Commercial Aviation Management Functions Essay Example | Topics and Well Written Essays - 1500 words

Commercial Aviation Management Functions - Essay Example This paper studies the different commercial aviation management functions to understand the issues and the unique solutions applied to solve the problems in an attempt to maximize profits in spite of the fixed inventory and high costs of investments. Overview of airlines management functions Airlines like any other business have a load of functions to manage for a competitive advantage in the industry. Essential functions are marketing, sales, etc. but the most recent emphasis on enhanced marketing tools and techniques characterizes the airlines industry. The use of a yield or revenue management tool to integrate the different functions of the business is an effective tool to realize the profit maximization in the industry. A marketing mix is of crucial importance for the airlines industry and involves activities like product planning, pricing, branding, packaging, promotion, advertising, selling, distribution, physical handling and service. The 4Ps of marketing mix: product, pri cing, place and promotion take into consideration all the activities mentioned and are at the heart of the yield or revenue management strategies (Knorr and Zigova, 2004; McGuire and Pinchuk, 2009). ... involves the tactical control of seat inventory through protection of seats for later-booking by high-fare customers by a proper balance of the load factor and yield (Fundamentals of pricing and revenue management, 2012). YM aims to maximize profits by controlling the load factor of the perishable seat inventory and selling the correct number of seats at discriminated prices based on demand and pricing elasticity. YM can be considered to the activity of selling the right product to the right customer at the right place and at the right time for optimum price through the best available channel (Rose, 2012). Further, YM involves management of the inventory, distribution channels and prices to yield profitability in the long run (Kleywegt, 2008). Implementing YM is seen to increase 3-9 percent of airlines revenue by combining different models for discrete choice analysis, forecasting, and large-scale optimization (Rose, 2012). However, there have been changes in the approaches to YM ove r the years based on the changes in airline business environment (Smith, 2002). Airline planning and marketing: Supply and demand  Airlines usually compete for customers, horizontally and vertically (Netessine and Shumsky, 2004). The inventory is perishable and the demand is time-variable and a trade-off between price (yield) and volume (load factor) becomes essential in this industry. Load factor is the percentage of capacity sold and demand for this perishable inventory changes by the time of day, day of week and season (Dr. Britton, 2009). Seat inventory control under horizontal competition (airlines competing for customers on a single flight leg) and vertical competition (airlines flying different flights on a multi leg itinerary) is usually achieved by a pure strategy Nash