The Airline Industry Value Chain

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The Airline Industry Value Chain

By | Jan. 2007
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Airline industry value chain

Inbound logistics
Primary activites
•Stock control – airlines must store and handle fuel, food, and drinks. Stock is managed to ensure reductions in stock turnover, thus reducing costs and wastage. •Route selection – airlines must choose their flight routes. These will be selected upon desired routes, and deals negotiated with the airports. Airports are selected for their prime location, to allow consumers to get to their desired location. This then entails the scheduling of flights and crew. •Passenger services system – software which allows the airlines to function "comprehensive passenger reservations, inventory control, fares, ticketing, and departure control functions" (AirportTecnology.com 2006). This allows airlines to reduce their costs of wages and paper transactions, and maximize utilization. •Yield management – this allows the airlines to compare their available seats against demand for particular flights to price the tickets accordingly. This has been particularly prevalent in recent years for airlines, particularly low cost carriers such as Ryanair whose prices for a flight vary greatly.. •Aircraft acquisition – airlines must negotiate deals with aircraft manufacturers to acquire planes. For instance Ryanair use a standardized airplane which allows them to reduce their staff training costs, as well as their maintenance costs. Support activities

•Firm infrastructure – budgets, accounting, regulatory compliance, legal issues, public relations •Human resources – flight, route and yield analyst training •Technology development – computer reservation systems, in-flight systems, flight scheduling systems, yield management systems •Procurement – information technology communications

Operations
•Ticket counters – airlines must operate ticket counters to get their passengers onto their airplanes. Some passengers may find at the counter that they can't get on the flight as the airlines oversell tickets for their...

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