business and Economy class which have become a benchmark for industrial standards • Convenient timings for transit passenger’s—which is their main customer base • Onboard and ground services ensuring they win customer satisfaction before the flight departs • London Heathrow Airport, London Gatwick Airport as hub airport • Effective fleet utilization • Future Orders and plans • Marketing and sponsorship and various other activities 4 Virgin Atlantic Airlines:- Virgin Atlantic Airways IATA ICAO Call sign VS VIR VIRGIN Founded 1984 London Heathrow Airport Hubs London Gatwick Airport Focus cities / secondary hubs Manchester International Airport Frequent flyer program Flying Club Member lounge Clubhouse Fleet size 34 Destinations 31 Parent company Virgin Group Crawley, England, United Headquarters Kingdom Richard Branson (Chairman), Key people Steve Ridgway (CEO) Virgin Atlantic Airways usually referred to as Virgin Atlantic, is one of the airlines of Richard Branson's Virgin Group, operating long-haul routes between London and North America, the Caribbean, Africa, the Middle East, Asia and Australia. Its main bases are London Heathrow (LHR) and London Gatwick (LGW), with a smaller base at Manchester International Airport (MAN). The company holds a United Kingdom Civil Aviation Authority Type A Operating License, it is permitted to carry passengers, cargo and mail on aircraft with 20 or more seats. 5 History:- Richard Branson Sir Richard Branson during the announcement of the Virgin Express airline which would compete with Ryan air and Easy Jet. Sir Richard Charles Nicholas Branson, sometimes abbreviated as SRB for "Sir Richard Branson" (born 18 July 1950, Shamley Green, Surrey), is a British entrepreneur, best known for his Virgin brand, a banner that encompasses a variety of business organizations. The name Virgin was chosen because a female friend involved in setting down the initial record shop commented that they were all virgins in business and there were no virgins between them. It is estimated that Branson is worth over £3 billion (equivalent to over US$5 billion) according to the Sunday Times Rich List 2006. It is also said that he is starting a new were business but no-one knows what this will be or what it is about. he is also going to the moon on SPECIAL SHUTTLE THAT IS BEING BUILT FOR HIM. Branson formed Virgin Atlantic Airways in 1984, launched Virgin Mobile in 1999, Virgin Blue in Australia in 2000, and later failed in a 2000 bid to handle the National Lottery. In 1997 Branson took what many saw as being one of his riskier business exploits by entering into the railway business. Virgin Trains won the franchises for the former Intercity West Coast and Cross-Country sectors of British Rail. Launched with the usual Branson fanfare with promises of new high-tech tilting trains and enhanced levels of service, Virgin Trains soon ran into problems with the aging rolling stock and crumbling infrastructure it had inherited from BR. The company's reputation was almost irreversibly damaged in the late 1990s as it struggled to make trains reliably run on time while it awaited the modernization of the West Coast Main Line, and the arrival of new rolling stock. Virgin has acquired European short-haul airline Euro Belgian Airlines, renaming it Virgin Express. It also started a national airline based in Nigeria, called Virgin 6 Nigeria. Another airline, Virgin America, is set to launch out of San Francisco in 2007. Branson has also developed a Virgin Cola brand, but is now retreating only to the UK market, and even a Virgin Vodka brand, which has not been an overly successful enterprise. As a consequence of these lack luster performers and perceived obscure accounting practices, the satirical British fortnightly magazine, Private Eye, has been critical of Branson and his companies.