Commercial Air Transport Overview

Commercial Air Transport

• Air transportation types vary depending on travel purposes, including military, general/civil, and commercial aviation
• Commercial air transport involves scheduled/non-scheduled transportation of passengers, mails, or cargo for revenue

Characteristics of Commercial Air Transport

• Operates on macro, international, and national levels
• Commercial air transport faces strict regulations and control due to air service rights, foreign ownership, and market competition
• Demand for air transport is derived from the need for transport and is affected by fuel prices, civil conflicts, terrorist threats, and fortuitous events
• Commercial air products can only be offered once, as empty seats cannot be resold once the aircraft is airborne
• Ownership and operations can be either private or public, based on country regulations and control
• Commercial air is dominated by a few airline companies and alliances
• It has various impacts on both the environmental and social aspects of the world

Airline Business Models

• Airlines use business models to identify target customers, revenue sources, and cost structure while building flexibility
• The airline industry is competitive and affected by external factors
• Airline companies must refine or redefine business models to remain profitable

Full-Service Network Carrier (FSNC)

• FSNCs were originally state-owned "flag carrier" airlines and are now allowing private companies to operate
• Philippine Airlines (PAL) is an example of FSNC
• FSNCs have access to many routes connected to main hubs
• FSNCs are doing mergers and joining strategic alliances to combine services and route access to stay competitive

Low-Cost Carrier (LCC)

• LCCs, or budget airlines, are established in domestic and regional markets due to deregulation and easier market entry
• LCCs often use secondary airports for cost-effective operations and utilize aircraft more efficiently than FSNCs
• Cebu Pacific (CEB) and AirAsia Philippines are budget airlines

Comparing FSNC and LCC Models

• FSNC uses both narrow and wide-body aircraft depending on route and capacity, while LCC often uses narrow-body aircraft.
• Standard aircraft use for FSNC is often less than LCCs due to factors such as connecting flights, different time zones, and crew rest periods
• Standard aircraft use for all short-haul operations for LCC is 11 hours or more per aircraft
• FSNC operates a hub-and-spoke network, while LCC operates on point-to-point networks located in less-congested secondary airports
• FSNC offers different classes of cabin services with meals and in-flight refreshments
• LCC offers only one class (economy)

Other Airline Business Models

• Charter Airline: Operates on demand without a fixed schedule, mainly from secondary airports, offering point-to-point services to holiday destinations, services may include complimentary checked baggage, in-flight meals, and entertainment
• Regional Airline: Operates in medium-density routes using regional jets or turboprop aircraft and are independently or government owned
• Hybrid Airline: Established to classify airlines using characteristics from several business models
• Specialist Operator: Concentrated on low density but vital services such as public service organizations, charities, and humanitarian aids and mainly serves remote areas/airfields