Factors Of Production: Aircraft, Airports, Airways, Human
And Capital Resources Air traffic: describes all movements of
people, freight and mail by air.
Aviation industry:summarises all facilities
needed for the production and supply of
Air transport industry aircraft as well as infrastructural facilities
such as airports and air traffic control
systems.
Aviation organisation: includes all
institutions, which lay out the basic
conditions for air traffic operation and
production.
1. Passenger traffic increased by 1.5 times
in the past decade →CAGR*(A Compounded
average annual growth rate)of 6.0%;
2. corona crisis → decline 60% in 2020（9.1
in 2019）;
3. global recovery to pre-crisis level →
2024
4.German traffic recovers more slowly(vs
European)； 5.
1.the aviation market after crisis CAGR around 1-3% p.a.
1. US airports benefited from a strong
domestic market, China saw declines due to
zero-COVID policy; 2.
leading airports: HKG(HK)/MEM(US)/PVG(
CN)
Direct Connectivity
connectivity
Hub Connectivity
Global air traffic
pre-Corona on the future development of
global passenger air traffic to be around 3-
4％ p.a. → Growth drivers and Growth risks
China to become world‘s largest market
Competitive situations in the process chain
vary strongly
(Example: Passenger process)
Specific characteristics of air transport
#4
2. key market participants: airlines,
airports, air traffic control
The key players of Aviation (operations)
LECTURE 1 INTRO
The Influencing Factors Determine
Governmental Aviation Policy
The instruments can be used to
achieve those governmental
objectives
3. legal basics
Each state has complete and exclusive sovereignty over the air
space above its territory.” (Chicago Convention Part 1)
International legislation – Sovereignty and Agreements
Freedoms of the air #9
The political process of deregulating(放松管制) the First EU liberalisation(⾃由
aviation market started in the US in 1978 化) package is in 1987
Aviation industry before COVID – a driver of
employment #1
Aviation industry before COVID – a driver of
employment #2
4. positive and negative external
effects of air traffic
The pandemic threatened thousands of jobs –
recovery creates staff scarcity in Germany #3
Negative effects: overview on environmental impact
Global air traffic is developing dynamically,
however, at a very different pace by region.
Air transport is characterized by specific
features which make the business complex.
Competition in the process chain of air
transport varies immensely if e. g.
considering manufacturers vs. airports or
Global air traffic is developing dynamically,
airlines.
however, at very different pace by region.
Conclusion Air transport is characterized by specific
Key players of air traffic operations are
features which make the business complex.
airlines, airports and air traffic control. For
airlines and airports exist different
business and network models
Air transport fosters employment and
global trade as well as understanding
cultures. However, it also has negative
effects on the environment as noise and air
pollution
direct air services from airports(measured
→destinations and the frequency of flights
to the same destinations)5 daily flights ＞4
daily flights
the key metric(度量标准) for any hub
airports big or smaller; measures
→connecting flights that can be facilitated
in the hub airport(minimum and maximum
connecting time and the quality of the
connections→by the detour involved绕路/迂
回and connecting time)
＋：economic growth; urbanization(城市
化)；migration; globalization; mobility
needs(迁移需求)；population growth
—：political crisis/war; trade war(US vs
China/Iran); global pandemic;
environmental regulations; oil price
development/inflation(膨胀)； global budget
debt
growth drivers will be located in Asia and
the Middle East
Asia/Pacific Pax CAGR 8.7％
1. China, the US and India are predicted to
remain the world's leading aviation
markets, with China ranking first by 2040；
2. Middle Eastern hubs will also gain market
share, to the chagrin of European hubs –
and are likely to be winners of the current
political
crisis； 3.
Western countries will be outpaced
by “ East ”
future:
1. Only two major aircraft manufacturers(
1.China trying to catch up with Comac(
Manufacturers the Boing Company/ Airbus SE)
commerical aircraft cooperation of China);
(Aircraft, Spare parts) 2. Few manufacturers of spare parts (e.g.
2. New players on the market for general
for overhaul)
aviation (air taxis) and sustainable aircraft
1.Air Traffic Control: national monopolies（ future:
垄断）, no competition, commencing 1.ATC: Single European sky?
Infrastructure privatisation(开始私有化) 2.Airports: even heavier competition in
(Airports, Air Traffic Control→ATC) 2.Airports: − strong competition for transfer Europe or consolidation?
passengers; − strong competition for local 3.More point-to-point traffic with
passengers sustainable aircraft?
1.Online platforms taking the lead
2.Still two leading Global Distribution
Systems
(GDS) future: Platforms win?
Sales and Distribution 3.Direct sales gain importance 1. continuous pricing”
4. New Distribution Capability (NDC) will 2. Ancillaries revenues key
make airline pricing more flexible,
overcoming current limitations on product
differentiation
1.Catering（提公饮⻝及服务）, Cleaning,
Fuelling（加燃料）, Ground Handling:
future: Robotics and AI taking over ground
monopolies are slowly breaking up
Ground Service handling tasks (autonomous cars, belly
2.Maintenance, Repair, Overhaul (MRO) -
un-/loading, apron control)
Services: mostly strong dependence on one
supplier
future:
1.Strong competition on trunk routes（主⼲
1.More (European) nationalization or rather
线上的强烈竞争）
consolidation(联合；统⼀)?
2.Regional niches(区域优势)
Passenger flights offer 2.Importance of health care?
3. Extensive privatisation(进⼀步私有
3.Importance of nonstop travel options, also
化)
fostering（哺育） door-to-door?
4.Low cost enabling "mass transportation"
4.Digital Certificate as a global standard?
1.an immaterial（⽆形的） service product；
2.Production and distribution coincide in
time；
Transport service cannot be stored 3.created and consumed at the same time；
4.no passengers or freight are transported
during the provision（供应品） of service,
rejects（废品） are produced
#1. Transport service cannot be stored and
seasons fluctuate(波动) strongly
1.strongly affected by seasonal
fluctuations (time, weekday,
month)；
Strong seasonal fluctuations in demand 2.High volume periods can have two to five
times the volume of demand compared to
low volume months（⾼成交量时期的需求可
能是低成交量时期的2-5倍）
#2. High share of fixed costs（⾼份额的维修成 The aviation industry is characterised by a
本） huge capitalisation ratio（资本化⽐率）
#3. Operating expenses vary strongly by
business model
1. An adjustment of the production capacity, meeting changes in
demand, can hardly take place immediately (lead time for
purchasing new aircraft: minimum 18-month, lead time for
selling used aircraft: 6 to24
Low supply flexibility month).
2. The operation of differently sized aircraft types (so called
equipment changes) can only be used to compensate
geographical but hardly temporal fluctuations ( on Monday
#4. Supply is not very flexible, competition may be distorted by state morning and Friday afternoon, all aircraft should be big)
1. Some airlines are privately owned, and some are state-owned.
2. This can distort competitive relations, as public undertakings
Competition between private and public in the absence of profitability are often fully or partially
owned companies subsidised (e. g. Alitalia/ITA), even if this violates against
applicable EU law. And it distorts competition e. g. of EU carriers
vs. state-owned carriers, in particular of Non-EU countries.
Airport
Network carrier (long haul⻓途⻜⾏)
Regional Airlines (domestic or continental
traffic)
Business models
Low-Cost-Carrier “no frills”(低成本载客 没有花⾥
胡哨的东⻄)
Leisure Airlines (holiday)
Airlines: Business models vary from network to leisure
LUFTHANSA GROUP Airlines Network/Regional/Low Cost/Leisure
carrier(休闲娱乐的载体) to exploit market potentials
Route Network
Fleet policy
Production processes
(Flight Operations)
Classification criteria Customer segments
Product policy / service concept
Distribution and sales
Price policy
Low Fare 低廉票价
Corona forced LCCs back to the roots as VFR and leisure
segment as well as “P2P” will be first to
"Back to the Roots" 回归根本 Leisure
recover. *(VFR-visiting friends and relatives/
P2P-point to point traffic)
Point to Point
The infrastructure（基础设施） for airlines: Commercial Airport types
Airline
overlapping:重叠，搭桥；sizeable:相当⼤的；
catchment:集⽔区，⽔盆地；alliance：结盟，
联盟;Subordinate:使服从
1. DFS Deutsche Flugsicherung GmbH is responsible for air traffic
control in Germany
DFS 2. State-owned company (Federal Republic of Germany holds a 100 %
stake) under private-law
3. Based in Langen, Hessen
▪The main task is to guide aircraft
safely trough German airspace.
▪ In Frankfurt, DFS operates
Control Center
Europe´s largest radar control centre.
▪ There are additional control centres
Air Traffic Control(ATC) in Bremen, Karlsruhe and Munich.
▪ Ensures, that air traffic at German airports
is handled safely and punctually.
▪ Throughout Germany, DFS is represented at
Tower
16 international airports, and nine regional
airports by its subsidiary DFS Aviation
Services.
Areas of activity
▪ Produces aeronautical
publications and products (e.g.
Aeronautical
Solutions aeronautical maps and charts
for
Germany and Europe).
▪ Wholly owned subsidiary of
DFS.
▪ Core business consists of air
DFS Aviation navigation services in
Services GmbH Germany, as well as the
worldwide offer of products
and services related to air
navigation.
▪ The deterioration of the economy and
remaining travel restrictions put pressure
on the whole aviation industry.
▪ By December 2020 more than 620,000
jobs have already been cut.
During COVID ▪ Especially Europe and North America are
affected. Other regions are said to have high
number of unreported cases.
▪ According to IATA, aviationsupported jobs
could decline by -52.5% by the end of the
crisis.
▪ The strong ramp-up phase(爬坡阶段) led to
a lack of operating staff, in particular in
Germany and Europe.
▪ As a result, aviation has returned to a
Recovery / driver of employment, as many vacancies
New Normal need to be filled.
▪ Boeing estimates that 449,000 employees (
crew and technicians) will be needed in
Europe over the next 20 years to meet
commercial aviation demand.
The air transport industry is vital for
globalisation and mobility.
All partners involved have to take on
responsibility to grow its benefits and reduce
negative environmental effects.