Economies Of Scale In Airlines Management Essay

Economies Of Scale In Airlines Management Essay Abstract The following report is aimed at examining the economies of scale concept and strategies in the airline industry. This document is divided into several pieces which discuss the impact of the economies of scale on the main aspects of the airline industry. The last section of the document concludes. Introduction The financial aim of firms is to increase the shareholders capital (Atril, P., Mc Laney E., 2008). Business management, then, have to either optimize asset utilization or reduce firms costs. Current economic situation have managed industries to achieve historic levels of asset optimization. Therefore, special emphasis had been put in cost reduction strategies during the last decade (Akan, M., Ata, B., Lariviere, M. A., 2011). Airline companies were one of the industries which suffered, almost immediately, the effect of these new market conditions. To cope with this scenario, the industry implemented several cost saving strategies; among them the economies of scale'(EoS). The following document is aimed at examining the term EoS and analysing how applicable the concept is to major carriers/airlines. The document is divided into eight pieces. The first discusses how the EoS applies to the airline industry. The remained sections comment on how the EoS affects: the airlines purchasing process, managerial procedures, marketing, technology usage, consolidation, and the open skies strategy. The last section concludes. Economies of scale in airlines EoS can be defined as any cost reductions, responding to increased demand for output, moving along a given, downward-sloping long run cost curve (Grieve, R. H., 2010). In other words, the demand allows firms, in this case airlines, to distribute costs over a greater number of products/services. Airlines have put in place several strategies to increase the number of flights. Among them: ticket-selling process optimization, in-flight meal reduction/suppression, alliances, and consolidations (Harvey, G., 2009). EoS concept assumes that increasing returns emerge at the level of the firm. However, some authors claim that EoS does contribute to cost reductions, but turnover growth does not generally manifest itself in this manner. Empirical evidence has shown that EoS only helped those airlines which do not lose their identity when demand increases. That is, Airlines which do not lose the control of the service delivery even they rely in a complex provider structure. Following this train of thought, EoS are of little importance in accounting for increasing returns, since these return rates are attributable to other factors such as external economies or industrial differentiation (Grieve, R. H., 2010). A successful example of EoS implementation is Star Alliance. Star Alliance is a network of 24 member airlines. Lufthansa and United airlines have registered an important growth in its passenger airline group during 2010 (DATAMONITOR, 2010). Whereas, a failed implementation, MexicanaClick, a low cost airline which was property of the second largest Mexican carrier (Mexicana), did not produced the expected results (BBC, 2010). The EoS effects in purchasing processes The implementation of EoS has forced airlines to change their business model. Traditionally, ticket selling was made in two main forms: over the airline counter or via an agent. Information Technologies (IT) have modified this process. Customer can directly make reservations and buy tickets without by themselves. Therefore, ticket agents have evolved to electronic system which provided the function of searching, reserving, and selling tickets making the purchasing process more accurate, fast, and reliable (Singh, A.Kr., Das, D., 2010). In the same manner, EoS has managed airlines to establish stronger relationships with their suppliers. For instance, the supply IT systems have allow airlines to avoid intermediaries in the requisition of resources since mid 80s, therefore, their logistic costs have decreased (Caves, D. W., et al, 1984). Investments in these matters have allowed Lufthansa to be the third largest airlines of Europe, and the worlds fifth largest airline in terms of overall passengers (Singh, A.Kr., Das, D., 2010). EoS and managerial procedures Outsourcing is the most recurrent strategy of the EoS. By outsourcing activities, the airline allows market forces to reduce the costs of subcontractors who offer for the business (Harvey, G., 2009). However, some author claim that high specialization, in providers, jeopardize business continuity of the outsourced firm (Grieve, R. H., 2010). Nowadays, airline employees are based in different parts of the world, sometimes in places where salaries and benefits are lower than their airline-home based colleagues. In this manner, airlines have also relocated business functions to take advantage of lower wages and social charges incurred in some countries. For instance, British Airways relocated its ticket processing function to New Delhi (Harvey, G., 2009). EoS and marketing Marketing function has also been affected by EoS. Alliances have switched this function to major airlines. Major airlines are responsible for the marketing trips for routes which are composed of international and local courses. In this manner, major companies deliver the international legs of the trip and regional airlines the local ones. When the complete journey is made by two major companies, the role of major and regional firms are switched. That is, the airline which delivers the international leg is responsible for the marketing duties of that trip and vice versa. Additionally, these functions are, most of the times, outsourced. The flight Atlanta-Barcelona is a good example. British Airways is responsible for the marketing of that route, but it only delivers the track from Atlanta to London. The second leg, London-Barcelona is delivered by Iberia; whereas in the route Barcelona-Atlanta, these functions are switched (Wright, C. P., et al, 2010). In the case of regional or small companies, marketing function is totally absorbed by the major company, since regional/small firms do not have the required infrastructure to perform this task (Forbes, S. J., Lederman, M., 2010). Technology in airlines IT systems are the most popular EoS strategy. They have not only changed the airlines purchasing process, but also have optimized the occupation and improved the communication with providers (Pilarski, A., 2005). However, that is not enough. Energy represents one of the biggest costs of the airlines. Air France-KLM and Air China reported that fuel costs accounted for almost 39% of its global costs in the fiscal year 2009 (DATAMONITOR, 2010). Thus, better engine technology, logistic, and route planning system will help the airlines to reduce these costs. Airlines have not been able to apply EoS to aircraft technology since they have a higher dependency in two main providers: Airbus and Boeing (DATAMONITOR, 2010). Generally speaking, the whole industry efficiency depends upon technological advances and cost improvement that these two companies may achieve. Therefore, it can be said that all technology which does not directly depend upon airlines is already optimized. Air France-KLM and Delta are a good example of technological optimization since some of their process like luggage registering and check-in can be done by the customer himself avoiding long queues. Consolidation of the airline industry Consolidation is also a well known EoS strategy. Consolidation is mainly aimed at reducing costs by combining mature and efficient processes into one unique entity (Oum, T. H., et al, 1995). Some authors claim that consolidations make airlines to increase their market share. However, Empirical evidence has shown that market share remains stable. For instance, in the 70s five US airlines controlled 87% of the global market. In 2003, none of these five airlines exist, although the share of the top-10 airlines in all traffic was 86% (Pilarski, A., 2005). On the other hand, consolidations are long and complex processes due to tax and aeronautical regulations. Alliances have been a optional strategy for consolidations. Alliances is formed by any two airlines that exchange interline passengers and that have a proration agreement for the revenue collected from the sale of interline itineraries. In this manner, an airline can expand its destinations and, therefore, increase its revenues. In 2006, 59% of all worldwide available seat miles were flown by airlines belonging to one of the three largest international alliances: Star, SkyTeam, or oneworld. Alliance activity is expected to continue growing (Wright, et al, 2010). Therefore, alliances seem to be the right strategy for the industry. Open skies strategy The open skies strategy consists on allowing airlines to fly within one country, that is, no restriction in local services. In this fashion, an airline may design routes to cover local routes and directly compete with regional firms. The agreement between US and the EU allows airlines to reduce costs of share codes and to improve their costing schema. European airlines which are already consolidated with American ones can operate as one entity, because they do not have restrictions to operate in both regions and vice versa. However, European Court of Justice has found that this agreement is breaking the law, thus, some amendments have to be done to this agreement (Yu-Chun, C., et al, 2009). Open skies strategy is not a direct result of the EoS, but a mean to achieve it. This strategy was created to impulse airline industry in the 1940s. Thus, agreements like that in other regions will allow airlines to reduce their costing schema and to increase their market participation. Conclusions Airline industry is the foundation stone of the current global commerce. Its high efficiency has allowed firms to sell their products in other regions with competitive prices. On the other hand, this industry is a facilitator for some others. Its relevance has been exposed during natural disasters when airports are blocked and products cannot be transported. Current economy cannot be understood without air transportation. The challenge of airlines, now, is to find creative ways to continue their optimization and profitable continuity. Airline industry allows us not only to reach any part of the world, but also to have a competitive and trustable economic system.

Mid-Semester Coursework Assignment

City University of Hong Kong School of Law LW3902 The Law Relating to Companies Mid-Semester Coursework Assignment Semester B, 2012/2013 Instructions to Students: 1. The assignment is worth 50% of the overall mark for this course. The total word limit is 1,500 words, excluding footnotes and bibliography. You must do a word count and indicate the number of words on the cover page. If a paper exceeds the allowable word limit, only the first 1,500 words will be read and marked. 2. Your answers must be double spaced, and typewritten in 12 point, Times New Roman font.Failure to comply with this format will result in a penalty of five (5) marks. 3. Indicate the course code and title, your name, student number, seminar section, and lecturer’s name on the cover page of your assignment. 4. The deadline for submission is Friday 15 March 2013 at 5 pm. Additional instructions on the submission of your coursework assignment will be provided to you on Blackboard / in class. 5. You must stri ctly adhere to the policy of City University of Hong Kong on plagiarism, which is a serious academic offence. Suspected plagiarism may be subject to disciplinary action.You may discuss your work with others, but you must provide your own answers. In case of doubt as to what amounts to plagiarism, please consult your lecturer. All coursework assignments will be reviewed on Turnitin for plagiarism and originality. 6. Any sources for your answers must be footnoted in the paper. You should cite authority (i. e. cases and/or statutes) to support your legal arguments, and these sources must be acknowledged. 7. Examples of proper citation: Case: Liu Hon Ying v Hua Xin State Enterprise (HK) Ltd [2003] 3 HKLRD 347 Statute: s. 75(1) of the Companies Ordinance (Cap 32) 8. Extension to the deadline for submitting the assignment may be granted only in exceptional circumstances. Prior to obtaining any extension to the deadline, you must first approach your lecturer well in advance with a reason a nd supporting documentation for the request. 9. Any late submissions without permission will incur a penalty of 5 marks per day. For example, for a 2-day delay, a student’s mark may be reduced from 80 marks to 70 marks. No assignment will be accepted after 22 March 2013. 1Instructions: Answer both questions. Question 1 (50%) Lee used to work as a chef at Golden Wok of Fortune, a famous dim sum restaurant in Mong Kok, Kowloon. During his employment, Lee gained a lot of experience in the art of making, preparing and serving dim sum. In particular, Lee learnt the secret ingredients for the restaurant’s special sauce, which made its dim sum items so popular. Since he was a child, Lee had dreamed of starting his own dim sum business, and after many years of dedicated service to Golden Wok of Fortune, Lee decided to leave the restaurant.However, Lee’s employment contract with the restaurant contained a non-competition clause which forbade him from setting up a competi ng dim sum business in Mong Kok within 1 year of termination of employment. It also contained a confidentiality clause which prohibited him from disclosing the ingredients of any recipes that Lee had learnt in the course of his employment. To circumvent these restrictions, Lee incorporated a catering company called Fragrant Kitchen Ltd. specializing in the preparation and sale of dim sum items for office parties and other special events.The head office of the company was based in Shatin, but had branches located in Mong Kok and Tsim Sha Tsui. Lee appointed himself CEO of the company, and was the only director and shareholder. The products of Fragrant Kitchen Ltd. were very popular because of its special sauce, which tasted suspiciously similar to that of Golden Wok. Lee also embarked on a very successful marketing campaign, with the motto: â€Å"Enjoy excellent dim sum in the comfort of your own office or home. Don’t come to us, we will come to you! Due to the attractive pri ces offered by Lee’s new company, many of Golden Wok’s previous customers stopped patronizing Golden Wok. Golden Wok has since become aware of Lee’s connection with Fragrant Kitchen, and is considering legal action against Lee. Advise Golden Wok. Question 2 (50%) Michael and Joshua, both of whom are freelance interior decorators, decided to go into business together in 1990. Michael contributed HK$500,000, a vehicle and some supplies and equipment to the business. Joshua did not contribute any money or assets, but agreed to work full time for the business.Michael and Joshua did not sign any partnership agreement. In the course of their long collaboration, Michael paid Joshua a monthly wage of HK $16, 000, and also paid himself out of the business bank account. Only Michael had signing authority on the business bank account. Joshua was very dedicated to the business and all of his customers were impressed with his decorating skills. Michael, on the other hand, pl ayed a largely managerial role in the business and left most of the decorating work to Joshua.Michael pocketed 2 all of the profit generated by Joshua’s decorating work, but re-invested some of the money in the business over the years. In 2011, Michael acquired a new office building for the business, which Joshua helped decorate and furnish. In 2013, after 23 years of working side by side, the relationship between the two men began to sour. Joshua now wishes to be acknowledged as a partner and claims to be entitled to 50% of the business’s assets. Does a partnership exist? Advise Joshua. 3

Competency Statement Essay

To advance physical and intellectual competence†¦ It is essential to the growth and development of every child to advance their physical and intellectual needs. Preschool age children have a short attention span. They learn by example, and learn by activities that are interesting to them. I keep their minds fresh by including fun games in the weekly lesson plan that improves their physical, cognitive and creative development. I do this on a daily basis. I sing songs, read books and talk about shapes, colors, numbers and letters. I encourage all children to be active, especially, during outside play. I provide the children with opportunities to develop their upper body strength by rolling balls, swinging, and throwing bean bags. I also focus on running, jumping, and balancing to help strengthen their lower bodies. At the center, we come up with all sorts of active games to build up both gross and fine motor skills. I included a game called â€Å"Sleeping Giants† into my weekly plan that is a combination of pretend play and physical activity. The â€Å"Sleeping Giants† game stimulates imagination and multi-directional movement while strengthening their heart, lungs, muscles, and agility. During the game, children will use their large motor skills to run or jump while listening for me to say â€Å"Sleeping Giants†. When I call out, the children will try their hardest to stay quiet to represent a sleeping giant. Then when I call out â€Å"Walking Giants† the game continues and allows the children to be active and freely express themselves.

Adoption Of Single Parent Households - 1150 Words

Two-thirds of all children in the U.S. will spend some time in a single-parent household before they’re eighteen. In fact, the amount of single-parent families has been steadily increasing in the past few decades. If single-parent households are becoming part of the norm, then why are adoptions by single men and women still facing so much scrutiny? This is a countless amount of people who are trying to adopt as a single parent that are being overlooked by the adoption agencies in favor of married couples. On top of this, single parents that are trying to adopt are faced with scrutiny from society. Singles trying to adopt will be able to provide the same amount of love and money as a married couple so they should be presented with the same opportunities to adopt. There are many children wanting to be adopted, and many singles with the adequate resources to raise a child, and doesn’t make sense to rid a child of a stable home. â€Å"In the U.S., there are 397,122 childre n are living without permanent families in the foster care system. 101,666 of these children are eligible for adoption but nearly 32% of these children will wait over three years in foster care before being adopted. In 2012, 23,396 youth aged out of the U.S. foster care system. Out of these adults, 60% had been convicted of a crime, and only 48% were employed† (â€Å"Facts and Statistics† 1). As these statistics show, there is too vast of a number of children in foster care. 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