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  1. Airline Revenue – Case StudyAirline Revenue – Case Study and Industry Analysis Route density determines the size of the aircraft an airline can use and…
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  • 1. Airline Revenue – Case StudyAirline Revenue – Case Study and Industry Analysis Route density determines the size of the aircraft an airline can use and the frequency with which it can fly a given route. An airline must fly an airplane of a size that allows competitive unit costs in the market it serves. The airline must also find enough passengers who will sit together in it at fares that will pay the total cost of running it.” - Airline Leader tdmc
  • 2. T H E D ATA M I N I N G C O M PAN Y tdmc creative data intelligence strategy solutions for small, medium and corporate enterprise A N A LY T I C S D E S C R I P T I V E P R E D I C T I V E P R E S C R I P T I V E Visit us at: www.thedataminingcompany.com human interface business consulting services
  • 3. Services include in depth analysis of your business and industry with unbiased advice to analyze and optimize your industry specific challenges for the new digital economy. Services Include: Business Assessment – Measures business health and positioning. Big Data – Are you making the most use of your data streams? Data Integrity Evaluation – Is your IT system giving you the right numbers? Data Intelligence Analytics – Extracting Business Value – What is your data worth? Data Management at Project Implementation - Is your data as clean as possible? Supply Chain Analysis and Optimization – Are you running a lean operation? Market Research Intelligence Services – What is the industry doing? White Paper Research and Intelligence – What information is important? Business Requirements – Translating for digital products? Going Digital– Optimize ROI for digital transformation? Understanding the Consumer – Ecommerce and Social Media strategy optimization. T H E D ATA M I N I N G C O M PAN Y tdmc www.thedataminingcompany.com
  • 4. 4 Executive Summary Airlines around the world are facing increased pressures to generate revenue as communication technology and globalization of business advances. Competitive advantage will be gained by those who use data driven solutions for sustainable cost savings and revenue generation. From big data for yield management to advanced algorithmic predictive and preventive aircraft maintenance processes, the acquisition and processing of digital information will be of utmost importance for those who wish to remain competitive. – F.A. tdmc
  • 5. 5 Executive Summary Airline Revenue Optimization  The classic and most efficient business model holds true for this complex industry  CUT COSTS and MAXIMIZE REVENUES  Profitability in the airline business is calculated by “Seat Miles”  COSTS as CASM (Cost per available Seat Mile)  REVENUE as RASM (Revenue per Available Seat Mile)  1 seat flown 1 mile = ASM (Available Seat Mile)  Technological advances in Data Management for all business streams has given rise to the global market. Cost cutting and Revenue Optimization opportunities abound for those industry leaders that are willing to embrace “data driven” technology and apply it to all aspects of their business.
  • 6. 6 Executive Summary Airline Revenue Optimization  The Opportunity  Customer Segmentation through Big Data Analytics will be significant for the Airline Industry because:  Different Customers will be willing to pay different prices for using the same amount of resources (an Available Seat Mile)  Controlling the availability of resources will be key to maximizing revenue from passenger travel seat acquisition  While they are a captive audience, maximizing the ancillary revenue based on “who” is your customer will be imperative
  • 7. 7 Executive Summary Airline Revenue Optimization  This industry analysis paper attempts to cover both COST CUTTING and REVENUE OPTIMIZATION opportunities including:  Fuel Saving strategy for in flight management and on ground operations  Fuel Efficiency - Streamline Flight Takeoff and Landing Techniques  Cabin Configuration  Ancillary Revenues / Big Data Opportunities  Passenger loading optimizations  Aircraft Design for fuel efficiency  Flight Route optimization
  • 8. 8 Executive Summary Airline Revenue Optimization  This industry analysis paper attempts to cover both COST CUTTING and REVENUE OPTIMIZATION opportunities including:  Fleet Management  Travel Demand Modeling / Predictive Analytics / Passenger Experience  Biofuels Case Study  MRO Management / Cost Savings / SAP Predictive and Preventive Analytics  Emerging Market Penetration  New Business Model for Aircraft assets
  • 9. 9 Executive Summary Includes:  Airline major cost drivers  Introduction to Rotable Components  Understanding the Repair Loop  Supply Chain Value Creation  Pricing Models and their Application  Smarter MRO – Deloitte  RFID Technology – MRO Management December 2013  Big Data and MRO – SAP Predictive and Preventive Analytics  Aircraft MRO Market Study to 2035 – STRAIR  Aviation growth patterns and the MRO strategy forward  Commercial Aviation MRO 2020 – IBM  MRO Survey 2014 – Oliver Wyman  AHMS – Aircraft Health Management Systems Aircraft Rotable Components MRO  For cost savings opportunities in MRO and Rotables management please visit our presentation research on our website www.thedataminingcompany.com by clicking image below:
  • 10. 10 Terminology tdmc
  • 11. 11 Terminology
  • 12. 12 Available Seat Mile (ASM): The Basic Measure of Capacity  One seat (empty or filled) flying one mile is an ASM  A 140-seat MD-80 flying a 500-mile segment creates 70,000 ASMs.  System ASMs are simply the sum of each of these individual segment calculations  In a typical day in 2007; American made available about 465 million ASMs Revenue Passenger Mile (RPM): The Basic Measure of Production  A paying passenger flying one mile creates an RPM  100 passengers flying 500 miles generates 50,000 RPMs  System RPMs are the sum of this calculation for each of the revenue segments we fly.  In a typical day in 2007, American produced 380 million RPMs. Basic Measurements in the Airline Business Click for Web Source
  • 13. 13 Load Factor: Production Compared to Capacity  To calculate system-wide load factor, divide RPMs by ASMs; in 2007 it's 138.5 billion RPMs divided by 169.9 billion ASMs, or 81.5 percent.  For an individual flight, divide the revenue passengers on board by the aircraft capacity; in the MD-80 example above, it is 100 divided by 140, or 71.4 percent.  High load factors are not necessarily desirable - How much each passenger pays is also important, as we see in the next measure. Basic Measurements in the Airline Business Click for Web Source
  • 14. 14 A prime example of Airline Revenue Optimization  It’s not necessarily the maximizing of Load Capacity, but the optimization of how much value (yield) you can obtain per seat mile flown as illustrated in this example: Basic Measurements in the Airline Business
  • 15. 15 Yield: Revenue per Passenger Mile  To calculate system yield, divide passenger revenue by total RPMs; For American in 2007, this is $18.2 billion divided by 138.5 billion RPMs, or 13.1 cents per mile.  To calculate a customer's individual yield, divide ticket price by mileage; if a customer pays $98.00 for the 500-mile segment above, the yield would be 19.6 cents per mile. Revenue per Available Seat Mile (R/ASM): The Best Basic Measure  Multiply load factor times yield to get the measure of how much revenue we generate per increment of capacity; using the 2007 example above, it's 81.5 percent times 13.1 cents or 10.7 cents. Basic Measurements in the Airline Business Click for Web Source
  • 16. 16 Cost per Available Seat Mile (C/ASM): The Basic Measure Of Cost  Unit costs represent how much it costs to fly one seat (empty or filled) one-mile.  To calculate unit costs, divide total operating expenses by Total ASM capacity; For American in 2007, this is $19.24 billion divided by 169.9 billion, or 11.3 cents per mile. Basic Measurements in the Airline Business Click for Web Source
  • 17. 17 Airline I.O.C. Indirect Operating Costs Aircraft Ground Handling Landing Fees Aircraft Service Cabin Attendants Food and Beverage Passenger Handling Reservations and Sales Baggage Cargo Handling Passenger Commissions Passenger Advertising Cargo Commission General and Administration
  • 18. 18 Airline Productivity Measures Click for Full Report
  • 19. 19 Aircraft Design – Cabin Configuration Decision making in design is crucial to arriving at viable and worthwhile cabin formats. Too little innovation will result in an aircraft manufacturer and airlines using its products falling behind its competitors. Too much may result in an over-extension with, for example, use of immature technologies that do not have the necessary reliability for a safety critical industry or sufficient value to justify the development effort. – Science Direct tdmc
  • 20. T H E D ATA M I N I N G C O M PAN Y tdmc creative data intelligence strategy solutions for small, medium and corporate enterprise A N A LY T I C S D E S C R I P T I V E P R E D I C T I V E P R E S C R I P T I V E Visit us at: www.thedataminingcompany.com human interface business consulting services
  • 21. Services include in depth analysis of your business and industry with unbiased advice to analyze and optimize your industry specific challenges for the new digital economy. Services Include: Business Assessment – Measures business health and positioning. Big Data – Are you making the most use of your data streams? Data Integrity Evaluation – Is your IT system giving you the right numbers? Data Intelligence Analytics – Extracting Business Value – What is your data worth? Data Management at Project Implementation - Is your data as clean as possible? Supply Chain Analysis and Optimization – Are you running a lean operation? Market Research Intelligence Services – What is the industry doing? White Paper Research and Intelligence – What information is important? Business Requirements – Translating for digital products? Going Digital– Optimize ROI for digital transformation? Understanding the Consumer – Ecommerce and Social Media strategy optimization. T H E D ATA M I N I N G C O M PAN Y tdmc www.thedataminingcompany.com
  • 22. 22 Aircraft Seating Configuration Density The Opportunity  Big Data has given rise to dynamic customer segmentation, real time airline bookings through omni channel elements, origin to destination software development, and fare structures that can be optimized in real time based on daily, if not minute by minute real time tracking of consumer trends  Airlines are now able to optimize seating configurations for different cabin classes, and release the different options in real time as required. They are also able to withhold premium seating for higher paying customers, and release open seats as necessary to optimize Revenue per Available Seat Mile
  • 23. 23 Aircraft Seating Configuration Density Click for Full Report
  • 24. 24 Aircraft Seating Configuration Density Without much fanfare, WestJet Airlines Ltd. has been quietly rolling out some strategic changes to its fleet of Boeing 737s in recent weeks, altering the cabin configuration fairly dramatically to add a new class of seating, all the while packing in more travelers in the rest of its planes. Click for Full Report
  • 25. 25 Report Highlights  Slimline seats are replacing old bulky seats  Results in more paying passengers  Smaller fuel bill with lighter seats  Additional legroom may allow higher fee per seat Aircraft Seating Configuration Density Click for Full Report
  • 26. 26 Aircraft Seating Configuration Density Click for Full Report
  • 27. 27 Aircraft Design – Seating Technology The BL3530 follows another vital trend; at 10 kilograms per seat, it's lighter than its predecessors. "Fuel costs are extremely high these days -- this is just an accepted fact in the industry. As a result, every kilogram counts," says James Lee, director of Paperclip Design Limited, an award-winning industrial design studio. The lightest chair on the market is made by relative newcomer Expliseat, a French company that has crafted a model made from titanium and composite materials. It weighs just 4 kilograms. The company estimates the weight savings could translate into $500,000 of fuel savings per aircraft per year. – Daisy Carrington for CNN tdmc
  • 28. 28 Aircraft Seating Configuration Density / Technology The Opportunity  Aircraft seating technology has seen huge strides in newer lightweight materials that will not only save fuel (weight advantage) but also have the same robustness while taking up less space.  Airlines may now optimize for weight, class configurations, and passenger comfort while maintaining best in class gains for fuel savings opportunities which accounts for a major portion of an airlines budget.
  • 29. 29 Aircraft Seating Technology Click for Website Seat configuration squeezes passengers into 23 inches of pitch
  • 30. 30 Aircraft Seating Technology Click for Web Article
  • 31. 31 Aircraft Seating Technology
  • 32. 32 Aircraft Seating Technology Click for Web Article Step Up, Lie Down, Sit Sideways As Airlines Explore Creative Seating
  • 33. 33 Aircraft Seating Technology Click for Web Article
  • 34. 34 Aircraft Seating Technology Click for Web Article
  • 35. 35 Aircraft Seating Technology Click for Web Article
  • 36. 36 Aircraft Seating Technology Click for Web Article
  • 37. 37 Aircraft Seating Technology Click for Web Article
  • 38. 38 Aircraft Seating Technology Click for Web Article
  • 39. 39 Emerging Markets tdmc
  • 40. T H E D ATA M I N I N G C O M PAN Y tdmc creative data intelligence strategy solutions for small, medium and corporate enterprise A N A LY T I C S D E S C R I P T I V E P R E D I C T I V E P R E S C R I P T I V E Visit us at: www.thedataminingcompany.com human interface business consulting services
  • 41. Services include in depth analysis of your business and industry with unbiased advice to analyze and optimize your industry specific challenges for the new digital economy. Services Include: Business Assessment – Measures business health and positioning. Big Data – Are you making the most use of your data streams? Data Integrity Evaluation – Is your IT system giving you the right numbers? Data Intelligence Analytics – Extracting Business Value – What is your data worth? Data Management at Project Implementation - Is your data as clean as possible? Supply Chain Analysis and Optimization – Are you running a lean operation? Market Research Intelligence Services – What is the industry doing? White Paper Research and Intelligence – What information is important? Business Requirements – Translating for digital products? Going Digital– Optimize ROI for digital transformation? Understanding the Consumer – Ecommerce and Social Media strategy optimization. T H E D ATA M I N I N G C O M PAN Y tdmc www.thedataminingcompany.com
  • 42. 42 Emerging Markets The Opportunity  As the Industrial Revolution pushed forward enormous growth in certain world markets, so will the digital revolution fundamentally change the dynamics of where people work, live, travel, and spend their income.  It will be imperative for leading airlines in the worlds current developed markets to subscribe to and provide travel services to and from the emerging markets if they want to stay in the travel game.
  • 43. 43 Emerging Markets
  • 44. 44 Emerging Markets
  • 45. 45 Click for Web Source Emerging Markets
  • 46. 46 Hong Kong is located five hours’ flying time from half the world’s population. Together with New York and London it is ranked as a global financial and business services centre, a lofty perch decided by its rule of law, independent legal system, well- educated talent pool, modern infrastructure, low taxes and light regulation topped off with an “open for business” culture. Emerging Markets Click for Web Source
  • 47. 47
  • 48. 48
  • 49. 49
  • 50. 50 Click for Web Source Emerging Markets
  • 51. 51 Click for Web Source Emerging Markets
  • 52. 52 The five largest Middle East carriers generate almost 60% of the region’s ASKs. The region has grown at a CAGR of 10.9% and expects to produce more than 586.7 billion ASKs in the year ended October 2014. Emerging Markets Click for Web Source
  • 53. 53 Emerging Markets Click for Web Article
  • 54. 54 Emerging Markets Click for Web Article
  • 55. 55 Emerging Markets Click for Web Article
  • 56. 56 Emerging Markets Click for Web Article
  • 57. 57 Aircraft Wing Design Wingtip vortices are associated with induced drag, an unavoidable consequence of three-dimensional lift generation. The rotary motion of the air within the shed wingtip vortices (sometimes described as a "leakage") reduces the effective angle of attack of the air on the wing. The lifting-line theory describes the shedding of trailing vortices as span-wise changes in lift distribution. For a given wing span and surface, minimal induced drag is obtained with an elliptical lift distribution. For a given lift distribution and surface, induced drag is reduced with increasing aspect ratio. - Wikipedia tdmc
  • 58. T H E D ATA M I N I N G C O M PAN Y tdmc creative data intelligence strategy solutions for small, medium and corporate enterprise A N A LY T I C S D E S C R I P T I V E P R E D I C T I V E P R E S C R I P T I V E Visit us at: www.thedataminingcompany.com human interface business consulting services
  • 59. Services include in depth analysis of your business and industry with unbiased advice to analyze and optimize your industry specific challenges for the new digital economy. Services Include: Business Assessment – Measures business health and positioning. Big Data – Are you making the most use of your data streams? Data Integrity Evaluation – Is your IT system giving you the right numbers? Data Intelligence Analytics – Extracting Business Value – What is your data worth? Data Management at Project Implementation - Is your data as clean as possible? Supply Chain Analysis and Optimization – Are you running a lean operation? Market Research Intelligence Services – What is the industry doing? White Paper Research and Intelligence – What information is important? Business Requirements – Translating for digital products? Going Digital– Optimize ROI for digital transformation? Understanding the Consumer – Ecommerce and Social Media strategy optimization. T H E D ATA M I N I N G C O M PAN Y tdmc www.thedataminingcompany.com
  • 60. 60 Aircraft Wing Design The Opportunity  Another method of reducing induced drag is the use of winglets, as seen on most modern airliners. Winglets increase the effective aspect ratio of the wing, changing the pattern and magnitude of the vorticity in the vortex pattern. A reduction is achieved in the kinetic energy in the circular air flow, which reduces the amount of fuel expended to perform work upon the spinning air. Any drag reduced is a reduction in friction which will reduce the amount of fuel used during flight.
  • 61. 61 Aircraft Wing Design
  • 62. 62 Aircraft Wing Design
  • 63. 63 Aircraft Wing Design
  • 64. 64 Aircraft Wing Design
  • 65. 65 Aircraft Wing Design Click for Web Article
  • 66. 66 Click for Web Article Aircraft Wing Design
  • 67. 67 Aircraft Wing Design Spiroid Wing Tips Click for Web Article
  • 68. 68 Aircraft Wing Design Actively Controlled Wingtips Click for Patent Page
  • 69. 69 Click for Web Article Aircraft Wing Design
  • 70. 70 Click for Web
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