From Lose To Profit It is a simulate case from Air To Land, three technique are applied 1- U curve Technique to define the right capacity 2- Defining the Right Fare Strategy. 3- Profit Maximizing Aden Local Network is addressed in this study, many sectors are make profits, others are not. Hope to enjoy

1. From Lose to Profit
By :
Mohammed Salem Awad
Consultant

2. Outlines
1- Introduction
2- Defining The Problem
3- Sequence of the
analysis.
4- Data Collections.
5- Defining Demand
6- Fleet Repositioning
7- Fare Analysis
8. Competitive Fare Strategy.
9. Redefining Opt. Network
10. Profit Maximization
11. Redefining Seat Config.
12. Summary
13. Source
14. Contact

3. Introduction
Al-Mukalla

4. Defining The Problem

5. Defining The Problem

6. Sequence of The Analysis
1. Point To Point Approach - to define the right seat
bus configuration.
2. Multi stops Approach – to improve the network and
Maximize the profit.
3. In

7. Data Collection
Data Collection:

8. Defining Demand

9. U Curve Technique

10. Input Data
Distances , Passengers and Fares

11. Optimum Operating Curve
Typical Seat Configuration Vs Typical Operating Cost

12. Final Outcome
1. Typical Seat Configuration ( 50 seat )

13. Fleet Repositioning
Using step
function idea,
we draw and
develop an
optimum
operating
curve, that
reflects all the
level of costs.

14. Fare Analysis

15. Mapping Analysis
Fare Analysis :
Based on the U curve analysis and by manipulate the input
fares by percentage the table will reflect two possible out comes
that
1- based on minimize the cost, the program will act to change
the values of frequencies, so to reduce the impact of increasing
cost , so it will reduce to 1. ( RED COLOR )
2- If the values of fare percentage has positive impact on cost,
this will lead to increase the numbers of frequencies which
represented by GREEN COLOR
Four routes are out of control and above 100 % Fare
percentages ( indicated by long red lines )

16. Setting Fare Strategy

17. Setting Fare Strategy
In the previous slide, the analysis shows many of the routes are
subjected to loses, so will develop a competitive fare strategy to
response the competitive market fare. The analysis will be in two
directions
- Omitting losing routes and develop a profitable Margin of the Fare
Structure. ( 5 %)
- Dealing these loses routes with multi-stops operation approach,
so these routes are subsides by another profitable routes ( optimum
network slide )
Which shows we can reduce the overall percentage Fare structure
by 5 % without effecting our profit margin (off course will reduce but
still we are in the profit margin range). The company can set up an
individual fare policy, and apply the right fare until it phase out the
other competitors.

18. Opt. Network & Profit Max.

19. Profit Maximization
In Fare Analysis slide some sectors profitable and the other
sectors are unprofitable, we apply 0.95 fare competitive strategy
for profitable sectors ( SANA'A-TAIZ , SANA'A-ADEN , TAIZ-ADEN
, ADEN-MUKALLA ) while Fare of unprofitable sectors is
unchanged i.e remain at the level Market Fare as shown by Yellow
strips ( SANA'A-MUKALLA , TAIZ-MUKALLA).
So by considering a 45 seat and optimum cost at 0.0125
cent/ASK, While the demand of unprofitable routes remain
unchanged, but demand of profitable routes can be adjusted to
take only the share that maximize the profits, in multi stops
operation while the remaining profitable routes can be treated as
direct operating service between the cities (point to point approach
– as it is a profitable routes)

20. Profit Maximization
Even SANA'A – MUKALLA and TAIZ – MUKALLA are unprofitable
sectors, but the overall results of Multi stops operation is profitable
one = 18,830 USD.
Also the cost of one trip by this case = total cost / no. of frequency
= (171217)/(291) = 588.375 USD
And that is done at 34 (inch) pitch (distance between the heads of
two seats in sequences).
While the load factors of the cabin of the bus is always greater
than 90 %. i.e the cabin load factor ( annual operation ) =
SANA'A-TAIZ = 97 %
TAIZ-ADEN = 99 %
ADEN-MUKALLA = 93 %

21. Redefining Seat Configuration

22. Summary
The problem of local transportation is solved by implementing and
defining the right assets to operate and designing a profitable
operating network, based on two approaches or scenarios
First : point to point and
Second : multi stops operation,
bearing in minds the cost driver in a transportation situation which
is ASK ( Available Seat Kilometer ), a multi stop operation a
marginal decision factors play an important rule in maximizing the
profit i.e seat allotment ratio, which is based on demand , market
fare and cost, deriving to get a maximum cabin load factor with a
high yield.

23. Summary
While in point to point approach , companies can easily positioning
their fleet by using optimum operating curve to achieve high
performance and they improve it by targeting the cost.
Also a competitive market fare strategy is developed based on U
curve techniques and mapping a frequency factor to define
Favorite and Un-favorite percentage range of Market fare which
consequently defining the profitable and loses routes in the
network.

24. Source
The study can be
get on the web
from:

25. Welcome In The Club
Thanks !

26. Contact
 Mohammed Salem Awad
 Consultant
 Tel: 00967 735222692
 Email: mohammed.hadi@yemenia.com
smartdecision2002@yahoo.com