Fleet optimization

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Airlines can be define by a three parameters i.e Passengers, Fares , and Network Distance, yes there another important factor which is cost which can be define as step function to develop the optimum operating curve of the airline

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Fleet optimization

  1. 1. Fleet Planning Strategies To Achieve An Optimal Efficiency Mohammed Salem Awad Senior Consultant Felix Airways Fleet Optimization
  2. 2. Fleet Optimization <ul><li>Outline </li></ul><ul><ul><li>Introduction </li></ul></ul><ul><ul><li>Lessons learnt from a successful low cost airline. </li></ul></ul><ul><ul><li>Impact of contraction of credit Market. </li></ul></ul><ul><ul><li>Optimization in Aviation – U curve Technique. </li></ul></ul><ul><ul><li>Fleet Management Strategy. </li></ul></ul><ul><ul><li>Design an optimal Fleet in point to point operating model. </li></ul></ul><ul><ul><li>Results. </li></ul></ul><ul><ul><li>Summary </li></ul></ul>
  3. 3. Fleet Optimization <ul><li>Introduction </li></ul><ul><ul><li>Evolution of Low Cost Model </li></ul></ul><ul><ul><ul><li>Operate from secondary Airport. </li></ul></ul></ul><ul><ul><ul><li>Higher Aircraft Utilization </li></ul></ul></ul><ul><ul><ul><li>Fast Turnaround </li></ul></ul></ul><ul><ul><ul><li>Short haul point to point </li></ul></ul></ul><ul><ul><ul><li>Standard Fleet with High Seat Density </li></ul></ul></ul><ul><ul><ul><li>Distribution through direct channels </li></ul></ul></ul><ul><ul><ul><li>Simple product </li></ul></ul></ul><ul><ul><ul><li>Highly Incentive Workforce </li></ul></ul></ul>
  4. 4. Fleet Optimization <ul><li>Lessons Learnt from a Successful Low Cost Airlines </li></ul><ul><ul><li>Economy of Scale </li></ul></ul><ul><ul><li>Sale Concentration on Aircraft and not passengers </li></ul></ul><ul><ul><li>Package Business Concept – A series Business Chain. </li></ul></ul>
  5. 5. Fleet Optimization <ul><li>Impact of contraction of Credit Market </li></ul><ul><ul><li>Airlines : </li></ul></ul><ul><ul><ul><li>Forecasted capacities have a negative factor leading to financial losses </li></ul></ul></ul><ul><ul><ul><li>Order of aircrafts blocked, and fail to fulfil the financial commitments </li></ul></ul></ul><ul><ul><ul><li>Consolidation and merge of many airlines. </li></ul></ul></ul><ul><ul><li>Manufactures </li></ul></ul><ul><ul><ul><li>Direct effect on sale performance of aircraft </li></ul></ul></ul><ul><ul><ul><li>Increase of Receivable cycle which impacts the cash flow. </li></ul></ul></ul><ul><ul><li>Leasing Companies : </li></ul></ul><ul><ul><ul><li>Airline looking after short term commitments that offer leasing companies. </li></ul></ul></ul>
  6. 6. Fleet Optimization <ul><li>Aircraft Cost By Manufacturers </li></ul>
  7. 7. Fleet Optimization <ul><li>Cost By Operators ( Experience ) </li></ul>
  8. 8. Fleet Optimization <ul><li>Classical Evaluation of Aircraft Cost By Manufacture </li></ul>Decision Matrix : Cost per Trip Vs Cost per Seat
  9. 9. Fleet Optimization <ul><li>Classical Evaluation of Aircraft By Manufacturer </li></ul>Cost per trip vs per seat Matrix For - Boeing, - Airbus, - Embraer, and -Bombardier Who is Right ?
  10. 10. Fleet Optimization <ul><li>How to get the Right Decision ? </li></ul><ul><ul><li>Apply ……………. </li></ul></ul>U Curve Technique
  11. 11. Fleet Optimization <ul><li>Optimization in Aviation – U Curve Technique </li></ul><ul><ul><li>Linear Program is a Powerful tool in Optimization. </li></ul></ul><ul><ul><li>Solver is the software version in Microsoft Excel. </li></ul></ul><ul><ul><li>Objective : </li></ul></ul><ul><ul><ul><li>Maximise the profit: </li></ul></ul></ul><ul><ul><ul><li>Minimize the cost and errors. </li></ul></ul></ul><ul><ul><ul><li>Setting up project budgets </li></ul></ul></ul>
  12. 12. Fleet Optimization <ul><li>Optimization in Aviation – U Curve Technique </li></ul><ul><ul><li>Cost Minimizing : </li></ul></ul><ul><ul><ul><li>U – Curve Technique </li></ul></ul></ul>
  13. 13. Fleet Optimization <ul><li>Optimization in Aviation – U Curve Technique </li></ul><ul><ul><li>Cost Minimizing : </li></ul></ul><ul><ul><ul><li>U – Curve Technique </li></ul></ul></ul><ul><ul><ul><ul><li>Number of Seats </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Number of Spare Engines </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Level of Preventive Maintenance </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Time Between Overhaul of Engine </li></ul></ul></ul></ul>
  14. 14. Fleet Optimization <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. 15. Fleet Optimization <ul><li>Optimization in Aviation – </li></ul><ul><ul><li>U Curve Technique </li></ul></ul><ul><ul><ul><li>Basic Equation: </li></ul></ul></ul>
  16. 16. Fleet Optimization <ul><li>Optimization in Aviation – </li></ul><ul><ul><li>U Curve Technique </li></ul></ul><ul><ul><li>Optimum Operating Curve </li></ul></ul>
  17. 17. Fleet Optimization <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>
  18. 18. Fleet Optimization <ul><li>Design An Optimal Fleet In Point to Point Operating Model </li></ul><ul><ul><li>Data input : </li></ul></ul><ul><ul><ul><li>Passengers </li></ul></ul></ul><ul><ul><ul><li>Fares </li></ul></ul></ul><ul><ul><ul><li>Distance </li></ul></ul></ul>
  19. 19. Fleet Optimization <ul><li>Design An Optimal Fleet In Point to Point Operating Model ( Analysis) </li></ul>Inputs Passengers, Fares, Distances Number of Seats Sectors
  20. 20. Fleet Optimization <ul><li>Design An Optimal Fleet In Point to Point Operating Model </li></ul><ul><ul><li>Result at 0.055 USD for ASK </li></ul></ul>
  21. 21. Fleet Optimization <ul><li>Optimum Operating Curve </li></ul><ul><ul><li>Selecting the right Aircraft based on typical Aircraft Manufacture Values </li></ul></ul>
  22. 22. Fleet Optimization <ul><li>Optimum Operating Curve </li></ul><ul><ul><li>Selecting the right Aircraft based on the experience of Operators </li></ul></ul>
  23. 23. Fleet Optimization <ul><li>Optimum Operating Curve </li></ul><ul><ul><li>Getting the Right Cost </li></ul></ul>0.044
  24. 24. Fleet Optimization <ul><li>Network Analysis Point to Point Operating Model </li></ul><ul><ul><li>Aircraft: A320 Seat : 180 Cask = 0.044 USD. Target Load Factor= 0.85 </li></ul></ul>
  25. 25. Fleet Optimization <ul><li>Number of Aircrafts required in the Fleet </li></ul><ul><li>Total Market Define By = 668,278,864 ASK </li></ul><ul><li>Daily Utilization = 8 Hours </li></ul><ul><li>Aircraft Speed: 480 Kilometers per Hour </li></ul><ul><li>Annual ASK per A/C = 365*8*480*180 </li></ul><ul><li>Number of Aircraft Required = 2.64 </li></ul><ul><li> = 3 Aircrafts </li></ul>
  26. 26. Fleet Optimization <ul><li>Summary </li></ul><ul><ul><li>Term – Optimization – Minimize the cost . </li></ul></ul><ul><ul><li>U curve technique is a powerful tool to make a decision </li></ul></ul><ul><ul><li>It is a fair method that gives the right decision </li></ul></ul><ul><ul><li>Low cost carrier model can be define by 3 parameters: fares, passengers and distance which reflect the optimum operating curve </li></ul></ul>
  27. 27. Contact Further Information: Mohammed Salem Awad : Tel: 00967 734777518 Email: smartdecision2002@yahoo.com www.freewebs.com/wingsofwisdom/ www.freewebs.com/art-of-knowledge/ www.standout-from-the-crowds.webs.com

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