MIDTERM PERIOD o Large regionals are certificated carriers with annual

gross revenues between $10 million and $99.9

Civil aviation includes all airline flights and services
offered to the traveling public (Purzycki,2001). In the
aviation industry, we can identify the three main
stakeholders - aircraft manufacturing industry, airlines
and airports. The most prominent stakeholder group in
the aviation industry are the airlines.
Airline Business Models - SCHEDULED AIRLINES
A. Basic civil aviation categories: Scheduled airlines
and Charters or supplemental airlines.
1. SCHEDULED AIRLINES
• Scheduled airlines offer regularly timed flights over
prescribed routes and published timetables.
• The majority of passenger flights are on scheduled
airlines.
• The scheduled airlines fall into three major
categories: major and national carriers, regional
carriers, and commuter carriers.
MAJOR AIRLINES
• also called trunk airlines, or full-service carriers,
focus on long-distance or long-haul routes.
• Flag carriers also fall under this category.
• Major airlines serve major city airports in addition
to international destinations. In United States,
airlines generating more than $1 billion in revenue
annually are categorized as a major airline.
REGIONAL AIRLINES
million.
o Medium regionals are certificated carriers with
annual gross revenue less than $10 million.
o The Small regional airlines don't have a set revenue
definition but are usually referred to as "commuter
airlines" and they are non-certificated (no aircraft
operators certificate or AOC).
Small regional carriers are airlines using aircraft
seating less than 60 passengers. Commuters
operate shuttle services between smaller airports
that cannot support the major airlines and
equipment.
2. SUPPLEMENTAL or CHARTER AIRLINES
Routes and schedules that are not flown by the
scheduled airlines.
They are considered to provide additional or
supplemental service to the major airlines.
Supplemental airlines are also called charters.
Charter airline flights do not have standard fare
structures nor set flight schedules as it operates for the
exclusive usage of passengers who requested the
service based on demand. Seats on public charter
sometimes are offered thru travel agencies in
promotional tours, utilizing the chartered flights
inclusive of the tour package.

• Provide air service between smaller cities and There are three major stakeholders in the aviation
connect these small communities with major industry and the most prominent group are AIRLINE.
airports.
• They operate between points within a specific area
of the country. B. AIRLINE BUSINESS MODEL Categories based on
• In US DOT, regional carriers are subdivided as large, product offerings and value-added services.
medium, or small depending on gross revenue and
Another way of categorizing is to base it on its product
whether they hold a certificate of public
offerings, value-added services, revenue sources, and
convenience.
target market (Cento, 2009).

LLEGADO
  The major airlines or the traditional carriers, is
categorized as Full-Service Carriers (FSCs),
 while budget airlines classified as Low-Cost
Carriers (LCCs) and third set will be the
Chartered airlines.
1. Full-Service Carriers: Basically, the FSCs, which
are scheduled airlines and developed from national flag
carriers, have the following basic characteristics
• utilizes the 'hub and spoke' connection (this will
be discussed in full under Networks section of
this course).
• are usually members of Alliances and other
partnerships.
• Fares are inclusive of in-flight services and
other amenities;
• they are using Global Distribution system (GDS)
or other external airline computer reservation
systems.
• sales channels are extensive including usage of
intermediaries such as travel agencies, and •
its product differentiation, pricing and
Yield Management system is advanced In
support of its network revenue maximization.
2. Chartered Airlines will be discussed under
Supplemental Airlines,
• Do not have standard fare structures.
• No get flight schedules provide essential public
services.
• Seats on public charter sometimes are offered
thru travel agencies in promotional tours willing
the chartered flights inclusive of the tour
package.
3. Low-Cost Carrier (LCC) characteristics will be
discussed under Other Airline Business Models.
• Also known as “no frills airlines” that cater to
passengers wanting cheap airfares with little
demand for inflight services to achieve its
selling point of low fares. The following
LLEGADO
elements are being utilized by LCC’s differing
from the traditional airlines.
• Focus is its core business as a passenger air
service.
• Point-to-point network service- no connections
are provided from the airline “base” minimizing
cost specially delay costs.
• Use of secondary airports to decrease airport
fees and charges.
• SINGLE-AIRCRAFT FLEET – Only one or two
aircraft types are utilized to cut down repair
costs AND MAN- power training costs.
• Aircraft utilization is maximized due aircraft Is
used for longer hours due to ITS point-to-point
service.
• SERVICE IS SIMPLIFIED - No lounge no choice of
seats, no frequent flyers, and no in-flight
services such as meals.
1. AIR CARGO CARRIERS - a special form of an
airline business model
A. Network carriers have their own cargo fleets
these companies ship cargo in their freighters as
well as in the cargo compartments of their
passenger fleet. (e.g. Malaysia Airlines Cargo,
Lufthansa Cargo)
B. Airfreight-only carrier whereas in the field of air
cargo carriers. (e.g. FedEx, DHL)
2. SHUTTLE AIRLINES - Caters mainly to business
travelers seeking movement between two majors to city
centers
• The shuttle concept is similar to a conventional
bus service offering a reasonable airfare with no
reservation.
• High frequency and easily remembered times
are typical attributes of a shuttle.
Types of Flight Services
There are three types of flight services: direct, nonstop,
and connection.
NONSTOP FLIGHT
• Flight which operates between a board point and
an off point in a single leg without any
intermediate landings.
• Means the passenger gets on the plane from origin,
and without any transfer nor in between stopover
points, plane lands to its final destination.
• A flight with no intermediate stops with same flight
number and aircraft.
Example: AI 118 MNL DEL 1750 2010 0
Hint. one flight only and there is zero in the end means
nonstop. 0 = non-stop
DIRECT FLIGHT
• Any flight ticketed as a single flight coupon,
irrespective of whether there are enroute stops
and/or changes of aircraft types.
• Means the passenger gets on one aircraft from
journey origin and with or without stopping any
other points, lands to its journey destination with
or without changing plane using single ticket
coupon.
• Example: Flight no. PR147 from Manila to London,
makes a fuel stop in Dubai, this flight will still
consider a direct flight Manila-London. This type of
service is also known as "through' flight or a 'Direct
Service” in the industry.
CONNECTION FLIGHT
• Air service between two cities that contains one or
more immediate stops during which the passenger
changes aircraft and flight number.
• Passenger boards a plane in point of origin, then
before arriving at final destination, passenger
boards another plane in a connecting stopover
point in a less than 24 hours stay at that point.
Hint. Two flights and there is one in the end.
On-line connection A connection with a change of
aircraft and flight number within the same airline.
LLEGADO
An example will be a passenger taking Cathay Pacific
Airways going from Manila to his destination Los Angeles.
As there is no direct flight from Manila to Los Angeles on
CX services, his itinerary is Manila to Hongkong, and upon
arrival at CX Hub -Hongkong, passenger transfers to another
plane, also another CX flight, from Hongkong to Los Angeles.
FLT NO DATE FROM /TO ETD
MH087 Y 01JUN MNL KUL 2100
MH083 Y 02JUN KUL LON 0800
Off-line or Interline connection Connection with a
change of aircraft and flight number between two
different airlines.
For example, passenger is flying from Manila (MNL) to final
destination -Dallas Fort Worth (DFW). His first flight is on
Philippine Airlines (PR) from MNL to Seoul (SEL) via Asiana
(OZ) flight, then upon arrival in SEL takes a connection flight,
transferring to American Airlines flight service from SEL to
DFW.
Flt No. Date From To ETD
PR 321 Y 12MAR MNL HKG 0800
CX 233 Y 12MAR HKG LAX 1210
Types of Seating
First, Business, Economy.
Originally, major airlines offered three types of seating
configurations: first, business, and economy. In time,
business became more difficult to operate a successful
airline from a financial perspective, many airlines are
doing away with the three classes and moving toward
two classes.
1. FIRST CLASS
 The first-class section of an airplane is the class with
the best service and is typically the highest priced.
 Available on only a small number of long flights.
 Passenger in this class have a separate check-in
counter, access to the airline's first-class lounge.
 First class is being removed and replaced with
increased business class seating and increased
economy class seating.
2. BUSINESS CLASS
 Originally intended as an intermediate level of
service between economy class and first class.
 Expensive fare but also offers more Amenities to
travelers than the lower class of service.
 Business class seating is important to airlines
wanting to attract business travelers willing to pay a
high air fare.
3. ECONOMY
 coach, standard, main cabin, or “cattle class”
 The airline travel class with the lowest ticket price
because the level of comfort is lower than that of
the other classes.
 The most basic class.
 The seats here are the narrowest, ranging from 16
inches to just over 19 inches wide and the seat
pitch, the distance from one seat to the seat in front
or behind it – what travelers often refer to as
“legroom” – ranges from 30 inches to 34 inches.
Premium economy: Virgin Atlantic was actually the first
airline to incorporate the concept of premium economy
back in 1992. Since then, dozens of airlines have picked
up the concept. Once only found on international
flights, premium economy is widely available on flights
within North America. The slightly comfier premium
economy offers wider seats and more legroom at a
comfier price than business or first class on most
airlines. Some airlines categorize economy and premium
economy under main cabin. Typically, physically
partitioned on international and some long-haul flights,
the “premium” in premium economy is the added space
and sometimes location of seats in more desirable
locations, like the front of the aircraft. On international
flights, premium economy may not only be physically
separate from economy class, but it may also offer
additional perks like complimentary or better food, a
LLEGADO
greater baggage allowance and amenity kits. Premium
economy often refers to the “better” seats on an aircraft
on domestic flights.
AMENITIES
Food and Bar
Major airlines or Full-service Carriers serve meals and
beverage on-board and at the airport lounge for
business class and first-class passengers. However,
meals are not inclusive of the fare in Low-cost carriers.
Entertainment
Some aircrafts are equipped with various types of
inflight entertainment offering but will of course add to
the airline expense. However, the usual long-range
aircrafts have this offering.
Cargo and Freight
Most major airlines offer cargo bookings, together with
passenger service. Making sure that the type of aircraft
is suitable, considering the limitations of space and
cargo dimensions.
Airline management and
organizational structure
a firm’s top management is generally considered to be
the policy-making group responsible for the overall
direction of the company.
middle management is responsible for the execution
and interpretation of policies throughout the
organization; and
operating management is directly responsible for the
final execution of policies by employees under its
supervision."
Levels of Management
Top Management. Is the highest level in the
management hierarchy. Their main job is to set the
policies, procedure and long-term objectives which will
meet the goals established by the board of directors.
They are responsible for the over-all direction of the
company. They usually have many years of experience in
all phases of management. Typical title - Executives,
senior executives, or major executives, Chief Operating
Officer, President, Executive Vice-President, Senior company goals, assigning to the personnel, and
vice-president. delegating necessary authority to carry out these tasks.

Middle Management. Is the second level of
management in the organization and is responsible for
the execution and interpretation of policies throughout
the organization. Middle management is responsible for
coming up with operational plans and procedures to
apply the overall plans handed out by top management.
Middle management includes heads of departments or
divisions within a major administration, such as the
advertising department under marketing or the flight
procedures and training department under flight
operations. Or it might include the simulator division
head, who reports to the flight procedures and training
department head. Typical titles for individuals in
charge: vice-presidents, directors, and, in the case of
maintenance facilities, superintendents.
STAFFING. Staffing involves putting people to work in
the positions of the organization structure, and keeping
it manned.
DIRECTING. Includes assigning tasks and instructing
subordinates on what to tot do and perhaps how to do
it. It involves giving directives clearly, communicating
the orders down to the subordinates. Key elements:
supervision, motivation, leadership, communication.
CONTROLLING. The measure and correcting of activities
of subordinates to ensure that events conform to plans.
Thus, it involves measuring performance against goals
and plans, showing where deviations occur and, by
putting in motion actions to correct deviations, ensuring
accomplishment of plans.

Operating Management. Is also called supervisory level

or lower-level management. It is directly responsible
FLIGHT PHASES
for the final execution of policies by employees under its
supervision. Typical titles include managers, assistant
managers, section chiefs, general supervisors, and
supervisors who head up sections, groups, or units that
report to division or department heads.

Functions of Management
The main functions of management are planning,
organizing, staffing, directing, and controlling. The key
tools of management are supervisory skills, which must
be learned and practiced. 1. Flight Crew Sign-in
PLANNING. Airlines heavily depend on top
 Crew members are required to sign in at the airport
management planners. The choice as to which airline
flight operations office (normally) 1 hour prior to
business model plan, the company goal set by
the departure of the first leg.
management is the road to where the company is
heading. Goals are established based on internal and  Cabin crew members attend the briefing session
external factors affecting the company decisions. The with the chief purser.
creation of airline company policy, procedures, rules,  The chief purser will share the flight information
and regulations are all part of planning. (passenger number, passenger information,
weather, flight time, special handling, etc.)
ORGANIZING. Involves creation of a formal structure of
authority, division of work and flow of authority and
2. Operations/Planning
responsibility. Organizing is concerned with identifying
the different tasks and activities needed to reach the
 Selecting the best routing. (Minimum time,
minimum fuel, best ride conditions, etc.).
LLEGADO
 Generating a flight plan accounting for aircraft type,
forecast weather conditions, and other constraints
and limitations.
3. Pre-flight
• Cabin crew:
o In-flight inspection: Check the readiness of
the cabin such as Public Address (PA)
system, cabin light system, lavatory,
passenger seat, and safety system (life vest,
medical equipment, etc.)
o Galley preparation
Cockpit Crew:
o Exterior walk around examination
o Cockpit setup and system checks
4. Pre-departure
• Board passengers.
• Closing the aircraft doors with the captain and lead
flight attendant.
• Performing the “just prior to push back” portion of
the checklist
• Flight attendants arm the escape slide mechanism
of the entry doors in case a ground evacuation
becomes necessary.
5. Gate departure
• Removing wheel chocks and releasing the parking
brake.
• Starting the engine and beginning the taxi out.
6. Taxi-out
• Calculating finalized take-off performance data.
• Resetting the stabilizer trim and set take-off
references speeds through the bugs on the airspeed
indicators.
• Making a departure PA announcement to inform
the flight attendants that the take-off is imminent.
7. Take-off
• Issuing a "position and hold" clearance to an
aircraft in preparation for final take-off clearance.
LLEGADO
• Making final checks of the wind/weather and the
presence of runway contamination.
8. Terminal Area Departure
• The aircraft is accelerated to maximum low- altitude
climb speed, after the immediate airport traffic area
is cleared.
• The flight attendants typically commence their
inflight service duties during climb-out.
9. Climb
• Checking the FMS and/or performance charts.
• Resetting the altimeter.
• Passenger related activities during the climb
include:
o beginning the meal & beverage service
o delivering any PA announcements
o activating the entertainment system
10. Cruise
• Maintaining a time/fuel log in order to compare
planned time and fuel burn performance.
• On international flights, transitioning through
airspace boundaries under the jurisdiction of other
national sovereignties may require supplementary
procedures to address local restrictions.
• FIR (Flight Information Region) boundaries
normally require advance notification via the flight
planning process (filed flight plan), and preliminary
contact by the aircraft as the flight approaches the
boundary.
• The crew performs various administrative duties in
preparation for descent.
11. Descent
• Beginning the approach and landing preparations.
• Transmitting an "In Range" message to the
destination airport station.
• Setting up the navigation equipment for the
expected arrival procedure.
• Starting cabin crew activities for descending.
The cabin crew activities during the descent include:
 o preparing the cabin and galleys for landing • Cockpit crews: accomplish any required debriefing
o forwarding connecting gate information to the reports.
passengers
o completing customs-related documents
o forwarding any cabin-related discrepancies to AIRLINE CODE
the cockpit
o verifying that seatbelt compliance requirements
are satisfied.

12. Terminal Area Arrival

• Generally beginning when the aircraft descends

below 10,000 feet about 30 to 40 miles from the
destination airport.
• Being issued additional real-time landing
information or instructions.
13. Final Approach

• If the runway is in sight and clear of obstruction at

the decision point, the cockpit crew continues the
descent until initiating the landing "flare"
maneuver.

14. Landing and Rollout

• Using a combination of reverse thrust, ground

spoilers and wheel braking to decelerate to taxi
speed and vacate the runway after touching down
on the runway.

15. Taxi-in

• Pilots use taxiway diagrams of the destination

airport to assist in the execution of taxi clearances.
• Once breaks are parked, agent moves the jet bridge
into position at the entry door, or in the case of
airstair, it is positioned under exit doors.

16. Parking

• Verifying the disarming of the doors with the flight

attendants & opens the designated exit door(s) to
commence passenger disembarkation.

17. Post-flight

• The flight attendant makes liquor & duty-free

deposits usually at the station operations.

LLEGADO
 generally used for medium-distance flights with fewer
passengers, i.e., destinations within continent .
Example: Boeing 717,737 & 757, Airbus A320 family
McDonnell Douglas DC-9 & MD-80/MD-90 series,

Characteristics of an Aircraft:

1. Range - the maximum distance that it can fly without
stopping fo additional fuel, while still carrying a
reasonable payload of passengers and/or cargo.
2. Size - represented by measures such as its seating
and/or cargo capacity, as indicators of the amount of
payload that it can carry.
If aircraft types have the same size and range, the
industry will take it as competing aircraft types such as
A320 and B737, as both are single-aisle, twin-engine
with around 150 seat capacity, and most of all, with
similar range capabilities.
3. Endurance is the time the aircraft can stay in the air
with a tank of fuel.
4. Payload means aircraft weight or carrying capacity.
Aircraft Categories:
1. Narrow-body aircraft - have one walking aisle down
the center with two or three seats on each side. (B737
and A320)
3. Regional airliners( Short range): Seat fewer than 100
passengers, short flights serving small markets and feed
hub airports. Example: Bombardier CRJ series and ATR
42/72
Major Aircraft Manufacturer:
1. Airbus - based in Europe with its headquarters in
Toulouse, France and has 12 sites in Europe located in
France, Germany, Spain, and UK . The main products are
A-series A320,A330,A340,A350 and A380. Around 2019
Airbus displaced Boeing as the largest aerospace
company by revenue.
2. Boeing - the oldest aircraft manufacturer, is based
in USA with its headquarters located in Chicago. The
main commercial product that Boeing manufacturers
are the 737, 747, 767 ,777 and 787 families of airplanes
and the Boeing Business Jet, with nearly 9,000
commercial jetliners in service worldwide (about 50
percent of the world fleet).

2. Wide-body aircraft - have two walking aisles and thus

a middle section of seats in addition to the two sets of
seats on each side. (B767, B747 and A380)

Types of Commercial Airlines:

1. Wide-body jets (Long range): The largest airliners, ,

also known as a twin-aisle aircraft, is an airliner with a
fuselage wide enough to accommodate two passenger
aisles with seven or more seats abreast .Example:
Boeing 747-767 & 777, Airbus A300/A310, Airbus
A330, Airbus A340, Airbus A380(which can hold up to
800 passengers)

2. Narrow-body jets ( medium range): Single-aisle

aircraft , permitting up to 6-abreast seating in a cabin
below 4 metres (13 ft) of width. Smaller airliners ,

LLEGADO
Seat Configuration

Seat assignments - When a specific seat is

reserved for a passenger, it is called a seat
assignment. It has a row number and seat
letter.

Revenue Management – is the process of

determining how many seats to make
available at each fare level.

Ex: Cathay Pacific Flight: Manila – Hongkong

Equipment: Boeing 737
Configuration: 174 seats
(Business – 12/Economy– 162)
Yield Management – involves tactical control of airlines
seat inventory by determining the number of seats to
be made available to each “fare class” on a flight.
Booking Classes:
J, C, D, I – Business Class Service
Y, B, H, K, M, L, V, S, N, Q, O - Economy Class Service
Airline Pricing Practice
Pricing – refers to the process of determining the fare
levels, combined with various service amenities &
restrictions, for a set of fare products in an origin-
destination (O-D) market.
• Airline fares are defined for an Origin- Destination
(O-D ) market, not for an airline flight leg.
• Airline prices are established for travel between
origin point A and destination point C.
1. Theoretical Pricing Strategies
• Cost-based pricing - The costs to an airline of
operating a schedule of flights are fixed
• Demand-based pricing - Based on consumers’
“willingness to pay”.
• Service-based pricing - The higher the quality of
the service generally will mean higher operating
cost for the airline.
2. Price Discrimination vs Product Differentiation
• Price Discrimination - practice of charging
different prices for the same products that have
the same cost of production based on the
consumers’ willingness to pay (WTP).

LLEGADO
 • Product Differentiation – involves charging
different prices for products with different
quality of service characteristics & different
costs of production.
Revenue Management Techniques
expected by the airline, there are cost
associated for the lost revenue for empty seats.
Spoilage Costs – loss of revenue from seat that
departed empty.

• Fare Class Mix - Involves determination of the

no. of seats that should be made available to
each of the different fare classes that share the
same inventory of seats in a physical
compartment.
Inconvenience Cost - Restrictions increase the
“disutility cost” of low fares to travelers with
high Willingness to Pay (WTP).
• Overbooking - Accepting reservations in excess
of aircraft actual capacity to overcome loss of
income due “no show” passengers.
No-show rate (NSR) - The mean proportion
(percentage) of passengers with confirmed
bookings that do not show up.

Physical capacity (CAP) - Actual number of

seats on the flight, usually maximum capacity of
the aircraft

Authorized booking capacity (AU) – maximum

no. of bookings that an airline is willing to
accept.
Ex. Boeing 787
Physical Capacity (CAP):
Configuration: 330 seats (Business – 40 /
Economy – 290)
Authorized booking capacity (AU):
Configuration: 332 seats (Business – 41 /
Economy – 291)

Denied Boarding (DB) - If too many

reservations are accepted, and more
passengers show up than there are physical
seats.
✓ Cash compensation (involuntary DB),
✓ Free travel voucher (voluntary DB)
✓ Meal & hotel cost
✓ Space on other airlines for displaced
passenger.

Spoilage - If not enough reservations are

accepted and the no-show is greater than
LLEGADO