discussion on cost reduction strategies through ground handling

Discussion on Cost Reduction Strategies through

Ground HandlingTargeting Low Cost Airlines

Prepared for

Ground Handling Conference

By

Soumyajyoti Basu

(Consultant)

Frost & Sullivan Aerospace & Defense Practice

March 23, 2010

Role of Ground Handling in Cost Reduction

Ground-Handling: A case of optimization

Boarding/De-boarding

Baggage Handling

Fuel Economy

Push Back Operation & Stairs

Table of Contents

Cost

Opti

miz

ati

on in G

round H

andlin

g

11

22

33

44

55

66

Cost of Lease/Purchase

Allocation to PnL

Interest Service/Insurance

CostCost of Fuel

Maintenance Cost

Salary Cost (Crew)

Fees in•Airport Charges• Air Traffic Control• Ground Handling

Hardly any difference between Legacy &

LCC

Small Difference

Ground Handling Costs contributes a very small component of overall operating cost

Would strategizing ground handling operation really help the Low Cost Carriers

Role of Ground Handling in Cost Reduction

Customer

Process

Interfaces

One Product: Journey from point A to point B

Pre Sales&

Sales Departure Flight Arrival

After SalesService

Airline

Travel AgencyAirline

(Internet)

AirlineAirport

Ground HandlingRegulatory BodyAir Traffic Control

Airlines Customer Perspective

Direct Operating Cost Per Passenger per Unit Flight-Time

Reduction in turnaround time, through faster ground handling, increases utilization

Increasing Ground Handling Time

Decreasing Flight Time

• Increased Passengers are obtained through

reduced fare

• Decreasing Ground Handling time would help in

reaching scale of operation thus reducing DOC.

• The reduction should aim at a certain threshold

time beyond which the reduction does not have

much affect.

• Short haul flight has lesser utilization hence

ground handling becomes more important.

• Increased Passengers are obtained through

reduced fare

• Decreasing Ground Handling time would help in

reaching scale of operation thus reducing DOC.

• The reduction should aim at a certain threshold

time beyond which the reduction does not have

much affect.

• Short haul flight has lesser utilization hence

ground handling becomes more important.

Role of Ground Handling in Cost Reduction (contd ..)

The aim to reduce cost is about optimizing the Ground Handling process to reduce turnaround time

Fueling

Catering

• Process flow needs to be optimized, keeping boarding and de-boarding process at the end.

• In low cost travel some of the processes would be optional like fueling and catering which need not be performed at every stop.

• Process like cleaning would be very small in Low cost travel because of less food on board???

• Process like push back operation adds redundancy in the whole process which can or should be done away with.

Ground Handling: Typical Case of optimization

Aim is to minimize K

  One Door Two Door

K (secs) 8 5.3

Minimizing K

• Use of third door: Typically for an 180 seats A320 aircraft, can provide K = 4 seconds, boarding and 7 seconds de-boarding which means it saves around 10 minutes in boarding de-boarding process over a two door process

• Optimized seating policy:

• Free seating the best procedure???

• What about other chosen methods???

• Wider Doors

• Wider Passage without major modification

De-Boarding

  One Door Two Door

K (secs) 13 9

Boarding

. Route range, capacity, etc should all be considered in tandem in optimizing overall costs

Boarding/ De-Boarding

Baggage Handling

Possibility of Simultaneous loading/unloading Both minimum cost & time are the aim in baggage handling

Power Stow Sliding Carpet

• Possibility of Simultaneous baggage loading/unloading is difficult with the retractable landing gear systems.

• Some smaller aircrafts with tandem landing gears can perform simultaneous loading/un-loading

• However a hanging landing gear increase drag thus increasing fuel burnt & increasing costs. Hence again the question is about optimization.

Fuel Economy

• Center of Gravity position

• The center of gravity of an aircraft should be as aft as possible for lesser fuel burn during take off• Passengers should be seated accordingly

• Taxiing• Using less than the total number of available engines for taxiing. Congested airports mean greater taxi time and hence

much fuel can be saved in this manner

• Auxiliary Power Unit (APU)

• Optimizing between GPU use and APU use in order to save cost• In short haul flights the optimization needs to be done in the options between shutting down the APU altogether and the use

of RTL (Ready to Load Condition)

Fuel Optimization is targeted more on cost and less on turnaround time

Fuel Economy

Push Back/Taxi Operation & Stairs

Push back & Taxiing operation

Stair

A more autonomous aircraft provides more independence in ground handling operation

Airstair Airbridge

Conclusion

It is an optimization process with “no one rule fit all” strategy

While Ground Handling Costs constitute a very small component of overall airline costs, it can have a large scale indirect effect on the same.

Standardization in LCC operation can help standardize the optimization process

Alliances & adoption of International Best Practices would further help in optimization

Soumyajyoti Basu

Consultant

Frost & Sullivan, Kuala Lumpur

Aerospace & Defense Group

+60102181357

soumyajyoti.basu@frost.com