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Introduction to Airline Industry
- 1. Introduction to the airline industry V. Meril
- 2. Definition • Airline Industry is a system of transportation • Part of Aviation industry • Moving people and goods • Utilizing the airways • One of the only true global businesses Cargo
- 3. Scope Aircraft Airport Operations Support Industries Service Providers Manufacturers • Commercial • Fuel Supply • Runways • Travel Agents transport • Maintenance • Navigation • Freight • General Aviation systems • Ground Forwarders planes transportation • Military aircrafts • Hospitality Industry • Car Rentals 2
- 4. Type of airlines • Scheduled (fixed routes and timings) • Non-scheduled • Passengers • Cargo • Passenger & Cargo • Intercontinental • International • Domestic
- 5. 84% world’s international traffic 240 member airlines 188 countries
- 6. Passenger Travel Leisure: Corporate: Extended period Short period Recreation purpose Official purpose 950 million tourists Increased profitability Worldwide (2010) Contributes to GDP Creates employment
- 7. Cargo Dangerous Non Perishable Live Animals Goods Perishable Passenger Air Freight Forwarders Airlines Passenger Cargo Airlines Super Cargo Airlines
- 8. Economic and Social Impact 2.5 billion passengers worldwide 5.5 million Airlines employees 9.5 million Airlines Supply Chain employees 18 million indirect Tourism jobs
- 9. History background 1944 1945 Chicago International Air Convention Transport Association on Standards and International IATA Recommended Civil Aviation Practices SARPS International Civil Aviation Organization ICAO
- 10. Freedom of the Air 1: Right to fly across a country’s territory without landing 2: Right to land for non-traffic purposes 3: Right to carry passengers and goods from OWN’s country to another 4: Right to carry passengers and goods from another country to one OWN’s 5: Right to carry passengers from one OWNs country to a 2 nd country and to a 3rd country
- 11. Freedom of the Air 4 3 5
- 12. Business Metrics / KPIs Revenue Passenger Kilometer Average Unit Revenue Available Seat Kilometer RPK Measure of passenger traffic Measure of yield Measure available capacity Number of Revenue Revenue Number of seats Passenger X X RPK X Number of kilometers Kilometers of the segments e.g: e.g: e.g: 200 seats X 7,000 kilometers 150 passengers X 7000 117,000 USD / 1,050,000 =1,400,000 ASKs kilometers= 1,050,000 RPKs RPKs= 0.16USD/kilometer
- 13. Business Metrics / KPIs Unit Cost Passenger Load Factor Measure of profitability Measure of capacity utilization Expenses (COST) RPK / / ASK ASK e.g: e.g: 140,000 $ / 1,400,000ASKs 1,050,000 RPKs = 0.1$ / 1,400,000 ASKs = 75% PLF
- 14. Revenue Management Yield Price Improvement Maximization of Profits Revenue Management Traffic Segmentation Traffic (RPKs)
- 15. Main Industry Features Thin Profit Seasonal • Capital Intensive • High Cash Flow Labor Intensive Service
- 16. Development of Commercial Airlines 1910s 1940s 1970/80s 2000 WW1 WW2 Deregulation New Era Military to Civil conversion