Airline Industry Over the Past Research Paper

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Innovation is our signature. We foster creativity and vision to provide solutions beyond today's boundaries ("FAA Mission)."

JAA

The Joint Aviation Authorities (JAA) was developed in the 1970s by a handful of major European National Aviation Authorities when they began to join activities. The JAA was established for the purposes of developing a platform for a cooperative safety regulatory system because they desired to have a uniform high standard of aviation safety. Simultaneously, the JAA effectively became the European counterpart of the U.S. FAA ("Background").

In the time after the JAA was created the organization began to collaborate with the FAA to harmonizing rules and regulations where possible. In addition the JAA also signed Bilateral Agreements with other Aviation Authorities, including Transport Canada. In 1991 JAA established their headquarters in Hoofddorp, the Netherlands ("Background"). In addition it was during this time that more European National Aviation Authorities (NAA) became JAA Member States. Nevertheless, the rules and regulations JAA suggested for adoption were not mandatory and each JAA-NAA still had the right to maintain their national legislation if they wanted to do so ("Background"). In addition as it pertained to JAA

"A new framework for aviation safety in Europe, created by the adoption of EC Regulation 1592/2002 (Basic Regulation) of 15 July 2002 on common rules in the field of civil aviation, led to the establishment of the European Aviation Safety Agency (EASA), whose adopted rules and regulations are mandatory for each Member State. As a consequence, as of autumn 2003 JAA's rulemaking activities were gradually transferred to EASA, while the upcoming close-down of the former JAA-system was processed by means of a transition phase ("Background")."

Eventually the developement of the revised EC Regulation 1592/2002 in March of 2008, EASA seized control of all responsibilities once governed by JAA.

An ECAC Directors General meeting in 2008, determined that the JAA Liaison Office in Cologne would be broken up by June of 2009. However the JAA Training Organisation would persist "in the legal form of a Dutch Foundation and as an associate body of ECAC ("Background")."

PESTE analysis

Political

From a political point-of-view, the condition and domestic carriers has been an issue of concern. This concern has to do with the influence that the airline industry has as it relates to the economy in addition to the manner in which passengers are treated when on domestic flights. As it pertains to the former, regulation and deregulation have been the primary tools used by politicians to attempt to control the industry and ultimately the economic influence of the airline industry.

Environmental

At the current time the state of the environment is of utmost concern for many different industries. For the airline industry, environmental concerns are currently at the forefront of a great deal discussion concerning the manner in which the airlines operate. One of the most prominent issues is the subject of flying greener. According to an article entitled "A U.S./EU Dogfight Over Greener Air Travel" Many U.S. Air carriers have been reluctant to implement the new emissions rules established by the EU. However, the article points out that such reluctance seems to be ill-advised as the new emissions standards are not as intense as those of other industries. The article further explains that this new emissions standard is the initial step in the development of more strenuous European cap and trade laws (Aston, 2009). The laws require airlines to either decrease the amount of greenhouse gases it emits or pay for permits to emit these gases beginning in 2012 (Aston, 2009). U.S. airlines are apprehensive about adapting these new standards because they are already in a difficult position as a result of a decrease in demand for travel and fluctuating fuel prices (Aston, 2009). The article further explains that

"The Air Transport Assn. (ATA), which represents U.S. carriers, says the plan violates international law, and that the U.S. government is obliged to object. If the EU proceeds on its course, it faces a thicket of lawsuits, predicts Nancy Young, ATA's vice-president for environmental affairs. "We adamantly oppose their scheme," she says -- adding that having to purchase credits will stifle funding for the very innovations airlines must develop to cut emissions (Aston, 2009)."

The idea of having to pay for emissions is referred to as carbon costs. The article explains that it is unclear as to whether or not such carbon costs will increase the costs of airline tickets (Aston, 2009). However there have been aviation studies which have asserted that the yearly expense associated with American carriers landing in Europe could increase by a billion dollars each year (Aston, 2009). However, other analysts assert that this estimate is not correct and assert that the average price increase associated with a cross-Atlantic round-trip ticket at $6 to $56 by 2020 (Aston, 2009). The actual costs will be dependent upon the cost of carbon permits. As such these analysts have explained that these costs increases are consistent with what travelers are used to paying (Aston, 2009).

Additionally some environmentalists have argued that compared to other industries such as the automobile industry, are much more stringent than the airline industry as it pertains to carbon policies and efficiency targets (Aston, 2009). Environmentalists also assert that airlines have enjoyed a special status since the enactment of the Kyoto accord (Aston, 2009). This was the case because the accord failed to establish reduction targets for airlines or marine shippers, in spite of the fact that both industries were asked to develop their own strategies to reduce admissions (Aston, 2009). At the time of the accord plane flights only composed 2% of all the industrial emissions (Aston, 2009). The article also explains that

"U.S. carriers have boosted their fuel efficiency by 31% since 1990 and have promised an equal gain by 2035. Airplane and engine builders, from Boeing and Airbus to General Electric and Rolls-Royce, are researching lightweight materials and plant-based jet fuel. Airlines are seeking streamlined flight paths to avoid wasting fuel. Still, because air traffic is growing so fast globally, the sector's emissions are on track to more than double by 2035…U.S. carriers, which consume 35% of the world's jet fuel, may not be able to opt out of carbon limits much longer (Aston, 2009).

Social

From a social perspective the airline industry continues to be a an important part of society and people still utilize air transport as the most favorable ways to ravel. / However many consumers have grown weary of certain restrictions and charges that have been levied against them as a result of airlines attempting to cut costs and improve profits. These restrictions and charges include fees associated with check on baggage. These fees did not exist in the past and many consumers believe that they are being charged excessively. Chen & Mahmassani (2009) explain further that these fees have unintended consequences associated with increased boarding times and even safety. The authors explain

"From a passenger service perspective, these fees may produce unintended impacts for airlines due to shifts in passenger luggage check-in preferences. Some passengers with a low tolerance for additional trip costs may respond to fees by bringing more carry-on luggage onto an already tight-spaced plane, stuffing more into overhead bins. Other passengers may simply pack more items into fewer pieces of luggage. From a security standpoint, the higher volume of carry-on luggage may stress passenger screening systems in airports. Additionally, the higher volume of carry-on luggage may also have adverse effects on overall boarding times, due to more items that need to fit in overhead bins. Thus, passengers' sensitivity to checked baggage fees may lead to significant shifts from check-in to carry-on, causing unwanted delays in boarding and consequently turnaround times of aircrafts (Chen & Mahmassani (2009).

Society has also been fed up by the general treatment that many airlines show to customers. For instance there have been several instances in which airlines have left passengers sitting on the tarmac on hot planes with no food and overflowing toilets. Many passengers feel that the costs associated with flying should be enough incentive for airline companies to make sure that their customers are comfortable and not trapped on airplanes for hours.

Technological elements

Technology is constantly growing and changing and in many ways technology can serve as a way to alter the ways in which the airline industry operates. In the past and at the current time technology has forever changed the manner in which people purchase tickets and the types of tickets that they purchase. For instance, people have a choice as to whether or not they want and electronic ticket or a paper ticket. In addition airports have also exploited the use of technology, with such conveniences as electronic check in.

In addition to the creation of computerized systems for revenue management is a real example of the successful incorporation of IT and operations research in the airline industry. Revenue management (RM) systems are important because they are essential to determining the price at which airline…[continue]

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