Airline Route Planning

Airline Route Airline Route PlanningPlanning

Planning a journey that could Planning a journey that could optimize airline profit while bearing optimize airline profit while bearing

the coststhe costsBalancing the demands and Balancing the demands and

capacitiescapacities

Its significanceIts significance

Determine the feasibility and possibility to Determine the feasibility and possibility to flyfly

Determine what is required and what can be Determine what is required and what can be offeredoffered

Determining the kind of costs and expensesDetermining the kind of costs and expenses Determine ways to gain profitDetermine ways to gain profit

IntroductionIntroduction

A route is a description of the path followed by an aircraft when A route is a description of the path followed by an aircraft when flying between airports. Most commercial flights will travel from one flying between airports. Most commercial flights will travel from one airport to another but private aircraft, commercial sightseeing tours, airport to another but private aircraft, commercial sightseeing tours, and military aircraft may often do a circular or out-and-back trip and and military aircraft may often do a circular or out-and-back trip and land at the same airport from which they took off.land at the same airport from which they took off.

This is where airlines deal with the application of forecasting method This is where airlines deal with the application of forecasting method in determining the costs of a route of one flight from one destination in determining the costs of a route of one flight from one destination to another eitherto another either• Domestic orDomestic or• International International

In terms of …In terms of …• Flight personnelFlight personnel• Fuel consumptionFuel consumption• Facilities and Airport costFacilities and Airport cost• Passenger Movement and Air CargoPassenger Movement and Air Cargo

Importance of Route PlanningImportance of Route Planning

Fuel prices are driving up costs just as business is starting to return to normal after a number of events in the recent past that had a major impact on international civil aviation.

One of the steps that airliners are taking are to continue to ensure that the most cost-effective route between points of departure and destination is available.

Due to many conflicting demands on the use of airspace by its many different users, as well as political, environmental and security considerations, it is frequently not possible to fly the most desirable route, and this adds to the additional fuel and maintenance costs incurred by operators.

Route Planning ConsiderationsRoute Planning Considerations

Route planning must take many factors into account: Passenger demand: The ability to obtain maximum airline

profit from high passenger load factor Distance/ Mileage: The particular route to be flown determines

the ground distance to cover, effecting on time and marketability of the route

Feasibility: Government and regulation permission for feasible airline route

Weather forecasts: The air temperature affects the efficiency/fuel consumption of aircraft engines. The wind may provide a head or tail wind component which in turn will increase or decrease the fuel consumption by increasing or decreasing the air distance to be flown

Passenger safety: Passenger risk assessment

Routing typesRouting types

Aircraft routing types used in flight planning are: Airway,

Navaid and Direct. A route may be composed of segments

of different routing types. Airway

• Airway routing occurs along pre-defined pathways called Airways. Airways can be thought of as three-dimensional highways for aircraft. In most land areas of the world, aircraft are required to fly airways between the departure and destination airports. 

Routing typesRouting types

Aircraft routing types used in flight planning are: Airway, Navaid and Direct. A route may be composed of segments of different routing types. Navaid

• Navaid routing occurs between Navaids (short for Navigational Aids, see VOR) which are not always connected by airways. Navaid routing is typically only allowed in the continental U.S. If a flight plan specifies Navaid routing between two Navaids which are connected via an airway, the rules for that particular airway must be followed as if the aircraft was flying Airway routing between those two Navaids. Allowable altitudes are covered in Flight Levels.

Routing typesRouting types

Aircraft routing types used in flight planning are: Airway,

Navaid and Direct. A route may be composed of segments

of different routing types. Navaid

Routing typesRouting types

Aircraft routing types used in flight planning are: Airway,

Navaid and Direct. A route may be composed of segments

of different routing types. Direct

• Direct routing occurs when one or both of the route segment endpoints are at a latitude/longitude which is not located at a Navaid. Some flight planning organizations specify that checkpoints generated for a Direct route be a limited distance apart, or limited by time to fly between the checkpoints (i.e. direct checkpoints could be farther apart for a fast aircraft than for a slow one).

Determine the FEASIBILITYDetermine the FEASIBILITY

The 9 freedoms of the air in airline business: The 9 freedoms of the air in airline business: The The Freedoms of the airFreedoms of the air are a set of are a set of commercial aviation rights granting a commercial aviation rights granting a country's airline(s) the privilege to enter and country's airline(s) the privilege to enter and land in another country's airspaceland in another country's airspace

Freedom 1Freedom 1

It was also known as It was also known as technical freedom.technical freedom. The right The right to overfly a country without landing. It grants the to overfly a country without landing. It grants the privilege to fly over the territory of a treaty country privilege to fly over the territory of a treaty country without landing. without landing.

Member states of the International Air Services Member states of the International Air Services Transit Agreement are granting this freedom (as Transit Agreement are granting this freedom (as well as the Second Freedom) to other member well as the Second Freedom) to other member states,states, subject to the transiting aircraft using subject to the transiting aircraft using designated air routesdesignated air routes

Freedom 1Freedom 1

Freedom 2Freedom 2

It was also a It was also a technical freedomtechnical freedom. The right to . The right to stop in a country for refueling or stop in a country for refueling or maintenance on the way to another, maintenance on the way to another, without transferring passengers or cargo.without transferring passengers or cargo.

Freedom 3Freedom 3

It was the First It was the First Commercial Freedom.Commercial Freedom. The The right to carry passengers or cargo from one's right to carry passengers or cargo from one's own country to another.own country to another.

Freedom 4Freedom 4

The right to carry passengers or cargo from The right to carry passengers or cargo from another country to one's own.another country to one's own.

Third and fourth freedom rights are almost Third and fourth freedom rights are almost always granted simultaneously in bilateral always granted simultaneously in bilateral agreements between countries.agreements between countries.

Freedom 5Freedom 5

It is also called a It is also called a connecting flightconnecting flight. The right to carry . The right to carry passengers from one's own country to a second country, and passengers from one's own country to a second country, and from that country to a third country. An example of this could from that country to a third country. An example of this could be Emirates Airlines flights originating in Dubai, then going on be Emirates Airlines flights originating in Dubai, then going on to Bangkok, and then from Bangkok to Sydney, where tickets to Bangkok, and then from Bangkok to Sydney, where tickets can be sold on any or all sectors.can be sold on any or all sectors.

Two sub-categories exist. Two sub-categories exist. Beyond Fifth FreedomBeyond Fifth Freedom allows the allows the right to carry passengers from the second country to the third right to carry passengers from the second country to the third country. country. Intermediate Fifth FreedomIntermediate Fifth Freedom allows the right to carry allows the right to carry passengers from the third to the second country.passengers from the third to the second country.

The Silk Road extending from Southern Europe through Arabia, Somalia, Egypt, Persia, Pakistan, India, Bangladesh, Java and Vietnam until it reaches China. Land routes are red, water routes blue

Freedom 6Freedom 6 The right to carry passengers or cargo from a second country The right to carry passengers or cargo from a second country

to a third country by stopping in one's own country.to a third country by stopping in one's own country. Cathay Pacific Airways, Thai Airways, Malaysia Airlines, Cathay Pacific Airways, Thai Airways, Malaysia Airlines,

Singapore Airlines and other airlines in Asia use sixth-freedom Singapore Airlines and other airlines in Asia use sixth-freedom rights extensively to fly passengers between Europe and rights extensively to fly passengers between Europe and Australasia. Likewise, American Airlines connects passengers Australasia. Likewise, American Airlines connects passengers from Europe and Asia to other countries in the Americas via from Europe and Asia to other countries in the Americas via U.S. ports, and British Airways commonly tickets passengers U.S. ports, and British Airways commonly tickets passengers from America to Asia via London. Iceland air sells tickets from America to Asia via London. Iceland air sells tickets between Europe and North America via Iceland, Finnair sells between Europe and North America via Iceland, Finnair sells tickets from North America to Asia via Helsinki.tickets from North America to Asia via Helsinki.

The Kangaroo Route traditionally refers to air routes flown by Qantas between the countries of Australia and the United Kingdom, via the Eastern Hemisphere.

Freedom 7Freedom 7

The right to carry passengers or cargo between two foreign The right to carry passengers or cargo between two foreign countries without continuing service to one's own country.countries without continuing service to one's own country.

The seventh freedom is rare because it is usually not in the The seventh freedom is rare because it is usually not in the commercial interest of airlines, except in Europe where an EU commercial interest of airlines, except in Europe where an EU open sky has seen many carriers, particularly low cost carriers, open sky has seen many carriers, particularly low cost carriers, operate flights between two points, with neither of them being operate flights between two points, with neither of them being in their home country. in their home country.

Freedom 8Freedom 8

The right to carry passengers or cargo between two or more The right to carry passengers or cargo between two or more points in one foreign country. points in one foreign country.

The eighth freedom is also known as The eighth freedom is also known as cabotagecabotage, and is , and is extremely rare outside of Europe. extremely rare outside of Europe.

The main real life example of eighth-freedom rights is the The main real life example of eighth-freedom rights is the European Union, which has granted such rights between all of European Union, which has granted such rights between all of its member states.its member states.

Freedom 9Freedom 9

The right to carry passengers or cargo within a foreign country The right to carry passengers or cargo within a foreign country without continuing service to or from one's own country.without continuing service to or from one's own country.

Sometimes also known as Sometimes also known as stand alone cabotagestand alone cabotage. It differs from . It differs from the aviation definition of the aviation definition of true cabotagetrue cabotage, in that it does not , in that it does not directly relate to one's own country.directly relate to one's own country.

The EU agreements mentioned above also fall under this The EU agreements mentioned above also fall under this category.category.

Freedoms of the airFreedoms of the air

Determine the DEMANDSDetermine the DEMANDS

Passenger Demand: Passenger Demand: • How many? How many? • How many seats available?How many seats available?• The kind of aircraft to be used?The kind of aircraft to be used?• The kind of facilities needed? (i.e., catering, The kind of facilities needed? (i.e., catering,

baggage handling, airport facilities)baggage handling, airport facilities) Fuel: Fuel:

• How much is the consumption?How much is the consumption?• How far is the journey?How far is the journey?

Determine YOUR CAPACITYDetermine YOUR CAPACITY

Cabin CrewsCabin Crews Facilities-Airport servicesFacilities-Airport services Ground Handling-MROGround Handling-MRO

Determine the COSTSDetermine the COSTS

Remember the categories of costs in airline Remember the categories of costs in airline business?business?• Two major costsTwo major costs• Direct, indirect and non-operating costsDirect, indirect and non-operating costs• Major and unpredictable costsMajor and unpredictable costs

DIRECT COSTSDIRECT COSTS

Expenses associated with and dependent on the Expenses associated with and dependent on the type of aircraft being operated, including all flying type of aircraft being operated, including all flying expenses such asexpenses such as• Flying operations costsFlying operations costs

• Flight crew expensesFlight crew expenses• Fuel and oilFuel and oil• Airport and en route chargesAirport and en route charges• Aircraft insurance costsAircraft insurance costs• Other flight-operations expensesOther flight-operations expenses

• MRO costsMRO costs

INDIRECT COSTSINDIRECT COSTS

Those costs that will remain unaffected by a Those costs that will remain unaffected by a change of aircraft type because they are not change of aircraft type because they are not directly dependent on aircraft operations directly dependent on aircraft operations such assuch as• Station and ground expensesStation and ground expenses• Reservations, sales and promotional costsReservations, sales and promotional costs• General and administrative costsGeneral and administrative costs

Non-operating costsNon-operating costs

Those expenses and revenues not directly Those expenses and revenues not directly related to the operation of an airlines’ own air related to the operation of an airlines’ own air transportation services liketransportation services like• Gains or losses raising from the retirement of property Gains or losses raising from the retirement of property

or equipmentor equipment

• Interest paid on loans, banks or depositsInterest paid on loans, banks or deposits

• Gains or losses raising from an airline’s affiliated Gains or losses raising from an airline’s affiliated companiescompanies

• Direct gov. subsidies and paymentsDirect gov. subsidies and payments

Costs for Cargo AirlineCosts for Cargo Airline

CommoditiesCommodities Containers (if any)Containers (if any) MRO (Overnight)MRO (Overnight) FuelFuel Crew Expenses (Pilot and Co-Pilot)- Lesser Crew Expenses (Pilot and Co-Pilot)- Lesser

than passenger airlinethan passenger airline

PROFITS GAINPROFITS GAIN

Service chargeService charge Ticket PricingTicket Pricing

• DestinationDestination• FuelFuel• SeatSeat• CateringCatering

InsuranceInsurance Airport TaxAirport Tax

Example of CalculationsExample of Calculations

COSTS PROFITS

DIRECT COSTS

Fuel Fuel Charge

Labor

MRO MRO Charge

Ground Handling Baggage Handling

Airport Charges Airport Tax

Insurances Passenger Insurance

INDIRECT COSTS

General and administrative costs Service Charge

Flight planning and weather Service Charge

Reservations, sales and promotional costs Service Charge

TOTAL =A TOTAL =B

TOTAL PROFITS: B – A= C

Question 1Route planning plays an important role in any aviation enterprise that provides a strategic decision-making in accurate airline route management.

a)Briefly explain in your own words the concept of airline route planning and it’s implication to airliners.(5 marks)

b) Discuss the three types of route available for airline routing management (6 marks)

c) From your opinion, which is the most difficult freedom of air feasibility permission to be obtained by airliners? State your reasons. (4 marks)

Question 2Airline Route Planning deals with the application of forecasting method in determining the feasibility of a route of one flight from one destination to another.

a)Discuss in your own words the significance in Freedoms of the air in air route feasibility (8 marks)

b) Provide a route example for each freedom of air. (4 marks)

c) From your opinion, why it is so importance for airline route planning management and state your reasons. (3 marks)

Question 3

Airline Route Planning provides airliners with the global overview and practical detail necessary to improve their traffic systems and fleets, and thus to enhance the operating and economic efficiency of airlines.

a)Describe your understanding on the implication of airline route planning to airliners. (5 marks)

b) Discuss in your own words the similarities and differences of the fifth and sixth freedom of air. (6 marks)

c) From your opinion, why does weather forecast is an important factor in airline route planning? State your reasons (4 marks)

Question 4Airlines determine their own fate on how profitable a particular route is by how well they manage the revenue management process. Revenue Management is the process by which an airline manages its inventory on routes.

a)What is the three most importance factors need to be considered before planning your airline routing. (8 marks)

b) Which freedom of air is known as “stand alone cabotage”? Briefly explain it. (4 marks)

c) From your opinion, what are your creative strategies to improve the airline routing that could attract more passengers. (3 marks)

Question 5

Often the research to determine whether any particular route is profitable or not is a vital question to consider. Airlines believe to study the latest trends and critical factors to look for during route feasibility analysis.

a)Explain in your own words the common factors need to be considered during route feasibility analysis (9 marks)

b) If MAS is planning to carry passengers from Kuala Lumpur and Singapore to Melbourne, Australia, which freedom of air should MAS comply? State your reasons. (3 marks)

c) From your opinion, which routing type would you opt to use for your airline company. State your reasons (3 marks)