“Revival of a Sick Airline” Introduction: Few inventions have changed how people live and experience the world as much as the invention of the airplane. During both World Wars, government subsidies and demands for new airplanes vastly improved techniques for their design and construction. Following the World War II, the first commercial airplane routes were set up in Europe. Over time, air travel has become so commonplace that it would be hard to imagine life without it. The airline industry, therefore, certainly has progressed. It has also altered the way in which people live and conduct business by shortening travel time and altering our concept of distance, making it possible for us to visit and conduct business in places once considered remote the airline industry exists in an intensely competitive market. In recent years, there has been an industry-wide shakedown, which will have far- reaching effects on the industry's trend towards expanding domestic and international services. In the past, the airline industry was at least partly government owned Hind airline provides air transport services for passengers or freight. Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit. Generally, airline companies are recognized with an air operating certificate or license issued by a governmental aviation body. The effecting major forces for an airline are Increasingly being faced with tough competition Aging Fleet and Low Profitability Poor On time performance Lack of Leadership Unhealthy Industrial Relations Inadequate Cash Flow Few more issues are: Low-Cost Carrier Phenomenon Rise of Emerging Markets Globalization of the Industry and of the Executive Job Market Chronic Financial Underperformance A Changing of the Guard Main Text: Increasingly being faced with tough competition: Competition in the airline industry is at an all-time high, challenging provider to reduce costs while improving quality. In this environment, attracting new customers and retaining existing ones through superior customer service is not only a key competitive differentiator but a necessity. Obstacles met in the search for flight information can diminish a customer's perception of an airline's capability, decrease the opportunity for future revenue, and open the door for other carriers to win the business Deregulation has contributed to the industry’s problems and, furthermore, to problems for passengers. Regulations and deregulation before deregulation of the airline industry began in 1979, the Civil Aeronautics Board controlled both the routes airlines flew and the ticket prices they charged, with the goal of serving the public interest. With deregulation, any domestically owned airline that was deemed “fit, willing, and able” by the Department of Transportation (DOT) could fly on any domestic route. The primary regulatory role of the DOT changed from approving whether an airline was operating in the public interest to deciding whether an airline was operating in accordance with safety standards and other operating procedures. While route schedules and pricing for the airline industry have been largely deregulated for over 20years, many other aspects of the industry are still highly regulated. Perhaps the most important regulation comes from local governments, which own and manage the airports in their region and therefore control key bottle necks to airport services: access to boarding gates and runways. Most local airport commissions allocate gates without a formal market mechanism, such as a bidding process; often they require proof that the airline would operate in the best interest of the public. In addition, international routes have been deregulated only gradually, through negotiated bilateral open-skies agreements, which generally allow airline companies from the two countries in question to fly between those countries without restrictions. These open-skies agreements do not create a fully competitive market as they do not allow foreign carriers to transport passengers within the United States or vice versa. Aging Fleet and Low Profitability: Airlines' profitability is closely tied to economic growth and trade. During the first half of the 1990s, the industry suffered not only from world recession but travel was further depressed by the Gulf War. In 1991 the number of international passengers dropped for the first time. Airlines have had to recognize the need for radical change to ensure their survival and prosperity. Many have tried to cut costs aggressively, to reduce capacity growth and to increase load factors. At a time of renewed economic growth, such actions have returned the industry as a whole to profitability. It is necessary for airlines to reduce their debt, build reserves and sustain investment levels. In addition, many airlines remain unprofitable. To meet the requirements of their increasingly discerning customer’s the airlines have to invest heavily in the quality of service that they offer, both on the ground and in the air. Ticketless travel, new interactive entertainment systems, and more comfortable seating are just some of the product enhancements being introduced to attract and retain customers. The availability of large aircraft such as the Boeing 747 made it convenient and affordable for people to travel further to new and exotic destinations Poor On time performance: Airline punctuality is in the headlines. Hardly a week passes without an article in a newspaper, magazine or airline industry journal discussing the issue of poor on-time performance and its impact on the industry and on society at large. Punctuality differs widely between airlines. It has become a competitive differentiator, both in positive and negative ways—and customers do care strongly about it. When following newspaper headlines its clear that airlines are active in sharing good punctuality performance with the world, and when they have problems with their punctuality, it is unlikely that the world will not quickly hear about it in the press. More importantly, however, punctual airlines appear to be more profitable Punctuality is one of the key performance indicators in the airline industry and an important service differentiator especially for valuable high-yield customers. In addition, improved on-time performance can help achieve significant cost savings: Airlines report delay costs from 0.6 to up to as much as 2.9% of their operating revenues. Punctuality is a key leadership challenge throughout the organization and should rank high on the management agenda—from strategy and planning all the way to front-line operations the three main levers for punctuality improvement that are within their reach: — Network planning and control — Aircraft availability — Ground operations and departure process Tools such as simulations, statistical sampling, process monitoring and key performance indicators build the foundation to drill down to the root causes of delays. The key success factor is to merge quantitative analytical rigor with the rich qualitative information from front line observations, know-how and staff experience. Lack of Leadership: “Leaders are change agents who see opportunities and promise where others see only defeat." Airline leaders separately expressed concerns that the lack of consensus from political leaders at the conference means that the airline industry is entering a period of confusion, inefficiency and risk mitigation. At each stage of aviation's business life cycle—start-up, growth, maturity, decline, rebirth—Leaders in the airline industry have primarily been local nationals despite the highly international nature of the sector. Individual executives shape the industry and were shaped by it is the subject of a new history of the airline industry and its leaders, Entrepreneurs, Managers, and Leaders. Unhealthy Industrial Relations: An unhealthy relation in an industry leads an airline out of the competition and market and once an airline is out it gradually goes down and down. In order to maintain an airline in all regards it is very necessary that it has a healthy relation in an industry all the time and also understand what it takes to maintain a healthy relation in an industry all the time in global terms. An airline also has to understand who defines a market and what kind of market does an industry is looking for. Market is a segment of requirements of a customer and their appraisals which are moved in an industry through out. Unhealthy industrial relations may put an airline out of the market. In order to make an airline one of the best it should have healthy industrial relationship. The market of an airline and the relation with the market goes hand in hand till then an airline cannot become a successful one. On the other side an airline industry should always have a healthy relation with customers such that they raise that value of an airline in all regards. Customers are the source who defines an airline in a market and then into the industry, customers always play a dual role inside and outside the market. So customers are to be treated as their guest all the time. Inadequate Cash Flow: Cash flows of airlines, which had turned into a trickle with falling passenger traffic and fares, are swelling again, but unlike in the past, carriers are not rushing to expand their operations. Instead, they are building cash reserves that will see them through the next dry spell. The profit and loss accounts nor the balance sheet provides information directly on cash flow position of an airline and how the cash was generated for the payment of loan and repayment of loan. Suggestion/Conclusion: Air travel remains a large and growing industry. It facilitates economic growth, world trade, international investment and tourism and is therefore central to the globalization taking place in many other industries. Deregulation is also stimulating competition, such as that from small, low- cost carriers allowing an airline from one member state to fly passengers within another member's domestic market. However, rapid growth challenged our reservation center with unexpectedly high call volumes. This created unacceptable hold times to access information and book flights. We were concerned about losing prospects and existing customers. The need for a cost-effective interactive voice response (IVR) solution that could easily scale to support its growing customer base and improve customer service. Load Factor: This indicator, compiled monthly by the Air Transport Association (ATA), measures the percentage of available seating capacity that is filled with passengers. Analysts state that once the airline load factor exceeds its break-even point, then more and more revenue will trickle down to the bottom line. Keep in mind that during holidays and summer vacations load factor can be significantly higher, therefore, it is important to compare the figures against the same period from the previous year. Airline has to invest heavily in the quality of service that they offer, both on the ground and in the air. Ticketless travel, new interactive entertainment systems, and more comfortable seating are just some of the product enhancements being introduced to attract and retain customers. The outlook for the air travel industry is one of strong growth. Forecasts suggest that the number of passengers will double. For airlines, the future will hold many challenges. Successful airlines will be those that continue to tackle their costs and improve their products, thereby securing a strong presence in the key world aviation markets. Punctuality is one of the key performance indicators. Improved on-time performance can help achieve significant cost savings: Airlines report delay costs from 0.6 to up to as much as 2.9% of their operating revenues. Airline must posses all three disciplines of leadership . Operational leadership Product leadership Customer closeness The biggest challenge is to choose a knowledgeable second in command who would inevitably play a major role in leading the company. Improved conditions have resulted in positive cash flow. It will provide relief to us because we can use the same for our working capital requirements. Healthy relations are required to know where exactly an airline stands globally. Adequate flow of cash is profit driving factor. An airline should understand the source and the final flow of cash in and around. Globalization of the Industry.
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