I titled my first blog here for this semester’s independent research on the commercial aviation industry “the stories behind the metal birds.” The past few months were a blink. Now, at the end of May, I am sitting in front of my laptop composing my last blog entry. But before I revisit the “stories” I have looked over the course of my work, I want to first share a story about how I personally came to be fascinated by the airline industry.
Afternoon view of the Hollywood Hills (picture taken by myself in January 2017)
This is my 24th blog post, after two whole semesters of conducting an independent seminar/research on finance and entrepreneurship. This semester has definitely gone smoother than the last one has, and I am incredibly thankful for what these two semesters have taught me. Continue reading →
As a continuation of my previous discussions about United Express Flight 3411, Part II includes a closer examination of the incident from perspectives of both United Airlines and today’s commercial aviation industry.
The end of Part I seems to suggest an easily-reached conclusion: since clauses regarding overbooking are specified in the contract of carriage, airlines could as easily deny a passenger to board if they see a greater economic interest in selling more tickets or accommodating other last-minute top-tier frequent flyers or VIPs. As long as airlines see a smaller marginal cost to denying a “regular passenger” onboard, they are free to do so within the legal frame. And in the case of United Express Flight 3411, the “VIPs” were four “deadhead crew” who needed to fly from their base in Chicago to Louisville to serve another flight. Again, what the crew on that flight did was perfectly legal: after 9/11, for security reasons, on U.S. commercial aircrafts, crew members are given the absolute authority and failure to comply with any of their instructions could result in the intervention of law enforcement. But this time, with the rapid spread of this incident’s footage on the Internet, the marginal cost of denying David Dao skyrocketed.
Lufthansa 747-8 at Frankfurt Airport (picture taken by myself in March 2017)
The semester is almost over, and I’m inching closer and closer to graduation. My independent study this semester was so much more better structured than it was last semester, and I think it has been much easier because I put more time into planning out the details of how the course was going to go. However, I am still a little bit behind the schedule, because I did not expect the courses to be double the workload they were the last semester. This is only to say that I am behind on the blog posts, because it is insanely difficult to squeeze over two hours of online lectures into one page of a blog post. The learning is very much on track. Continue reading →
Starting from the end of last month, when passengers travel from many Muslim-majority countries in the Middle East into the United States, they are no longer allowed to bring electronics larger than smartphone onboard as part of their carry-on luggage. Shortly after the U.S. announced this electronics restriction, the U.K. followed similarly. The three huge air carriers in the Middle East, Emirates, Qatar, and Etihad, are most affected by this newly enacted and executed security ban. These three carriers soon announced policy changes, such as allowing laptops to be checked-in at the gate, to minimize the negative effect this ban has on their customers. Yet despite their attempts, when you board Emirates’ signature A380 double-decker to fly from Dubai to New York next time, you will not be able to work on your laptop nor could you entertain yourself from an iPad. U.S. authorities have claimed that this ban is based on latest intelligence reports, which have indicated a possibility of terrorists inserting small bombs within electronic devices. This claim is understandable: after all, the lack of an effective and thorough security screening system creates room for many terrorist attacks. However, to what extent government authorities can exert their control in the name of safety is always debatable. Why is the electronics ban only on certain countries with a Muslim majority, with no U.S. carriers affected? How about the potential security threat in the checked baggage, which is often less scrutinized? In fact, arguments about how increasingly stricter airport security measures result in the violation of personal rights is never new.
Cathay Pacific A350 at Hong Kong International Airport (HKG) (picture taken by myself)
We live in a digital age that relies on social media for business and social outreach. The internet has allowed for a regular conglomeration of millions of people per day on the same platform connecting and engaging with friends, advertisements, businesses, and public figures alike. For anyone creating a nonprofit, business, or awareness campaign, Facebook is a key tool that should be utilized to the fullest. Here are my top tips and tricks for using Facebook’s various features to the fullest. These tips will allow you to increase engagement and reach more people.Continue reading →
It’s been a long time since my last post…Good to be back here to talk about commercial aviation. I have previously mentioned, in my first blog, that different airlines can be seen as distinct agents that represent the cultures of their home countries. I made this point totally out of my observations. When I boarded my first few flights almost a decade ago, I started to notice different seat decorations of different carriers. It was not until later years that I figured out some meaning out of these ostensible differences. For example, hidden behind the cloud-shaped figures imprinted on seats of Air China is the oriental philosophy that promises happiness and tranquility; ANA’s signature boarding music Another Sky brings a taste of traditional Japanese music, ongaku, to its passengers. Yet as I think about the subject deeper, I have found out that the footprint of an airline’s culture extends far beyond explicit manifestations of national symbols. As you will see in the three case studies below, both the indigenous, regional culture and the internal corporate atmosphere have huge impacts on almost every dimension of an airline’s operation and the product it delivers. The cumulation of every little cultural detail, in turn, shapes the identity of airlines and helps them differentiate from their competitors.
ANA Onboard Japanese Meal Selection from Tokyo Narita to Shanghai (Picture taken by myself) Continue reading →
Ratio Analysis is a very self explanatory subject, as it is really just analyzing situations using different kinds of ratios. Ratios are very handy when assessing risk, liquidity, and profitability, because they can be used to accentuate competitive advantages and warn for potential trouble. Continue reading →
At the end of my last blog, I mentioned how airlines have become so adept at differentiating their products that in a foreseeable future, a greater level of customer-driven customized flight experience can be expected. In fact, not only is this phenomenon a significant trend in the airplane seat development, it also represents a unique feature of the industry’s revenue composition. When I was building an eco-hotel business model in my Business & Society class back in the fall, I noticed that approximately 10% of hotel revenue comes from sources other than regular room rates. This seems quite reasonable: after all, meals, laundry, mini-bar expenses are often an important part of travelers’ hotel bills. However, I was surprised to find out that according to a consulting firm IdeaWorks, the ancillary revenue of traditional U.S. air carriers (non-inclusive of those low-cost competitors like Southwest) had 11.9% share of their total revenue in 2015, meaning that in average, when a major U.S. airline sells a $1,000 ticket, it would later get $119 more revenue from somewhere else. While these numbers seem to illustrate the power of the “customization” I have previously mentioned, they indicate something far more profound. A deeper look into IdeaWorks’ report suggests that nearly 55% of U.S. major airline ancillary revenue came from “sale of FFP (frequent flyer program miles).” In fact, aside from the seemingly excessive baggage and seat selection charges, airlines increasingly found frequent flier programs to be just as lucrative. Arguably, the proliferation of loyalty programs in airlines has become a definitive feature of the industry, shaping the modern-day air travel landscape in so many ways.