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Unit - 2

This document discusses various topics related to airline economics, including forecasting, route analysis, fleet planning, budgeting, cost planning, and passenger fares. It explains that forecasting helps airlines quantify future demand and is important for short, medium, and long term planning. Route analysis considers factors like costs and regulations to maximize profits from airline networks. Fleet planning involves selecting aircraft that meet needs based on markets, fuel efficiency, and other factors. Budgeting and cost planning are important to minimize expenses and maximize revenue. The document also outlines different types of passenger fares and factors that affect their costs.

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52 views

Unit - 2

This document discusses various topics related to airline economics, including forecasting, route analysis, fleet planning, budgeting, cost planning, and passenger fares. It explains that forecasting helps airlines quantify future demand and is important for short, medium, and long term planning. Route analysis considers factors like costs and regulations to maximize profits from airline networks. Fleet planning involves selecting aircraft that meet needs based on markets, fuel efficiency, and other factors. Budgeting and cost planning are important to minimize expenses and maximize revenue. The document also outlines different types of passenger fares and factors that affect their costs.

Uploaded by

sero
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Unit – 2 : Airline Economics

Forecasting
 Expectations, predictions, projections.
 Forecasting is an attempt to quantify demand
in a future time period (quantification -
revenue).
 It is an indispensible part of planning.
 Propose of fore casting:
 Short term forecasting – competitive situation based on
day to day, month or year
 Medium term forecasting – rote decisions for 5years
 Long term forecasting – fleet planning and financial
commitments for 5-10yrs
Cont..
i. Analysis
ii. Planning
iii. Control
 Aircraft evaluation:
◦ Design characteristics
◦ Physical performance (technical parameters)
◦ Maintenance needs
◦ Acquisition cost
◦ Operating economics
Airline Rote analysis
 Provides rote planning w.r.t other airlines
 Maximize airline routes and network
 Improve traffic system
 Enhancing airline economics and
operational cost
Factors affecting routes
 Operational cost (maintenance cost)
 Management system (airline management)
 Financial (or) Economic (owner or share
holders decision)
 Regulatory Authority (political or
geographical locations)
Factors governing route analysis
 Route forecasting and economics
 Route profitability analysis
 Rote optimization
 Rote licensing
Principles of Airline Economics
 Airline production (seats-km)
 Load factor (filled seats / flight capacity)
(passenger-km to seats-km)
 Operating cost (direct and indirect)
 Flight operation
 Fuel cost
 Aircraft Maintenance and overhaul
 Aircraft financing
 Payload range
 Block speed
Fleet Planning
 Selecting the right aircraft or market
 Do exiting aircrafts needs to be replaced?
 What plan does the airline have to
expand service?
 How much fuel do they burn per mile?
 How much are maintenance expenses?
 How much people are in need of their
service?
Fleet planning (or) Aircraft Selection
process
 Information needed
 Current resources
 Corporate objectives
 Projected industry environments
 Marketing strategy
 Fleet planning model
 System constraints
 Internal – airport facility, runway, gate and
terminal capacities
 External – maintenance, crew training
Budgeting
 To minimize airline cost where money
spends more and maximize the airlines
revenge.
 Propose of budgeting
 Forecasting airline’s economy
 Actual financial conditions
 How to do budgeting
 Budget for infrastructure
 Airline corporate budget
 Revenue budget
 Expenditure budget
Cost planning
 Process of identifying the constriction cost
associated with an investment
 Cost management cycle

Planning and
preliminary
budgeting

Post
construction Pre-design and
programming

Design and
construction
Benefits of cost planning
 Greater satisfaction with end results
 Better vale for money
 Improved building quality and
performance
 Budget and vale accountability
 Problems identified and solved earlier
 Early identification of high cost elements
Passenger Fare and Tarrifs
 Structure of passenger fares
 Fares are negotiated each year by tariff
co-ordination conference of IATA.
 Types of international tarrifs
 First class fares
 Business class fares
 Economic class fares
 Preferential fares
 Promotional fares
Factors affecting cost of passenger
fares
 Purchase rate
 Class
 Destination
 Flight date and time
 Fuel cost
 Competition fares
 Special fares
 Hub system

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