Air Transportation : A Management Perspective

by WELLS

• ISBN13: 9780534534783
• ISBN10: 0534534783
• Format: Paperback
• Copyright: 1998-06-08
• Publisher: Brooks Cole

Summary

This is an introductory book written to impart to the student a broad understanding of the air transportation industry and the management functions within an airline, yet its sophisticated and clear treatment of the material permits a wide range of flexibility and to encourage interest in keeping abreast of current information in the field. It presents the basic concepts and problems facing the industry in a straightforward, logical way and promotes student interest by providing up-to-the-minute information in the field.

Table of Contents

Preface	xii
PART ONE AN INTRODUCTION TO AIR TRANSPORTATION	3	(164)
1 Aviation: An Overview	3	(30)
Introduction	4	(1)
The Aerospace Industry	4	(20)
Characteristics of the Industry	5	(2)
Economic Profile of the Industry	7	(3)
Industry Suppliers	10	(1)
The Government Market	11	(2)
The Civil Aviation Market	13	(5)
Factors Affecting Commercial Transport Sales	18	(4)
General Aviation	22	(1)
Related Products and Services	23	(1)
The Air Transportation Industry	24	(6)
Contribution to the Economy	25	(3)
Contribution to Efficient Conduct of Business	28	(1)
Impact on Personal and Pleasure Travel Patterns	29	(1)
Key Terms	30	(1)
Review Questions	30	(1)
Suggested Readings	31	(2)
2 Historical Perspective	33	(60)
Introduction	34	(1)
The Formative Period: 1918-1938	35	(12)
The Post Office Department Service	35	(2)
Contract Mail Service	37	(3)
Postmaster General Brown and the Airlines	40	(3)
The Turning Point for the Airline	43	(3)
The Arrival of the Professional Airline Manager	46	(1)
The Growth Years: 1938-1958	47	(4)
1938-1945	47	(1)
The Postwar Years	48	(3)
Maturity-Jets Arrive: 1958-1978	51	(3)
Economic Developments Prior to Deregulation	54	(4)
Federal Legislation and the Airlines	58	(16)
Early Federal Legislation	59	(1)
The Air Commerce Act of 1926	60	(2)
Additional Air Mail Acts	62	(1)
The Civil Aeronautics Act of 1938	63	(2)
Economic Functions of the CAB	65	(2)
The Federal Aviation Act of 1958	67	(1)
The Deregulation Movement	68	(3)
The Airline Deregulation Act of 1978	71	(3)
Postderegulation Evolution	74	(6)
Merger Mania	75	(2)
Regional Commuter Airlines	77	(1)
New-Generation Airlines	78	(2)
General Aviation	80	(9)
The Home of General Aviation	80	(2)
Mr. Piper and His Cubs	82	(1)
The Post-World War II Years	82	(2)
The Maturing of General Aviation	84	(3)
Business Aviation	87	(2)
Key Terms	89	(1)
Review Questions	89	(2)
Suggested Readings	91	(2)
3 Air Transportation: Regulators and Associations	93	(34)
Introduction	94	(1)
The Department of Transportation	95	(7)
The Federal Aviation Administration	97	(1)
The Federal Highway Administration	97	(1)
The Maritime Administration	98	(1)
The St. Lawrence Seaway Development Corporation	98	(1)
The Federal Transit Administration	99	(1)
The United States Coast Guard	100	(1)
The National Highway Traffic Safety Administration	100	(1)
The Federal Railroad Administration	101	(1)
The Research and Special Programs Administration	101	(1)
The Bureau of Transportation Statistics	101	(1)
The Federal Aviation Administration	102	(9)
Major Responsibilities	103	(1)
Other FAA Activities	110	(1)
The National Transportation Safety Board	111	(5)
Scope and Responsibilities	111	(3)
Steps Involved in a Major Accident Investigation	114	(2)
Major Aviation Associations	116	(8)
Airline-Related Associations	116	(1)
Other Airline Associations	117	(2)
Aircraft-Manufacturing Associations	119	(2)
General Aviation Associations	121	(1)
International Aviation Associations	122	(2)
Key Terms	124	(1)
Review Questions	124	(1)
Suggested Readings	125	(2)
4 The General Aviation Industry	127	(40)
Introduction	128	(1)
General Aviation Statistics	129	(18)
Factors Affecting General Aviation	131	(4)
Uses of Aircraft	135	(8)
Airports	143	(2)
FAA Services	145	(2)
The General Aviation Support Industry	147	(7)
The Manufacturers	147	(1)
The Aviation Service Industry	148	(6)
The Available Market-The Users	154	(7)
The Business Market	155	(5)
The Personal Market	160	(1)
Key Terms	161	(1)
Review Questions	162	(1)
Suggested Readings	163	(4)
PART TWO STRUCTURE AND ECONOMICS OF THE AIRLINES	167	(58)
5 The Airline Industry	167	(30)
Introduction	168	(1)
Structure of the Airline Industry	168	(3)
Growth and Regulation	168	(3)
Deregulation	171	(1)
Major and National Carriers	171	(5)
Regional Carriers	176	(5)
Early Growth	176	(1)
Role of the Regional Air Carrier	177	(1)
Code Sharing	178	(2)
Flight Equipment	180	(1)
Airline Statistics	181	(1)
Airline Certification	181	(2)
Section 401 Certificates	181	(2)
U.S. Air Carrier All-Cargo Certificates Under Section 418	183	(1)
Commuter Air Carrier Fitness Determinations Under Section 419	183	(1)
Data Collection by the DOT	183	(1)
Air Carrier Accounting and Guidance	184	(1)
Financial and Statistical Reporting	184	(1)
Industry Agreements	184	(3)
Identification Codes and Airline Designators	185	(1)
Publishing Schedules	185	(1)
Interline Agreements	186	(1)
Traffic and Financial Highlights: 1960-1996	187	(7)
Early 1960s	187	(2)
Late 1960s	189	(1)
Early 1970s	189	(2)
Late 1970s	191	(1)
Early 1980s	191	(1)
Late 1980s	192	(1)
Early 1990s	193	(1)
Late 1990s	194	(1)
Key Terms	194	(1)
Review Questions	194	(1)
Suggested Readings	195	(2)
6 Economic Characteristics of the Airlines	197	(28)
Introduction	198	(1)
The Airlines as Oligopolists	199	(9)
Number of Carriers and Market Share	199	(1)
High Barriers to Entry	200	(2)
Economies of Scale	202	(1)
Growth Through Merger	203	(3)
Mutual Dependence	206	(1)
Price Rigidity and Nonprice Competition	207	(1)
Other Unique Economic Characteristics	208	(7)
Government Financial Assistance	208	(1)
High Technological Turnover	209	(1)
High Labor and Fuel Expenses	210	(1)
The Competitive Advantage of Schedule Frequency	211	(1)
Excess Capacity and Low Marginal Costs	212	(1)
Sensitivity to Economic Fluctuations	213	(1)
Close Government Regulation	214	(1)
The Significance of Airline Passenger Load Factors	215	(5)
Traffic Peaks and Valleys	216	(1)
Capacity Versus Demand	216	(3)
Pricing in Relation to Load Factor	219	(1)
Key Terms	220	(1)
Review Questions	220	(1)
Suggested Readings	221	(4)
PART THREE MANAGERIAL ASPECTS OF AIRLINES	225	(302)
7 Airline Management and Organization	225	(48)
Introduction	226	(1)
Management	226	(5)
Levels of Management	226	(3)
Decision Making	229	(2)
Functions of Management	231	(4)
Planning	231	(3)
Organizing	234	(1)
Staffing	234	(1)
Directing	234	(1)
Controlling	235	(1)
Organization	235	(3)
Principles of Organization Planning	235	(3)
Line and Staff Responsibilities	238	(1)
The Organizational Chart	238	(1)
Staff Departments	239	(5)
Finance and Property	239	(1)
Information Services	240	(2)
Personnel	242	(1)
Medical	242	(1)
Legal	242	(2)
Corporate Communications	244	(1)
Economic Planning	244	(1)
Line Departments	244	(24)
Flight Operations	245	(6)
Engineering and Maintenance	251	(10)
Contract Maintenance	261	(1)
Marketing and Services	261	(5)
The Flight-Serving Passengers	266	(2)
Key Terms	268	(1)
Review Questions	269	(1)
Suggested Readings	270	(3)
8 Forecasting Methods	273	(26)
Introduction	274	(1)
The Purpose of Forecasting	274	(2)
Analysis	275	(1)
Planning	275	(1)
Control	275	(1)
Forecasting Methods	276	(11)
Causal Methods	276	(3)
Time-Series or Trend Analysis Methods	279	(3)
Smoothing the Variations	282	(1)
Accuracy of the Causal Models and Time-Series Forecasts	283	(1)
Judgmental Methods	284	(3)
Usefulness of Judgmental Methods	287	(1)
Key Terms	287	(1)
Review Questions	287	(1)
Suggested Readings	288	(1)
Appendix: Air Marketing Research	289	(6)
Appendix: TWA	295	(4)
9 Airline Passenger Marketing	299	(26)
Introduction	300	(1)
Development of the Marketing Concept	300	(1)
The Marketing Mix	301	(7)
Product	303	(1)
Price	304	(1)
Promotion	305	(1)
Place	306	(2)
The Consumer-Oriented Marketing Concept	308	(6)
Market Segmentation	309	(2)
Intensive Growth Strategies	311	(3)
Marketing Strategies Since Deregulation	314	(7)
Computerized Reservation Systems (CRSs)	315	(1)
Travel Agents	316	(1)
Frequent-Flier Programs	317	(1)
Business-Class Service	317	(1)
Code Sharing	318	(1)
Hub-and-Spoke Service	319	(2)
Advertising and Sales Promotion	321	(1)
Key Terms	321	(1)
Review Questions	322	(1)
Suggested Readings	323	(2)
10 Airline Pricing, Demand, and Output Determination	325	(38)
Introduction	326	(1)
The Trend in Domestic Passenger Air Fares	327	(2)
Pricing and Demand	329	(9)
Determinants of Demand	330	(1)
Changes in Demand	331	(2)
Elasticity of Demand	333	(4)
Determinants of Elasticity	337	(1)
No-Frills Air Fare and Survey Warfare	338	(1)
Types of Passenger Fares	339	(1)
The Pricing Process	340	(7)
Pricing Strategies and Objectives	341	(1)
Pricing Tactics	342	(3)
Pricing Analysis	345	(1)
The Role of Inventory Management	346	(1)
Airline Costs	347	(5)
Direct Operating Costs	347	(2)
Indirect Operating Costs	349	(1)
Nonoperating Costs and Revenues	350	(1)
Fixed Versus Variable Costs	351	(1)
Pricing and Output Determination	352	(6)
Total Costs in the Short Run	353	(1)
Load Factor	354	(3)
Profit Maximization in the Short Run	357	(1)
Key Terms	358	(1)
Review Questions	359	(2)
Suggested Readings	361	(2)
11 Air Cargo	363	(28)
Introduction	364	(1)
Historical Overview	364	(7)
Air Express	365	(1)
Overnight Air Express	366	(2)
Air Freight	368	(1)
The Arrival of Jumbo Jets	368	(1)
Types of Carriers	369	(2)
Air Cargo Today	371	(3)
The Future	374	(1)
The Market for Air Freight	375	(2)
Types of Air Freight Rates	377	(5)
General Commodity Rate	377	(1)
Specific Commodity Rates	378	(1)
Exception Rates	379	(1)
Joint Rates	379	(1)
Priority Reserved Air Freight	379	(1)
Speed Package Service	380	(1)
Container Rates	380	(2)
Special Air Freight Services	382	(3)
Assembly Services	382	(1)
Distribution Service	383	(1)
Pickup and Delivery Service	384	(1)
Other Specialized Services	384	(1)
The Air Cargo Guide	385	(1)
Factors Affecting Air Freight Rates	385	(2)
Costs of the Service	385	(1)
Volume of Traffic	385	(1)
Directionality	385	(1)
Characteristics of the Traffic	386	(1)
Value of the Service	386	(1)
Competition	387	(1)
Key Terms	387	(1)
Review Questions	387	(1)
Suggested Readings	388	(3)
12 Principles of Airline Scheduling	391	(36)
Introduction	392	(1)
The Mission of Scheduling	392	(3)
Equipment Maintenance	395	(4)
Flight Operations and Crew Scheduling	399	(2)
Ground Operations and Facility Limitations	401	(4)
Schedule Planning and Coordination	405	(12)
Traffic Flow	406	(1)
Schedule Salability	407	(3)
Schedule Adjustments	410	(4)
Load-Factor Leverage	414	(2)
Putting Together the September Schedule	416	(1)
Equipment Assignment and Types of Schedules	417	(2)
Hub-and-Spoke Scheduling	419	(3)
Advantages of Hub-and-Spoke Systems	420	(2)
Disadvantages of Hub-and-Spoke Systems	422	(1)
Data Limitations in Airline Scheduling	422	(1)
Key Terms	423	(1)
Review Questions	424	(1)
Suggested Readings	425	(2)
13 Fleet Planning: The Aircraft Selection Process	427	(34)
Introduction	428	(1)
Factors in Fleet Planning	428	(10)
The Prederegulation Era	428	(1)
The Hub-and-Spoke System	429	(1)
Technical Aspects	430	(1)
Fleet Rationalization	431	(2)
Fleet Commonality	433	(1)
Long-Range Aircraft	433	(1)
The Trend Toward Leasing	434	(3)
Noise Restrictions	437	(1)
Design and Development-The Manufacturer's Viewpoint	438	(8)
The Boeing Approach	438	(3)
Challenges from Airbus	441	(4)
Other Factors in Design and Development	445	(1)
The Fleet-Planning Process	446	(6)
Information Needed	446	(2)
The Fleet-Planning Model	448	(1)
System Constraints	448	(1)
Aircraft Evaluation	449	(3)
Tentative Fleet Plan and Financial Evaluation	452	(1)
Presentation and Management Approval	452	(1)
The Decision to Upgrade or Replace	452	(2)
Key Terms	454	(1)
Review Questions	454	(1)
Suggested Readings	455	(1)
Appendix: Fleet Planning at American Airlines	456	(5)
14 Airline Labor Relations	461	(32)
Introduction	462	(1)
The Railway Labor Act and the Airlines	463	(6)
The Origin and Provisions of the Labor Relations Act	463	(3)
The Collective Bargaining Process	466	(2)
Criticism of the Process	468	(1)
Historical Overview of Airline Union Activity	469	(7)
The Prejet Age	469	(2)
The Jet Age	471	(4)
Summary: Prederegulation Labor-Management Relations	475	(1)
Labor Relations Since Deregulation	476	(13)
Elimination of the Automatic Labor-Cost Pass-Through	478	(1)
A Period of Labor Unrest: The 1980s	478	(5)
The Consolidation Period: 1986 to the Present	483	(4)
Future Collective Bargaining Strategies	487	(2)
Key Terms	489	(1)
Review Questions	489	(1)
Suggested Readings	490	(3)
15 Airline Financing	493	(34)
Introduction	494	(1)
Sources of Funds	495	(10)
Internal Sources	495	(1)
External Sources	496	(9)
Sources and Uses of Funds by the U.S. Scheduled Airlines	505	(14)
Industry Balance Sheet	507	(1)
Sources and Uses of Funds: 1960-Present	507	(8)
Funding Sources in the 1990s and Beyond	515	(2)
Putting It All Together	517	(2)
Cash Management and Financial Planning	519	(4)
Cash Flow	520	(1)
Cash Budgeting	521	(2)
Key Terms	523	(1)
Review Questions	523	(1)
Suggested Readings	524	(3)
PART FOUR THE INTERNATIONAL SCENE	527	(30)
16 International Aviation	527	(30)
Introduction	528	(1)
The Question of Sovereignty in Airspace	528	(3)
The Paris Convention of 1919	529	(2)
The Havana Convention of 1928	531	(1)
International Air Law	531	(8)
The Warsaw Convention of 1929	532	(1)
The Chicago Conference of 1944	533	(6)
The Formation of the IATA	539	(1)
The Bermuda Agreement of 1946	539	(2)
Three Decades Later: From Bermuda to Deregulation	541	(4)
Challenges to the Established Order: The Early 1970s	541	(3)
New U.S. Policy in International Aviation: The Late 1970s	544	(1)
The Pursuit of Open Skies	545	(5)
The International Air Transportation Competition Act of 1979	545	(1)
The 1980s	546	(3)
Late 1990s Policy	549	(1)
Globalization	550	(3)
Future Challenges	553	(1)
Key Terms	554	(1)
Review Questions	554	(1)
Suggested Readings	555	(2)
Appendix A Career Planning in Aviation	557	(20)
Introduction	558	(1)
Choosing and Getting Your First Job in Aviation	558	(7)
Making a Self-Assessment	558	(1)
Examining Career Fields and Job Descriptions	559	(4)
Collecting Information	563	(1)
Finding Job Openings	563	(2)
Cover Letters and the Resume	565	(2)
Cover Letters	565	(1)
The Resume	565	(2)
The Interview	567	(10)
The Questions	567	(1)
After the Interview	568	(9)
Glossary	577	(34)
Index	611