Midterm Period Lectures: AB651 – Airline Logistics Management

Week 7: October 4-5, 2023 – Covers Lecture 13, 14 (Oct 4) and 15, 16 (Oct 5)

Lecture 13: Logistical Requirements of Legal & Counsel Services Department

Figure 13.1: Table of Organization of Legal & Counsel Services Department

1. Structural Design
a. Office of the VP – Legal & Counsel Services
1) Administration – of the departmental functions reflected in the
mission of the four divisions within the department
2) Legal Library – for company-wide benefit the office maintains a legal
library where law books and legal documents related to the
company’s operation are archived; made available to school
researchers who may learn more about the airline through the legal
books, records and publications in the legal library
b. Corporate Cases Division – handles cases related to any of the following:
1) Ownership disputes among the stockholders with their principals
behind the issues and threatening court action
2) Business registration, licenses, permits which might be disputed at the
SEC or in public forums
3) Shareholders equity and disputes which may involve inequities in
issuance of dividends
4) Board disputes arising from differences of opinion and questionable
action a member or a group of them may have taken

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Midterm Period Lectures: AB651 – Airline Logistics Management

5) Franchise issues which might have expired and meeting objections

arising from charges of franchise violations and other issues
6) Due diligence audits which may not meet the approval of some board
members who might refuse the disclosure of certain company and/or
stockholders data
7) Capital item acquisition & disposal differences among the board
members on any such acquisition or disposal e.g., of new airplanes for
acquisition and might involve substantial capital infusion or obsolete
equipment for disposal to which some may not agree
8) Good governance issues that might be raised on the competence of
any of the board members and/or without any record of having gone
through good governance seminar
9) Congressional investigations on franchise issues, issues of poor service
e.g., too many flight delays and cancellations, among many others
c. Commercial Cases Division – handles cases related to any of the following:
1) Interline agreements that might have been violated by interline
partners
2) Special prorate agreements that might have been misapplied in the
computation and remittance of prorates due
3) Service-provision contracts that might have been violated related to
ground handling, catering, maintenance, CRS/GDS and other
commercial or marketing-related contracts
4) Agency contracts might have been violated on the part of general sales
agent, travel agent, cargo agent, or any intermediary or middleman
5) Customs bonded warehouse (CBW) operation-related that might be
raised by Customs against the company
6) Claims and settlements related to the company service to passengers
and their intermediaries, or baggage handling, cargo handling, tariffs-
related issues, or any aspects of the airline service
7) Contracts & litigations related to commercial or marketing matters
d. Industrial Cases Division – supports Human Resources, Internal Audit &
Control and/or departments concerned on any of the following:
1) Administrative charges that might evolve into litigation for among
other reasons, technicality for not following the processes as defined
in the labor laws
2) Grievances that might evolve into litigation for among other reasons,
technicality for not following the processes as defined in the CBA
currently in effect
3) Collective bargaining negotiation unresolved issues that might
graduate into court action
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4) Formal investigations that may have to be under the oversight

supervision of labor lawyers
5) Administrative actions e.g., suspensions, demotions, terminations that
might evolve into litigation for among other reasons, technicality for
not following the processes as defined in the CBA currently in effect
6) Industrial actions e.g., walk-outs, sit-downs, demos, strikes that may
have to be elevated to court for one reason of the other by either the
company or the union
7) NLRC-DOLE, CA and/or SC courts cases necessarily requires the
handling by labor lawyers
8) Congressional inquiries related to labor matters e.g., employees
related to issues raised by the employees and/or labor unions about
the company; complaints about some high-profile companies are often
picked up by Congress for investigation
9) Contracts & litigations particularly related to violations of CBA
provisions by either party e.g., management or the labor union
e. Aeropolitical Cases Division – related to matters pertaining to any air
services agreements (ASA) and/or marketing, interline, special prorates
agreement:
1) Air traffic rights being denied in violation of the ASA duly negotiated
and concluded with the Philippine Negotiating Panel e.g., KWI
denying PR right to carry 5th freedom traffic between KWI and DXB
2) Commercial or marketing agreements provisions not being honored
by the partner or alliance airline e.g., non-payment of agreed
royalties, denial of usage of VIP lounge among others, denial of
bookings on a codeshared sector
3) Congressional inquiries related to ASA matters
4) Contracts & litigations related to violations of commercial or
marketing agreements
5) Attendance in CAB hearing of airlines and ASA-related cases on
commercial or marketing agreements either as plaintiff, or defendant
or observer
2. Manpower Strength
a. Department head and required number of division heads for specific
functions and their corresponding staff
b. Sufficient number of lawyers to handle case investigations and/or litigations,
legal researchers to help the lawyers in preparing contracts, depositions and
other legal documents, and clerical services to prepare the paper works for
necessary filing at appropriate agencies and/or courts
3. Budgetary Outlay

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a. Labor cost: compensations, statutory contributions e.g., SSS, PhilHealth,

allowances and fringe benefits e.g., group insurance, education assistance,
medical assistance for dependents
b. Operating expenses: rentals, office space allocated cost, energy, water,
communication, and services e.g., janitorial; services purchased outside e.g.,
external legal counsel for specific cases; investigation services by private
detectives, etc.
c. Publication cost: e.g., legal notices for the customers and the general public
d. Travel expenses e.g., per diems and company representation costs: official
business, court hearings at home base and domestic or international
outstations, conferences, social events
e. Capital expenditures: facilities renovation, construction cost; purchase of
equipment, tools, systems; company cars
4. Facilities and Work Stations
a. Office: for department and division heads and their staff
b. Legal library – books, publications, and legal documents of the company to
be archived for future references
c. Audiovisual facilities: darkroom, AVP presentation room re investigations,
discussions of cases among others
5. Equipment and Tools
a. Office equipment e.g., desk computers, laptops, gadgets, copiers, printers
b. Company car, mobile gadgets for department and division heads
6. Supply and Provisions
a. General office supplies e.g., stationeries, pencils, pens, printer ink, etc. for
communications, inter-office correspondence, for legal documents
b. Publications: current newspapers, magazines, aviation industry publications
c. Operating manuals on rules of court, etc.
d. Fuel and oil for company cars

Lecture 14: Logistical Requirements of Internal Audit & Control Departmet

1. Structural Design
a. Office of the VP – Internal Audit & Control
1) Administration – of the departmental functions reflected in the
mission of the three divisions within the department
2) Look into all company aspects from top to bottom, bottom-up;
competence of auditors a must, key to good audit; objective and
impartial

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3) Avoidance of Gestapo style of audit; observance of human rights,

presumption of compliance with criteria till proven otherwise; being
courteous but firm; need for facts and evidence
4) Observance of proper conduct in relation with subjects of audit; not
fall victim to pandering and gifts

Figure 14.1: Table of Organization of Internal Audit & Control Department

5) Desired internal audit staff positive traits: Good judgment, analytical
mind, precision in task execution, with planning skill, systematic,
motivated, and good interpersonal relations skill
b. Management & Financial Audit Division:
1) Test of compliance with established policies and agreed upon criteria
in the pursuit of company activities
2) Criteria and performance delivery all geared towards service and
customer-handling improvements
3) Findings and conclusions based on factual and carefully measured
performance
4) Results-orientation geared towards challenging current service
criteria, procedures, and methods
5) Adherence to financial handling and control fidelity e.g., handling of
discretionary funds, engaging in inducements, kickbacks, bribes
c. Operational Audit Division:

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1) Line operations audit based on manuals of procedures and

corresponding compliance
2) Covers technical compliance to flight (check rides), maintenance and
other critical skills area of performance
3) Includes transparency and accuracy in the handling of cash,
accountable forms, property items by line sales staff, safe keepers,
service delivery work force
4) In the airline strict compliance to load control, weight & balance
rules; scrutiny of baggage and cargo for cases of DGR,
underweighing, and other aircraft and traffic handling scams
d. Information System Audit Division
1) Evaluation of software and hardware selection for value for money
decision
2) Evaluation of performance delivery of acquired computer systems,
programs, applications acquired at usually big outlays to measure if
optimal use and returns are achieved
3) Prevention of erroneous acquisition and abuse of acquired systems,
programs, and applications such as non-use of systems modules,
among others
2. Manpower Strength
a. Department head and required number of division heads for specific
functions supported by their corresponding staff
b. Manager, auditors, and staff sufficient to carry out the functions of auditing
of management, financial deals, operations both technical and commercial to
ensure compliance with policies and procedures by all offices, all stations of
the airline network both domestic and international
3. Budgetary Outlay
a. Labor cost: compensations, statutory deductions e.g., SSS, PhilHealth,
allowances and fringe benefits e.g., group insurance, education assistance,
medical assistance for dependents
b. Operating expense: rentals, office space allocated cost, energy, water,
communication and services e.g., janitorial; services purchased outside e.g.
consultancies such as psychiatric check-up of pilots
c. Meetings expenses in discussion and evaluation of audit findings by field
auditors
d. Travel and transportation expenses in the audit of offices and stations within
the airline network and attendance in cases being heard at the NLRC or the
regular courts either at home base or in domestic or international outstations
where audit findings are used as evidence

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e. Capital expenditures: facilities renovation, construction cost; purchase of

equipment, tools, systems; company cars
4. Facilities and Work Stations
a. Office: for department and division heads and their staff
b. Conference rooms for the evaluation of audit findings
c. Audiovisual facilities for AVP presentation during audit finding meetings
5. Equipment and Tools
a. Office equipment e.g., desk computers, laptops, gadgets, copiers, printers
b. Company car, mobile gadgets for department and division heads and
auditors as needed
6. Supply and Provisions
e. General office supplies for inter-office correspondence and mailed
communications
f. Publications: current newspapers, magazines, aviation industry publications
g. Operating manuals e.g., Personnel Policies & Procedures Manual, Code of
Discipline Manual, unless digitalized and incorporated in a Management
Information System of the company; for reference in formulating possible
charges based on audit findings
h. Fuel and oil for company cars

Lecture 15: Logistical Requirements of Security & Fraud Prevention Dept

1. Structural Design
a. Office of the VP – Security & Fraud Prevention
1) Administration – of the departmental functions reflected in the
mission of the four divisions within the department
2) Security Library – for company-wide benefit the office maintains a
security library where security documents and cases related to the
company’s operation are archived and shared with interline partners
b. Corporate Security Division – handles security concerns related to any of the
following:
1) Headquarters and IT & Technical centers’ security not only because
of the big value involved but also because of the strategic value to the
company’s operation
2) Security of company executives e.g., body guards as per policy,
firearms per policy, enforcement of limitation in number of executives
traveling together

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Midterm Period Lectures: AB651 – Airline Logistics Management

3) Intelligence property rights: integrity of data & statistics, plans, blue

prints of projects, business plans

Figure 15.1: Table of Organization of Security & Fraud Prevention Department

4) Stock trading secrets and security of stock certificates
5) Due diligence confidentiality and all company documents involved
6) Corporate espionage: prevention of leakage of info related to board
deliberations & decisions
7) Security of company events e.g., inaugurals, etc.
c. Aircraft & Airport Security Division – handles security of the aircraft and
the airport operation of the airline.
1) Flight security: advance passenger information system (APIS),
advance cargo information system (ACIS) biometrics, vehicle
inspection, body search, explosive detector, security dogs, air marshal,
laser/flares deflectors vs. man-pad/missiles;
2) Foiled Oplan Bojinka uncovered in Manila on plan to blow up
simultaneously more than 10 US carrier flights at the same time led
instead to the 911 incident of 2001 in New York City and Washington
DC with equally grievous consequences
3) Airport security: perimeter fences against intruders, terminals,
warehouses, ramp, domestic & international outstation coordination
4) Scanning & body frisking: CCTV, metal, gunpowder, explosive
detector, body/baggage/cargo; dominance of US Transportation
Security Agency (TSA) over airports
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5) Aircraft security: Cockpit sanitation, Kevlar doors, air marshals,

positive intelligence reports
d. Workstation Security Division – handles the security of personnel and
property items in all operating units of the airline.
8) Commercial and industrial plans: products, price, promotion, and
distribution initiatives; manufacturing blueprints
9) Security of ticket offices, cargo offices, check-in counters, ramp,
aircraft servicing, traffic servicing
e. Fraud Prevention Division – recognition and prevention of fraud that may
happen in very phase of airline operation such as:
1) Passenger handling: Reservations and ticketing scams, checking-in
scams, FBA-riders, excess baggage scams, pakidala
2) Cargo handling: Underweighing, smuggling, pilferage, and theft
3) Sales proceeds handling: Kiting, agency commission kickbacks, ticket
and airwaybills theft, card-boarding
4) Technical scams: overlooking guarantees, ghost deliveries of spare
parts, switching OEMs and life-limited spare parts and assemblies,
technical smuggling e.g., through catering, warehousing
5) Management: purchasing kickbacks, aircraft purchase commission,
anomalous property disposal, acceptance of hollow collaterals
6) Coordination with authorities: NBI, ASG, PNP, MIAA Police, OTS,
US HSD/TSA, CIQ for joint security operation including covert ones
7) Coordination with alliance and interline partners: blacklisting, lost
inventories of accountable forms; sharing of airline fraud and scam
findings
8) Establishment of a code of discipline defining infractions, frauds, and
the corresponding punitive measures for deterrence
9) Pursuit of all cases of frauds from investigation to litigation towards
incarceration of perpetrators for deterrence
7. Manpower Strength
a. Department head and required number of division heads for specific
functions and their corresponding staff
b. Sufficient number of security officers to:
1) handle the contracting of security agencies to man the various offices
and stations and airport work stations;
2) provide oversight functions over the security agency service delivery;
3) secure the CCTV systems in specific airline offices;
4) investigate reported security breaches and commissions of crimes
listed in the Fraud Prevention Division mission;

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5) help company lawyers in litigations in court where investigation

reports of security might be used as evidence in the court
proceedings
8. Budgetary Outlay
a. Labor cost: compensations, statutory deductions e.g., SSS, PhilHealth,
allowances and fringe benefits e.g., group insurance, education assistance,
medical assistance for dependents
b. Operating expense: rentals, office space allocated cost, energy, water,
communication, and services e.g., janitorial; services purchased outside e.g.,
external services for covert operation on specific cases; investigation services
by private detectives, police and NBI assistance e.g., transport, meals, etc.
c. Publication cost: e.g., paid notices for the customers and the general public
warning of certain scams, exposure to danger e.g., at the airport or at any of
the airline offices
d. Travel expenses e.g., per diems and company representation costs: official
business, as witness in court hearings at home base and domestic or
international outstations, conferences, social events
e. Capital expenditures: CCTV and other security installations, facilities
renovation, construction cost; purchase of equipment, tools, systems;
company cars
9. Facilities and Work Stations
a. Office: for department and division heads and their staff
b. Security library – books, publications, and legal documents of the company
to be archived for future references
c. Investigation rooms and evidence inventory rooms
d. Audiovisual facilities: photography darkroom, AVP presentation room re
investigations, discussions of cases among others
10. Equipment and Tools
c. Office equipment e.g., desk computers, laptops, gadgets, copiers, printers
d. CCTV installations and other security devices e.g., firearms, metal detectors,
x-ray machines
e. Company car, security vans, mobile gadgets for department and division
heads
11. Supply and Provisions
a. General office supplies e.g., stationeries, pencils, pens, printer ink, etc. for
communications, inter-office correspondence, for legal documents
b. Publications: current newspapers, magazines, aviation industry publications
c. Security operating manuals, operating manuals on rules of court, etc.

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d. Fuel and oil for company cars, ammunitions for firearms, video tapes for
CCTVs

Lecture 16: Logistical Requirements of Safety & Environment Departmet

1. Structural Design
a. Office of the VP – Safety & Environment
1) Administration – of the departmental functions reflected in the
mission of the four divisions within the department
2) Responsible in installing the Safety Management System (SMS) as
mandated by ICAO of all aviation establishments particularly the
airlines and ensure the proper manning and training of all airline
employees on SMS

Figure 16.1: Table of Organization of Safety & Environment Department

3) Facilitates the conduct of the periodic Safety Board meetings presided
by the President & CEO as required by the SMS policy of the ICAO
b. Aircraft Accident Investigation Division:
1) Oversee the establishment of emergency procedures related to aircraft
accident handling and investigation
2) Facilitates the organization of the Emergency Response Unit (ERU) of
the airline as required by SMS and the designation into the emergency
task forces of the ERU

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3) Coordination with the appropriate government and industry agencies

involved in aircraft accident e.g., CAAP AAIB, LGU/PNP, AFP
branches e.g., PA, PN and PAF
4) Organization of the Emergency Response Unit
a) ERU Team Leader is no less than the President & CEO of the
airline as required by CAAP regulations
b) Flight Watch & Notification Team Leader is usually the VP-
Operations Control Center responsible to issue potential
emergency notification (PEN) and definite emergency
notification (DEN) when called for
c) Search & Rescue Team Leader is usually the VP-Flight
Operations for quick coordination with the PA, PN and the
PAF for air, sea, and land search if necessary

Figure 16.2: Table of Organization of the Emergency Response Unit

d) Ground Recovery Team Leader is usually the VP-Sales &
Services having under him all the branches of the airline
network with the greatest number of personnel needed for the
recovery operation of fatalities, personal belongings, cargoes,
and salvageable aircraft parts more importantly the flight data
recorder (FDR) and the cockpit voice recorder (CVR) often
referred to as black boxes
e) Logistics & Transport Team Leader is usually the VP-Finance
for the immediate requisition and delivery of all supplies
needed for the operation of all teams

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f) Media Handling Team Leader is usually the VP-Corporate

Communication to ensure control of media releases until all
families of passengers have been informed of the accident and
the status of their loved ones
g) Family Assistance Team Leader is usually the VP-Human
Resources whose team attends to the needs of family members
from identification of the fatalities to mortuary, wake, and
internment services
c. Ground Accident Investigation Division
1) Accident report and notification by office/unit and staff members
involved
2) Formal investigation by Safety in coordination with Security and
Legal, if necessary: Personnel, facilities, ground equipment, tool
involved
3) Formal findings, corrective and preventive measures; sanctions
4) Selection, training and licensing of ground equipment operators and
load controllers
d. Typhoon and Fire Containment Division:
1) Typhoon procedures: Typhoon Advisory & Coordination Team
(TACT); the command post
2) Typhoon watch and tracking; coordination with PAG-ASA
3) Decision points: to tie-down aircraft or to evacuate aircraft on the
ground; to divert enroute flights, delay or cancel flights
4) Coordination with outports in case of decision to evacuate aircraft
5) Fire containment procedures dissemination
6) Fire drills and firefighting equipment installation, inspection on non-
expiry of fire extinguishers
7) Coordination with fire stations and airport authorities
e. Environmental Compliance Division
1) Coordination with the regulatory/environmental: DENR, DOTC,
ICAO, LLDA, ATO
2) Prevention of CO2 (carbon dioxide) emission, aviation, industries,
volcanic eruptions, dry ice
3) Prevention of NOx (nitrogen oxide) emission; industries, utilities;
contrails; lead to acid rain, global warming
4) Hydrogen-powered aircraft stalled by cost & complex tech
5) Noise pollution sufficiently addressed by the aviation industry: Stage
3 a/c, Quiet Tech Demonstrator (QTD); noise abatement system

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2. Manpower Strength
a. Department head and required number of division heads for specific
functions supported by their corresponding staff
b. Manager, safety officers and staff sufficient to carry out the functions of
safety both for the technical and commercial aspects of the airline to ensure
compliance with policies and procedures by all offices, all stations of the
airline network both domestic and international
3. Budgetary Outlay
a. Labor cost: compensations, statutory deductions e.g., SSS, PhilHealth,
allowances and fringe benefits e.g., group insurance, education assistance,
medical assistance for dependents
b. Operating expense: rentals, office space allocated cost, energy, water,
communication, and services e.g., janitorial; services purchased outside e.g.,
consultancies such as the Red Cross, the safety associations of the industry,
the ICAO for the installation of SMS
c. Meetings expenses of the Safety Board; meeting in discussion and evaluation
of safety issues, hazard reports by operating units concerned
d. Travel and transportation expenses in the safety inspection of offices and
stations within the airline network domestic and international
e. Capital expenditures: facilities renovation to adapt to SMS requirements,
construction cost; purchase of equipment, tools, systems; company cars
4. Facilities and Work Stations
a. Office: for department and division heads and their staff
b. Safety library where all safety records are maintained e.g., safety manuals,
safety records of hazard reports, investigation, action, resolution for sharing
with ICAO and the industry
c. Conference rooms for the Safety Board meetings and meeting to discuss and
evaluate hazard reports and safety issues
d. Audiovisual facilities for AVP presentation during Safety Board meetings
and other safety-related presentations
5. Equipment and Tools
a. Office equipment e.g., desk computers, laptops, gadgets, copiers, printers
b. Company car, mobile gadgets for department and division heads and
auditors as needed
6. Supply and Provisions
a. General office supplies for inter-office correspondence and mailed
communications
b. Publications: current newspapers, magazines, aviation industry publications

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c. Safety manuals for all departments for the Safety Library

d. Fuel and oil for company cars

Additional Reading Materials of Lecture 14 on Audit

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Additional Reading Materials for Lecture 15 on Security e.g., Bomb Threat

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