The Functions and Principles of Management Towards Airline Industry - Essay Example

Airline Industry Table of Contents Table of Contents 2 Introduction 3 2. Main Findings 4 2 Principles of Management 4 2.2 Human Resource Management 9 2.3 Safety and Security 15 3. Conclusions 19 References 20 1. Introduction Aviation industry is one of the largest as well as booming industries around the world. It helps in economic growth, world trade, tourism and international investment. According to the International Air Transport Association, for the last three decades the number of passengers travelling on scheduled flights has increased on average by over six percent annually. In 2004, traffic of international airline passenger was improved nearly about fifteen percent in contrast to 2003 in a few regions such as Asia-Pacific (Holtbrugge & Et. Al., n.d.). In the present situation of fast changing of environment in air transport, the professionals in aviation sector must have access to highly developed and comprehensive knowledge including in-depth understanding of the requirements of the airline industry globally (American Institute of Aeronautics and Astronautics, 2011). The incident of September 11 had certain worst economic effects on the airline industry. This had caused dramatic dropdown in passenger demand as well as high costs to a large extent. However, the industry was facing worst period before as well. Thus, it contributed problem for the industry besides having problems for passengers (FRBSF Economic Letter, 2002) In this paper the functions and principles of management towards airline industry have been explained in brief. The role of human resource manager and major issues of human resource management in air transport industry have been mentioned. The issues related to safety and security in airline industry along with their importance has also been highlighted in the paper. 2. Main Findings 2.1 Principles of Management The airline industry is one of the competitive industries because accuracy and safety are required in such area. Thus, the functions of the management are to make the task process efficient and reliable so that it can safeguard the business of airlines as well as the lives of passengers. The various functions and principles of aviation industry are planning, leading or motivating, organising and controlling. The purpose of planning is to create effective strategy that will facilitate to achieve the goals of any industry. The planning process includes scope, goals, objectives and statements of the organisation. It also includes analysis of external environment, threats and opportunities of the industry. Planning and Controlling in Airlines Industry Operators Planning and controlling are vital parts of any organisation as both are required for smooth functioning of the management of industry. Strategic planning in airports provides emphasis to safety as well as security of the travelling passengers and for achieving huge profits. The planning whether it is for single airport or a multiple-airport and the strategic planning for airport plans are prepared keeping in mind the future vision of the airport industry. It determines strategies, goals and objectives for the development or success of the organisation together with the type of products and services it provides and assists in achieving the vision and objectives of the industry. The airport’s simple strategic planning “formula” for product differentiation is: “Low Cost × High Service = Excellent Customer Value.” The setting of strategic planning process in the airline industry is influenced by product differentiation. The implementation of strategic planning needs the opinion of stakeholders which includes business leader, local government and interest of local public. Planning in this industry is a challenging one due to its competitive growth. Planning is influenced by the uniqueness and operation of each airport which is different from one another. Before planning activities several issues are required to be considered such as historical context, vision as well as mission of organisation, both inner and outer environment where industry operates along with strategic issues of organisation for competitive advantage. The strategic planning in airline industry is fragmented into four phases namely, pre-planning, evaluation and implementation along with monitoring. The flow chart of strategic planning of airline industry is provided below (ACRP, n.d.). Source: (ACRP, n.d.). After planning of the flights in a day, the operators in the Airline Operations Center (AOC) of an airline regulate the time schedule of the movements of hundreds of aircrafts and thousands of crew members. This is done in order to minimise the delays and cancellations, while complying with complex contractual as well as upholding routing constraints. The planning and control authority of the AOC handle a few departures of scheduled flight. Within one hour of departure, the flight hours are handled by the ‘departure airport (or “station”) control centre’ of the airline. AOC has various operators. System Operation Controllers manages airline operation and is in charge of schedule adjustment of the flights. Aircraft Routers supervises as well as regulates aircraft routing by means of network of flights. Crew scheduler monitors the work of crew members; dispatchers have the responsibility to prepare flight plans along with departure of flights. ATC (Air Traffic Controller) coordinators act as interface between FAA (Federal Aviation Administration) and AOC during delay of flights (Pujet & Feron, 1998). For example, in British Airways the planning and controlling activities are performed in an effective manner. The planning and controlling involve maintenance of the schedule of each flight; therefore they can depart and reach throughout the world on time. The operation control department maintains take-off for long-haul of the flights prior to seven days and three days for short-haul flights. The planning and scheduling handle the timetable of each flight. The operation control changes the time table if required. Thus, if controlling is done in a proper way, it helps the industry to make effective planning for efficient functioning of the industry (Sami, 2010). Organising is the management process which builds the structure of internal organisation based on the policies of the particular industry. The managers are responsible for controlling and dividing different job duties within the organisation. The managers are also in charge of various tasks of translating the process that will be involved in attaining the steps of the organisation (Academic Writing Tips, 2011). An airport operator is an organisation which is responsible for the management and direction of several airports. Such an organisation considers aviation as a powerful and positive force in the modern world. They believe that involving its community to the world’s aviation system as closely as possible will facilitate the community’s economy to develop and prosper. The airport operator is responsible for providing law enforcement services on the airport. This is often accomplished by organising and maintaining an eminent police department as a part of the airport operator’s organisation. At other places it is accomplished by undertaking such services regulated by an airport base police force for serving the community. For that it requires the development of excellent skills which is exclusive to the airport environment (Wilding, n.d.). Motivating the employees is an essential process in aviation industry. It is a psychological development of the employees involved in any organisation. The managers facilitate the employees to make proper performance within the industry. Primarily motivation arises from the managers of the company as they are much influential in any operations of the company. The employees possess excellent reward scheme for qualitative service in the work. Thus, the employees will be motivated which may result in effective functioning of the employees. This will bring positive outcomes for the company (Academic Writing Tips, 2011). 2.2 Human Resource Management The airline industry is considered as one of the fastest developing industries than any other industries in the world. The various issues of human resource management in the airline industry are safety and risk, human factors, recruitment and selection as well as training. Human resource management is one of the vital factors for success or failure of the industry. The HRM instrument of the airline industry such as recruitment and selection, remuneration and employee participation, training and development along with coordination of HRM activities are analysed properly. The influence of HRM in the airline industry is great due to its huge competition, great importance to safety and security along with its orderly arrangement of service. The competition is due to two reasons: one is ‘deregulation’ and the other is ‘increased price pressure’. In the first case the industry has altered from being non-labour sensitive to high-labour sensitive. It has incorporated various allegations for labour management relations. The increase in price pressure from the Low Cost Carrier (LCC) raises competition since they provide low-priced fares that they can attain by leasing rather than purchasing aircrafts and operates only in ‘second-tier airports’ and by selling by means of direct channels through the Internet. The passengers are extremely concerned for safety due to sudden accident or terrorist attack in airline. The majority of the failures are due to poor team work and faults of pilots or crews. These may be the results of deficiency in social and cognitive skills, poor interpersonal communication as well as crew coordination, ineffective decision making and lack of leadership skills. These happen as a result of ineffective training procedures, insufficient recruitment and lack of inadequate resource allocation. Thus, training has a vital role in airlines industry and is provided prior importance. Excellent customer service in this industry is most essential. The high level service will lead to increase in customer satisfaction, build up airline brand, retain older passengers and attract the new one with competitive price (Holtbrugge & Et. Al., n.d.). Labour relations along with HRM are the two features of maintaining employment relationship. In airline industry, employment relationship is of great significance as it has a positive or negative impact on the performance of the airline. This relationship will lead to large percentage of labour cost to total cost and high level of unity in the industry; otherwise the industry will face high cost with less operating flexibility when the employees attain high level of wages through collective bargaining. Airlines industry around the world provides importance to the workforce management as this will facilitate advantage for the industry. They strive to achieve either lower unit cost or higher customer service or combination of both. Airlines are part of air transport system which involves partner in code sharing and other relationships, union involving employees at several airlines, competitors as well as government agencies such as National Medium Board (NMB) in the USA that manages labour relation in the airline industry for resolving disputes of collective bargaining. The efficient management and structure of industry-level features of labour relation provide the industry to gain positive outcome in case of airlines, flying passenger and employees as well. Labour Relation in US Airline Industry The airline industry in the USA is one of the extremely unionised sectors. The majority of the eligible candidates nearly about 70% belong to the union. In airlines industry, collective bargaining has definite role in employment relationship. Within the same industry different unions are present and airlines bargain with several unions, which represent distinctive occupations. At the firm level collective bargaining occurs when similar unions represent a definite occupational group within several airlines. Collective bargaining is also formed by regulatory framework. In the US airline labour are managed by the Railway Labour Act (RLA) (Belobaba & Et. Al., 2009). Recruitment and Selection in Airlines Since the major accidents in airlines are at times due to lack of skill in the pilots or failure of effective team work, recruitment and selection procedure are provided great importance. The pilot is selected based on his flying skills. The human resource manager in aviation industry is providing continuous grooming after selection to the professional pilots. Interpersonal skills and technical skills are much essential for success and security of pilot. For careers at aviation industry it is required to have pilots with competence in crew resource management skills as “successful completion of a flight or mission requires not only flying skills but the ability to work well in a crew situation” (Appelbaum & Fewster, 2003). The airlines industry is lacking in skilled pilots and front line staffs. For example in the Southwest airline, the recruitment and selection of the front line staffs are done based on the attitude of the candidates and not on the skills. The major role of recruiter is to assure the candidate that it is a good “cultural fit”. This airline industry hires the candidate with attitude because the recruiter thinks through training, skills can be developed in them but attitude cannot be altered. They test “sense of humour, ability to work with others and friendliness” (Appelbaum & Fewster, 2003). Training and Development The airline industry spends huge sum of money to train the employees. The proper training and development provide airlines with competitive advantage. According to the American Society for Training and Development (ASTD), several industries are committed for training and a Southwest airline is one of them. In Southwest training centre, 25000 people undertake training each year. Along with the new employees, managers and supervisors are also provided training for two days. Singapore Airlines invest huge fund for training the customer service staffs. In Singapore Airlines flight attendants are provided training for four months and American industry offers four weeks training (Appelbaum & Fewster, 2003). Organisational Development Organisational development is required in order to arrange the strategic development of a customer-centric, learning-oriented workforce that is competent to adjust easily to the strategic goals and frequent transformation facing the airline industry. The movement towards the flattening of organisations is indicative of a shift in HRM from seeking control over employees in order to achieve loyalty from them as it is the basis of organisational development. Example, Duncan Aviation is a leading industry in the US aviation service and maintenance. The management received the opinions of employees sincerely, when the outcome of the survey was provided to Duncan’s employees. The survey presented significant and useful response to the HR specialist who carried out the research. The result of the survey has been considered to take three initiatives of HR. At first, “viable company-wide pay schedule based on accurate job descriptions”, secondly, “create strong teamwork at the senior management level” and at last “implementation of formalised on-going employee-training programme” (Appelbaum & Fewster, n.d.). Thus, there is a huge role of human resource managers in the aviation industry as their responsibilities are related to the staffing of skilful staffs, who will provide qualitative customer service, profit maximisation, recognised brand name and their performance will assist the particular industry to be a global leading industry in the airline business. 2.3 Safety and Security Safety The aviation industry is becoming global gradually. Certain markets, operations, supplier network of business entity are restricted in a single place in a country. Thus, safety record is essential for aviation industry. The approach for rising aviation activity and falling resources are based on the safety efforts into the standard management structure of aviation operations. The innovation in safety procedures of aviation is named as “Safety Management Systems” which means safety efforts are successful when they are made a part of business along with government management of operations as well as oversight. SMS provides effective organisational structure in order to maintain safety culture. SMS forms safety effort of the company for general aviation operators and certificated operators. It provides well-organised ‘means of interfacing’ with the help of FAA certificate oversight offices. SMS provides structured set of tools to the aviation service provider. The modern management along with safety oversight training are moving gradually toward a system approach that deliberates more on management of processes rather than efforts targeted toward vigorous inspection in addition to remedial actions on end products. The effective safety management is dependent on the processes of operators that affect safety. ICAO (The International Civil Aviation Organisation) provides emphasis to the safety which is a managerial process and shared by state as well as those performing aviation operations. The various organisational cultures are belief, performance measures, legends, goals and responsibilities towards community, customer along with employees. The various aspects of organisation which is related to safety are called “safety culture”. Safety risk is a consequence of various activities linked with production. The employees and customers of aviation service provider are the possible victims of the results of breakdown in the safety system. The prime duty and the responsibility of the aviation service provider are to recognise risk and handle it in the methods they manage their operational environment. The aviation service provider is also mainly responsible for safety management (Federal Aviation Administration, 2006). Federal Aviation Administration is responsible for regulating airlines and upholding air safety. It is reducing real inspections of airplanes by its own staff by means of electronic-surveillance system that relies much on statistical analysis and reporting by the airlines themselves. Since 2001, airline industry has not faced a major accident due to its maintenance of safety. But smaller accident occurred in recent years (Consumer Reports, 2007). Security Management Systems (SEMS) is extremely structured and standardised approach for implementing security procedures that will provide generally better and much uniform standards all through the aviation industry. SEMS is a part of responsibility of corporate management which helps in placing company’s security policy. It is essential as it manages security which is a vital part of its overall business making security as one of the company’s core principles by developing a security culture. Various methods and procedures need to be followed in order to maintain security in the industry. Senior management need to make commitment to Security. The head of security is appointed to maintain security and a proper organisational structure is created in the Security department. Training is provided to the security personnel as well as to each employees of the department so as to make them aware of security in the department. The Security Personnel is evaluated on regular basis, thus the operations can be made much effective. Any incident or accident record is investigated properly. Continuous correction is done from the accident records and various procedures should be followed for correction of such record. Regular audit needs to be done for improvement of such incidents. Proper procedures need to be followed if any emergency situation arises (IATA, 2007). Civil Aviation Authority (CAA) Civil Aviation Authority is the aviation regulatory specialist in the UK. The various responsibilities of CAA in aviation sector are air safety, consumer protection, airspace and economic regulation, and environment research as well as consultancy. Another function of CAA is that it makes certain that the standard of the UK civil aviation are placed and achieved. It helps in controlling economic activities of airports, airlines along with National Air Traffic Services and encourages for competitive industry. CAA manages the major travel protection scheme of the UK, helps in licensing airlines of the UK, controls Air Travel Organiser Licensing and helps in managing consumer issues. It assists in bringing military and civil interest so as to ensure that needs of all users is met as justifiably as possible. In case of any issues arise relating to the aviation sector it advises the government regarding this, performs scientific and economic research, helps in representing consumer interests, creates statistical data and renders specialist services (Civil Aviation Authority, n.d.). The International Civil Aviation Organisation (ICAO) ICAO is one of the specialised agencies of the United Nations which was created with the Convention on International Civil Aviation in Chicago. In the global aviation industry ICAO places standard practices in order to maintain safe, security and systematic development of global civil aviation industry. ICAO has developed three objectives: enhance “safety” of international civil aviation, increase “security” standard of aviation sector and “environmental protection and sustainable development of air transport” for promoting harmony and economically feasible development of international civil aviation that do not make destruction to the environment internationally (International Civil Aviation Organisation, n.d.). 3. Conclusions It can be recognised that airline industry is a highly complex industry which is characterised by huge competition, high growth and low margin of profit. Due to its rapid growth it is facing huge competition in the airline business market. It has been observed that aviation industry is formed by the combination of four factors which include airliners, institution, airports and aircraft industry. To remain competitive in the aviation industry market, the industry provides regular training to the employees and develops continuous grooming program for the new and existing employees. As this help them to be efficient in interpersonal communication skill which becomes essential in airlines industry. The industry in order to retain customers should provide qualitative service through customer service department and low cost facilities to the passenger. The manager in airline industry has vital role as he is responsible for hiring the skilful staff which will benefit the industry in profit maximisation. He is responsible for recruitment; training, health safety and security of the employees in the industry. Various industries are providing much importance to the training programme so that the incidents of accidents records can be reduced considerably. The airlines industry is facing huge downturn since several years. 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