Exam questions: AE3-295-I

1. Describe the difference between the fifth and the sixth "freedom of the air".
Solution:
Fifth freedom: Traffic from a foreign country to another foreign country but it
originates or ends in own country
Sixth freedom: Traffic from a foreign country to another foreign country via own
country.

2. What three types of air freight carriers can be distinguished and what are the primary
characteristics of these carriers. Mention an example airline (currently operational) for
each type of air freight carrier.
Solution:

Combination carriers Normal flights, contains both passengers and cargo, airport
to airport service, e.g. KLM

All cargo airlines flights that contains only cargo, airport to airport service e.g.
Cargolux

Integrated carriers they provide cargo services from door to door e.g. UPS, Fed ex

3. Most safety measures have a dual effect. Whether they are more or less directed at
survivability or at prevention, they can be categorized into 5 groups. Name those 5
groups and give for each group 3 examples.
Solution:
Book, Page 27,28

4. Mention three Dutch companies that are involved in the manufacturing of engine
components and who are members of the Dutch Aero Engine Cluster (DAEC).
Solution:

NLR

Dutch aero

Sulzer Eldim

5. Quality Management as a safety measure has evolved significantly in recent years.

Highlight the major differences between quality control in the past (quality inspection)
and at present (quality assurance)?
Solution:

Aircraft manual updated contains more restriction as a function of runway length and
temperature.

6. What are the essential characteristics, advantages and disadvantages of (i) a hub-and-
spoke network, and (ii) a point-to-point (grid) network?
Solution:
(i) Hub and Spoke Network:
Advantages: Disadvantages:

Increase in city pairs coverage Potential cost penalties

Increase in traffic density High dependency on punctuality

Protection from competition Unattractiveness (due to much time)
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 (ii) Point to point Network:

Every point has direct less city pairs
connection with every other point

Minimum travelling time cost is usually high

Difficult to fill the flight

7. What is the difference between Direct Operating Cost (DOC) and Indirect Operating Cost
(IOC)? Mention 3 cost elements related to DOC and 3 cost elements related to IOC.
Solution:
Direct Operating Cost is the costs those are direct related to the flights
Indirect operating costs are ground costs to have a airline.
Rest on Page 79

8. What are the issues that were typically covered in a conventional (pre-1978) bilateral
agreement?
Solution:

Bilateral agreementsTraffic rights (Permission to serve the routes)

Inter airlines agreements Capacity (Aircraft size, Frequency)

Tariff agreements under IATAFares (price for passengers and cargo)

9. What are the main characteristics of low-cost carriers as identified by Transavia?

Solution:

Single type fleet +Standardization

Low overhead costs(outsourcing)

Sales via Internet and call centres

Low yield, high volume concept

Short haul, high frequency, quick turnaround, and high crew productivity

In Flight Sales, E-business

Simple and single type service on board and on the ground

10. What are the main aims of the Single Sky Initiative?
Solution:

More efficient routes(direct routes)

Flexibility in routes.

Increase the capacity of airfield.

11. Many of the concepts and principles of airline economics apply equally to the cargo side
of the air transport industry equally as to the passenger side. However, there are also
certain aspects in which they are quite different. Mention at least four of these aspects.
Solution:
Cargo side is different than the passenger side because

Most Cargo, except emergency freight is in different to routing, while most passengers
prefer shortest route.

The passengers airline usually sells the ticket directly to individual passengers, result
high profit margin while cargo airlines usually deal with the wholesalers and fright
consolidators that results very low profit.

The all cargo flights doesn’t required on board services.

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12. Despite the fact that the DOC per seat is relatively high for regional jets in comparison to
regional turboprops and narrow body jets, regional jets are progressively deployed on
U.S. route networks. Why is that?
Solution:
This is because the velocity and capacity of turboprops is low for such a long routes

13. What are the reasons that regional jets have a higher DOC per seat in comparison to
narrow body jets?
Solution:

The cost of regional jet is higher (one has to pay more interest).

Pilot and Cabin crew

High fuel consumption

14. Describe the difference between the seventh and the eight "freedom of the air".
Solution:

Seventh freedom: Traffic entirely from foreign country to another foreign country.

Eighth freedom: Traffic with in a foreign country.

15. What is the meaning of the following acronyms: (i) ICAO, (ii) IATA, (iii) FAA, (iv)
JAA, (v) ECAC.
Solution:

ICAO: International Civil Aviation Organisation

IATA: International Air Transport Association

FAA: Federal Aviation Administration

JAA: Joint Airworthiness Authorities

ECAC: European Civil Aviation Conference

16. In 1978 the Airline Deregulation Act was signed into law in the U.S. What was the
impact of the liberalization of the air transport market on the charter airline industry in
the U.S.?
Solution:
The limitations on charter industry were removed in that act and unlimited charter rights
granted.

17. What are the governance principles that are employed at Transavia airlines?
Solution:

Cyclic planning on three levels: Strategic, Tactical, Operational

Tight and loose control (freedom within agreed limits)

Control as closely as possible to the process (max delegation of authority)

Reporting (Daily, monthly, quarterly and yearly)

18. In the nineteen sixties and seventies the average yearly productivity of the KLM fleet
rose dramatically, but in the last decades the increase in productivity has tapered off.
What is the definition of productivity?
Solution:

The productivity is the efficiency of fleet.

Increasing productivity through new technology enabled the airlines to develop new,
price sensitive markets. This facilitated fast growth.
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Current technology does not offer the same rate of productivity increase.

19. In the last few decades the average yields have steadily eroded and also ticket prices
continue to decline. At the same time, aircraft purchase prices are escalating. From what
improvement areas do the cash-generating abilities of new aircraft types now have to
come?
Solution:
Increase in cash-generating ability of new aircraft models has to come from other
improvement areas:

Lower operating cost: fuel burn, maintenance cost etc.

Increased daily utilization of aircraft

20. What are the most important expected near-future developments in the charter market?
Solution:

21. Air Traffic Control plays an important role in making air transportation possible?
a) What are the legal tasks of ATC The Netherlands?

air traffic control

flight information service

alerting service

b) The controlled airspace can be divided into three vertical areas (note than one of
these areas is often further subdivided into “upper and “lower”). Name these areas
and their associated acronyms.

Control zone (CTR)

Terminal Control Area (TMA)

Control Area & Upper control Area (CTA & UTA)

c) Name the responsible sub-organization for each of these three areas.

???
d) Which four regulations form the basis for the Single European Sky?

service provision regulation

airspace regulation

interoperability regulation

Framework regulation
e) What is the reason that the provision of air navigation services is much more cost
effective in the U.S.A. in comparison to Europe?
????
f) What are the most important issues covered by the regulations laying down the
framework for the creation of the Single European Sky?
????

22. Describe the noise regulations pertaining to Schiphol airport. How is the “actual“ noise
load (as specified in the noise regulations applicable to Schiphol airport) determined?
Solution:

Limits on cumulative noise load for one year:
- “total volume” of noise
- noise at “enforcement points”
- separate sets of limits for 24 hours period (Lden) and night (Lnight)
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Limits based on scenario for airport operation meeting basic equivalence criteria (for
example 12,300 houses within 58 dB (A) Lden contour)

Noise load = Lden = 10 * log(∑iN w*fi*10SEL/10)-75
N = Total number of aircraft movements per year
W*fi = weighing factor
SEL = Sound Exposure Level

23. What are the present R&D (Research & Development) focus areas of the Stork Fokker
AESP company?
Solution:

R&D focus areas, aerostructures

Low weight designs through innovative materials processing(glare,
thermoplastics)

24. In the context of the Single European Sky initiative, the introduction of so-called FAB’s
is considered. What is a FAB? What is SESAR and what are the quantified 2020 targets
for SESAR?
Solution:
FAB:

airspace block based on operational requirements

established regardless of State boundaries

service provision performance driven and optimised

enhanced cooperation among air navigation service providers

where appropriate, an integrated provider
SESAR:
SESAR is Joint European ATM Program to identify ATM requirements for 2020 and a
Master plan for implementation

25. The Dutch airline Transavia.com employs a hybrid business model. What is the meaning
of the notion “hybrid” in this context? What are the implications of this hybrid business
model for, aircraft type, crew type, service concept, branding and distribution?
Solution:
Hybrid mean Charter and Scheduled flights
All types are single, except two distribution channel.

26. What is the meaning of the acronym IATA? Historically, what has been the main
function of this organization?What are IATA’s main functions at present?
Solution:
IATA=International Air Transport Association
Historical Function: set airline fares and cargo rates
Present Function: operate the clearing house for the inter airline debts

27. What cost elements contribute to the cost advantage that a typical non-scheduled charter
operator enjoys over a scheduled airline?
Solution:
Station Costs, passenger services, depreciation costs

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28. The European charter industry is characterized by a strong tendency towards “vertical
integration”. What is the meaning of the notion “vertical integration” in the context of the
charter industry? Did vertical integration also take place in the U.S market? Explain.
Solution:
Vertical integration is the cooperation of tour operators and charter airlines, this is not
possible in the US since the anti-trust regulations prevents it.

29. Describe the role of the national governments with respect to arranging airline tariffs in,
(1) a conventional(pre-1978) bilateral agreement, (2) a 1978-91 “open market” bilateral
agreement, (3) a post 1991 “open skies”bilateral.
Solution:

governments maintained right to approve/disapprove tariffs proposed by airlines,
where possible use procedures of IATA

Country of origin rules for scheduled tariffs and double disapproval of both
governments

free pricing

30. Europe, the United States and Canada are currently discussing the creation of a
“Transatlantic Common Aviation Area” (TCAA), to move beyond the present “open
skies” agreements. What are the four key issues that need to be resolved before
(potentially) an agreement on TCAA can be reached?
Solution:

open market access within common aviation area

nationality or ownership rules and the right of establishment

competition policy

regulations

31. In the context of a hub & spoke network system, what is a “trunk route”?
Solution:
The direct route between two hub airports

32. Lean Six Sigma drives the new business culture at KLM E&M. What are the key
elements of the Lean Six Sigma management philosophy?
Solution:

33. Indicate the primary reasons why larger aircraft generally have a lower direct operating
cost per seat-kilometer relative to smaller aircraft.
Solution:
The number of seats is larger while the flight equipment, airport charges and crew salary
stays about the same

34. When KLM opened its new route to Nagoya, Japan, what were the main considerations in
the network development?

direct flight AMS-NGO, without traffic rights

Circle flight AMS-NGO-SPK-AMS with fuel stop,without traffic rights

Circle flight AMS-NGO-SPK-AMS with traffic rights

AMS-SPK-NGO with traffic rights

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35. What is the issue that the JAR-145 (or EASA PART-145) standard addresses? What is
the meaning of the acronyms JAR and EASA?
Solution:
JAR=Joint Airworthiness Requirement
EASA=European Aviation Safety Agency
No aircraft used for commercial air transport may fly unless the certificate of release to
service has been issued by an organization of maintenance.

36. When considering an airline’s economic performance, what is the difference between
yield and net margin?
Solution:
Yield is the average revenue collected per passenger kilometer or ton kilometer of freight
carried. Passenger yield is calculated by dividing the total passenger revenue on a flight
by the passenger kilometers generated by that flight. It is a measure of the weighted
average fare paid.
While net margin is a profit generated after the deduction of all costs.

37. What are the names of the three largest global airline alliances? For each global alliance,
mention three member airlines.
Solution:

Sky-Team (Airfrance-KLM,Northwest, Alitalia)

OneWorld (Qantas, Iberia, American Airlines)

StarAlliance (Lufthansa, United Airlines, Singapore Airlines)

38. Describe the concept of (cost) escapability. Explain the meaning of fixed (or standing)
costs and variable (or flying) costs in the context of escapability.
Solution:

Different costs will require different periods of time before they can be avoided, but in the end
all costs are escapable.
Fixed costs=costs which are directly escapable in the short run
Variable costs=costs which are not escapable in the short run

39. An aircraft’s operational performance can be characterized by three diagrams, viz., the
payload-range diagram, the productivity diagram and the cost relationship diagram. Draw
those three diagrams, explain them briefly and draw them in such at way that the
relationship between the three diagrams is clear!
Solution:
See flying off course, page 123

40. What are the present R&D (Research & Development) focus areas of the Stork Fokker
AESP company?
Solution:

composites

high performance machining

assembly

GLARE

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41. Describe the difference between the first and the second "freedom of the air".
Solution:
1st=fly over a foreign country without landing
2nd=land in a foreign country for technical reasons