2000 word Management Report; Due in 24hrs

3522NSC Contemporary Aviation Management

Table of Contents About this document 2 Instructions 3 Marking Criteria 5 Exemplar 9

This document aims to provide you with all the detail you need to complete the written assignment for 3522NSC.

If you have any questions, please feel free to email me at [email protected].

1. Mark yourself using the approach in the following example

a. Assign a grade or mark for each criterion

b. Calculate the percentage for each criteria

c. Total the % column to get your total mark out of 100

2. Please provide a brief justification for the percentage (%) you assigned yourself for each criterion

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Marking Criteria for 3522NSC - Written Assignment: REPORT

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ASSIGNMENT COVER SHEET Course Code : 3 5 2 2 N S C Course Name : Contemporary Aviation Management Due Date : 4 October 2016 Assessment Item Number : Written Assignment Campus and Enrolment : Off-campus Lecturer : Dr. Tarryn Kille Course Convenor : Dr. Tarryn Kille Word Count 2023 + Exec. Summary and Recommendations Student Number [Insert student number] Student Name [Insert student name] Dear Students, Following is an exemplar for the Written Assignment for 3522NSC Contemporary Aviation Management. This exemplar should be examined in addition to: The Writing Style Manual (found on Learning@Griffith); The Assignment Instructions (found on Learning@Griffith); and The Marking Criteria (found at the end of the Assignment Instructions). Word count is an important aspect of report writing. Pay attention to this. Your employer or the company commissioning you to write the report often gives you limits. Your ability to give valuable insight that is clear and concise (remaining within the word limit) is an important skill in the air transport industry. See the advice offered by the Writing Style Manual (“A Guide to the Preparation and Presentation of Written Assignments”). For this report, please note that the words used in the Executive Summary and Recommendations do not count towards the word count limit. Please take the advice of the Manual and the exemplar regarding the word count length of the Executive Summary and Recommendations. Words used in the in-text referencing; reference list; and appendices also do not count. My exemplar is not to give you answers, but to help in the ‘assignment feedback’ process, which occurs well before you submit your assignment. My aim is to provide you with transparency of assignment requirements, marking criteria and expectations of a sound response to the question. Remember, the course rationale, aim, learning and teaching strategies and assessment items (particularly this essay) are all linked to the learning outcomes for this course: Demonstrate an understanding of the principles of the air transport industry and associated infrastructure Analyse an aviation organisation’s internal and external environments within a competitive global environment, recommend appropriate options and implement strategies that could improve the organisations performance. Demonstrate a working knowledge of the current theories, common tools and best practice applications of management in aviation business. It is my intention to provide you with assessment items that are interesting, fair and (most importantly), relevant. If you have any questions, please feel free to email me: [email protected] Best wishes, Tarryn Kille

1. Executive Summary

This report investigates the current trend associated with airline passenger comfort in the Low Cost Carrier (LCC) environment. A brief history of comfort and service associated with the LCC model is initially outlined. The discussion then focuses on three key airline management considerations associated with the issue of seat pitch including: (1) socio-cultural trends in the external environment; (2) the competitive advantage; and (3) innovation. It is concluded that while the external environment may influence a need to alter business approaches, airline managers need to retain focus on the LCC’s long-term strategic goals. The application of this conclusion is provided through three recommendations that include: (1) a need for managers to manage the business impact of the external environment by developing strong and positive relationships with key stakeholders; (2) the need for managers to retain focus on pure low-cost strategies in times of significant LCC competition; and (3) the need for managers to nurture innovative and creative organizations feeding a strengthened and sustainable competitive advantage.

Introduction

The comfort aspect of the flying experience is emerging as an issue of great important for passengers of Asian carriers in the twenty first century (The Future Laboratory, 2014). One of the most important factors influencing aircraft seating comfort in economy class is legroom (Kremser, Guenzkofer, Sedlmeier, Sabbah, & Bengler, 2012). Walton (2012) defines seat pitch as the distance between the back of your seat and the back of the seat in front.

Over the years, commercial air traffic and the number of passengers have been constantly increasing. One of the key reasons for this development has been the growth of the low cost carrier (LCC) (Brundrett, 2001). While the LCC’s have stimulated markets by offering more affordable opportunities to fly (O'Connell & Williams, 2011), the lower prices have broadly translated to reductions in comfort and service levels (Kremser et al., 2012).

Considering the volatility of the airline industry, the growth potential and increased penetration of LCC’s in Asia, the airline industry has started to take note of the attitudes and behaviours of future passengers (The Future Laboratory, 2014). As such, recent passenger comfort research has called the aviation industry to consider minimum standards for seat pitch in order to improve overall passenger comfort and wellbeing (Airbus, 2013). From the passenger’s perspective, improvements to seat pitch that translate to increased passenger comfort, emphasize the airlines strong commitment to the passenger and thus has the potential to influence the passengers airfare choice when faced with competing propositions (Kremser et al., 2012).

Thus, emerging trends in seat pitch are an important consideration for airline managers. In the following section, seat pitch is examined with respect to three key management concepts associated with our LCC airline including: (1) the socio-cultural trends in the external environment; (2) the airlines competitive advantage; and (3) innovation. These discussions underscore the concluding recommendations, which aim to assist our airline manage this emerging trend while focusing on long-term sustainable business practices.

Discussion

socio-cultural trends in the external environment

In the air transport industry, the seat pitch issue is representative of an airline’s external environment. External environments are defined as events or forces external to the organization that have the potential to influence the organizations performance (Robbins, Decenzo, & Coulter, 2013). These external forces can change and thus alter the environment in which the airline operates.

The media releases from Airbus, the Future Laboratory, and the London Sleep Centre (Ebrahim, 2013; The Future Laboratory, 2014) demonstrate a socio-cultural component of the general external environment that indirectly affects the LCC. The socio-cultural aspect of the seat pitch issue illuminates a change in trend, tastes and patterns of behaviour that calls the industry to respond (Robbins et al., 2013).

A heightened awareness and keen understanding of the various components of the external environment are key characteristics for airline managers. The seat pitch problem challenges the airline management team through various stakeholder relationships. The rate of environmental change experienced by the LCC can be appropriately managed with the careful consideration of key stakeholder relationships including, for example, relationships with suppliers.

According to Samson and Daft (2012) managers who understand their business suppliers and work to build strong, long-term relationships with those suppliers, often receive higher quality parts at lower prices. However, suppliers are not the only external stakeholder to an LCC. While the seat pitch research has been reported by suppliers (e.g., Airbus), the changing trends of passenger ‘comfort’ requirements are reported by Trade and Industry Associations, customers, research communities, as well as the media (Brown et al., 2001; Ebrahim, 2013; MSN Money Partner, 2013; Rabinowitz, 2014).

It is inevitable that the external stakeholders affecting an LCC are large. However, Robbins et al. (2013) concur that stakeholder relationships offer managers the opportunity of influence in managing environmental change. Thus, the more apparent and assured relationships are with key stakeholders, the more influence managers will have over organizational outcomes.

In the context of the seat pitch issue, airline managers of LCC’s will need to maintain strong and secure relationships with key external stakeholders. For example, a strong relationship with Airbus, signified by long-term fleet expansion commitments, may provide the executive team of an airline the influence to request that Airbus engage in enhanced research and development focused at finding the most optimal seat pitch given safety and cost requirements.

This type of collaborative relationship may present positive media opportunities, offering the airline a competitive advantage as the ‘first to move’. In any event, management of the external environment needs careful consideration and focus on the competitive strategy of the airline.

The competitive advantage

The second management element associated with the seat pitch issue is the consideration of what sets our organization apart from the rest (i.e., our ‘competitive advantage’). Robbins et al. (2013) comment that an organisation’s competitive advantage is the distinctive edge that generally comes from the organisation’s core competencies that other companies cannot easily reproduce. Southwest Airlines has a competitive advantage because of it’s skills at offering passengers what they want – an inexpensive, convenient, reliable and friendly service (Miles & Mangold, 2005). Customer service is a fundamental component of Southwest’s mission (Southwest Airlines, 2014) and through an intrinsic dedication to employees in the form of an employee branding positioning strategy, Southwest is able to deliver this mission to success (Miles & Mangold, 2005).

Of the three generic competitive strategies posed by Michael Porter, it is apparent that the competitive strategy of our airline is one of cost leadership (Ormanidhi & Stringa, 2008). According to Samson and Daft (2012), cost leadership strategy defines a type of organisation that “seeks efficient facilities, pursues cost reductions, and uses tight controls to produce products more efficiently than competitors” (p. 251). For our airline, this means that we focus on undercutting the competitor’s prices while still offering comparable quality and earning a reasonable profit.

Following the standard business model of an LCC, we have maximized the number of seats on board our aircraft with seat pitches smaller than that of full service carriers. Kremser et al. (2012) suggest that, in general, LCC passenger seats (compared to full service carriers) often mean a reduction of comfort and service. As an LCC, we appreciate that some of our consumers might be willing to pay slightly more for value added propositions.

This is supported by Balcombe, Fraser, and Harris (2009) who conducted a study in 2009 and found that passengers would pay up to $170 for higher comfort and up to $47 for a larger seat pitch. Lee and Luengoprado (2004) concur that business consumers are willing to pay extra for comfort. This is one of the reasons that ‘economy plus’ class has received heightened interest over the past decade (Kremser et al., 2012). This ‘economy plus’ product, generally offers a larger seat pitch to passengers than standard economy class (Kremser et al., 2012). Changes in fare structure and product offerings such as these has led to differing business models of LCC’s (Mason & Morrison, 2008) in an effort to achieve competitive advantage through a point of differentiation.

The competitive landscape of the Asian aviation industry has changed significantly. Yet, LCC penetration in the region is expected to maintain dramatic growth into the next decade (Standard Chartered, 2013). Even in favourable conditions, LCC’s can struggle if management fails to sharpen the organisation’s competitive advantage. The previous section highlighted the evolution of consumer trends with respect to seat pitch. Although cost leadership is the cornerstone of LCC competitive strategy (O'Connell & Williams, 2011), the changing landscape of the Asian market calls for heightened attention to competitive strategy to ensure the organisation maintains a sustainable competitive advantage.

Mason and Morrison (2008) argue that when one airline in a region establishes a low-cost position in it’s product and organisational architecture (POA), then competitors are forced to choose a different POA strategy in an effort to avoid direct competition with their lowest-cost competitor. This POA might consider airline ancillary revenues, which are hailed as the next milestone for the aviation industry and rapidly becoming a key competency within the marketing mix of successful airlines (O'Connell & Williams, 2011). For LCCs, an ancillary revenue might come in the form of extra charges associated with more comfortable seating. Whilst this ancillary revenue might be a consideration, it is important to note that in competitive strategy, Mason and Morrison (2008) conclude that “the positioning of some airlines to offer improved comfort in a bid to achieve higher yields is marginally successful but is not as profitable as the pure low cost approach” (p. 84).

The growth and penetration of LCC’s in the Asian aviation industry is assured. However, the provision of a sustainable competitive advantage in the LCC market requires careful business management, which includes elements of creativity and innovation.

Innovation

The third management consideration for the seat pitch issue is one of innovation. Innovation is integrated with other issues discussed previously including strategic positioning and product differentiation. According to Robbins et al. (2013) success in business today requires innovation. In industries defined by volatility and chaotic global competition, businesses need to create new products and services and embrace state-of-the-art technology in order to compete successfully (Jagersma, 2003). However, it is not just the development of new products or services that characterizes innovation.

Kachaner, Lindgardt, and Michael (2011) comment that development teams often consider that a new product or service offering should always be better and more sophisticated than previous models. However, profitable low cost operators appreciate that true innovation seeks to target the large, low-income segments of the population. Innovation can come from the leverage of new technologies. As an LCC, our Airline may consider innovative techniques that appeal to the low cost ‘leisure travellers’.

Over the past two decades, the norm for economy seating has meant more seats with reduced seat pitch and seat width. While this trend continues unabated in the future, innovative techniques are required for LCC’s to meet the demands of passengers, while maintaining their low cost focus. In terms of leveraging from new technologies in an appeal to large segments of the population, Rabinowitz (2014) reports an innovative technique demonstrating that even the smallest changes can make a great impact on the consumer. Recaro, one the largest seat manufacturers offers the addition of a few simple pieces to a seat, which allows the seat to hold up a tablet device. This is particularly useful with the emerging trend where passengers bring their own device while connecting to an in-flight entertainment system. Recently Spirit Airlines partnered with ACRO to design a carved economy seat that measures a seat pitch of just 29 inches but has the effect and feel of a 32 inch seat.

Managers can make an airline more innovative by encouraging creativity. Innovation is turning the outcomes of the creative process into useful products or work methods (Robbins et al., 2013). There are a range of structural, cultural and human resource variables that affect innovation in an organisation. However, Samson and Daft (2012) argue that an ambidextrous approach to innovation is the most effective. With this approach, managers encourage flexibility and freedom to innovate and propose new ideas with creative departments and venture teams. However, they use a more rigid, centralized, and standardized approach for implementing innovations. Essentially, it is the staff (usually at lower levels) that generate the innovative ideas. This, however, only occurs when there an appropriate culture, structure and human resource commitment to the creative process (Williams, 2013).

The idea of staff engagement in innovative techniques is epitomized by the AirNZ sky couch seat design in recent years. With management support, a multidisciplinary team were encouraged to develop, construct and implement an innovative economy seating design that won AirNZ professional acclaim and a range of international awards (Kelley & Kelley, 2012).

The people of the organization often hold the airline’s competitive advantage. Successful business solutions, driving sustainable competitive advantages are often found when appropriate culture, structure and human resources are applied which encourage and nurture creativity and innovation.

Conclusion

This report considered the impact of the current trend associated with airline passenger comfort on the Low Cost Carrier (LCC) model. The discussion focussed on three key airline management considerations associated with the issue of seat pitch including: (1) socio-cultural trends in the external environment; (2) the competitive advantage; and (3) innovation. The external environment indirectly impacts on the LCC model. This often requires airline managers to consider alternative approaches to business. It is concluded that in times of volatility and high competition, airline managers need to retain focus on the LCC’s long-term strategic goals. This can be achieved through three applicable business recommendations which include: (1) a need for managers to manage the business impact of the external environment by developing strong and positive relationships with key stakeholders; (2) the need for managers to retain focus on pure low-cost strategies in times of significant LCC competition; and (3) the need for managers to nurture innovative and creative organizations feeding a strengthened and sustainable competitive advantage.

Recommendations

R1: In an effort to manage dramatic indirect effects of socio-cultural components (such as trends in seat pitch), it is recommended that airline managers of our Airline maintain strong and positive working relationships with key stakeholders in the airlines general external environment. The more apparent and assured relationships are with key stakeholders, the more influence managers will have over organizational outcomes.

R2: LCC penetration in the Asian aviation industry is expected to continue unabated in the next decade. With this in mind, it is recommended that our Airline maintains focus on competitive advantage and associated strategy emphasizing the pure low cost approach. While external trends (combined with fierce competition in the LCC market), may force airline management to consider alternative pricing structures and seating configurations, research indicates that these competitive strategies may not be as profitable as the pure low-cost approach.

R3: Successful organisations of volatile industries are often those that nurture creativity amongst their staff. It is recommended that our airline ensures appropriate culture, structure and human resource commitment to encourage creativity and innovation in our Airline. Innovation must be considered with relation to our Airline’s overarching and long-term strategic goals. Although some aspects of our external environment may influence a need to alter seating and configuration, we may need to be innovative by working with what we have and listening to the needs of our target market.

References

MARKING CRITERIA

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