Module : Transportation TM

Management 201

Unit 2

Aviation Sector

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 Module : Transportation TM
Management 201

Unit 2: Aviation Sector

Introduction:
This unit will discuss the world of the aviation industry, including its structure
and organization. The role of domestic and international airlines and the role of
airports in the management of customers.

Learning Outcomes
At the end of this Unit and after actively participating in the live and online class
the student should be able to:
knew the structure and organization of the aviation sector and the
role of airports in the handling of tourist as travelers.
identified the different function of a domestic and international airline
industry.
discussed the way in airline markets and valued passenger.
explained the key trends in the airline sector and the importance of
the low cost airlines as a new business sector.

Air Transport
AIR TRANSPORT plays a significant role in linking people in this great
country that has over 7,000 islands and extends from north to south for around
1,800 kilometers. And it has an even greater role in linking the Philippines with the
rest of the world, making trade and tourism easier.
The net result is that aviation contributes importantly to the Philippine
economy. In an Oxford Economics study , it was found that aviation supports P35.5
billion of economic activity — equal to 0.4 per cent of GDP — and has created some
123,000 jobs. If we add to the effects of aviation-related tourism, the figures are
rising to P192.2 billion—2.4 percent of GDP — and some 874,000 workers (2.5
percent of the labor force).

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Overview of the Aviation Industry

The airlines industry offers passenger and freight air transport through the use of
aircraft such as aircraft and helicopters. The flight's origins date back to 400 B.C., when
the Chinese invented the kite, which was used not only for fun but also for testing the
weather, and for later balloon and gliding development. In the 1480s, Leonardo da Vinci
was intrigued by the thought of flight and drew pictures and sketches of his ideas of flight
and flying machines. The first recorded flight was in 1783, when two French inventors flew
the first hot air balloon, and the Wright brothers successfully flew the first airplane in
1903.

Air travel may be scheduled or non-scheduled. Most commercial airlines operate as

scheduled, flying regular routes even when the aircraft is not full. Air carriers that do not
operate on a daily basis normally fly during off-peak hours, and therefore have more
flexibility in choosing airport, flight times, and load factors. Nonscheduled airlines sell
passenger, freight, or specialty flying charter flights.
Industrial workers include aircraft mechanics and service technicians, airline pilots,
co-pilots, flight engineers, flight dispatchers, freight and cargo agents, flight attendants,
and ticket booking and transportation agents and travel clerks. The Bureau of Labor
Statistics reported that close to 455,000 workers were employed by the air transport
industry in December 2015.

The economic contribution Aviation is making to the Philippines should be

even more than it is today. Unfortunately, over the years political negligence has
resulted in security risks, insufficient airport capacity and high taxes, resulting in
missed economic opportunities.

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Unit 2_Lesson 1

Transportation and
Travel Evolution

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Activity

Recently, Cebu Pacific has become the Philippines ' largest airline by
domestic traffic and capacity, overtaking Philippine Airlines, a flag carrier.

DIRECTION: Analyze the following pictures.

Check the correct box of what you need to bring with you when you have a flight.

1. 6.

2. 7.

3. 8.

4. 9.

5. 10.

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ANALYSIS

An Airline Ticket is a paper or electronic record issued by an airline or

a travel agency, which indicates that a person has the right to a seat on an
aircraft flight. The airline ticket can be one of two types: a paper ticket that
contains vouchers or coupons; and an electronic ticket.

Answer the following questions.

Give 10 reasons why people are traveling by airplane.

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_______________________________ .

As a responsible traveler, how would you protect yourself and others during
your trip? Give 5 points.
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_______________________________ .

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ABSTRACTION

Unit 2. Lesson 1: Transportation and Travel Evolution

Transport evolution, much like human evolution, has passed through
trials and tribulations because it has progressed over time.
Some transport modes have evolved and even more have gone extinct.
Alongside the expansion of our human understanding and culture, the modes of our
transport have evolved. In addition, our greatest demands and difficulties have
prompted our greatest imaginative feats that took us from where we came to where
we wanted to go.
Transportation technology has been a gateway to our fastest development in
sociology and teleology. And it will continue to do so in the near future, as it has
done so in the distant past.
In this portion you can learn about the early-period transition of travel.
Early-Industrial Travel System Era

Road developments such as services for roads , canals and steamships

resulted from rapid industrialization and advances in transport technology.
Local carriers came into being and started providing schedule-transport
services on a regular basis.

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Mature-Railway System Era

This period was characterized by railway increasing its activities by operating
hotels and offering other services related to travel. Travel agencies were created, as
were tour companies. During this period, Thomas Cook, an innovator in this area,
began the activities of his firm in the UK in 1840. More people have been traveling.

THOMAS COOK
The Thomas Cook Group is among the largest
leisure travel companies in the world. In the private
sector business, Thomas Cook is a mass market tour
operator. We provide package holidays that provide
flights and accommodation, activities and any other
ancillary services for their customers.
Thomas Cook, (born 22 November 1808,
Melbourne, Derbyshire, England — died 18 July 1892,
Leicester, Leicestershire), English innovator of the
tour and founder of Thomas Cook and Son, a travel
agency worldwide. We may claim that cook invented
modern tourism.

Express Travel System Era

Increased Express services. Trains and other modes of transportation stopped
not at each station or terminal but only at the main stations. This increased travel
speed and facilitated more journeys than before.

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Automobile Based Travel System Era

In North America, car ownership
boomed. In the later half of this period that
was from 1920-1974, motorways, interstate
highways, and other trunk highways were
created. From 1920-1945 the car
predominated over other transport modes.

Modern Tourism Travel System Era

The period 1945-1974 is regarded as the age of the modern tourism system.
Vehicle ownership kept increasing at a rapid pace, primarily at the cost of long-
distance rail travel.
In 1970, the advent of large bodied jets increased air travel considerably.
During the 1950s and 1960s, the ideology and marketing approaches to "mass
tourism" predominated.

Post-mobility adjustment Era

This age started in 1973-1974 as a

result of the Organization of the Petroleum
Exporting Countries (OPEC) generated oil
embargo and subsequent fuel price
increases. The events of the energy crisis
fundamentally changed worldwide travel
patterns.

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An overview of Philippines airline industry

The Philippine airline sector continues to be a booming business. This year
the industry's growth is projected to be robust through numerous joint agreements
with our neighboring countries, as well as the ongoing expansions.
One expansion project is that of the country's top airlines, Philippine Airlines
and Cebu Pacific, re-fleeting plan. Philippine Airlines explicitly intends to acquire
long-haul suitable aircraft which would increase the amount of passenger traffic.
Below are facts about Philippine airline industry.

Timeline of the airline industry:

1931 – The Government established an office under the Department of Commerce
and Communications to deal with airline matters.
1941 – Philippine Airlines (PAL), the first domestic airline, was created. PAL is now
the Philippine flag carrier airline.
1952 – The Civil Aeronautics Board and the Civil Aeronautics Administration were
reorganized under Act 776 of the Republic of Germany.
1973 – Philippine Airlines (PAL), which is the sole domestic airline, effectively
monopolized the aviation industry in the region.
1974 – PAL continues to dominate the sector by maintaining a domestic travel
monopoly.
1978 – However, a new franchise was issued to the airline under the conditions that
the government controlled the fares.
1995 – With the implementation of national and international civil aviation
liberalization policies, the sector was liberalized and government restrictions
eliminated.
1999 – Increased competition from airlines. Despite of this, market share of PAL
decreased.

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The Civil Aviation Authority of the Philippines

(CAAP) is responsible for enforcing civil aviation
policies to ensure free, economical, and effective air
travel.

In addition, the current aviation industry is numbered here:

According to the Philippines Civil Aviation Authority there are 71 airports in
the country. Eleven of these are able to accommodate international flights. 32 of
them handle only domestic voyages and 28 of them are primarily used for
general navigation. The Ninoy Aquino International Airport, located in Pasay City,
is the most popular of those airports. It has four terminals and can accommodate
hundreds of international as well as domestic flights every day, making it the
country's busiest airport by far.

Freedom of the Air

Freedoms are not necessarily given as a right to an airline; they are rights to
be negotiated, and they may be the source of political pressure. All freedoms beyond
the First and the Second must be negotiated through bilateral agreements, such as
the 1946 agreement between the United States and the United Kingdom, which
permitted restricted rights to the "fourth freedom." The Convention of 1944 has
since been expanded, and there are actually nine separate freedoms (see figure
above):

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The International Civil Aviation Organization

is a specialist United Nations agency. It changes the
principles and techniques of international air navigation,
and encourages international air transport planning and
development to ensure secure and orderly production.

First Freedom of the Air - the right or privilege, in respect of scheduled

international air services, granted by one State to another State or States to fly
across its territory without landing (also known as a First Freedom Right).
Second Freedom of the Air - the right or privilege, in respect of scheduled
international air services, granted by one State to another State or States to land in
its territory for non-traffic purposes (also known as a Second Freedom Right).
Third Freedom of The Air - the right or privilege, in respect of scheduled
international air services, granted by one State to another State to put down, in the
territory of the first State, traffic coming from the home State of the carrier (also
known as a Third Freedom Right).
Fourth Freedom of The Air - the right or privilege, in respect of scheduled
international air services, granted by one State to another State to take on, in the
territory of the first State, traffic destined for the home State of the carrier (also
known as a Fourth Freedom Right).
Fifth Freedom of The Air - the right or privilege, in respect of scheduled
international air services, granted by one State to another State to put down and to
take on, in the territory of the first State, traffic coming from or destined to a third
State (also known as a Fifth Freedom Right).
ICAO characterizes all "freedoms" beyond the Fifth as "so-called" because
only the first five "freedoms" have been officially recognized as such by international
treaty.
Sixth Freedom of The Air - the right or privilege, in respect of scheduled
international air services, of transporting, via the home State of the carrier, traffic
moving between two other States (also known as a Sixth Freedom Right). The so-
called Sixth Freedom of the Air, unlike the first five freedoms, is not incorporated as
such into any widely recognized air service agreements such as the "Five Freedoms
Agreement".

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Seventh Freedom of The Air - the right or privilege, in respect of

scheduled international air services, granted by one State to another State, of
transporting traffic between the territory of the granting State and any third State
with no requirement to include on such operation any point in the territory of the
recipient State, i.e. the service need not connect to or be an extension of any service
to/from the home State of the carrier.
Eighth Freedom of The Air - the right or privilege, in respect of scheduled
international air services, of transporting cabotage traffic between two points in the
territory of the granting State on a service which originates or terminates in the
home country of the foreign carrier or (in connection with the so-called Seventh
Freedom of the Air) outside the territory of the granting State (also known as a
Eighth Freedom Right or "consecutive cabotage").
Ninth Freedom of The Air - the right or privilege of transporting cabotage
traffic of the granting State on a service performed entirely within the territory of the
granting State (also known as a Ninth Freedom Right or "stand alone" cabotage).

Source: Manual on the Regulation of International Air Transport (Doc 9626, Part 4)

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APPLICATION

Direction: Please read the case in the box. Address the following questions below
and write it down in the space provided.

Skiplagged.com

At the end of 2014, the online travel agent and airline joined forces to sue the 22-year-old and
his company Skiplagged.com. Skiplagged helped users find cheaper flights by uncovering
"hidden city" tickets. Those are flights with stopovers in several locations where passengers
leave from one of the stopover cities rather than the final destination (Harris and Sasso, 2014).

Hidden city tickets operate when the cost to travel from point A to point B to
point C is less costly than to travel from point A to point B. Passengers book the whole
flight, but get off at the stopover. This practice is usually discouraged by airlines due to
safety issues and logistical problems, since it makes the number of passenger’s wrong,
creating possible delays and miscalculation of fuel. When found, it may result in a
passenger getting his or her ticket voided.

The complaint against Skiplagged founder Aktarer Zaman alleged that the
website "intendedly and maliciously ... [promoted] banned means of travel" (Harris and
Sasso, 2014, ¶ 4). Orbitz (OTA) and United Airlines claimed that Zaman 's website was
unfairly competitive with their company, thus making it seem that these businesses
were partners and supported the operation by linking to their websites.

1. What are the risks and inconveniences of making passengers disembark

during a trip? In addition to the ones mentioned here, come up with two
more.
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2. Could this lawsuit and the ensuing publicity result in unintended negative
consequences for United and Orbitz? What might these be?
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3. Should Zaman already be held accountable for promoting this form of

travel in practice? But are passengers expected to bear the responsibility?
Why or why not?
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4. Imagine that your flight is delayed because the number of passengers is

wrong and the fuel needs to be recalculated. What kind of action would you
take, if any?
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ASSESSMENT

Multiple Choice.
Direction: Choose and circle the LETTER of the correct answer.
1. The aviation industry is the business sector dedicated to ________________all
types of aircraft.
2. ______________known as the Father of Travel Agency
3. ______________Travel System Era where car ownership begun to boomed in
North America.
4. ______________was the year the Civil Aeronautics Board and the Civil
Aeronautics Administration was reorganized due to the Republic Act 776.
5. ______________a Chinese Filipino Businessman known as the founder of the
Philippine Airline.
6. ______________indicates the right of an Airline, Registered in country X, to drop
off traffic from country X to country Y.
7. ______________indicates the right of an Airline, registered in country X, to carry
traffic between any points in the same foreign country; also known as cabotage.
8. According to the Civil Aviation Authority of the Philippines, the country has _____
airports.
9. ______________ considered as the first Aircraft of the Philippine Aviation
Industry.
10. ______________ was the year when the government created
the Philippines' National Telecommunications Commission under the Department
of Commerce and Communications to handle the airline matters in the country.

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