Aviation Risk Management to Comparative Performance in Air China with American Airlines

This paper presents a model comparison between the Air China and American Airline. The aim of this study is to research on strong and weak points of these companies on the grounds. Both the countries are from in the continent of Asia and North America and the world. It also concentrates on the domestic and international aviation sector to comparative both Air China and American Airline with political and economic volatility. The sample of SWOT is used to test indexes and to measure volume of strengths and weakness to both the firms. The model represents one of the tools of Aviation Risk Management to evaluate Air China through find all the elements of development and address the weaknesses and shortcomings of the Chinese aviation company in order to compete with the major international airlines.


Introduction
Given the magnitude level of economic and social backgrounds of China and America, The transport by airlines can partly patterns progress country in different aspects that air companies transport are leading for comprehensive transport access, mobility, and positive impacts as well as the information about networks transport is for understanding and grasping airline companies behaviour and the kind of products and services that they produce to people, tourism and economic. Aviation Risk Management measures operating efficiency for Air China and American Airline as well as identifies the sources of efficiency, inefficiency within each airline So that we conduct a research on comparison between both the two airlines companies. In this aspect Kun and Xingli (2014) wrote last 20 years ago the airlines companies in China had wide growth skills that pushed the country's rapid expanding economy. In market volume, the number of air ridership grew at an annual average around 15% among 1990 and 2010. In 2005 Chinese Airlines companies had been the world's second-biggest aviation market, after the United States. Chinese airlines are now between the most earnings airlines in the world. Since 2011 the total profit reached more than (34.1 million RMB) about USD 5 billion representing around 60% of the industry's global gain. In 2013 the Chinese airlines earnings were twice those of airlines companies in the USA. Laura (2012) adds although one of the joint characteristics between the carriers is the concentrate on operating as a business in level first, the airline conducting the comparison between airlines companies the means of achieving the firm's goals. Barry and others,(2006) studied comparisons between various different areas of aviation and goals achieved, where he says a lot of airlines in developed countries release regular reports about their achievement in environmental in conjunction with the achievement of the basic goals of competition and achieve growth and maintain market value improvements. In the literature of aircraft companies industry the prime goal is to map the status of environmental reporting by airlines based in Europe and the Asia-Pacific region to identify the major components of the reports and to examine the performance indicators comparisons of the units operating in the Asia-Pacific and the with units in Europe. Winai and others (2013) argued competition and comparative between airlines he said in 1970 Southwest Airlines in USA present the sample commercial low-price carrier has been employed by airlines in much markets as a competitive alternative to the traditional complete-service airline business pattern. On broadly (LPC) supply low-pay air journey services without providing different (frills) like in-flight hospitality and free meals offered by these airlines. Cristina at al. (2008) add analysis performance by comparative tools to show efficiency of airlines in big market looking at a great model of airlines using different methods of measuring showing efficiency. In this study, we conduct a comparison between two of the largest airlines in the world for the performance and the search for opportunities and minimize the weaknesses to assess what is left in order to compete with international airlines. The residue of the study is organized as follows: Section 2 reviews the related literature; Section 3 characterizes the study methodology and the detail of the tests conducted; Section 4 presents the study's results; and Section 5 summary and conclusions.

Literature Review
Due to the importance of comparative studies between the different airlines in order to assess performance and achieve the goals we review some of the previous studies and the task carried out by the risk management in this task. McFadden (1996) wrote lately, investigators have begun treat the issue of how surely airline safety data pattern. Although Former studies have discovered pilot-specific factors like driving background, a pilot's gender, and others using the comparison characteristics between of the company's sections. Rico and others (2006) studied advantages of allocative efficiency said main advantages of allocative efficiency compared to parametric methods that it does not request any presumption on the functional form of product, results or cost frontiers, and it also does not have to assume that firms always aim to minimize cost. Also does not request any information on prices, which is the most useful in data base for example sensitive industries like airlines. Joyce (2013) application a fuzzy multi-criteria decision-making method to evaluate the financial performance of local Taiwan airlines based on clusters of financial ratios acquired from logical analysis by measuring volume comparative study in period 2001-2005. Yee (2008 studied on competition and comparison in China's domestic aviation market airlines firms consecrate large magnitude of resources in provided high services to expand customer satisfaction and increase their income and revenues. In the literature there is a few studies about customer satisfaction regarding to the service quality of the airlines companies. In China aviation market changed in 2000 like carriers competing, ticket prices compete with service quality to gain customer satisfaction. Carlos (2015) used analyses the efficiency and competence of airlines of Africa by Technique for Order Preference by comparison to the Ideal Solution (TOPSIS). This studied of airline has adopted a lot of methods like factor product, econometric border These studies have analyzed airlines from different countries and regions in the world including African Airlines have yet to be fully analyzed for that this research give to airline efficiency by analyzing (TOPSIS). Barros and others (2013) add a lot of cases have been addressed by this method in these regions or countries like US Airlines, Canadian, European and Asian Airlines. Besides efficiency rankings, regulatory measures on the execution and slack comparisons, the impact of network gage or volume was done. Review Jiao et al. (2015) for competition and comparison they said In 1970, US has been Deregulation and in other Anglo Saxon economies that means best quality airline services, achieve lower air fares and big competition with the airlines of China have widely grown and tremendously in 1980 and expanded the ridership size from 10.3 billion person-km to 499 billion person-km, between 1985 and 2012. The rapid growth of passengers is a result of the increase in the numbers of flights, by using big airplanes. Fu and others (2010)  China's Airlines have market power nationally, internationally, more than mature airlines in the USA and the Europe where liberalization began the latter two have a much more extensive international network of routes, more market power, financial resources and the larger fleets. China wishes to create national champions competing and comparing with internationally. On the other hand Fu (2012) wrote on the comparison of income between Chinese Airlines with the US and Europe Airlines confirmed this paper by illustrative diagrams to Chinese airline the top of the US and Europe domestic airline flight Unlike the US and Europe Airline they achieve income profit more than international flights. In the same context Zhang (2009) study, confirmed that there are some limitations still exist in China's aviation industry and some airlines are still owned by the state unlike European and American Airlines, but at the same time, Chinese airlines has significant growth rates, which helps to the prosperity and development in this industry. The study of Rogers (1997), adopted the style of the comparison between American Airlines and Air China to preserve the environment and the methods used for this purpose. The results obtained from this study affirmed the obligation of environmental standards developed by the United Nations, to maintain the integrity of the environment of air in both the countries and neighboring countries to leave the environment through high levels of pollution and illustrations emphasize this fact, which was used in this study.

Comparative Studies
Research and Comparative studies of important scientific issues that built on the basis compared to the potential and the ability of the company with a similar firm in order to discover the strengths and weaknesses of the company and work to improve performance. The scientific comparison on the risk management tools of aviation .we compare between Air China with American Airline in financial terms and submit a brief summary about the stages of development of the two companies. Safety Action Program (ASAP) in conjunction with the Federal Aviation Administration.

History of Air China
As a result of the Chinese government's decision Air China was formed in 1988. This divisions lead to six separate airlines. One of them is Air China and this company was given the head responsibility for intercontinental flights. According to merger plan, In January

SWOT Comparative
SWOT, one of the performance evaluation tools for businesses companies. It consists of four letters the first letter symbolizes to the strength, the second symbolize to the weakness, the third symbolizes to the opportunities and the last letter symbolizes to the threats. This tool can be used in the evaluation and comparison between airlines and in our study between American Airline and Air China that can be considered one tools the risk management of aviation for the diagnosis of vulnerability and threats in order to provide solutions to them and also provide elements of power and opportunities for creative through comparisons with similar companies as well as some times with another rival aircraft company. Figure 3 shows a matrix SOWT that containing four parts. number one containing the elements of power held by the airline, the second contains elements of weakness that could airline weaken, the third part consists of the available opportunities that can be developed and used and the last part contains threats that could be exposed airline.
3.3.1 American Airline SWOT According to Matrix SWOT Aviation we evaluate and compare the American Airline with Air China to get the results of this study. In the first part we analyze American Airline through SWOT Matrix Aviation. Does American Airline has elements of power and the technological development and is working to open new lines and improved the efficiency of pilots and staff. Signal to American's annual report at the end of the year to 2014 that this company on an ongoing basis to keep pace with the technological development in passenger service and working to open new transmission lines and to develop and improve programs pilots and staff. The Department of possession of opportunity in the aviation matrix we see that there is fluctuation in stock prices on the New York Stock Exchange and the reason for that market factors. Some of these factors internal and some external but the company at the end of 2014, operating profit has been achieved which shows the financial stability of the company American Airline. The weak part in the Matrix Aviation, which may be exposed to the American airline, is concerned with incidents of aviation and air disasters and the renewal of the air fleet. We note that the company has been subjected to disasters aerial previously been incidents of air has endured losses corporeal considerably exceeds millions of dollars and there are some older aircraft still working in some lines of the Interior, which is a weakness in the company's performance. We are in the final section of the Matrix Aviation, called Threats. Is that the company is part exposed to threats and what are these threats. We see that the threats come from customers and competitors when the complaints by customers against airlines and competition with other airlines big threats are sizeable. In our study we do not have accurate statistics about the numbers of complaints against the company. As competition with other Air companies in the strong market .the annual American Airline report indicates that the American Airline is working with full force in order to remain a strong competitor in the market and the aviation industry. On the other hand the analysis data of Air China according to the SWOT that shows same characteristics of American Airline within the same area of specialization and Industry flights. For example, the opportunities for Air China are similar to the American Airline. It is possible to take advantage of these opportunities available.

Air China SWOT
Indicators of strong growth in Chinese aviation market demonstrated the existence of significant opportunities to achieve the goals of Air China while the weaknesses points in the company by measured the performance; we believe that the achievement of the company operating income shows the efficiency performance, However, in the case of a certain weaknesses in performance we believe that use tool of SWOT is to assess the performance of a good tool to detect vulnerabilities and work on it. In addition to the existing or anticipated threats they are found in the most of airlines and must the Air China to work on reduced or avoided. But there is a fundamental difference between the two companies which share prices on the stock market .The Global American Airline Company is much larger than Air China but the growth in Air China expansion and achieve operational profits is the largest of American Airline.

Fleet Volume
Studies and Researches on comparison between airlines, among companies in the same country or different countries provide an important analytical environment (Barbot et al., 2008). This style of research shows the opportunities in order to optimize and diagnosis as well as the negatives in order to overcome on it.

Route of American Airline and Air China
American Airlines operate about 6,700 flights per day to 1000 routes in 150 countries from its hubs in Washington D. C Charlotte, Chicago and Dallas. This company provides Miles programs for members vacation packages, car rentals, miles for travel, buy tickets, hotel and purchases daily. While Air China its hubs in Beijing, Chengdu, Hong Kong and Shanghai hub in order to enhance our control over the Southwestern China market and consolidate its competitive edge as a regional hub. The revenue from transfer flights had a year-on-year growth of 5%. End of 2014 increased of 24 from the previous year. Air China has 225 domestic routes to 159 cities and had grid covers 1,321 routes in 193 countries. On the other hand the financial statements of American Airline for the fiscal year ending show in 2014 (in millions) in Table 3 as follows: local or international lines that reflect the evolution of performance for both companies.

Aviation Risk Management
In 2001 Air China formed Aviation Risk Management operate that controlling of risk arising from the rise in fuel price and engaging in transaction of fuel hedging of the hedging instruments used were mainly derivatives of Brent crude oil and new York crude oil Singapore kerosene together which are closely linked to the price of jet fuel. For that establishment this new position at present the Air China operates to develop its fuel edging business with regulatory requirements so as to cope with changes in the jet fuel market. While the formation of risk management in American Airline in the seventies of the last century, which was the basis of her work as well as occupational safety and air insurance. In 1998 due to the high volatility of fuel prices, due to the threat of the financial status of company and low price of shares for that this company has added another important work for the risk management to hedge the price of fuel reserves to protect the company from the of high fuel price and potential losses.

Methodology
The present study uses model comparison between Air China and American Airline using statistical models that are using the comparative financial analysis of the prices of the shares of both companies listed on international stock exchanges (Shanghai and New York). The results of the financial and statistical analysis of comparative data provide a base from which to find out how much the link between global stock exchanges in the form of one group or independently in addition to the knowledge of the best performance for both companies. After comparative statistical we use( SWOT Airline) model, which contain four letter the first characters representing the strength of the company, the second character is weak of the airline, the third characters represents the company's opportunities and the fourth is a threat the company. This model represents one of tools risk management aviation to evaluate performance.
In this research we use scientific method (CORREL) to compare the Air China and American Airline stocks prices. The correlation coefficient is a number between -1 and 1, which shows a linear relationship between two variables and the direction of that relationship as follows: + 1 positive relationship means in the sense that the more a plus b The smaller than b least a -1 Means the inverse relationship in the sense that the greater than and b at least the less a than the b Zero means that there is no relationship between two variables. When approaching the correlation coefficient of one of these values, it shows what is signified by these values, but to a lesser degree. For example, 0.9 indicates a strong positive relationship between the two variables, but not absolute, such as those that you would expect when the correlation coefficient is equal to + 1 in the following model: Where:

Xi= price Air China
Yi= price American airline Numerator in this equation is the sum of the product of the difference between the value of the Air China, American airline and the arithmetic average of the difference between the value of each variable and the second arithmetic average. The primarily is multiplied by the standard deviation for each of the air china and American Airline.

Comparative Results
The result in this study that American airline and Air china in stock exchange (shanghai and New York) in period 2014-February using comparative tools for both the companies that evaluate performance observation (60).
When we test a sample (airlines listed in stock shanghai and New York). This finding about our by the significant statistically to analyze and take decision by aviation risk management. Table 1 and Table 2 show the result of this study:  In Table 4, We note that the correlation coefficient between Air China with the Americans Airline at the open price 0.64 efficient, close price 0.55 that mean both companies at 0.5 ** In other words, both companies that affects the one on the other in the international stock markets at 0.5 when exposed International financial variables. More clarify the link between the two companies in global markets after the second level of the positive relationship. Note. *significant at 0.5 level, **significant 1 level.
In  In Figure 5 the relationship between the standard deviation, variance and zero value can be seen. Whenever the indicator is close to zero is the ideal case. The interpretation of the scientific case that the value of zero or near-zero indicates the strength of the correlation between stock prices and not swing which indicates the stability of the price airline stocks listed in international stock markets. Note. *significant at 0.5 level, **significant at 0 level.  Figure 5, which refers to the relationship between the standard deviation and variance with value of zero, we find that the performance of Air China is the best of American Airline on the grounds that the statistical values in these tests are closer to zero, which www.ccsenet.org/ibr Vol. 9, No. 2;2016 demonstrates the strength and unity of Air China shares prices more than American Airline.

Comparative (RFTK) and (RPK)
According to the civil aviation authority in the United States of America and the Republic of China is different Data Base on carriers in both countries, including financial statements and other transport. We offer (RFTK),

Correlation Regression Comparative
We use correlation regression to analyze and compare relationship between American Airline and Air China. However in our study the regression is better suited for studying functional dependencies between two factors time and price exchange implies that the time independent and stock prices dependent because he was variable in the time. The goal of this type of analysis shows the possibility of gains for the prices of shares of airlines in the least possible time with the predictability of stock prices in the future in accordance with the data available the results are of less value, the results are best viewed as gains can be achieved in less time. To obtain a simple regression model is done by: y = a + b x y represents the predicted value a represents the intercept of the best fitting line b represents the slope of the line.
The above equation could be explained as in the Figure 8.  Figure 9 shows the simple regression coefficient for Air China, which shows us the stock price in the test period February 2014. With blue spots represent stock price and this slope represents the best case can be obtained this test by computer. By offsetting the values of β, α and rate stock prices in Air China we getting value of model simple regression coefficient. The results obtained by simple regression shows that, predicted value 13.59 and indicates that the stability, reliability and profits in 13.59 days in accordance with changes available.  Figure 10. American Airline correlation regression Figure 10 shows the simple regression coefficient for American Airline that shows to the stock price in the test period February 2014. Green spots refers to stock shareholders and this slope represents the best case can be obtained this test by computer. By offsetting the values of β, α and rate stock prices in American Airline we getting value of model simple regression coefficient. The findings refer to simple regression with the forecasting value 10.04 and indicates that the stability, reliability and profits in 10.04 days in accordance to the effect different factors.

Discussion
Basic functions of the Aviation Risk management is the financial and job situation for airlines to assess in collaboration with senior management. We focus in this paper on the two companies in the field of aviation are American and China, considering that both companies in two major countries such as the United States and China. The purpose of this research is to research and analysis of the reality of the two companies from several aspects, including the financial and service side and the size of both companies and services provided by both local and international. We used the correlation coefficient between the American Airline and Air China to show the affect both companies in the global stock markets. The statistical tests for each company individually show that the central tendency of the Air China company standards are more stable and consistent than the American airline, but the market value of stock prices for American line is the largest of China in global stock markets. Both companies are working for the development of performance and keep pace with the evolution of the global air services and the opening of new air routes and reducing errors that may occur to the lowest possible level. Both companies prepared the report points at the end of 2014.They may have achieved operating income which helps to strengthen the financial position and the market value for both companies. But when analyzing both the reports of both the companies we found that Air China's faster growth and expansion than of American Airline. Finally, the Risk Management operates through comparative studies between companies using matrix SWOT to assess the performance and the discovery of vulnerabilities and threats in order to find solutions to these problems and to maximize the opportunities and strengths of the company to maintain the financial position and to maximize the market value of the company. We find that there is a benefit of this study in comparing the Aviation risk management tools to periodic review to assess the performance of air China.