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De La Salle University Mr. Glenn Sipin
An Analysis On the Different Business Processes Under the Aviation Industry
Members Clarese Bautista Kathlyn Sanchez Angeli Tiu Daniel Galang
Table of Contents
Abstract ………………………………………………………………………… p3 Industry Background …………………………………………………………. P4-5 Top Companies …………………………………………………………….. p5-9
Asiana Airlines …………………………………………………………………….. p5 Singapore Airlines …………………………………………………………………. P5 Qatar Airways ……………………………………………………………………… p6 Cathay Pacific ……………………………………………………………………… p6 Air New Zealand …………………………………………………………………... p7 Etihad Airways …………………………………………………………………….. p7 Qantas Airways ……………………………………………………………………. P7-8 Emirates ……………………………………………………………………………. P8 Thai Airways ………………………………………………………………………. P8 Malaysia Airlines …………………………………………………………………... p9
Selected Companies to be Benchmarked ………………………………....... p10-40
AirPhil Express ………………………………………………………………….. p10-17 Cebu Pacific Air ………………………………………………………………… p18-26 Shanghai Airlines ……………………………………………………………….. p27-31 Air China ………………………………………………………………………... p32-35 Iran Air ………………………………………………………………………….. p35-40
Major Business Processes of the Industry …………………………………. P41-44 Bibliography ……………………………………………………………….p45
Abstract The airline industry with various departments and various industries has different processes in their operations and workload. In this paper, we discussed about the ten best airlines in the world, and most importantly, five airlines which we benchmarked. There are a lot of similar process as well as difference, nevertheless, airline industries’ processes are all cross-functional because there are a plethora of tasks for their operations. The analysis also includes graphs and a final proposed graph for the entire five companies presented with narratives to further expound the flowcharts. It is to further assess companies on their functional units which cuts across different departments and the so called cross functional process. All airline industry today has implemented this process since it is only the most effective way of ushering passengers into boarding the plane. Consequently, this paper concludes the general process based on the five companies benchmarked.
Industry Background According to Philippine Airlines’ former President and Chief Operating Officer, Mr. Avelino Zapanta, the airline industry is unique because it is composed of a manufacturing and a service oriented industry rolled into one; it has to avail products and services from their producers in order for them to serve their consumers. The producers of the airline industry include: Manufacturers that are responsible for the production of aircraft engine and parts, computer systems. Government that creates laws and regulations regarding flight activities; government departments that are concerned are the Bureau of Customs and the Bureau of Immigration. Aviation Services include insurance/leasing and maintenance. Airports provide a place where aircrafts land and take-off; they also provide a temporary place for travelers to stay. And Airlines that is composed of operators and carriers that provides special services and general aviation. The consumers of the airline industry on the other hand include: Passengers and Freight. Like other industries, the aviation industry’s success lies on the effective internal management of the factors that will yield the envisioned output to its customers; however, the airline industry rely their wide area of supply line resources from global suppliers which makes them different from other industries. The airline industry had been continuously active for the past 100 years due to the timeliness and the convenience that it offers to transport goods and people from its origin to its destination. But there were also times when the airline industry was set back due to unforeseen events. Some of these events like the 1997 Financial Crisis, 911 attack, SARS outbreak though disastrous, were able to cause further improvement or precaution in the industry. First, the 1997 Financial Crisis did not only devastate economies located at the East Asian region, but it also led to the temporary closure of Philippine Airlines. Secondly, the 911 terrorist attacks have caused a number of European airlines to be shut down due to mothballed aircrafts. Lastly, the SARS outbreak has left the greatest destabilization among all; the SARS outbreak caused the immediate recession in air traffic worldwide. Those events also brought about insurance companies refusing to cover third party liabilities, flight guarantees only offered by rich countries to their people. Despite of the devastating events, the airline industry was able to recover soon together with preventive measures; Kelvar cockpit doors, thermal detectors, x-ray machines were made available in the Philippines and worldwide.
and east. Looking at the technological side. abbreviated as SIA. games and music that can be played in a large monitor in every bed-type seat. Top Companies 1. II. the usage of mobile phones and Internet access is one of its services. is one of the top leading airlines in the whole world. As of the year 2010.654. There is a high power vested upon the suppliers because there are only two dominant suppliers (Boeing and Airbus). The company retained the position as second since last year (2010).373.395. Asiana Airlines competes in transportation services sector with its top three competitors namely. and Korean Airlines. There are no available substitutes that will replace the timeliness and cost-effectiveness of air transportation. Its Operating Income is 675. As of December 2010. They also have their flyer program named ―Kris World‖ to support the use of the gadgets and other forms of entertainment. and many more. 2011). the AVOD or Audio Video on Demand is a selection of movies. Its revenue is $14.In the Philippines. Also.525. The power suppliers that make the services of the airline possible are Rolls Royce.3 KRW (Korean Wons). Boeing. The powers of buyers are low because the operation of air transportation is costly. Asiana Airlines Asiana Airlines is one of the two major airlines in South Korea and it is known for its hospitable flight attendants and out of the world in inflight experience. southeast.2.7 while its net income is 215. competition in the industry is low because there is a dominant airline that is operating which is Philippine Airlines. 180degrees bed-type seats.551. accommodating flight staffs. Singapore Airlines Singapore Airlines. Its main hub is currently at Chiangi Airport with countless flight destinations in which the most prominent are at Asia mainly south. Lastly. the market capitalization of Singapore Airlines is 14 billion US Dollars. Japan Airlines. the total revenue of Asiana Airlines is 5.8 5 . For pure relaxation flight experience. the threat of new entrants in the industry is low because a stakeholder should have a large amount of money prior to open his own airline. 2. What makes Asiana Airlines to be the top 1 airline in the world is because of the excellent inflight services such as a wide range of food choices. and Airbus. Boeing and Airbus are the suppliers of the aircraft. which makes its extraordinary services possible. SIA has an alliance called ―Star Alliance‖ that codeshares from different airlines. During the 2011 World Airline Awards. Asiana Airlines stand out against other airlines company (―Top 10 Airlines of the World‖. Cathay Pacific. Singapore Airlines is ranked 2nd in the leading airlines among the numerous airlines in the globe.
Cathay is considered as the biggest airline in the airplane industry in Hong Kong operating under Swire group. an American. Together with this. Central Asia. power of buyers are low since the cost of travel is quite expensive and the demand for overseas travel comes rarely in an unimportant event. 6 . Qatar Airways also has its very crucial competitors. Roy Farrell and. Europe. In the previous years. South America and Oceania. they are under the command of Christopher Pratt--the Chairman of the airline. and its net income is $1.048 million last 2010.8% increased economic growth for the six nation Gulf Cooperation Council made up for the industry’s shortcoming. business class. Sydney de Kantzow in Hong Kong. Currently.419. they have also integrated social media to share its ideals with the customers. 4. The suppliers that are considered as one of the key elements of the Airways are Boeing and Airbus. Cathay was able to own Dragon air as their subsidiary but despite of this situation.0 million. Two of Cathay Pacific’s competitors are Hong Kong Air and Dragon Air. Its main hub is at Doha International Airport and its flight destinations are across the following countries: Africa. 7. The renowned supplier of Qatar Airways is HRG UK. they have provided kiosks around the airlines. and its most likely competitor are Singapore Airlines and Asiana Airlines since the two industries are one and two steps behind Qatar Airways in terms of service.271.3 million. Qatar Airways Qatar Airways is one of the leading airlines in the world. its parent company. Cathay Pacific has a total Revenue of HK $89. which gives costumers the service they deserve. SIA toughest competitor is Qatar Airways. Far East. Cathay said that they would still operate separately. The target revenue of Qatar Airways was behind its goal by 6% as expected and its net income also decreased to USD400 million. South Asia. 3. Hong Kong air on the other hand was just formed last 2001 with less than half of Cathay’s fleet and cargo size leaving Cathay the renowned airlines in the industry. Check-in through the phone could also be done. Passengers can choose what service they would like to get. an Australian. North America.524million and net income of HK $$14. Cathay Pacific Airways Cathay Pacific was founded during the 1940s by. Middle East. they have been battling to climb up in the ladder of top Airlines ever since. But last 2009. As expected from airlines.million. its operating income is $1. premium economy class and economy class. Cathay pacific continues to please its customers through improving its facilities and services. They offer first class. and income. However the civil unrest was replaced by good news.
They also have kiosk around the airlines for check-in convenience. The airline aims to depict the finest of the Arabian’s hospitality. 6. In just a span of 8 years. Although Qantas is not the best nor the worst airline. It was established by Royal (Amiri) Decree way back in July 2003. 7. they use recently produced entertainment systems. they are responsible for majority of the services with in the airline. This is the now the only airline that can circumnavigate the world operating under their CEO. Air New Zealand is owned by the New Zealand Government. Giving the passengers a superior traveling experience is the goal of the airlines. Not only do Etihad provide superior experience in-flight. Aside from this. the reputation of Qantas Airways is still high because of the assurance that Qantas is number one on the safest Airlines. They relate to passengers by determining the services and products that would satisfy the guests if they themselves were in the passengers’ shoes.5. Abu Dhabi is known to be the airline’s hub. The airline provides extremely comfortable chairs. Even though it originated in the year 1920. they make sure that guests are at ease and they are given a fast as possible service. Air New Zealand lounges and clubs wherein members may check in exclusively get the seats that they prefer. it 7 .72% of its shares. which they have 73. The suppliers of Air New Zealand are Boeing and Airbus. but also on the ground. Etihad Airways United Arab Emirates’ nationwide airline is the Etihad Airways. Rob Fyfe. they are also offering air points so that customers would be patronizing their airline. and to further improve the reputation of Abu Dhabi as the heart of hospitality throughout the country. Qantas Airways Qantas Airways was founded in the year 1920 in Australia and it is considered the oldest airline company that is still operating. The airline acquired a profit of 82 million New Zealand dollars in the previous year. Air New Zealand Air New Zealand was founded by a flying boat company during the 1940s as Tasman Empire Airways Limited and was renamed as Air New Zealand in the 1960s. it has climbed its way up to the world’s top leading airlines. and they offer people a fine dining experience with flawless service. check in extra baggage etc.
Air France. The airline has Boeing and Airbus as its suppliers for its services to happen and be offered to costumers. the net profit of Qantas is A$249 million (143 Aircrafts) (―Qantas‖. Qantas Airways competes in transportation services sector with its top three competitors namely. It originated in Dubai and it is also considered as the largest airline in the Middle East while it ranks number 8 on the top ten airlines of the world as of the year 2011. Qantas guarantees that its passengers will always be on time of arrival. Emirates Emirates is one of the most travelled airlines in the world. the revenue of Qantas group is A$13. Emirates has more than 160 aircrafts and its operating profit rose 52. (―Top 10 Airlines of the World‖. GE and Rolls Royce. Emirates is known for its inflight entertainment.5 billion) (―emirates‖. Thai airline became fully independent and are now one of the most renowned airlines in the world operating under Ampon Kittiampon. Boeing. Thai airways is excellent in terms of customer facing. 2011) The reason behind it is that Emirates provides outstanding inflight entertainment to its customers. on April 1977.441) while its net profit increased by 52% (AED m 5. As of the year 2010. 8. 2012) 9. Emirates was awarded the ―World's Best Airline Inflight Entertainment” for the reason that Emirates provides prominent services to its valued customers such as ―AeroMobile‖ and ―OnAir – Wifi in the sky‖ which allows its passengers to have internet access and usage of mobiles phone during flight. it was awarded as the World’s Best Cabin Staff and the Best Airline it the World on the year 2006. As of the year 2011. (―Top Emirates Competition‖. and Cathay Pacific. 8 . Its first class lounge was also recognized as the World’s best on the year 2009. and Deutsche Lufthansa. In fact. Emirates competes in transportation services sector with its top three competitors namely. Air New Zealand.772 billion while its Operating income is A$253 million and not being too far off. Emirates Airline also provides a number of movie selections for its individual passengers and of course. 2012). In addition.373)($1. a matching ambience for a cozy flight. SAS aimed to help Thai Airways Company to be a fully independent airline through guiding them in the different business processes involved. Etihad Airways. All Nippon Airways. which was made between Scandinavian Airlines System (SAS) and Thai Airways Company. 2011).6% making (AED m 5. Thai Airways Thai Airways started as a joint venture in the 1960s. One of which is the above-mentioned ―AeroMobile‖. Finally. its chairman. In addition.never had a fatal air crash incident. The major contributors that make the services of the airlines possible are its suppliers— Airbus.
the Premium Economy. and gaining partnerships among big industries in order to provide people with beyond excellent service. to improve operational processes towards excellence. But as Singapore and Malaysia was separated and the partners that initiated the airlines also parted ways. becoming aware of the full potentials of workers. 20 years have passed by and the airline had acquired numerous awards for giving guests an exceptional service. and this is Thai’s ministry of Finance. 9 . The accommodation services or accommodation seats for the costumers are the Royal First Class. and the Economy Class.Aside from these awards given by Skytrax. The suppliers of the airways are Boeing and Airbus. 10. Malaysia Airlines Malaysia Airlines was first known to be as Malayan Airways Limited. the Royal Silk Class (Business). Looking to the economical side of the company. It has a parent company. they have also received recognition from the World Health Organization for its remarkable hygiene measures.34 billion baht or 222 Million Dollars last 2009. its net income was 7. the airline was given a new name—Malaysia Airlines. which guides them on the decisions they make. The way airlines process their businesses is through satisfying costumers’ demands. It was started by the cooperative vision of the Ocean Steamship Company of Liverpool. the Straits Steamship of Singapore and Imperial Airways to run an airline between Penang and Singapore. It has good profit figures that make the company deserving its spot in the top 10 airlines.
The processes works cross-functionally and does involve the participation of other departments in coordination of providing its quality service to its passengers. All in all. Due to the fact that Airphil Express is considered a low-fare airline that provides quality service to its passengers. the airline had reached over 1. To take a closer look on how the company performs. At the current time. Air Philippines is owned by Lucio Tan group of companies and is now referred as Airphil Express. AirPhil Express Airphil Express or formerly called as Air Philippines is an airline company that was owned by William Gatchalian and established in the year 1995. 2011) The success of the airline company is most likely the outcome of the success of its processes. the former Air Philippines had to stop its operation for a short span of time. including international destinations. and the new Airbus320 which will start to operate on the year 2013. the company has three air fleet namely. PASSENGER Allow Passenger a certain period to confirm the Manuel reservation ticketing or AutoTicketing Airphil Express Receive call/email reservation Request Reservation for Enter Data in computerized reservation system Cashier receives payment for Ticket Receive confirmatio n of Reservation A B 10 . let us examine first the core process in that the company practices to delegate the tasks among different departments to ensure that quality service is provided to its customers. there are 33 destinations. Airphil Express was also bought by Lucio Tan group of companies in the year 1999 and started to become sister company of Philippine Airlines. BombardierQ400. (airphil express. Airphil Express is considered the fastest growing airline company that has gained 19% of market shares in the industry. which the airline company operate its flights.III.9 million passengers as of the year 2010 an continually increasing. The core processes to be shown is the entire process in which the airline company conducts its workflow from booking a flight of a passenger until the very end in which the passenger lands to his/her desired destination. (―Airphilexpress‖. Bombardier Q300. As of the year 2011. Due to the shortcomings of management during the said time frame. fully operated on 1996 and was first based at Subic bay. As of the current. 2011) The hanger of Airphil Express is currently located at Pasay City. Philippines and the airline company runs domestic and international flights. Companies to be Benchmarked A.
OPERATIONS DEPARTMENT MAINTENANCE AND ENGINEERING AIRPORT SERVICES INFLIGHT FLIGHT OPERATIONS Airport services focuses on the processes of ticketing. baggage services. All of the work that is included in the aircraft falls to the inflight group. and other services that are most likely to be done inside the airport. let us view the Operation department in which most of the above mentioned processes will fall to. For the Operations department. the flight operations are those which gives the go signal to the flight and is in charge of the scheduling. and delaying flights. Now that the Operations group was already identified. From flight amenities to the meals and beverages offered to the passengers on board. Maintenance and Engineering. Once again. Next is the maintenance and engineering group which centralizes on keeping the aircrafts secure and free from any malfunctions to ensure that each flight is secured and amenably safe. All throughout the process. Before we begin summarizing the core processes. there are four subgroups that does the workflow functionally depending on the type of service to the passengers. First is the inbound logistics which job is to manage the booking of flight and giving 16 . it is all part of the inflight group. checking in. All of these subgroups work functionally in order to achieve the goal of the operations department that is to ensure that every flight is of quality service to every single passenger. the Operations department has Most of the activities done since the main proponent of the process is the flight experience of the passengers. let us summarize the steps in which different departments participation will be explained. Although cross-functionality is a more desirable workflow. the operations department’s four subgroup focus on different functions assigned to each group. and flight operations.Now that we’ve examined the core business process of Airphil Express from booking a flight to landing on the destination. Inflight. adjusting. let us now distinguish the different departments which support the operation department in ensuring quality service to the passengers. It is their main objective to ensure that their passengers are able to pass all of the requirements before passing them to their flight stations. The four subgroups of operations department namely are Airport Services. Moving forward. the inflight crews are composed of the flight attendants which job is to accommodate the needs of the passengers on board. Lastly. we are to examine the processes of the airline and not to analyze the process to determine if the company needs reengineering.
It also supports the inbound and outbound logistics. 17 . the passenger may board the aircraft and to take the specified seat issued to the passenger. the inbound logistics will be in charge of issuing the ticket to the passenger. After the waiting period. They are in charge of tracing the baggage of customers and delivering those baggages to the baggage center of the airport. After confirming the reservation. when the aircraft had already landed to the destination. After all of the processes. Airphil Express. A boarding pass would then be given to the passenger after checking-in the passenger. and weighing of baggage. As for the first process which is the booking for reservation. The name of the passenger would then be entered to the database of the flight to assure that the passenger has a reserve seat for the flight. It involves the processing of reservations. Afterwards. After completing the reservation process. to support other departments and mainly to keep the workflow within the airline as efficient as possible. Passing on. the last thing left for the passenger to do is to retrieve the baggage and to leave airport. After entering the aircraft. if a certain event is to happen which may cause a delay of flight. the baggage of the passenger would then be passed to the baggage counter and the airport services group of the operations would take charge on processing the baggage. As for now. flight operations will also be in charge of adjusting the schedules and delaying the flight. The entire core business process is done for operating the inflight boarding of passengers.free baggage allowance to customers. The next phase is in the check-in counter wherein the ticket will be presented to validate the flight of the passenger and to take the baggage for boarding. After that. the IT department is in charge in booking the passenger and would be entered in a computerized reservation system. payments. let us examine more clearly the entire process within the airline company. Setting that aside. Next is the IT or technology development which is in charge of keeping records of online booking. the aforementioned departments will be the main focus since the core processes of Airphil Express mainly involves the coordination of the mentioned departments. The flight operations would then be in charge of giving the ―go signal‖ if the flight to take place is all set. the issued ticket would then be checked before entering the airport to recheck if the ticket is legitimate. the outbound logistics would then be in charge of tracing the baggage of passengers to be delivered to the baggage counter of the airport. The next thing that the passenger has to do is to proceed to the gate of departure and wait for the flight. the entire process would then be repeated if the customer wishes to book another flight to return from the former destination of the passenger. Whichever is to be done. an allotted time will be given to the passenger to confirm the reservation. it can be done through email or through phone call. Henceforth. reservation. In contrary. Last is the outbound logistics which does the job after the flight. Now. the inflight group under operations is in charge of providing quality inflight services to its passenger. the airport service is in charge of this phase. payment of ticket. etc. Once again.
B. baggage claim slips & put tags on baggage Baggage handling services Check in agents give brochures Inbound Logistics Check in agent gives ticket. Cebu Pacific Air CHECK IN AND BOARDING ACTIVITIES Arrive at airport Place bags at X-ray machine Fall in line at CPA check in customer Maintenance of check in area & visibility of proper signage Service department Place baggage on weighing scale & give ticket to check in agent Check in agent asks for seat preference & fragile items in baggage Process boarding pass. boarding pass & baggage claim slips Production/ Operations Department Maintain database Proceed to pre-departure area Continuous Training 19 .
food preparation.FRONT STAGE Local singing group performs Filipino songs BACKSTAGE Wait for boarding announcements Maintenance of aircraft. Pregnant. fueling & ground handling services Purchasing department Boarding agent announces flight Proceed to gate & present boarding pass Boarding agent checks documents Proceed to aircraft CPA personnel assists all passengers esp. loading of baggage. seniors & handicapped Briefing of Cabin Crew Present boarding pass to sercurity personnel for final check Outbound Logistics Board aircraft Technical check up by Pilot 20 .
Business System Information Technology Reservation agent recaps Reservation agent asks frequent passenger if arrival assistance is needed Enter ticketing office Maintain cleanliness of ticket office Janitorial Services/Human Resource Guard greets & gives queing number Maintain adequate supply of number slips Purchasing Department Sit down & wait for turn. read magazing or watch TV 21 .RESERVATIONS AND TICKETING FLOWCHART OF ACTIVITIES FRONT STAGE Consult directory & make a call Directory Advertisement BACK STAGE Reservation agent answers call Make reservations & date Access computer system (VTM) & enter data Maintenance of corp.
FRONT STAGE BACKSTAGE Ticket agent starts timer Approach counter when number is called Ticketing agent greets and attends to customer Access VTM Maintenance of Computer System Information Technology Sit down & wait for processing Pay Cashier accepts payment & prepares ticket Maintain supplies and equipment Purchasing department Get ticket & leave 22 .
In-Flight Flowchart of Activities FRONT STAGE Cabin crew greets passenger in local language BACKSTAGE Look for designated seat Cabin crew assists passenger. place bags in compartment Services Passenger get ready for take-off Pilot checks if aircraft is ready for take-off Cabin Crew checks if seats are in proper position & seatbelts are fastened Pilot puts on seatbelt sign Cabin Crew welcomes passengers & performs safety demo Aircraft takes off Pilot checks with control tower Cabin Crew offers newspapers Newspaper subscription Services 23 .
FRONT STAGE BACKSTAGE Preparation of snacks Food Services Cabin Crew serves snacks and Magic drawing to kids Cabin Crew conducts games Preparation of prizes PIlot announces information on landmarks Cabin Crew gets trash and newspapers Arrange newspapers and dispose of trash Passengers get ready for landing FA’s handout Service Encounter Forms Cabin Crew checks if seats are in proper position Pilot puts on seatbelt sign Cabin Crew announces landing Aircraft lands Pilot parks the plane Ground crew prepares canopied stairs Ground Handling Services Passenger gets off the aircraft 24 .
and Purchasing/Finance while the minor processes are Information Technology.Arrival Flowchart of Activities FRONT STAGE Proceed to baggage retrieval area Baggages are unloaded BACK STAGE Baggages are placed in designated carousel Get baggage Maintenance of carousel Outbound Logistics Security personnel get baggage slips CPA personnel assists frequent passenger (Arrival Assistance) Services Leave Airport Cebu Pacific or Cebu Pacific Air is currently the leading domestic airline in the Philippines. It upholds the name of being a cost-effective airline directing a goal of affordability for Filipinos to embark. reservations of ticket. Human Resource. Zamboanga International Airport. Francisco Bangoy. the main departments involving the processes are Outbound Logistics. Marketing. The processes above are classified according to their purposes including check-in and boarding of plane. Cebu Pacific has the most passenger around 11 milion for the year 2011. Services. and arrival of plane processes. According to statistics. overthrowing PAL as the second. Inbound Logistics. Its airplanes are residing in Ninoy Aquino International Airport. and Diosdado Internatonal Airport. Mactan-Cebu International Airport. Given the graphs. 25 . In-flight. Cebu Pacific is following a cross-functional process having different departments cut across various scattered processes in the airline industry. and Maintenance department.
necessary materials for flight operations. assisting of elderly and handicapped people. it has numerous tasks and process for the service department such as checking of passports before entering airport. outbound logistics is the most important department of the overall process whether it is from check in up to arrival of plane apparently because it is responsible of transporting all of the needed belongings of passengers. Inbound Logistics Operations such as transporting luggage within the airport. tax payment. food transport. Its operations start from the customer’s check in of baggage up to the arrival of destination. luggages are transported from one place to the airplane’s storage place. it is still imperative to recognize this department as one of the major cores. Outbound Logistics For any airline industry. Services/Operations Customer satisfaction exemplifies the main purpose of this department and from what the graphs show. and other integral material needed by the passengers and the airplane are handled by this department. a Cebu Pacific employee will gather all of the baggage and place it on the conveyer belt leading to a storage place for baggage in the plane. Another task carried out by this department is the re-fueling of the airplane transported via truck or buggy too together with the assistance of maintenance department. ticket reservation and pecuniary activities. and passport. and other services inside the airplane and airport. 3. Next. After all of the process gone through by the passenger. Hand carried baggage is excluded from the transport thus is taken by the passenger along all of the important documents like boarding ticket. all of the baggage is perched on the conveyer belt again for redeeming of luggage. luggage payment. it collects the boarding tickets which are important for passengers to progress through the process. and the passengers itself. It also holds the documents required by different departments before boarding on the plane. 4. Overall operations are also handled by this department hence is truly essential in the airline business because the pay is mostly dedicated to the services it provides and it attracts customers in experiencing or riding their airline. Upon checking in of baggage. With the help of the conveyer belt. The transportation of food is dispatched via buggy/truck along with the aid of catering services. fuel transport.Main Process: 1. it maintains the performance and efficiency of computers connected to different sets of department contributing to the entire effectiveness of the 26 . The role of the department ends when passenger gives the boarding ticket and leaves the airport. Although purchasing only happens on check-in and arrival. For one reason. the plane is now ready to transport its passengers to the desired destination. Purchasing/Finance In managing boarding ticket payment. assisting passengers when sorting luggage. Supporting Process: 1. Information Technology Maintenance of computers and other technical errands are managed by the IT department. food services on the airplane. In the case of airlines. this department is in charge of collecting and organizing errands under these. 2.
Human Resource The service/operations. It supports the overall facilities in the airlines in order for it to work properly. In the case of Cebu Pacific. although it is not a major core process. It is of the supporting process because it aids the audience popularity of the airline not breached by the main processes. purchasing department lies on the human resource department making it also an essential functional unit. Recruitment is beyond the four processes presented so it lies on minor processes not mentioned. 4. facilities maintenance. Maintenance This includes fueling of airplane. together with the HR. they keep order in the information systems. advertising. Marketing Responsible for promoting. 27 . maintaining airplane’s condition. and enticing audience. 3. all other operations are not significantly involved in the HR dept. 2. its banner is a cost-efficient airline having low prices affordable to middle and high class society. Its role is eminent on the reservation of tickets since Cebu Pacific uses an online reservation booking of tickets which connects to computers of the industry. and other assets of the airline industry in need of vigilance. The reason behind that is because the services and other departments only get human power in this department.process. their task force combined keep the industry and airplane in condition. Together with maintenance department. it requests recognition and acknowledgement to the outside audience preferably accentuating the banner of the industry.
Price.C. luggage tag. Shanghai Airlines Establishment of Flight Plans Passenger Service Process Flowchart: In A Big Picture Publicize Flight Schedule. and Seats Available Accept Passenger Reservation Check passenger’s documents for identification Sales Department Accept Special VIP services Fill in info in ticket Necessary alterations of ticket Charge the fare Forecast Passenger Info A Receive incoming flight telegraph Opening of counters 90-120 minutes before flight Check identification documents. plane ticket. and charge overweight luggage Guide passengers off plane Departur e Provide special services Unload luggage Arriv al Prepare Load Balance Sheet Provide Services Special Luggage carried to aircraft Delivery of Checked Luggage Guide passengers to board Send departure telegraphs Luggage Inquiry A 28 . and accept luggage Accept Random business document Give boarding pass.
it has a total of 25 airplanes that are able to fly 136 routes going to 48 of China’s big cities and 5 international cities. opening of counters for them to stay in the mean time. analyzing and training people before they are deployed to a certain position in the company. FURTHER SUPPORTING PROCESS: HUMAN RESOURCE UNIT The operational units has to be supported by the human resource unit because human resource unit is responsible for recruiting. outbound logistics will always be a core process because the transportation of a person or a good from its origin to destination occurs. Recently. CORE PROCESSES: INBOUND LOGISTICS UNIT As an entity in the airlines industry. SUPPORTING PROCESS: OPERATION UNIT As we can see. CORE PROCESSES: OUTBOUND LOGISTICS UNIT As an entity in the airline industry. The company supports domestic and international passenger service. outbound logistics need the help of operation units or production unit that will yield a particular service when we talk about work in the airline industry. PROCESS SUMMARY: Outbound Logistics Financial Mgt Human Resources Operations Sales Info Inbound Logistics Marketing Based on the complete process diagram. check all necessary documents before flight. the group was able to identify the different core and supporting processes: 1. 30 . Those operation people are in charged to check the passenger’s documents for identification. and charge overweight luggage. give boarding passes. 2. cargo service and proxy services.Shanghai Air is one of the earliest commercial airlines that were established in China. check in of luggage. inbound logistics is considered as one of the core business process because this is where the landing of people happens and this is also where the planning before scheduled flight happens.
And when there are passengers that will arrive soon. they are the ones who makes the flight plans. liabilities. That is the reason why information technology can be considered as another supporting process of inbound logistics. in addition to that. they will provide the necessary services of landing like the unloading of luggage. 4. marketing is always a vital process of a company because it is through marketing wherein we can show our company’s strength in order for us to attract clients. As we can see. 31 . 5. And after receiving the telegraph. they are also the ones who will give traveler’s information to outbound logistics for them to know how many people are going to be transported out of the country. confirm and make necessary alterations in a ticket. CORE PROCESSES: SALES UNIT As we can see on the complete process diagram. the company would be able to properly manage their assets. inbound logistics also need the help of operation units or production units that produces service that is needed. Aside from these services. outbound logistics sends telegraphs to inbound logistics so it is concluded that they used information technology as a tool for convenient communication. the sales people in Shanghai Air are the ones who will accept passenger reservations. we would be able to assess how the company is currently performing by comparing those values with the previous year’s value. 3. In addition to that. CORE PROCESSES: FINANCIAL MANAGEMENT Financial Management is important in an airline industry because through those documents. they have to research about it and develop products that will hit the market that is why research and development is considered as a supporting process of the marketing unit. weaknesses and the market’s needs.SUPPORTING PROCESS1: OPERATION UNIT Like the outbound logistics. CORE PROCESSES: MARKETING UNIT No matter what industry we maybe into. the sales are also responsible for the collection of random business documents or receipts that are received due to a transaction that happened in the airplane. SUPPORTING PROCESS: RESEARCH AND DEVELOPMENT UNIT In order for the company to know its strengths. charge the travelling fare. the ones who make the load balance sheet to determine if the plane is overloaded with things or not. owner’s equity. most of the processes of ticketing are under the sales department unlike in Air China that process its sales on inbound logistics. it will also serve as a guide in making economical decisions. SUPPORTING PROCESS2: INFORMATION TECHNOLOGY UNIT Information Technology is added as a part of the value chain in the airline industry because as we can see in the full process flow diagram. With financial management. they will anticipate for the coming of a telegraph to know the details of the passengers in order to serve them better.
they should also give attention to procurement. D.SUPPORTING PROCESS: PROCUREMENT Procurement can be considered as a supporting process of financial management because procurement is where the company acquires materials cost-efficiently in order to produce a finished product. And upon acquiring those products. They should make sure that there is no unnecessary expenditure that are happening so that the company would not lose money. luggage collection loading Maintenance & Guarantee Flight Crew Preparation Refuel Cabin Cleaning Meal Preparation Baggage Loading and Unloading Stowage Dispatching O N S I T E D I R E C T I N G Joint Investigation Terminal Services (wait for plane) Check in services Luggage Release Baggage Handling Guide Visitors Arrival Services Cabin Services Farewell Travelers Green Arrows: main process Violet Arrows: flow of info 32 . they would have a direct effect on the company’s financial statement so in order to manage the company’s finance properly. Air China Marketin g Plan Flight Plans Control of Seats Ticket Sales F L I G H T O P E R A T I O N I N F O M G T Check in.
front office personnel to be able to do their designated tasks correctly. FURTHER SUPPORTING PROCESS: HUMAN RESOURCE UNIT In order for the flight attendants. in addition to that. cabin crews. compared to China’s Southern and Eastern airlines. it was said to have 176 working airplanes and is in the process of renewing some of them. investigation of materials that are in the luggage. In addition to that. in order to support the outbound logistics in performing its necessary operations. The training that is offered to the employees is critical because the employees will be the one who will attend to the passengers that will receive a lasting good or bad impression after the trip. when it officially formed Air China. it was known to be the main airlines that caters domestic and international passenger services and cargo transport. In the 1950s. 34 . terminal services that are offered while waiting for the plane and cabin services. it focuses on the outbound logistics wherein they’re responsible for the people that are leaving the airport. China. load and unload baggage. they are also responsible for the checking-in of the passengers. the production and manufacturing unit or the operational unit in this case goes together with outbound. they should be properly trained under the human resource unit. Air China’s scale is a lot smaller compared to its competitors. Recently. dispatch things. PROCESS SUMMARY: Outbound Logistics Procurement Marketing Facilit ies Mgt Sales Operations and Customer Finance Management Inbound Logistics Human Recruitment Analysis of Requirements Proper Training 1. But now. outbound logistics are responsible of the preparation of flights. they clean the cabin. As we can see in the diagram.Air China was formerly the Civil Aviation Administration of Beijing. CORE PROCESS: OUTBOUND LOGISTICS UNIT SUPPORTING PROCESS: OPERATION UNIT Since the airline industry aims to transport people and good from its origin to its destination.
35 . customer service unit is separated from sales because customer service unit focuses more on how to enhance the service that is given by the airlines to the passengers while the sales falls under inbound logistics wherein they are the ones who are responsible for the plans. fuel for them to be able to run the airplane. this will also give them the information to make the necessary improvements for the future. In addition to that. there is a number of supporting unit under it. They should also refer to their financial statements for them to be able to evaluate their previous performance in order to assess their current performance. the operations unit should assist them in landing. 2. ticketing and sales related issues. fares that are assigned to a certain destination and ticketing needs. these three supporting units should work hand in hand in order to properly execute the core process which is the inbound logistics. therefore it has to be supported by the sales unit. The customer service unit then is further supported by the human resource unit so that the people that are under the customer service unit would be properly trained to address concerns. guiding the visitors.1. CORE PROCESS: INBOUND LOGISTICS UNIT SUPPORTING PROCESS1: OPERATIONS UNIT After the person or the goods has arrived. Because inbound logistics covers the systems that are used for passenger reservation. As we can see. there should be a customer service unit that supports the outbound logistics unit to ensure that there would be no problem in the transportation of passengers or goods from its origin to its destination. In the airlines industry. SUPPORTING PROCESS 2: FINANCIAL MANAGEMENT UNIT After the person or the goods has been transferred to its proper designation. Without the procurement unit. the inbound logistics are in charge of baggage handling. Due to the necessity of airlines to acquire materials such as raw food for them to produce meals. one of the units that support the inbound logistics unit is Financial Management because they have to check their financial capacity when there is a need for them to acquire fuel for plane or even the plane itself. the inbound logistics now is responsible for the people’s entrance and services inside the airport. there might be unnecessary overspending. and luggage release. SUPPORTING PROCESS 4: SALES UNIT Another unit that serves as support to the inbound logistic unit is the sales unit.2 SUPPORTING PROCESS2: CUSTOMER SERVICE UNIT FURTHER SUPPORTING PROCESS: HUMAN RESOURCE UNIT In order to address the different concerns made by the passengers. SUPPORTING PROCESS 3: PROCUREMENT UNIT Another unit that serves as support to the inbound logistics unit is the procurement unit. Under inbound logistics.(like what we can see in the diagram) they should be able to be cost effective in any economic decisions that are made in the company. In conclusion.
As we can see. facilities management is the first E. ENTIRE SUPPORTING PROCESS: FACILITIES MANAGEMENT UNIT Facilities management is considered as one of the core business process because it is important for the facilities of the airlines especially the airplane to be in a good condition for them to be able to transport people safety from their origin to their destination. CORE PROCESS: MARKETING UNIT SUPPORTING PROCESS 1: RESEARCH AND DEVELOPMENT UNIT Marketing Unit is considered as one of the core business process because this is how the company attracts attention from people. nothing would follow after this step. how they convince them that they are the ones who would be able to offer the best services to them. they would not be able to offer their service. they should first conduct a series of research on the market so that they would be able to target a certain part of the business industry to achieve competitive advantage.3. And in order to properly market the strengths of the airlines. If their facility is wretched. Iran Air Iran Air’s Passenger’s Flight Experience: Departure 36 .
Departure Confirm Reservation and issue ticket Update Luggage Info Reservation confirmed Book Ticket Check In Luggage Check In Security Screening Boarding API/PNR data Government Authority Data Inbound Logistics Research and Development Inbound + Operations Outbound + Operations Marketing Financial Management Sales & Costumer’s Service Operations/Production Outbound Logistics Human Resource Procurement Facilities Management Arrival Inbound Logistics Research and Development Inbound + Operations Sales & Costumer’s Service Operations/ProductionOutbound + Operations 37 .
Outbound LogisticsProcurement Marketing Human ResourceFacilities ManagementFinancial Management API Updates Disembark Authenticate ID Collect Bag Onward Travel Baggage to carousel Iran Air started off with a name Iranian Airways. Iran Air already had millions of passengers to be flied from different places. 38 . Because of the emerging of the two airlines. Also. whether it is domestic or international. it got merged with Pars Airways. Iran Air was established because of the people’s desire to have a credible transportation service to different neighboring countries. Iran Air is currently operates 35 international and 25 domestic destinations. they had already transported more then ten thousands cargo to different destinations. but due to certain events that have happened throughout the history of Iran. it brought to the birth of Iran Air.
the screening of luggage in the security. the transfer of luggage in and out of the plane.PROCESS SUMMARY: Outbound HR Marketing R&D Inbound Sales Financial Management Procurement Operations IT Core Business Process: Inbound Logistics Inbound logistics is considered as one of the core business process of the airline because this is the department where the process of travelling begins. but Inbound Logistics need it more. and updates with in the departure process happens. The main reason why Inbound Logistics need it more is because almost majority of the process that will happen when a person is traveling 39 . the booking of flight. Supporting Process: Information Technology Almost all of the departments need information technology in their processes. Supporting Process: Operations In the operations department. Not only do it considers the processes before the flight happens. the verification of the passenger’s identity. and the claiming of the luggage happens. The reservation of ticket. but it also covers the landing and arrival to the destination. this is where the checking in of luggage.
and analyzing what other ways employee could do to satisfy the needs of a passenger. and to the information on the passengers are all controlled by a system that is maintained by the IT department. IT is needed from the reservation of ticket. This is evident nowadays given the fact that our world is continually leaning to the advancement of technology. to the updates on luggage. Supporting Process: Human Resources Human Resource department are in charge of training and recruiting employees that would be able to contribute to the goals and objectives of the airline. No one will move or the whole process of the traveling of the person will not be possible if there will be no employees to give service to their needs.happens in Inbound Logistics. 40 . Core Business Process: Sales Prices of tickets and packages that are offered in certain destinations falls under the Sales department. This department is responsible for recruiting people who deserve the job. People also go through security screening which fall under operations of the airline. Both Outbound and Operations contribute to a same process that a person undergoes when he or she is travelling. receiving their ticket/s. Supporting Process: Human Resources Human resource department is contributes majorly in the Outbound Logistics. going through the security screening. They are in charge of keeping up with the latest trends on discounts or offers among their competitors. They make sure that everyone does their jobs well and every employee is able to meet the needs of the passengers. Core Business Process: Outbound Logistics Outbound Logistics department are the ones who are in charge of checking in of the people who are travelling. to the booking of flight. Supporting Process: Operations Outbound is cross-functional with Operations because there are certain processes that they both cover. Thinking of possible ways on how to increase clients and persuade people in flying their airlines through the different tactics in selling are the jobs of people in the department. and transfer of passengers to the waiting room before boarding or transfer. assessing if they are able to meet the company’s requirements.
Their job is to show to the public what their airlines has to offer. Core Business Process: Financial Management Handling of the assets. With the analysis that this department makes. Supporting Process: Research & Development This department is in charge of doing assessment and research on different ways to improve the processes in the airline.Core Business Process: Marketing Marketing department is in charge of making advertisements or commercials on why would people choose their airlines for travelling. Supporting Process: Procurement Procurement is an important factor of the Financial Management department because what it does is the purchasing of different items that would be needed in the airline such as. They are in charge of making financial reports. They collect and analyze data about what they can still improve in the different departments that makes up their company. liabilities. 41 . They are in charge of controlling and monitoring the budget of the company. and owner’s equity is what the Financial Department does. planes and fuels. A bigger company would be very beneficial because it would increase the company’s bargain power. encoding the debits and credits in the company. The economies of scale are maximized because of the help of partnerships that would make duties simpler. It is also through them that the company would be able to determine the problems financially that the airline is facing. and that must be in a persuading manner in order to gain clients. the company would be able to determine of they are being profitable or not.
However. there were similarities from the work processes performed by the departments on each of the company. In contrary. As for the other company. The only differences are the respective functions of these departments that are part of the core processes. Cebu Pacific has merged the operations unit into the inbound and outbound logistics. 42 . Inbound Logistics As for inbound logistics. Mainly. In example. the Operations Department functions and deliberates the core processes while the inbound and outbound logistics supports the operations department of Airphil Express. for the Shanghai Air. there were alterations of work process and job designation from different departments because the different companies practices different cultures. in any airline company. Let us now analyze the five common core processes and three other support processes that are considered to be important in the entire business process of an airline industry. marketing also provides a competitive edge to other airline company since the effectiveness of the department affects the success of the whole company. As for some reasons. the core process that actively participates in the workflow is the inbound logistics and outbound logistics while the operation unit is the one which supports the process. Major Processes Marketing For any airline company. it is always considered to be an important unit since it manages the booking process and securing the luggage of passengers.IV. there were common core processes that are defined with a corresponding support process from another department. it is always important to gain customers in order to generate profit. the works of inbound logistics are of those in the departure stage of the passenger. Marketing is a one of the most common core process to be identified since the transactions of the company lies within the smooth function of the marketing department. Out of the five companies. the process in which the different companies follow the workflow is somewhat interrelated to one another. for the Airphil Express. the inbound logistics happens to be in charge of the reservation process up to the issuance of ticket and checking-in of passenger and cargo. Major Business Process of the Industry Based from the core processes defined from the companies that were discussed. Generally. While on the other hand.
Also. the finance is in charge of taking in profitable transactions to account these transactions to determine the financial status of the company. Everything that is to be transported is part of the duty of the outbound logistics. Financial Management Like in any other company and industry. Other important tasks are done under the operations. Outbound Logistics Similarly to inbound logistics. the outbound logistics is in charge of the luggage to be transported back to the baggage counter once the aircraft has landed. flight scheduling. IT is the main support process of all since the need for disseminating information is the most important proponent of each department to ensure that the current process is on the right track. airport services. The support of human resource is also of a big help for other departments since the workforce also contributes to the efficiency of the process. Mostly. Finance acts as a support process for top management to determine decisions to be made. Finance also provides help for decision makers to determine the current status of the company and to visualize if the company needs improvements. The operations department work hand-in-hand with all other department such as inbound and outbound logistics in order to create a smooth cross-functional workflow within the company. In other words. they support all of the departments to ensure that efficiency of work is fully established. Just like 43 . Support Processes IT For the technology development. all of the work done by the inbound logistics would then be passed to the responsibility of the outbound logistics. and the like. Human Resource Manpower is of course needed in an airline company to ensure that there is someone in charge of some tasks. all of the related inflight and ground activity tasks are subjected to the operations department. Operations The operations department is the over-all in charge of giving quality service to the passengers since all of the process will involve the operations department. such of which are flight plan. IT enables cross-functionality among different departments since the use of the system enables all of the department to coordinate for the workflow.
It supports the marketing department by enlisting the market’s needs so that the marketing department can take action to gain more passengers in the airline. security personnel under HR are in charge of checking the passes of those that are to enter the airport. 44 . Research and Development Research and development helps the marketing and other departments to implement new strategies that will create a competitive advantage.in the checking of ticket pass.
investopedia. from http://epubl.bizdatascreener.se/1653-0187/2007/008/LTU-PB-EX-07008-SE. March 21.d.aspx Retrieved March 21. Thesis.asp#axzz1nfG68s7v Airline Business top 100 airlines ranking-Asia Pacific (2012) in Flight Global Retrieved on March 20.pdf.cninfo.php?option=com_k2&view=item&id=18:airlineindustry&Itemid=12 Air China(2006) in Hong Kong Exchanges and Clearing Limited Retrieved March 19. Tarbiat Modares University Faculty of Engineering Department Industrial Engineering Lulea University of Technology. from 47 . 2012 from http://airphilexpress. 2012.com.hkex.aci. grabs 19% market share. (2011) Airphil from http://www.airphilexpress. Gregorio.PDF Airphilexpress Inc.flightglobal. 2012.com/site/305/default.hk/chi/csm/news/shnews/20060730/601002_20060731_1.iranair. 2012. The ideal process (―SPT: Ideal Process Flow V2.pdf Shanghai Airlines (2002) in CNINF Retrieved http://www.com/Features/world-airline-rankings/Asia/ Apostol. 2012 on http://www. (2006). Philippines Chitnis. 2012 from http://www. Tugbang (1998) A Customer Service Plan For Cebu Pacific Air. http://www.com/index. A.com/ Express March 19. Iranian Airways was (―About IranAir‖.html The Industry Handbook: The Airline Industry(2012) in Ivestopedia Retrieved on March 20.).aero/aci/aci/file/Free%20docs/IPF_V20_30_Nov_06.0‖. 2006).cn/finalpage/2002-09-16/651845. Satisfaction Formation Process For Iranian Airline Passengers. March 21. 2012 on Retrieved March 20.ltu. Retrieved March 20. 2012 from http://www.com/features/industryhandbook/airline. Escolar. n. 2012 Airphil Express (2011) Airphil Express now fastest growing carrier.com.com/2011/06/airphil-express-nowfastest-growing. Retrieved.pdf.V. from http://www. Retrieved. 2012 on http://www. Bibliography Airline Industry: Value Chain (2012) in Business Data Insight Retrieved March 19.blogspot.
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