Reading In The Future, it is a series of forecasting presentations, concerning airlines, most of the airlines addressing their performance of current month for current year to the same month of the previous year, i.e is month by month comparison by looking backward, no target setting/ level to achieve. Today the story is different and the approach is unique, airlines can define their seasonality patterned and consequently set their targets in future, and it is your decision to look backward and stick on it, or move onward by setting your targets and try to achieve them..

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

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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

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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

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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

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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

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Errors Vs KPIs

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Errors Vs KPIs

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FORECASTING

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Basic concept of forecasting Model

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Basic concept of forecasting Model
Directional Displacement

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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)

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Traffic

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Capacity

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Evaluation Actual vs Forecast

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Traffic

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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 %

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

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

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Traffic - Canada

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Capacity - Canada

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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 %

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Market Segments – Traffic - 2015

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Market Segments – Capacity - 2015

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Results

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Welcome In The Club
Thanks !

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