AST11614 Summary PDF

Lecture 1 Introduction Aviation and Air Transport Air transport is the nation’s dominant intercity mode of transport for passengers & goods Certificated air carriers or scheduled airlines All purpose carriers (PAX + cargo) like CX, HKEX and All cargo carriers General aviation All ci...

Lecture 1 Introduction Aviation and Air Transport Air transport is the nation’s dominant intercity mode of transport for passengers & goods Certificated air carriers or scheduled airlines All purpose carriers (PAX + cargo) like CX, HKEX and All cargo carriers General aviation All civil aviation except that which is carried out by certificated air carriers ○ Business flying, instructional, personal, commercial (i.e. agricultural spraying) All scheduled air transport is commercial, but general aviation can be either commercial/private Certificated air carriers Holds certificates issued by the Department of Transportation Includes all passenger and cargo flights operating on scheduled routes Limited amount of non-scheduled (charter) operations Passenger and freight Airlines carries passengers, freight and mail International freight market is more profitable than domestic freight market ○ Large competition with other options: truck, trains are much cheaper General Aviation Largest segment of aviation based on Number of aircrafts Number of pilots Number of airports and communities served For both private and commercial Mostly flown for business and commercial purposes  The use of GA Business aviation Provides quick, flexible, safe, direct and more secure and reliable transportation Personal flying Instructional flying External load and medical Carrying heavy loads or carry people or donor organs for transplant Commercial and industrial aviation Aerial application ○ Fire-fighting, agricultural, insect control Aerial observation ○ Photography, patrol, search and rescue Other flying Research & development, testing, red bull race The cyclical nature (Cycle of around 10 years) 4-5 years of poor performance followed by an upturn 4-5 years of improving results In-line with global economic cycle The performance of the airline market is the worst performing of any sectors in air transport chain Even when a route is unprofitable, airlines can’t easily cancel the route When cancelled the same route can’t be obtained easily ○ Airlines can reduce route frequency instead Factors that influence the cycle Economic growth ○ Demand of air transport ↑ ---> aircraft orders ↑ (make to order) ○ Incomes of household ↑ ---> spending on travels ↑ Inflation ○ When prices are stable, interest rates tend to be low ○ High interest rates will inhibit economic activity Expenses ↑ ↑ ---> customer services ↓ Fleet capacity ○ High load factor: rising air traffic ---> buy more aircrafts  Overview of world passenger traffic Airlines in asia-pacific region have grown much more rapidly World passenger traffic has doubled every 15 years Important indicators (supply & demand) Why do we need RPK, ATK It is for long term planning: Do we need additional staff? Are current facilities at the airport enough for increased operations? Lecture 2 International Aviation Freedoms of the air Building blocks of air transportation regulation The freedoms of the air are a set of commercial aviation rights granting a country’s airline the privilege to enter and land in another country’s airspace Lecture 3 Airport Components of airport: airside and landside Landside All passengers and baggage processing can be performed without being physically close to and aircraft Airside Facilities focus on the efficient serving of aircraft including fueling, loading and unloading etc Further categorized into Airspace and airfield Access from landside areas to airside areas is tightly controlled, i.e. security check-point The Airfield Includes all facilities located on the physical property of the airport to facilitate aircraft operations Runway Taxiway Apron - Accommodate planes for purpose of loading/unloading Aircraft ground handling To ensure safety of the aircraft To reduce ground time To ensure high reliability of handling activities, avoiding delays Two types of stands: Frontal (inner) with jet bridges or remote (outer) require bus or cars  The airspace The area off the ground surrounding the airport Air traffic control tower (ATCT) Ground and tower Ground control is responsible for directing all ground traffic, except traffic on runways Planes, baggage trains, trucks, personnel cars Tower control is responsible for aircrafts on the runway and in controlled airspace immediately surrounding the airport Coordinate sequencing of aircraft in traffic pattern Aircrafts passing through airspace ensure they avoid traffic and position known The Landside Accommodate the movement of ground-based vehicles, passengers and cargo The Terminal Component Designed to facilitate the movement of passengers and baggage from the landside to the airside The Ground Access component Accommodates the movement of ground based vehicles to and from cities Operators at HKIA Lecture 4 Airline Business The nature of the airline product The demand for passenger air services is a derived demand, it depends on the demand for other activities like business or leisure Essential to forecast the demand for other activities to forecast demand for air travel Strong pressure on airlines to expand into other areas ○ Hotels, travel agencies, car rental etc Airline marketing is essential for selling the airline products Airlines have to face the reality that: Airlines are homogeneous (similar) ○ One airline is similar to another ○ One airline seat is similar to another ○ Same aircraft types used by other airlines This homogeneous nature of airline product has 2 consequences: Costly to differentiate (differentiation strategies) from competitors: ○ First to introduce new aircraft type ○ Increasing frequency of flights ○ Introducing new destinations ○ Spending more on in-flight catering or IFE Emergence of new airlines or incursion of new airlines on same route relatively easy (little to no entry barrier) Airline costs Average revenue must be sufficient to cover cost per km flown  Two costs: Operating costs (direct and indirect) Non-operating costs ○ Losses arising from retirement of equipment ○ Interest paid on loans ○ Taxes Cost-cutting trends Lay off employees and re-employ Outsourcing ground services to ground handling agent Reduce aircraft fleet size and frequency Increase passenger load factor (promotion, discounts etc) Increase aircraft utilization (average numbers of block-hour per 24 hours)  Airline business models Full service network carriers (FSNC) Core business: PAX, cargo, maintenance Hubs and spoke network: good coverage Global player: domestic, international flights Multi type of aircraft (heterogeneous) Alliances development: enlarge network by interlining with partner carriers In-flight services ○ Superior product delivery (quality service, create seamless travel experience) ○ Schedule and network ○ Seat and in-flight frills Free drinks & meal services little /no sale Free IFE Customer relationship management (CRM): loyalty programme Low cost carriers (LCC) Core business: PAX Point to point network: routes from one or multiple base airports Secondary airports: less congested + lower airport fees Single aircraft fleet (homogeneous), high load factor, high aircraft utilisation (block hours) No-frills service (basic service) ---> more promotion on flights No loyalty programme  Introduction of route network Point to point Aircraft travels directly to a destination Network is developed from one or few base airports No connections are available at base airports Advantages: Eliminates the need for connections Reduces travel time for passengers Simplifies scheduling for minimum turnaround time Switching route cost is low ---> easy to open and close routes Disadvantages: If a desired origin destination pair is not served, passengers will have to take other airlines or have to make connections themselves Hub and spoke Routes (spokes) radiate from central hub to a number of outlying airports Several points of departure are fed into a single airport hub Number of city pairs is much greater than when they are linked directly Providing more daily service between points Advantages: Once an airline established itself with a solid hub network at an airport, it can be a major entry barrier for other airlines  Provide connection for passengers from small cities to other cities in the world with relatively low fars Disadvantages: Congestion at hub airport Delays at hub may create delays system wide ○ Delays puts extra pressure on baggage handling Puts extra pressure to airport infrastructure expansion Complex scheduling --- more coordination for arrival and departure time Ownership of airlines Before deregulation of industry, airlines were owned by state governments Government subsidised them in order to protect local employment, to promote trade and tourism The trend is that an increasing number of airlines decided to privatise In search of grater operating efficiency To increase customer service Airline alliances & loyalty schemes Airline alliances Agreement to share resources Marketing agreements and technical co-operations Code sharing, block seat, frequent flyer programs Joint aircraft purchasing (Larger bargaining power) Loyalty schemes Provides a valuable source of data about customers Focuses on passengers whose price is usually not sensitive ○ But looks for quality of service Frequent flyer programmes Rewards the customer for repeat use of service, earning mileage point  Codeshare agreement Two or more airlines publish and market the same flight One airline is the operating carrier, they will use their own planes and crews to operate this route One airline will be the marketing carrier, seats will be marketed by them When airline B is unable to serve a particular airport which is served by airline A Revenue or profit sharing Coordination of schedule Baggage handling Joint venture A partnership between two or more airlines to operate as a single entity on certain routes Both airlines will operate on same route, but on different days E.g. Cathay Pacific flies for Mon, Tue, Weds, Thurs; Malaysia airlines fly Fri, Sat, Sun Lecture 5 Aircraft Manufacturers Aircraft manufacturers Boeing, Airbus, Comac, Embraer, Lockheed, ATR, Bombardier Basic aircraft components  The Boeing Company Commercial airplanes (707, 717, 727, 737, 747, 757, 767, 777, 787) Integrated defence systems (F-14, F-15, F-16. C-17, C-5; Starliner) The Airbus company Commercial (A300, A310, A320, A330, A340, A350, A380) Defence and space (A400M, Typhoon, Eurofigher, A330MRT) Helicopters Cross crew qualification Within the same family, share the same design, same cockpit design Reduced maintenance costs for airlines Airbus vs Boeing Both have broad product range varying from single aisle to wide body, from short haul to long haul Compete head on Long term market trend Structure More composite materials ---> light weight ---> more fuel efficient Twin engine aircrafts Larger fuselage ---> More capacity New engine performance ---> reduce noise, more environmental friendly Lecture 6 Air Freight Air cargo transportation has been partly influenced by the rapidly growing e-commerce industry during the covid 19 pandemic Categorisation Market outlook Air cargo market is in-line with global economy growth = Derived demand  Freight vs passenger market Demand of freight: Unidirectional ---> Imbalance in freight flows Passenger travel: millions of individual decision makers Air freight transport: Only a few major cargo agency Passenger: flight duration Freight decision: by delivery time at the destination Decisions by passenger: taste or subject assessment as in passenger business Decisions by shippers or forwarders on choice of airline are much rational (freight rates) Transporting freight is more complex ---> requires freight forwarders specialist Importance of air cargo Quickest but expensive mode of transportation Low weight, but high value and time sensitive cargo Why is cargo important for airlines? Capacity utilisation: Utilise the belly space of aircraft Profit maximisation: Extra revenue on passenger carrying flights Potential growth market: Upward trend, especially on e-commerce by air transport  Key players in air freight 5 key players in the air freight industry: Combination carrier (PAX + cargo) All cargo carrier Integrator Contact freighter operator Freight forwarders Combination carrier (Cathay Pacific) Scheduled airlines who transport both passengers and cargo in belly space of plane All cargo carrier (CargoLux) Operate scheduled cargo service and ad-hoc (when necessary) charters Increases its payload by half or more compared to a passenger aircraft Integrator (DHL, UPS, FedEX) Door to door service within specified time periods Provide a total product ○ Pick up and delivery ○ Customs clearance ○ Paperwork processing Able to handle all kinds of cargo worldwide with one system Contract freight operation Operates all cargo aircraft ○ Primarily on behalf of other airlines ○ On wet lease contract on ACMI (aircraft, crew, maintenance, insurance) The lessor is not exposed to short term traffic fluctuations Freight forwarders An agent who acts on behalf of importers, exporters ○ To organise safe, efficient and cost-effective transportation of goods Provide shippers with complete end to end service Can meet specialised needs Logistics Flow of air cargo Lecture 7 Aviation and the Environment Major environmental impacts Greenhouse Gases emission ( NOx, CO2, CH4) Noise Air quality, water Flying green: ICAO - CORSIA Airlines and aircraft operators was required to offset any growth in CO2 emissions Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) Record, monitor and verification Operational Improvement - Air Traffic Management Aircraft technology - Hybrid electric aircraft Sustainable aviation fuel - Biofuels Airport carbon accreditation Global carbon management programme for airports Independently assesses and recognises airports’ efforts to reduce CO2 emission Aims of airport carbon accreditation Encourage and enable airports to implement best practices in carbon management ○ Ultimately with the objective of becoming carbon neutral Innovate airports, to reduce its environmental footprint 4 stages: Mapping Determine emissions sources within operational boundary of the airport Compile carbon footprint report Reduction Provide evidence of effective carbon management procedures Optimisation Widen the scope of carbon footprint to include third party emissions Neutrality  Offset remaining emissions to achieve carbon neutral operations More emission reduction actions in aviation Co-operating with governments and air navigation service providers (ANSP) to use the shortest feasible routes Implement continuous descent approaches Flying at optimal speeds and altitudes Noise impacts Immediate impacts Sleep disturbance ---> leading to fatigue, loss of productivity of residents Cognitive and emotional responses Annoyance ---> lead to stress-related symptoms Impacts on learning in children Long-term responses Cardiovascular diseases ---> increased risk of heart disease/ heart attack Noise reduction Steeper approach using Ground Based Augmentation System ---> reduce noise Satellite based precision approach aid for landings New quieter aircraft type / engine development Airport curfews ---> limits a time period where aircrafts cannot land or take off Lecture 8 The Development of Aviation Industry The new era An increase of air travel is due to “revenge travel” Airports and airlines re-ramping up capacity and production targets Expansion of airport facilities HKIA 3 runway system came into operation on November 28th Makes HK an even stronger aviation hub HK authority introduced incentives of up to HKD 7 million annually for airlines expanding long-haul routes and adding new destinations The use of sustainable aviation fuel (SAF) Reduced Emissions: SAF can significantly lower greenhouse gas emissions compared to traditional jet fuel. It can reduce lifecycle carbon emissions by up to 80%, helping to mitigate climate change Renewable Sources: SAF is produced from renewable resources, such as waste oils, agricultural residues, and other sustainable feedstocks, reducing dependency on fossil fuels Compatibility: SAF can be blended with conventional jet fuel and used in existing aircraft and infrastructure without the need for significant modifications Improved Air Quality: By reducing particulate matter and other pollutants, SAF contributes to better air quality around airports and flight paths Economic Opportunities: The development of SAF can create new jobs in the renewable energy sector and stimulate local economies through the production of sustainable feedstocks Regulatory Compliance: As governments implement stricter emissions regulations, SAF can help airlines meet sustainability targets and regulatory requirements  More partnership among airlines Codesharing agreements: Increases destinations between airlines Airline Mergers: Advantages ○ Increased network expanding the business ○ Reduced competition thus reducing advertising frequency and costs ○ Enhanced customer experience, more resources Disadvantages ○ Less competition ---> higher ticket price, fewer choice ○ Integrating 2 different corporate cultures lead to internal conflict between workers Investment for the future Increase fleet size Enhance customer expectation Streamlined booking process User friendly apps Able to reach customer support easily Enhanced in flight experience Increased width between seats, more movies to watch in IFE Organised queuing before entering the aircraft There is always a huge pile up before and during boarding Change up boarding method like allowing passengers at the back to board first