1. Mohammed Salem Awad
Research Scholar
Aviation Management
Airline industry is a perishable industry. Today big names in the
aviation world declare their bankruptcy , why !!!!!!, I don’t
think they don’t have the facilities and tools to afford recovery
and repositioning their carriers tracks. Actually it is like a big
ship sinking and deriving/( driving) everything down. Today airline business runs as
a wheel. If airlines make a good start and continue fairly with economic shocks from
time to time, unless it will collapse. In some cases for political reasons airline survive,
while some counties prefer to spend the money on their flag carriers.
If the Thumb is characterized by 32 marks and Eye by 520 marks, then how we can
define airline characteristic of point to point airline business model. Definitely the
basic airline data are Traffic Demand, Market Fare, and Operating Network (
Distances ). So each airline is characterized by these three mean factors, while the
fourth one is its Operating Cost. We will span and manipulate those three factors
while cost element will be considered as defined single figure (as step function). Off
course we can use the actual value of the airline cost in the analysis, but that will be
meaningless as the objective is to develop the optimum operating curve of airline
which represents the characteristic of the airline.
2. So based on the airline inputs the issue not. If it matches, the airline on right
can be classified by multi-dimensional track. If not, the airline needs to
matrix which develop and reflect the reposition and restructure its fleet.
outcomes of optimum operating curve
of the airline. Consequently defining Airline Optimum Operating Curve:
airline positioning in that Matrix as
winner or loser airline !. In point to point airline business
model, airline can be defined by its
RASK & CASK: Designed Network, Market Fares, and
Demand Passengers. These are the
The main product of the airline is basic factors that derive Optimum
offering seat to move from one city to Operating Curve of the airline. It acts
another city, i. e. distance, in aviation as thumb for airline that differentiates
terminology called ASK, Available airline from other airlines,, no two
Seat Kilometers. The related cost airline can be similar. The unit cost per
element is called CASK, i . e.
Cost/ASK.
Likewise in revenue part, the income
revenue determine by the term RASK,
i. e. Revenue/ASK.
Simply Profit equal Revenue minus
Cost while in airline industry may
represent by dividing this equation by
ASK, resulting the following form:
PASK = RASK-CASK where PASK
represent Profit per ASK.
ATK or ASK is used as step function
Allocating the Right Aircraft in these scenarios, to plot and map
Capacity: optimum operating curve of the airline.
Mathematically, the airline formula is
The main factor for successful airlines defined by the following terms ,i. e,
is to match the demand (Capacity, Frequency) = function of
passengers/market demand by the right (Pax, Fare, Distance, and Cost) . Based
configuration of aircraft. Based on on airline strategy, either to emphasis
on capacity or frequency, these two
terms have a counteract effects.
So the airline can position its fleets
according to the actual cost the aircraft
and its configurations and capacities in
terms of seats, i. e. aircrafts that lay on
the curve represent the best solution for
the airline.
But if we look closely to the curve, we
airline inputs of passengers, fares and can read and explore airline heath
proposed network, using the concept of situation by defining the boundaries of
U curve technique, the right capacity the analysis in multi-dimensional
can be defined. It might be matched the matrix.
exciting aircraft capacity it might be
3. Winner vs Loser Position Matrix survival level. It is hardly gaining its
profits with a very tight margin. Its
Based on the output of optimum RASK is slightly higher than the
operating curve of the airline, the CASK. This situation is more likely to
exciting fleet will plot and map on the move winners situation if they reduce
graph, there will be four decision their cost.
outcomes to reach the healthy
situation of airline. These situations are Critical Airline:
Winner, Survival, Critical and Loser This is the lower-left part below the
airlines. Usually the starting origin optimum operating curve. Airlines
point is 160 seat suffer a hard situation where they are
operating by small capacities in a low
yield environments. It may represents
some regional airlines where their
CASK is usually matching their
RASK. It is more likely to move the
loser situation. The issue of these
airlines is serving a wrong markets.
They don’t define their markets
properly. While they can be moved to
winner situation if they apply cost
reduction strategy and implement
turnaround philosophy.
Loser Airline:
Most of airlines located in this part. It
is the lower-right part, simply indicated
Winner Airline: when CASK is greater than RASK. It
Airlines position themselves on the is characterized by higher cost with
upper-left part above the optimum low yield. These airlines need urgent
operating curve. They are restructuring e and implementing cost
characterized by high yields, lower reduction strategy. Carries do not have
cost, medium capacity, clear strategy a clear vision and strategy. It may
and well organized and structure represent flag carriers. Some mega
airline. They operate based on the carriers that have poor brand name.
sound of the market, these includes
Air Taxi, Business Jets, and Legacy Summary
Airlines. Simply it can be realized
when, RASK is greater than CASK in The key principle of the analysis is to
their annual reports. position the tangible line that landmark
the coordinate of the matrix on the
Survival Airline: curve. The outcome results will be of
This represents upper-right part above RASK and CASK; while by mapping
the optimum operating curve. It is optimum operating curve, the board
initially started by Low Cost Carriers explores the complete financial picture
and ended by Mega Carriers driven by of airline position in region. In case
cost and relayed on economy of scale, mix fleet airline, the annual final
fleet commonalty, large capacity, results may give some initial signals of
higher frequency and many economic airline financial health.
factors that maintain the airline in
