Production & Operations Management

16 Pages 4013 Words

Introduction

Yield management originated with the deregulation of the U.S. airline industry in the late 1970. Effectively managing capacity is a challenging aspect of the airline business. Emirates airlines also use the industry wide concept of Dynamic Pricing. This assignment will discuss Emirates Airline's focus on the revenue perspective of capacity management i.e., yield management in an effort to improve the airline’s performance. It will also discuss the key concepts of capacity management, impact on the airline industry and challenges faced in capacity management. Critical analysis on a few functions and trends of capacity management alongwith capacity fluctuations will be discussed with appropriate recommendations. Break even point and best operating levels will also be discussed briefly.

Company

Emirates Airline is the world’s fastest growing airline. Currently the fleet of Emirates is 66 aircrafts. By 2012 the figure is likely to go up to 169 aircrafts. Presently the airline is serving 77 destinations around the world, New York and Christchurch being the latest additions. Primarily in the business of carrying people from one place to another, the market of Emirates covers almost the entire globe and if Emirates currently does not serve a destination then it enters into strategic partnerships and alliances with other carriers which also increase capacity for the airline.

Discussion
Effectively Managing Capacity- The Perishable asset
In the airline industry, plane seats are referred to as inventory. If the plane leaves the gate with empty seats, this inventory cannot be stored and is lost. If an airline can minimize the inventory waste, then it can operate more efficiently. Yield management determines the load level to try and maximize revenue. Hotel rooms and cars at a car rental company also form a similar sort of perishable asset. From an Emirates perspective the management of capacity is twofold- Operatio...