Organization and Business Processes

De La Salle University Mr. Glenn Sipin

An Analysis On the Different Business Processes Under the Aviation Industry

Members Clarese Bautista Kathlyn Sanchez Angeli Tiu Daniel Galang

Section: S13

Table of Contents
Abstract p3 Industry Background . P4-5 Top Companies .. p5-9
Asiana Airlines .. p5 Singapore Airlines . P5 Qatar Airways p6 Cathay Pacific p6 Air New Zealand ... p7 Etihad Airways .. p7 Qantas Airways . P7-8 Emirates . P8 Thai Airways . P8 Malaysia Airlines ... p9

Selected Companies to be Benchmarked ....... p10-40

AirPhil Express .. p10-17 Cebu Pacific Air p18-26 Shanghai Airlines .. p27-31 Air China ... p32-35 Iran Air .. p35-40

Major Business Processes of the Industry . P41-44 Bibliography .p45

Abstract The airline industry with various departments and various industries has different processes in their operations and workload. In this paper, we discussed about the ten best airlines in the world, and most importantly, five airlines which we benchmarked. There are a lot of similar process as well as difference, nevertheless, airline industries processes are all cross-functional because there are a plethora of tasks for their operations. The analysis also includes graphs and a final proposed graph for the entire five companies presented with narratives to further expound the flowcharts. It is to further assess companies on their functional units which cuts across different departments and the so called cross functional process. All airline industry today has implemented this process since it is only the most effective way of ushering passengers into boarding the plane. Consequently, this paper concludes the general process based on the five companies benchmarked.

I.

Industry Background According to Philippine Airlines former President and Chief Operating Officer, Mr. Avelino Zapanta, the airline industry is unique because it is composed of a manufacturing and a service oriented industry rolled into one; it has to avail products and services from their producers in order for them to serve their consumers. The producers of the airline industry include: Manufacturers that are responsible for the production of aircraft engine and parts, computer systems. Government that creates laws and regulations regarding flight activities; government departments that are concerned are the Bureau of Customs and the Bureau of Immigration. Aviation Services include insurance/leasing and maintenance. Airports provide a place where aircrafts land and take-off; they also provide a temporary place for travelers to stay. And Airlines that is composed of operators and carriers that provides special services and general aviation. The consumers of the airline industry on the other hand include: Passengers and Freight. Like other industries, the aviation industrys success lies on the effective internal management of the factors that will yield the envisioned output to its customers; however, the airline industry rely their wide area of supply line resources from global suppliers which makes them different from other industries. The airline industry had been continuously active for the past 100 years due to the timeliness and the convenience that it offers to transport goods and people from its origin to its destination. But there were also times when the airline industry was set back due to unforeseen events. Some of these events like the 1997 Financial Crisis, 911 attack, SARS outbreak though disastrous, were able to cause further improvement or precaution in the industry. First, the 1997 Financial Crisis did not only devastate economies located at the East Asian region, but it also led to the temporary closure of Philippine Airlines. Secondly, the 911 terrorist attacks have caused a number of European airlines to be shut down due to mothballed aircrafts. Lastly, the SARS outbreak has left the greatest destabilization among all; the SARS outbreak caused the immediate recession in air traffic worldwide. Those events also brought about insurance companies refusing to cover third party liabilities, flight guarantees only offered by rich countries to their people. Despite of the devastating events, the airline industry was able to recover soon together with preventive measures; Kelvar cockpit doors, thermal detectors, x-ray machines were made available in the Philippines and worldwide.

In the Philippines, the threat of new entrants in the industry is low because a stakeholder should have a large amount of money prior to open his own airline. There is a high power vested upon the suppliers because there are only two dominant suppliers (Boeing and Airbus). The powers of buyers are low because the operation of air transportation is costly. There are no available substitutes that will replace the timeliness and cost-effectiveness of air transportation. Lastly, competition in the industry is low because there is a dominant airline that is operating which is Philippine Airlines. II. Top Companies

1. Asiana Airlines Asiana Airlines is one of the two major airlines in South Korea and it is known for its hospitable flight attendants and out of the world in inflight experience. What makes Asiana Airlines to be the top 1 airline in the world is because of the excellent inflight services such as a wide range of food choices, accommodating flight staffs, 180degrees bed-type seats, and many more. For pure relaxation flight experience, Asiana Airlines stand out against other airlines company (Top 10 Airlines of the World, 2011). Looking at the technological side, the usage of mobile phones and Internet access is one of its services. Also, the AVOD or Audio Video on Demand is a selection of movies, games and music that can be played in a large monitor in every bed-type seat. The power suppliers that make the services of the airline possible are Rolls Royce, Boeing, and Airbus. As of the year 2010, the total revenue of Asiana Airlines is 5,373,654.3 KRW (Korean Wons). Its Operating Income is 675,395.7 while its net income is 215,551.2. Asiana Airlines competes in transportation services sector with its top three competitors namely, Cathay Pacific, Japan Airlines, and Korean Airlines.

2. Singapore Airlines Singapore Airlines, abbreviated as SIA, is one of the top leading airlines in the whole world. During the 2011 World Airline Awards, Singapore Airlines is ranked 2nd in the leading airlines among the numerous airlines in the globe. The company retained the position as second since last year (2010). Its main hub is currently at Chiangi Airport with countless flight destinations in which the most prominent are at Asia mainly south, southeast, and east. Boeing and Airbus are the suppliers of the aircraft, which makes its extraordinary services possible. SIA has an alliance called Star Alliance that codeshares from different airlines. They also have their flyer program named Kris World to support the use of the gadgets and other forms of entertainment. As of December 2010, the market capitalization of Singapore Airlines is 14 billion US Dollars, Its revenue is $14,525.8

million, its operating income is $1,271.3 million, and its net income is $1,419.0 million. SIA toughest competitor is Qatar Airways; they have been battling to climb up in the ladder of top Airlines ever since.

3. Qatar Airways Qatar Airways is one of the leading airlines in the world. Its main hub is at Doha International Airport and its flight destinations are across the following countries: Africa, Central Asia, Europe, Far East, South Asia, Middle East, North America, South America and Oceania. As expected from airlines, power of buyers are low since the cost of travel is quite expensive and the demand for overseas travel comes rarely in an unimportant event. The renowned supplier of Qatar Airways is HRG UK, which gives costumers the service they deserve. The target revenue of Qatar Airways was behind its goal by 6% as expected and its net income also decreased to USD400 million. However the civil unrest was replaced by good news, 7.8% increased economic growth for the six nation Gulf Cooperation Council made up for the industrys shortcoming. Qatar Airways also has its very crucial competitors, and its most likely competitor are Singapore Airlines and Asiana Airlines since the two industries are one and two steps behind Qatar Airways in terms of service, and income.

4. Cathay Pacific Airways Cathay Pacific was founded during the 1940s by, an American, Roy Farrell and, an Australian, Sydney de Kantzow in Hong Kong. Cathay is considered as the biggest airline in the airplane industry in Hong Kong operating under Swire group, its parent company. Currently, they are under the command of Christopher Pratt--the Chairman of the airline. They offer first class, business class, premium economy class and economy class. Passengers can choose what service they would like to get. Cathay pacific continues to please its customers through improving its facilities and services. In the previous years, they have provided kiosks around the airlines; Check-in through the phone could also be done. Together with this, they have also integrated social media to share its ideals with the customers. The suppliers that are considered as one of the key elements of the Airways are Boeing and Airbus. Cathay Pacific has a total Revenue of HK $89,524million and net income of HK $$14,048 million last 2010. Two of Cathay Pacifics competitors are Hong Kong Air and Dragon Air. But last 2009, Cathay was able to own Dragon air as their subsidiary but despite of this situation, Cathay said that they would still operate separately. Hong Kong air on the other hand was just formed last 2001 with less than half of Cathays fleet and cargo size leaving Cathay the renowned airlines in the industry.

5. Air New Zealand Air New Zealand was founded by a flying boat company during the 1940s as Tasman Empire Airways Limited and was renamed as Air New Zealand in the 1960s. This is the now the only airline that can circumnavigate the world operating under their CEO, Rob Fyfe. Air New Zealand lounges and clubs wherein members may check in exclusively get the seats that they prefer, check in extra baggage etc. They also have kiosk around the airlines for check-in convenience. Aside from this, they are also offering air points so that customers would be patronizing their airline. The suppliers of Air New Zealand are Boeing and Airbus; they are responsible for majority of the services with in the airline. The airline acquired a profit of 82 million New Zealand dollars in the previous year. Air New Zealand is owned by the New Zealand Government, which they have 73.72% of its shares.

6. Etihad Airways United Arab Emirates nationwide airline is the Etihad Airways; Abu Dhabi is known to be the airlines hub. It was established by Royal (Amiri) Decree way back in July 2003. In just a span of 8 years, it has climbed its way up to the worlds top leading airlines. The airline aims to depict the finest of the Arabians hospitality, and to further improve the reputation of Abu Dhabi as the heart of hospitality throughout the country. Giving the passengers a superior traveling experience is the goal of the airlines. They relate to passengers by determining the services and products that would satisfy the guests if they themselves were in the passengers shoes. The airline provides extremely comfortable chairs, they use recently produced entertainment systems, and they offer people a fine dining experience with flawless service. Not only do Etihad provide superior experience in-flight, but also on the ground, they make sure that guests are at ease and they are given a fast as possible service.

7. Qantas Airways Qantas Airways was founded in the year 1920 in Australia and it is considered the oldest airline company that is still operating. Although Qantas is not the best nor the worst airline, the reputation of Qantas Airways is still high because of the assurance that Qantas is number one on the safest Airlines. Even though it originated in the year 1920, it

never had a fatal air crash incident. In addition, Qantas guarantees that its passengers will always be on time of arrival. The airline has Boeing and Airbus as its suppliers for its services to happen and be offered to costumers. As of the year 2010, the revenue of Qantas group is A$13.772 billion while its Operating income is A$253 million and not being too far off, the net profit of Qantas is A$249 million (143 Aircrafts) (Qantas, 2011). Qantas Airways competes in transportation services sector with its top three competitors namely, Air New Zealand, All Nippon Airways, and Cathay Pacific.

8. Emirates Emirates is one of the most travelled airlines in the world. It originated in Dubai and it is also considered as the largest airline in the Middle East while it ranks number 8 on the top ten airlines of the world as of the year 2011. (Top 10 Airlines of the World, 2011) The reason behind it is that Emirates provides outstanding inflight entertainment to its customers. In fact, Emirates was awarded the World's Best Airline Inflight Entertainment for the reason that Emirates provides prominent services to its valued customers such as AeroMobile and OnAir Wifi in the sky which allows its passengers to have internet access and usage of mobiles phone during flight. Emirates is known for its inflight entertainment. One of which is the above-mentioned AeroMobile. In addition, Emirates Airline also provides a number of movie selections for its individual passengers and of course, a matching ambience for a cozy flight. The major contributors that make the services of the airlines possible are its suppliers Airbus, Boeing, GE and Rolls Royce. As of the year 2011, Emirates has more than 160 aircrafts and its operating profit rose 52.6% making (AED m 5,441) while its net profit increased by 52% (AED m 5,373)($1.5 billion) (emirates, 2012). Emirates competes in transportation services sector with its top three competitors namely, Air France, Etihad Airways, and Deutsche Lufthansa. (Top Emirates Competition, 2012)

9. Thai Airways Thai Airways started as a joint venture in the 1960s, which was made between Scandinavian Airlines System (SAS) and Thai Airways Company. SAS aimed to help Thai Airways Company to be a fully independent airline through guiding them in the different business processes involved. Finally, on April 1977, Thai airline became fully independent and are now one of the most renowned airlines in the world operating under Ampon Kittiampon, its chairman. Thai airways is excellent in terms of customer facing, it was awarded as the Worlds Best Cabin Staff and the Best Airline it the World on the year 2006. Its first class lounge was also recognized as the Worlds best on the year 2009.

Aside from these awards given by Skytrax, they have also received recognition from the World Health Organization for its remarkable hygiene measures. The accommodation services or accommodation seats for the costumers are the Royal First Class, the Royal Silk Class (Business), the Premium Economy, and the Economy Class. The suppliers of the airways are Boeing and Airbus. It has a parent company, which guides them on the decisions they make, and this is Thais ministry of Finance. Looking to the economical side of the company, its net income was 7.34 billion baht or 222 Million Dollars last 2009. It has good profit figures that make the company deserving its spot in the top 10 airlines.

10. Malaysia Airlines Malaysia Airlines was first known to be as Malayan Airways Limited. It was started by the cooperative vision of the Ocean Steamship Company of Liverpool, the Straits Steamship of Singapore and Imperial Airways to run an airline between Penang and Singapore. But as Singapore and Malaysia was separated and the partners that initiated the airlines also parted ways, the airline was given a new nameMalaysia Airlines. 20 years have passed by and the airline had acquired numerous awards for giving guests an exceptional service. The way airlines process their businesses is through satisfying costumers demands, to improve operational processes towards excellence, becoming aware of the full potentials of workers, and gaining partnerships among big industries in order to provide people with beyond excellent service.

III.

Companies to be Benchmarked

A. AirPhil Express Airphil Express or formerly called as Air Philippines is an airline company that was owned by William Gatchalian and established in the year 1995; fully operated on 1996 and was first based at Subic bay. Due to the shortcomings of management during the said time frame, the former Air Philippines had to stop its operation for a short span of time. At the current time, Air Philippines is owned by Lucio Tan group of companies and is now referred as Airphil Express. Airphil Express was also bought by Lucio Tan group of companies in the year 1999 and started to become sister company of Philippine Airlines. As of the year 2011, Airphil Express is considered the fastest growing airline company that has gained 19% of market shares in the industry. Due to the fact that Airphil Express is considered a low-fare airline that provides quality service to its passengers, the airline had reached over 1.9 million passengers as of the year 2010 an continually increasing. (airphil express, 2011) The hanger of Airphil Express is currently located at Pasay City, Philippines and the airline company runs domestic and international flights. All in all, there are 33 destinations, including international destinations, which the airline company operate its flights. As of the current, the company has three air fleet namely, Bombardier Q300, BombardierQ400, and the new Airbus320 which will start to operate on the year 2013. (Airphilexpress, 2011) The success of the airline company is most likely the outcome of the success of its processes. To take a closer look on how the company performs, let us examine first the core process in that the company practices to delegate the tasks among different departments to ensure that quality service is provided to its customers. The core processes to be shown is the entire process in which the airline company conducts its workflow from booking a flight of a passenger until the very end in which the passenger lands to his/her desired destination. The processes works cross-functionally and does involve the participation of other departments in coordination of providing its quality service to its passengers.

PASSENGER Allow Passenger a certain period to confirm the Manuel reservation ticketing or AutoTicketing

Airphil Express Receive call/email reservation

Request Reservation

for

Enter Data in computerized reservation system Cashier receives payment

for

Ticket

Receive confirmatio n of Reservation

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Now that weve examined the core business process of Airphil Express from booking a flight to landing on the destination, let us summarize the steps in which different departments participation will be explained. All throughout the process, the Operations department has Most of the activities done since the main proponent of the process is the flight experience of the passengers. Before we begin summarizing the core processes, let us view the Operation department in which most of the above mentioned processes will fall to. For the Operations department, there are four subgroups that does the workflow functionally depending on the type of service to the passengers. Although cross-functionality is a more desirable workflow, the operations departments four subgroup focus on different functions assigned to each group. Once again, we are to examine the processes of the airline and not to analyze the process to determine if the company needs reengineering. The four subgroups of operations department namely are Airport Services, Maintenance and Engineering, Inflight, and flight operations.

OPERATIONS DEPARTMENT
MAINTENANCE AND ENGINEERING

AIRPORT SERVICES

INFLIGHT

FLIGHT OPERATIONS

Airport services focuses on the processes of ticketing, checking in, baggage services, and other services that are most likely to be done inside the airport. It is their main objective to ensure that their passengers are able to pass all of the requirements before passing them to their flight stations. Next is the maintenance and engineering group which centralizes on keeping the aircrafts secure and free from any malfunctions to ensure that each flight is secured and amenably safe. Moving forward, the inflight crews are composed of the flight attendants which job is to accommodate the needs of the passengers on board. All of the work that is included in the aircraft falls to the inflight group. From flight amenities to the meals and beverages offered to the passengers on board, it is all part of the inflight group. Lastly, the flight operations are those which gives the go signal to the flight and is in charge of the scheduling, adjusting, and delaying flights. All of these subgroups work functionally in order to achieve the goal of the operations department that is to ensure that every flight is of quality service to every single passenger. Now that the Operations group was already identified, let us now distinguish the different departments which support the operation department in ensuring quality service to the passengers. First is the inbound logistics which job is to manage the booking of flight and giving

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free baggage allowance to customers. It involves the processing of reservations, payment of ticket, and weighing of baggage. Next is the IT or technology development which is in charge of keeping records of online booking, reservation, payments, etc. to support other departments and mainly to keep the workflow within the airline as efficient as possible. It also supports the inbound and outbound logistics. Last is the outbound logistics which does the job after the flight. They are in charge of tracing the baggage of customers and delivering those baggages to the baggage center of the airport. As for now, the aforementioned departments will be the main focus since the core processes of Airphil Express mainly involves the coordination of the mentioned departments. Now, let us examine more clearly the entire process within the airline company, Airphil Express. As for the first process which is the booking for reservation, it can be done through email or through phone call. Whichever is to be done, the IT department is in charge in booking the passenger and would be entered in a computerized reservation system. After completing the reservation process, an allotted time will be given to the passenger to confirm the reservation. After confirming the reservation, the inbound logistics will be in charge of issuing the ticket to the passenger. The name of the passenger would then be entered to the database of the flight to assure that the passenger has a reserve seat for the flight. Passing on, the issued ticket would then be checked before entering the airport to recheck if the ticket is legitimate. After that, the baggage of the passenger would then be passed to the baggage counter and the airport services group of the operations would take charge on processing the baggage. The next phase is in the check-in counter wherein the ticket will be presented to validate the flight of the passenger and to take the baggage for boarding. A boarding pass would then be given to the passenger after checking-in the passenger. Once again, the airport service is in charge of this phase. The next thing that the passenger has to do is to proceed to the gate of departure and wait for the flight. The flight operations would then be in charge of giving the go signal if the flight to take place is all set. In contrary, if a certain event is to happen which may cause a delay of flight; flight operations will also be in charge of adjusting the schedules and delaying the flight. Setting that aside, After the waiting period, the passenger may board the aircraft and to take the specified seat issued to the passenger. After entering the aircraft, the inflight group under operations is in charge of providing quality inflight services to its passenger. Afterwards, when the aircraft had already landed to the destination, the outbound logistics would then be in charge of tracing the baggage of passengers to be delivered to the baggage counter of the airport. After all of the processes, the last thing left for the passenger to do is to retrieve the baggage and to leave airport. The entire core business process is done for operating the inflight boarding of passengers. Henceforth, the entire process would then be repeated if the customer wishes to book another flight to return from the former destination of the passenger.

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B. Cebu Pacific Air

CHECK IN AND BOARDING ACTIVITIES

Arrive at airport

Place bags at X-ray machine

Fall in line at CPA check in customer

Maintenance of check in area & visibility of proper signage

Service department

Place baggage on weighing scale & give ticket to check in agent

Check in agent asks for seat preference & fragile items in baggage

Process boarding pass, baggage claim slips & put tags on baggage

Baggage handling services

Check in agents give brochures

Inbound Logistics

Check in agent gives ticket, boarding pass & baggage claim slips

Production/ Operations Department

Maintain database

Proceed to pre-departure area

Continuous Training

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FRONT STAGE Local singing group performs Filipino songs

BACKSTAGE

Wait for boarding announcements

Maintenance of aircraft, loading of baggage, food preparation, fueling & ground handling services

Purchasing department

Boarding agent announces flight

Proceed to gate & present boarding pass

Boarding agent checks documents

Proceed to aircraft

CPA personnel assists all passengers esp. Pregnant, seniors & handicapped

Briefing of Cabin Crew

Present boarding pass to sercurity personnel for final check

Outbound Logistics

Board aircraft

Technical check up by Pilot

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RESERVATIONS AND TICKETING FLOWCHART OF ACTIVITIES FRONT STAGE Consult directory & make a call
Directory Advertisement

BACK STAGE

Reservation agent answers call

Make reservations & date

Access computer system (VTM) & enter data

Maintenance of corp. Business System

Information Technology

Reservation agent recaps

Reservation agent asks frequent passenger if arrival assistance is needed

Enter ticketing office

Maintain cleanliness of ticket office

Janitorial Services/Human Resource

Guard greets & gives queing number

Maintain adequate supply of number slips

Purchasing Department

Sit down & wait for turn, read magazing or watch TV

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FRONT STAGE

BACKSTAGE
Ticket agent starts timer

Approach counter when number is called

Ticketing agent greets and attends to customer

Access VTM

Maintenance of Computer System

Information Technology

Sit down & wait for processing

Pay

Cashier accepts payment & prepares ticket

Maintain supplies and equipment

Purchasing department

Get ticket & leave

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In-Flight Flowchart of Activities FRONT STAGE

Cabin crew greets passenger in local language

BACKSTAGE

Look for designated seat

Cabin crew assists passenger, place bags in compartment

Services

Passenger get ready for take-off

Pilot checks if aircraft is ready for take-off

Cabin Crew checks if seats are in proper position & seatbelts are fastened

Pilot puts on seatbelt sign

Cabin Crew welcomes passengers & performs safety demo

Aircraft takes off

Pilot checks with control tower

Cabin Crew offers newspapers

Newspaper subscription

Services

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FRONT STAGE

BACKSTAGE
Preparation of snacks Food Services

Cabin Crew serves snacks and Magic drawing to kids

Cabin Crew conducts games

Preparation of prizes

PIlot announces information on landmarks

Cabin Crew gets trash and newspapers

Arrange newspapers and dispose of trash

Passengers get ready for landing

FAs handout Service Encounter Forms

Cabin Crew checks if seats are in proper position

Pilot puts on seatbelt sign

Cabin Crew announces landing

Aircraft lands

Pilot parks the plane

Ground crew prepares canopied stairs

Ground Handling Services

Passenger gets off the aircraft

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Arrival Flowchart of Activities FRONT STAGE

Proceed to baggage retrieval area Baggages are unloaded

BACK STAGE
Baggages are placed in designated carousel

Get baggage

Maintenance of carousel

Outbound Logistics

Security personnel get baggage slips

CPA personnel assists frequent passenger (Arrival Assistance)

Services

Leave Airport

Cebu Pacific or Cebu Pacific Air is currently the leading domestic airline in the Philippines, overthrowing PAL as the second. According to statistics, Cebu Pacific has the most passenger around 11 milion for the year 2011. Its airplanes are residing in Ninoy Aquino International Airport, Mactan-Cebu International Airport, Zamboanga International Airport, Francisco Bangoy, and Diosdado Internatonal Airport. It upholds the name of being a cost-effective airline directing a goal of affordability for Filipinos to embark. The processes above are classified according to their purposes including check-in and boarding of plane, reservations of ticket, In-flight, and arrival of plane processes. Cebu Pacific is following a cross-functional process having different departments cut across various scattered processes in the airline industry. Given the graphs, the main departments involving the processes are Outbound Logistics, Inbound Logistics, Services, and Purchasing/Finance while the minor processes are Information Technology, Human Resource, Marketing, and Maintenance department.

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Main Process: 1. Outbound Logistics For any airline industry, outbound logistics is the most important department of the overall process whether it is from check in up to arrival of plane apparently because it is responsible of transporting all of the needed belongings of passengers, necessary materials for flight operations, and the passengers itself. Its operations start from the customers check in of baggage up to the arrival of destination. Upon checking in of baggage, a Cebu Pacific employee will gather all of the baggage and place it on the conveyer belt leading to a storage place for baggage in the plane. Hand carried baggage is excluded from the transport thus is taken by the passenger along all of the important documents like boarding ticket, and passport. After all of the process gone through by the passenger, the plane is now ready to transport its passengers to the desired destination. Next, all of the baggage is perched on the conveyer belt again for redeeming of luggage. The role of the department ends when passenger gives the boarding ticket and leaves the airport. 2. Inbound Logistics Operations such as transporting luggage within the airport, food transport, fuel transport, and other integral material needed by the passengers and the airplane are handled by this department. With the help of the conveyer belt, luggages are transported from one place to the airplanes storage place. The transportation of food is dispatched via buggy/truck along with the aid of catering services. Another task carried out by this department is the re-fueling of the airplane transported via truck or buggy too together with the assistance of maintenance department. 3. Purchasing/Finance In managing boarding ticket payment, luggage payment, tax payment, ticket reservation and pecuniary activities, this department is in charge of collecting and organizing errands under these. Although purchasing only happens on check-in and arrival, it is still imperative to recognize this department as one of the major cores. For one reason, it collects the boarding tickets which are important for passengers to progress through the process. It also holds the documents required by different departments before boarding on the plane. 4. Services/Operations Customer satisfaction exemplifies the main purpose of this department and from what the graphs show, it has numerous tasks and process for the service department such as checking of passports before entering airport, assisting passengers when sorting luggage, assisting of elderly and handicapped people, food services on the airplane, and other services inside the airplane and airport. Overall operations are also handled by this department hence is truly essential in the airline business because the pay is mostly dedicated to the services it provides and it attracts customers in experiencing or riding their airline. Supporting Process: 1. Information Technology Maintenance of computers and other technical errands are managed by the IT department. In the case of airlines, it maintains the performance and efficiency of computers connected to different sets of department contributing to the entire effectiveness of the

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process. Its role is eminent on the reservation of tickets since Cebu Pacific uses an online reservation booking of tickets which connects to computers of the industry. Together with maintenance department, they keep order in the information systems. 2. Human Resource The service/operations, purchasing department lies on the human resource department making it also an essential functional unit, although it is not a major core process. The reason behind that is because the services and other departments only get human power in this department, all other operations are not significantly involved in the HR dept. Recruitment is beyond the four processes presented so it lies on minor processes not mentioned. 3. Maintenance This includes fueling of airplane, maintaining airplanes condition, facilities maintenance, and other assets of the airline industry in need of vigilance. It supports the overall facilities in the airlines in order for it to work properly, together with the HR, their task force combined keep the industry and airplane in condition. 4. Marketing Responsible for promoting, advertising, and enticing audience, it requests recognition and acknowledgement to the outside audience preferably accentuating the banner of the industry. In the case of Cebu Pacific, its banner is a cost-efficient airline having low prices affordable to middle and high class society. It is of the supporting process because it aids the audience popularity of the airline not breached by the main processes.

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C. Shanghai Airlines
Establishment of Flight Plans

Passenger Service Process Flowchart:

In A Big Picture

Publicize Flight Schedule, Price, and Seats Available

Accept Passenger Reservation

Check passengers documents for identification

Sales Department

Accept Special VIP services

Fill in info in ticket

Necessary alterations of ticket

Charge the fare

Forecast Passenger Info

A
Receive incoming flight telegraph

Opening of counters 90-120 minutes before flight

Check identification documents, plane ticket; and accept luggage

Accept Random business document

Give boarding pass, luggage tag; and charge overweight luggage

Guide passengers off plane

Departur e

Provide special services

Unload luggage

Arriv al

Prepare Load Balance Sheet

Provide Services

Special

Luggage carried to aircraft Delivery of Checked Luggage Guide passengers to board

Send departure telegraphs

Luggage Inquiry

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Shanghai Air is one of the earliest commercial airlines that were established in China. The company supports domestic and international passenger service, cargo service and proxy services. Recently, it has a total of 25 airplanes that are able to fly 136 routes going to 48 of Chinas big cities and 5 international cities. PROCESS SUMMARY: Outbound Logistics Financial Mgt Human Resources
Operations

Sales Info

Inbound Logistics

Marketing

Based on the complete process diagram, the group was able to identify the different core and supporting processes: 1. CORE PROCESSES: OUTBOUND LOGISTICS UNIT As an entity in the airline industry, outbound logistics will always be a core process because the transportation of a person or a good from its origin to destination occurs. SUPPORTING PROCESS: OPERATION UNIT As we can see, outbound logistics need the help of operation units or production unit that will yield a particular service when we talk about work in the airline industry. Those operation people are in charged to check the passengers documents for identification, opening of counters for them to stay in the mean time, check all necessary documents before flight, check in of luggage, give boarding passes, and charge overweight luggage. FURTHER SUPPORTING PROCESS: HUMAN RESOURCE UNIT The operational units has to be supported by the human resource unit because human resource unit is responsible for recruiting, analyzing and training people before they are deployed to a certain position in the company. 2. CORE PROCESSES: INBOUND LOGISTICS UNIT As an entity in the airlines industry, inbound logistics is considered as one of the core business process because this is where the landing of people happens and this is also where the planning before scheduled flight happens.

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SUPPORTING PROCESS1: OPERATION UNIT Like the outbound logistics, inbound logistics also need the help of operation units or production units that produces service that is needed. As we can see, they are the ones who makes the flight plans, the ones who make the load balance sheet to determine if the plane is overloaded with things or not. And when there are passengers that will arrive soon, they will anticipate for the coming of a telegraph to know the details of the passengers in order to serve them better. And after receiving the telegraph, they will provide the necessary services of landing like the unloading of luggage. SUPPORTING PROCESS2: INFORMATION TECHNOLOGY UNIT Information Technology is added as a part of the value chain in the airline industry because as we can see in the full process flow diagram, outbound logistics sends telegraphs to inbound logistics so it is concluded that they used information technology as a tool for convenient communication. That is the reason why information technology can be considered as another supporting process of inbound logistics. 3. CORE PROCESSES: SALES UNIT As we can see on the complete process diagram, most of the processes of ticketing are under the sales department unlike in Air China that process its sales on inbound logistics, the sales people in Shanghai Air are the ones who will accept passenger reservations, confirm and make necessary alterations in a ticket, charge the travelling fare. In addition to that, they are also the ones who will give travelers information to outbound logistics for them to know how many people are going to be transported out of the country. Aside from these services, the sales are also responsible for the collection of random business documents or receipts that are received due to a transaction that happened in the airplane. 4. CORE PROCESSES: MARKETING UNIT No matter what industry we maybe into, marketing is always a vital process of a company because it is through marketing wherein we can show our companys strength in order for us to attract clients. SUPPORTING PROCESS: RESEARCH AND DEVELOPMENT UNIT In order for the company to know its strengths, weaknesses and the markets needs, they have to research about it and develop products that will hit the market that is why research and development is considered as a supporting process of the marketing unit. 5. CORE PROCESSES: FINANCIAL MANAGEMENT Financial Management is important in an airline industry because through those documents, we would be able to assess how the company is currently performing by comparing those values with the previous years value. With financial management, the company would be able to properly manage their assets, liabilities, owners equity; in addition to that, it will also serve as a guide in making economical decisions.

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SUPPORTING PROCESS: PROCUREMENT Procurement can be considered as a supporting process of financial management because procurement is where the company acquires materials cost-efficiently in order to produce a finished product. And upon acquiring those products, they would have a direct effect on the companys financial statement so in order to manage the companys finance properly; they should also give attention to procurement. They should make sure that there is no unnecessary expenditure that are happening so that the company would not lose money. D. Air China
Marketin g Plan Flight Plans Control of Seats Ticket Sales
F L I G H T O P E R A T I O N I N F O M G T

Check in; luggage collection loading

Maintenance & Guarantee Flight Crew Preparation Refuel

Cabin Cleaning

Meal Preparation
Baggage Loading and Unloading

Stowage Dispatching

O N S I T E D I R E C T I N G

Joint Investigation

Terminal Services (wait for plane)

Check in services

Luggage Release

Baggage Handling Guide Visitors

Arrival Services

Cabin Services

Farewell Travelers

Green Arrows: main process Violet Arrows: flow of info

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Air China was formerly the Civil Aviation Administration of Beijing, China. In the 1950s, when it officially formed Air China; it was known to be the main airlines that caters domestic and international passenger services and cargo transport. But now, compared to Chinas Southern and Eastern airlines, Air Chinas scale is a lot smaller compared to its competitors. Recently, it was said to have 176 working airplanes and is in the process of renewing some of them. PROCESS SUMMARY:

Outbound Logistics

Procurement

Marketing
Facilit ies Mgt

Sales
Operations

and

Customer

Finance Management Inbound Logistics Human Recruitment Analysis of Requirements Proper Training

1. CORE PROCESS: OUTBOUND LOGISTICS UNIT SUPPORTING PROCESS: OPERATION UNIT Since the airline industry aims to transport people and good from its origin to its destination, it focuses on the outbound logistics wherein theyre responsible for the people that are leaving the airport; in addition to that, in order to support the outbound logistics in performing its necessary operations, the production and manufacturing unit or the operational unit in this case goes together with outbound. As we can see in the diagram, outbound logistics are responsible of the preparation of flights; they clean the cabin, load and unload baggage, dispatch things. In addition to that, they are also responsible for the checking-in of the passengers, investigation of materials that are in the luggage, terminal services that are offered while waiting for the plane and cabin services. FURTHER SUPPORTING PROCESS: HUMAN RESOURCE UNIT In order for the flight attendants, cabin crews, front office personnel to be able to do their designated tasks correctly, they should be properly trained under the human resource unit. The training that is offered to the employees is critical because the employees will be the one who will attend to the passengers that will receive a lasting good or bad impression after the trip.

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1.2 SUPPORTING PROCESS2: CUSTOMER SERVICE UNIT FURTHER SUPPORTING PROCESS: HUMAN RESOURCE UNIT In order to address the different concerns made by the passengers, there should be a customer service unit that supports the outbound logistics unit to ensure that there would be no problem in the transportation of passengers or goods from its origin to its destination. The customer service unit then is further supported by the human resource unit so that the people that are under the customer service unit would be properly trained to address concerns. In the airlines industry, customer service unit is separated from sales because customer service unit focuses more on how to enhance the service that is given by the airlines to the passengers while the sales falls under inbound logistics wherein they are the ones who are responsible for the plans, ticketing and sales related issues.

2. CORE PROCESS: INBOUND LOGISTICS UNIT SUPPORTING PROCESS1: OPERATIONS UNIT After the person or the goods has arrived, the operations unit should assist them in landing. As we can see, the inbound logistics are in charge of baggage handling, guiding the visitors, and luggage release. SUPPORTING PROCESS 2: FINANCIAL MANAGEMENT UNIT After the person or the goods has been transferred to its proper designation, the inbound logistics now is responsible for the peoples entrance and services inside the airport. Under inbound logistics, there is a number of supporting unit under it; one of the units that support the inbound logistics unit is Financial Management because they have to check their financial capacity when there is a need for them to acquire fuel for plane or even the plane itself. They should also refer to their financial statements for them to be able to evaluate their previous performance in order to assess their current performance. In addition to that; this will also give them the information to make the necessary improvements for the future. SUPPORTING PROCESS 3: PROCUREMENT UNIT Another unit that serves as support to the inbound logistics unit is the procurement unit. Due to the necessity of airlines to acquire materials such as raw food for them to produce meals, fuel for them to be able to run the airplane;(like what we can see in the diagram) they should be able to be cost effective in any economic decisions that are made in the company. Without the procurement unit, there might be unnecessary overspending.

SUPPORTING PROCESS 4: SALES UNIT Another unit that serves as support to the inbound logistic unit is the sales unit. Because inbound logistics covers the systems that are used for passenger reservation, fares that are assigned to a certain destination and ticketing needs, therefore it has to be supported by the sales unit. In conclusion, these three supporting units should work hand in hand in order to properly execute the core process which is the inbound logistics.

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3. CORE PROCESS: MARKETING UNIT SUPPORTING PROCESS 1: RESEARCH AND DEVELOPMENT UNIT Marketing Unit is considered as one of the core business process because this is how the company attracts attention from people, how they convince them that they are the ones who would be able to offer the best services to them. And in order to properly market the strengths of the airlines, they should first conduct a series of research on the market so that they would be able to target a certain part of the business industry to achieve competitive advantage. ENTIRE SUPPORTING PROCESS: FACILITIES MANAGEMENT UNIT Facilities management is considered as one of the core business process because it is important for the facilities of the airlines especially the airplane to be in a good condition for them to be able to transport people safety from their origin to their destination. If their facility is wretched, they would not be able to offer their service; nothing would follow after this step. As we can see, facilities management is the first

E. Iran Air Iran Airs Passengers Flight Experience: Departure

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Departure Confirm Reservation and issue ticket Update Luggage Info

Reservation confirmed

Book Ticket

Check In

Luggage Check In

Security Screening

Boarding

API/PNR data

Government Authority Data

Inbound Logistics

Research and Development Inbound + Operations Outbound + Operations Marketing Financial Management

Sales & Costumers Service Operations/Production Outbound Logistics Human Resource Procurement Facilities Management

Arrival Inbound Logistics Research and Development Inbound + Operations

Sales & Costumers Service Operations/ProductionOutbound + Operations

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Outbound LogisticsProcurement Marketing Human ResourceFacilities ManagementFinancial Management

API Updates

Disembark

Authenticate ID

Collect Bag

Onward Travel

Baggage to carousel

Iran Air started off with a name Iranian Airways, but due to certain events that have happened throughout the history of Iran, it got merged with Pars Airways. Because of the emerging of the two airlines, it brought to the birth of Iran Air. Iran Air is currently operates 35 international and 25 domestic destinations. Iran Air already had millions of passengers to be flied from different places, whether it is domestic or international. Also, they had already transported more then ten thousands cargo to different destinations. Iran Air was established because of the peoples desire to have a credible transportation service to different neighboring countries.

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PROCESS SUMMARY:

Outbound

HR

Marketing

R&D

Inbound
Sales Financial Management Procurement

Operations

IT

Core Business Process: Inbound Logistics Inbound logistics is considered as one of the core business process of the airline because this is the department where the process of travelling begins. The reservation of ticket, the booking of flight, the verification of the passengers identity, and updates with in the departure process happens. Not only do it considers the processes before the flight happens, but it also covers the landing and arrival to the destination. Supporting Process: Operations In the operations department, this is where the checking in of luggage, the screening of luggage in the security, the transfer of luggage in and out of the plane, and the claiming of the luggage happens. Supporting Process: Information Technology Almost all of the departments need information technology in their processes, but Inbound Logistics need it more. The main reason why Inbound Logistics need it more is because almost majority of the process that will happen when a person is traveling

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happens in Inbound Logistics. IT is needed from the reservation of ticket, to the booking of flight, to the updates on luggage, and to the information on the passengers are all controlled by a system that is maintained by the IT department. This is evident nowadays given the fact that our world is continually leaning to the advancement of technology. Supporting Process: Human Resources Human Resource department are in charge of training and recruiting employees that would be able to contribute to the goals and objectives of the airline. They make sure that everyone does their jobs well and every employee is able to meet the needs of the passengers.

Core Business Process: Outbound Logistics Outbound Logistics department are the ones who are in charge of checking in of the people who are travelling, receiving their ticket/s, going through the security screening, and transfer of passengers to the waiting room before boarding or transfer. Supporting Process: Operations Outbound is cross-functional with Operations because there are certain processes that they both cover. People also go through security screening which fall under operations of the airline. Both Outbound and Operations contribute to a same process that a person undergoes when he or she is travelling. Supporting Process: Human Resources Human resource department is contributes majorly in the Outbound Logistics. No one will move or the whole process of the traveling of the person will not be possible if there will be no employees to give service to their needs. This department is responsible for recruiting people who deserve the job, assessing if they are able to meet the companys requirements, and analyzing what other ways employee could do to satisfy the needs of a passenger. Core Business Process: Sales Prices of tickets and packages that are offered in certain destinations falls under the Sales department. They are in charge of keeping up with the latest trends on discounts or offers among their competitors. Thinking of possible ways on how to increase clients and persuade people in flying their airlines through the different tactics in selling are the jobs of people in the department.

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Core Business Process: Marketing Marketing department is in charge of making advertisements or commercials on why would people choose their airlines for travelling. Their job is to show to the public what their airlines has to offer, and that must be in a persuading manner in order to gain clients. Supporting Process: Research & Development This department is in charge of doing assessment and research on different ways to improve the processes in the airline. They collect and analyze data about what they can still improve in the different departments that makes up their company. Core Business Process: Financial Management Handling of the assets, liabilities, and owners equity is what the Financial Department does. They are in charge of making financial reports, encoding the debits and credits in the company. With the analysis that this department makes, the company would be able to determine of they are being profitable or not. It is also through them that the company would be able to determine the problems financially that the airline is facing. Supporting Process: Procurement Procurement is an important factor of the Financial Management department because what it does is the purchasing of different items that would be needed in the airline such as, planes and fuels. They are in charge of controlling and monitoring the budget of the company. A bigger company would be very beneficial because it would increase the companys bargain power. The economies of scale are maximized because of the help of partnerships that would make duties simpler.

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IV.

Major Business Process of the Industry

Based from the core processes defined from the companies that were discussed, there were similarities from the work processes performed by the departments on each of the company. The only differences are the respective functions of these departments that are part of the core processes. In example, for the Shanghai Air, the core process that actively participates in the workflow is the inbound logistics and outbound logistics while the operation unit is the one which supports the process. In contrary, for the Airphil Express, the Operations Department functions and deliberates the core processes while the inbound and outbound logistics supports the operations department of Airphil Express. While on the other hand, Cebu Pacific has merged the operations unit into the inbound and outbound logistics. Mainly, there were alterations of work process and job designation from different departments because the different companies practices different cultures. However, the process in which the different companies follow the workflow is somewhat interrelated to one another. Out of the five companies, there were common core processes that are defined with a corresponding support process from another department. Let us now analyze the five common core processes and three other support processes that are considered to be important in the entire business process of an airline industry. Major Processes Marketing For any airline company, it is always important to gain customers in order to generate profit. Marketing is a one of the most common core process to be identified since the transactions of the company lies within the smooth function of the marketing department. As for some reasons, marketing also provides a competitive edge to other airline company since the effectiveness of the department affects the success of the whole company. Inbound Logistics As for inbound logistics, in any airline company, it is always considered to be an important unit since it manages the booking process and securing the luggage of passengers. As for the other company, the inbound logistics happens to be in charge of the reservation process up to the issuance of ticket and checking-in of passenger and cargo. Generally, the works of inbound logistics are of those in the departure stage of the passenger.

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Outbound Logistics Similarly to inbound logistics, the outbound logistics is in charge of the luggage to be transported back to the baggage counter once the aircraft has landed. In other words, all of the work done by the inbound logistics would then be passed to the responsibility of the outbound logistics. Everything that is to be transported is part of the duty of the outbound logistics.

Operations The operations department is the over-all in charge of giving quality service to the passengers since all of the process will involve the operations department. Other important tasks are done under the operations; such of which are flight plan, airport services, flight scheduling, and the like. The operations department work hand-in-hand with all other department such as inbound and outbound logistics in order to create a smooth cross-functional workflow within the company. Mostly, all of the related inflight and ground activity tasks are subjected to the operations department.

Financial Management Like in any other company and industry, the finance is in charge of taking in profitable transactions to account these transactions to determine the financial status of the company. Finance also provides help for decision makers to determine the current status of the company and to visualize if the company needs improvements. Finance acts as a support process for top management to determine decisions to be made.

Support Processes IT For the technology development, they support all of the departments to ensure that efficiency of work is fully established. IT is the main support process of all since the need for disseminating information is the most important proponent of each department to ensure that the current process is on the right track. Also, IT enables cross-functionality among different departments since the use of the system enables all of the department to coordinate for the workflow. Human Resource Manpower is of course needed in an airline company to ensure that there is someone in charge of some tasks. The support of human resource is also of a big help for other departments since the workforce also contributes to the efficiency of the process. Just like

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in the checking of ticket pass, security personnel under HR are in charge of checking the passes of those that are to enter the airport. Research and Development Research and development helps the marketing and other departments to implement new strategies that will create a competitive advantage. It supports the marketing department by enlisting the markets needs so that the marketing department can take action to gain more passengers in the airline.

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V.

Bibliography

Airline Industry: Value Chain (2012) in Business Data Insight Retrieved March 19, 2012 on http://www.bizdatascreener.com/index.php?option=com_k2&view=item&id=18:airlineindustry&Itemid=12 Air China(2006) in Hong Kong Exchanges and Clearing Limited Retrieved March 19, 2012 on http://www.hkex.com.hk/chi/csm/news/shnews/20060730/601002_20060731_1.pdf Shanghai Airlines (2002) in CNINF Retrieved http://www.cninfo.com.cn/finalpage/2002-09-16/651845.PDF Airphilexpress Inc. (2011) Airphil from http://www.airphilexpress.com/ Express March 19, 2012 on

Retrieved

March

20,

2012

Airphil Express (2011) Airphil Express now fastest growing carrier, grabs 19% market share. Retrieved March 20, 2012 from http://airphilexpress.blogspot.com/2011/06/airphil-express-nowfastest-growing.html The Industry Handbook: The Airline Industry(2012) in Ivestopedia Retrieved on March 20, 2012 from http://www.investopedia.com/features/industryhandbook/airline.asp#axzz1nfG68s7v Airline Business top 100 airlines ranking-Asia Pacific (2012) in Flight Global Retrieved on March 20, 2012 from http://www.flightglobal.com/Features/world-airline-rankings/Asia/ Apostol, Escolar, Gregorio, Tugbang (1998) A Customer Service Plan For Cebu Pacific Air, Philippines Chitnis, A. (2006). Satisfaction Formation Process For Iranian Airline Passengers. Thesis, Tarbiat Modares University Faculty of Engineering Department Industrial Engineering Lulea University of Technology. Retrieved, March 21, 2012, from http://epubl.ltu.se/1653-0187/2007/008/LTU-PB-EX-07008-SE.pdf. The ideal process (SPT: Ideal Process Flow V2.0, 2006). Retrieved, March 21, 2012, from http://www.aci.aero/aci/aci/file/Free%20docs/IPF_V20_30_Nov_06.pdf. Iranian Airways was (About IranAir, n.d.). http://www.iranair.com/site/305/default.aspx Retrieved March 21, 2012, from

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