Annual Sales Conference 6-7 Oct. 2019 Route Development By: Mohammed Salem Awad Corporate Planning Director Outline Introduction Basic Notes New Routes Existing Route Supply Vs Demand Route Development Converge Case. Levelling and constant gap. Diverge Case. Examples Summary Route Forecasting Annually Data Discrepancy Trend Analysis Monthly Seasonality Pattern 2 Introduction 1/2 Route Developments All concern about Route Development, and today Airline Industry suffering by the competition from the new concept of LCC, resulting more Airline declare their bankruptcies, the reason of that, they are not able to adjust their cost to meet their expenditure, at a very tight profit margin in Aviation Industry. So the passengers experience, study the basic behavior mode and practice by passengers and this lead us to Study Route Development in terms supply (seats) and demand (passengers) 3 Introduction 2/2 Route Developments Airlines Vs Airports Route Development, it is a mission of airline that done by Airports, in spite of Airports, don’t have aircrafts, but they are more concerned about route development. Supply (Seats) and Demand (Passengers) Performance of Route = Pax/Seat (Pax Load Factor) Converge Vs Diverge Situations 4 Basic Notes Route Developments Airlines Vs Airports Basically we study the both trends of supply and demand. The basic concept of forecasting is implemented by two main factors: Displacement Factor Rotational Factor 5 New Routes Opening New Route Thumb analysis Gravity Model https://www.slideshare.net/wings_of_wi sdom/yemenia-focus-no-2-gravitymodel-for-aden-airport 6 Existing Routes Routes Development It is address the relation between Demand (Pax) and Supply (Seat) It can be easily evaluate by 12 month moving to damp the fluctuation Using Two trend Models, Straight Line and Polynomial – Second Degree Straight Line : Measure the General trend of the Data Polynomial – Second Degree The impact of the latest data on the model The Gap between the two models will measure the Data Discrepancy 7 Supply Vs Demand In Airline Industry: Our Product is ASK - Seats (Supply) while what we are achieved is RPK – travelled Passengers (Demand) The concept is to study the relations between these two factors the out Comes are – Diverge , Leveling , and Converge. 8 Route Forecasting Routes Forecasting (basic Notes) Annual Forecasting - Trend analysis Using Two trend Models 1- Straight Line 2- Polynomial – Second Degree Straight Line : Measure the General trend of the Data Polynomial – Second Degree The impact of the latest data on the model The out comes, it can be positive, negative trends or high discrepancy data. And the best scenario is to select the mid way between these two trends. 9 Existing Routes Routes Forecasting Monthly Forecasting – Seasonality Patterned. The out comes of Passengers/Seat = = Passenger Load Factor (Performance) The final annual preset Load Factor by Annually analysis will be the Annual Load factor resulting by monthly Analysis. In terms of LOAD FACTOR, the seasonality pattern is developed on monthly bases for the predicted year (2019) , defining the peak periods that need more concern in the future. This give a clear picture either to add frequencies or delate the extra flight or change the type of the aircraft to meet the expected Growth. 10 Route Development - Outcome Three Possible Outcomes Converge: It is happen when the Growth of passengers is greater than the Growth of Seats. This needs to add more frequency to absorb the increase of passengers demand. Results higher expected load factor. Leveling and Constant Gap It is happen when the Growth of passengers and Seats have a zero slop or same growth rate – it is create a constant Gap between these two lines. Diverge It is happen when the Growth of passengers is less than the Growth of Seats. This means there are extra capacity on this route, should be reduced. Results lower expected load factor. 11 Examples : ADE-AMM https://www.slideshare.net/wings_of_wisdom/yemenia-focus-no-1aden-amman-market 12 Examples : ORY-TLS 13 MUC-HEL 14 DXB-FRA 15 CPH-AGP CPH-FRA 16 CPH-NRT https://www.slideshare.net/wings_of_ wisdom/route-performance-yul-cdg https://www.slideshare.net/wings_of_ wisdom/route-performance-vno-fra https://www.slideshare.net/wings_of_ wisdom/2019-performance-analysisiata 17 Summary The final word for route development is LOAD FACTOR, which is the out come of PAX/SEAT. In terms of LOAD FACTOR, the seasonality pattern is developed on monthly bases for the predicted year (2019) , defining the peak periods that need more concern in the future. This give a clear picture either to add frequencies or delate the extra flight or change the type of the aircraft to meet the expected Demand. 18 Thank You 19
