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Airline Network Planning

Airline Network Planning

Network routes are an airline’s primary product. Network Planning reviews how flights can fit into a schedule. Analysing the effect of a schedule including the potential impact on competitors is a complicated task. If not done correctly, revenue opportunities can be lost, and the airline loses money. Schedules are designed to maximise long-term profitability, provide optimum consumer service, and fit within the airline’s financial requirements. Schedule design can take months to develop. Network Planning determines where to fly, how many people want to go there, how much they would be willing to pay, which airplane should be used on each route, and understanding consumer needs. Fuel costs and crew costs are two main drivers which can influence the difference between revenue raised and the cost of running the schedule.

Schedule Development

Airline schedules are created by specialised teams responsible for the planning, developing, and publishing of seasonal schedules. Development may start 12+ months before the day of operation and take up to 9 months to complete. During the development phases numerous processes will occur. One of the first being the service plan, flights which will operate in a specified market. Other crucial elements are traffic forecasting, operating costs, competitors, internal resources, profit and loss assessment. Tourism Boards also play a pivotal role in securing new routes to an area in which they represent, recognising the importance of a good airline to the destination. Route Planning requires an evaluation of demographics and a seasonality profile, input and support from local business, civil aviation authorities, tourism operators and regional government are good investors.

The final publication of a schedule is a culmination of a lengthy process which includes:

  • Operational and infrastructure constraints
  • Security and safety evaluations
  • Obtaining traffic rights and airport slots
  • Gathering of market intelligence
  • Passenger movement and economic modelling

There are numerous operational issues which must be addressed before a successful season’s flying may commence. Many of these issues are the same as those addressed by the Network Operations Control Center (NOCC) as part of its schedule maintenance and disruption management process, which include the availability of:

  • Suitably qualified pilots and cabin crew
  • Aircraft and appropriate engineering support
  • Airport handling
  • Overflight and operational clearances

Flight Schedule File

A schedule file is basically a simple file containing flight schedule data. The IATA Standard Schedules Information Manual contains the industry standard message formats which are used by airlines, known as a SSIM file. The IATA format is used when exchanging airline schedules and data on aircraft types, airports and terminals and time zones.

A flight schedule file may be used by Crew Management to assess a manpower plan. Aircraft type and aircraft routings are required in order to build crew pairings and rosters.

Airline Metrics

Airlines use a series of metrics for internal health checks. Below is a summary of the most common.

Available Seat Miles/Kilometers (ASM or ASK)

This metric highlights the number of seats available in an airlines network. An airline with a multiple fleet type will have aircraft with different seating capacity. One fleet type may have a seating capacity of 60, whilst another has 100. Airlines will count all seats on all aircraft to establish a total number of available aircraft seats and multiply that value by the total number of miles/kilometers flown per sector. A simple example would be 100 aircraft seats on a flight sector of 100 miles, 100*100 = 10,000 available seat miles/kilometers. This value indicates how many seat miles are available to buy on the airline. It is a measure of an airlines available carrying capacity to generate revenue.

Cost per Available Seat Mile/Kilometer (CASM or CASK)

This is a common unit of measurement to determine the airline’s efficiency. The lower the CASM/CASK the more profitable and efficient the airline is which results in a strong focus on expenses which impact on an airlines bottom line. CASM/CASK is the result of dividing the airline’s operating cost by the ASM/ASK. The cost in cents to fly a single seat by one mile or kilometer.

Many airlines may exclude fuel costs from their operating expenses, which can render the metric unreliable. It is however useful when used with revenue per available seat mile/kilometer, (RASM/RASK).

Revenue per Available Seat Mile/Kilometer (RASM or RASK)

This metric is used to estimate an airlines profitability and facilitate a revenue to expense comparison. In general, the higher the RASM/RASK the more profitable the airline is and it focuses on revenues earned. For example, this metric is of particular importance to a Low-Cost Carrier (LCC) who by nature discount basic fare costs to attract consumers. The discounts are often insufficient to maintain profitability so LCCs entice consumers to purchase additional items, or “ancillaries”, which form part of the revenue flow. Examples of this would be, inflight meals and drinks, baggage fees, seat allocation and some booking fees.

Revenue Passenger Mile/Kilometer (RPM/RPK)

This metric is used to calculate the distance travelled by paying consumers. Using the simple example from previous, the 100-seat flight sector flying 100 miles carries 75 paying passengers. The equation 75*100 = 75,000 revenue passenger miles/kilometers.

Dividing the RPM by the ASM provides a load factor (a percentage value). This reflects how effective an airline is at earning revenue.

Network Planning Summary

Network Planning is all about reacting to consumer needs, creating demand through attractive offers, reviewing equipment type, adding extra capacity, looking to add extra sectors, reducing fares, reviewing what the competition is doing, evaluating the market.

If a route is losing money, the key question “is it critical to the strategy and if operations cease can someone else take over?”, or “does the route contribute to other routes?” Schedules will always change for numerous reasons.

Maximising profit, providing reliability and value for money to consumers at the lowest possible cost are challenges airlines face every day.

A contributing factor to overcome these challenges is through efficient Crew Management processes. Crew usually represents the second highest cost element, second only to fuel cost.