Project Planning for Opening New Destinations for Global Air Carriers

Announcing new flight routes for promising overseas destinations is a sign of stepping into global business for airlines. Opening new flight lines means expanding the product line for any airline. New destinations in turn mean gaining new customers while retaining the existing ones. That is the main reason why global airlines continually seek for new destinations to extend their flight network. This process is a very complex one with a lot tasks and resource requirements. The projected opening date sets the deadline for all the activities. Project management principles needs to be employed to meet these deadlines in order not to experience any delay. To illustrate this problem a new destination project for Turkish Airlines (THY) is explored in detail. THY, as a global network carrier, is planning to expand its operations spectrum and in achieving that makes intensive use of PERT method. This process is illustrated briefly in the paper.

Project management is the major philosophy for dealing with change. General attributes of this philosophy are as follows: work is organized around processes, temporary teams are drawn from a range of functional expertise, workforce is trained constantly and so on. The result of project management usually takes the form of a new or improved product, service, or process (Cleland & Ireland, 2007, p. 37).
A new product line requires financing, design, development and production-clearly an opportunity for project management particularly if the emerging opportunity constitutes an effort that is too large to manage in a "business as usual" approach or product is very important to the company's future. If such an emerging product carries high risk and has apparent direct relationship to the company's objectives, then project management is usually required. When ad hoc activity has high risks and uncertainty factors then the use of project management techniques such as PERT may be required.
In this paper, we will discuss how project management could be used as a measure to reduce risks in opening new destinations on flight networks.

New Destinations
The current organization of the world traffic is the result of various processes of liberalization that took place in air transport. Since the deregulation of air transport, started in 1978 with the United States and which is spreading over the world since 1993, the routes followed by planes do not depend any more solely on the capacities of the places to exchange, nor to the "technological" limits of the apparatuses (Rozenblat et al., 2000). Other logics participate to structure the organization of air exchanges; economical logics of competition between the companies or partnership inside "alliances" of which most known are Sky Team, Star Alliance and One World. These alliances organize the division of air networks between various companies, and offer larger destinations for the passengers. The economical logic of these alliances is to develop consumer loyalty by various programs proposing specific advantages; airport logics, through agreements between companies and airports, define hubs and spokes, where shorter or average routes are concentrated in order to feed connections of long distance flights more regularly.
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"national" airports. In Europe, capacity was regulated and the existence of the major flag carrier in each country meant there was already a tendency to hubbing. Burghouwt and de Wit (2003) investigate the trend in the European aviation network after deregulation and concludes that a temporal concentration trend exists among European airlines. With the deregulation of the EU air transport market from 1988 on, a second phase of airline network concentration started. Temporal concentration may increase the competitive position of the network in a deregulated market because of certain cost and demand advantages. European deregulation has resulted in the adoption or intensification of wave-system structures by airlines. These wave-system structures as well as the overall traffic growth have significantly stimulated the number of indirect hub connections. Airline hubs with wave-system structures perform generally better than airline hubs without a wave-system structure in terms of indirect connectivity given a certain number of direct connections.
Airlines can strengthen their competitive position and market power by opening new routes. However, additional routes also mean an increase in costs. For example, negotiation costs with airports, operating costs and costs to overcome possible entry barriers. Therefore net effect of opening one extra route is not always clear. Tsai et al. (2008) have developed a framework to evaluate the net welfare impacts of new routes. They used a methodology to quantify these effects of 230 new route announcements made by 27 US-based carriers between 1993 and 2002. By taking the variation in the stock price after a new route announcement as the dependent variable they observed a positive impact on the stock price on the day of the announcement. In general, a positive impact on the stock price on the day of the announcement is observed but in the days before and after, no significant impact has been found, meaning that the positive effect is only on the day itself. On the other hand a first entrant on a route has a higher positive impact on the share price (Tsai et al., 2008). Dennis (2005) examines the recent development of long-distance scheduled air services from Europe and identifies the increasing dominance of the major hub airports. The changes taking place in the long-distance aviation arena have been neglected in recent years-the main focus of interest being competition from new entrant "low-cost" carriers on short-distance routes. Dennis (2004) analysed the recent development of long-distance air services in Europe and identify the key changes. Forecasts of long-distance traffic are discussed and the scope for low-cost airlines in the long-distance market is examined.
Because of changing environment such as penetration of internet technology, growing travel volumes beverages, more passengers per flight attendant, no lounge, no interlining or code-sharing, electronic tickets, no pre-assigned seating, and less leg room. Most importantly the LCC does not attempt to connect its network although there may be connecting nodes. Product design in this context refers to the "look and feel" of a product, and is the most visible difference between low-cost and full service carriers to the airline passenger (Burghouwt & de Wit, 2003).
There are several key areas in process design (the way in which the product is delivered to the consumer) for a LCC that result in significant savings over a full service carrier. One of the primary forms of process design savings is in the planning of point-to-point city pair flights, focusing on the local origin and destination market rather than developing hub systems. In practice, this means that flights are scheduled without connections and stops in other cities. Low-cost carriers also tend to focus on secondary airports that have excess capacity and are willing to forego some airside revenues in exchange for non-airside revenues that are developed as a result of the traffic stimulated from low cost airlines. In simpler terms, secondary airports charge less for landing and terminal fees and make up the difference with commercial activity created by the additional passengers. Further, secondary airports are less congested, allowing for faster turn times and more efficient use of staff and the aircraft.

Worldwide Multi-Level Networks of Air Traffic
The network structure is founded under the supervision of airline companies, following their own strategy. As most airline companies are private companies, they organize their network to optimize profit neglecting the development of a territorial homogeneous flight network. Companies being less and less national, the routes followed by companies exceed national borders and create new transnational structure of equivalent territories (i.e., connected to the same focal point or hub). Thus territorial logics which prevailed before the deregulation are becoming obsolete and new territorialities emerge.
New reticular territories implicitly defined in air transport networks leads to a multilevel presentation of the most connected cities in the world, underlining the necessary steps to go through when travelling worldwide, described as a path through the different levels and components. These "new reticular There has been an evolving literature on the economics of network configuration. Hendricks et al. (1995) shows that economies of density can explain the hub-and-spoke system as the optimal system in the airline networks. The key to the explanation lies in the level of density economies. However, when comparing a point-to-point network the hub-and-spoke network is found to be preferred by the companies when marginal costs are high and demand is low but given some fixed costs and intermediate values of variable costs a point-to-point network may be preferred.
Nowadays it is debated intensively that creating a global hub would in turn create more problems particularly environmental issues. For a global carrier whose network is much larger than the low-cost carriers to take advantage of long-distance flights by creating a hub where the passengers are accumulated and flown to different points is an effective solution to economic and service considerations of the business.
Airline economics could be shifted against the environmentally damaging hub-and-spoke system that relies on transfer passengers changing planes at airports such as Heathrow, in favour of the direct "point-to-point" services operated by airlines such as Ryanair, Virgin and easyJet. Ball (2005) argues that, if consumers care about travel time, then for shorter routes point-to-point structures are faster and thus more efficient than the hub-and-spoke structure. This runs counter to most of the theoretical literature on airline networks which predict that point-to-point carriers can't compete with hub carriers.
When it comes to a choice between flying directly from one big city to another, or changing at a "hub", most passengers will prefer the direct route. On the other hand, the literature shows that profit maximizing airlines with market power (in many cases monopoly airlines are modelled) will choose Perhaps the most important factor that now affects network evolution is the growth of LCCs in domestic markets. Hub carriers now face erosion of their domestic market as well as fractioning of their markets (David Gillen, 2005). After all, market growth is served by more airplanes not bigger airplanes.
LCCs' route networks were strictly based around very short distance, point-to-point sectors (average of 400 nautical miles) and a high number of daily frequencies in each direction. However, this culture has been rapidly changing (Alamdari & Fagan, 2005). Although the culture of low-cost air travel today is still short-haul based there are a number of successful LCCs now breaching the 1000 nautical mile barrier, with two US LCCs even breaching the 2000 nautical mile barrier. Virgin Express and easyJet are the only LCCs in Europe that operate a sector exceeding the 1000 nautical mile barrier. For instance, easyJet's London Luton to Istanbul Sabiha Gokcen service is no exception to that.

The Case of Turkish Airlines
Although airline transport has undergone a radical change after 9-11 turbulence it nevertheless has gone to extreme dimensions thanks to the ever-expanding global business and tremendous improvements in the airspace technology. Global competition in the airline industry continued to be even more challenging. This situation has led Turkish Airlines (briefly known as THY) to become a global network carrier within the world market serving passengers on an international level rather than a national airline confined itself to the local market. In this respect, THY have set its goal as to "provide a bridge between the Turkic countries, the Balkans, Near East and Far East, America and Europe". Turkish Airlines' flight network has been expanded to provide more connections between these geographical regions and to establish Istanbul as an important international hub.
Since the Turkish Airlines monopoly for domestic flights ended nearly six years ago, then many private companies have forced their way into the market and eventually fares gone down drastically. Turkish Airlines began scheduling flights between cities with high passenger potential and flights to or from Istanbul and Ankara.
Growing competition in the international market, plus successive economic crises has forced airlines build stronger network structures. Turkish Airlines continued to add new destinations to its international network, thus further promoting its corporate identity as a "global network carrier". As of today, Turkish Airlines has flights to New Delhi, Toronto, New York, Rio de Janeiro, Beijing, Shanghai, and Tokyo. India and China, few of the fastest growing markets in the world that helped strengthen Turkish Airlines' flight network, continues to exceed the general growth trend in the market.
Turkish Airlines has restructured its flight schedule to maximize the use of its long distance fleet and take advantage of this growing market. In this regard, Turkish Airlines began channelling the new capacity toward the Beijing/Shanghai route. For the summer season, Turkish Airlines has increased the number of flights to these destinations from three to five per week. As a result of a careful research number of flights per week to Dubai, one of the favourite holiday spots of the last few years, have been increased. Turkish Airlines' flights revived quickly after the war in Iraq and have regained previous load factors.  Activity-on-Arrow (AoA) notation is used in diagrams to better understand the relationships between activities. A PERT diagram of the project is given in Figures 1 & 2 at the end of the paper. The activity times are taken from real data although the name of the destination is not disclosed in this paper.

Conclusions
Adding new destinations to flight networks is an entirely new and risky endeavour for global airlines.
To reduce the amount of risks and costs of such non-routine tasks project management tools must be employed. PERT provides an excellent platform where you can direct and control the resources of activities on a new route development project. New route projects present an ideal case for the application of PERT networks because every destination has its specific conditions and costs; therefore must be tackled in a different way.