DEVELOPING A METHODOLOGY IN AVIATION RISK MANAGEMENTBASED ON SUSCEPTIBILITYbyNG YING CHOWThesis submitted in fulfillment of therequirements for the degreeof Master of Science2007
 
 
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ACKNOWLEDGEMENTS
I would like to take the chance to express my greatest gratitude to mysupervisor, Dr Hamid R. Saeedipour, for his constant guidance, support andsupervision which is the essential part of me to complete this research successfully. Iwould also like to extend my greatest appreciation to Mr. Illiyia, Dr Radzuan Razali, DrAzlin for providing immeasurable help for me in the admin part, which enable me tocarry out my research while conducting interviews and conferences for my research.Also not to forget Mr Samsul, who gave much valuable input for my thesis, to make itmore unusual.Many thanks to the people from the organizations who had involved in thisthesis, who gave me a helping hand during my research. Special thank goes to StevenTan (Transmile), Megat Farizat Mohd. Zamri ( Malaysia Airports), Shahrul bin AhmadShah (MIAT), May Toh (Transmile) and Miss Sharifah (MAS)who had provided mevaluable assistant during this period. Sincere thanks also due to all my friends andcolleagues, for their support and inspirations that has made this project a memorableone.Last but not least, I would like to express my deepest sense of gratitude to myfamily and relatives who had been a tremendous source of inspiration, and alwaysbeen supportive and patient during my research.
 
 
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CONTENTS
PAGEACKNOWLEDGEMENTS
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CONTENTS
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LIST OF TABLES
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LIST OF FIGURES
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LIST OF ABBREVIATION
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LIST OF APPENDICES
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LIST OF PUBLICATIONS & SEMINARS
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ABSTRAK (in Bahasa Melayu)
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ABSTRACT (in English)
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CHAPTER ONE : INTRODUCTION
1.0 Preface 11.1 The Background of Analysis 21.2 Airline Industry Analysis 31.2.1 Industry Competitors 41.2.2 Suppliers 51.2.3 The Buyer’s Power 81.2.4 New Entrants 101.2.5 The Substitute 12
CHAPTER TWO : LITERATURE SURVEY
2.0 The Aviation Industry 142.1 Aviation Deregulation 162.2 Management and Communication in Air Crises 182.3 Globalization Approach 212.4 Technology 232.5 The Business Model 242.6 Alliances 252.7 Switching Cost in Frequent Flyer Program 292.8 Capacity Management 312.9 Hedging 322.10 State Aid 33
 
 
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CHAPTER THREE: METHODOLOGY
3.0 Introduction 363.1 Data Gathering 363.2 Data Analysis 383.3 Identify Problem and Research 393.4 Results and Discussions 393.4.1 Aviation Risk Modeling 403.4.1.1 Determining Potential Markets (routes) 423.4.1.2 Determining Flight Frequency 433.4.1.3 Determining Cost and Expected Revenue 443.4.1.4 Competitiveness 47
(a) Price Competitiveness (b) Flight Frequency Competitiveness (c) Time of Flight, T 
 
4848493.4.1.5 Case Study 493.4.2 ‘The MAS Way’ Survivability Solution 543.4.2.1 ‘The MAS Way’ Solution 543.4.2.1.1Flying to Win Customers 563.4.2.1.2Mastering Operational Excellence 563.4.2.1.3Financing and Aligning the Businesson the Profit-Loss Account573.4.2.1.4Unleashing Talents and Capabilities 583.4.2.1.5Winning Coalitions 583.4.2.2 The Analysis 593.4.2.2.1Commercial 593.4.2.2.2Operation 613.4.2.2.3Finance 633.4.2.2.4The People 643.4.2.2.5The Stakeholders 65
CHAPTER FOUR: SUSCEPTIBILITY AND VULNERABILITY
4.0 Introduction 674.1 The Concept of Susceptibility 684.1.1 Simplified Business Model 694.1.1.1 Technology 704.1.1.2 Outsourcing 73
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