Questions and Answers of Transportation A Global Supply Chain Perspective

▪▪ Explain the importance of the Warsaw Convention
▪▪ Understand the purpose of international air law
▪▪ Discuss the major provisions of the Paris Convention
▪▪ Deﬁne sovereignty of airspace, and distinguish between the two principal theories held by early international jurists
11. W hy is having too much cash on hand almost as bad as not having enough? Why is the ﬁnancial community concerned about the cash position of the carriers? How much cash should an airline have on
10. In your opinion, does the industry have the ﬁnancial capability for fleet replacement and expansion in the early 2000s and beyond?
9. Classify the major carriers in terms of their ability to ﬁnance their capital needs in the 2000s. What are some of the alternatives for capital-constrained carriers? Summarize several of the
8. In light of the demand for capital funds by the airlines during the 1990s and early 2000s, how does the ﬁnancial community view the industry as a whole? Why was the ﬁnancial community
7. What were the major sources and uses of funds according to the industry’s balance sheets during the periods 1960–66, 1966–71, 1971–76, 1976–81, 1981–86, 1986–91, 1991–97 and
6. Deﬁne balance sheet, assets, liabilities, and net worth. What is included under the assets portion of an airline’s balance sheet? Under the liabilities portion?
5. What is meant by venture capital? Why has this source of funding become particularly important to the newer carriers? Who provided the backing for the earlier venture capital groups?
4. Why has leasing become such an important source of funding for the airlines? Give four advantages of leasing. What is its major disadvantage? Distinguish between operating leases and capital
3. Why did the life insurance companies in particular become a major lending source in the early 1970s? What are investment banks? What is the difference between common stocks and preferred stocks?
2. Why have commercial banks traditionally been in the short-term lending market?What is a line of credit? What is an equipment trust? What is its major advantage?
1. Discuss the relationship between proﬁtability and ﬁnancing capital needs during the 1990s and early 2000s. What is meant by depreciation? By deferred taxes? How does one distinguish between
▪▪ Discuss the importance of cash management andﬁnancial planning
▪▪ State which carriers might have the most difﬁcult time generating funds in the money market in the future
▪▪ Summarize the general ﬁnancial climate in which the U.S. scheduled airlines ﬁnd themselves during this decade
▪▪ Deﬁne current ratio, long-term debt/equity ratio, and return on investment (ROI)
▪▪ Discuss the major uses and sources of funds for the U.S. scheduled airlines from 1960 to the present, and compare the cycles of business activity during this period
▪▪ Deﬁne balance sheet, and describe the major items appearing under assets and liabilities
▪▪ Compare and contrast operating leases and capital leases
▪▪ List the advantages and disadvantages of leasing
▪▪ Deﬁne debt financing and equity financing, and discuss the airlines’ primary sources of external funding
▪▪ Describe the airlines’ major sources of internal funds
9. Describe “Generation Y.” What challenges will industry face as a result of the Millenial Generation?
8. W hat is meant by the elimination of the automatic labor cost pass-through? How did labor–management relations change in the 1980s? Give some examples. Why was the period between 1982 and 1985
7. What has been the most important effect of deregulation on airline labor relations?What are some of the newer carriers’ advantages over the established lines regarding payment and utilization of
6. Describe the labor–management scene before 1958. What happened in the early 1960s to change that scene? What was the result of this situation for the period from 1958 to 1970? What was the
4. W hat are the steps involved in the collective bargaining process under the RLA? What is the role of the National Mediation Board? Discuss some of the criticisms of the process.
3. Why is the airline industry subject to the Railway Labor Act? How are airline strikes different from railway strikes? What are the basic purposes of the act? Describe several major differences
2. In what sense are airline labor unions organized on a craft basis? What signiﬁcance does this pattern of organization have in airline operations?
1. Labor costs represented what percentage of total airline operating expenses in 1986?Why is this signiﬁcant? “Service industries are labor intensive.” What does that mean?
▪▪ Discuss future human resource challenges in the 21st century
▪▪ Compare and contrast labor relations in the prederegulation and postderegulation periods
▪▪ Distinguish between industry-wide bargaining and pattern bargaining
▪▪ Explain how airline union activity has changed over the years
▪▪ Describe some of the criticisms of the process
▪▪ Discuss the collective bargaining process under the Railway Labor Act
▪▪ Describe the basic purposes of the Railway Labor Act of 1926, and explain the role of the National Mediation Board
▪▪ Discuss some of the reasons labor is such an expensive resource
7. W hat are some of the items included in corporate planning’s recommendations of a fleet plan to top management? Why is top management apprised of developments as the fleet-planning process
6. G ive some examples of items to be considered under the following areas in the aircraft evaluation process: design characteristics, physical performance, maintenance needs, acquisition costs, and
5. W hat is meant by the unconstrained operating plan? What are the basic purpose of and data derived from fleet-planning models? Give several examples of external and internal system constraints.
4. Describe what is included in each of the four basic inputs (informational needs) to the fleet-planning process. Marketing strategy was referred to as the “how-to” function.What does that mean?
3. What are some of the factors an aircraft manufacturer has to take into consideration during the design and development stage of a new commercial jetliner? What is meant by “designing and
2. What are some of the advantages of fleet commonality? Why has there been a trend toward leasing? Distinguish between an operating and a ﬁnancial lease. How will noise restrictions affect future
1. Discuss the importance of the fleet-planning process to both short-term and longterm management decision making in an airline. How is this process in a sense betting on the future? What effect has
▪▪ Discuss the ﬁve areas that must be considered by an individual carrier in evaluating a particular aircraft
▪▪ Deﬁne system constraints and constrained operating plan
▪▪ Identify the four inputs in the fleet-planning process and explain what each one means
▪▪ Discuss the major factors an aircraft manufacturer must take into consideration in designing and developing a new jetliner
▪▪ Describe the industry changes since deregulation that have affected the fleet-planning process including new aircraft technology
▪▪ Understand the importance of fleet planning, and describe its long-range implications
10. What are the three basic in-service equipment assignments? The ﬁve out-of-service assignments? Discuss the advantages and disadvantages of skip-stop, local service, cross-connection, and
9. Airlines produce revenue passenger miles but sell available seat-miles. What does that mean? Why do the costs of operating a flight vary only slightly with additional passengers?
8. How do other operating factors, such as time zones, station personnel, and equipment turnaround time, affect the scheduling process? Why might a jet flight scheduled to depart Los Angeles at 11:35
7. Discuss some of the problems faced by an airline scheduling department that are similar to problems of other industries and some problems that are unique to the airline industry. Discuss three
6. “You can please all of the people some of the time and some of the people all of the time, but you can’t please all of the people all of the time.” How does this relate to scheduling? Why is
5. What is the objective of ground handling in the scheduling process? What are some of the facility limitations imposed on schedulers? What is a schedule plotting chart?Why is personnel planning so
4. Flight operations is concerned with a number of operational factors in schedule planning. Discuss three of them. How do crew time limits and employee agreements affect flight scheduling? How does
3. If an aircraft experienced a mechanical breakdown in Cleveland, how might that affect passengers expecting to board a flight in Youngstown?
2. What is the primary purpose of engineering and maintenance and line maintenance with regard to scheduling? Discuss the four maintenance efﬁciency goals. Name several of the inspection and
1. What is the mission of scheduling? Discuss some of the external factors that schedule planners must take into consideration. Why do many airlines use the committee system to analyze a proposed
▪▪ Discuss the advantages and disadvantages of huband-spoke scheduling
▪▪ Explain the four basic schedule types
▪▪ Describe such unique problems facing schedulers as trafﬁc flow, sensitivity to schedule salability, operational difﬁculties of adjusting schedules, and the ﬁnancial leverage of load
▪▪ Understand the role of the scheduling department in developing and coordinating the schedule planning process
▪▪ Deﬁne and explain maintenance efficiency goals, flight-operations factors in schedule planning, and facility constraints
▪▪ Describe the major internal and external factors that affect the scheduling process
6. List and briefly describe six factors affecting air freight rates. An aircraft may “gross out” before it “spaces out,” and vice versa. How is this related to air cargo? What are stacking
5. List ﬁve major commodities shipped by air. Why do you think they are shipped by air versus surface modes of transportation? Distinguish between general commodity rates and specific commodity
4. Do you think that air cargo revenue will ever exceed passenger revenue? Why or why not? Discuss several factors that will influence air cargo growth in the future.
3. Distinguish between integrated carriers, combination carriers, and all-cargo airlines, and give examples of each. Why have the integrated carriers gained a signiﬁcant market share in recent
2. Describe the basic concept of Federal Express. Why has this company revolutionized the air express business? Explain the role of the air freight forwarder in the air cargo business. Why did the
1. What is the difference between air express, air freight, and air mail service? Why was the early air mail service so important in establishing the U.S. airline system? Discuss the role of the
▪▪ Discuss several types of air freight rates and factors affecting them
▪▪ List some of the special air freight services provided by the carriers
▪▪ Discuss the market for air freight in relation to the type of commodity carried and demand and distribution problems
▪▪ Compare and contrast the role of air cargo today and in the future with the carriage of passengers and other modes of transportation
▪▪ Deﬁne the three types of air cargo carriers and give examples of each
▪▪ Explain why the arrival of jumbo jets in the early 1970s proved to be both a boon and a bane for the cargo business
▪▪ Describe the role of air freight forwarders in the air freight business
▪▪ Describe the concept of overnight air express as established by Federal Express
▪▪ Discuss the role of the Railway Express Agency in the early development of air-express service in the United States
▪▪ Distinguish between air-express, air freight, and air mail services
12. Describe in your own words the proﬁt-maximization point (use ASMs, RPMs, total revenue, and total cost in your answer). What is meant by marginal cost and marginal revenue? How do we determine
11. Give several examples of direct (variable) expenses and of ﬁxed-overhead expenses.What is the relationship between ASMs and RPMs? Given a ﬁxed fleet of aircraft and other resources in the
10. Deﬁne and briefly describe ﬁve direct operating expenses. What is meant by maintenance burden? Give an example of depreciation and an example of amortization.What are indirect operating
9. Give an example of an advance purchase requirement, a fare penalty, and peak/offpeak pricing. Why is the decision to use any one, or a combination, of these tactics essentially a decision to raise
8. What is the primary function of the Airline Tariff Publishing Company (ATPCO)?Why is the application of textbook strategies to airline pricing so difﬁcult? How do introductory fares differ from
7. Distinguish between normal and promotional fares. What is meant by common fares? By joint fares?
6. What are the major determinants of elasticity of demand? Use these determinants to judge whether the demand for the following services is elastic or inelastic:a Short-haul, primarily
5. Determine the elasticity of demand for the following demand schedule (use the total revenue test to check your answers):Passengers Total Fare Carried Revenue Ed$160 622 150 730 140 782 130 804
4. What does the coefﬁcient of elasticity of demand measure? What is meant by elastic demand? By inelastic demand? What effect will the following changes have on total revenue?a. Fares are reduced
3. What effect will each of the following have on the demand for Airline A’s passenger trafﬁc?a. Competitor B improves its on-time performance.b. Competitor B offers a special promotional fare on
2. Explain the law of demand as it relates to air travel. What are the nonprice determinants of air travel demand? What happens to the demand curve when each of these determinants changes?
1. What was the primary reason for the changes in average air passenger fares between 1929 and 1941, 1950 and 1953, 1960 and 1970, 1973 and 1986, 1987, 2001 and the present?
▪▪ Understand cost-cutting trends imposed by airlines for the 21st century
▪▪ Describe the proﬁt-maximizing level of output

Showing 500 - 600 of 855