Managing change in Civil Aviation Department ( Hong Kong )

Managing change in Civil Aviation Department ( Hong Kong )

Introduction

Even before the US airline industry was struck by what the Air Transport Association (2002) has called “The Perfect Economic Storm” - economic recession, war, September 11, and Severe Acute Respiratory Syndrome (SARS) - a new model of air transportation was gaining ground on the traditional air carriers. Following the 1978 deregulation of the US airline industry, these traditional carriers created hub-and-spoke networks to funnel passenger traffic from smaller markets to a central node in a key major city where a bank of large planes waited to be filled and flown on to another large central node city. The most successful carriers came to dominate their hub markets allowing them to exert greater control over pricing and capacity. Traditional carriers also developed frequent flyer programs to increase the switching cost of their customers and substantially adjusted service quality levels to differentiate the different fare classes of ticketed passengers. Along with its hub and frequent flyer program, traditional US carriers developed elaborate systems to optimize revenue (or yield) that involved dividing the capacity on board each aircraft into a number of booking classes (up to 26 in some airlines). Each class was distinguished by the restrictions attached to it i.e. Saturday night stay, advance booking, fee for change, refund, etc. and the fare attached to that class (Shaw, 1999). Passengers were now ranked based on their service cost and return to the firm with top tier consumers receiving an “unprecedented level of personal attention” (Brady, 2000, p. 121). This traditional model is increasingly under attack because of “unprecedented pressure on prices, challenges to further cost cutting, the replacement of turboprops by more comfortable regional jets, and a change in flying habits since September 11” (Costa et al., 2002, p. 5). In particular, the business class passenger who often accounted for the majority of revenue generated by traditional carriers has begun to rebel against the high fare differential, restrictions on reservations, and lost time to security and hub routing. These high-yield passengers have decided that it “is one thing to charge a very high walk-up fare to a last minute business traveler in a hub city where the passenger at least gets a nonstop flight. It is another thing to ask for a fare of an order of magnitude higher than the deep discount fare and still force a passenger to go through a hub with the extra trip time involved, and the possibility of missed connections and lost baggage” (Taneja, 2003, pp. 78-9).

For many years the reactive approach has predominated in Hong Kong major industries as the practical way to reduce accident losses. Losses, their causes, and suspected factors in the loss have been identified through accident investigation and accident research. This approach has many shortcomings. The most serious is that it permits many fatalities and injuries to occur in order to evaluate needs and priorities of safety improvement ...