discussion on cost reduction strategies through ground handling
TRANSCRIPT
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