Airplane Maintenance - Assignment Example

Air Transport Table of Contents Abstract 2 Introduction 3 Question 1 3 Maintenance alternatives for the airline- Advantages and Disadvantages 3 Question 2 6 Examination of the air freight market- Ways in which the airline may enter the market 6 Question 3 8 Impacts of baggage mishandling on the airline business 8 Ways to deal with customer complaints 10 Measures to reduce the occurrence of baggage mishandling 11 Conclusion 12 References 13 Bibliography 14 Abstract The project begins with an analysis of the alternative modes of maintenance in the airlines industry. The various methods have been described and presented along with their advantages and disadvantages. It chooses the most suitable policy for the new airlines company and recommends the same. It is then followed by a brief description with regards to the present air freight market in the world. It presents the current air freight market situation for nations like Australia, Singapore, Thailand and Vietnam where the company has been trying to expand. Lastly, it tries recommending methods to improve the functioning of the company and ways to tackle inconveniences caused due to baggage mishandling in the industry. Introduction The project begins with the analysis of the airlines industry. By doing this it tries to evaluate the advantages and disadvantages of various maintenance methods. It presents and describes each method at length. Then it tries to evaluate the pros and cons related to each method. Having done this, it tries to propose the most suitable one for the new airlines company. The next objective is to make an analysis of the airfreight market. The project tries to analyze the present scenario of the airfreight market in countries like Australia, Singapore, Thailand and Vietnam. In doing this it helps to find if the present company would benefit in trying to expand operations in the respective markets. The airlines sector has been fast expanding and showing growth opportunities for the industry. Lastly, the project tries to bring forth the biggest challenge that the airlines company would have to face. The problem of baggage mishandling has been a predominant cause of concern for all companies in the sector, big and small. The project tries to propose ways of handling complaints. Most importantly it suggests technological ways of tackling problems of luggage mishandling and reducing inconvenience of customers. Question 1 Maintenance alternatives for the airline- Advantages and Disadvantages Regular maintenance of airlines is a mandatory activity for the airlines engineers. The maintenance programs are primarily based on the belief that “every item has a “right age” at which complete overhaul is necessary to ensure safety and operating reliability” (Lacey & Stein, 2003, p.1). The airlines industry is putting more and more emphasis on the maintenance of aircrafts. The study tries to explore the different maintenance alternatives and tries to choose the best one. A number of alternatives are present but the difficult challenge in front of the management is to identify the one which befits the cost. The aircrafts maintenance programs are developed to repair system functions, and design damage tolerant structures. However, it was felt that a number of failures could not be brought under control or prevented by maintenance schedules. There were a number of witnesses where the so called ‘problem free’ machines which were tested and put to trial failed to provide services after a short while. This called for development of various maintenance plans of aircrafts. The biggest challenges faced by the company were to find the answers to three questions. These were the reason behind occurrence if failures, the consequences of such failures and the ways in which maintenance could help prevent failures (Lacey & Stein, 2003, p.1). The first alternative in front of any aircraft industry is to undertake maintenance task themselves. The most probable would be an economic one and which would be based on safety. An example of this may be provided by the program which was developed for DC-8. This may be taken as an example for its application in the context of the present project. The program required “required scheduled overhaul for 339 items, in contrast to seven such items in the DC 10 program - a good example of the economic benefits of MSG-1 and MSG-2 approach” (Lacey & Stein, 2003, p.2). The turbine engine was no more subject to the overhaul limits. Such programs are known as “Reliability Centered Maintenance” (Lacey & Stein, 2003, p.2) and were developed according to the concept of MSG. This program was primarily devised with the motive to reduce costs of maintenance and operation. Based on the above concept another concept was developed to reduce the costs even further. The concept developed was called MSG-3 and gave way a totally new approach to the maintenance plans in the aircrafts industry. Under this system, the maintenance logic helps to attain economic and safe results through the application of maintenance programs. In other words, the system tried to establish the concept that failure of a certain functional part would not have any effect on the operational safety of the aircraft. Thus there was no requirement for regular maintenance activities. Consequently, this would have lower economic repercussions. Another important fact to be noted was whether the maintenance costs were exceeding the costs of failure. In this regard a plan could be developed in which pilot reports would be used for implementing corrective maintenance steps. The report would be developed by the flight crew. But there were cases where the flight crew would not be able to observe the failures. For these, specific maintenance activities would be required to be implemented. Some of the activities are servicing and lubrication, operational and functional checking, detailed inspection, overhaul and replacement (Lacey & Stein, 2003, p.2). While the most obvious maintenance activities could be developed by the aircraft companies, some have proposed outsourcing of maintenance activities to foreign countries as a cost effective measure. According to the report of recent audit done by the “the Department of Transportation's Office of the Inspector General (OIG)” (Baum & Hedlund, 2010), nine major airlines in the world outsource 71% of their mentainances activities to overseas companies. Although outsourcing of maintenance works can be extremely cost effective it can have other problems. In fact some of the major disasters in the worlds aircraft industry has been on account of outsourced activities. Some of the best airlines industries in the world have witnessed accidental disasters because of the above reason (Baum & Hedlund, 2010). The problem is this case is that the company has no place to monitor over the foreign country’s operations. Neither can they monitor the activities of the workmen responsible for the maintaining the aircraft. In most cases they are inexperienced subcontractors. There could be carelessness on their part as they are not the owners of the aircraft. Outsourced activities often underperform on account of accountability. Thus it is clear that irrespective of the cost effectively of the system; outsourcing of maintenance tasks can never be considered a suitable option for the aircraft industry. Question 2 Examination of the air freight market- Ways in which the airline may enter the market The air freight market was subject to sharp decline during the time of recession. But the “Freight Market Outlook 2010” (Aviainform-a, 2010) shows a steady recovery of the market towards progress. The report also forecasts the development of the European Cargo at a fast rate. The aircraft industry has been hit hard by the recession. Even though some of the air carriers have frozen their flights and reduced networks, the financial figures of the companies do not look very impressive. This reduction id expected to have a major impact on the airports across the world. This is causing them to cut down on employment as well as their financial figures. Resulting from the loss the aircraft industries across the globe have undertaken massive job cuts, employee redundancies and salary cuts (Aviainform-a, 2010). The IATA reported the international traffic results for the month of September. It showed a 10.5 % from the previous year. This accounted for a significant increase from the previous year in August when the figure was 6.5%. “International freight traffic recorded a 14.8% year-on-year increase, which is significantly weaker than the 19.0% rise recorded in August” (Aviainform-b, 2010). Recently there has been an upturn in the airlines industry across the world. Demand for the air transport and freight are on the path of recovery these days. The figures show significant positive results for the year 2010. The industry’s growth rate from the previous year is 0.3% (IATA-a, 2009, p.1). The situation in Australia looks bright as the country has been trying to integrate its airline with the global market for the past few decades. It would offer several opportunities for the present airline to expand its business. Operating in the Australian market would prove to be beneficial for the present airline and would also serve the national interest of Australia. Exports in air freights have grown steadily. Market liberalization has significantly benefitted outbound travel. A number of changes have been implemented by the Australian government on the nation’s aviation industry. These changes were implemented with the view to increase opportunities for both the foreign and Australian airlines (Commonwealth Department of Transport and Regional Services, n.d., p.3). Market research has revealed that Singapore has great potential to improve in its aviation sector. “Singapore is expected to have real trade growth in 2010 of 11.69% and an average of 6.5% over the forecast period” (PRLog, 2010). The Singapore freight companies are also expected to witness rapid growth in the years 2010 and 2011. The two main modes of transport which dominates in Singapore are Maritime Cargo and Airfreight. After the economic crisis, the airfreight has recovered at a very fast rate. Singapore’s huge investments in logistics also show that it would be a popular place for market entry of the airlines industry (PRLog, 2010). The freight market has also been expanding in the middle income countries like Thailand and Vietnam. These countries have been increasingly trying to integrate itself with the global economy. The present airlines may make a detailed analysis of the above nation’s freight market before investing. Opportunities in nations like Vietnam and Thailand looks bright, and the costs of expansion would also be low in these countries. The company also needs to make a thorough analysis of the freight infrastructure before expanding (Bridger, 2008, p.1). Question 3 Impacts of baggage mishandling on the airline business Any airlines industry is supposed to handle numerous passengers. The ever increase growth of passengers are resulting in the increase in baggage checking which is consequently straining the baggage handling infrastructure of the airlines companies. This has given rise to the number of mishandled baggage as well. The airlines company needs to be specifically alert about proper baggage handling because it can have severe effects on the company’s reputation. Some of the major issues which lead to baggage mishandling have been represented in the figure below. Figure 1: Key issues behind baggage mishandling (Source: Motorola, 2008, p.5) The following figure has been provided as an example which depicts the cost that an international airport had to bear because of mishandled baggage. Figure 2: Cost of mishandled baggage in international airport (Source: Motorola, 2008, p.6) Firstly a single mishandled baggage implies a heavy financial loss for the company. Not only does the airline company bear cost of the lost baggage but it also has to bear the cost of irate customer. The company may eventually lose a potential customer. Luggage mishandling implies severe revenue loss for the company as well. Negative word of mouth may even erode the company’s revenue and customer base. Today the number of reports on mishandled baggage has increased significantly over the last few years. “In Europe, the Association of European Airlines (AEA) reported that the incidence of mishandled bags has increased 14.6 percent” (Motorola, 2008, p.1). This figure represented over 1.2 million number of mishandled baggage at the time of arrival. In the United States as well the number of baggage complaints has been rising steeply. Mishandles baggage takes a severe toll on the company’s image. It leads to frustrations among customers and the eventual loss of customer base. Ways to deal with customer complaints Customer complaints have increased dramatically with regard to baggage mishandling. As a measure to tackle customer complaints on services provided by the airlines industry, especially regarding mishandled baggage; major airports around the world have started using RFID (Radio frequency identification) technology. Application of this technology has helped to reduce baggage mishandling to a substantial extent. It helps in tracking location of the bag. It gives the detailed whereabouts of every passenger bag at any point of time. The most beneficial effect of this system is that it helps to increase loyalty of customers by way of eliminating the irate consumers who suffer from the inconvenience caused due to the mishandled baggage. In case the bag is left behind, the system even helps in transferring the bag to the desired destination. The airlines industry would have to compensate for the loss of the customer due to lost baggage, misplaced baggage or mishandled baggage. The basic objective of the airlines should be to retain the customer and their loyalty. The industry should focus on the improving performance of their customer care executives. There must be a system to evaluate their performance on a regular basis. Ira Gershkoff, an airlines industry consultant has observed that the focus of this industry has shifted from maintaining high standards to satisfy customers to financial survival and growth. He has also complained that the industry has failed to understand the need to make their customers happy. Customer complaints have also increased with regards to delayed flights and high transaction costs. Airlines should make attempts to monitor the arrival and departure of flights as this happens to be one of the most important causes of customer inconvenience. Instead of implementing rectification methods, proactive methods would help to reduce the number customer complaints to a substantial extent (Buchanan & Clinton, 2010, p.6). Measures to reduce the occurrence of baggage mishandling As mentioned, the most recent and effective method to tackle the problem of baggage mishandling is to apply the RFID (Radio frequency identification) technology. The system is based on a technology which helps to track the location of the bag during the course of the flight. Even in cases when the baggage is not carried along with the flight, the technology ensures that the baggage is transferred to the desired destination. Recently a new program was developed with the view to cut down baggage mishandling. It ensures improved baggage processes and promises the reunion of passengers and baggage at the point of destination. “The Baggage Improvement Program (BIP)” (IATA-b, 2010) tries to address all the key issues related to baggage mishandling. The program aims to reduce the mishandlings by 50% by 2012. The program has been increasingly adopted by nations. The system ensures increased security measures in the system. The program works by integrating the entire system to ensure information flow between departments. It also aims to provide training to employees on updating technologies in order to reduce errors. The system ensures proper message transfer and at the right time so that the baggage movements are not delayed and are available when needed. It also aims to increase the awareness among customers so that they check their bags early and attach proper labels to the bags. Conclusion While doing the project, it was felt that the airlines industry has to choose from a number of alternatives and select the one most suited for the industry. In case of a new airline, the most cost effective method would be to outsource the maintenance activities to foreign countries. This would save the cost of the company to a substantial extent. But the method has a number of disadvantages as well. There is no way to monitor the accuracy and effectiveness of performance of the method. Nothing can possibly be done in case of failure in the system. Next the project tries to evaluate a number of alternatives by which the new airlines company may enter the international market. Analysis reveals that the air freight market is suitable in Australia, Singapore, Thailand and Vietnam. These nations have been trying to expand their airlines sector and encouraging foreign investments also. This would prove to be beneficial for the company to expand its operation. The greatest challenge that the company would have to face is coping with customer complaints. It is felt that improving and enhancing quality of the system would be the most suitable way of tackling customer complaints. In fact the industry has to especially emphasize on reducing baggage mishandling using the available technologies. The number of mishandled baggage has been increasing at a faster rate than the increase of air passengers. This problem requires to be controlled immediately for the smooth running of the industry. References Aviainform-a. 2010. Aviainform | Freight Market Outlook 2010 Europe. [Online]. Available at: http://www.aviainform.org/freightmarketoutlook/fmo20102.html. [Accessed on October 27, 2010]. Aviainform-b. 2010. September Traffic: Stronger Passenger, Weaker Freight. [Online]. Available at: http://www.aviainform.org/. [Accessed on October 27, 2010]. Baum & Hedlund. May 17, 2010. Airplane Maintenance Outsourcing Tests Bounds of Safety. [Online]. Available at: http://www.hg.org/article.asp?id=18872. [Accessed on October 27, 2010]. Bridger, R. May 14, 2008. Food air freight, the global infrastructure expansion. [Online]. Available at: http://www.foodethicscouncil.org/system/files/bridgerairfreightexpansion.pdf. [Accessed on November 2, 2010]. Buchanan, F. R., Clinton, M. S. 2010. Customer Service in the United States. [Pdf]. Available at: http://www.jbam.org/pubs/jbam/articles/vol11/no3/5_Buchanan_5_2010.pdf. [Accessed on November 2, 2010]. Commonwealth Department of Transport and Regional Services. No Date. Contribution to the APEC “liberalization library” on air freight. [Doc]. Available at: http://www.apec-tptwg.org.cn/new/Steering-Committees/Competitive/air-services-group/air/air-freight/air-f-australia.doc. [Accessed on November 2, 2010]. IATA-a. October 2009. Air Transport Market Analysis. [Pdf]. Available at: http://www.iata.org/whatwedo/Documents/economics/archive/MIS_Note_Oct09.pdf. [Accessed on October 28, 2010]. IATA-b. June 2010. Baggage Improvement Program (BIP). [Online]. Available at: http://www.iata.org/pressroom/facts_figures/fact_sheets/Pages/bip.aspx. [Accesses on November 2, 2010]. Lacey, L. N. & Stein, A. 2003. Airline maintenance programs, a challenge for the appraiser. [Pdf]. Available at: http://www.mba.aero/presentations/Airline%20Maintenance%20Programs%20_Parts%201%20and%202_.pdf. [Accessed on October 27, 2010]. PRLog. October 9, 2010. Market Report, "Singapore Freight Transport Report Q4 2010", published. [Online]. Available at: http://www.prlog.org/10985699-market-report-singapore-freight-transport-report-q4-2010-published.html. [Accesses on November 2, 2010]. Bibliography Hierling, M. 2007. The Australian Airline Industry and the Case of OzJet – A Strategic Analysis Report: Case Study about OzJet and the Airline Industry in Australia. GRIN Verlag. Read More