The Analysis Of China Airlines Cost Strategy

Having experienced a strategic reorganization and formed the three major aviation groups, China's airlines are preparing for the complete open-up of the domestic commercial aviation after entering WTO, in order to keep in line with the international air and capture the market share with the international large-scale airline.Although the aviation industry has developed rapidly, the high costs and the great loss of most domestic airlines seriously have affected their competitiveness and sustainable development. Therefore, the first and foremost of the domestic airlines'jobs is reducing high levels of internal cost, getting a return to profitability and changing the backward management model so as to secure a leading position in the competition . The main reasons of the high cost of domestic airline are attributed to the backward management level and management awareness, as a result, this report pursues a detailed cost analysis of the airlines from a management point of view : that domestic airlines should conduct an overall strategy of the transformation process to reduce the cost, especially the reform of the budget system ; the local financial management of the airlines can use ABC------ Activity-Based Costing to control the cost; they can also base on the modern electronic information technologies for the management, together with the implementation of e-ticketing , departure systems and electronic ticket system, the financial means to help reduce the cost of oil, and enjoying the opportunities brought about by the appreciation of the Renminbi. This paper will make a detailed analysis of the costs conducted by Southern China Airlines, and the actual success of its cost control as the evidence. Besides, it will use the internal management value chain of enterprises as the reference from different aspects to explore effective ways to resolve the issue of cost of airlines, achieving a three-dimensional cost control strategies.