The Airline Industry Value Chain
Airline industry value chain
Inbound logistics
Primary activites
Stock control airlines must store and handle fuel, food, and drinks. Stock is managed to ensure reductions in stock turnover, thus reducing costs and wastage.
Route selection airlines must choose their flight routes. These will be selected upon desired routes, and deals negotiated with the airports. Airports are selected for their prime location, to allow consumers to get to their desired location. This then entails the scheduling of flights and crew.
Passenger services system software which allows the airlines to function "comprehensive passenger reservations, inventory control, fares, ticketing, and departure control functions" (AirportTecnology.com 2006). This allows airlines to reduce their costs of wages and paper transactions, and maximize utilization.
Yield management this allows the airlines to compare their available seats against demand for particular flights to price the tickets accordingly. This has been particularly prevalent in recent years for airlines, particularly low cost carriers such as Ryanair whose prices for a flight vary greatly..
Aircraft acquisition airlines must negotiate deals with aircraft manufacturers to acquire planes. For instance Ryanair use a standardized airplane which allows them to reduce their staff training costs, as well as their maintenance costs.
Support activities
Firm infrastructure budgets, accounting, regulatory compliance, legal issues, public relations
Human resources flight, route and yield analyst training
Technology development computer reservation systems, in-flight systems, flight scheduling systems, yield management systems
Procurement information technology communications
Operations
Ticket counters airlines must operate ticket counters to get their passengers onto their airplanes. Some passengers may find at the counter that they can't get on the flight as the airlines oversell tickets for
Inbound logistics
Primary activites
Stock control airlines must store and handle fuel, food, and drinks. Stock is managed to ensure reductions in stock turnover, thus reducing costs and wastage.
Route selection airlines must choose their flight routes. These will be selected upon desired routes, and deals negotiated with the airports. Airports are selected for their prime location, to allow consumers to get to their desired location. This then entails the scheduling of flights and crew.
Passenger services system software which allows the airlines to function "comprehensive passenger reservations, inventory control, fares, ticketing, and departure control functions" (AirportTecnology.com 2006). This allows airlines to reduce their costs of wages and paper transactions, and maximize utilization.
Yield management this allows the airlines to compare their available seats against demand for particular flights to price the tickets accordingly. This has been particularly prevalent in recent years for airlines, particularly low cost carriers such as Ryanair whose prices for a flight vary greatly..
Aircraft acquisition airlines must negotiate deals with aircraft manufacturers to acquire planes. For instance Ryanair use a standardized airplane which allows them to reduce their staff training costs, as well as their maintenance costs.
Support activities
Firm infrastructure budgets, accounting, regulatory compliance, legal issues, public relations
Human resources flight, route and yield analyst training
Technology development computer reservation systems, in-flight systems, flight scheduling systems, yield management systems
Procurement information technology communications
Operations
Ticket counters airlines must operate ticket counters to get their passengers onto their airplanes. Some passengers may find at the counter that they can't get on the flight as the airlines oversell tickets for
References: Scholes,K. et al. 2005 Exploring Corporate Strategy. 7th Edition. Harlow: Prentice Hall Grant, R. 2005. Contemporary strategy analysis. 5th Edition. Oxford: Blackwell Publishing Hooley, G. et al. 2004. Marketing strategy and competitive positioning. 3rd Edition. Harlow: Prentice Hall. McNamee, P. 1999. Developing strategies for competitive advantage. Revised Edition. Oxford: Pergamon AirportTechnology.com 2006. Virgin Blue selects Ibs ' AIRES passenger service system. [online] Available from; http://www.airport-technology.com/contractors/consult/ibs/press18.html. [accessed 15/12/06] Videcom. 2006. Videcom Airline Reservation Service. [online] Available from; http://www.videcom.com/general_overview.htm. [accessed 15/12/06] Silicon.com 2005. No more lost luggage: Airlines go for RFID. [online] Available from; http://www.silicon.com/research/specialreports/enterprise/0,3800003425,39130986,00.htm. [accessed 15/12/06] British Airways. 2006. Euro Traveller. [online] Available from; http://www.britishairways.com/travel/etexp/public/en_gb. [accessed 15/12/06]