Preface

On 28 May 1999, Contracting States of the International Civil Aviation Organization signed the new Convention for the Unification of Certain Rules for International Carriage by Air, which emerged from the International Conference on Air Law, held in Montreal from 10 to 28 May 1999. The new Montreal Convention, once it receives the 30th instrument of ratification, is intended to defragment the various scattered pieces of treaty which govern the regime of private air carrier liability. It was also the last major initiative of ICAO before the dawn of the year 2000. The Montreal Convention symbolises the compelling need for the aviation community to focus on new issues and to refurbish old ones in an appropriate garb for the dawning millennium.

There are two types of mega trends affecting the aviation industry today. They are country mergers and airline mergers. Both these trends affect the airline industry profoundly. Of these, the unification of Europe is the largest single influence on international airlines. On 1 January 1993, 12 European countries commenced sharing their air traffic rights and strengthening their airlines' marketing potential. Ever since, there have been significant developments within Europe sufficient to completely change the face of the aviation industry in the region over a short span of 7 years.

In the new millennium, individual airlines would be compelled to remain competitive, just to survive. They would need to flow with the tide of such commercial trends as privatization, the use of information technology, removing infrastructure constraints and governmental restraints and most importantly, changing travel patterns. These trends have given rise to the new phenomenon in the global aviation scene that survival (if not success), of airlines is now dependent not on pricing but on service. This new phenomenon calls for the airline product to be similar to one from the entertainment industry, bearing in mind that a passenger spends 70% of his total travel time in the aircraft on long distance flights. To counter strong alliances between countries and airlines, the smaller carriers (as well as the big ones) are now going in more for glamour and in flight luxury to score on the 70% in flight time. Personal video screens for every seat, satellite assisted telephone facilities and tele-conference services are some of the luxuries offered. Indeed, as David Shoenfeld, International Marketing Vice President of Federal Express said, "if you view your services as flying between terminals, you miss the point". 

The view that "marketing is determined from the view of the customer" is becoming more valuable now more than ever before. To survive, airlines have to build "brand recognition". In this context, the International Travel Market Research (INTRAMAR) study is one of the best indicators of the key strategic factors towards achieving passenger satisfaction. INTRAMAR usually measures for each airline a PAX/SAT (passenger satisfaction) index that correlates closely with the major indicators of airline performance. An INTRAMAR study, conducted on 44 of the world's most profitable and financially successful airlines reveals that Singapore Airlines received an extremely high PAX/SAT index rating, coming second among all airlines of the world. The first was Swissair. 

According to the INTRAMAR survey, there are 12 important factors influencing passenger choice. They are: flight punctuality; excellence of inflight service; superiority of aircraft; comfortable seats; clean cabins seats and washrooms; good food and beverages; superior first class; superior business class; efficient reservations systems; pricing; good check in service and attractive frequent flyer programmes. At least seven of these factors are entirely dependent on the quality of the aircraft. The foremost important factor - punctuality - cannot indeed, be achieved with aged aircraft. The matter becomes more crucial to a relatively small airline, running a small fleet of aircraft where, if one aircraft is grounded for reasons of repair or maintenance, the entire flight schedule of the airline would be in disarray, leading to delays down the line. Connecting services would be disrupted and passengers stranded. It is needless to envisage the effect this catastrophe would have on the airline's good name. No amount of superior in flight service would atone for a six hour delay where a connecting passenger has to sit inside an unknown airport terminal. It is therefore necessary for any airline to seriously consider removing one of its most burdensome infrastructural constraints - its ageing aircraft. 

Another compelling reason for airlines to enter into commercial alliances, modernize their fleets and enter into other new trends as franchising and leasing is that ageing aircraft do not conform to noise restrictions imposed by many countries and thus face being barred from certain airports. The noise issue has become a crucial environment issue in the world aviation community. At the 27th Session of the Assembly of the International Civil Aviation Organization (ICAO) held in Montreal in 1989, when the matter of possible noise restrictions on subsonic jet aircraft was taken up, the main concern of the Assembly was to achieve a balance between the desire to protect the environment around airports against unnecessary noise and the desire to avoid excessive costs associated with accelerated replacement of noisier aircraft, particularly where these aircraft were registered in countries which did not themselves intend to introduce noise-related operating instructions. In the Sessional discussions, The Airport Associations Co-ordinating Council (AACC, now Airports Council International, ACI) noted that aircraft noise represented a major constraint upon the future viability and capacity of the aviation system. Unless concerted international action was taken, there would be a proliferation of various local legislation banning noisy aircraft from their airports - a measure that would have a devastating effect on air commerce. The International Air Transport Association (IATA) representing the airlines at the Session noted that the airline industry recognized the need in many States to address political and other concerns relating to the environment and the fact that the noise climate in areas adjacent to airports is linked to the ability of airports to provide expanded travel facilities to meet the growing demand of air travel. The ICAO Assembly ultimately decided that further time was necessary for consultation and analysis with a view to reaching consensus, and deferred the issue to the 28th Session (Extraordinary) of the Assembly which was held in Montreal in October 1990.

At its 28th Session (Extraordinary), the ICAO Assembly, by its Resolution A28-3 resolved to urge States not to commence phasing out noisy aircraft until 1 April 1995, and to spread out the phasing in period over 7 years from 1 April 1995, so that airlines would have time to renew their aircraft fleets or hush-kit (silence the engines of aircraft) them to conform to prescribed noise levels. ICAO further urged States not to restrict before the end of the phase in period the operations of any aircraft less than 25 years of age from the date the aircraft was issued its first certificate of airworthiness and to assist aircraft operators in their efforts to accelerate fleet modernization.

The standards of the international community on ageing aircraft are now clear. States have been given the right by the international civil aviation community to start phasing out aircraft from 1 April 1995, exactly three years from now, until the year 2002. What this means is that airlines that have in their fleets ageing aircraft would have to commence modernizing their fleets soon. If they fail to modernize their fleet their ageing aircraft would not be admitted to countries which have phased them out by legislation. The need for modernizing ageing aircraft fleets has become more compelling than ever, and is amply reflected by the recommendations made by the Fourth Meeting of ICAO’s Committee on Aviation Environmental Protection (CAEP) which was held from 6 to 8 April 1998. CAEP has recommended the reduction by an average of about 16 per cent levels of nitrogen oxides (NOx) that aircraft engines are currently allowed to emit under Annex 16 to the Chicago Convention. CAEP has also recommended that States implement ICAO’s new Communications, Navigation, Surveillance and Air Traffic Management systems (CNS/ATM), thereby implicitly requiring aircraft to be equipped with the modern facilities onboard to comply with the satellite navigation systems introduced by the CNS/ATM systems.

Another measure taken by CAEP at its Fourth Meeting which would seriously impact airlines with ageing fleets, needing them to consider the modernization of their fleets, was CAEP’s commitment to carry out more work in the future to establish new noise standards for jet aeroplanes that would be more stringent than the present Chapter 3 Standards in Annex 16.

ICAO records that between 1989 and 1998 the reported number of commercial aircraft in service increased by about 60 per cent from 11,253 to 18, 139 aircraft. In 1998, 1463 jet aircraft were ordered, compared with 1309 in 1997, and 929 were delivered compared with 674 aircraft in 1997. In 1998, the total scheduled traffic carried by airlines of the 185 Contracting States of ICAO amounted to a total of about 1462 million passengers and about 26 million tonnes of freight. These figures are reflective of the rapidly increasing frequency of aircraft movements at airports, calling for drastic management of airport capacity. To cope with the demand, airlines are forming strategic alliances with themselves by utilizing such commercial tools as franchising, leasing and interchange of aircraft. 

Competent airline managers now need to know that in the foreseeable future, there would be a few mega-carriers operating in America, Europe, Asia and the Pacific Rim and that these carriers would probably be composites of strong strategic alliances between powerful airlines and powerful regional States. They would be well equipped to offer the quality of service and punctuality that modern glamour requires of air travel. To compete with these carriers for a fair share of the market, a smaller airline would have to offer a comparable product. This book addresses some new issues that the aviation industry may find topical and applicable to modern aviation management in the new millennium.

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