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Aviation Case

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Key Performance Matrices

* Successful Risk Management Strategies to maximize operating margins: To minimize the impact of volatility of oil, strong fuel hedging strategies need to be used as a profit protection tool, in both enhanced and depleted supply demand conditions.

* Diversification & expansion of operations across identified sectors and locations: Constantly identify and expand operations in prospective sectors with huge demand.

* Low Cost or No Frill Model: Airlines operating on this model have shown exponential growth vis-à-vis the legacy carriers.

* Unionization: The airline business is labor intensive. Most of the employees are unionized. Human resource management measures like proactive industry oriented performance management process and compensation management for all employees, regular employee satisfaction surveys etc. Failure to do so may lead to work stoppages or strikes, hampering operations.

* Ancillary Revenue: A number of supplementary revenue streams helped the airline industry gain ground in 2010 after two years of drought. The airline companies enforced fees on reservation change, pet travel, food and beverage, freight charges to add to their revenue streams.

* Consolidation: Airline companies are consolidating in order to restore profits. The first consolidation in the industry was Delta Air Lines successful acquisition of Northwest Airlines in 2008. The merger catapulted Delta to the position of the second largest airline in the world, generating significant cost savings for both the airlines. In October 2010, United Airlines merged with Continental Airlines and formed a new company -- United Continental Holdings Inc. This is the second merger that has created the world's largest airline, overtaking Delta Air Lines.

* Technology Upgrades: Air carriers are involved in numerous technology upgrades and system automation for various activities such as airline reservation system, flight operations system, website, maintenance and in-flight entertainment systems. These upgrades enable companies to perform better, lower costs and enhance customer service.

* Baggage policy for Legacy Carriers: Introduction of initiatives like "Bags Fly Free" in order to attract a bigger share of business.

* Baggage policy for No Frill Carriers: The goal of airlines was to reduce the weight on the plane to cut fuel costs, so how would not charging checked bags help solve their problem? Reducing the weight limit of the first bag can help the airlines accomplish their goal. Charging for bags that weigh more than the limit should reduce the size. Charging even more for a second bag will reduce the overall luggage. If they were to follow this logic, airlines will now have less carry-on bags, and revenue from three different areas; carry-on bags, first bags that are over the weight



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