airline+route+planning

7/28/2019 Airline+Route+Planning

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Airline Route PlanningPlanning a journey that could

optimize airline profit while

bearing the costsBalancing the demands and

capacities


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Introduction

This is where airlines deal with the application

of forecasting method in determining the

costs of a route of one flight from one

destination to another either Domestic or

International

In terms of

Flight personnel

Fuel consumption

Facilities and Airport cost

Passenger Movement and Air Cargo


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Its significance

Determine the feasibility and possibility to fly

Determine what is required and what can be

offered

Determining the kind of costs and expenses

Determine ways to gain profit


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Determine the FEASIBILITY

The 9 freedoms of the air in airline business:

The Freedoms of the air are a set of

commercial aviation rights granting a

country's airline(s) the privilege to enter and

land in another country's airspace


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Freedom 1

It was also known as technical freedom. The

right to overfly a country without landing. It

grants the privilege to fly over the territory of

a treaty country without landing.

Member states of the International Air

Services Transit Agreement are granting this

freedom (as well as the Second Freedom) toother member states,subject to the transiting

aircraft using designated air routes


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Freedom 2

It was also a technical freedom. The right to

stop in a country for refueling or maintenance

on the way to another, without transferring

passengers or cargo.


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Freedom 3

It was the First Commercial Freedom. The

right to carry passengers or cargo from one's

own country to another.


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Freedom 4

The right to carry passengers or cargo from

another country to one's own.

Third and fourth freedom rights are almost

always granted simultaneously in bilateral

agreements between countries.


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Freedom 5

It is also called a connecting flight. The right to carry

passengers from one's own country to a second country, and

from that country to a third country. An example of this could

be Emirates Airlines flights originating in Dubai, then going on

to Bangkok, and then from Bangkok to Sydney, where ticketscan be sold on any or all sectors.

Two sub-categories exist. Beyond Fifth Freedom allows the

right to carry passengers from the second country to the third

country. Intermediate Fifth Freedom allows the right to carrypassengers from the third to the second country.


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The Silk Road extending from Southern Europe through Arabia, Somalia, Egypt,

Persia, Pakistan, India, Bangladesh, Java and Vietnam until it reaches China.

Land routes are red, water routes blue


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Freedom 6

The right to carry passengers or cargo from a second country

to a third country by stopping in one's own country.

Cathay Pacific Airways, Thai Airways, Malaysia Airlines,

Singapore Airlines and other airlines in Asia use sixth-freedom

rights extensively to fly passengers between Europe and

Australasia. Likewise, American Airlines connects passengers

from Europe and Asia to other countries in the Americas via

U.S. ports, and British Airways commonly tickets passengers

from America to Asia via London. Icelandair sells ticketsbetween Europe and North America via Iceland, Finnair sells

tickets from North America to Asia via Helsinki.


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The Kangaroo Route traditionally refers to air routes flown by Qantas between the

countries of Australia and the United Kingdom, via the Eastern Hemisphere.


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Freedom 8

The right to carry passengers or cargo

between two or more points in one foreign

country.

The eighth freedom is also known as

cabotage, and is extremely rare outside of

Europe.

The main real life example of eighth-freedom

rights is the European Union, which has

granted such rights between all of its member

states.


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Freedoms of the air


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Determine the DEMANDS

Passenger Demand:

How many?

How many seats available?

The kind of aircraft to be used?

The kind of facilities needed? (i.e., catering,

baggage handling, airport facilities)

Fuel:

How much is the consumption?

How far is the journey?


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Determine YOUR CAPACITY

Cabin Crews

Facilities-Airport services

Ground Handling-MRO


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Determine the COSTS

Remember the categories of costs in airline

business?

Two major costs

Direct, indirect and non-operating costs

Major and unpredictable costs


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DIRECT COSTS

Expenses associated with and dependent on

the type of aircraft being operated, including

all flying expenses such as

Flying operations costs

Flight crew expenses

Fuel and oil

Airport and en route charges Aircraft insurance costs

Other flight-operations expenses

MRO costs


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INDIRECT COSTS

Those costs that will remain unaffected by a

change of aircraft type because they are not

directly dependent on aircraft operations such

as

Station and ground expenses

Reservations, sales and promotional costs

General and administrative costs


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Non-operating costs

Those expenses and revenues not directly

related to the operation of an airlines own

air transportation services like

Gains or losses raising from the retirement of

property or equipment

Interest paid on loans, banks or deposits

Gains or losses raising from an airlinesaffiliated companies

Direct gov. subsidies and payments


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Costs for Cargo Airline

Commodities

Containers (if any)

MRO (Overnight)

Fuel

Crew Expenses (Pilot and Co-Pilot)- Lesser

than passenger airline


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PROFITS GAIN

Service charge

Ticket Pricing

Destination

Fuel

Seat

Catering

Insurance

Airport Tax


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Example of CalculationsCOSTS PROFITS

DIRECT COSTS

Fuel Fuel Charge

Labor

MRO MRO Charge

Ground Handling Baggage HandlingAirport Charges Airport Tax

Insurances Passenger Insurance

INDIRECT COSTS

General and administrative costs Service Charge

Flight planning and weather Service Charge

Reservations, sales and promotional costs Service Charge

TOTAL =A TOTAL =B

TOTAL PROFITS: B A= C


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Exercises (Quiz 5)

Airline Route Planning deal with theapplication of forecasting method in

determining the feasibility of a route of one

flight from one destination to another.

Discuss in your own words the Freedomsof the air and provide a route example at

each freedoms.

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