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Air Transport Sector Restructuring. What is Restructuring in Air Transportation ? Any change in form of administration, function, operation and ownership...to achieve improved service delivery, staff productivity and financial performance" . Air Transport Sector Restructuring. Who are
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1. Air Transport Sector Restructuring
Victor Craig
Director Air Transport
Halcrow AirPlan - Malaysia
2. Air Transport Sector Restructuring
What is Restructuring in Air Transportation ?
“Any change in form of administration, function, operation and ownership…
...to achieve improved service delivery, staff productivity and financial performance”
- The context addressed here is the restructuring of civil aviation entities presently responsible to government
- Restructuring can affect all or any aspects of civil aviation
- For Civil Aviation Administrations restructuring generally involves most of these elements
- For airlines, restructuring mostly affects ownership and operations
- Institutional change may liberalize air transport service environment
in turn affect air carriers especially those protected as National Carriers
- Improvements sought through restructuring relate to how well the organization performs, its staff levels and its financial bottom line.
- The context addressed here is the restructuring of civil aviation entities presently responsible to government
- Restructuring can affect all or any aspects of civil aviation
- For Civil Aviation Administrations restructuring generally involves most of these elements
- For airlines, restructuring mostly affects ownership and operations
- Institutional change may liberalize air transport service environment
in turn affect air carriers especially those protected as National Carriers
- Improvements sought through restructuring relate to how well the organization performs, its staff levels and its financial bottom line.
3. Air Transport Sector Restructuring
Who are the Principal Candidates ?
National Air Carriers
Civil Aviation Administrations
Airport Administrations
- Really three types of organization affected by institutional restructuring
- Civil Aviation Administrations that may be restructured into commercially focussed businesses
- Airport Administrations may be restructured through being spun-off as independent agencies - may be devolved down to other public sector levels, privatized by outright sale or through public share issue
- National Air Carriers may be restructured generally through sale of the airline to investor groups, other airlines or by public share issue.
- Restructuring has occurred for all 3 candidate organizations in several countries
- Really three types of organization affected by institutional restructuring
- Civil Aviation Administrations that may be restructured into commercially focussed businesses
- Airport Administrations may be restructured through being spun-off as independent agencies - may be devolved down to other public sector levels, privatized by outright sale or through public share issue
- National Air Carriers may be restructured generally through sale of the airline to investor groups, other airlines or by public share issue.
- Restructuring has occurred for all 3 candidate organizations in several countries
4. Air Transport Sector Restructuring Why Restructure Civil Aviation ?
Improve delivery of services to users
Improve financial performance
Remove counter productive constraints imposed by Government structures
but
- Radical change not always best solution
- Issues & Implications must be studied
- What has been done elsewhere may not suit another application
- There has to be a reason to change the way civil aviation is administered.
- The main reasons are ..
- The first two are obvious, but the last one is at least as important.
Government imposes constraints that greatly affect the performance of a Civil Aviation Department or Airport Administration.
Manifest in terms of “freeze on hiring”, civil service staff grading and salary levels, illogical and inefficient procurement policies etc.
However,
- The approach that best suits you has to be determined through study
- All of the issues have to be addressed and a restructuring proposal evaluated, and an implementation plan put forward
- Most important to realize that what suits one Country may not suit another. There are many models for restructuring and many variations on the theme
- Just because one Nation has corporatized their ANS does not mean that it will work for everyone.
- There has to be a reason to change the way civil aviation is administered.
- The main reasons are ..
- The first two are obvious, but the last one is at least as important.
Government imposes constraints that greatly affect the performance of a Civil Aviation Department or Airport Administration.
Manifest in terms of “freeze on hiring”, civil service staff grading and salary levels, illogical and inefficient procurement policies etc.
However,
- The approach that best suits you has to be determined through study
- All of the issues have to be addressed and a restructuring proposal evaluated, and an implementation plan put forward
- Most important to realize that what suits one Country may not suit another. There are many models for restructuring and many variations on the theme
- Just because one Nation has corporatized their ANS does not mean that it will work for everyone.
5. Air Transport Sector Restructuring National Air Carrier Restructuring
Many National Carriers have been restructured
Moved away from Government control
Reinforced commercial focus
Involved ownership change - full or partial privatization
Involved major route, service and fleet rationalization
Involved improving staff productivity
Firstly, to address restructuring of National Air Carriers
- Restructuring among National Carriers is quite common
- Main feature has been change of ownership to the private sector
sale to investors, other airlines, or by public share issue
- Korean National (KNA) was an early one in 1960’s - became private as Korean Air Lines
- Since mid-80’s privatization of national carriers accelerated
- Several prominent National Carriers totally privatized - Air Canada, British Airways 1986, Japan Airlines, Qantas (1993-1995)
- Other airlines retained some proportion of public sector ownership - Malaysia Airlines (30%), Singapore Airlines (54%) - and of course Philippine Airlines
- In Asia strong correlation between privatization of national carriers and per capita income - the higher the per capita income the more likely the airlines have gone through restructuring and change of ownership from public to private sector.
- Possibly not appropriate to address airline restructuring with respect to Philippine Airlines at this time - however route and service changes have occurred, fleet has been rationalized. More pain to come as staff productivity issue is addressed
Firstly, to address restructuring of National Air Carriers
- Restructuring among National Carriers is quite common
- Main feature has been change of ownership to the private sector
sale to investors, other airlines, or by public share issue
- Korean National (KNA) was an early one in 1960’s - became private as Korean Air Lines
- Since mid-80’s privatization of national carriers accelerated
- Several prominent National Carriers totally privatized - Air Canada, British Airways 1986, Japan Airlines, Qantas (1993-1995)
- Other airlines retained some proportion of public sector ownership - Malaysia Airlines (30%), Singapore Airlines (54%) - and of course Philippine Airlines
- In Asia strong correlation between privatization of national carriers and per capita income - the higher the per capita income the more likely the airlines have gone through restructuring and change of ownership from public to private sector.
- Possibly not appropriate to address airline restructuring with respect to Philippine Airlines at this time - however route and service changes have occurred, fleet has been rationalized. More pain to come as staff productivity issue is addressed