Essentially, a strategic fleet planning is vital for airlines to yield a higher profit margin while providing a desired service frequency to meet stochastic demand. In contrast to most studies that did not consider slot purchase which would affect the service frequency determination of airlines, this paper proposes a novel approach to solve fleet planning problem subject to various operational constraints. A two-stage fleet planning model is formulated for which the first stage selects individual operating route that requires slot purchase for network expansions while the second stage, in the form of probabilistic dynamic programming model, determines the quantity and type of aircraft (with the corresponding service frequency) to meet demand …show more content…
A strategic fleet planning is vital as it has a great impact on the economical efficiency of airlines [1]. In addition, an oversized aircraft supply implicates an increased cost while an undersized aircraft composition results in not only unsatisfied demand but also a substantial financial loss to airlines [2, 3, 4].
Travel demand and service frequency are found to be two influential factors in an optimal fleet planning [5, 6, 7]. How to estimate and monitor them in fleet planning would affect the accuracy of the optimal decision. This is because there is a close relationship between the aircraft type and quantity with the travel demand as well as the service frequency in fleet planning. Past research had shown that if travel demand is estimated stochastically to account for uncertainty, the optimal solutions are more accurate and reliable [6, 8, 9]. In addition, it has an added advantage if varying passengers‟ classes (i.e. business and economy) is considered [10, 11]. From airline‟s business principles, the airfare of different passenger‟s class is a crucial element
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Khoo and Teoh [14] considered annual service frequency of airline in their fleet planning optimization model. Although the forecasted flight frequency could meet annual stochastic demand under uncertainty, they did not capture service frequency constraint that would limit aircraft operations of airline. In other words, the annual service frequency of airline which did not capture the control of flight frequency explicitly may not be practical under circumstances, especially when the number of flights of airlines is limited at busy airports.
In view of the above limitations of service frequency modeling and estimation in the existing fleet planning model, there is a need to relook on how to model and incorporate the service frequency accurately in the model. This is crucial especially it involves airline‟s plan to expand their services to serve new destinations. Practically, the service frequency of airlines is strictly constrained by regulatory limits, especially the arrival/departure restriction slots at particular airports. For instances, the operating quota of aircraft movements at Orly International Airport, France is 36 takeoffs and
34 landings per hour during peak hours [15]. Therefore, it is apparent that
Gulfstream Aerospace is one of leading corporate jet manufacturers in the world. They have been building jets since the late 50’s and continue to create top of the line aircraft which have become the status symbol of success. With their success comes an extensive company infrastructure and supply chain. First, we will discuss how Gulfstream uses the location to maximize the effectiveness of its supply chain. Then we will look at the business case for Gulfstream’s approach to its supply chain, and in particular, does it make sense to have a car follow supplies while it is on the rail system. Finally, we will look at Gulfstream’s to the “just in time” manufacturing and its strategic approach to choosing locations.
Accuracy: This paper demonstrates much accuracy, this is proven through the subtitles, statistics and in text citations for
The basic marketing strategy of Song Airlines was to reduce cost and increase volume through operational efficiencies and hence increase profits.
The objective of this paper is to analyze and discuss some of the Boeing Company's business decisions using their strengths, weaknesses, opportunities and threats, also known as an S.W.O.T. analysis which is defined as, "a planning tool used to analyze an organization's strengths, weaknesses, opportunities, and threats. (Nickels, McHugh, McHugh, page 216)". This is a very powerful tool usable by any business that is just starting out, going through a change in direction, or in the process of a major merger. The SWOT analysis consists of a few simple steps which can provide valuable insight for direction and decision making. This paper will use The Boeing Company as an example of SWOT analysis application.
...leader. Certainly, it has to take into account the implications of completion from both the direct and the indirect competitors. That is why EasyJet centers on the cost management strategy and the differentiation strategy (Hanlon, 2007). Through an analysis of EasyJet Airplane company strategies and performance, it is clear that they are ambitious and strive for the best. They not only survive in an industry that is intensely competitive, as shown through the analysis by Porter's Five Forces, but also succeed in terms of offering their customers the best that they have to offer in terms of value for money. The advantage this airline gains over its oligopolistic competitors stems from flexible ticketing and complete access to all primary routes. However, in keeping airline industry, there is room for improvement and growth as the analysis using Ansoff Matrix reveals.
The trucking industry over the years have changed the type of services and the quality that it has provides to its customers. In today’s industry the focus is on efficiency with the overall beneficiary being the American consumer. Majority of today’s freight is being transported by truck during sometime in the distribution chain. Some of factors the trucking industry is facing today include hours and earnings and safety issues.
Airline and travel industry profitability has been strapped by a series of events starting with a recession in business travel after the dotcom bust, followed by 9/11, the SARS epidemic, the Iraq wars, rising aviation turbine fuel prices, and the challenge from low-cost carriers. (Narayan Pandit, 2005) The fallout from rising fuel prices has been so extreme that any efficiency gains that airlines attempted to make could not make up for structural problems where labor costs remained high and low cost competition had continued to drive down yields or average fares at leading hub airports. In the last decade, US airlines alone had a yearly average of net losses of $9.1 billion (Coombs, 2011).
Southwest Airlines strategy of focusing on short haul passenger and providing rates as low as one third of their competitors, they have seen tremendous growth in the last decade. Market share for top city pairs on Southwest's schedule has reached 80% to 85%. Maintaining the largest fleet of 737's in the world and utilizing point-to-point versus the hub-and-spoke method of connection philosophy allowed Southwest to provide their service to more people at a lower cost. By putting the employee first, Southwest has found the key to success in the airline business. A happy worker is a more productive one as well as a better service provider. Southwest will continue to reserve their growth in the future by entering select markets only after careful market research.
It has stayed relevant to the market through its propelled philosophy of relationships to generate profits in the business. Since its establishment in Monroe, Louisiana the once tiny airline has stretched to greater heights serving in 6 continents. It has also established a distinguishable name among its competitors with a reputation of leading customer services. However, even as an established venture, the company needs to maximize its profits in order to stay in business and expand in to new territories beyond its conquered boundaries. A strategic analysis was carried out by our team to establish the company’s current situation. A SWOT analysis was performed to come up with three referenced, strategic alternatives. This alternatives are meant to act as a strategic guidance to the company in order to enhance growth. The strategic recommendation provided will improve and enable the business to cope with the competitors while the implementation of the strategy section will outline the way to go about achieving these alternatives in the business setting. Lastly, we put up a discussion on the evaluation procedures and necessary controls for the
This paper will discuss the management planning of Boeing. Boeing, being a leading distributors of aircrafts, satellites and missiles, I will evaluate and analyze the impact of legal issues, ethics and social responsibility in which they carry. I will show how these factors may influence their strategic, tactical and contingency planning.
Lufthansa, one of the world’s biggest airliners, has divisions handing maintenance, catering and air cargo. Since the World War II the airline industry has never earned its cost of capital over the business cycle (Hitt, 2010). Most of the airline companies have either filed for bankruptcy or are being bailed out by their government. Lufthansa had also gone through these tough times, but had resurfaced to become one of the worlds most profitable airline company. The company adapted a transnational strategy, seeking to achieve both global efficiency and local responsiveness. Lufthansa’s monopoly in Germany came to a halt with the creating of the European Union. All the EU member countries become one regional and therefore the European competition became, an increasingly a local competition. Lufthansa created its regional Hubs, to cater for its domestic market. But the availability of substitutes such as bullet trains and the Euro tunnel, made is necessary for Lufthansa to create short traveling time, customizations and quality standards in the region to achieve a competitive advantage. But outside the EU there are no substitute to air travels as such all the flag carriers are competing in the market, the international airline industry is a highly competitive environment. A new force has also emerged in the world of air travel, in the form of three Gulf airlines with jumbo ambitions. Within a decade Dubai’s Emirates, Qatar Airways and Eithad from Abu Dhabi have between them carried the capacity of two hundred million passengers (Micheal, 2010). The company had to go global and therefore adopted the international corporate-level strategy, where Lufthansa will ope...
Airline industry is affected by no. of factors such as fuel price fluctuations, high fixed costs, strong influence of external environment and excessive use of marginal costing by carriers. Recessions in the industry tend to last longer, while recovery periods are generally shorter. Over the past nine years, it is observed that industry has made losses for five years and during the profitable years margins were on a lower end. The airlines industry is acutely sensitive to external events such as wars, economic instability, government policies and environmental regulations.
Porter stated; “for an airline to succeed in the marketplace, it must have a sustainable competitive advantage” (Porter M. E., 2008). The airline industry is the highest competitive industry, and I believe a sustainable completive advantage is essential to succeed in the future of the aviation industry. The competitive advantages that an airline embrace, needs to be based on the airlines strategy and differentiation to competitors. Emirates displays how it has a strategy and how the airline gets ahead of its competitors through how unique it is.
Strategic management is a disciplined effort or control to make necessary decisions that have an effect on a business or an organization; the aim of strategic management is mainly to develop new, innovative or diverse ideas and opportunities for potential or development, and facilitates or assists an organization to achieve its goals (SM, 2010). In reality, strategic management not only can be used or applied to determine mission, vision and values or objectives, but it also establishes roles and responsibilities or timelines in a business (David, 2009). In the following sections, this study will focus on and examine the nature of strategy formulation, implementation, and evaluation activities, and analyze the potential pitfalls or risks in using a strategic-management approach to decision making.
Within the airline industry currently the airlines can be divided into low cost airlines and full service airlines. The low cost airlines targets customers that are seeking no frills connectivity between cities at low ticket prices. The full service airlines provide several add-ons like free meals, on plane entertainment, and communication facilities. The target market for full service airlines are customers who are willing to spend extra for the services that the airlines provides.