The document presents a comprehensive analysis of future airline performance, focusing on market segmentation, key performance indicators (KPIs), and forecasting models using a case study of Air Canada. It highlights the importance of traffic (RPM), capacity (ASM), and load factors in evaluating airline efficiency, with a predictive outlook for 2015 suggesting a slight increase in ASMs and an expected load factor of 83%. Additionally, the study emphasizes the significance of establishing a KPI policy to guide airline management in setting targets based on historical data trends.

1. Future Performance
Reading In
The Future (2)
Case Study
83 %
Drive For Excellence
Mohammed Salem Awadh
Aviation Consultant

2. Future Performance
“Excellence is never an accident. It is always
the result of high intention, sincere effort, and
intelligent execution; it represents the wise
choice of many alternatives - choice, not
chance, determines your destiny.”
― Aristotle
Future Performance

3. Future Performance
Outline 1/2
• Airline Market Segmentation
• Key Performance Indicators For Airlines
• Errors Vs KPIs
• Forecasting
– Basic concept of forecasting Model
– Forecasting – Trend vs. Seasonality
– Model Constrains
– Max.& Min Signal Tracking Analysis

4. Future Performance
Outline 2/2
• Case Study : ( Air Canada )
• Basic Data Base ( Three years data )
• Forecasting
– Traffic 2014
– Capacity 2014
– Evaluation - Actual vs Forecast
– Traffic 2015
– Capacity 2015
– Expected Load Factor 2015
• Analysis
• Summary

5. Future Performance
Airline Market Segmentation
To facilitated business, the business units
define by their Market Segments, Air Canada
addressing about 5 regions / areas ,
As , CANADA - domestic, US Transborder,
Atlantic, Pacific, Latin America and Caribbean.
Defining by two main performance factors,
RPM, and ASM.
So most of airlines working on a clear
objectives and that’s come with clear targets
which lead us to set a clear picture of
forecasting process.
Based on that, our objective is to develop a
clear massage for top managements for the
key performance figures of the airline, not just
to compare month by month approach but to
develop the right path ( time series ) in the
future to set the right targets which
consequently develop K.P. I for the airlines

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K.P.I For Airlines
• Key Performance Figures
• Capacity = ASM( available seat miles )
• Traffic = RPM( revenue passenger miles )
• Load Factor ( LF ) =
RPM/ASM

7. Future Performance
K.P.I For Airlines
• K. P. I for Lufthansa Group:
Each Airline has its own
KPIs policy, ASM , RPM &
L/F are main measuring
KPIs for Air Canada

8. Future Performance
Errors Vs KPIs

9. Future Performance
Errors Vs KPIs

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FORECASTING

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Basic concept of forecasting Model

12. Future Performance
Basic concept of forecasting Model
Directional Displacement

13. Future Performance
Basic concept of forecasting Model
Evaluation Forecasting

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Forecasting – Trend vs. Seasonality
Trend Forecasting
Tell us in which direction (Growth) of the
historical data, and usually is a long term
forecast.
Seasonal Forecasting
Tell us the Seasonal, Cyclic shocks, we
used it to define the forecasting Pattern
Trend vs Seasonal Forecasting
Forecasted Year of TREND
= Sum of 12 forecasted Seasonal Months
for same year,

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Model Constrains
 Two Main Constrains to get a fair model:
R2 = Coef. Of Determination T. S. = Tracking Signal
R2 > 80%
AND
-4 < T.S.< 4

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Max.& Min Signal Tracking Analysis

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Case Study :

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Basic Data Base ( Three years data: 2012-2014)
• 36 months data files

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Forecasting
Air Canada (2014)
– Traffic - RPMs
– Capacity – ASMs
– Load Factor
– Evaluation (2014)
Air Canada (2015)
– Traffic - RPMs
– Capacity – ASMs
– Load Factor
– Forecast ( 2015)

20. Future Performance
Traffic

21. Future Performance
Capacity

22. Future Performance
Evaluation Actual vs Forecast

23. Future Performance
Traffic

24. Future Performance
Capacity

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Expected Load Factor -2015

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Analysis
– Three Parameters Air Canada Addressing their performance
– Traffic : - in terms of Revenue Passengers Miles ( RPMs )
– Capacity :- in terms of Available Seat Miles (ASMs)
– Load Factor :- it is the outcome of RPM/ASM.
– The period of 2014 is forecasted for the propose of
evaluation.
– The study shows, there is an increase during June- August
period (2015 ) for ASMs, above the forecasted trend model,
this is may be due to increase in frequencies, or introducing
new fleet, or flying to new destinations.
– The outcomes are fairs with very high Coefficient of
Correlations.

27. Future Performance
Summary
• Most of Investors in Airline Industry are concerned for the
performance factors that’s Traffic and Capacity , RPM ,ASM ,
and Load Factor. They evaluate them by comparing their
values in past according to month by month approach.
• This presentation tilling us the future patterns for these
factors, which consequently we can develop and forecast the
expected Load Factor.
• This also will help the airline to set their targets, and
developed the right KPI policy for measuring airline
performance.
• The data is fairly fitted, with a minimum errors.
• The results shows that there will be slight increase in ASMs
for 2015. which reflects the higher frequencies , or
introducing a new fleet or opening new destinations.
• The expected performance for 2015 ( load factor ) = 83 %

28. Future Performance
Not Yet
"Prediction is very difficult, especially if it's about
the future."
-Nils Bohr,
Nobel laureate in Physics

29. Future Performance
Segment Forecast
There five major traffic segments for
Air Canada :
• Canada
• US – Transborder
• Atlantic
• Pacific
• Latin America & Caribbean

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Traffic - Canada

31. Future Performance
Capacity - Canada

32. Future Performance
Load Factor – Canada – 83.40 %

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Traffic – US Transborder

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Capacity - US Transborder

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Load Factor – US Transborder – 84.22 %

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Traffic - Atlantic

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Capacity - Atlantic

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Load Factor – Atlantic – 81.11%

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Traffic – Pacific

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Capacity – Pacific

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Load Factor – Pacific - 85.02%

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Traffic - Latin America & Caribbean

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Capacity - Latin America & Caribbean

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Load Factor Latin A. & Caribbean 84.91 %

45. Future Performance
Market Segments – Traffic - 2015

46. Future Performance
Market Segments – Capacity - 2015

47. Future Performance
Results

48. Future Performance
Welcome In The Club
Thanks !

49. Future Performance
Contact
• Mohammed Salem Awad
• Chairman Adviser – Yemenia
• Tel: 00967 735222692
• Email: mohammed.hadi@yemenia.com
smartdecision2002@yahoo.com