reading in the future air canada

Future Performance

Reading In The Future (2)Case Study

83 %

Drive For Excellence

Mohammed Salem AwadhAviation Consultant

Future Performance

“Excellence is never an accident. It is always the result of high intention, sincere effort, and intelligent execution; it represents the wise choice of many alternatives - choice, not chance, determines your destiny.”

― Aristotle

Future Performance

Future Performance

Outline 1/2

• Airline Market Segmentation• Key Performance Indicators For Airlines• Errors Vs KPIs• Forecasting – Basic concept of forecasting Model– Forecasting – Trend vs. Seasonality– Model Constrains– Max.& Min Signal Tracking Analysis

Future Performance

Outline 2/2

• Case Study : ( Air Canada ) • Basic Data Base ( Three years data )• Forecasting

– Traffic 2014– Capacity 2014– Evaluation - Actual vs Forecast– Traffic 2015 – Capacity 2015– Expected Load Factor 2015

• Analysis• Summary

Future Performance

Airline Market Segmentation

To facilitated business, the business units define by their Market Segments, Air Canada addressing about 5 regions / areas , As , CANADA - domestic, US Transborder, Atlantic, Pacific, Latin America and Caribbean. Defining by two main performance factors, RPM, and ASM.So most of airlines working on a clear objectives and that’s come with clear targets which lead us to set a clear picture of forecasting process. Based on that, our objective is to develop a clear massage for top managements for the key performance figures of the airline, not just to compare month by month approach but to develop the right path ( time series ) in the future to set the right targets which consequently develop K.P. I for the airlines

Future Performance

K.P.I For Airlines

• Key Performance Figures• Capacity = ASM( available seat miles )

• Traffic = RPM ( revenue passenger miles )

• Load Factor ( LF ) = RPM/ASM

Traffic

Capacity

Targets & KPIs

Load Factor

Future Performance

K.P.I For Airlines• K. P. I for Lufthansa Group:

Each Airline has its own KPIs policy, ASM , RPM & L/F are main measuring

KPIs for Air Canada

Future Performance

Errors Vs KPIs

Future Performance

Errors Vs KPIs

Future Performance

FORECASTING

Future Performance

Basic concept of forecasting Model

Future Performance

Basic concept of forecasting Model

Directional Displacement

Future Performance

Basic concept of forecasting Model

Evaluation Forecasting

Future Performance

Forecasting – Trend vs. Seasonality

Trend ForecastingTell us in which direction (Growth) of the historical data, and usually is a long term forecast.Seasonal ForecastingTell us the Seasonal, Cyclic shocks, we used it to define the forecasting Pattern

Trend vs Seasonal ForecastingForecasted Year of TREND

= Sum of 12 forecasted Seasonal Months for same year,

Future Performance

Model Constrains

Two Main Constrains to get a fair model:

R2 = Coef. Of Determination T. S. = Tracking Signal

R2 > 80%

AND

-4 < T.S.< 4

Future Performance

Max.& Min Signal Tracking Analysis

Future Performance

Case Study :

Future Performance

Basic Data Base ( Three years data: 2012-2014)

• 36 months data files

Future Performance

ForecastingAir Canada (2014) – Traffic - RPMs– Capacity – ASMs– Load Factor– Evaluation (2014)

Air Canada (2015)– Traffic - RPMs– Capacity – ASMs– Load Factor– Forecast ( 2015)

Future Performance

Traffic

Future Performance

Capacity

Future Performance

Evaluation Actual vs Forecast

Future Performance

Traffic

Future Performance

Capacity

Future Performance

Expected Load Factor -2015

Future Performance

Analysis – Three Parameters Air Canada Addressing their performance – Traffic : - in terms of Revenue Passengers Miles ( RPMs )– Capacity :- in terms of Available Seat Miles (ASMs)– Load Factor :- it is the outcome of RPM/ASM.– The period of 2014 is forecasted for the propose of evaluation.– The study shows, there is an increase during June- August

period (2015 ) for ASMs, above the forecasted trend model, this is may be due to increase in frequencies, or introducing new fleet, or flying to new destinations.

– The outcomes are fairs with very high Coefficient of Correlations.

Future Performance

Summary• Most of Investors in Airline Industry are concerned for the

performance factors that’s Traffic and Capacity , RPM ,ASM , and Load Factor. They evaluate them by comparing their values in past according to month by month approach.

• This presentation tilling us the future patterns for these factors, which consequently we can develop and forecast the expected Load Factor.

• This also will help the airline to set their targets, and developed the right KPI policy for measuring airline performance.

• The data is fairly fitted, with a minimum errors.• The results shows that there will be slight increase in ASMs for

2015. which reflects the higher frequencies , or introducing a new fleet or opening new destinations.

• The expected performance for 2015 ( load factor ) = 83 %

Future Performance

Not Yet"Prediction is very difficult, especially if it's about the future."

-Nils Bohr, Nobel laureate in Physics

Future Performance

Segment Forecast

There five major traffic segments for Air Canada :• Canada • US – Transborder• Atlantic • Pacific• Latin America & Caribbean

Future Performance

Traffic - Canada

Future Performance

Capacity - Canada

Future Performance

Load Factor – Canada – 83.40 %

Future Performance

Traffic – US Transborder

Future Performance

Capacity - US Transborder

Future Performance

Load Factor – US Transborder – 84.22 %

Future Performance

Traffic - Atlantic

Future Performance

Capacity - Atlantic

Future Performance

Load Factor – Atlantic – 81.11%

Future Performance

Traffic – Pacific

Future Performance

Capacity – Pacific

Future Performance

Load Factor – Pacific - 85.02%

Future Performance

Traffic - Latin America & Caribbean

Future Performance

Capacity - Latin America & Caribbean

Future Performance

Load Factor Latin A. & Caribbean 84.91 %

Future Performance

Market Segments – Traffic - 2015

Future Performance

Market Segments – Capacity - 2015

Future Performance

Results

Future Performance

Welcome In The Club

Thanks !

Future Performance

Contact

• Mohammed Salem Awad • Chairman Adviser – Yemenia • Tel: 00967 735222692• Email: mohammed.hadi@yemenia.com smartdecision2002@yahoo.com