Ethical Responsibility Of The Airline Industry Management Essay

The internal and external environment of an organization is related to managerial ethics and also corporate social responsibility in the process of management. This report focuses on the airport industry. In my report, there is the meaning of all factors and also an analysis of the airport industry. I expect that this report will help us know more about some key areas that need to be improved and understand key management.

Ethical Responsibility of the Airline Industry


The business of international airline has developed as businesses progressively are rotating worldwide in periods of their investments, provide and output chains and their consumers. The fast development of world business in items and services and worldwide direct buying have furthermore supplemented in the development of enterprise travel? One thing that actually influenced people about the industry of airline was their proficiency to sustain high earnings and sustain high clientele groundwork even after the September 11 attacks and the 2002 recession (John, 2005). The worldwide charges have expanded due to advanced security methods while localized or nationwide charges are very inexpensive to consumers.


Airlines’ achievement is mainly due to their pointed aim. This is apparent through their no-frills, low-cost model; their aim is to supply the safest and cheapest pattern of air travel between two destinations. Driven through the concept that consumers can be persuaded without having costly choices accessible for them, International Air Transport Association, IATA, outlooks a boost in worldwide air travel through an mean 6.6% a year to the end of the ten years and over 5% a year from 2000 to 2010 (John, 2005). These rates are alike to those of the past 10 years. According to the last four years, outcomes of airlines’ economic advancement have sustained stable snare sales. In 1999, they had a mean snare sale of $6,739 million, which is an increase to $7,565 million. Their minor fall in 2002 to $7,225 million was due to the September 11th occurrence (Graham, 2010). However, this is not anything contrasted to other foremost commerce that had lost so much more. Since then, numerous airlines and airports have filed for insolvency and have been compelled to close down. In detail, airlines are the only foremost US carrier to stay money-making since then; airlines were influenced through the poor financial situation (John, 2005).

A number of components are compelling airlines to become more proficient. In Europe, the European Union (EU) has directed that authorities must not be permitted to sponsor their loss-making airlines. In several other countries, governments’ anxieties over their own investments and acknowledgement of the advantages of privatization have directed to a stepwise move of possession of airlines from the state to the personal area. In alignment to apply to potential shareholders, the airlines have become more effective and aggressive. There are other causes as to why there has been a boost in air travel. Firstly there has been a decline in employed time since 1971 producing and boost in free time.

Emerging trends

Fast rising volumes of traffic and estimations of continued expansion into the next decades has damage on the airport capability. Industries of Airbus, for instance, expects a standard yearly traveler traffic development rate of 5.0 percent throughout the next 20 years, which means that throughout this time traffic will raise by 168 percent. At the same time, tolerance of the public environmental effects of air traffic around airports like noise, air contamination and third party danger would emerge and have to be reduced. These contradictory styles of direct airlines, airports , organizations of air traffic control and the industry of equipment and aircraft to plan latest innovative ways and technologies of working aircraft and airports in order to gather both the capacity demands and the environmental limitations. Safety is not the objective of these developments; it is a mere constraint. Consequently, new hazards emerge and accessible dangers become complicated to maintain unless proper concentration is given to security features in this arrangement of rising trends. A latest aspect, third party danger, presented itself as a security distress in a rising number of European states.

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Airports are centers in the system of air transport. Therefore, their attendance causes a junction of air traffic over the region nearby the airport. For the people living in the surrounding area of an airport this involves unintentional experience to the danger of aircraft mishaps. Even though the possibility of a mishap per flight is extremely small (normally in the order of 1 in one million), local danger levels around airports are higher than one may think. The resulting yearly possibility of a mishap at a distinctive large airport is so much larger than the small possibility of being concerned in an aircraft mishap as a passenger. In addition, mishaps have a propensity to happen throughout the landing and take-off stages of flight and therefore close to an airport. Security information from researches describes that approach and landing stage mishaps account for a major part of fatal air transport mishaps. It can be observed that 82 percent of the accidents of world jet aircraft fleet 1988-1997 happened in these flight stages and recorded for 58 percent of every wounded. Historical information verifies that accidents of aircraft relating significant numbers of third party sufferers happen numerous times a year. Perhaps the best recognized example is the terrible mishap of a Boeing 747 in suburban Amsterdam in 1992. Latest mishaps happened in Taiwan (Taipeh), Russia (Irkoetsk), Paraguay and Zaire (219 3rd party victims). This environmental effect is of rising consequence to airports security liability and decision making on airport improvement and land-use development for airports.

Airports play a significant function in the security of air travel. A current study of mishaps described that around 30 percent of these mishaps related at least one airport concerned aspect in the fundamental chain leading up to the accident. Airport related factors in this case are taken as those factors which are specific to the airport environment but are not necessarily owned by the airport (and can therefore include concerns like fog, snow, inadequate ATC guidance, etc.). The comparative value of airport fundamental aspects can be anticipated from their comparative frequency of incidence in fundamental series of mishaps in the dataset. To this end, the 76 various airport connected fundamental aspects discovered, were grouped into seven groups. These groups are:

· Marking and Lighting

· Taxiways and runways

· Information

· External dangers

· Ramp and apron and

· ATC procedures and operations

· Aerodrome

Definition of social responsibility

Social responsibility is the managerial obligation to take action that protects and improves both the welfare of society as a whole and interests of the organization means, not an end. To be socially responsible, the airline industry must have a clear, rational definition of social purpose, a system of setting priorities based on their social implications, and a structured, integrated approach to financial and social action (Graham, 2010). Implicit in social responsibility is a new definition of success for small business.

Area of Social Responsibility

When defining its sense of social responsibility, airline industries typically confronts four areas of concern: responsibilities toward the employees, environment, customers and its investors (John, 2003).

Social responsibility towards employees

In the best tradition of participative management, the airline industries invited all its employees to join in forging a new statement of values to avoid massive layoffs. These included teamwork, mutual respect, and professionalism, all duly inscribed on, among other places, coffee cups at office, so that, “every time you had some coffee, you drank the values, too” (Gurpreet, 2003). Employee’s needs must be met if the business itself is to prosper. Relationships of decency and trust are central to the achievement of the airline industries aim. Employees who in the form of dirty lavatories, lack of privacy or unjust wage structures, will be unwilling to contribute to the airline industries. Do people imagine a worker might be inclined to maximize his/her profits by stretching out the work to get more overtime or perhaps even a little Sunday double time? And just as employees need to believe in the company’s commitment to treating them with decency, they expect to be treated justly and fairly, not be used and then arbitrarily rejected. If they can strike a fair deal with people they’ll come back for more. In the long run, airline industries will do that much better.

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Social responsibility towards investors

The views of shareholders / investors might have encouraged responsibility in the airline industries. Stockholders want the company to make as much money for them as possible (Gurpreet, 2003). Their objectives differ and they are not confined to furthering the strictly economic role of companies. Indeed, recent developments in the area of ethical investment trusts would seem to indicate that many investors, like employees, are very keen to feel good about the firms in which they are involved. Certainly not all of them are simply after a quick financial return and they are often clear about areas like tobacco, alcohol, gambling, or arms – into which they do not want to, put their money (John, 2003).

Social responsibility towards customers

Obviously, a company should act responsibility towards its customers and provide quality products and pricing product fairly based on consumer rights (Graham, 2010). Consumers have a right to safe products, most completed instruction and product testing. Consumers have a right to be informed about all relevant aspects of a product.

Social responsibility towards environment

Good environmental management can improve employee morale and help attract better quality staff, cut costs by eliminating waste and saving energy, and bring competitive advantage by putting the company at the forefront of technical and regulatory development. Firms in numerous other industries have also integrated socially conscious thinking into their production plans and marketing efforts. The production of environmentally safe products, for example, has become a potential boom area, designing products to be environmentally friendly. Sales of vegetable-based cleaning products, recycled paper products and all natural toiletries are a few examples.

Approaches to social responsibility

There are four approaches to social responsibility. First is obstructionist approach. Second is defensive approach. Third is accommodative approach. And fourth is proactive approach.

Advantages of behave social responsibility

Using social responsibility to spot out new markets isn’t a matter of recognizing that these opportunities exist. That means we may have to be content with a smaller profit margin in exchange for gaining a new market, and never make the mistake of assuming that a less-affluent market is any less choosy than the well off when it comes to buying habits.

Disadvantages of behaving in an unsocial manor

Unethical and irresponsibility business practices towards customers can result in government fines and loss of clientele. Collusion occurs when two or more firms agree to collaborate on such wrongful acts such as fixed pricing. However irresponsible behavior towards investors means abuse of a firm’s financial resources. In such cases, the ultimate losers are indeed the owners who did not receive there due earnings or dividends. Companies can act irresponsibility by misrepresent ting company resources such as improper financial management, check kiting, insider trading, and misrepresentation of finances (John, 2003).

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Case study

There is an example of Malaysia Airlines System (MAS) as a case study. As an employer, insurer, consumer and investor, MAS has studied that the social responsible can be reflected in its environment, community, workforce, human rights, health and safety, suppliers, customers and standards of business practice. Every member is committed to continuous improvement in the corporate social responsibility program and this encourages those business partners to strive for matching performance. Thus, they recognize that the business activities have direct and indirect impacts on the society in which is operating all the time and carried out some policies as below:

a) Employee appreciation and prizes: MAS realizes that workers are inclined to enlist in demeanor that is identified and paid and bypass demeanor that is punished. The system of employing, chartering, encouraging, reimbursing and openly respecting workers all may be conceived to encourage business communal duty.

b) Communication, education and training: MAS identified that workers will not be held responsible if they are not cognizant of its significance and supplied with the data and devices they need to proceed properly in bearing their job requirements. They announce the significance of business communal blame internally, encompass it as a subject in administration teaching programs, and supply managers and workers with decision-making methods that support them accomplish to blame results.

c) Environment: MAS has an encouraging dream of a cleaner, smarter development in aviation which maximizes the affirmative advantages for humanity – facilitating prosperity, regeneration, local and UK competitiveness, heritage exchange and communal addition – while minimizing contradictory communal and ecological influences (David, 2009).

d) Practices of business: It has habitually integrating schemes, inducements and pay schemes to make sure that sustainable improvement main concerns are echoed in day-to-day conclusions and procedures at each of the airports. By advancing presentation through objectives, externally audited goals, key presentation signs and by mirroring these main concerns in connections with enterprise suppliers and partners.

By looking through MAS past accomplishments, they have struggled to assist the buyer better and have obtained worldwide acclaim from numerous unaligned associations for diverse facets of their services. Their peak administration group obtained an accolade from the Asian Institute of Management and the World Executive Digest, for its excellence in general administration and achievement in positioning itself in the airline industry. Going as far back as 1957, they obtained the Cumber Batch Trophy for no misfortune record (John, 2003). In year 1995, the Boeing Commercial Aircraft Company provided Malaysia a ‘Pride in Excellence Award’ in accomplishing reliability excellence for the B737-400 fleet (David, 2009).

Malaysia Airlines performance has a crucial function in projecting Malaysia as a favored and worth for cash tourist place traveled to through comprehensive on-going junction advancements with tourism in Malaysia at main markets to boost tourist appearances into Malaysia.


Malaysia Airlines can play a role of leadership in influencing the behavior of others, from business partners to industry colleagues to neighboring businesses. The entire company has been acting conscientiously and thinking long term because they recognize that eventually it is in everyone’s best interests to have as several companies as possibly honoring the expectations and requirements of responsibility of corporate social. It endeavors to control every procedure in a responsible approach, believing that sound and provable performance in relation to business social responsibility rules and practices is a basic element of business success.

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