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A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
A Regional Airline interconnecting the Middle East
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A Regional Airline interconnecting the Middle East

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This presentation address the main challenges for airline, Decided the Right Aircraft capacity for point to point airline operating Model, and profit maximization for multi stops operating airline …

This presentation address the main challenges for airline, Decided the Right Aircraft capacity for point to point airline operating Model, and profit maximization for multi stops operating airline model using the concept of optimization ( U curve Concept )

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  • 1. A Regional Airline interconnecting the Middle East Mohammed Salem Awad Senior Consultant Felix Airways 2 nd -4 th Nov. 2009 Amman Jordan
  • 2. Outline <ul><li>Introduction </li></ul><ul><li>Lessons learnt from a successful low cost airline. </li></ul><ul><li>Doing Business Right – Domestic – Regional – LCC !!!!!!!! </li></ul><ul><li>Middle East Competitive Environments </li></ul><ul><li>Aircraft Manufacturer Costs </li></ul><ul><li>Operators Cost Experience </li></ul><ul><li>Evaluation of the Demand Pattern </li></ul><ul><li>Fleet Management Strategy </li></ul><ul><li>Summary </li></ul>
  • 3. Introduction <ul><li>Felix Airways – Background </li></ul><ul><ul><li>Started : Oct 2008 </li></ul></ul><ul><ul><li>Network : Domestic Operation </li></ul></ul><ul><ul><li>Fleet : 2 CRJ 200 , 2 CRJ 700 </li></ul></ul><ul><li>Challenges and Threats : </li></ul><ul><ul><li>Yemen Economy – PPP – GDP </li></ul></ul><ul><ul><li>Competition with Land Transportation Companies </li></ul></ul><ul><ul><li>Yemenia – Operation </li></ul></ul><ul><ul><li>World Financial Crisis </li></ul></ul><ul><ul><li>Low Domestic Yield </li></ul></ul>
  • 4. Lessons Learnt <ul><li>Lessons Learnt from a Successful Low Cost Airlines </li></ul><ul><ul><li>Economy of Scale : </li></ul></ul><ul><ul><ul><li>Doing the business in large scale this will derive the cost down </li></ul></ul></ul><ul><ul><li>Sale Concentration on Aircraft and not passengers only </li></ul></ul><ul><ul><ul><li>The philosophy of LCC is to gain as much as you can of revenue per Aircraft. </li></ul></ul></ul><ul><ul><li>Developing Multi Hubs Operation </li></ul></ul><ul><ul><ul><li>To Over ride the restriction of long haul operation LCC, They develop a multi hubs in their regions </li></ul></ul></ul><ul><ul><li>Package Business Concept – A series Business Chain. </li></ul></ul><ul><ul><ul><li>Earning form airlines is too low, so travelling act as business tool to derive the other business </li></ul></ul></ul><ul><ul><ul><li>As Hotels, Travel Agencies Tours, Truism, cars, </li></ul></ul></ul>
  • 5. Doing Business Right <ul><li>Doing Business Right – Domestic – Regional – LCC </li></ul><ul><ul><li>Felix Airways: </li></ul></ul><ul><ul><ul><li>Started As Domestic Operation – Low yield environment </li></ul></ul></ul><ul><ul><li>Changing In the Strategy : </li></ul></ul><ul><ul><ul><li>Adapting the right model </li></ul></ul></ul><ul><ul><ul><li>Addressing Regional Operation </li></ul></ul></ul><ul><ul><ul><li>Minimizing the effect of World Financial Crisis </li></ul></ul></ul><ul><ul><ul><li>Tracking High Yield Routes </li></ul></ul></ul><ul><ul><ul><li>Operate to Secondary Airports </li></ul></ul></ul>
  • 6. Middle East Competitive Environments <ul><li>Surviving in the Middle East Competitive Environments </li></ul><ul><ul><li>Positioning the company in the Market </li></ul></ul><ul><ul><li>Enhancing the partnership with Yemenia </li></ul></ul><ul><ul><li>Support liberation and deregulation in the region in a fair mutual business. </li></ul></ul><ul><ul><li>Out sourcing the most costly business parts to achieve more effective results. </li></ul></ul><ul><ul><li>Addressing the profitable segments. </li></ul></ul><ul><ul><li>Encourage innovation and support positive ideas. </li></ul></ul>
  • 7. Aircraft Manufacturer Costs <ul><li>Typical Aircraft Manufacturer Costs </li></ul>who is right ?
  • 8. Aircraft Manufacturer Costs <ul><li>Cost per trip and Cost per seat Matrix </li></ul>Profit and Market Opportunity Matrix Vs
  • 9. Aircraft Manufacturer Costs Profit and Market Opportunity Matrix ( Yemenia and Felix airways experience ) Assign the Right Aircraft Operate the most profitable Route
  • 10. Operators Cost Experience <ul><li>Operators Cost Experience </li></ul><ul><li>getting the right cost picture ! </li></ul><ul><li>Studying Airlines having same type of Aircraft. </li></ul><ul><li>In case of different fleet Situation, reflect the Max and Min Fleet Capacities. </li></ul>
  • 11. Evaluation of the Demand Pattern <ul><li>Evaluation of the Demand Pattern </li></ul><ul><ul><li>Consider the travelling Demand Pattern of SAH-ADE Sector on daily bases for one week. </li></ul></ul>90 Seat 180 Seat
  • 12. Evaluation of the Demand Pattern <ul><li>Evaluation of the Demand Pattern </li></ul><ul><ul><li>In 50-120 Seat Market :( Domestic Market ) Regional Aircraft can meet the demand fairly but if the demand is high, higher aircraft capacity is preferred. </li></ul></ul><ul><ul><li>If Higher aircraft capacity used, it will subjected to low load factor with a higher respective cost. </li></ul></ul><ul><ul><li>In 100-220 Seat Market : ( Regional Market ) aircraft of A320/B737NG can be fit fairly to meet this demand pattern, </li></ul></ul><ul><ul><li>If lower aircraft capacity used, it will subjected to high load factor with high frequencies, leading to increase the variable cost. </li></ul></ul>How to adapt the Right Demand Pattern
  • 13. Evaluation of the Demand Pattern <ul><li>U Curve Technique </li></ul>
  • 14. Evaluation of the Demand Pattern <ul><li>Optimization in Aviation – </li></ul><ul><ul><li>U Curve Technique </li></ul></ul><ul><ul><ul><li>Number of Seats of Aircraft: </li></ul></ul></ul>
  • 15. Evaluation of the Demand Pattern <ul><li>U Curve Technique </li></ul>
  • 16. Evaluation of the Demand Pattern <ul><li>By Using U Curve Technique </li></ul>Optimum Operating Curve
  • 17. Evaluation of the Demand Pattern <ul><li>Evaluation of the Demand Pattern ( Domestic ) </li></ul><ul><ul><li>For 70 – 100 Seat the typical cost of ASK = 0.022 USD </li></ul></ul>
  • 18. Evaluation of the Demand Pattern <ul><li>Evaluation of the Demand Pattern ( Regional ) </li></ul><ul><ul><li>For 120 – 170 Seat Market the typical cost of ASK = 0.02 - 0.06 USD </li></ul></ul>
  • 19. Fleet Management Strategy <ul><li>Fleet Management Strategy ( Point to point Model ) </li></ul><ul><ul><li>Fleet Standardization and Commonality. </li></ul></ul><ul><ul><li>Medium Range and Modern One </li></ul></ul><ul><ul><li>One Set Configuration. </li></ul></ul>
  • 20. Summary <ul><li>In point to point operating model, Airline can be define by three factors : Passengers, Fare and Distance, While Cost is implemented as step function. </li></ul><ul><li>Optimum operating Curve is the only picture that painted by Airline figures, it is the hidden thumb that define the airline. </li></ul><ul><li>Felix Airways examine these methods to derive and control the costs by Top – Bottom approach. </li></ul><ul><li>Airlines interesting to minimise costs, but experience shows, they should addressing profit, to meet their obligations. </li></ul>
  • 21. <ul><li>Contact </li></ul>[email_address]
  • 22. <ul><li>Thank You </li></ul>

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