The Essentials of Airplane Maintenance

By Michael Loong

How can a CEO spend creative energy to improve the performance of his organization instead of spending patch-up energy to quick-fix symptoms of problems? How can he develop a balanced, proactive plan (like a yin-yang relationship) so that his managers can properly manage their portfolios according to the companys aims and objectives?
The heart of The Essentials of Airplane Maintenance addresses issues concerning how to set up and manage an engineering and maintenance organization with all necessary facilities, departments, procedures in place, and staffing. Running an airline business in the current global environment is not meant for the fainthearted person or novice. The operation is complex and risky.
In The Essentials of Airplane Maintenance, author Michael Loong provides practical information to the new and practicing engineers, engineering, and maintenance managers and CEOs of airlines. His philosophical approach to solving practical problems is enlightening and pragmatic, not only for the airlines, but also for the aviation suppliers. In order to achieve reliability and safe operation of airplanes, he advocates applying economic theory in managing engineering repair and replacement procedures instead of following the book blindly. It is a must-read book to achieve success in the dynamic, complex world of airline operations.

• Language: English
• Publisher: Partridge Publishing Singapore
• Release date: Jan 28, 2015
• ISBN: 9781482829518

Michael Loong

Michael Loong has made numerous trips to China since 1987 and has witnessed the country’s success in lifting two hundred million people out of poverty.

Book preview

CHAPTER I

Introduction

1.1 About An Airline Business

Running an airline business in the current global environment is definitely not meant for the faint-hearted person or a novice. The operation is complex and risky. It encompasses:

•  International rules and regulations

•  Sound technical knowledge of airplane operations and maintenance, and effective materials inventory management and control

•  Efficient utilization of financial, human, and material resources

•  Reliance on many suppliers to provide real-time and quality services

•  Global economic and political environments

•  Many Plan-Bs ready to cushion any impact of political turmoil, terrorism, or natural and man- made crises

•  Marketing skill with high-yield strategy for high and low seasons

•  Complex passenger preferences and characteristics

•  Cargo sales network in different countries

•  Ticket sales through Internet, interline, telephone and retails

•  Effective control and management of supply chain processes

•  An effective organization with adequately trained and motivated staff with team spirit

•  Computerized reservation system and many other IT data gathering and processing computerized systems

•  Finance and cost management and control

•  Constant upgrading of systems of operations, implementing new ideas, and relentless training of staff to acquire new skills

The CEO should be mindful of the fact that the airline products —the seats—are easily perishable. An airline operation is but a series of activities performed within a supply chain system, and they are not to be interrupted anytime and anywhere. You are not only selling seats to the passengers, but also a whole package of passenger services prior to, during, and after the flight; and the entire airline management system is involved.

In airplane maintenance, you must pay attention to every aspect of airplane operation, including safety, cost and productivity. Neglect in any one area of the operations may cause grave problems later to your organization. Also, you need to spread your attention to cover all grounds in order to prevent any loophole for unsafe practices. Executives need to walk the floor at ground zero to see what is happening and to act proactively on what shortcomings need to be rectified and processes improved. Operational problems are dynamic and could cause chain reactions. The severity of problems can grow rapidly to a magnitude that could necessitate a major overhaul of the entire organization. Hence, it is prudent to apply proactive solutions (creative energy) to problems to prevent them from cascading to expensive consequential problems.

The airline business operation is very dynamic. New problems surface daily and constantly. As a senior executive, you cannot and would be unwise to try to micromanage every aspect of the operation. You need well-trained staff to take care of new problems on the spot in the field, just like in guerrilla warfare. If you do not trust your staff to make correct decisions, you have no hope in achieving your company’s objectives in this rapidly changing world.

Many iconic airlines in the world have gone the way of the dodos. They serve as constant reminders that unless you are in absolute control of the cost drivers, your treasury will bleed dry in a short time. It is so hard now to earn a profit of a few dollars from selling a ticket worth a few hundred dollars. In fact, the price of a B747-400 Singapore–London economy return ticket is not only cheaper in year 2005 than in year 1970 flying a B707, but also the passengers get better cabin amenities and services. An airline operating a fleet of five B737s can be in the red with two engine turbine failures. An unscheduled line station engine change on a B747 could cause your airline to lose half a million dollars in revenue and incur bills worth hundreds of thousands of dollars for passenger hotel accommodations and other incidentals in an expensive city like New York or Tokyo. It is hard to imagine the total cost of canceling an A380 flight with up to 500 passengers. The ghosts of a fatal air crash can haunt you for many years when compensation lawsuits fly in from all corners of the globe, and the legal proceedings could continue for many years. Airlines with accidents are vulnerable to bad media publicity. The record of accidents is always in the aviation history archive for all to see. No one wants to find his airline’s name tainted with tragedy in those archives.

1.2 Knowledge Required To Run An Airline

Here are six pieces of the jigsaw puzzle of the complexity of an airline operation. As the chief of an airline, you need to have the required knowledge to appreciate that every piece of the jigsaw must fit together nicely before the airline can make the passenger-boarding announcement.

[1] Technology

There is no perfect airplane model to meet your airline needs. Every airplane design has its own limitations and characteristics of performance and capability. Before any airplane purchase, the airline must first decide which airplane model best fits its marketing requirements for ten to fifteen years. There is no perfect airplane to suit each airline for every route and market conditions. It is a compromise. The airline must also decide early whether the airplane is also used for carrying cargo as a good source of revenue in addition to carrying passengers. It needs to decide early whether it is going to have a single- or multi-class cabin configuration. Changing cabin configuration can cost millions of dollars per ship-set for retrofitting different galley designs and installation, and payment of retrofit design and modification might take a year or more to complete and receive approval. Buying different airplane models from different manufacturers for a small fleet can be too costly to operate and maintain.

[2] Finance

For airline operations, proper financial control is a necessity.

•  It is a big gamble to order a fleet of airplanes three to ten years in advance, costing many hundreds of millions, or billions, of dollars, not knowing what the market conditions will be like in the future.

•  Should you buy a lot of airplanes with options stretching for many years with a fixed price and price escalation clauses locked in, or you buy only what you need for the next few years, you must bear in mind that, at a later stage, the fierce competition and the depressed market can force the airframe manufacturer to drop prices drastically.

•  You must know where to get the cheapest financing deals worldwide.

•  Revenue can plummet due to the effects of severe economic crises (anecdotal evidence of the aftermaths of 1987 Asian financial crisis and Wall Street stock market crash post-Sept. 11), sudden terrorism, and contagious diseases (like SARS and mad cow disease).

•  Opening new stations is expensive without guarantees of future success.

•  Control and management of foreign currency exchanges with wild fluctuations in various countries.

•  Fuel supplies and hedging.

•  Bad debts.

•  Control and managing accounts receivables worldwide.

•  Control and management of costs of foreign stations operations, ticket sales, business and staff expenses.

•  Labor costs.

•  Annual balancing budget for entire airline operations.

•  Capital project management.

[3] Marketing Skill

To sell tickets effectively and quickly, you need to possess marketing skills and knowledge in the following areas:

•  Computerized reservation system worldwide

•  Wholesales & ticketing agencies

•  Interline agreements with various airlines

•  National and international sales and marketing promotions

•  Tour agencies

•  Advertising local and worldwide

•  Internet sales

•  Passenger services in the air (cabin) and on the ground

•  Food and beverage catering needs to suit all kinds of passengers

•  Allocation of tickets for different markets

•  Understanding domestic, regional, and different international markets with different types of cultures, tastes, habits, holiday periods, and needs

•  Alliances and code-sharing with other airlines

•  Airplane departure schedules

•  Airport departure/arrival availability slots

•  Airport operations restrictions, and charges—for example, night curfew, maximum noise levels, and engine exhaust gases emission limitation

•  Rules and regulations of different countries

•  Buying or leasing new airplanes or used airplanes

•  Ability to borrow money to buy new airplanes with less maintenance costs, and pay less for used airplanes but more on maintenance

[4] Human Resources

You need to know how to utilize human resources wisely and carefully to operate an airline successfully:

•  Aviation and commercial licensing rules and regulations concerning operational staff

•  Staffing for flight operations, cabin crews, engineering & maintenance, finance accounting, administration, marketing, cabin services, and passenger and cargo ground handling

•  Foreign station staffing and training for different cultures and languages

•  CRM (Crew Resource Management)

•  Industrial relations and union matters

•  Staff recruitment, training, remuneration packages, control, and management

•  Line station airplane and ground handling and maintenance staff

•  Staff development

•  Hygiene and environmental issues

•  Manpower outsourcing

•  Productivity management

•  Legal requirements domestic and worldwide on labor employments

•  Proper communication system worldwide

•  Air and ground safety surveillance and accident prevention procedures and systems

[5] Engineering & Maintenance (E&M)

You need to set up, during the initial period of airline operation, a modest E&M organization to cater to in-house maintenance for transit checks, night stop checks, and A Checks, with C and D Checks outsourced to a third-party Maintenance, Repair, and Overhaul (MRO) agency. The E&M organization deals with the following matters:

•  Knowledge of airplane and components operations

•  Aviation rules and regulations

•  Safety standards for airplane maintenance

•  Achieving highest productivity of airplane and labor

•  Maximizing airplane operating hours and time between scheduled airplane maintenance checks

•  Lowest cost of passenger seat mile or kilometer

•  Lowest airplane and engine ownership costs

•  IT database and computerized systems for information gathering, processing, and storage and retrieval

•  Spare airplane and component control and management

•  Differentiation between international and domestic operations

•  Proper control and managing of line station maintenance

•  Maintaining acceptable quality standard of outsourced maintenance

•  Proper scheduling of manpower and use of equipment for airplane defect troubleshooting

•  Material inventory control and management system for spare parts and sales of surplus materials

•  Maintaining main base and line station airplane dispatch reliability within acceptable levels

•  Maintaining good relationship with aviation authorities in all countries

•  Airplane and component maintenance workscopes, procedures, and processes

•  Fuel conservation programs

•  Effective project study, planning, execution, and management

[6] Company-wide Supply Chain Processes

All the senior staff are to be familiar with the theory and practice of the supply chain processes:

•  Actions and movements throughout the company worldwide network involving airplanes, manpower, ticketing, passengers, food and beverages, ground services, cargo, pre-departure flight plans, documentation, and approval must be synchronized to meet airplane scheduled flights

•  Timely availability of airplane for commercial service after scheduled and unscheduled maintenance. Adverse chain reaction will happen if international flight is cancelled or delayed, affecting subsequent connecting flights. It might take five to ten days to restore normalcy of flight schedule

•  Punctual delivery of airplane spare parts and services from local and international supply chains every day

•  Efficient communication channels and effective information data gathering and processing

•  Constant upgrading of processes and procedures

•  Cordial relationship with the Original Equipment Manufacturers (OEM) and government officials

The success of the supply chain process depends on the weakest link in the chain of events. Every person looks at the aviation business differently, from different perspectives and personal agendas (as in the Blind Men & Elephant Story). However, the CEO cannot be blinder than others. He has to see a wider composite picture of the business better than others. For any major decision, he has to evaluate, without any pre-conceived idea, every available piece of evidence and every available fact in order to decide for the good of the whole and not part of the organization. Of course, he needs a team of wise and experienced senior management staff to help in the decision-making process. He has to be a high Application IQ person.

A CEO needs to spend creative energy to improve the performance of the organization and not spend patch-up energy to quick-fix symptoms of problems. There is a gold mine in every part of his organization. To get the gold, he has to search for it. He needs a balanced, proactive plan (yin- yang relationship) to perform his directing like a five-star commander; and he needs to let his managers manage their portfolios according to the company’s aims and objectives. Respectively, they need a checklist for their job functions incorporating continuous improvement programs. Beware of the life cycle of any business that is getting shorter each passing year. The low-cost airlines that are sprouting everywhere should not be considered as an enemy but as a timely wake-up call to force your organization and staff to improve productivity and efficiency, and to reinvent and retool your company to be more in tune with the real world and to meet new challenges.

Every day is different in the real world of airline business.

Because airline operations are complex, it makes the job of managing one very exciting. Every day is a challenge. There is always something new happening that needs clarification or requires assistance from colleagues, business associates, or suppliers. Or perhaps amendments need to be made to the operating instruction manuals. The marketing conditions are so dynamic that what is OK today is NO-GO tomorrow!!

Be safe. Follow the rules.

Airplane operations are very sensitive to any action that is not in compliance with national and international rules and regulations. For example, your airplane cannot take off with less than the required legal number of cabin crew. Your airplane can be impounded at a foreign station if it is found to be infested with rodents or insects, or if it appears to be unhygienic. Your airplane must not fly if the insurance expires, even in the air halfway en route to your home base after crossing the dateline. Therefore, everyone has to exercise discretion; but the discretion should not get the better of you because of expediency. You must do your job legally and safely. Even if you are a Nobel prize winner, neither pleading nor mitigating factors can exonerate you from the disastrous consequence of your unapproved or unsafe practices. Hence, you will be doing a disservice to your company if you want to save money by using unsafe work practices.

1.3 Airline Business Must Be Directed By The CEO

As the airline industry is so meticulously bound by rules and regulations, and as the penalty for noncompliance can be expensive, it is, therefore, the task of the CEO to inculcate in each staff member the commitment, discipline, responsibility, and care that goes with his job. Such obligations override a person’s personal aspiration and agenda. It is of vital importance that the CEO gives each of his senior staff a job specification that entails his job scope with various priorities and responsibilities; and the job scopes are to be periodically reviewed and revised to keep abreast of the prevailing conditions. It should be done exactly the same way that a pilot updates his preflight checklist before every takeoff, to cater to any new condition or requirement.

It is true that the airline business means different things to different staff members at different echelons. Management staff cannot expect junior staff to act and think like a manager when they are paid only as junior staff members, although it is convenient to have such staff who can think one level up. By nature, airline operations are highly pressurized by punctuality and safety considerations. Under such conditions of working, it is essential that the CEO maintains his surveillance and keeps communication channels open at all times for any emergency consultation. It is he who provides the leadership, needs the ability to think out of the box, looks at the bigger picture, and is fully committed to the company’s goals. He provides the resin that glues together all the staff in the company. Junior staff watch quietly from afar to see how the CEO performs in the company. They will respond in kind and show their loyalty and commitment if they see the CEO as someone who is a capable leader, fair to all, and evenhanded in his dealings with staff matters, and who sets a good example of being selfless and caring.

Each successive new model of airplane coming into the market incorporates the latest technology, uses better quality material and workmanship, offers lower fuel consumption per seat mile, and has higher reliability with reduced ownership costs over the previous models. This is how the airplane manufacturers survive. They sell not only the airplane per se, but also the operating and management systems that collectively contribute toward the making of the final saleable product. Airline management, likewise, must train and acquire cutting-edge management skills, operating systems, and state-of-the-art tools to improve efficiency and productivity and to reduce costs of operation in order to meet the ever-rising demands of the passengers and to successfully compete in business. Every airline operates the same kind of airplane. Some airlines make profits; others fail. The only differentiator is the people—the CEO and his workers. You need to pay well to attract and keep the right caliber of staff. (As the old saying goes, you get monkeys when you pay peanuts!) Equally important is having a congenial working environment that encourages staff to want to go to the workplace and enjoy working every day.

1.4 What Do You Sell As An Airline?

You are selling not only a seat, which is highly perishable, but also a host of other services. For the US $200 ticket (your profit margin is probably US $20, or even less if you are a budget airline), and for a total of three to four hours on the ground and in the air until the passenger collects his luggage at the destination, there are many things that your staff must do to satisfy him. You have to compensate him when his luggage is lost in the system through no fault of your airline. Neither party will be happy over the incident. Your airline does not make money and the passenger is unhappy with the loss of his luggage.

How do passengers look at your airline before they buy a ticket from your sales staff? There are a myriad of reasons for passengers to choose or to reject a particular airline over others. Here are some of the factors:

•  Convenient timing of flights

•  Reasonable fares or cheapest fares

•  Safety record

•  Quality of food and cabin amenities

•  New airplane

•  Fast retrieval of luggage

•  Friendly service on the ground and in the air

•  Reliable flight departures

•  Good experience on previous flights

•  Better interline connections

•  Clean toilets

More competition is on the way!

There is no monopoly of passengers in the present, liberalized air service agreement between countries. Many countries are trying to open up their airports to as many airlines as possible— a reversal of yesteryear restrictions—to bring in more foreign tourists to spend money on shopping and touring, much to the delights of hotels and tour operators and the cascading effect on the local economy. One tourist dollar may generate three other dollars of local business activities. Big corporate business travelers may be still around for awhile to fill up the first- and business-class seats on long- haul flights; but with the attraction of low fares and convenient flight schedules, they may also hop onto the no-frill airlines. Many people who normally would not fly can now afford to fly with low-cost airlines because of cheap fares. These low-cost airlines have innovative ideas to open up the aviation market, providing more new challenges in the aviation industry. Many old airlines will fade away because of management problems, outdated practices, and the high cost of operations.

1.5 Recipes For Making Companies Successful

Rome was not built in one day. Similarly, the seed of a successful company takes years to germinate and grow. A successful company has the following attributes:

•  The company is well-organized, its infrastructure agile and flexible, its management focused; and it’s led by an enlightened, selfless CEO with leadership qualities and high Application IQ.

•  Its business plan is well-defined and focused, properly and timely executed by management team members.

•  Management practices are always in the forefront.

•  It treats staff as assets and not digits.

•  It is generous on training staff.

•  It confronts the reality of the prevailing environment.

•  It anticipates changes around you and is proactive in taking action to be ahead of potential problems.

•  It does not take advantage of your company but lets the company take advantage of you.

•  Its contribution cannot be measured but is how you feel about the satisfaction and happiness of contributing.

•  It discerns the world as it is and not the way it want it to be. It avoids tunnel vision when viewing the world around us.

•  It understands that your time spent in attending internal meetings is not free. The most unproductive internal administrative meetings are the ones that run the longest with the largest number of attendees.

•  It always stays ahead of the cost curve. It knows all the major cost drivers.

•  It is a team game. The success and value of an airline or an E&M organization is based on the wisdom, experience, and contributions of all the staff, from past and present.

1.6 What Is The Life Span Of An Airline?

The product life cycle is getting shorter for many commercial products. With the World Trade Organization (WTO) in force, many countries are free to trade with one another, and hence competition amongst free trade nations is getting fiercer. Game rules are changing continuously. More low-cost or budget airlines with innovative ideas are being set up that will compete with the traditional airlines that are hamstrung by old legacies and archaic management practices. On short-haul flights, the value of cabin services may not be significant enough for the traditional airlines to demand a 100–200% higher fare than the low-cost airlines offering budget fares.

International terrorism and natural disasters shown on TV screens are bad news, with a negative effect on travel industries. Therefore, airline operations are not a smooth sailing business. They need good staying power and sound cash flows. It is not the lack of money that sinks the hope and fortune of an airline, but a failure of organization without good leadership.

History shows world trade patterns and foreign investment money shifts from continent to continent regularly. As the importance of the world economy shifts from one country to another, so also are the airline business operations that are linked to these shifts. With adaptation and strategic planning, smart airlines can shift their business operations quickly to meet the new challenges and, hence, can survive another decade or so. The new entrant airlines will have a better cost-structure without any historical baggage of union agreements regarding generous salaries and benefits to worry about. They are more motivated to get on with their new business, whereas the older airlines may have slipped into a laid-back mode, enjoying the fruits of past glories and successes; or they are in the midst of a major restructuring to get rid of deadwood; or they are embarking on a massive cost-cutting exercise to avoid being sucked into the Chapter 11 tornado.

From historical records, few airlines can survive more than fifty years, or two generations. The early generations toiled hard to get the airline to be successful, learning through the school of hard knocks the lessons to build up the company. The next generation enjoyed the success and basked in the past glories by taking the energy out of the flywheel without spinning it until it finally stopped. Every organization, like an airplane, has a soft life. Every system or procedure has a use- by date. Every skill is dated.

Airplanes go through D Check and incorporate service bulletins to restore an acceptable airworthiness condition for continuing operations. An organization, though not under any legal obligation, should also go through a thorough regular health check to revamp or eradicate irrelevant practices, incompetent workers, and unproductive processes when it has the time, energy, and money to do so. It will be too late to do anything when a fragmented organization reaches the terminally ill stage of cash depletion and heavy operating losses. A languishing boat with a broken sail, defective rudder, and leaking hull has no hope of survival in a rough sea.

The staff is the most important foundation of a company. They must be adequately and properly trained for their jobs. In order for them to stay happy, their working life must have a meaning, value, purpose, self-esteem and self-actualization, and a sense of belonging to a respectable company. It is the CEO who has to facilitate the provision of safety and the right infrastructure and working environment to achieve the right lifestyle for his staff.

No matter how busy the CEO is with his daily administrative work, he has to plan his work carefully in order that he always stays ahead of the cost curve, leads the organization to do the right things (permitting his managers to do the things right), and continuously trains the staff to be more productive and innovative. The CEO is akin to a football team coach who knows the strengths and weaknesses of his players. To win the championship in a team game tournament, he has to come up with new strategies against different opponent teams with different strengths. He has to win every match to reach the final one. An airline operation is also a team game involving a long supply chain of human activities and confronting ever- changing landscapes of competitions. The CEO needs to strategize, encourage, and lead his teammates.

The full-time job of managing airplane maintenance has to be shouldered by the E&M Director. He must be one who knows airplane maintenance, finances, and human resources. Engineering maintenance function is more than keeping the airplane in safe working condition in compliance with the aviation authority rules and regulations. He also has the important function of maintaining the cost of airplane ownership at the minimum level. It is extremely hard to earn a few dollars selling a passenger ticket in the present competitive markets; but it is very easy to lose millions of dollars when your airline does not have the engineering expertise to control and manage the repair and overhaul of airplanes, engines, and components—in-house or outsourced—with economic considerations. This expertise takes years to build up by technical engineers with sound theories of engineering, finance, and practical experience in airline operation. You also need to have appropriate and cost- effective workscopes for airplane, engine, and component maintenance at the hangar and shop levels. There is no other alternative to maximize resources at minimal costs.

1.7 Future Trends Of Airplane Maintenance

The landscape for E&M organization will change dramatically in the near future. The traditional methods of maintaining an airplane are too costly to continue. The Dell computer and Nike shoe concepts and even the dull apparel industries (see Note 1) are changing the way businesses are supposed to be conducted. Productivity and efficiency are still the twin pillars of successful business operations, now and in the future. The common denominators for the Dells, Nikes, and name brand dresses are:

•  Fast speed in introducing new ideas and designs or specifications to meet market demands (customer- focused and oriented)

•  Outsourcing of manufacturing of parts and services to worldwide firms that can provide quality, short lead-time and competitive pricing based on world parity of costs

•  Excellent logistic control and management system of parts delivery and assembly into final products

•  Relentless pursuit of cost reduction, better quality, and productivity

Many E&M organizations still operate under the patronage of the Marketing Department in an airline. The present world of business operation dictates that no airline can afford the luxury of keeping an expensive workforce and facility to cater to unplanned or wavering commercial demands.

Concurrently, the E&M organization must not consider itself an iron rice bowl operation by charging the airline on the basis of cost plus for services rendered. Such practices can stifle innovations and productivity improvement programs.

The airline CEO must appreciate that unless you have competition, you cannot expect the E&M organization or third-party maintenance to give you value for money for services rendered. In the service industry, the airline is selling more than a service on the ground and in the air. It sells the entire spectrum of airline operation systems at the lowest possible costs with an acceptable quality standard just like the Dells, Nikes, Wal-Marts, Carrefours, and the garment merchants in the Guangdong Province of China (see Note 1).

Indeed, you would have a hard time to find out how much you should pay the worker who, with thirty years of working experience in the airline, changes an airplane battery on the twenty-year-old B737 as compared with another worker who, with three years of working experience in the airline, does the same kind of job on your new airplane A380. Chances are that you pay the former twice the salary of the latter, based on a time-scale salary agreement, bearing in mind that the A380 has four to five times the earning capacity of the B737. Such disparity of salary makes no economic sense in the current WTO trade conditions. In the future, there will be many state- of-the-art MRO organizations providing quality engineering and maintenance services without the burden of having to pay staff salary based on the time-scale formula.

¹The mind-boggling transformation in the past ten to fifteen years of the world-renowned apparel industries in the Guangdong Province of China bordering Hong Kong is a classic business survival evolution. For many decades, the apparel industry in China was considered to be a sweatshop type of business, with poorly paid workers working in appalling environments, producing clothing only meant for customers looking for cheap, not durable or fashionable, clothing. Such scenarios are no more. You can see models wearing name-brand dresses on the catwalk today in New York or Paris. By the next day, you can buy similar dresses made in Guangdong Province, with color, fabric, design, and quality to match the name brands, but at a fraction of the price. The landscape of apparel industry in Guangdong has changed beyond recognition. What are the reasons that make Guangdong Province so successful? They are:

•  Many subcontracting firms specializing in making different portions of the clothes—like the threads, buttons, zippers, straps, side trims, belts, beads, collars, and other accessories—with real-time delivery. No one, single firm makes everything in- house. Every contracting manufacturer is a specialist, much akin to the suppliers of components to Dell computers.

•  Many suppliers with ready stocks of all kinds of fabrics and raw materials for dress making.

•  Availability of skilled laborers and adaptations to various volume demands.

•  Advanced cutting and sewing machines.

•  Sophisticated logistics, shipping, distribution, and marketing networks worldwide.

The apparel industry is a sunset industry no more, as envisaged by many doomsayers. The whole transformation, from conditions of low to high technology, sweatshops to modern factories, low to high quality, and erratic low- volume to consistent high-volume output cannot be achieved without systematic reforms and sound leadership of the entrepreneurs in the industry, coupled with the application of IT and the prudent investment of training, making China, a Communistic administration, the undisputed leader in the garment-making industry in the world. It can make quality clothing at competitive prices, and it can make them fast. China’s educated workers are not the cheapest in the world. In fact, they are paid higher than their counterparts in Indonesia, Vietnam, India, Bangladesh, and Cambodia, who are fearful of China’s efficient and productive business operations. There is no second guess as to who can survive in any business for a long time. It is the ones who are at the forefront always. The airline business used to concentrate on the elite and privileged. It is now tilted towards the mass market.

CHAPTER II

Aviation Industries of the Past,

Present, and Future

2.1 Aviation History

Aviation history can be traced back to the Wright brothers in the USA in the 1900s when they flew in their flimsy, fabric- and wooden-structured airplane (privately funded) for a few seconds in the air under its own power.

The first commercially-available air transportation was for the carrying of mail between cities in the USA. In the intervening years between World War I and World War II, the aviation business was used primarily for the military and mail services. Many brave private aviators (in the USA and UK) piloted small airplanes between the UK and the USA and between the UK and Australia to open up the frontier for passenger flights over long distances.

The early airplane was mainly made of wood, fabric, and a single piston engine of twenty-plus horsepower. The pioneering commercial airplane carried four to six passengers in wooden seats. They had no navigational aids except a compass. The airplane took off from unpaved runways. There were no pneumatic tires, hydraulic systems, air-conditioning and pressurization, and no electrical power generation on the wooden airplane. The airplane flight control system was all mechanically connected with steel wires.

The airline industry started mainly after World War II with many Douglas DC3s (Dakota) retired from the military services and used by civilians in the USA for commercial operations. More than 10,000 twinned piston-engine DC3s were manufactured. The airplane was popular for carrying passengers and cargo. Some are still being used today, though with some modifications in the cockpit—like Traffic Collision and Avoidance System (TCAS) and Ground Proximity System (GPS)—for better navigational aids. As it is not a pressurized airplane, there is no fatigue problem. It is a simple airplane without air-conditioning and pressurization. The wings can be detached from the fuselage for repair. In fact, the airplane can be used indefinitely as long as you can get spare parts for maintenance.

Aviation progress relies on airplanes flying higher and faster. Piston-engine airplane design is limited in power and speed. The jet engine era started with the commercial Hawker de-Havilland Comet 4 airplane that flew at high Mach number and high altitude for less air drag. The cabin had to be pressurized. However, it was the pressurization that led to the ultimate failure and early retirement of Comet 4 because of the numerous air crashes arising from metal fatigue. The Comet 4 did provide the comfort of air travel over long distances and it opened the chapter for modern-day air travel with better comfort, pleasure, safety, and reliability.

2.2 History of Airplane Manufacturing Industries and Airline Operation

The Aviation Industry in 1950–70

In the USA during 1950–70, long-range flights (transcontinental coast to coast) and faster speeds (MN 0.75–0.82) were the main factors that encouraged rapid civil aviation progress. Earlier, the British and French companies were at the forefront of the airplane and engine manufacturing industries. However, it was the huge market and its efficient manufacturing strength that made the USA the dominant airplane-manufacturing base in later years. The U.S. government supported the aviation industry with military contracts. There were many civilian airplane manufacturers, notably Douglas Airplane Corporation, Lockheed, Convair, and Boeing, plus many general aviation airplane manufacturers like Cessna and Learjet.

Douglas was the market leader for commercial airplanes with its well-known stable of successful DC series airplanes, such as the DC-3, -4, -6, -8, -9 and -10. Boeing’s commercial success came with the introduction of the long-range, four- engine B707 with PWA JT3D engines in 1957, and later its mid-range, tri-engine B727 (the first wide cabin interior look) in 1960s and the twin-engine, short-range B737 with JT8D engines. All of them had a difficult introductory period due to wrong timing of entering the market. The B727 and B737 primarily were meant for the U.S. domestic markets.

The B707—like its contemporaries the DC8 and Convair880, popular with many foreign airlines—was the forerunner of long-haul travel across the vast oceans. With deregulation and severe competition, the USA airplane manufacturing industry went through a consolidation phase with Boeing dominating as the only big civilian airplane manufacturer in the USA. MDC went through a disastrous experience with the American Airline DC10 crash in Chicago (1975), resulting in the first worldwide grounding of the entire DC10 fleet.

The international carriers like Pan Am, BOAC, Braniff, Air France, and Lufthansa, and the huge USA domestic carriers like United, American, and Continental, dominated the airline industry during 1950–1970. These big airlines dominated the industry by asking the airplane manufacturers what they should build and at what price as these airlines placed large orders for new airplanes. With Airbus now as the strong competitor, the big airlines in USA were no longer in the commanding position as the airplane design pacesetter.

The Aviation Industry in 1970–1980

Pan Am, the mighty USA flag carrier from 1950–70, was credited for asking Boeing to commercialize the B747 after Boeing lost its competition to Lockheed in the contract from the U.S. Air Force. Although the first B747 in 1969 was besieged with many teething problems due to inadequate engine power for maximum takeoff weight and ovalization of engine casing at max power and landing gear problems, nonetheless, with subsequent improved models and modifications, the airplane became one of the best-selling and most successful cash-cow airplanes for Boeing for many years to come. The airplane was the first to equip with sleeper seats to make air travel more comfortable.

Many innovations began to be incorporated into the new airplanes like B747 and DC10. The wide body look of B747 was replicated on B737, B727 and B707. These helped Boeing sell more planes. Other innovations were the INS (inertia navigational system), auto-land system, FMS (flight management system first introduced on the DC10 airplane), and EICAS (engine indicator crew alert system). Both the flight navigator and flight engineer in the cockpit were eliminated by the advancement in computer chips and software designs, allowing the airplane systems and component operations to be monitored effectively by the pilots. During this same period, engine manufacturers made great strides in the design of combustion chambers, turbine blades and vanes that could withstand higher operating temperatures, resulting in improved thermal efficiencies. The electronic fuel control (EEC) was another great invention (tried on B727 airplanes for many years) that controls the fuel air mixture for various compressors operating temperature and pressure. It had eliminated engine starting, acceleration and top-of-descent surge problems associated with the hydro-mechanical fuel control. The EEC also eliminated the need to trim the engines regularly to align the engine throttles. The engine manufacturers began to use the modular construction concepts that make engine maintenance easier and quicker in turnaround time.

The Aviation Industry from 1990–Present

The last decade has seen many new airplane models incorporating many new electronic features like the EICAS in the cockpit, providing the pilots and maintenance staff instant information on airplane defects and corresponding remedial actions. The automatic refueling system lessens the workloads of ground staff and human errors. The new airplane flight management computer system allows the airplane to fly practically hands-free from take-off to landing with ease. The automatic braking system is so gentle in its performance that some passengers do not even feel the airplane has already landed. Engines and components reliabilities and durability have improved tremendously. More innovations will be incorporated in future airplanes, including more composite materials for airplane construction that will increase the life of the airplane, minus the corrosion problem.

Airline business is characterized by high cost of capital investment, intensive labor and unpredictable political and economic conditions. It is very hard for many airlines to survive if management is not capable of innovation and introducing continuous improvements, controlling the cost of operation and maintaining a harmonious industrial labor relationship. In the past 15 years, many well-known airlines have fallen by the wayside and some are presently on the brink of bankruptcy.

2.3 Can Airline Operations Make Money?

From historical anecdotal evidence, it was possible to make money from operating airplanes for the purpose of carrying passengers and cargo. The golden era for making money was during the period when each country regulated airline operations and airfares. The favorable factors were:

•  Airfares based on cost plus margin

•  Tight restrictions on the number of airline operator licenses

•  Controlled flight frequency between cities

•  Relative low costs of airplanes (for example, the B747 US $25m apiece, 1974 price)

•  Relative low cost of fuel (US $0.30–0.35 per U.S. gallon) (Concorde design criterion)

•  Relative low cost of insurance premiums

•  Low-density and low-yield towns and cities not served by airlines unless with government subsidies

•  Long flight delays tolerable by passengers with 90% airplane dispatch reliability being the acceptable standard

•  Little competition from foreign carriers

•  Strong support from government civil servants traveling demand

•  Landing and airport service charges were low

•  Airplane and engine designs with government subsidies

A low passenger load factor of 50–55% could provide profitable operation. Also, the daily airplane utilization of 6 –7 hours (compared with 12–16 hours for the current situation) for intercontinental operation was considered acceptable.

For engineering and maintenance departments, 10% spare airplanes and 25% spare engines were commonly accepted standards in the 1980–90 to cater to airplane maintenance and commercial operations. Many airlines did their own airplane and engine maintenance as it was difficult to contract out to the suppliers due to the long distances between USA companies and overseas airlines, and because of the relative long turnaround time and sea freight. The normal means of correspondence was by letter writing since telephone charges were high and so was the telegram service. Numerous airlines hired many technical engineers to do in-house repair and design changes.

The aviation industry was glamorous, with frequent high society galas of the top brass of the airlines mingling in the circle of Hollywood socialites and people with power and wealth. The aviation industry paid their workers well.

Difficult to make money after aviation industry deregulation post–1970s

Aviation industry deregulation in 1978 was sparked off by the prolonged airport flight controller industrial strikes throughout the USA, causing political and commercial upheaval and disruption to air travel. Many controllers were laid off. Airport operations began to be privatized. The airport arrival/departure gate slots for airline operations were up for auction. With deregulation, high inflation, lower airfares, frequent price wars and intense international competitions, airline operation profits declined quickly. With less government funding for civil airplane design, the price of new airplanes escalated. Costs of strikes and legal costs of accident compensation also went up tremendously. Many well-known airlines, like Pan Am, Continental, Laker Air, Swissair and Ansett, went bankrupt. Many marginal airlines merged with others to stay alive. The airline business was no longer glamorous.

Afraid of being crowded out by the larger airlines in the West, many smaller international airlines joined the big airline alliances to reduce operating costs and to become more cooperative instead of being more confrontational like in the past. Still, the profit margin remains meager. Along with the demise of many airlines, many aviation companies that used to make civil airplanes (Fokker, Convair and Lockheed), engines and components folded up their businesses in the USA and Europe.

With more liberalization of international trade and ease of setting up of no-frill airlines throughout the world, competition will be greater in the coming years. Currently, many older airlines are hanging onto the edge of insolvency. Many of them will not survive for long. Even the civil aviation authorities in communist countries like Russia and China have loosened the control of their state-owned airlines to phase in with the international standard of airline operations. Their present cabin crews have begun to look charming and wear smiles to greet passengers, unlike their former old comrades with sultry and stiff faces. Their airlines have to compete to stay in business without subsidies. Their present flight safety record is