Management Within the Airline Industry

Introduction Page 3

Principles of Management Page 3

Human Resource Management Page 7

Safety and Security Page 10

Conclusion Page 13

References Page 14

Introduction:

Good management is critical to the success of any business but with Airlines with low percentage profits good management is the line between profit and bankruptcy. Through this project I will look at the management of airlines their functions and the general principles management undertake to provide a functioning a profitable business model in both bull and bear markets. Management's attitudes and necessary evolution to safety and security and the relationship between planned practices and executed plans especially between regional and international airports. Also I will look at human resource management and their inputs to a cohesive company. I will use examples to show the general nature of these aspects form ICAO states and how different markets call for differing management skills.

Functions of Management

There are many principles of management, but five core principles act as a foundation to the rest. The five functions are planning, organizing, staffing, directing and controlling (Higgins, 1994). Planning is concerned with today's decisions and their impact on the future and each plan should have a vision, mission, objective and an end goal. This is fundamental for the efficient workings of any airline company being as the end goal will always be profit with safety. Timing is crucial in the airline industry since an idle plane makes no money and only certain slot times are available at certain times. This requires crew and ground personnel to be there when needed since aircraft have to be refuelled, cleaned and catered. Maintenance of aircraft must not impact on scheduled flights. The schedule is important for the passenger and the company's competiveness. Planning is essential for airline competiveness and profits U.S. and European airline hedge their exposure to jet fuel to protect themselves from volatility in that market. They divide up their fuel budget and buy fuel at different prices during the year for next year hoping to save money, however top global airlines are staying away from further hedging jet fuel purchases that account for around a third of their costs, betting that a recent surge in oil prices to two-year highs will slow (Kan, 2011). Airlines must always look to the future in order to seek out unexplored markets and methods, Richard Branson and Michael O'Leary are synonymous with their plans and advances in the airline sectors. As Branson would say "You can't just make it a standard product," (Thottam, 2008) and neither of these have, both are price orientated to knock out their competition but their plan to hold their sector may vary as Branson bases more on service and O'Leary on the lowest price their end goals don't change, a calculated plan makes profits.

The second principle organizing can be divided into five sectors; division of Labour, delegation of authority, departmentation, span of control and coordination (Erven, 1999) which can be summed up as the flow of information within the organization. With current competition from low cost carriers such as Ryanair and Southwest it has caused many of the worlds larger airlines to change to new organizational models. This is due to larger airlines creating regional and budget carriers, Aircraft maintenance and catering and cargo as operational complexity increased, decision-making bottlenecks at the top of some companies began to hinder their ability to respond rapidly to shifting competition thus a change in their organizing structure (Heynold, 2006). One airline that that has really taken the concept of organization to a whole new level is Southwest airlines. Gittell describe it the best "Southwest's most powerful organizational competency--the "secret ingredient" that makes it so distinctive--is its ability to build and sustained high performance relationships among managers, employees, unions, and suppliers. These relationships are characterized by shared goals, shared knowledge, and mutual respect" (Gittell, 2005). By developing strong relationship\s within the company it makes it easier from an organizational point of view for new models to be implemented e.g. Management and unions have mutual respect for each other.

The third principle staffing can vary considerably from airline to airline and country to country the filling and keeping filled positions with qualified people in an airline is imperative to an airlines success. Many airlines have resorted to staffing cuts to increase profits in recent times of economic crisis. US airlines collectively shed 2.3 percent of their workforce over the last year, according to the U.S. Bureau of Transportation Statistics (BTS) (Padilla, 2010). Although it does seem like a quick fix to save money job cuts are not taken by all airlines, South west for example are more interested in employee satisfaction and believe a more positive result can be seen from this type of interaction. All in management are asked to lead with credibility and caring. They have also made themselves available to frontline employees, demonstrating a level of caring that is beyond the norm in large companies. The company invests in frontline leadership by having more supervisors per frontline employee than any other airline in the country. The supervisors spend more time than their colleagues engaged in coaching in the form of problem solving and advising the frontline employees. Also they place a great deal of importance on hiring people with the right attitude motivation and interpersonal skills. At Southwest, managers are expected to take an active role in resolving cross-functional conflicts. Employees are encouraged to be themselves at work and to openly recognize major events in the lives of employees and their families. South west also attempts to keep jobs flexible and make unions partners, not adversaries (Gittell, 2005).

"There is one key to profitability and stability during either a boom or bust economy: employee morale." --Herb Kelleher, founder of Southwest Airlines

The final two of the five principles of management directing and controlling are closely interlinked. Directing is a process in which the managers instruct, guide and oversee the performance of the workers to achieve predetermined goals. Controlling is a four-step process establishing performance