KeywordsFlight Attendant Schedule Airline Legacy Carrier Aviation Regulation Airline Operating
Airlines or airways form a system or organization which provides typically scheduled flights for passengers or cargo among specified points (Doganis 2012). As an air transport system, it includes its equipment, routes, operating personnel, and management systems. Globally, it consists of over 2,000 airlines which transport over three billion passengers (Belobaba et al. 2009). In 2007, 29 million scheduled flights were made (Belobaba et al. 2009). Airlines may operate as scheduled services or charters, which operate flights outside normal schedules through a hiring arrangement (Cento 2009). Charters “bundle” flights and accommodation packages together, whereas scheduled airlines do not (Truxal 2013).
A scheduled airline in the United States refers to any civilian aircraft run by a civilian scheduled carrier. The airline, guaranteed a departure and arrival slot, publishes tariffs for passenger services between named cities at usual and specified times on regular flights. Under the US Special Federal Aviation Regulations, a scheduled airline is a “Part 121” carrier in legal terms and flies specific routes. “Part 135” carriers are on-demand airlines and include charter flights where a trip to any destination can be requested. Thus, a scheduled carrier is an airline operating according to a timetable (Crocker 2007).
In 1916, the earliest airline organization, Aircraft Transport and Travel Company, was formed and in 1919 offered 2½-h flights daily from Hounslow Heath Aerodrome in London to Le Bourget in Paris. It was the first regular international service in the world (Larsen et al. 2012), using de Havilland DH-4 biplanes. The first countries to offer air transportation to its colonies were Belgium in 1920 (Sabena), the Netherlands in 1926 (KLM), the United Kingdom in 1924 (Imperial Airways), and Australia in 1922 (Qantas). The first American service operated from Miami to Cuba in 1927. United Airlines introduced the first flight attendants in 1931 and they were all trained nurses (Larsen et al. 2012).
Deregulation and alliance
Many countries have national airlines owned by the government. However, from 1978, the United States and many other countries deregulated their airlines so that they can negotiate their own operating arrangements without governmental interference (Belobaba et al. 2009). In the 1990s, open skies agreements became more common and opened up international routes to further competition. Planes can now fly from any place in the European Union to the United States. Deregulation in Europe started in 1988 and the European airline operation over the past 20 years has changed from being highly regulated to a free-market industry (Cento 2009). In November 1990, domestic aviation in Australia was deregulated.
Airlines lease or own their aircraft. They may have only a single aircraft for carrying mail or cargo or have hundreds for intercontinental, intracontinental, domestic, regional, or international travel. Thus, since deregulation, partnerships or alliances have formed with other airlines in which each utilizes each other’s resources to save costs (Cento 2009). In 2008, British Airways and Iberia formed the International Airlines Group, the biggest in Europe (Truxal 2013). Deregulation of the markets also led to the formation of frequent flyer programs in 1981, which offer free travel for loyal customers. American Airlines was the first to introduce this program (Escobari et al. 2011).
Profits and costs
In December 1991, Pan Am Airlines ended its reign as a result of bankruptcy. This event highlighted the financial costs faced by airline companies. Carriers cost their pricing for services to maximize revenue. Yield management measures the average fare paid by all passengers per kilometer or mile on a particular route. Most airlines use price discrimination, which takes into account the days remaining until departure, the booked load factor, the forecast of total demand, competitive pricing, and variations by day of week of departure and by time of day. Each cabin of the aircraft (first, business, and economy) is divided into classes for pricing purposes with the goal of fetching the highest price for each seat without driving the consumer elsewhere. Thus, leisure passengers are price elastic, while business people are less so because they are more time sensitive (Belobaba et al. 2009; Cento 2009).
In low-fare carriers, however, a simplified price structure exists with fares substantially lower than legacy airlines (Belobaba et al. 2009). Full-service or legacy carriers have fixed operating costs. Most of the income from ticket sales is paid to a wide variety of cost centers. The 1992–1996 period showed that each air transport party is more profitable than the airlines itself. While they earn 6 % return on capital, airports earned 10 %, catering companies 10–13 %, handling companies 11–14 %, aircraft lessors 15 %, aircraft manufacturers 16 %, and global distribution companies more than 30 % (Doganis 2012). On average, airlines earn only a US$4.00 profit per passenger regardless of the airfare.
Skytrax introduced the World Airline Star Rating program in 1999. It ranks airline product and service standards. Its rating levels are based on professional evaluations conducted by internal airline audit specialists, rather than on customer reviews. This ensures that every airline receives a fair and independent evaluation. Ratings consider all areas of an airline’s airport and onboard product and service standards.
Since the first scheduled daily international commercial air service began in 1919, the airline industry has grown like no other to transport passengers to their chosen destinations. Most countries have airlines departing from them, and it is projected that the number of airlines worldwide will continue to grow as world population figures continue to rise and as airline competitors continuously try to bring lower airfare prices to tourists.
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