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Sunday, January 15, 2006

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SkyWest Airlines.

SkyWest Airlines: Non-Union Success Story
Growth has accelerated rapidly over the past five years, at Non-Union SkyWest Airlines.

"In 2000, SkyWest operated just 16 CRJs, according to Raymond James & Assoc. At the end of 2004, it was up to 137 CRJs (125 CRJ200s and 12 CRJ700s), including 28 added last year of which 24 were new and four were purchased from Independence Air. It will take a further 20 CRJ700s this year, a move that will require hiring 200 more pilots. Sixty-nine Brasilia turboprops round out the fleet."

"The carrier also enjoys 'the strongest balance sheet in the Regional airline industry,' according to RJ&A. Its long-term debt to capitalization ratio was 61% at Sept. 30, 2004, compared to an industry average of 92% among its peers. Long-term debt totaled $463.2 million at year end and it was sitting on a cash hoard of $550 million."

What follows, is the official statement from SkyWest Airlines, about why they have remained union-free for 30 years, and how that fact gives them a distinct advantage over much of their competition:

~~~~~~~~~~~~~~~

Our Union Free Statement

SkyWest Airlines has been union-free for over 30 years. It is our desire to remain so. Today, SkyWest is standing amidst the ruins of a once proud industry. Our success is our people. We have accepted the responsibility of open and honest communication. We have maintained an open-door policy that enables any employee access to anyone in management, from your supervisor to our CEO. We want you to be informed. And as SkyWest continues to grow, the continued empowerment of employees through education is what will not only preserve, but improve Our Culture.

We feel strongly that the long-term interests of all SkyWest employees can be best served by maintaining our current environment of open and honest communication without adding an unnecessary layer of outside third party bureaucracy. We should not compromise the environment we have worked so hard to create. The existence of a third party will undoubtedly change the relationship that we currently have of dealing directly with one another.

And while union organizers may want you to believe they have your best interest at heart, the truth is that unions are businesses that generate money by signing up new members and collecting dues. They do not provide wages, benefits, buildings and equipment, or any other asset necessary to keep our company in business. A union can only provide its members with what a company is willing to give. The truth is that a union only has two things it can guarantee its members: its right to strike and make its members pay dues and assessments.

History has taught us that powerful unions, particularly in our industry, do not hesitate to place their companies in financial peril -- ultimately costing thousands of hardworking men and women their jobs. Understand, this is not "just a pilot" issue. Union activity affects every single employee.

Our dedication to fairness in all that we do, coupled with an uncompromising commitment to quality, truly sets SkyWest apart as an airline and an employer. We believe in treating each employee with respect. We have continued to update our policies and procedures to ensure that you will be treated fairly and consistently. By working together, we have created an environment of competitive wages, good working conditions, and opportunity for both personal and professional growth. Together we have built SkyWest; and together we can continue to build a better SkyWest for our fellow employees and ourselves.



~~~~~~~~~~~~~~~~~

The Legacy Airlines are at a tremendous disadvantage in comparison to non-union airlines like JetBlue and SkyWest. The managements of those non-union carriers have a much greater range of options available to them, enabling them to keep their companies on a more efficient path and to ensure they are able to continue expanding, in a consistently profitable way.

Legacy Airlines, in contrast, have so many union work-rule millstones hanging about their necks, that their managements are not only saddled with much higher labor costs, but they are also very limited in their options. Being so constrained, often induces those managements to grasp for straws, as they try to find ways to make money for their airline.

In my view, that was a significant underlying factor in United's decision to attempt to acquire US Airways, in the year 2000. It proved to be a very costly mistake; one which probably never would have been made, had United not been saddled with a pilots' union like ALPA, led by the likes of Frederick Dubinsky.

Legacy Airlines have been unable to expand into smaller markets with smaller jets, like the CRJs, because of the highly restrictive "Scope" clauses in the union contracts of those millstone-laden carriers. Following that Dubinsky model, the ALPA pilots thought they were protecting their jobs, but in fact they were only making it harder for their own airlines to operate profitably, while at the same time, handing their competition the keys to the treasury.

As long as anyone is willing to accept the idea that wealth and abundance can be produced, just by union "solidarity" forcing the employer to capitulate to every irrational demand of the union bosses----without any regard to the realities in the Free-Market Place----then union jobs will continue to go the way of the Dodo Bird. Loyalty to one's peer group is a poor substitute for understanding the basic laws and fundamental facts of economics.

Any way you look at it, the economic model of ALPA and Frederick Dubinsky and Roger Hall has been an unmitigated disaster for United Airlines, and for all the other Legacy Airlines who have tried to follow that suicidal model, which has been leading them all down the bone-yard path to the tar pits, where the dinosaurs are laid to rest forever.

US Airways is in bankruptcy court for the second time. United has been there too, for over two years. Delta and Northwest are now filing too, for the same bankruptcy protection. One cannot help but wonder if American and Continental won't eventually be drug down that same path to oblivion.

Meanwhile JetBlue and SkyWest are continually expanding, hiring and making money. Southwest is too, because so far its management has been able to persuade its unions to behave in a responsible way, which recognizes the realities of the highly competitive Free-Market. Translated-----Southwest does not have the usual kinds of featherbedding millstones in its union contracts, which so hamstring the Legacy Airlines. And fortunately, SWAPA apparently hasn't yet been cursed with union "leaders" of the ilk of Frederick Dubinsky or Roger Hall. If that ever happens, and a majority of the SWAPA pilots buy into the siren song of such economic charlatans, then the heyday of Southwest Airlines will have passed, and they too will begin the trek down that bone yard road to the dinosaur tar pits.

Monday, January 09, 2006

JAPAN AIRLINES.

History

During the 1960s, Aeroflot operated Tokyo-Moscow flights in joint Aeroflot/JAL livery.The former Japan Air Lines was established in August 1951, with the government of Japan recognizing the need for a reliable air transportation system to help Japan grow in the aftermath of World War II. On October 25, using three Northwest Airlines Martin 2-0-2 aircraft, and Northwest crews, Japan Air Lines began serving several domestic cities from Tokyo.

In 1953, the new Japan Airlines, which was owned by Japanese government, was established and the former company was dissolved. Its first aircraft, a DC-3 named "Kinsei", was leased from Philippine Airlines. Japan Airlines, in addition to the 2-0-2's, used DC-3, DC-4, DC-6 and DC-7 during the 1950s. Towards the end of that decade, it started its first international service, to San Francisco.

In 1960, Japan Airlines bought their first jet, a DC-8. Soon after, they decided to re-equip their airline, using jet airplanes only. That decade, many new international destinations were established.

In the 1970s they bought the Boeing 747, the Boeing 727 and the McDonnell Douglas DC-10 to accommodate the ever growing list of international routes, both to its Asian neighbors, and around the world.

In the 1980s Japan Airlines performed special flights for the Crown Prince of Japan and the Princess, Pope John Paul II, and various Japanese prime ministers. During that decade they also began to be more promotionally aware, with plane models and other promotional items being produced in quantity. It also bought new Boeing 767 jets and retired the DC-8's and 727's. In 1987, Japan Airlines Co, Ltd was completely privatised.


JAL Boeing 747-400 in 1989-2002 colour schemeJapan Airlines began the 1990s with flights to help evacuate Japanese citizens from Iraq before the start of the Gulf War. In 1992, Japan Air Charters was established, and in 1997, an agreement with The Walt Disney Company was announced, making Japan Airlines the official airline of Disney Tokyo. That year also, JALExpress had been established, with Boeing 737 aircraft. Also in 1997, the airline had to fly the Japanese prime minister to Peru to help negotiate in the Tupac Amaru kidnapping case. Japan Airlines acquired Boeing 777's during that decade.


Japan Airlines Cargo Boeing 747-400 (JA402J) waiting for take-offJapanese airlines had kept the Big 3 (Japan Airlines, All Nippon Airways and JAS) structure for many years. But in 2001, Japan Air System (JAS) and Japan Airlines (JAL), the largest of the Big 3, agreed to merge.

On October 2, 2002, JAS and JAL established a new holding company which was called Japan Airlines System (日本航空システム) and they were reborn as the new Japan Airlines (JAL) group. Airplane liveries were changed to match the design of the new JAL group. At that time, the new JAL group was the sixth largest in the world by passengers carried and the third largest measured by revenue.

On April 1, 2004, Japan Airlines (old JAL) changed its name to Japan Airlines International and Japan Air System (JAS) changed its name to Japan Airlines Domestic. At the same time, all JAS flight codes, check-in desks and plane were unified into JAL. On June 26, 2004, Japan Airlines System was renamed to Japan Airlines Corporation to make the most of the JAL brand.

On 25 October 2005, Tokyo - JAL group decided to apply to join the airline alliance oneworld (JAL already has code sharing on several members of oneworld: American Airlines, British Airways, Cathay Pacific, Iberia and QANTAS.)

JALUX Inc., established 1962, is JAL's catering company which also does a variety of work for the company including the "De sky" line of snack foods, supplying JAL's 'Blue Sky' restaurants and 'JAL-DFS' shops, Aircraft fuel components, cabin services and In-flight duty-free. JALUX merged with JAS TRADING on January 2004 to form one complete company.

Japan Airlines is one of the most widely known companies by model aeroplane collectors, their planes being produced in mass quantities by Schabak, Wooster, Herpa, Flight Miniatures, Long Prosper, Dragon Wings, etc., etc.


JAL Boeing 747-400

Incidents and Accidents

In 1952, a Martin 2-0-2 of Japan Air Lines crashed, killing all 37 on board.
On August 12, 1985, Japan Airlines flight 123, a 747 bound for Osaka International Airport, Itami/Toyonaka, lost control and crashed into a mountain after takeoff from Tokyo International Airport, Ota, Tokyo; it is the worst single-aircraft disaster in history; 520 out of 524 people on board died (excludes an unborn baby who died).
On 22 January 2005 a Japan Airlines Boeing 777-200 aircraft (with 211 people on board) at Sapporo airport, Japan, began its take-off run without being cleared to do so and was told by air traffic control to abort, which it did. The fault was compounded by the failure of the captain to report the event, for which the airline was reprimanded by the ministry of land, infrastructure and transport (ref: Flight International, July 2005).
On August 12, 2005 metal fragments fell in a Fukuoka residential area from a JALways' DC-10 bound for Honolulu after an engine briefly caught fire, underlining JAL's recent poor safety record. A boy and a man were injured by fragments. The plane was forced to return to Fukuoka Airport and land there. The sight of flames coming from the engine was captured by a NHK film crew which happened to be recording because the service to Hawaii is soon to be withdrawn as it is unprofitable.


Onboard Entertainment

JAL and JAA are known for their onboard entertainment system called MAGIC. The system is updated by JAL Entertainment Network (JEN) and features credit card phone, multiple movies, destination guides with immigration card filling instructions, active airplane stats, games and more. There are three generations of the MAGIC system: MAGIC-I, MAGIC-II, and MAGIC-III. The latest MAGIC-III system which is installed in Boeing 767 and Boeing 777 aircraft (also available on select Boeing 747-400 aircrafts), provides Audio/Video On Demand (AVOD) entertainment to the passengers. Recently, MAGIC systems have had the duty-free shopping catalouge added , including flight crew recommendations and a video of specials avalible on your flight. Aircraft with MAGIC-I and MAGIC-II have movies that automatically start once the AVOD system is turned on once the aircraft reaches cruise level. Passengers can tune in at any time of the movie. All movies restart upon completion. When the aircraft is in the pushback, taxi, takeoff, ascension, descension, stacking, landing, taxi, and docking, all TV's in the cabin automatically tune into the video camera outside the airplane to provide "Pilot Vision" to the passengers. This feature is common on many Japanese airlines.

The JAL Group have their own inflight magazine called Skyward reflecting on the company motto. Before merger with JAS ( The current JAL Domestic), JAL's inflight magazine was called Winds. All of the JAL Group magazines are provided by JALUX.


Fleet

The Japan Airlines fleet consists of the following aircraft (at November 2005):

23 Boeing 737-400 (JAL Express/JTA)
2 Boeing 747-100B/SUD
5 Boeing 747-200B
10 Boeing 747-200F
11 Boeing 747-300
42 Boeing 747-400
2 Boeing 747-400F
3 Boeing 767-200
23 Boeing 767-300
13 Boeing 767-300ER (further 2 on order)
14 Boeing 777-200 (further 3 on order)
11 Boeing 777-200ER
8 Boeing 777-300
4 Boeing 777-300ER (further 9 on order)
18 McDonnell Douglas MD-81
8 McDonnell Douglas MD-87
16 McDonnell Douglas MD-90
28 Airbus A300-600R

The Boeing customer codes for Japan Airlines are x46 for international and x89 for domestic (used for former Japan Air System) (examples: 777-346ER, 777-289, etc).

Aircraft disposed of include 8 Boeing 737-400, 8 Boeing 747-100, 6 Boeing 747SR (one now being used as a NASA Shuttle Carrier aircraft), 19 Boeing 747-200, 5 Boeing 747-300 and 10 McDonnell Douglas MD-11 aircraft.

The Airbus A300s were actually acquired from Japan Air System, not directly from Japan Airlines, along with the MD-81, MD-87, MD-90, and their Boeing 777s.

In December 2004, Japan Airlines announced the selection of the Boeing 787 for its medium-size aircraft fleet. It is seeking 30 aircraft, with options on 20 more. Delivery is expected to start from 2008 and the aircraft will be used on domestic and international routes (ref: Airliner World, March 2005).

Japan Airlines confirmed an order for six new Boeing 767-300ER aircraft, three freighter and three passenger models, valued at approximately $800 million at list prices (ref:Airliner World, September 2005).

On October 31, 2005 Japan Airlines operated its last two DC-10 flights. One aircraft, JA8543, operating flight JL736 from Hong Kong International Airport to Narita International Airport, touched down at 16:05. Another aircraft, JA8541, operating flight JL952 from Incheon International Airport to Narita International Airport touched down at 16:37, marking the DC-10's last flight with the airline, after over 30 years of reliable operations with the airline.

Since 1984, Japan Airlines has been and is currently the largest Boeing 747 operator in the world.


Livery

The JAL livery is called the "Arc of the Sun." The livery features the motif of a rising sun on a creamy parchment colored background. JAL is a strong supporter of UNICEF and expresses its support by having a "We Support UNICEF" logo on each of the airline's aircraft.

JAL is known for adopting special liveries for individual aircraft. One 747, registration JA8908, carries an Adidas soccer livery. Another 747, registration JA8907, is the Matsui Jet, featuring the famous Japanese baseball player Hideki Matsui. The airline's Boeing 767-300, registration JA8253, is the Expo 2005 airplane. Various aircraft in the JAL fleet carry a Yokoso Japan logo supporting the Visit Japan campaign. During late 2005, Japan Airlines began using a Boeing 777 (registration JA8941), featuring Japanese actor Shingo Katori on one side, and television series Saiyuki, along with it's main character "Goku" on the other side.

JALways' fleet includes some colourful Boeing 747 and DC-10 aircraft with "Reso'cha" titles. These aircraft are used on charter flights to holiday destinations in the Pacific, such as Hawaii. Reso'cha is a marketing abbreviation for Resort Charter. Reso'cha planes were formerly known as JAL Super Resort Express.

JAL is actively repainting all it's aircraft with the new livery but can still see JAL, JAA and JALways aircraft in their old liveries.

JAL is also known for its numerous liveries featuring Tokyo Disneyland and Tokyo Disney Sea, as it is the official airline of the Tokyo Disney Resort. They sponsor the attraction, Star Jets, which feature a variation of the current livery on the ride vehicles. At one time there was more than 6 widebody aircraft painted with the special liveries.

BRITISH AIRLINES.

History

British Airways Boeing 757

Components

British Airways
British Airways Citiexpress
Franchisees
British Mediterranean Airways
Comair
GB Airways
Loganair
Sun Air
Destinations
British Airways destinations
British Airways franchise destinations
Heritage
Imperial Airways
British Airways Ltd
British European Airways (BEA)
British South American Airways
British Overseas Airways Corporation (BOAC)
Other
British Airways ethnic liveries
Timeline of British Airways
Speedbird


The airline's origins go back to the birth of civil aviation and the pioneering days after the First World War. On 25 August 1919 its forerunner company, Aircraft Transport and Travel (AT&T), launched the world's first daily international scheduled air service, between London and Paris. On 31 March 1924, Britain's four fledgling airlines - Instone, Handley Page, Daimler Airways (a successor to AT&T) and British Air Marine Navigation - merged to form Imperial Airways, which developed its Empire routes to Australia and Africa.

Meanwhile a number of smaller UK air transport companies had started flights. These merged in 1935 to form the original privately-owned British Airways Ltd. Following a government review Imperial Airways and British Airways were nationalised in 1939 to form the British Overseas Airways Corporation (BOAC). Post-war, BOAC continued to operate long-haul services, other than routes to South America - these were flown by British South American Airways, which was merged back into BOAC in 1949. Continental European and domestic flights were flown by a new airline, British European Airways (BEA).

The 1950s saw the world enter the passenger jet era - led by BOAC, with the De Havilland Comet flying to Johannesburg in 1952, halving the previous flight time. The birth of the mass package-holiday business meant changes for the airline industry. BEA met this by establishing BEA Airtours, which took off in 1970. In 1972 BOAC and BEA were combined under the newly formed British Airways Board, with the separate airlines coming together as British Airways in 1974. British Airways, simultaneously with Air France, inaugurated the world's first supersonic passenger service with Concorde in January 1976.

Privatisation

Sir John King, later Lord King, was appointed as Chairman in 1981 with the mission of preparing the airline for privatisation. King hired Colin Marshall as CEO in 1983. King was credited with turning around the loss-making giant into one of the most profitable air carriers in the world, boldly claiming to be "The World's Favourite Airline", while many other large airlines struggled. The airline's fleet and route map were overhauled in the early years of King's tenure, with brand and advertising experts being recruited to overhaul the airline's image. Over 23,000 jobs were shed in the early 1980s, though King managed the considerable trick of boosting staff morale and modernise operations at the same time. Lord King also recognised the importance of Concorde to the company's business strategy, and used the supersonic airliner to win business customers by guaranteeing a certain number of Concorde upgrades in return for corporate accounts with BA.

The flag carrier was privatised and floated on the London Stock Exchange in February 1987 by the Conservative government, with the initial share offering being 11 times oversubscribed. In April 1988 British Airways effected the controversial takeover of Britain's second-force airline British Caledonian, and in 1992 absorbed Gatwick-based carrier Dan-Air.


"Dirty tricks"

Soon after privatisation Richard Branson's Virgin Atlantic, which began with one route and one Boeing 747 in 1984, was beginning to emerge as a serious threat on some of BA's most lucrative routes. Following Virgin's highly publicised mercy mission to Iraq to fly home hostages of Saddam Hussein in 1991, King is reported to have told Marshall and his PA Director David Burnside to "do something about Branson" ¹. This began the campaign of "dirty tricks" that ended in Branson suing King and British Airways for libel in 1992. King countersued Branson and the case went to trial in 1993. British Airways, faced with likely defeat, settled the case, giving £500,000 to Branson and a further £110,000 to his airline; further, BA was to pay the legal fees of up to £3 million. Branson divided his compensation among his staff, the so-called "BA bonus".


British Airways Concorde, since retiredDuring the 1990s BA became the world's most profitable airline and trumpeted the slogan "The World's Favourite Airline." In 1992 Deutsche BA was established as a subsidiary operating in Germany. By the time it was sold in June 2003 DBA was operating 16 Boeing 737s and was the second-largest German domestic carrier, after Lufthansa.

Lord King stepped down as chairman in 1993 and was replaced by former deputy Colin Marshall, who initially combined the roles of CEO and Chairman. Bob Ayling, who would later take on the role of CEO, was appointed Managing Director by Marshall at that time. Lord King was appointed President, a role created specifically for him, and became President Emeritus in 1997, until his death in July 2005.

In 1995 BA formed British Asia Airways, a subsidiary based in Taiwan. British Asia Airways was set up due to political sensitivities, the Union Jack tailfin being replaced by Chinese characters. Many airlines followed the same practice, e.g. Qantas flew as "Australia Asia Airways" and KLM's operations became "KLM Asia". British Asia Airways ceased operation in 2001 as the airline suspend operation to Taiwan due to low yield.


Bob Ayling

In 1996 British Airways, with its newly appointed Chief Executive Bob Ayling, entered a period of turbulence. Increased competition, high oil prices and a strong pound hurt profits. BA management and trade unions clashed and the resulting disruption cost the company hundreds of millions of pounds. In 1997 Ayling dropped BA's traditional Union Flag tailfin livery in favour of world design tailfins, in an effort to change its image from a strictly British and aloof carrier to a more cosmopolitan airline. The move was not a success and Ayling slowed the process, eventually declaring the fleet would sport a dual livery; half a Union Flag design, half the world design tailfins. Ayling devoted a lot of time pursuing a merger with American Airlines, but this was ultimately unsuccessful due to the conditions placed on the deal by regulatory authorities, the most painful of which would have been the sacrificing of landing slots at Heathrow.

Positive news during Ayling's reign included cost savings of £750m and the establishment of the successful, but highly subsidised, Go in 1998. Go was a low-cost carrier intended to compete in the rapidly emerging "no-frills" segment. After four years of successful operations, the airline was sold off and merged with easyJet. Another efficiency sought by Ayling was the reduction of capacity, cancelling Boeing 747-400 orders in favour of the Boeing 777 and rationalising BA's short-haul fleet with an order for the efficient Airbus A319/A320/A321 family.


Rod Eddington

In 1999 British Airways reported a 50% slump in profits, its worst since privatisation. In March 2000 Bob Ayling was removed from his postion. British Airways announced Rod Eddington as his successor in May. Eddington set about cutting the workforce further, dramatically so after the slump caused by the September 11th attacks in 2001. In May 2001 Eddington announced the return of the Union Flag to the entire fleet, reversing his predecessor's rebranding exercise.

Marshall, who had been appointed a life peer in 1998, retired as Chairman in July 2004 and was replaced by Martin Broughton, former Chairman of British American Tobacco.

On 8 March 2005, Broughton announced that former Aer Lingus CEO Willie Walsh would take over from Rod Eddington upon his retirement in September 2005.

During the fiscal year ending 2005, BA carried some 35m passengers on revenue exceeding £7.8bn, posting a pre-tax profit of £415m. It employs 51,939 staff.


Willie Walsh

In September 2005 new CEO Willie Walsh announced changes to the management of British Airways, with the aim of saving £300 million by 2008, the cost of the move to Heathrow's Terminal 5. Walsh had shadowed his predecessor for four months prior to taking charge of the company.


Industrial action

Over the last 3 years British Airways employees have engaged in substantial strike action three times. Over 600 BA flights were grounded on 11 August 2005 - 12 August 2005, when baggage handlers, loaders, and cargo staff went on strike in support of laid-off catering workers.


Financial performance

Year ended Turnover (£m) Profit/(loss) before tax (£m) Net profit/(loss) (£m) Basic eps (p)
31 March 2005 7,813 415 251 23.4
31 March 2004 7,560 230 130 12.1
31 March 2003 7,688 135 72 6.7
31 March 2002 8,340 (200) (142) (13.2)
31 March 2001 9,278 150 114 10.5
31 March 2000 8,940 5 (21) (2.0)
31 March 1999 8,915 225 206 19.5
31 March 1998 8,642 580 460 44.7
31 March 1997 8,359 640 553 55.7
31 March 1996 7,760 585 473 49.4

Current Operations

British Airways Boeing 737-400British Airways is based at London Heathrow Airport in London, England. It also has a commanding presence at Gatwick and Manchester International Airport. BA has succeeded in dominating Heathrow to the point that the airport is commonly referred to as Fortress Heathrow within both the airline and its competitors.

As an incumbent airline, BA had grandfather rights to around 36% of takeoff and landing slots at Heathrow, many of which are used for the lucrative trans-Atlantic market. Some competitors, such as Virgin Atlantic, bmi and United Airlines, assert that this stifles competition and some political think-tanks recommend an auction of slots. In recent years British Airways has been buying slots from other airlines including United Airlines, SN Brussels and Swiss International Air Lines, and now owns about 42% of slots at Heathrow.

Some British Airways services are operated by various subsidiaries and franchisees:


Subsidiaries
British Airways Citiexpress

Franchisees

British Mediterranean Airways, UK, franchisee since 1997.
Comair, South Africa, franchisee since 1996.
GB Airways, UK, franchisee since 1 February 1995.
Loganair, UK, franchisee since July 1994.
Sun Air, Denmark, franchisee since 1 August 1996.
British Airways is pioneering the use of "flat beds" in the premium cabins on their long-haul routes and has the most flat beds of any airline on their aircraft. On 8 September 2004 British Airways announced that it was to sell its 18.5% stake in Qantas, but would continue their alliance (such as sharing revenue), particularly on the Kangaroo routes. Commentators have suggested that while the expected £425m from the sale will be used to reduce the airline's debt mountain it may also be used to fund expansion.

It owns a 9% stake in Spanish airline Iberia.

British Airways is a founding member of the oneworld airline alliance.


Incidents and Accidents

On the 24 June 1982, flight 009, a 747-200, G-BDXH, City of Edinburgh flew through a cloud of volcanic ash and dust from the eruption of Mount Galunggung, causing all four engines to fail. The aircraft managed to glide out of the dust cloud and restart three engines, allowing it to make an emergency landing at Jakarta.
On 10 June 1990, British Airways Flight 5390, a BAC 1-11 flight between Birmingham and Malaga, suffered a windshield blowout. The pilot was partially sucked out of the cockpit but was held back by the crew. The co-pilot landed the plane safely at Southampton with no fatalities.
On August 2, 1990- British Airways Flight 149 landed at Kuwait International Airport four hours after the Iraqi invasion of Kuwait, leading to the capture of the passengers and crew, and the destruction of the aircraft.
On 19 February 2005, the No 2 engine of a Boeing 747-400 (G-BNLG) surged and suffered internal damage just after take off from Los Angeles on a flight to London Heathrow with 16 crew and 351 passengers on board. The crew shut the engine down. They continued the climb and, having checked the performance figures, decided that continuing to London was possible. Because it was cleared for a lower transatlantic flight level than requested, the aircraft suffered a fuel shortage and had to divert to Manchester. The United States Federal Aviation Administration has been critical of the crew's decision, but there was no breach of regulations and BA has supported the crew decision (ref:Flight International, July 2005).
On 25 February 2005, a crew flying the same aircraft (G-BNLG) also had to shut an engine down, this time in the cruise from Singapore to London, and the crew again elected to continue. This time they landed without any further incident at their destination (ref: Flight International, July 2005).

Fleet

British Airways Airbus A319-100 (G-EUPO)
British Airways Airbus A319-100 (G-EUPU)Up until recently for its main fleet, BA had traditionally been a Boeing customer. This has been always been a subject of controversy, as many expect that as a British carrier it would be natural for BA to support the British manufacturing industry and buy Airbus jets (BAE Systems build all wings for Airbus jets and many Airbus subcontractors are based in the UK). The company has defended its decision by arguing that, with the exception of 29 of its 777 fleet, it has always equipped its Boeing aircraft with British-made Rolls-Royce engines. This goes back to the 1960s when the company ordered Boeing 707s - a condition was placed on the company that it used Rolls-Royce power for the new jets.

However, it has operated non-Boeing planes in the past mainly as a result of takeovers and joint agreements with other airlines. One example of this was planes acquired through the buyout of British Caledonian Airways in the 1980s; it successfully operated the Douglas DC-10 and Airbus A320 for a number of years. In the late 1990s British Airways placed its own first direct Airbus order, for over 100 A320/A319s to replace its own ageing fleet of Boeing 737s.

BA was an operator of the famous Aerospatiale-BAC Concorde supersonic airliner, with a daily service between Heathrow and New York JFK (although the original service was from London to Bahrain). Initially, Concorde was very much a financial burden, placed on the national carrier by the government, and attracted criticism from the press as a white elephant. However Lord King recognised the importance of Concorde to British Airways, and the one thing that everybody agreed was the charismatic value of the aircraft. BA used Concorde to win business customers, guaranteeing a certain number of Concorde upgrades in return for corporate accounts with the airline - a key factor in winning business from transatlantic competitors.

With the Paris Crash in 2000, followed by the 9/11 terrorist attacks the following year, coupled to escalating maintenance costs, the future of Concorde was limited — this despite an expensive upgrade. It was announced (on 10 April 2003) that, after 24 October 2003, they would cease scheduled services with Concorde, due to depressed passenger numbers. The last day of its Saturday-only London Heathrow to Barbados Concorde flight was on 30 August 2003.

The British Airways fleet consists of the following aircraft (at December 2005):

33 Airbus A319-100 (further 3 on order)
5 Airbus A320-100
21 Airbus A320-200 (further 3 on order)
7 Airbus A321-200
5 Boeing 737-300
18 Boeing 737-400
9 Boeing 737-500
57 Boeing 747-400
13 Boeing 757-200
21 Boeing 767-300ER
3 Boeing 777-200
40 Boeing 777-200ER

Future
The long-term replacement of the 767 fleet is likely to lead to a purchase of the Boeing 787 or Airbus A350. [1] British Airways' decision to replace its Boeing 747-400s will be viewed with interest, whether it selects the Airbus A380 or Boeing 747-8.


Tail fins

British Airways Boeing 767, featuring Ethnic art tailfin

The Blue Peter special-paint British Airways Boeing 757-200

Since its formation in 1974, though to a limited extent until all aircraft were repainted, British Airways aeroplanes carried a Union Flag scheme painted on their tail fins. In 1997, they began to be repainted (and the planes re-named) with abstract world images, Delft pottery or Chinese calligraphy for example, relating to countries they fly to. This caused problems with air traffic control: previously controllers had been able to tell pilots to follow a BA plane, but because they were each painted in different colours they were harder to identify.

Margaret Thatcher famously covered the tail fin of a model aircraft with the new design using her handkerchief at the 1997 Conservative Party conference. She claimed they made it look like a third world airline. "We fly the British flag, not these awful things."

In May 2001, chief executive Rod Eddington declared that all BA planes would be repainted with the Chatham Dockyard Union Flag, a design first used on Concorde.


World Cargo

BA is, through its subsidiary British Airways World Cargo, the world's fifth-largest cargo airline. BA World Cargo has extensive global reach through the British Airways scheduled network. In addition to the main fleet, BA World Cargo wet lease three Boeing 747-400F dedicated freighter aircraft from Atlas Air, one of which is presented in full British Airways World Cargo livery, as well as utilising space on dedicated freighters operated by other carriers on European services. Dedicated freighter services allow the airline to serve airports not currently connected to the scheduled network, such as London Stansted, Glasgow Prestwick, Frankfurt-Hahn, Vitoria and Seoul.

British Airways opened its £250m World Cargo centre, Ascentis, at Heathrow in 1999. As one of the largest and most advanced automated freight handling centres in the world, it contains a Special Handling Centre for unusual and premium cargo, and a Perishables Handling Centre for fresh produce, of which it handles over 80,000 t per year. BA World Cargo also handles freight at London's Gatwick and Stansted airports, and, through its partner British Airways Regional Cargo, at all of the main regional airports throughout the UK.


Other facts

British Airways Boeing 747-400British Airways and Air France were the only two Concorde operators.
British Airways was the first airline to implement full-flat beds in Business class, many airlines subsequently followed the practice.
The airline is the largest operator of the Boeing 747-400, with 57 aircraft. JAL has the largest fleet of 747s, but only 45 Series 400s.
British Airways aircraft generally use the Airline call sign "Speedbird" in ATC radio transmissions. On UK Domestic routes from Heathrow to Glasgow, Edinburgh and Manchester, the call sign "Shuttle" is used.
British Airways has featured prominently in recent James Bond films, most notably an air-air shot of a BA 747 in Die Another Day.
Boeing's airline code for BA is XXX-X36, i.e. 737-236, 747-436, 777-236.
British Airways' Frequent Flyer Program is one of the largest in the world, and is known as the Executive Club
In recent years, British Airways has transported Queen Elizabeth II and the British Prime Minister on official duties, using a dedicated Boeing 777 aircraft. Royal Air Force transports were traditionally used in such roles.
British Airways was, together with Virgin Atlantic, a premier partner of the London 2012 Olympic bid campaign. One of the airline's Boeing 747-400 aircraft became a "flying petition" for the games, with Prime Minister Tony Blair being the first to sign the aircraft. The official bid campaign video also featured BA and Virgin flight attendants 'competing' in a race to cross a road.
The music used on BA advertisements for many years is "Flower Duet" by Léo Delibes.

MALAYSIA AIRLINES.

Aircraft Engine.

Tradeoffs

Because of the complexities of flight, aircraft engines need to satisfy several requirements to sustain prolonged flights. These engines must be:

=lightweight, as a heavy engine decreases the amount of excess power available.
=small and easily streamlined; large engines with substantial surface area, when installed, create too much drag, wasting fuel and reducing power output.
=powerful, to overcome the weight and drag of the aircraft.
=reliable, as losing power in an airplane is a substantially greater problem than an automobile engine seizing. Aircraft engines operate at temperature, pressure, and speed extremes, and therefore need to operate reliably and safely under all these conditions.
=repairable, to keep the cost of replacement down. Minor repairs are relatively inexpensive.
=Unlike automobile engines, aircraft engines run at high power settings for extended periods of time. In general, the engine runs at maximum power for a few minutes during taking off, then power is slightly reduced for climb, and then spends the majority of its time at a cruise setting—typically 65% to 75% of full power. In contrast, a car engine might spend 20% of its time at 65% power accelerating, followed by 80% of its time at 20% power while cruising.

If a car engine fails you simply pull over to the side of the road. If the same occurs in an single-engine aircraft it will glide but, depending on the circumstances, may result in a fatal accident. For this reason the design of aircraft engines tend to favor reliability over performance. Even with this mindset, it took many years before the reliability was established to fly over the Atlantic or the Pacific Ocean [1].

Engine failure at all stages in flight is an important part of flight lessons for student pilots. Forced landings without power are practiced extensively over rural areas until the new pilot is proficient enough to handle such situation during a solo flight.

Long engine operation times and high power settings, combined with the requirement for high-reliability means that engines must have large engine displacement to minimize over-stressing the engine. The engine, as well as the aircraft, needs to be lifted into the air, meaning it has to overcome lots of weight. The thrust to weight ratio is one of the most important characteristics for an aircraft engine. A typical 250 hp engine weighs just 15% of the total aircraft weight when installed into a 3000 lb (1,400 kg) aircraft.

Aircraft engines also tend to use the simplest parts and include two sets of anything needed for reliability, including ignition system (spark plugs and magnetos) and fuel pumps. Independence of function lessens the likelihood of a single malfunction causing an entire engine to fail. Thus magnetos are used because they do not rely on a battery. Two magnetos were originally installed so a pilot can switch off a faulty magneto and continue the flight on the other—but, later, dual ignition was found to offer some detonation protection too. Similarly, a mechanical engine-driven fuel pump is often backed-up by an electric one.

Two engines are more attractive from a reliability angle than a single one, regardless of the fact that the additional systems decrease the reliability, statistically speaking. Many twin-engined aircraft are designed to be capable of at least a marginal climb on one engine, even carrying the maximum load at take-off. But by doubling the number of engines, the chance of one failing is at least doubled when statistics are considered. However, the chance of both engines failing at the same time is relatively small. Interestingly enough, if one engine DOES fail, the aircraft loses about 80% of its power, not just 50% (remember, one engine would then have to overcome the weight of the aircraft, the dead engine, and itself!) Frequently, the greater economy and simplicity of a single-engine aircraft is preferred over the extra power and speed, as well as finesse needed, to operate a twin engine, especially for private pilots.

Another difference between cars and aircraft is that the aircraft spend the vast majority of their time travelling at high speed. This allows aircraft engines to be air cooled, as opposed to requiring a radiator. In the absence of a radiator aircraft engines can boast lower weight and less complexity.

Aircraft operate at higher altitudes where significantly less air (oxygen) is available than at ground level. As engines need oxygen to burn fuel, an induction-assist mechanism—like a turbocharger or supercharger—is especially appropriate for aircraft use. This does bring along the usual drawbacks of additional cost, weight and complexity.


History

At one time all engine designs were new and there was no particular difference in design between aircraft and automobile engines. This changed by the start of World War I, however, when a particular class of air-cooled rotary engines became popular. These had a short lifespan, but by the 1920s a large number of engine designs were moving to the similar radial engine design. This combined air-cooled simplicity with large displacements and they were among the most powerful small engines in the world.

Both the rotary and radial engine have one drawback however, they both have very large frontal areas (see drag equation). As planes increased in speed and demanded better streamlining, designers turned to water-cooled inline engines. Throughout WWII the two designs were generally similar in terms of power and overall performance but some mature-design radials tended to be more reliable. After the war, in the USA, the water-cooled designs rapidly disappeared.

For the smaller application, notably in general aviation, a hybrid design in the form an air-cooled inline, almost always 4 or 6 cylinders horizontally opposed, is most common. These combine small frontal area with air-cooled simplicity, although they required careful installation in order to be effectively cooled, notably the rearmost cylinders. To make repairs practical, each cylinder is individually replaceable, as are each of the accessories (pumps, generator and magnetos).

Throughout most of the history of aircraft engine design, they tended to be more advanced than their automobile counterparts. High-strength aluminum alloys were used in these engines decades before they became common in cars. Likewise, those engines adopted fuel injection instead of carburetion quite early. Similarly, overhead cams were introduced, while automobile engines continued to use pushrods.

Today the piston-engine aviation market is so small that there is essentially no commercial money for new design work. Almost every engine flying is based on a design from the 1960s, or before, using original materials, tooling and parts. Meanwhile the relentless financial power of the automobile industry has continued improvement. A new car design is likely to use an engine designed in the last three years, build of alloys that did not exist more than five years ago and having ignition and other systems features that did not exist then either. Modern car engines require no maintenance at all (other than adding fuel and oil) for over 100,000 km, aircraft engines are now, in comparison and paradoxically, rather heavy, dirty and unreliable. Accordingly, some hobbyists and experimenters prefer to adapt automotive engines for their home-built aircraft, instead of using certified aircraft engines.

Over the history of the development of aircraft engines, the Otto cycle, that is, conventional gasoline powered engines have been by far the most common type. That is not because they are the best but simply because they were there first and type-certification of new designs is difficult.

Another promising design for aircraft use was the Wankel engine. The Wankel engine is about 1/2 the weight and size of a traditional four stroke cycle piston engine of equal power, and much lower in complexity. In this role the power to weight ratio is king, and the Wankel makes particularly good sense. Furthermore, due to the composition of the engine with an aluminium housing and a steel rotor, unlike a piston engine the engine will not seize when overheated, as the aluminium expands more than the steel; this adds a safety factor for aeronautical use. Considerable thinking on such designs started in the post-war era, but at the same time the entire industry felt that jets, often in the form of turboprops, would power everything from the biggest to smallest designs. In the end little work was actually carried out, much to the chagrin of many.

The diesel engine is another engine design that has been examined for aviation use. In general diesel engines are more reliable and much better suited to running for long periods of time at medium power settings—this is why they are widely used in trucks for instance. Several attempts to produce diesel aircraft engines were made in the 1930s but, at the time, the alloys were not up to the task of handling the much higher compression ratios used in these designs. They generally had poor power-to-weight ratios and were uncommon for that reason. Improvements in diesel technology in automobiles (leading to much better power-weight ratios), the diesel's much better fuel efficiency (particularly compared to the old designs currently being used in light aircraft) and the high relative taxation of gasoline compared to diesel in Europe have all seen a revival of interest in the concept. As of May 2004 one manufacturer, Centurion, is already selling certified diesel aircraft engines for light aircraft, and other companies have alternative designs under development. It remains to be seen whether these new designs will succeed in the marketplace but they potentially represent the biggest change in light aircraft engines in decades.


See also

Hyper engine
Air safety
List of aircraft engines

Airport Security.

Airport security

Bags are scanned by X-ray machine, people are scanned by metal detectorsAirport security refers to the techniques and methods used in protecting airports and by extension aircraft from crime and terrorism.

Large numbers of people pass through airports every day. Such a large gathering of people presents a natural target for terrorism and other forms of crime due to the number of people located in a small area. Similarly, the high concentration of people on larger airliners and the potental high lethality rate of attacks on aircraft provide an alluring target for terrorism. Airport security provides a first line of defence by attempting to stop would-be attackers from bringing weapons or bombs into the airport. If they can succeed in this, then the chances of these devices getting on to aircraft is greatly reduced. As such, airport security serves two purposes: To protect the airport from attacks and crime and to protect the aircraft from attack.

Contents [hide]
1 Airport enforcement authority
2 Process and equipment
3 Notable incidents
4 Airport Security by Country
4.1 Canada
4.2 France
4.3 India
4.4 Singapore
4.5 United Kingdom
4.6 United States
5 See also
6 External links



Airport enforcement authority

While some countries may have uniform protection at all of their airports, in other countries like the US, the protection is controlled at the state or local level. The primary personnel will vary and can include:

A police force hired and dedicated to the airport
A branch (substation) of the local police department stationed at the airport
Members of the local police department assigned to the airport as their normal patrol area
Members of a country's military
Members of a country's airport protection service
K-9 services for explosive detection, drug detection and other purposes
When additional personnel are required, then several of the groups listed above can be used and as required supplemented by other resources that include:

Officers from the normal agency, but in larger numbers using personnel not normally assigned to the airport
Security guards
Paramilitary forces
Reserve military forces

Process and equipment

Many past tragedies were the result of travelers allowed or able to carry either weapons or items that could be used as weapons on board aircraft so that they can hijack the plane. Travelers are quickly but efficiently screened by a metal detector. More advanced explosive detection machines are being used in screening passengers. Baggage must be screened to prevent the carrying of bombs aboard an aircraft. X-ray machines are often used to speed this process. Explosive detection machines can also used for both carry on and checked baggage.

Generally people are screened through airport security into the concourse{s}, where the gates are all located. This area is often called a secure or sterile area. Passengers are discharged from airliners into the sterile area so that they usually will not have to be rescreened if boarding a domestic flight, however they are still subject to search at any time. For those airports that have sit down eating establishments, a common feature is that they will use plastic cutlery and paper cups rather than metal cutlery and glasses made out of glass, lest they be used as a weapon.

In some countries, specially trained individuals may engage passengers in a conversation to detect threats rather then relying on equipment to find threats.


Notable incidents

The world's most lethal failure of airport security to date was the September 11th attack on the World Trade Center and The Pentagon using hijacked jetliners which killed nearly 3000 people. The deadliest airline catastrophe resulting from an onboard bomb was Air India Flight 182, which killed 329 people.

Another notable failure was the 1994 bombing of Philippine Airlines Flight 434, which turned out to be a test run for a planned terrorist attack called Operation Bojinka. The explosion was small, killing one person, and the plane made an emergency landing. Operation Bojinka was discovered and foiled by Manila police in 1995.

On May 30, 1972 three members of the Japanese Red Army undertook a terrorist attack, popularily called the Lod Airport massacre, at the Lod Airport, now known as the Ben Gurion International Airport, in Tel Aviv. Firing indiscriminately with automatic firearms and throwing grenades, they managed to kill 24 people and injure 78 others before being neutralized (one of them through suicide). One of the three terrorists, Kozo Okamoto, survived the incident.

The Rome and Vienna airport attacks in December 1985 were two more instances of airport security failures. The attacks left 20 people dead when gunmen threw grenades and opened fire on travelers at El Al ticket counters.



Airport Security by Country

Canada

All restrictions involving airport security are determined by the Canadian Air Transport Security Authority (CATSA). Since the September 11, 2001 attacks, airport security has tightened in Canada in order to prevent any attacks on Canadian soil.

France

French security has been stepped up since the terrorist attacks in France in 1986. In response France established the Vigipirate program. After a brief drop of the program it was reinstated in 1991. The program involves using troops to reinforce local security. The program increases requirements in screenings and ID checks.

India

India stepped up its airport security after the 1999 Kandahar hijacking. The Central Industrial Security Force, a paramilitary organisation is in charge of airport security. Terrorist threats and narcotics are the main threats in Indian airports. Another problem that some airports face is the profilaration of slums around the airport boundaries in places like Mumbai. Before you board the aeroplane, there is liable to be a hand-search of your hand-luggage.


Singapore

An Aetos auxiliary police officer stationed outside the Departure Hall of Terminal 2, Singapore Changi AirportSecurity for the country's two international passenger airports, comes under the purview of the Airport Police Division of the Singapore Police Force, although resources are concentrated at Singapore Changi Airport where scheduled passenger traffic dominate. Seletar Airport, which specialises in handling non-scheduled and training flights, is seen as posing less of a security issue. Since the September 11, 2001 attacks, and the naming of Changi Airport as a terrorism target by the Jemaah Islamiyah, the airport's security has been stepped up. Roving patrol teams comprising of two soldiers and a police officer armed with machine guns patrol the terminals at random.

Assisting the state organisations, are the security services provided by the ground handlers, namely that of the Singapore Airport Terminal Services's SATS Security Services, and the Aetos Security Management Private Limited, formed from a merger of the Changi International Airport Services's airport security unit and that of other companies to become a single island-wide auxiliary police company. These officers man check-in counters to screen luggage, control movements into restricted areas, and so forth.

Since 2005, an upgrade in screening technology and rising security concerns led to all luggage-screening processes to be conducted behind closed-doors. Plans are also in place to install over 400 cameras around the airport to monitor passenger activity around the clock and to check on suspicious parcels and activity to prevent bomb attacks similar to the 2005 Songkhla bombings in Southern Thailand where Hat Yai International Airport was targeted. Tenders to incorporate such a system was called in late September 2005 [1].

United Kingdom

The Department for Transport (DfT) is the heart of airport security in the United Kingdom. Along with the Home Office in September 2004, it started an initiative called the Multi Agency Threat and Risk Assessment (MATRA), which was initially piloted at five of the United Kingdom's major airports - Heathrow, Birmingham, East Midlands, Newcastle and Glasgow. Following successful trials, the scheme has now been rolled out across 44 airports. [2]

Since the September 11th attacks in New York, the United Kingdom has been assessed as a high risk country due to its support of the United States both in its invasion of Afghanistan and Iraq.

Currently there are limits as to the weight of hand luggage (regardless of what it contains), and the amount of hand luggage that can be taken on board. All bags are screened via X-ray before being put on the plane. All passengers must walk through metal detectors. Human airport security has also been increased. There are also the usual checks of passports.

There are a number of routes being considered to further improve airport security:

Biometrics - The use of bodily features to identify a person (fingerprints, eye scans, face scans).
Advanced CCTV cameras - Programmed to detect "odd behaviour", for example, someone running through usually calm areas of an airport or jumping over barriers.
Advanced X-Ray machines - Further developments in X-ray technology have meant that an entire 360 degree X-ray can be done of a person and can see under clothes, right down to the skin and bones.
Various criticisms have been brought up about these methods. Biometrics is extremely unreliable and, in some cases, easily faked, and biometrics incorporated into CCTV cameras which detect odd behaviour have raised the question "What exactly is odd behaviour?" Many people run in an airport, and excited children display what may be considered odd behaviour. The latest X-Ray machines (Backscatters) are planned to be tested in several U.S. airports through 2005 and at London's Heathrow Airport (ext. link). Due to their accuracy in looking under someone's clothes — genitalia have been displayed during tests, meaning it would be equal to that of a strip search — they will have to be carried out by someone of the same sex in accordance with strict rules. It is unlikely that everyone going through an airport would be liable to such a search.


United States

Prior to the 1970s American airports had minimal security arrangements to prevent aircraft hijackings. Screening measures were introduced starting in the late 1960s after several high-profile hijackings.

Sky marshals were introduced in 1970 but there were insufficient numbers to protect every flight and hijackings continued to take place. Consequently in late 1972, the FAA required that all airlines begin screening passengers and their carry-on baggage by January 5, 1973. This screening was generally contracted to private security companies.

The September 11, 2001 attacks prompted even tougher regulations, such as limiting the number of items passengers could carry onboard aircraft and generally requiring all passengers to present a government issued photo ID.

The Aviation and Transportation Security Act generally required that by 19 November 2002 all passenger screening must be conducted by Federal employees. As a result, passenger and baggage screening is now provided by the Transportation Security Administration (TSA), part of the Department of Homeland Security.


See also

Airline security
Airport security repercussions due to the September 11, 2001 attacks
Category:Airliner bombings
Category:Deliberate airliner crashes
Category:Airliner hijackings

Rolls Royce Company.

Rolls-Royce is a set of companies, all deriving from the British automobile and aero-engine manufacturing company founded by Henry Royce and C.S. Rolls in 1906. The companies are:

-Rolls-Royce plc, by far the most significant in economic terms, is a British engineering firm specializing in turbine-based products, particularly aircraft engines, but has recently added marine propulsion and energy systems to its portfolio, providing a wide range of civil and military engineering products and services.

-Rolls-Royce Motor Cars Limited, a new manufacturer of luxury automobiles, owned by BMW, which started deliveries of its single model, the Phantom, in January 2003 (see below).

-Bentley Motors is the continuation of the original Rolls-Royce automobile division. Since 1998 the company has been owned by the Volkswagen Group. Rolls-Royce and Bentley cars have shared much mechanically since the 1931 takeover of Bentley by Rolls-Royce, often differing in little other than the radiator grille. Confusingly, from 2003 the company is no longer allowed to produce cars called Rolls-Royce, the trademarks being licensed to BMW, rather than to Volkswagen.

-Nicknames for Rolls-Royce cars are "Rolls", "Roller" and "Double R", although in Derby (where the headquarters of Rolls-Royce plc are located), the firm is universally known as "Royce's". The term "The Rolls-Royce of x" is often used informally (Cadillac is the American version of the term) to describe anything that is the best of its type. The company is aggressive at protecting its trademarks whenever commercial use of the term is mentioned. (One noted example was a coachbuilder marketing the Custom Cloud - which used a Chevrolet Monte Carlo with Rolls-Royce cues. The company was forced to shut down production after a heated lawsuit.)

Rolls-Royce is a set of companies, all deriving from the British automobile and aero-engine manufacturing company founded by Henry Royce and C.S. Rolls in 1906. The companies are:

Rolls-Royce plc, by far the most significant in economic terms, is a British engineering firm specializing in turbine-based products, particularly aircraft engines, but has recently added marine propulsion and energy systems to its portfolio, providing a wide range of civil and military engineering products and services.

Rolls-Royce Motor Cars Limited, a new manufacturer of luxury automobiles, owned by BMW, which started deliveries of its single model, the Phantom, in January 2003 (see below).

Bentley Motors is the continuation of the original Rolls-Royce automobile division. Since 1998 the company has been owned by the Volkswagen Group. Rolls-Royce and Bentley cars have shared much mechanically since the 1931 takeover of Bentley by Rolls-Royce, often differing in little other than the radiator grille. Confusingly, from 2003 the company is no longer allowed to produce cars called Rolls-Royce, the trademarks being licensed to BMW, rather than to Volkswagen.

Nicknames for Rolls-Royce cars are "Rolls", "Roller" and "Double R", although in Derby (where the headquarters of Rolls-Royce plc are located), the firm is universally known as "Royce's". The term "The Rolls-Royce of x" is often used informally (Cadillac is the American version of the term) to describe anything that is the best of its type. The company is aggressive at protecting its trademarks whenever commercial use of the term is mentioned. (One noted example was a coachbuilder marketing the Custom Cloud - which used a Chevrolet Monte Carlo with Rolls-Royce cues. The company was forced to shut down production after a heated lawsuit.)

History

In 1884 Frederick Henry Royce started an electrical and mechanical business. He made his first car, a "Royce", in his Manchester factory in 1904. He was introduced to Charles Stewart Rolls in a Manchester hotel on the May 4 of that year, and the pair agreed a to deal where Royce would manufacture cars, to be sold exclusively by Rolls. A clause was added to the contract, stipulating the cars would be called "Rolls-Royce". The company was formed on March 15, 1906, and moved to Derby in 1908.

The Silver Ghost (1906-1925) was the model responsible for the company's early great reputation. It had a 6-cylinder engine. 6173 were built. In 1921, the company opened a second factory in Springfield, Massachusetts, in the United States to help meet demand there. A further 1701 "Springfield Ghosts" were built there. This factory operated for 10 years, closing in 1931. Its chassis was used as a basis for the first British armoured car deployed in both World wars.

During 1931, the company acquired rival car maker Bentley, whose finances were unable to weather the Great Depression. From then until 2002, Bentley and Rolls-Royce cars were often identical apart from the radiator grille and minor details.

The company's first aero engine was the Eagle, built from 1914. Around half the aircraft engines used by the Allies in World War I were made by Rolls-Royce. By the late 1920s, aero engines made up most of Rolls-Royce's business.

Henry Royce's last design was the Merlin aero engine, which came out in 1935 although he had died in 1933. This was a development subsequent to the R engine, which had powered a record-breaking Supermarine S6B seaplane to almost 400mph in the 1931 Schneider Trophy. The Merlin was a powerful V12 engine and was fitted into many World War II aircraft: the British Hawker Hurricane, Supermarine Spitfire, De Havilland Mosquito (twin-engined), Avro Lancaster (4-engine), Vickers Wellington (2-engine); it also transformed the American P-51 Mustang into possibly the best fighter of its time, its Merlin engine built by Packard under license. Over 160,000 Merlin engines were produced.

Rolls-Royce and Bentley car production moved to Crewe in 1946, and also Mulliner Park Ward, London, in 1959 as the company started to build bodies for its cars for the first time—previously it had only built chassis, leaving the bodies to specialist coachbuilders. For the rest of the automotive history, see sections below.

In the post-World War II period Rolls-Royce made significant advances in gas turbine engine design and manufacture. The Dart and Tyne turboprop engines were particularly important enabling airlines to cut journey times within several continents whilst jet airliners were introduced on longer services. The Dart engine was used in Argosy, Avro 748, Friendship, Herald and Viscount aircraft, whilst the more powerful Tyne powered the Atlantic, Transall, Vanguard and the SRN-4 hovercraft. Many of these turboprops are still in service.

Amongst the jet engines of this period was the RB163 Spey which powers the Trident, BAC 1-11, Grumman Gulfstream II and Fokker F28.

During the late 50's and 60's there was a significant rationalisation of the British aero-engine manufacturers, culminating in the merger of Rolls-Royce and Bristol Siddeley in 1966 (Bristol Siddeley had itself resulted from the merger of Armstrong-Siddeley and Bristol in 1959). Bristol, with its principal factory at Filton, near Bristol, had a strong base in military engines, including the Olympus, which was chosen for Concorde.

Financial problems caused largely by development of the new RB211 turbofan engine led—after several cash subsidies—to the company being nationalized by the Heath government in 1971. (This delay has been blamed for the failure of the technically advanced Lockheed TriStar to succeed in the airliner marketplace, when it was beaten to launch by its competitor, the Douglas DC-10.) In 1973 the automobile business was spun off as a separate entity, Rolls-Royce Motors. The main business of aircraft and marine engines remained in public ownership until 1987, when it was privatised as Rolls-Royce plc, one of many privatisations of the Thatcher government.

In 1980 Rolls-Royce Motor Cars was acquired by Vickers. In 1998 Vickers sold the company on to Volkswagen (see below). A year later Rolls-Royce plc acquired Vickers plc for £576m.

Today Rolls-Royce engines continue to power many of the world's civil and military aircraft, and the company has been particularly effective in reducing noise and adverse emissions from its aviation products, anticipating international regulations arising from community campaigns and improved environmental understanding.

Unfortunately, the managing director of BMW announced on 8 May 2005, that the sales of Rolls-Royce cars had fallen by 26% in only 6 months. BMW will seek to sell the company if the problems continue.


Rolls-Royce cars 1945-1998

The Rolls-Royce logo.The major events in the company's history were:

1965: launch of the modern Silver Shadow.
1971: nationalization of the combined aero-engine and car company.
1973: privatization of the car division as Rolls-Royce Motor Cars.
1980: Rolls-Royce Motor Cars acquired by Vickers.
Main cars in this period:

Silver Dawn, 1949-1955.
Silver Cloud, 1955-1966.
Silver Shadow, 1965-1980. This was the first Rolls-Royce with a monocoque chassis. Started with a 6.23 L V8 engine, later expanded to 6.75 L. This shared its design with the Bentley T-series.
Camargue, 1975-1986 with a Pininfarina body
Silver Spirit, 1980-1994. This shared its design with the Bentley Mulsanne.
Corniche, 1971-1996 (generations I - IV)
Bentley models were produced mostly in parallel with the above cars. The Bentley Continental coupés (produced in various forms from the mid-1950s to the mid-1960s) did not have Rolls-Royce equivalents. Very expensive Rolls-Royce Phantom limousines were also produced. In this period other luxury car makers, such as Mercedes-Benz, BMW and (much later) Lexus, made many technical advances combining sporting abilities with high levels of comfort; this left Rolls-Royces looking old-fashioned in many ways.


The VW and BMW deal

In 1998 Vickers decided to sell the Rolls-Royce automobile business. Although Volkswagen Group also made offers for the company, the leading contender seemed to be BMW, who already supplied engines and other components for Rolls-Royce and Bentley cars. However their final offer of £340m was outbid by VW, who offered £430m.

This was far from the end of the story though. Rolls-Royce plc, the aero-engine maker, decided it would license certain essential trademarks (the Rolls-Royce name and logo) not to VW, but to BMW, with whom it had recently had joint business ventures. VW had bought rights to the "Spirit of Ecstasy" mascot and the shape of the radiator grille, but it lacked rights to the Rolls-Royce name in order to build the cars. Likewise, BMW lacked rights to the grille and mascot. BMW took out the option on the trademarks, licensing the name and "RR" logo for £40m, a deal that many commentators thought was a bargain for possibly the most valuable property in the deal. VW claimed that it had only really wanted Bentley anyway.

BMW and VW arrived at a solution. For the period from 1998 to 2002, BMW would continue to supply engines for the cars and would allow use of the names, but this would cease on January 1, 2003. On that date, only BMW would be able to name cars "Rolls-Royce", and VW's former Rolls-Royce/Bentley division would only build cars called "Bentley". Rolls Royce's convertible, the Corniche, ceased production in 2002.

The British press, particularly the tabloids, expressed consternation that this symbol of British excellence was being sold to the Germans, and in such an undignified manner.


Rolls-Royce cars from 1998
-1998-2002 Silver Seraph - This shared its design with the Bentley Arnage, which sold in much greater numbers.
-1992-2003 Bentley Continental R - This 6.75 L 400bhp car ended production and has now been superseded by the Continental GT.
-1995-2003 Bentley Azure - This 2-dr convertible was Bentley's most expensive model, with about half of the models being customized by Mulliner.
-2000-2002 Corniche - This 2-dr convertible shared its design with the Bentley Azure and was the most expensive Rolls-Royce until the introduction of the 2003 Phantom.
-2003 Phantom - Launched in January 2003 at Detroit's North American International Auto Show, this is the first model of Rolls-Royce Motor Cars Limited, a BMW subsidiary having no technical or corporate connection with the original Rolls-Royce company, apart from the trademarks mentioned above. The car has a 6.75 L V12 engine from BMW, but most other components are unique to the car. Most parts are made in Germany, but the assembly and finishing is in a new factory in Goodwood, Sussex. The price starts at around £250,000. It is available in normal and extended wheelbase.

Prototype
Rolls-Royce 100EX

Cars

Rolls-Royce Camargue
Rolls-Royce Corniche
Rolls-Royce Phantom
Rolls-Royce Silver Ghost
Rolls-Royce Silver Cloud
Rolls-Royce Silver Seraph
Rolls-Royce Silver Shadow

Airline Industry.

Industry overview

The scale and scope of airline companies are from those with a single airplane carrying mail or cargo, through full-service international airlines operating many hundreds of airplanes in various types. Airline services can be categorized as being intercontinental, intracontinental, regional or domestic and may be operated as scheduled services or charters.

These variations in the types of airline companies,their operating scope,and the routes they serve,makes analysis of the airline industry somewhat complex. Nevertheless, some patterns have emerged in the last 50 years of experience:

The general pattern of ownership has gone from government owned or supported to independent, for-profit public companies. This occurs as regulators permit greater freedom, in steps that are usually decades apart. This pattern has not been completed for all airlines in all regions.

The demand for air travel services is derived demand. That is, it depends on other things: business needs for cargo shipments, business passenger demand, leisure passenger demand, all influenced by macroeconomic activity in the markets under study. These patterns are highly seasonal, and often day-of-week, time-of-day, and even directionally variable.

Notwithstanding these demand patterns, the overall trend of demand has been consistently increasing. In the 1950's and 1960's, annual growth rates of 15% or more were common. Annual growth of 5-6% persisted through the 1980's and 1990's. Growth rates are not consistent in all regions, but certainly areas where deregulation provided more competition and greater pricing freedom resulted in lower fares and sometimes dramatic spurts in traffic growth. The U.S., Australia, Japan, Brazil, Mexico, and other markets exhibited this trend.
The industry is cyclical. Four or five years of poor performance are followed by five or six years of gradually improving good performance. But profitability in the good years is generally low, in the range of 2-3% net profit after interest and tax. It is in this time that airlines begin paying for new generations of airplanes and other service upgrades they ordered to respond to the increased demand. Since 1980, the industry as a whole has not even earned back the cost of capital during the best of times. Conversely, in bad times losses can be dramatically worse.
As in many mature industries, consolidation is a trend, as airlines form new business combinations, ranging from loose, limited bilateral partnerships to long-term, multi-faceted alliances of groups of companies, to equity arrangements between companies, to actual mergers or takeovers. Since governments often restrict ownership and merger between companies in different countries, we see most consolidation taking place within a country. In the U.S., over 200 airlines have been merged, taken over, or simply gone out of business since deregulation began in 1978. Many international airline managers are actively lobbying their governments to permit greater consolidation, in order to achieve higher economies of scale and greater efficiencies.

Early development of airlines in the U.S.

Following World War I, the United States found itself swamped with aviators. Many decided to take their war-surplus aircraft on barnstorming campaigns, performing acrobatic maneuvers to woo crowds. In 1918, the United States Postal Service won the financial backing of Congress to begin experimenting with air mail service, initially using Curtiss Jenny aircraft that had been procured by the United States Army for reconnaissance missions on the Western Front. The Army was the first to fly these missions, but quickly lost the contract when they proved to be too unreliable. By the mid-1920s, the Postal Service had developed its own air mail network, based on a transcontinental backbone between New York, New York and San Francisco, California. To supplant this service, they offered twelve contracts for spur routes to independent bidders: the carriers that won these routes would, through time and mergers, evolve into Braniff Airlines, American Airlines, United Airlines (originally a division of Boeing), Trans World Airlines, Northwest Airlines, and Eastern Airlines, to name a few.

Passenger service during the early 1920s was sporadic at best: most airlines at the time were focused on carrying bags of mail. In 1925, however, Ford Motor Company bought out the Stout Aircraft Company and began construction of the all-metal Ford Trimotor, the first successful American airliner. With a 12-passenger capacity, it made passenger service potentially profitable. Air service was seen as a supplement to rail service in the American transportation network.

At the same time, Juan Trippe began a crusade to create an air network that would link America to the world, and he achieved this goal through his airline, Pan American World Airways, with a fleet of flying boats that linked Los Angeles to Shanghai and Boston to London. Pan Am was the only U.S. airline to go international before the 1940s, and quickly became a symbol of the potential of the American airline industry.

With the introduction of the Boeing 247 and Douglas DC-3 in the 1930s, the U.S. airline industry was generally profitable, even during the Great Depression. This trend continued until the beginning of World War II.

Early development of airlines in Europe

The Imperial Airways Empire Terminal, Victoria, London. Trains ran from here to flying boats in Southampton, and to Croydon AirportThe first countries in Europe to embrace air transport were France, Germany and the Netherlands.

In 1919 KLM was founded, still the oldest carrier operating under its original name. The first flight transported two English passengers to Schiphol, Amsterdam from London in 1920. Like other major European airlines of the time (see France and the UK below), KLM's early growth depended heavily on the needs to service links with far-flung colonial possessions (Dutch Indies). It is only after the loss of the Dutch Empire that KLM found itself based at a small country with few potential passengers, depending heavily on transfer traffic, and was one of the first to introduce the hub-system to facilitate easy connections.

France began an air mail service to Morocco in 1919 that was bought out in 1927, renamed Aéropostale, and injected with capital to become a major international carrier. In 1933, Aéropostale went bankrupt, was nationalized and merged with several other airlines into what became Air France.

The German airline industry began with Lufthansa in 1926, which, unlike most other airlines at the time, became a major investor in airlines outside of Europe, founding Varig and Avianca. German airliners built by Junkers, Dornier, and Fokker were the most advanced in the world at the time. The peak of German air travel came in the mid-1930s, when Nazi propaganda ministers approved the start of commercial zeppelin service: the big airships were a symbol of industrial might, but the fact that they used flammable hydrogen gas raised safety concerns that culminated with the Hindenburg disaster of 1937.

United Kingdom's flag carrier during this period was Imperial Airways, which became BOAC (British Overseas Airlines Co.) in 1939. Imperial Airways used huge Handley-Page biplanes for routes between London, the Middle East, and India: images of Imperial aircraft in the middle of the Rub'al Khali, being maintained by Bedouins, are among the most famous pictures from the heyday of the British Empire.

Development of airlines post-1945

As governments met to set the standards and scope for an emergent civil air industry toward the end of the war, it was no surprise that the U.S. took a position of maximum operating freedom. After all, U.S. airline companies were not devastated by the war, as European companies and the few Asian companies had been. This preference for "open skies" operating regimes continues, within limitations, to this day.

World War II, like World War I, brought new life to the airline industry. Many airlines in the Allied countries were flush from lease contracts to the military, and foresaw a future explosive demand for civil air transport, for both passengers and cargo. They were eager to invest in the newly emerging flagships of air travel such as the Boeing Stratocruiser, Lockheed Constellation, and Douglas DC-6. Most of these new aircraft were based on American bombers such as the B-29, which had spearheaded research into new technologies such as pressurization. Most offered increased efficiency from both added speed and greater payload.


In the 1950s, the De Havilland Comet, Boeing 707, Douglas DC-8, and Sud Aviation Caravelle became the first flagships of the Jet Age in the West, while the Soviet Union bloc countered with the Tupolev Tu-104 and Tupolev Tu-124 in the fleets of state-owned carriers such as Aeroflot and Interflug. The Vickers Viscount and Lockheed L-188 Electra inaugurated turboprop transport.

The next big boost for the airlines would come in the 1970s, when the Boeing 747, McDonnell Douglas DC-10, and Lockheed L-1011 inaugurated widebody ("jumbo jet") service, which is still the standard in international travel. The Tupolev Tu-144 and its Western counterpart, Concorde, made supersonic travel a reality. In 1972, Airbus began producing Europe's most commercially successful line of airliners to date. The added efficiencies for these aircraft were often not in speed, but in passenger capacity, payload, and range.

With deregulation in the U.S. beginning in 1978, barriers to entry were lowered for new entrants. Typically, a new wave of start-ups would enter during downturns in the normal 8-10 year business cycle. At that time, they find aircraft, financing, hangar and maintenance services, training all relatively inexpensive, and laid off staff from other companies eager and willing to take a job with the new company.

Alas, as the business cycle returned to normalcy, major airlines were able to dominate their routes through aggressive pricing and additional capacity offerings, often swamping the new startup. Only America West Airlines (now known as USAirways) has remained as a significant survivor from this new entrant era, as dozens, even hundreds, have gone under.

In many ways, the biggest winner in the deregulated environment was the air passenger. Indeed, the U.S. witnessed an explosive growth in demand for air travel, as many millions who had never or rarely flown before became regular fliers, even joining frequent flyer loyalty programs and receiving free flights and other benefits from their flying. New services and higher frequencies meant that business fliers could fly to another city, do business, and return the same day, for almost any points in the country. Air travel's advantages put intercity bus lines under pressure, and most have withered away.

By the 1980's, almost half of the total flying in the world took place in the U.S., and today the domestic industry operates over 10,000 daily departures nationwide.

Toward the end of the century, a new style of low cost airline was seen, offering a consistent, often high-quality product, using new aircraft models, at a price that was well-received. JetBlue, AirTran Airways, and other companies represented a serious challenge to legacy carriers, as their counterparts in Europe, Canada, and Asia did to legacy carriers in those regions. Their commercial viability also represented a serious cost threat to employees at legacy airlines, as they set the standard for wage rates in the industry that were a fraction of the prevailing wage.

Thus the last 50 years of the airline industry have varied from reasonably profitable, to devastatingly depressed. As the first major market to deregulate the industry in 1978, U.S. airlines have experienced more turbulence than almost any other country or region. Today, airlines representing approximately one-half of total U.S. seat capacity are operating under Chapter 11 bankruptcy provisions.

Regulatory considerations

Government regulation

Many countries have national airlines that are owned and operated by the government. Even fully privatized airlines are subject to a great deal of government regulation for economic, political, and safety concerns. Airline labor actions, for instance, are often halted by government intervention in order to protect the free flow of people, communications, and goods between different regions without compromising safety.

The United States, Australia, and to a lesser extent Brazil, Mexico, the European Union, and Japan have "deregulated" their airlines. In the past, these governments dictated airfares, route networks, and other operational requirements for each airline. Since deregulation, airlines have been largely free to negotiate their own operating arrangements with different airports, enter and exit routes easily, and to levy airfares and supply flights according to market demand.

The entry barriers for new airlines are lower in a deregulated market, and so the U.S. has seen hundreds of airlines start up (sometimes for only a brief operating period). This has produced far greater competition than before deregulation in most markets, and average fares tend to drop 20% or more, spurring new sources of demand. The added competition, together with pricing freedom, means that new entrants often take market share with highly reduced rates that, to a limited degree, full service airlines must match. This is a major constraint on profitability for established carriers, which tend to have a higher cost base.

As a result, profitability in a deregulated market is uneven for most airlines. These forces have caused some major airlines to go out of business, in addition to most of the poorly established new entrants.

International regulation

Singapore Airlines Boeing 747Groups such as the International Civil Aviation Organization establish worldwide standards for safety and other vital concerns. Most international air traffic is regulated by bilateral agreements between countries, which designate specific carriers to operate on specific routes. The model of such an agreement was the Bermuda Agreement between the US and UK following World War II, which designated airports to be used for transatlantic flights and gave each government the authority to nominate carriers to operate routes.

Bilateral agreements are based on the "freedoms of the air," a group of generalized traffic rights ranging from the freedom to overfly a country to the freedom to provide domestic flights within a country (a very rarely granted right known as cabotage). Most agreements permit airlines to fly from their home country to designated airports in the other country: some also extend the freedom to provide continuing service to a third country, or to another destination in the other country while carrying passengers from overseas.

In the 1990s, "open skies" agreements became more common, which take many of these regulatory powers from state governments and open up international routes to further competition. Open skies agreements have met some criticism, particularly within the European Union, whose airlines would be at a comparative disadvantage with the United States' because of cabotage restrictions.

Economic considerations

Although many countries continue to operate state-owned or parastatal airlines, most large airlines today are privately-owned and are therefore governed by microeconomic principles in order to maximize shareholder profit.

Financing

Airline financing is quite complex, since airlines are highly leveraged operations. Not only must they purchase (or lease) new airline bodies and engines regularly, they must make major long-term fleet decisions with the goal of meeting the demands of their markets while producing a fleet that is relatively economical to operate and maintain. Compare Southwest Airlines and their reliance on a single airplane type (the Boeing 737 and derivatives), with the now bankrupt Eastern Airlines which operated 17 different aircraft types, each with varying pilot, engine, maintenance, and support needs.

A second financial issue is that of hedging oil and fuel purchases, usually second only to labor in its relative cost to the company but with the fuel price touching $70/barrel it has become biggest part of total airlines expenses.While hedging instruments can be expensive, they can easily pay for themselves many times over in periods of increasing fuel costs, such as in the 2000-2005 period.

Operating costs

In a mature industry with low fare new entrants and tiny operating margins, it is imperative that airline managers identify controllable costs.

Full-service airlines have a high level of fixed and operating costs in order to establish and maintain air services: labor, fuel, airplanes, engines, spares and parts, IT services and networks, airport equipment, airport handling services, sales distribution, catering, training, insurance, and other costs. Thus all but a few cents on the dollar in ticket sales is paid out to a wide variety of external providers or internal cost centers.

Moreover, the industry is structured so that airlines often act as tax collectors. Airline fuel is untaxed however due to a series of treaties existing between countries. Ticket prices include a number of fees, taxes, and surcharges they have little or no control over, and these are passed through to various providers. Airlines are also responsible for enforcing government regulations. If airlines carry passengers without proper documentation on an international flight, they are responsible for returning them back to the originating country.

Analysis of the 1992-1996 period shows that every player in the air transport chain is far more profitable than the airlines, who collect and pass through fees and revenues to them from ticket sales. While airlines as a whole earned 6% return on capital employed (2-3.5% less than the cost of capital), airports earned 10%, catering companies 10-13%, handling companies 11-14%, aircraft lessors 15%, aircraft manufacturers 16%, and global distribution companies more than 30%. (Source: Spinetta, 2000, quoted in Doganis, 2002)

In contrast, Southwest Airlines has been the most profitable of airline companies since 1970. Indeed, some sources have calculated Southwest to be the best performing stock over the period, outperforming Microsoft and many other high performing companies. The chief reasons for this are their product consistency and cost control.

The widespread entrance of a new breed of low cost airlines beginning at the turn of the century has accelerated the demand that full service carriers control costs. Many of these low cost companies emulate Southwest Airlines in various respects, and like Southwest, they are able to eke out a consistent profit throughout all phases of the business cycle.

As a result, a shakeout of airlines is occurring in the U.S. and elsewhere. United Airlines, US Airways (twice), Delta Air Lines, and Northwest Airlines have all declared Chapter 11 bankruptcy, and American has barely avoided doing so. Alitalia, Scandinavian Airlines System, SABENA, Japan Air System, Air Canada, Ansett Australia, and others have flirted with or declared bankruptcy since 2000, as low cost entrants enter their home markets as well. Some argue that it would be far better for the industry as a whole if a wave of actual closures were to reduce the number of "undead" airlines competing with healthy airlines while being artificially protected from creditors via bankruptcy law.

Ticket sales

Airlines assign prices to their services in an attempt to maximize profitability. To do this well requires yield management technology and pricing flexibility.

They use differentiated pricing, a form of price discrimination, in order to sell air services at varying prices simultaneously to different segments. Factors influencing the price include the days remaining until departure, the current booked load factor, the forecast of total demand by price point, competitive pricing in force, and variations by day of week of departure and by time of day.

A complicating factor is that of origin-destination control ("O&D control"). Someone purchasing a ticket from say, Melbourne to Sydney for $A200 is competing with someone else who wants to fly Melbourne to Los Angeles through Sydney on the same airplane, and who is willing to pay $A1400. Should the airline prefer the $A1400 passenger, or the $A200 passenger + a possible Sydney-Los Angeles passenger willing to pay $A1300? Airlines have to make hundreds of thousands of similar pricing decisions daily in their markets.

In contrast, low fare carriers usually offer straightforward, preannounced, simple prices. They can do this by quoting prices for each leg of a trip; passengers simply add them together to construct a full journey.

The advent of advanced computerized reservations systems in the late 1970s, most notably Sabre, allowed airlines to easily perform cost-benefit analyses on different pricing structures, leading to almost perfect price discrimination in some cases (that is, filling each seat on an aircraft at the highest price that can be charged without driving the consumer elsewhere). The intense nature of airfare pricing has led to the term "fare war" to describe efforts by airlines to undercut other airlines on competitive routes.

Computers also allow airlines to predict, with some accuracy, how many passengers will actually fly after making a reservation to fly. This allows airlines to overbook their flights enough to fill the aircraft while accounting for "no-shows," but not enough (in most cases) to force paying passengers off the aircraft for lack of seats. Since an average of 1/3 of all seats are flown empty, stimulative pricing for low demand flights coupled with overbooking on high demand flights can help reduce this figure.


Related topics

-Price discrimination
-Travel class
-Yield management


Airport operations

Where an airline has established an engineering base at an airport then there may be considerable economic advantages in using that same airport as a preferred focus (or "hub") for its scheduled flights.

In view of the congestion apparent at many international airports, the ownership of slots at certain airports (the right to take-off or land an aircraft at a particular time of day or night) has become a significant tradeable asset in the portfolios of many airlines. Clearly take-off slots at popular times of the day can be critical in attracting the more profitable business traveler to a given airline's flight and in establishing a competitive advantage against a competing airline. If a particular city has two or more airports, market forces will tend to attract the less profitable routes, or those on which competition is weakest, to the less congested airport, where slots are likely to be more available and therefore cheaper. Other factors, such as surface transport facilities and onward connections, will also affect the relative appeal of different airports and some long distance flights may need to operate from the one with the longest runway.


Business-to-business relations

Code sharing is the most common type of airline partnership; it involves one airline selling tickets for another airline's flights under its own airline code. An early example of this was Japan Airlines' code sharing partnership with Aeroflot in the 1960s on flights from Tokyo to Moscow: Aeroflot operated the flights using Aeroflot aircraft, but JAL sold tickets for the flights as if they were JAL flights. This practice allows airlines to expand their operations, at least on paper, into parts of the world where they cannot afford to establish bases or purchase aircraft.

Since airline reservation requests are often made by city-pair (such as "show me flights from Chicago to Dusseldorf"), an airline who is able to code share with another airline for a variety of routes might be able to be listed as indeed offering a Chicago-Dusseldorf flight. The passenger is advised however, that Airline 1 operates the flight from say Chicago to Amsterdam, and Airline 2 operates the continuing flight (on a different airplane, sometimes from another terminal) to Dusseldorf. Thus the primary rationale for code sharing is to expand one's service offerings in city-pair terms so as to increase sales.

Virtually all international airlines practice code sharing.

A more recent development is the airline alliance, which became prevalent in the 1990s. These alliances can act as virtual mergers to get around government restrictions. Groups of airlines such as the Star Alliance, oneworld, and SkyTeam coordinate their passenger service programs (such as lounges and frequent flyer programs), offer special interline tickets, and often engage in extensive codesharing (sometimes systemwide). These are increasingly integrated business combinations-- sometimes including cross-equity arrangements-- in which products, service standards, schedules, and airport facilities are standardized and combined for higher efficiency. One of the first airlines to start an alliance with another airline was KLM, who partnered with Northwest Airlines. Both airlines later entered the SkyTeam alliance after the fusion of KLM and Air France in 2004.

Often the companies combine IT operations, buy fuel, or purchase airplanes as a bloc in order to achieve higher bargaining power. However, the alliances have been most successful at purchasing invisible supplies and services, such as fuel. Airlines usually prefer to purchase items visible to their passengers to differentiate themselves from local competitors. If an airline's main domestic competitor flies Boeing airliners, then the airline may prefer to use Airbus aircraft regardless of what the rest of the alliance chooses.


Customs and conventions

Each operator of a scheduled or charter flight uses a distinct airline call sign when communicating with airports or air traffic control centers. Most of these call-signs are derived from the airline's trade name, but for reasons of history, marketing, or the need to reduce ambiguity in spoken English (so that pilots do not mistakenly make navigational decisions based on instructions issued to a different aircraft), some airlines and air forces use call-signs less obviously connected with their trading name. For example, British Airways uses a Speedbird call-sign, named after the logo of its predecessor, BOAC.


Airline personnel

The various types of airline personnel include:

-Flight crews, responsible for the operation of aircraft while airborne. Flight crew members include:
-Pilots (captain and first officer: some older aircraft also require flight engineers and/or navigators)
-Flight attendants (led by a purser on larger aircraft)
-In-flight security personnel on some airlines (most notably El Al)
-Ground crews, responsible for operations at airports. Ground crew members include:
-Airframe and powerplant technicians
-Avionics technicians
-Baggage handlers
-Rampers
-Gate agents
-Ticket agents
-Passenger service agents (such as airline lounge employees)
-Flight dispatchers
-Reservations agents, usually (but not always) at facilities outside the airport
-Most airlines follow a corporate structure where each broad area of operations (such as maintenance, flight operations, and passenger service) is supervised by a vice president. Larger airlines often appoint vice presidents to oversee each of the airline's hubs as well. Airlines also tend to employ considerable numbers of lawyers to deal with regulatory procedures and other administrative tasks.


See also

-Air safety
-Airport security — no longer a responsibility of the airlines.
-Cargo airline
-Charter airline
-Commuter airline
-Low-cost carrier
-Airlines at the movies
-Airliners.net
-1000 Airlines in Color
-Airline timetable
-Red-eye flight
-Transportation Security Administration
-Federal Aviation Administration
-IATA — industry standards organization


Lists

-List of largest airlines
-List of airlines — A fairly comprehensive listing
-List of accidents and incidents on commercial airliners
-List of national airlines
-List of defunct airlines
-Timeline of airline bankruptcies



References

"Flying Off Course: The Economics of International Airlines," 3rd edition. Rigas Doganis, Routledge, New York, 2002. "The Airline Business in the 21st Century." Rigas Doganis, Routledge, New York, 2001.
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