Routes optimization


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Two models are present, the first is point to point model and demonstrated the minimizing cost issue, while the other model is Multi-stops operating model, and it is addressing profit maximization.

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Routes optimization

  1. 1. By : Mohammed Salem Awodh Consultant Asian Aviation Conference Route Optimization And Fleet Management Kuala Lumpur, Malaysia 16-17 March 2006
  2. 2. Outline <ul><li>Program </li></ul><ul><li>Results </li></ul><ul><li>Maximizing Route Profitability. </li></ul><ul><li>Case Study ( Input Data). </li></ul><ul><li>Program. </li></ul><ul><li>Output </li></ul><ul><li>Summary </li></ul><ul><li>Contact </li></ul><ul><li>Introduction </li></ul><ul><li>Industry Review </li></ul><ul><li>Current Network </li></ul><ul><li>Routes Segmentation </li></ul><ul><li>Current Fleet </li></ul><ul><li>Optimization </li></ul><ul><li>Optimization Technique. </li></ul><ul><li>(Point to Point System) </li></ul><ul><li>Case Study ( Input Data). </li></ul>
  3. 3. Industry Review <ul><li>Relative Cost per Trip Vs. Relative Cost per Seat </li></ul>
  4. 4. Industry Review <ul><li>Boeing Analysis </li></ul>Who to believe ? Airbus Analysis ?
  5. 5. Yield Trends Source : Boeing
  6. 6. Distribution of various markets Source : Boeing
  7. 7. Operating Cost per ATK per Airlines SQ BR GA MU CX UA CZ VN NH BA CO DL QF MH JL BI KE CA IB AF LH OZ AA EK Average Stage Length, Km NW Source : Company Reports, IATA, AAPA estimates
  8. 8. Passenger – Cargo IOC Components Source : Air Cargo Operations Cost Data Base - NASA
  9. 9. Cost per ASM for Aircrafts Source : Bhadra, Aircraft Choice Model
  10. 10. Yemenia International Network SANA’A
  11. 11. Routes Segmentation
  12. 12. Optimization <ul><li>To Day – Airlines Need To Reduce Cost </li></ul><ul><li>By Select The Right Capacity </li></ul><ul><li>By Operate At Optimum Frequency </li></ul><ul><li>By Repositioning Their Fleet </li></ul><ul><li> And that can be achieved by </li></ul><ul><li>Optimization Techniques </li></ul><ul><li>For International Network </li></ul><ul><li>Domestic Network </li></ul><ul><li>Cargo Network </li></ul>
  13. 13. Optimization <ul><li>Optimization Problem </li></ul><ul><li>Minimize Cost ( Point to Point system ) </li></ul><ul><ul><ul><li>Allocate Right Capacity </li></ul></ul></ul><ul><li>Maximize Profits ( Hub and Spoke System ) </li></ul><ul><ul><ul><li>Route Profitability Analysis </li></ul></ul></ul>
  14. 14. Optimization <ul><li>Optimization Techniques </li></ul><ul><li>- U Curve Techniques </li></ul><ul><li>- Integer Program / Solver ( Excel ) </li></ul><ul><li>- Lindo Program </li></ul>
  15. 15. Optimization Program <ul><li>A Cost of Offering Service </li></ul><ul><li>B Cost of Losing Opportunity </li></ul><ul><li>C Total Cost </li></ul><ul><li>U Curve Technique </li></ul>Cost A Cost of Offering Service B cost of Losing opportunity C Total Cost SELECTED PARAMETER COST
  16. 16. Optimization Program - Integer Program / Solver ( Excel ) – Right Capacity
  17. 17. Optimization Program <ul><li>Program </li></ul><ul><li>Initial Solution </li></ul><ul><li>Input Data : </li></ul><ul><li>City Pairs - Sector </li></ul><ul><li>Yields </li></ul><ul><li>Actual or Forecasted Demands ( Tones) </li></ul><ul><li>World Wide Cost -ATK </li></ul>Integer Program Model Optimum Curve Solution U curve Techniques
  18. 18. Optimization Program <ul><li>Optimum Solution Curve </li></ul>- Capacity ( Tone ) - Cost per ATK Cost per ATK Capacity ( Tone)
  19. 19. Case Study <ul><li>Yemenia </li></ul><ul><li>- Define Right Freight Capacity that fits the International Routes </li></ul><ul><li>- Operate at Optimum Frequency </li></ul><ul><li>- Positioning the Current Fleet in accordance with the Optimum Solution. </li></ul>
  20. 20. Input Data ( Point to Point) <ul><li>Based on </li></ul><ul><li>Weekly, Monthly, </li></ul><ul><li>or Annually Input. </li></ul><ul><li>Actual Demand </li></ul><ul><li>( Freight ) </li></ul><ul><li>Yield (USD) </li></ul><ul><li>Cost ( USD/ATK) </li></ul><ul><li>Distance (Km) </li></ul>
  21. 21. Program Input Data 100 % LF Integer Program U Curve Tech Right Capacity First Run At 100 % L/F Load Factor Result Right Capacity 
  22. 22. Optimum Freight Capacity at Minimum Cost
  23. 23. Program Input Data 70 % LF Integer Program U Curve Tech Optimum Frqcy Second Run At 70 % L/F Load Factor Result Optimum Frequency 
  24. 24. Program 100 % Load Factor 70 % Load Factor
  25. 25. Program Input Data ATK 1 , ATK 2 , ATK 3 …ATK n (A/C) ? Integer Program U Curve Tech Optimum Solution Curve  Run the Program with step function Developing Optimum Solution Curve Result Position the Fleet
  26. 26. Optimum Solution Curve
  27. 27. Optimum Solution Curve B767-300F
  28. 28. Results From Optimum Solution Curve Three Aircrafts are reflect the best solution for Yemenia Network B767-300 F , MD-11 , DC-10
  29. 29. Yemenia International Network Maximizing Route Profitability SAH-DXB-KUL-CGK
  30. 30. Optimization Program - Maximizing Route Profitability
  31. 31. Input Data <ul><li>Weekly Demand ( Tones) </li></ul><ul><li>Respective Yield </li></ul><ul><li>Cost of Aircraft ( USD/ATK) </li></ul><ul><li>Capacity ( Tones) </li></ul>SAH-DXB-KUL-CGK
  32. 32. Program <ul><li>Aircraft : </li></ul><ul><li>B767-300F </li></ul><ul><li>Cost of Aircraft ( USD/ATK) = 0.24 </li></ul><ul><li>Capacity ( Tones) = 58 </li></ul>
  33. 33. Output
  34. 34. Output
  35. 35. Summary The Right Capacity : The Program runs two times Depending on inputs and constrains used. At the first run it gives the Right Capacity and at the second run it gives Optimum Frequency. The results will clearly show how efficient existing fleets are compared to the ideal results. Route Profitability : Given the results of the above analysis, it shows the best scenario that maximize the profits and the perfect ratio of load factor in Multi stop routes.
  36. 36. Contact Further Information: Mohammed Salem Awad : Tel: 00967 734777518 Email: /art-of-knowledge/