The Aim of Preventing Airlines System Failure - Term Paper Example

Understanding Effects and Impact of Airlines System Failure Table of Contents Table of Contents 2 Introduction 3 Overview of the Airlines Industry 3 Threats and Challenges Faced by the Industry 4 Objective of the Study 4 The Causes of Airline System Failure 4 The Effects and Impact of Airlines System Failure 5 Airlines Industry Analysis 7 Power of Buyers 7 Power of Suppliers 8 Competitive Rivalry 8 Threat of New Entrants 8 Availability of Substitutes 9 Findings 9 Recommendation and Conclusion 10 References 11 Introduction Overview of the Airlines Industry The international airlines industry offers its exclusive services across different regions of the world and is one of the major contributors to global economy. In the earlier days, the airline industry was regulated rigidly, which significantly restricted the widespread development of this industry. Nowadays, the trend of the airlines industry has changed to a considerable extent. In this regard, it has been witnessed that airline industry has deregulated with the aim of substantial economic benefits. Moreover, deregulation of airline industry has offered the industry to access ample amount of scope to develop and expand its operations in the global market. At the same time, it has been also observed that the competition amid the airlines organisation has grown tremendously, which has affected the international airline industry in an immense manner (Massachusetts Institute of Technology, 2014). Similarly, during the year of 1990s, with the effect of globalization a huge impact has been observed in the airlines industry, which has highly influenced the global scenario. During that phase, it has been witnessed that the global airlines industry is engaged in providing exclusive services to more than 3,700 airports around the world through the help of more than 2,000 airlines along with 23,000 aircraft. Moreover, during the contemporary era the airline industry has become a major economic force in terms of its own operations and its influences on other related industries such as tourism and aircraft manufacturing among others (Massachusetts Institute of Technology, 2014). Threats and Challenges Faced by the Industry On the other hand, it has been recognised that the airlines industry has also witnessed several threats from the global market, which has also affected its growth. In this regard, it can be asserted that international conflict, terrorism, rising cost of air fuel and financial crisis of the global market has also affected the performance of the airlines industry. At the same time, airlines technical insufficiency/ system failure also leads to higher difficulties for the industry. As an effect, end numbers of airline consumers are witnessing huge difficulties in recent days, which have also initiated larger difficulties for the global airlines industry (Euromonitor International, 2014). Objective of the Study In this study, the objective is to identify the causes of airlines system failure. At the same time, the study will also analyse and discuss the impact and effect of airlines system failure in the global market. Moreover, the study will also try to identify the consequences on the people and airlines industries due to the failure of airlines system. Additionally, the study will highlight few preventive actions through which the possibility of airlines system failure can be reduced in the global market. The Causes of Airline System Failure In order to identify the causes of airline system failure it can be asserted that fail of hydraulic fluid transfer cylinder can cause difficulties for airlines. At the same time, it can be asserted that information technology services companies are highly blamed due to the failure of airline system. In this regard, more specifically it can be claimed that hardware failure or damage in system software can initiate larger difficulties for airlines and the consumers as well. Apart from this, it can be claimed that technical flaws such as hydraulic system failure can initiate larger difficulties for an aircraft industry. Apart from this, it can be asserted that lack of initiative of the airport transport management regarding reviewing the airlines system can impose massive challenge in front of the airlines industry. On the other hand, in order to highlight the cause of the airlines system failure it can be asserted that baffling network planning can impose more difficulties on the airlines industry. Additionally, it can be also claimed that poor support activity can initiate more difficulty for the industry. In this regard, it can be asserted that support activity signify planning within the airlines industry in terms of profitability forecasting system, data mining system, code share management systems and calibration tools. A calibration tool is electrical equipment through which electrical signal, pressure and temperature can be measured in an airlines. In this regard, it can be asserted that insufficient lubrication of the jackscrew can cause potential loss or damage towards the airlines industry. On the contrary, in order to highlight the cause of airlines system failure, it can be claimed that lack of responsibility and accountability of the aircraft maintenance, repair and overhaul team member can initiate larger difficult consequences for the airlines industry. At the same time, security related issues have also initiated several challenges for the industry in terms of terrorism and aircraft hijack. However, it can also be claimed that inefficient security systems can impose larger difficulties for the airlines industry (Lufthansa Systems, 2014). The Effects and Impact of Airlines System Failure In order to highlight the impact and effect of the airlines system failure it can be asserted that poor airlines support activity can probably cause an accident of an airplane. In accordance with the report of National Transportation Safety Board (2014), inadequate lubrication can cause excessive wear and tear, which can impose high loss in case of airlines industry. Similarly, poor support activity can also influence several operational difficulties for an airlines industry, which may also adversely affect the performance of the airlines industry in global market. Simultaneously, Baker (2013) claimed that computer system is one of the most essential constituent for the airlines industry during the modern days. In this regard, Baker (2013) also argued that technical problems in the computer system can lead to difficulties for the industry in terms of delays and cancellations of airplanes schedule, which can also affect the performance of the industry. However, according to Oprea (2010), the growth of world air travel has been observed to be approximately 5% per year over the last three decade. In this regard, in order to identify the cause of the issue it has been revealed that changing economic conditions has been one of the potential causes behind the above mentioned issue. On the other hand, differences in economic growth across different regions of the world have also been one of the crucial factors for declining the global airlines industry (Oprea, 2010). The international airline industry has undergone through several crisis in the past years including 2001 after the devastated attack on the World Trade Center. According to the observation, it has been identified that the global airlines industry has incurred 7% downfall during that phase. The rising price of oil is one of the most crucial issues, which has affected the global airlines industry in a huge manner. It has been observed that during the early stage of 21st century, the price of crude oil has increased due to the limited availability of oil resources. In accordance with Morrison & et. al. (2010), the fuel price has increased to 244% between the years 2004 to 2008 (Morrison & et. al., 2010). The impact of the same has been directly seen on the air fuel price and the performance of the airline industry. Apart from this, it has also been observed that the taxes and duties on the air fuel transportation have increased during that time period. Thus, it has become quite difficult for the global airlines to keep its transportation cost economical for the welfare and benefit of people. As an effect, the fare cost of air transportation has increased, which has caused difficulties for the global airlines business to attain considerable profit (ECORYS Transport, 2006). A graphical representation has been provided below with the aim of understanding the concept better. Figure: 1 Relation between fuel price, transportation costs and transportation prices (Source: ECORYS Transport, 2006) Airlines Industry Analysis In this study, in order to identify and analyse the consequences of the airline industry on the people and industry, it will be essential to implement the ‘Porter Five Forces’ model. The elements of this model are aligned with various factors related to the airlines industry, which is described hereunder: Power of Buyers In case of airlines industry, the bargaining power of the buyers is very low. In this regard, justifiably it can be asserted that involvement of cost is very high which include travelling through airlines, which does not motivate buyers to switch airplanes for travelling (Karagiannopoulos, & et. al., 2005). Power of Suppliers In order to identify the power of airlines suppliers it can be asserted that the entire business model is relying upon few of organization such as Boeing and Airbus. Due to this reason, the level of competition among the suppliers is very low, whereas suppliers are operating their function in a monopoly market situation. Thus, it can be asserted that the bargaining power of the suppliers is very high in case of airlines industry (Karagiannopoulos, & et. al., 2005). Competitive Rivalry In order to identify the competitive rivalry, it has been observed that in the airlines industry the cost of competition is high, which signifies that the level of competitive rivalry is also very high (Karagiannopoulos, & et. al., 2005). Threat of New Entrants Similarly, in order to identify the threat of new players, justifiably it can be asserted that the airlines organizations do not face any challenges from the new entrance as it is very difficult for the new player to assure quality of services like existing airlines organizations. At the same time, financial investment is also very high in case of operating or introducing airlines business in the global platform. Thus, it can be affirmed that in case of airlines industry the threat of new entrance is very low (Karagiannopoulos, & et. al., 2005). Availability of Substitutes In order to determine the availability of substitutes of the airlines, it has been revealed that airlines are the quickest mode of transportation in the contemporary society. There is no such substitute of airlines in the transportation sector. Thus, it can be claimed that availability of substitute is very low in this regard (Karagiannopoulos, & et. al., 2005). Findings Based on the above discussion and analysis, it has been revealed that the airlines industry has faced several difficulties in the recent years. Nevertheless, instead of that the industry has witnessed $12.9 billion revenue in the year 2013. Over the last few years, it has been perceived that even after several failure of the airlines system, the industry has improved its overall performance due to several strategic measures. Apart from this, according to the analysis it has also been recognised that due to high dependency on fuel commodity and -rising price of fuel has become a prior threat for the airline industry (Luft, 2006). On the other hand, it has been observed that the airlines industry has taken suitable approaches with the aim of enhancing issues for customer satisfaction. Moreover, the industry has also emphasised to develop fuel-efficient aircraft model for reducing the cost of the process. Apart from this, it has been noticed that the international airlines industry has introduced high productive aircraft, which has the potential of carrying large amount of goods and materials at a time. Conversely, the airlines industry has also concentrated on improving the level of efficiency by omitting its traditional aircraft designing process and introducing new eco-friendly and fuel-efficient aircrafts designing process. Moreover, the industry has attracted large number of investments through ensuring high return on investment (Macario & Voorde, 2009). Recommendation and Conclusion Based on the above analysis, it can be recommended that with the aim of preventing airlines system failure it will be highly essential to ensure the prevention of technical flaws in case of hydraulic system. At the same time, airport transport management authority will need to take additional responsibilities with the aim of reducing the operating and system related flaws to enhance the effectiveness of airlines support activity. Moreover, the air traffic network planning will also need to improve in order to meet the expectation of the consumers in the global arena. Simultaneously, the airport transport management authority will need to be more careful regarding security and safety related issues to enhance the level of satisfaction. On the contrary, in order to enhance the aircraft efficiency it will be highly crucial to maintain the responsibility and accountability of the aircraft maintenance and repair system. Thus, after considering all of these above factors, it can be evidently claimed that within the next five to ten years, the technology will become more advanced and it will bring considerable transmission in the operations of the airlines industry. Thus, in order to conclude it can be evidently asserted that the global airlines industry will be able to enhance its efficiency and effectiveness in the recent future, through implementing and improving its strategic measures. References Baker, P., 2013. American Airlines Resumes Flights after a Computer Problem. Business Day. [Online] Available at: http://www.nytimes.com/2013/04/17/business/american-airlines-cancels-flights-after-outage.html?_r=0 [Accessed October 30, 2014]. Euromonitor International, 2014. Key Threats and Opportunities Facing Global Airlines. Library. [Online] Available at: http://www.wtmlondon.com/library_2/1804829_assocPDF.pdf [Accessed October 30, 2014]. ECORYS Transport, 2006. Analysis of the Impact of Oil Prices on the Socioeconomic Situation in the Transport Sector. European Commission, pp. 1-123. Karagiannopoulos, G. D., & et. al., 2005. Fathoming Porter’s Five Forces Model in the Internet Era. Emerald Group Publishing Limited, Vol. 7, Iss. 6, pp. 66-76. Lufthansa Systems, 2014. Maintenance, Repair and Overhaul. Solutions-services. [Online] Available at: https://www.lhsystems.com/solutions-services/airline-solutions-services/maintenance-repair-overhaul.html [Accessed October 30, 2014]. Luft, G., 2006. The Oil Crisis and its Impact on the Air Cargo Industry. Institute for the Analysis of Global security, pp. 1-22. Massachusetts Institute of Technology, 2014. Global Airlines Industry Program. Airline Industry Overview. [Online] Available at: http://web.mit.edu/airlines/analysis/analysis_airline_industry.html [Accessed October 30, 2014]. Macario, R. & Voorde, E. V. D., 2009. The Impact of the Economic Crisis on the EU Air Transport Sector. European Parliament, pp. 1-37. Morrison, J. K. D., & et. al., 2010. Investigation of the Impacts of Effective Fuel Cost Increase on the US Air Transportation Network and Fleet. 10th AIAA Aviation Technology, Integration, and Operations Conference, pp. 1-15. Oprea, M. G., 2010. The Effects of Global Economic Crisis on the Air Transport of Passengers in Europe and In Romania. Geo Journal of Tourism and Geosites, Vol. 5, Iss. 1, pp. 52-61. Read More