airline revenue - case study and industry analysis

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Airline Revenue – Case Study Airline 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

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Airline Revenue – Case Study

Airline 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

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

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

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

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

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

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

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

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

Terminology

tdmc

11

Terminology

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Aircraft Seating Technology

Click for Website

Seat configuration

squeezes

passengers into 23

inches of pitch

31

Aircraft Seating Technology

32

Aircraft Seating Technology

Click for Web Article

Step Up, Lie Down, Sit Sideways As Airlines Explore Creative Seating

39

Emerging Markets

tdmc

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

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

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

Emerging Markets

44

Emerging Markets

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

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

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

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

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

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

Aircraft Wing Design

62

Aircraft Wing Design

63

Aircraft Wing Design

64

Aircraft Wing Design

67

Aircraft Wing Design

Spiroid Wing Tips Click for Web Article

68

Aircraft Wing Design

Actively Controlled Wingtips Click for Patent Page

72

Flight Dynamics and Operations

Flight and simulation data are expected to show that Tailored

Arrivals could save between 400 and 800 pounds of fuel per flight,

which adds up to more than $100,000 per year per aircraft. Using

less thrust during descent also yields quieter operations and

reduced aircraft emissions, which results in less impact to the

environment on final approach.

“The flights using Tailored Arrival procedures with existing

equipment on our Boeing and Airbus aircraft demonstrated that a

significant gain in operational efficiency is possible,” said Capt.

Murray Warfield, Qantas Airways general manager for Regulatory

and Industry Affairs. “We look forward to widespread

implementation of this capability.” – itravel magazine

tdmc

73

The Opportunity The efficiency at which an airlines prime assets (aircraft) move will have a

direct impact on revenue. From aircraft TAT (turn around time), refueling

processes, passenger loading sequences, and flight dynamics and

operations, every aspect of the movement of aircraft is important.

In the instance of flight dynamics and operations, the stages of flight

including takeoff, departure/climb, cruise, descent, final approach, and

landing must be monitored and efficient to save the airline money and

enhance the customer experience.

Flight Dynamics and Operations

76

Flight Dynamics RNP – Required Navigation Performance

77

Flight Dynamics RNP – Required Navigation Performance

78

Flight Dynamics RNP – Required Navigation Performance

79

Flight Dynamics

RNP – Required Navigation Performance PBN – Performance Based Navigation

Click for Web Article

80

Flight Dynamics

RNP – Required Navigation Performance PBN – Performance Based Navigation

Click for Web Article

81

Flight Dynamics

CDO – Continuous Descent Operations

82

Flight Dynamics

CDO – Continuous Descent Operations

83

Flight Dynamics

CDO – Continuous Descent Operations

84

Airplane Boarding Procedures – Plane Turn Around Time

Boarding time matters to airlines' bottom lines. Each extra minute a

plane spends at the terminal costs $30, according to an estimate

published in The Economist in 2011. Saving a minute on each flight

could save Delta Air Lines, which operates over 5,000 flights per

day, more than $50m a year. – The Economist

tdmc

Airplane Boarding

The Opportunity Aircraft are an airlines prime assets. Like consumer goods in a retail store,

the seats in an aircraft need to be moving with passengers in them to

generate revenue. This revenue is referred to as RASM (Revenue per

Available Seat Mile). Hence, aircraft that is idle sitting at the gate during a

turn around while loading passengers is not in prime revenue producing

mode. The faster they load passengers and get the aircraft to fly, the better

they are using their (prime assets) aircraft to generate revenue.

87

Scientific Paper on Aircraft Boarding Click for Whitepaper

Airplane Boarding

88

Airplane Boarding

Click for Web Article

“BOARDING a plane takes too long and is often the

most stressful part of a flight. Whenever a new

group is called, there's a mad rush for the gate,

sometimes complete with pushing and shoving. This

has only got worse with the advent of checked-bag

fees.”

Excerpt

89

Alternative Fuels

With high fuel costs buffeting airlines around the world, the best

hope for alternative energy for commercial aviation may be on the

horizon. The standards-setting body ASTM International is set to

vote this summer on certification of hydro treated renewable jet

(HRJ) fuel. Tests both in the laboratory and in the air (led by a most

prodigious jet fuel consumer, the U.S. Department of Defense) have

shown that HRJ can be processed from many types of feedstock—

from weedy plants to animal fat—to make a fuel chemically identical

to the crude-oil based kerosene that powers flight today.

National Geographic

tdmc

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

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

92

The Opportunity Technological advances in the processing of different raw materials with

gasification is giving rise to the production of biofuels derived from other

sources than crude oil.

One of the airlines major costs is jet fuel. By examining the chemical

composition of new derivative fuels and their performance with exisiting and

new jet engines, airlines may be able to cut significant costs from their

expenses. They may also reduce carbon footprints as some of these fuels

will burn with cleaner emissions.

Alternative Fuel

95

Click for Web Article

Alternative Fuel

"Our industry still faces two issues: there isn't enough aviation biofuel to

meet airline demand, and we need to bring the cost down to parity with

petroleum jet fuel," says Jessica Kowal of Boeing's environment

communications team``

96

New Business Model for Aircraft Assets

tdmc

97

The Opportunity After only about 100 years of technological evolution air travel is becoming,

or will become as available as ground travel modes. Costs are coming down

and more people now have access to air travel than ever before.

The emergence of new business models for aircraft assets will become more

and more prevalent as the evolution progresses. Luxury air travel is a new

market entrant that is now competing with marine cruise lines for world

travels.

New Business Model

99

Revenue Management

Today’s airline business is evolving into a two-tier industry: global

alliances are reaching worldwide coverage and no-frills carriers are

gaining market share with a low-cost, point-to-point product. Yet

both sides recognize revenue management and pricing as

cornerstones of their commercial strategy. Sophisticated systems

have been designed that optimally support these processes. The

future will bring a closer integration of revenue management and

pricing systems. Imagine the benefit of forecasts that trigger

automatic fare changes, or using price-elasticity models to

maximize revenue automatically on specific segments.

- Lufthansa Systems

tdmc

Revenue Management

100

The Opportunity The deregulation of air travel has given rise to ever increasing competition for

the acquisition of a customers dollar. Advances in communications and the

advent of internet technology make it seamless for a customer to shop for

and book airline travel from the comfort of home.

Airline revenue management processes need to take advantage of

technology to make certain their perishable aircraft seat miles inventory are

producing as much revenue as possible. Once the main passenger door is

closed and the aircraft lifts off, all empty seats become lost revenue.

Revenue Management

101

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:

104

Click for Web Article

“Over the last thirty years, a large number of airlines have invested heavily in traditional revenue

management solutions while ignoring the possibly greater return on investment offered by revenue

integrity solutions. Revenue leakage – the gap between the revenue that airlines book and the

amount that they eventually receive - is a significant problem. Preventing it is especially important

during periods of traffic downturn. It does not make sense to ignore the problem as so many airlines

have done for so long.”

Revenue Management

Excerpt

105

Click for Full Article

“Airline ticket prices often seem like a brain-teaser with little

logic. From Chicago, a flight to Miami is more than twice as

far as a flight to Memphis, but the shorter Memphis flight

costs 25% more on average. Fly to Washington, D.C., from

Hartford, Conn., and the average fare is nearly three times

as high as if you flew to nearby Baltimore from Hartford,

according to government data for the first quarter of this

year.”

Revenue Management

Excerpt

How Airlines set prices, parameters

106

Revenue Management

How Airlines set prices, parameters

107

Revenue Management

How Airlines set prices, parameters

108

Revenue Management

Airline Profitability hovers at an average of 0.1%

109

Click for Full Article

The Middle Seat asked US Airways and consulting firm

Oliver Wyman to crunch airline expenses down to the

percentages that an individual passenger pays, taking a

hard look at costs of running an airline. US Airways created

a hypothetical flight of 100 passengers. Each one paid the

average $146 fare for a domestic flight ($292 round-trip),

plus $18 each in fees and add-ons, based on a year's worth

of data ending March 31. The bottom line: There is very

little wiggle room on the plane for profit.

Revenue Management

110

“This article identifies major milestones in the science of Pricing and Revenue

Management. It starts with the first successes in travel and transportation, and it

follows the progression of the discipline in those realms. It explores breakthroughs

as the concepts evolved beyond airlines and other industries with perishable

products. It examines the impact on traditional Pricing and Revenue Management

thinking, as the adaptation of these concepts to diverse industries has

necessitated strategic and tactical innovations to optimally manage discount,

promotions, bulk and negotiated deals as well as customer retention. Finally, it

suggests future milestones as the science continues to grow and evolve.”

Click for Online Article

Revenue Management

Excerpt

111

Click for Online Article

“Preparing bespoke solutions for larger airlines can take time. Amadeus’

designers recently signed a large contract to deliver a personalised

system for one of its customers within the next 18 months. But it is

worth the wait for the bigger airlines. An effective revenue management

system can make a huge financial difference. One of Amadeus’ clients

is the US$18 billion dollar company Air France-KLM. If the Amadeus

system increases revenue by 1 percent, it adds US$180 million dollars

onto the company’s bottom line.”

Revenue Management

Excerpt

112

“Using publically-available seat map and pricing data from a major U.S.

airline, Garrow shows that customers' purchases of premium coach

seats (with extra legroom and early boarding privileges) are strongly

influenced by seat map displays. She finds that customers avoid

seating in middle seats and seats near the back of the plane by

purchasing premium coach seats. In fact, customers are between 2

and 3.3 times more likely to purchase premium coach seats when there

are no window or aisle seats that can be reserved for free. She uses

these results to show that if this major U.S. airline were to block certain

rows of seats for premier customers, the airline could sell more

premium coach seats and potentially increase seat revenues by more

than 10 percent. “

Click for Online Article

Revenue Management

Excerpt

114

Technology - Flight Operations – Flight Efficiency Services

With the international commercial airline industry experiencing growth 2-3 times

faster than the global economy over the last decade, the potential scale of the

application of the Industrial Internet to the sector is huge and growing. This is

something that GE and Alitalia are well aware of as they look to extend their initial

three year partnership beyond 2014. – GE and Alitalia Case Study

tdmc

115

Flight Operations Technology

Flight Sequencing Technology The Opportunity Advances in technology and the prevalence of Industrial Internet data are

giving way to enhanced diagnostics in real time tracking for aircraft

sequencing to optimize approach, arrival, and departure flows.

"GE's Flight Efficiency Services collects real-time data generated by the

aircraft and applies proprietary techniques that use historic intelligence to

help drive airlines' business strategies," said Alan Caslavka, president of

Avionics & Digital Systems for GE Aviation. "Aircraft performance analytics

are used to reveal patterns, transforming data into actionable insights that

improve operations."

116

Flight Operations Technology

“The aviation sector is a perfect setting for the Industrial Internet. The

industry estimates that during any given flight, the travel time, fuel

use, and flight path are 18 to 22 per-cent inefficient. Potential costs

savings are therefore substantial, with the recent GE Minds and

Machines report estimating that a 1 per cent reduction in jet fuel use

alone could save $30 billion over 15 years.”

Excerpt

Click for Online Case Study

GE / Alitalia

117

Flight Operations Technology

Flight Sequencing Technology Advantages and Benefits

Navigation Services - Coordinate air travel flow

Fuel Management - Cut costs (Fuel, Aircraft turn around time)

Flight Data Analytics - Eliminate inefficient use of resources

Reduce flight time / Increase departure and arrival accuracy

Make effficent use of open landing slots

Fleet Synchronization - Increase aircraft utilization

118

Flight Operations Technology

Using Wind to Save Fuel The Opportunity A subscription based service from an aircraft OEM uses existing aircraft

equipment (minimal upfront costs) to provide flight crews with real time

atmospheric conditions related to wind speed, wind direction and air

temperature to enhance and optimize the landing approach sequence for

efficient use of fuel resources.

Click for Web Article

119

Flight Operations Technology

Using Wind to Save Fuel Advantages and Benefits

Reduces fuel consumption by up to hundreds of pounds per flight

Increase Operational Efficiency

Stabilizes Approach

Reduce Carbon emissions

Reduces Crew Workload

Optimized approach reduces noise pollution

Subscription based service

Uses existing equipment

Big Data – The Industrial Internet Analytics and Crowdsourcing

121

Advanced Analytics for Flight Optimization The Opportunity Big Data and Data Scientists come together on a crowdsourcing platform

called Kaggle. Using historical flight information including weather, flight

plans, air traffic control, and past flight performance they create algorithms

that will optimize the future of flight for accurately predicting when a flight will land and arrive at the gate.

Click for Web Article

Big Data – The Industrial Internet Analytics and Crowdsourcing

122

Click for Web Page

Big Data – The Industrial Internet Analytics and Crowdsourcing

123

The realized cost savings Click for Web Page

Big Data – The Industrial Internet

124

Big Data Opportunities in Airline and Aviation

Click for Full Report

Big Data – The Industrial Internet

125

Big Data Opportunities in Airline and Aviation Click for Full Report

Big Data – The Industrial Internet

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Big Data Opportunities in Airline and Aviation

Click for Full Report

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Aircraft Route / Flight Planning

Flight planning is the process of producing a flight plan to describe

a proposed aircraft flight. It involves two safety-critical aspects: fuel

calculation, to ensure that the aircraft can safely reach the

destination, and compliance with air traffic control requirements, to

minimise the risk of mid-air collision. In addition, flight planners

normally wish to minimise flight cost by appropriate choice of route,

height, and speed, and by loading the minimum necessary fuel on

board. - Wikipedia

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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.

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Route / Flight Planning / Airspace Efficiency

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The Opportunity “Every commercial airline flight begins with a flight plan. Over time, small

adjustments to each flight plan can add up to substantial savings across a

fleet. Optimal overall performance is influenced by many factors, including

dynamic route optimization, accurate flight plans, optimal use of redispatch,

and dynamic airborne replanning. While all airlines use computerized flight

planning systems, investing in a higher-end system — and in the effort to use

it to its full capability — has significant impact on both profitability and the

environment.” – BOEING Aero

Route / Flight Planning / Airspace Efficiency

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Route / Flight Planning / Airspace Efficiency

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Click for Web Article

Route / Flight Planning / Airspace Efficiency

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Click for Web Article

Route / Flight Planning / Airspace Efficiency

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Click for Web Article

Route / Flight Planning / Airspace Efficiency

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Click for Web Article

Route / Flight Planning / Airspace Efficiency

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Click for Web Article

Route / Flight Planning / Airspace Efficiency

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Click for Web Article

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European Airspace Example RVAS from 2000ft to 1000ft

Shorten Aircraft Routes to save fuel and cut CO2 emissions

Route Planning / Airspace Efficiency

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European Airspace Example RVAS from 2000ft to 1000ft

Shorten Aircraft Routes to save fuel and cut CO2 emissions

Route Planning / Airspace Efficiency

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Fuel Efficiency

A plane like a Boeing 747 uses approximately 1 gallon of fuel (about 4 liters) every

second. Over the course of a 10-hour flight, it might burn 36,000 gallons (150,000 liters).

According to Boeing's Web site, the 747 burns approximately 5 gallons of fuel per mile

(12 liters per kilometer).

This sounds like a tremendously poor miles-per-gallon rating! But consider that a 747

can carry as many as 568 people. Let's call it 500 people to take into account the fact

that not all seats on most flights are occupied. A 747 is transporting 500 people 1 mile

using 5 gallons of fuel. That means the plane is burning 0.01 gallons per person per mile.

In other words, the plane is getting 100 miles per gallon per person! The typical car gets

about 25 miles per gallon, so the 747 is much better than a car carrying one person, and

compares favorably even if there are four people in the car. Not bad when you consider

that the 747 is flying at 550 miles per hour (900 km/h)! – HowStuffWorks.com

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Fuel Efficiency – Nanoparticle Technology

Click for Web Article

“A recent innovation developed at University West, Sweden,

promises to increase aircraft turbojet fuel efficiency, simply by

adding a nanoparticle coating to an existing engine design.

Turbojets already operate at very high temperatures, one key to

their current efficiency and power ratings. Still, internal temperatures

can only be permitted to go to a certain threshold, above which the

engine itself would start to melt. The turbojet’s fuel efficiency is

almost directly related to its internal temperatures, so the

nanoparticle coating would allow for more efficient fuel vaporization

and higher air-fuel ratios.”

Excerpt

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Technologies being Explored Geared Turbofan Engine

Composite Ceramics

The “Double Bubble” - Aircraft Design

The Flying Wing – Aircraft Design

High Speed Heat Exchanger

Fuel Efficiency – Five Technologies

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Fuel Efficiency

C

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Fuel Efficiency

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Incorporation of composite materials in Aircraft Design

Fuel Efficiency – Weight Savings

C

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Engine Technology Advancements

Fuel Efficiency – Engine Technology

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Engine Technology Advancements

Fuel Efficiency – Engine Technology

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Engine Technology Advancements – Big Data / Sensors in Jet Engines

Fuel Efficiency – Engine Technology

C

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Reduce Weight of onboard equipment and supplies

Fuel Efficiency – Weight Reduction

C

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Fuel Efficiency – Flight Operations

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Reduce Weight of onboard equipment and supplies

Fuel Efficiency – Weight Reduction

C

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Fuel Efficiency – Strategies

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1. Add weight where it counts 2. Add zonal dryers to remove trapped moisture 3. Engine Wash

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Fuel Efficiency – Strategies

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Fuel Efficiency – Strategies

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Fuel Efficiency – Strategies

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Fleet Optimization

Fleet management is the management of a company's transportation fleet.

Fleet management includes commercial motor vehicles such as cars, aircraft

(planes, helicopters etc.), ships, vans and trucks, as well as rail cars. Fleet

(vehicle) management can include a range of functions, such as vehicle

financing, vehicle maintenance, vehicle telematics (tracking and diagnostics),

driver management, speed management, fuel management and health and

safety management. Fleet Management is a function which allows companies

which rely on transportation in business to remove or minimize the risks

associated with vehicle investment, improving efficiency, productivity and

reducing their overall transportation and staff costs, providing 100% compliance

with government legislation (duty of care) and many more. These functions can

be dealt with by either an in-house fleet-management department or an

outsourced fleet-management provider. – Wikipedia

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The Opportunity Airlines that have large fleets of varied aircraft types are at a disadvantage

for cost optimization when they are compared to airlines with homogeneous

type aircraft fleets. From a cost standpoint, varied fleets will incur higher

costs when it comes to crew training and management, maintenance (both

heavy and MRO), and airport fees and restrictions. Those with a less varied

fleet will be able to rotate crews more effectively. They will also have the

opportunity of holding less varied rotable inventories for MRO operations.

Fleet Optimization

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Ancillary Revenue

With airlines and airports increasingly modelling themselves on retailers, shopping

has become an even more embedded part of the air travel experience. Creative

solutions developer Avanade is making exciting advances in next generation retail

with the development of its Grab and Go wall concept which, in the future, could

revolutionise retail both on the ground and in the air. The Grab and Go interactive

kiosk, responds to gestures and touch-based interfaces to allow a customer to

obtain information and coupons, and, though still in the early stages of

implementation, it could enrich the shopping experience in the air from the ground,

with enticing offers at kiosks in the terminal. - Future Travel Experience

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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

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human interface business consulting services

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.

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The Opportunity

The origin and destination of a flight is just like a retail store. It's like the walls

and shelves of a store, it sits there empty until the airline adds its branding to

it. With in flight connectivity gaining acceptance customers may now interact

with their own devices or seatback screen technologies to enhance

purchasing and customization experiences. Airlines may now partner with

other consumer goods product vendors so they may capitalize on a captive

market that is sitting in the aircraft for hours at a time.

Ancillary Revenue

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Ancillary Revenue

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Click for Website

Ancillary Revenue - Technology

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Click for Web Article

Hamburg – Airline passengers of the future can expect their movements to be

tracked, their needs assessed and solutions to arising problems remedied as

they move through every step in their journey, all with the help of technology at

their fingertips.

The ability of airlines to make full use of a passenger’s personal electronic

devices and wired lives for everything from missed sandwich orders to selling

automobiles inflight was part of the reoccurring theme in several opening

conference sessions that marked the beginning of the Aircraft Interiors Expo

and World Travel Catering and Onboard Services Expo whose trade show

doors will open Tuesday to thousands who have gather here for four days of

networking and business.

Ancillary Revenue

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Excerpt

Purpose of the research

In spite of the recent economic downturn, airlines are addressing trends, modernising

existing technologies and adopting more relevant solutions to take their IT portfolios to

the next level. Ancillary revenues are helping to fund this innovation; however, knowing

where and when to invest is no easy task. Travelport conducted this research to:

1. Provide airlines a solidly researched overview of the global PSS and IT landscape

2. Identify current areas of IT spending by airlines, as well associated initiatives,

requirements, projections and trends

3. Help airlines analyse, prioritise and plan current and future IT

investments

Ancillary Revenue - Technology

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Click for Website

Excerpt

Data Analysis

When you are in the market for aviation based data tools, look no further than

Innovata. We have developed a variety of software and partnerships to make

aviation data meaningful and usable to companies like yours. Simply click on

one of our product offerings below to learn more about how we can help you and

your business.

FlightMaps Analytics: Powered by two powerful and well-respected aviation

databases, FlightMaps is a map-based analytics product that can help you view

historical data, filter current data, select reporting data ranges and so much

more.

Ancillary Revenue - Technology

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Excerpt

For an industry which practically invented the concept of customer experience as part of the pre-flight and inflight services (remember United hiring its first stewardess in 1930s, or the on-board food services, the romance and adventure of the job) as well as some of the most successful customer loyalty programs (airline miles being at the forefront), it is quite disheartening to see it struggling for survival due to runaway oil prices and employee unions.

Ancillary Revenue - Technology

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Ancillary Revenue

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Excerpt Click for Web Article

As each airline makes these choices it is critical that they are not restricted by or held hostage to any particular standard or technology and that they can achieve a multichannel retail experience. Reacting in real-time to consumer trends and cunning competitor initiatives goes over and beyond the algorithms designed to plan for seasonal changes, holiday periods, transitory popular destinations and new routes. The ability to be even smarter and faster will lead to airlines using different technologies for different circumstances across a multitude of channels. Filing fares and modifying ancillary services at speed may require using an API – the technology that allows data to be transferred using XML-based paths.

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Ancillary Revenue - Technology

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Excerpt

“The blueprint for an airline business has changed dramatically over the past 10 years,” says Mike McGearty, CEO of CarTrawler. “Consumer demand for choice and convenience of complimentary products has forced the travel industry to reinvent itself with airlines leading the way. Consumers are more loyal to carriers that address their needs.

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Ancillary Revenue

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The project examined the disclosed financial performance of 108 airlines and the estimate includes revenue from unbundled services, such as baggage fees and food sold onboard aircraft, to new incremental income, such as ommissions from the sale of accommodation and travel insurance, plus partner revenue generated by frequent flier programs. The airline that collected the most ancillary revenue in dollar totals was the country’s largest airline, United Continental, with $5,047,477,000 last year. It was followed by next largest airline Delta, which raked in $2,473,469,000.

Excerpt

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Ancillary Revenue

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Click for Web Article Retailing trends in the airline travel industry

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Ancillary Revenue

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Click for Website

Excerpt

“Know your customer” is one of the most important tenets of the travel and

hospitality industries, but getting the right combination of data points about me to

the right people at the right time to give me what I want has eluded travel

companies—until now. Today, new technology is enabling the industry to gain a

more holistic view of its customers and consistently and affordably deliver highly

individualized customer service.

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Ancillary Revenue

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Click for Web Article

DMOs now have the ability to provide customized content to travelers, targeted by location, to an audience who’s got the time to listen. This means that destinations seeking to convince a business traveler to include leisure experiences to his itinerary or even extend her trip for leisure purposes can motivate and convert interest all from the confines of a seat-back entertainment system. Destinations seeking to augment dispersal can promote travel experiences beyond a city’s iconic attractions, wooing vacationers to venture further afield.

Excerpt

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Ancillary Revenue

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Click for Web Article

Excerpt

The great advances in airplane Internet connections are being driven far

more by the opportunities that high-speed broadband service presents for

airlines themselves to essentially sell more things to the customers,

whether the product is in-flight entertainment, food and drink, customized

services to elite-status passengers or products at the destination, including

hotel packages, sports and concert tickets, restaurant and theater

reservations. On an airplane, you have a captive market, and with

sophisticated technology, you can sell to passengers in very personal

ways.

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Mobile Technology in the Travel Industry

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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

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.

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Mobile Technology

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Mobile Technology

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Mobile Technology

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Mobile Technology

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Mobile Technology

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Mobile Technology

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Mobile Technology

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Mobile Technology

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Mobile Technology

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Mobile Technology

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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:

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The Future of Flight – Picture Showcase

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The Future of Fight

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The Future of Fight

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The Future of Fight

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The Future of Fight

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The Future of Fight

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The Future of Fight

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The Future of Fight

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The Future of Fight

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The Future of Fight

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The Future of Fight

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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

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

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Airline Revenue – Case Study

END

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