Aircraft manufacturers,configurations to improve performances of their new designs

 

 

Business School

 

Research Proposal – Form B

 

Student Name:

Student ID:

Course: Aviation Management – Dissertation

Email:

Supervisor:

Dissertation Details

 

Dissertation Title: Measuring the additional market that exist for high-density A380

 

 

 

 

1. Proposal Summary

Aircraft manufacturers like Airbus and Boeing are pushing for denser seat capacities within the aircraft configurations to improve performances of their new designs. It has to be noted that airlines have not made any new investments in the recent years, and the sales of large jumbo aircrafts have been depressed.

Flourishing companies like Emirates and Etihad have ordered new aircrafts compared to other legacy carriers. Airbus had even unveiled a new campaign like “own the sky” in veiled references to Emirates and Etihad, which are constantly capturing the market share. It called upon the older carriers to defend their turf by adopting larger jumbo carriers which with increased seating capacity would return better profitability per flight.

Airlines industry is facing its most challenging times in recent years with legacy carrier’s like British Airways, Lufthansa, and many others facing difficulties and shrinking of international travel. The recessionary trends across the world have affected the airline industry that it completely has been re-molding itself to gain operational efficiency to increase profitability.

It has been recently noticed that increased capacity would further increase operational efficiency and also increase profitability per seat. Large jumbo aircrafts like A380 has been pressed into service by leading airline companies like Emirates and Etihad for their primary routes. The secondary connectivity is pulled by the smaller aircrafts which help in improving profitability across all levels. Larger aircrafts are also considered more fuel efficient with better efficiency in managing the flight.

This research would concentrate the feasibility of adopting denser seating configuration for A380, which many feel that has mis-sold the concept. It lower seating capacities would not drastically improve comfort levels. It has been working with airline companies to add 10% to the economy and business class seats without compromising on the comfort levels.

It has been found that many aircrafts like Singapore airlines are low-density operators compared to emirates, which have a higher density layout. With denser seat layout, it has been noted that it may jump-start sluggish sales. The general focus question for the research is that the A380 would opt for denser seating capacity would sustainably add thousands of seats to the inventory and thus improve the marketing potential for the airbus. It would help gaining acceptance of A380 and widen the customer base. (Flottau, 2013)

1. Topic Literature Review

Singapore is amongst the leading aviation companies in the aviation industry and therefore studying aviation is very important for any student undertaking a course in aviation. Aviation requires that students have a wider scope of knowledge and have full background information of ground operations, flight operations, customer service and satisfaction, in-flight hospitality, air traffic control, marketing and management of aircrafts. Since Singapore airlines has all this services, the data collected will help the researcher utilize it in measuring the additional market that exist for high-density A380

            Recent announcements of significant orders for new large aircraft including the Airbus A380 by airlines such as Emirates and Etihad, along with the development of plans for large-scale expansion of major hubs in the Arabian Gulf, suggest massive growth in the future market for air travel.

Moreover, notwithstanding the depth of the global economic recession and its effects particularly on Western Europe and North America, there appears to be an appetite for established air transport markets for gearing up for anticipated growth. However, such announcements and plans prompt questions about the potential for growth in the market for air transport. The literature is replete with references to market trends and analysis. Less common are detailed analyzes of constraints on that market, including but not exclusively the issue of market maturity.

Given the scale of the investment, it would appear sensible to aggressively investigate the extent to which the market for air travel is subject to constraints and in particular, the propensity towards maturity with a view to developing market projection tools capable of producing robust forecasts of market conditions. This paper provides a critical review of the evidence of such conditions in the market and offers recommendations on methodological improvements to address the challenges posed by the requirement to produce reliable market forecasts (Flottau, 2013).

Taking marketing positioning into account, Singapore Airlines is a complete service airline and focus on adding value for long distance travelers. Studying the position of the market of Singapore airlines is very important as Singapore airlines were the launch customer of A380. Singapore airlines are the largest aircraft in the world that carries passengers and it also among the top 15 carriers throughout the globe.

Thus, the company scrutinizes the marketing environment to search for the benefit of their target customers. Realizing Airbus A380 is the world’s most advanced, spacious and efficient aircraft, and it provides large spaces and additional services for customers, which is completely matched with the company’s goals, so Singapore Airlines makes deal with Airbus through sufficient marketing scanning. Nevertheless, environmental scanning cannot always be perfect, as its limitation still exists (FlightGlobal, 2013).

In aviation industry, the innovation and upgrading of technology are revolutionary. For the reason of competing with Boeing, Airbus worked stiffly to study and develops new aircraft, and eventually develops the A380. The jumbo jet has ended the almost 37-year reign of Boeing 747 as the World’s most spacious traveler airplane. Powered by four Rolls-Royce Trent 900 engines, the A380 is the major aircraft, on top of being held to be “cleaner, quieter, and smarter”.

The A380 is the world’s largest passenger airplane comprising of two decks and seating for 555-840 people. It kindly incorporates lighter composite materials. Its jet engines produce more thrust and lift more weight. By reducing the consumption of fuel, the A380 offers its operators slight but much-esteemed wiggle room in the binding that ties them to oil prices.

Though no one of the A380 launch travelers has selected a passenger cabin fitted anywhere close to that many seats. Take an airplane 33 percent larger than a 747 and pack it with just 25 percent more passengers and a slightly more spacious environment will be the outcome (Flottau, 2013). It is important to carry out the survey on B747 since it offers complimentary services with A380, and, therefore, the results obtained from the study will be useful in the study.

When studying about A380 it is good to have background information about B747 airplanes. The knowledge 747 is important since most airlines are opting to replace Boeing 747 with A380.They can be used and misrepresented in markets that can utilize them. The more they are flown, the faster unit costs decline, the more often a market is served, the higher the outcomes, and, by flying wisely, total fleet costs can be minimized. The long delay in deliveries of A380 is having a major effect on carriers, their fleets, and their schedules.

 

Airbus’s new A380 leasing customer Amedeo feels that simple marketing efforts concentrating on the larger seating density can unlock the demand of larger aircrafts within the industry. It feels that Airbus has mis-sold the A380 as a luxury plane but need to focus on the marketing efforts as an ultra large plane which offers large seating and thus better profitability. Today A380 is considered as luxury plane and is one of the costliest pieces of real estate in the sky which is not viable for airlines which has been burdened by shrinking economy and fuel price hikes. The focus of the airline is operational efficiency and high seat cost economics.(Amedeo, 2013)

John Leahy, chief operating officer of Airbus, feel that A380 has a long-term market appeal, even though, the company had only received orders for 304 planes by the end of last year. The largest number of orders came from Gulf carriers of Emirates and Qatar Airways.

Airbus prides itself on providing increasingly comfortable seats which can be compared to a theater. But experts feel that this can be achieved event with higher seating density, and it can translate up to $5.5mil in added revenue per year for operators making the A380 more competitive with the 777 family. The Airbus’s new promotional campaign, “Own the Sky”, is intended to encourage carriers to take advantage of the A380’s bigger size with 600 seating capacity. (FlightGlobal, 2013)

 

 

1. Objectives

 

The general focus question is whether increasing the seating density of A380 jump start its sales and widen the customer base without compromising on customer comfort. The objective of the study is to understand whether, A380 can be marketed as an aircraft with higher seating densities with 427 18.5in- (47cm) wide economy seats on the main deck and 146 premium and economy seats on the upper deck – 12 first, 66 business and 68 economy.

The company needs to work with the airline companies which have not been optimally using the floor space of the A380 resulting in lesser seating economics. This has increased the cost per seat and affected the revenue pattern which has actually reflected in the demand for such jumbo aircrafts.

Different aircrafts require different needs. For example, Korean airlines seat only 407 passengers but provide luxurious amenities for its passengers, but Emirates is planning to squeeze maximum space by seating 11 passengers across its body. The company needs to work with the airlines and their markets to understand the requirements and customization needs.

It would be important to find what kind of markets would encourage such crowding. High-density seating may be encouraged in emerging economies like India, etc. which seek economical seating for the hundreds of the labor force which frequently move across the continents. Leasing companies like Fly Leasing may have to be interviewed to understand their viewpoint on the seating arrangements.

 

 

1. Project Outcomes

The outcome of the project is to understand whether the increased seating capacities for the A380 would improve its acceptability among customers thus improving its sales. Airbus’s A380 works on the principle that there is ability to considerable changes that can be allowed on the aircraft, and this has the distinction of having the lowest seat-cost economics in the entire industry.

For example the Korean Air configures the aircraft with 407 seats: 12 first class and 301 economy seats on the main deck and 94 prestige-class (business) seats on the upper deck and Emirates currently has current 489 and 517 seat configurations. With higher-density configurations, many feel that the demand for A380 would increase by improving the seat-mile costs. Decreasing the seat mile costs will lead to a decline in the revenues collected per seat and therefore there where will be a reduced profit margin though it will defeat its competitors as a result of the supply and demand laws.

The seats would be 19in-wide seats at 10-abreast resulting in a whopping 600-seat layout, which can dramatically improve the carrying capacities. These configurations many believe does not diminish the luxury component of the better room for the passenger and at the same time can increase its capacities for both economy and business level passengers. This project would review whether such a configuration would be acceptable to airline companies and can be done in a sustainable and lower cost manner.

 

 

 

1. Why are you interested in the project?

 

Amedeo, an aircraft leasing company, has recently commented that the Airbus has miss-sold A380 as a luxury airplane with an uneconomical lower seating density. This has made it a white elephant especially for commercial airlines, which prefer higher seating density in its primary routes. Many airlines cannot find it viable to fly at lower seating densities thus affecting the sales.

But it has to be noted that with reconfiguration this aircraft can be transformed to a large 600 seater which would offer better profits per seat. Aviation sector watchers like Sharan Lillaney feel that the layout comprising of 427 18.5in- (47cm) wide economy seats on the main deck and 146 premium and economy seats on the upper deck – 12 first, 66 business and 68 economy would not compromise on comfort and at the same time deliver better seating densities. This would make the aircraft more acceptable to many companies, in the long run.

 

1. What are the key questions the project attempts to answer?

The key questions include whether

• It is feasible to reconfigure the seating configuration in a sustainable manner
• Whether increasing seating densities can be adopted as a new marketing and advertising tool
• Would the better seating arrangements improve acceptability of the aircraft and widen its customer base.
• Would this arrangement jumpstart the sluggish sales of the aircraft
• Would it improve seat cost economics for the airline company without compromising on the customer comfort?

1. What Research Methods do you intend to use?

The research would be an exploratory method where in an interview can be undertaken by the premium airline companies whether the large jumbo aircrafts with reconfigured seating arrangement would be acceptable or not. This could be followed by a comprehensive literature review to understand the economics of the aircraft profitability and its relation to seating density. This would unlock the potential of A380 as a large seater, which can be then used as a marketing tool.

The survey can be conducted among prominent airlines like Emirates, Asian airlines, American airlines, Legacy airlines, and the upcoming airline from Emirates airways Fly Dubai. The rationale for surveying Fly Dubai airlines is that Flt Dubai is the current rising airlines from the Fly Emirates. Having the wider scope of knowledge concerning its operations will help the researcher understand why it is rising at the highest rate. For an airline to be famous and increase its operations, and then it must be serving exemplary services in terms of seating arrangement and the size of the aircraft.

The information about Fly Dubai will assist the research to point out areas that are supposed to be improved in A380 so as to offer excellent services. The survey will be based on such leading airlines provider since they are the ones that offer the same service as those of airbus A380. These companies have also been legendary for their customer service and comfortable flights. It would help to understand the feelings of the airlines about the increased seating density. Leasing companies like Amedeo also can be included in the mix.

There is a need to understand the market, which would encourage such seating arrangements. This includes passengers who need to be interviewed for their part of the story. Some may prefer price economies but may also prefer the current luxury amenities. A survey of passengers also would help to identify the market for high-density seating and lower passenger costs.

1. What primary and/or secondary data sources do you intend to use?

            It would be feasible to use deductive reasoning for arriving at a particular conclusion. Deductive reasoning has been the use of most of the qualitative study, commences with generalizations, and seeks to establish these generalizations to particular instances. The research seeks to establish whether adopting a high-density seating capacity could help to jump start airbus sales.

It would use an exploratory method with interviews with engineers and marketing department of airlines like Asian airlines, American airlines, Legacy airlines, and Fly Dubai. The primary data would be collected by means of a face-to-face interviewing the engineers and marketing department heads of the two major airline companies in UAE, Etihad, Cathay Pacific, Singapore, and Emirates.

The data would be collected by means of a structured interview which would gauge the acceptability of higher seating density. The interview would assist by means of a questionnaire, which can be recorded with permission, and the information thus gleaned can be analyzed by using statistical and graphical means. A survey of the passengers would also be conducted to understand the effectiveness of increasing seating density. This would gauge the passenger feeling about the decreasing seating width and lowering luxuries in the jumbo A380.

The interview would be conducted by few senior executives of the above airlines to understand the market for this seating density. These airlines have set up benchmarks for international travel would dilute the brand equity of the airlines. The survey among passengers would include a sample size of 100 passengers frequenting the Dubai International airport to understand the passenger view about the increased seating density. Many airlines feel that improved in-flight entertainment options, food, and reduced price would help bring together the market for 18-inch seating width and thus increased seating density. This survey would be undertaken by administering a small questionnaire, which would enumerate the important aspect of air travel including comforts like in-flight entertainment, seating comforts, food or pricing.

The secondary data would be collected by means of a comprehensive literature review which includes study of peer-reviewed journals, internet sources, and reports. This would assist in understanding the topic and developing a structure for the interview. Secondary data that will be utilized include data such like Government data, reported interviews and airline magazines.

Secondary data that will be obtained from government sources offers a tremendously rich pool of data that will be utilized by the researchers. To add on, many of these data can be found free of charge from the internet websites. We have a number of government agencies developing data, the data that is most likely to be correct but the problem is that it may not be up to date. On the other hand, data from airline magazines offers information concerning air fleet, as well as articles on destinations. The data is normally used to enhance their appeal to passengers.

1. Please provide draft chapter heading for your report

The chapter heading may be as follows:

Abstract

Introduction

Objectives

Analysis

Methodology

Literature review

Profitability

Calculations

Prospects for the future

Recommendations

Conclusion

List of references

 

1. Plan

 

	Weeks
	1	2	3	4	5	6		7	8		9
Developing of the research proposal
Developing the general objectives
Designing the questionnaire
Conducting interview
Data collection
Secondary research and literature review
Data analysis
First draft
Final report

 

Questionnaire (final) these questions are the final ones and will be used in completing the dissertation. They will not be adjusted but rather will be all included as they are in the final dissertation.

1. What makes A380 be considered for a mass transit aircraft and not other types of aircrafts?
2. Would an increase in seating density be welcomed by the customer? If yes, In your own opinion, what is the average monthly demand for A380 that can be expected?
3. How does the price an important factor in determining the aircraft? What will happen if we lower the price of tickets and then increase then abruptly?
4. From your knowledge, how can increase in economy seats and all the economy flight dilute the brand value? What do you think can be made to improve service delivery?
5. Can service quality offset the cramped seating conditions with lower prices?
6. How can an airline company differentiate itself from its competitors? What are the innovations that are supposed to be adjusted so as to get rid of competition?
7. What is the feasibility of A380 in high-density routes? Do they have a competing edge in the market? If so, what is its major competitor in the market and why has it emerged to be the top?
8. Would A380 be a differentiating factor for airlines? Give a brief reason on your views.
9. What should be the USP for A380?
10. Can it be a versatile aircraft, which can be modified based on routes and customer needs?

List of References

FlightGlobal. (2013). Airbus pitches higher seat-counts on A380. Retrieved from http://www.flightglobal.com/news/articles/airbus-pitches-higher-seat-counts-on-a380-386907/

Flottau, J. (2013). Airbus Sees Option For 10% More Seats In A380. Retrieved from http://www.aviationweek.com/Article.aspx?id=/article-xml/awx_06_06_2013_p0-585968.xml

Sify. (2013). Retrieved from Airbus wins $8.3bn order from Amedeo at Singapore Airshow: http://www.samachar.com/airbus-wins-8-3bn-order-from-amedeo-ocmkLGeddab.html