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INTRODUCTION TO THE AIRLINE INDUSTRY COURSE - IATA

INTRODUCTION TO THE AIRLINE INDUSTRY COURSE - IATA

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<strong>INTRODUCTION</strong> <strong>TO</strong> <strong>THE</strong> <strong>AIRLINE</strong> <strong>INDUSTRY</strong><br />

<strong>COURSE</strong> TEXTBOOK<br />

TABLE OF CONTENTS<br />

Introduction....................................................................................................................................... 1<br />

Module 1 – The Airline Industry Today<br />

1.0 The Airline Industry Today.......................................................................................................... 5<br />

1.1 The Airline Industry .................................................................................................................... 6<br />

1.1.1 What is the Airline Industry?.............................................................................................. 6<br />

1.1.2 Scope of the Airline Industry ............................................................................................. 9<br />

1.1.3 Types of Airline Service................................................................................................... 11<br />

1.1.4 Scheduled Flight Service................................................................................................. 13<br />

1.1.5 Non-Scheduled Flights .................................................................................................... 16<br />

1.1.6 Passenger Travel ............................................................................................................ 16<br />

1.2 Cargo Transport ....................................................................................................................... 19<br />

1.2.1 Air Cargo ......................................................................................................................... 19<br />

1.3 Economic and Social Impacts .................................................................................................. 22<br />

1.3.1 Impact as Major Employer............................................................................................... 22<br />

1.3.2 Impact on Tourism........................................................................................................... 23<br />

1.3.3 Opportunities for Promoting Sustainable Development .................................................. 23<br />

1.3.4 Additional Benefits........................................................................................................... 24<br />

Module Summary............................................................................................................................... 26<br />

Module 2 – Regulatory and Business Context<br />

2.0 Regulatory and Business Context ............................................................................................ 29<br />

2.1 Regulatory Bodies .................................................................................................................... 30<br />

2.1.1 Introduction of Standardisation........................................................................................ 30<br />

2.1.2 Standards and Recommended Practices (SARPS) ........................................................ 32<br />

2.1.3 Freedoms of the Air......................................................................................................... 34<br />

2.1.4 The Role of Governments ............................................................................................... 35<br />

2.1.5 Other Agreements and Treaties ...................................................................................... 36<br />

2.2 The Business Side of the Industry............................................................................................ 38<br />

2.2.1 Key Performance Indicators ............................................................................................ 38<br />

2.2.1.1 Revenue Passenger Kilometre............................................................................ 38<br />

2.2.1.2 Yield..................................................................................................................... 39<br />

2.2.1.3 Available Seat Kilometre ..................................................................................... 39<br />

2.2.1.4 Unit Costs............................................................................................................ 40<br />

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2.2.1.5 Passenger Load Factor ....................................................................................... 40<br />

2.2.2 Airline Profitability............................................................................................................ 40<br />

2.2.3 Revenue Management .................................................................................................... 42<br />

2.2.4 Growth of Passenger Service Worldwide........................................................................ 44<br />

2.2.5 Growth of Cargo Service Worldwide ............................................................................... 44<br />

2.2.6 Larger Profit Margins in Cargo ........................................................................................ 46<br />

2.2.7 Air Transportation Activity – Regional Breakdown .......................................................... 47<br />

2.3 Main Industry Characteristics of Passenger Airlines............................................................... 49<br />

2.3.1 A Service Industry ........................................................................................................... 49<br />

2.3.2 Capital Intensive .............................................................................................................. 50<br />

2.3.3 High Cash Flow ............................................................................................................... 50<br />

2.3.4 Labour Intensive .............................................................................................................. 50<br />

2.3.5 Highly Competitive........................................................................................................... 51<br />

2.3.6 Thin Profit Margins .......................................................................................................... 51<br />

2.3.7 Seasonal.......................................................................................................................... 51<br />

2.3.8 Current status .................................................................................................................. 51<br />

Module Summary............................................................................................................................... 53<br />

Module 3 – From Flying Machines to Airline Alliances: A Trip through<br />

History<br />

3.0 From Flying Machines to Airline Alliances: A Trip through History ......................................... 55<br />

3.1 Development of Commercial Airlines ....................................................................................... 56<br />

3.1.1 Early Beginnings Pre-World War II.................................................................................. 56<br />

3.1.2 Impact of World War I...................................................................................................... 57<br />

3.1.3 Growing Demand in the 1930’s ....................................................................................... 59<br />

3.1.4 Impact of World War II – 1945 to 1960............................................................................ 60<br />

3.1.5 The Jet Age ..................................................................................................................... 62<br />

3.1.6 Growth and Setbacks – 1960s ........................................................................................ 62<br />

3.1.7 The 1970s........................................................................................................................ 63<br />

3.1.8 The 1980s and 1990s...................................................................................................... 63<br />

3.1.9 Recent Challenges: 2000 and beyond ............................................................................63<br />

3.1.10 Growth of Airline Passenger Traffic............................................................................... 64<br />

3.1.11 Airline Cargo Traffic....................................................................................................... 65<br />

3.1.12 Timeline: The First 100 Years of Airline History............................................................ 66<br />

3.2 Deregulation ............................................................................................................................. 69<br />

3.2.1 Perspectives on Deregulation ......................................................................................... 69<br />

3.2.2 The Start of Deregulation ................................................................................................ 70<br />

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3.2.3 Continued Adoption of Deregulation ............................................................................... 71<br />

3.2.4 Effect of Deregulation on the U.S. Airline Industry.......................................................... 75<br />

3.2.5 Open Skies Agreements – International Deregulation.................................................... 77<br />

3.3 Impact of a Deregulated Airline Industry .................................................................................. 81<br />

3.3.1 Privatisation ..................................................................................................................... 81<br />

3.3.2 Consolidation................................................................................................................... 82<br />

3.3.3 Cooperative Arrangements ............................................................................................. 83<br />

3.3.4 Alliances .......................................................................................................................... 84<br />

3.3.5 Impact on Airport Facilities and Services ........................................................................ 87<br />

Module Summary............................................................................................................................... 88<br />

Module 4 – Within the Airlines<br />

4.0 Within the Airlines..................................................................................................................... 91<br />

4.1 How Airlines Are Structured ..................................................................................................... 92<br />

4.1.1 Basic Organisational Structure........................................................................................ 92<br />

4.1.2 Types of Airline Personnel .............................................................................................. 95<br />

4.1.2.1 Flight Operations Personnel................................................................................ 95<br />

4.1.2.2 Ground Operations Personnel............................................................................. 97<br />

4.1.2.3 Other Personnel .................................................................................................. 98<br />

4.1.3 Line Personnel and Back Office Staff............................................................................ 100<br />

4.1.4 Outsourcing ................................................................................................................... 101<br />

4.2 Key Airline Personnel: Flight Crew and Cabin Crew.............................................................. 103<br />

4.2.1 Close-Up on Flight Crew: Duties and Responsibilities.................................................. 104<br />

4.2.2 Key Pilot Tasks.............................................................................................................. 105<br />

4.2.2.1 Prior to Take-Off................................................................................................ 106<br />

4.2.2.2 Take-Off and Flight............................................................................................ 106<br />

4.2.3 Close-Up on Cabin Crew: Duties and Responsibilities ................................................. 108<br />

4.2.3.1 Flight Attendants ............................................................................................... 108<br />

4.2.3.2 Purser ................................................................................................................ 108<br />

4.2.4 Key Flight Attendant Tasks ........................................................................................... 109<br />

4.2.4.1 Prior to Take-Off................................................................................................ 109<br />

4.2.4.2 During the Flight ................................................................................................ 109<br />

4.3 The Role of Training within the Airlines.................................................................................. 111<br />

4.3.1 Entry Level Positions..................................................................................................... 111<br />

4.3.2 Pilot Training.................................................................................................................. 112<br />

4.3.3 Flight Attendant Training ............................................................................................... 112<br />

4.3.4 Reservation Agent Training........................................................................................... 113<br />

4.3.5 Gate Agent Training ...................................................................................................... 114<br />

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4.4 Organisational Culture of an Airline........................................................................................ 115<br />

4.4.1 Norms and Values......................................................................................................... 115<br />

4.4.2 The Role of Seniority..................................................................................................... 116<br />

4.4.3 Focus on Customer Service .......................................................................................... 118<br />

Module Summary............................................................................................................................. 122<br />

Module 5 – All about Airports<br />

5.0 All about Airports .................................................................................................................... 125<br />

5.1 Introduction to Airports ........................................................................................................... 126<br />

5.1.1 What is an Airport?........................................................................................................ 126<br />

5.1.2 Airport Ownership.......................................................................................................... 128<br />

5.1.3 Airport Codes and Names ............................................................................................. 131<br />

5.1.4 Physical Layout of an Airport......................................................................................... 132<br />

5.2 Airport Personnel.................................................................................................................... 138<br />

5.2.1 Airlines as an Onsite Customer..................................................................................... 138<br />

5.2.2 Other Airport Personnel................................................................................................. 139<br />

5.3 Processing Passengers and Freight ...................................................................................... 143<br />

5.3.1 Processing of Passengers............................................................................................. 143<br />

5.3.2 The Journey Begins…................................................................................................... 144<br />

5.3.3 Arriving Passengers ...................................................................................................... 151<br />

5.3.4 Luggage Processing...................................................................................................... 154<br />

5.3.5 Processing of Freight..................................................................................................... 155<br />

5.3.5.1 Freight Terminals and Processing..................................................................... 155<br />

5.3.5.2 Outbound Freight Processing............................................................................ 156<br />

5.3.5.3 Inbound Freight Processing .............................................................................. 156<br />

5.4 Security................................................................................................................................... 160<br />

5.4.1 Airport Security .............................................................................................................. 160<br />

5.4.2 Procedures for Controlled Access of Passengers, Luggage and Airfreight.................. 162<br />

5.4.2.1 Passenger and Carry-on Baggage Screening Procedures............................... 162<br />

5.4.2.2 Parallel Screening Channel............................................................................... 163<br />

5.4.2.3 Checked Baggage Screening Procedures ........................................................ 164<br />

5.4.2.4 Luggage Protection Procedures........................................................................ 164<br />

5.4.2.5 Airfreight Screening Procedures ....................................................................... 165<br />

Module Summary............................................................................................................................. 167<br />

Module 6 – Air Navigation Services (ANS)<br />

6.0 Air Navigation Services (ANS)................................................................................................ 169<br />

6.1 Overview of Air Navigation Services ...................................................................................... 170<br />

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6.1.1 Types of Navigation Services........................................................................................ 170<br />

6.1.2 Navigation Basics.......................................................................................................... 171<br />

6.2 Air Traffic Control (ATC)......................................................................................................... 174<br />

6.2.1 ATC Services................................................................................................................. 174<br />

6.2.2 The Structure of Controlled Airspace ............................................................................ 174<br />

6.2.2.1 Airways .............................................................................................................. 174<br />

6.2.2.2 Terminal Control Area ....................................................................................... 175<br />

6.2.2.3 Control Zone...................................................................................................... 175<br />

6.2.3 Air Traffic Control Services............................................................................................ 175<br />

6.2.4 Description of Air Traffic Services ................................................................................. 178<br />

6.2.5 Airspace Classifications ................................................................................................ 180<br />

6.3 Additional Air Navigation Services, Facilities and Providers .................................................. 184<br />

6.3.1 Flight Information Services and Alerting Services......................................................... 184<br />

6.3.2 Air Navigation Facilities ................................................................................................. 185<br />

6.3.3 Air Navigation Service (ANS) Providers........................................................................ 186<br />

Module Summary............................................................................................................................. 189<br />

Module 7 – Airplanes and Flight<br />

7.0 Airplanes and Flight................................................................................................................ 191<br />

7.1 Introduction to Airplanes and How They Fly........................................................................... 192<br />

7.1.1 Parts of an Airplane....................................................................................................... 192<br />

7.1.2 How Planes Fly.............................................................................................................. 196<br />

7.1.2.1 Gravity and Lift ................................................................................................... 196<br />

7.1.2.2 Drag and Thrust ................................................................................................. 197<br />

7.1.3 Changing Altitude and Direction.................................................................................... 198<br />

7.1.4 Flying an Airplane.......................................................................................................... 200<br />

7.1.5 Ready to Fly? ................................................................................................................ 201<br />

7.2 Today’s Airframe Manufacturers ............................................................................................ 204<br />

7.2.1 Manufacturing Companies ............................................................................................ 204<br />

7.2.2 Airbus Industrie – AI – FRANCE ................................................................................... 207<br />

7.2.3 The Boeing Company – USA ........................................................................................ 210<br />

7.2.4 Bombardier Aerospace Group – CANADA ................................................................... 213<br />

7.2.5 Embraer – Empresa Brasiliera de Aeronautica (EMB) – BRAZIL................................ 215<br />

7.3 Aircraft Types ......................................................................................................................... 218<br />

7.3.1 Types of Airliners........................................................................................................... 218<br />

7.3.1.1 Wide-body Jets................................................................................................... 218<br />

7.3.1.2 Narrow-body Jets ............................................................................................... 219<br />

7.3.1.3 Regional Airliners ............................................................................................... 219<br />

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7.3.2 ICAO Classifications...................................................................................................... 220<br />

7.3.3 Cabin Configurations..................................................................................................... 220<br />

Module Summary............................................................................................................................. 224<br />

Module 8 – Air Safety and Security<br />

8.0 Air Safety and Security........................................................................................................... 227<br />

8.1 Ensuring Safe Aircraft............................................................................................................. 228<br />

8.1.1 The Role of Regulatory Agencies.................................................................................. 228<br />

8.1.2 Manufacturer Responsibilities ....................................................................................... 231<br />

8.1.2.1 Meeting Airworthiness Requirements ................................................................ 231<br />

8.1.2.2 Safety Improvements ......................................................................................... 231<br />

8.1.2.3 Design Considerations ....................................................................................... 232<br />

8.1.3 Maintenance Procedures .............................................................................................. 234<br />

8.1.4 Airside Safety ................................................................................................................ 236<br />

8.1.4.1 Threats to Airside Safety .................................................................................... 236<br />

8.1.4.2 Safety Managements Systems........................................................................... 236<br />

8.1.4.3 Airport Design..................................................................................................... 237<br />

8.2 Safety in the Air ...................................................................................................................... 240<br />

8.2.1 Crew Responsibilities .................................................................................................... 240<br />

8.2.1.1 Pre-flight Inspection............................................................................................ 240<br />

8.2.1.2 Cabin Crew......................................................................................................... 241<br />

8.2.2 Culture of Safety............................................................................................................ 242<br />

8.2.3 Navigation Safety Aids .................................................................................................. 243<br />

8.2.3.1 Airport Lighting ................................................................................................... 244<br />

8.2.3.2 Instrument Landing Systems.............................................................................. 244<br />

8.2.3.3 Global Positioning Systems (GPS)..................................................................... 245<br />

8.3 Air Safety Issues..................................................................................................................... 247<br />

8.3.1 Natural Hasards and Weather Conditions..................................................................... 247<br />

8.3.1.1 Bird Strike........................................................................................................... 247<br />

8.3.1.2 Lightning ............................................................................................................. 248<br />

8.3.1.3 Ice and Snow...................................................................................................... 248<br />

8.3.1.4 Sand and Dust.................................................................................................... 248<br />

8.3.1.5 Volcanic Dust Particles....................................................................................... 249<br />

8.3.2 Component and System Failures .................................................................................. 250<br />

8.3.3 Human Factors as Causes............................................................................................ 252<br />

8.4 Accident and Incident Investigation........................................................................................ 255<br />

8.4.1 Why Study Accidents?................................................................................................... 255<br />

8.4.2 Procedures .................................................................................................................... 256<br />

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8.4.3 Investigative tools.......................................................................................................... 258<br />

8.4.4 The Flight Data Recorder .............................................................................................. 259<br />

8.4.5 The Cockpit Voice Recorder ......................................................................................... 259<br />

8.5 Security.................................................................................................................................... 261<br />

8.5.1 What Do We Mean by Aviation Security? ..................................................................... 261<br />

8.5.2 Response of ICAO......................................................................................................... 261<br />

Module Summary............................................................................................................................. 264<br />

Module 9 – Future of the Industry<br />

9.0 Future of the Industry ............................................................................................................. 267<br />

9.1 Predicted Growth of the Industry............................................................................................ 268<br />

9.1.1 Industry Overview......................................................................................................... 268<br />

9.1.1.1 The Leisure Market ............................................................................................ 268<br />

9.1.1.2 The Business Market.......................................................................................... 269<br />

9.1.1.3 Market Growth.................................................................................................... 269<br />

9.1.1.4 Decade of Disastrous Growth ............................................................................ 269<br />

9.1.2 Changes in the Industry ............................................................................................... 271<br />

9.1.2.1 The Drive towards Efficiency.............................................................................. 271<br />

9.1.2.2 Deregulation Intensified...................................................................................... 271<br />

9.1.2.3 Birth of the Airline Alliances................................................................................ 272<br />

9.1.2.4 New Services...................................................................................................... 272<br />

9.1.2.5 Arrival of the Low Cost Carriers (LCCs)............................................................. 272<br />

9.1.2.6 Projected Growth of Low Cost Carriers.............................................................. 273<br />

9.1.2.7 Future Growth..................................................................................................... 273<br />

9.2 Threats to the Airline Industry ................................................................................................ 275<br />

9.2.1 Financial Viability........................................................................................................... 275<br />

9.2.2 Fuel Prices..................................................................................................................... 276<br />

9.2.3 Fares ............................................................................................................................. 276<br />

9.2.4 Impact of Low Cost Carriers.......................................................................................... 277<br />

9.2.5 Capacity Management .................................................................................................. 277<br />

9.2.6 Taxes and Surcharges .................................................................................................. 278<br />

9.2.7 Health Issues................................................................................................................. 278<br />

9.2.8 Freight Shipments ......................................................................................................... 279<br />

9.2.9 Consolidation of Freight Forwarders ............................................................................. 279<br />

9.3 <strong>IATA</strong>’s Industry Priorities ........................................................................................................ 282<br />

9.3.1 <strong>IATA</strong>’s Role.................................................................................................................... 283<br />

9.3.2 Simplifying the Business ............................................................................................... 283<br />

9.3.2.1 E-Ticketing.......................................................................................................... 284<br />

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9.3.2.2 Common Use Self-Service (CUSS).................................................................... 284<br />

9.3.2.3 Bar-Coded Boarding Passes (BCBP) ................................................................ 284<br />

9.3.2.4 Radio Frequency ID (RFID)................................................................................ 285<br />

9.3.2.5 <strong>IATA</strong> E-freight..................................................................................................... 285<br />

9.3.3 <strong>IATA</strong>'s Additional Industry Priorities .............................................................................. 288<br />

9.3.3.1 Safety ................................................................................................................. 288<br />

9.3.3.2 Financial ............................................................................................................. 288<br />

9.3.3.3 Operations.......................................................................................................... 288<br />

9.3.3.4 Regulatory .......................................................................................................... 289<br />

Module Summary............................................................................................................................. 290<br />

Glossary ......................................................................................................................................... 293<br />

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