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Airline Industry - Dissertation Example

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The Global Airline Industry Table of Contents The Global Airline Industry 1 Table of Contents 2 Task 1 3 Cost of ASK (Available Seat Kilometres) 3 Revenue per RPK (Revenue Passenger Kilometres) 3 BELF (Break Even Load Factor) 4 Employee Productivity 5 Task 2 5 Introduction 5 Main Findings 6 Appraisal of airline’s operating environment 6 Market Analysis 6 PESTEL 7 Appraisal of airlines internal capabilities 10 SWOT 10 Key issues Identification and Analysis 12 Conclusions 14 References 16 Bibliography 17 Task 1 The airline industry is one of the most attractive and highly capital intensive industry segments operating in the business market…
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Download file to see previous pages Cost of ASK (Available Seat Kilometres) An available seat kilometre in airlines is calculated by multiplying the total number of seats offered by an airline and the total distance flown by an airline (British Airways-a, 2010). The Available seat kilometres for British Airways was found to be 141178 in 2010 which represents a decline from its previous year figures of 148504 in 2009 (British Airways, 2010, p.128). The statistics for its competitors Emirates airlines states the corresponding figures at 161756 which represent a rise from its figures last year that was quoted at 134180 (Emirates Airlines, 2010, p.4). The low value of ASK for British Airways can be largely held accountable to the financial downturn which put a pressure on the profit and revenue margins of the firm. Emirates airlines owning to better fleet management and route optimisation generated a much better performance than its competitor British Airways. Revenue per RPK (Revenue Passenger Kilometres) Revenue passenger kilometres (RPK) is calculated by multiplying the total number of revenue based passengers and the total air miles flown by the airline (British Airways-a, 2010). A good value of this statistic represents a healthy operational and financial aspect of the organization. The value of RPK for British Airways in 2010 was calculated at 110851 which represent a decline from its figures in the last year which was stated at 114346 in 2009 (British Airways, 2010, p.128). The slump in figures can be attributed to decline in the revenues per passenger as well as reduction in the total air miles flown due to route optimisation owning to pressures from the economic recession. The figures for Emirates airlines however show a distinct and definite opposite trend which is pegged at 126273 representing an improvement from its previous year’s figures of 101762 (Emirates Airlines, 2010, p.123). BELF (Break Even Load Factor) Break Even Load Factor or BELF is a value term expressed in percentage that represents a scenario in which revenues and operating costs become equal. This factor has different values for different flights and includes aspects like seasonal fluctuations and is largely based on the dynamics of demand and supply in the market (Radnoti, 2002, p.99). The Break Even Load Factor for British Airways was found to be 78.5 percent which represents a rise by about 1.5 percent from its figures in the last year. This was mainly reported due to a reduction in revenue from passengers by about 10.9 percent from the previous year (British Airways, 2010, p.16). The Break Even Load Factor for its competitor Emirates Airlines was found to be 64.4 percent which again represents a rise by about 0.3 percent from its corresponding figure quoted last year (Emirates Airlines, 2010, p.123). The major reason for this trend is accountable to the large scale dip in demand for air travel by business as well as individual passengers which was due to the reduction of disposable income and decline in profit margins of the other business travellers. The advent of low cost airlines has also led to a reduction in the ...Download file to see next pagesRead More
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