Midterm Exam Flashcards
Top 3 costs of an airline
Fuel
Labor
Maintenance
4 stages of airline industry
Regulation
Liberalization
De-Regulation
Re-Regulation
Air commerce act of 1926
Encouraged and developed commercial aviation
Entrusted many government departments with aviation
Began what some would call “Early Airlines”
Air Mail Act of 1935
Privatized air mail and airlines
“Kelly” Act of 1925
Beginnings of the airlines that would become American, Northest, and United
Contract Mail Service
first scheduled passenger airline
1914, Tampa Airboat Line
When did subsidized air service start
1918
what did federal regulation do
Stabilize the Industry
Improve Air Safety
Reduce Cash Subsidies
Civil Aeronautics Act of 1938
Created the Civil Aeronautics Authority (CAA) or Civil Aeronautic Board (CAB)
“Early FAA”
6 functions of Early FAA
Regulation of passenger fares and rates Granted and allocated routes (domestic) Established air mail rates Approval required for any air transport related to… -Mergers -Acquisitions -Consolidation
Federal Aviation Agency
Created in 1958
Deregulation PROS
increased effciency
lower prices
capture of CAB
increased service
Deregulation CONS
predatory pricing
destructive competition
monopolization
loss of service
Post deregulation
rapid expansion
new entrants
hub and spoke route system
mergers and acquisitions
Department of Transportation:
administration of the nation’s transportation programs
Stimulate technological advances of transportation
Develop and recommend policies and programs to the president and congress
Federal Aviation Administration
Promotion of aviation safety while ensuring efficient use of the nations navigable airspace
Issue and enforce safety regulation and rules
Certification of aviators, aircraft, airports, etc.
Conduct aviation safety research and development
Manage and operate the national airspace system
National Transportation Safety Board
entirely independent government agency
Required to determine probable cause of any accidents related to: civil aviation, highway, railroad, major marine, and pipeline
Under the transportation act of 1974, the board is required to take certain actions during and after an accident investigation
Transportation Security Agency
created in 2001, in response to the september 11 hijackings
Responsible for federal security screening of passenger air transportation
Discovers, prevents and deals with threats to transportation security
Coordinate intermodal security
Major Air Carriers
> $1 billion in annual revenue
National Air Carriers
$100 million to $1 billion in annual revenue
Regional Air Carriers
Airline Innovations:
Hub and spoke system
Frequent flyer programs
Sophisticated reservations systems
Code sharing / Alliances
ASM
Available Seat Mile
RPM
Revenue Passenger Mile
CASM
Cost Per Available Seat Mile
RASM
Revenue Per Available Seat Mile
oligopoly
high barriers of entry
takes a lot of capital to enter
requires high technical know how
Management
the process of achieving an organization’s goals through coordinated performance of five specific functions
Planning, organizing, staffing directing, and controlling
Organization
the framework within which the management process can be carried out. It is the structure that enables a large company to attain the same efficiency as or greater efficiency than a small firm run effectively by a few employees
Levels of Management
Top
Middle
Operating
Top Management:
the policy-making group responsible for the overall direction of the company
Middle Management:
it is responsible for the execution and interpretation of policies throughout the organization
Operating Management:
it is directly responsible for the final execution of policies by employees under its supervision
Administration
a major unit within the company, such as flight operations, engineering, marketing, or human resource
Board of Directors
it is the chief governing body of a corporation; board members are elected by stockholders and can include individuals from banks, hotels, former political and military leaders
