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Network and Fleet PlanningBruce Tecklenburg
Network, Fleet and Schedule
Strategic Planning
Module 8: 15 October 2015
Istanbul Technical University
Air Transportation Management
M.Sc. Program
2
Objectives
List as many reasons “why do customers travel”
Define “point-to-point” and “hub and spoke”
business models and match them to major network
planning characteristics to generate maximum value
Explain the methods used to identify the airplane
that best maximizes the network plan’s value
Describe how to best utilize the selected airplanes
with efficient flight scheduling to maximize revenue
and minimize cost
3
The planning cycle
» Determine passenger market characteristics and requirements
» Build a network to maximize demand and revenue
» Acquire and maintain fleet to efficiently fly the network
» Create a schedule to optimize revenue and fleet efficiency
Network Planning Fleet Planning Schedule Planning
Using Business Model
Determine where
to fly
Plan frequency
Select Airplanes
Fleet the network
Evaluate alternative
airplane choices
Assess
airplane
economics
Efficiently Use Airplanes
Optimize flight
timing
Seasonality
Day-of-week
Time-of-day
Market Analysis
Understand Passenger Needs
Forecast future
demand
Assess competitive
position
Determine existing
demand
composition
Grow network
Establish drivers
of demand
Assess
variability of
demand Plan for growth
& replacement
Enable
competitiveness
4
NETWORK AND FLEET
PLANNING
Market
Network
Fleet
Scheduling
5
Passenger analysis questions
What makes people travel?
Why does market size vary?
What can be done to stimulate travel in a given market?
What factors must be considered when deciding whether to serve a market or
not?
Why is it important?
8
Demand: measurement
Onboard Loads (also known as Leg or
Segment Loads)• excellent for dispatchers and caterers
• of limited use for airline planners
• cannot identify passenger O&D
CPT-JNB
JNB-IST
IST-YYZ
YYZ-YOW
4 passengers
YOWCPT YYZIST IST YYZ
Turkish #41Turkish #8698
Operated by Air Canada
JNB
True O&D
• useful in evaluating new off-line markets
• able to eliminate double-counting
• difficult to determine - can be estimatedCPT-YYZ 1 passenger
In 2014 – 1.1 passengers flew CPT-YOW each way, every day
Turkish #17
9
Unconstrained Passenger Demand
% D
ema
nd
Average
Demand
Onboard
Load
Airplane
Capacity
Spilloccurs when
demand exceedscapacity
Spoilageoccurs whenload factor is
less than 100%
Find the balance between spill & spoilage
11
Key spill concepts
Passenger demand varies
By season & month
By day of week & time of day
Purely random
Passenger demand is a random variable and can be represented
as a normal distribution
Spill is a concept used to understand the relationship between
variation in demand and a fixed airplane capacity
Sill is both good and bad, so must be balanced
Good:You are not flying too big of an airplane to address the variation in demand
Excess capacity leads to excess costs and reduced profits
Bad:Did not capture all the potential demand in the market
May send passengers to your competitor or invite a competitor to add service
12
NETWORK AND FLEET
PLANNING
Market
Network
Fleet
Scheduling
13
Network vs. point-to-point carriers
NETWORK CARRIER (also known as Hub and Spoke)
At least 1 large center of operations (Hub)
Usually has several different sizes of airplanes
Can connect passengers throughout the network with one stop
POINT- TO-POINT CARRIER
Typically a low cost/low fare airline
Has one or two types of airplanes
Typically flies passengers on a single flight leg
14
BREHAJ
FRA FRACDG LHRLBA HAMBLL CDGZRH BHXAAL BSLCPH TXLMUC MUCEDI GVA BRUGVA DUS SVG NWIKRS NWI VCE LUXABZ BRE OSL LBALYS LHR LUX VIE MANSVG LHR CDG HAJ LPI STRNTE MAN LUX VCE HUY NCE BRSGOT NCL CDG OSL LHR MRS NUEBGO TXL BLL LPI HAM FLR CWL
BRU LPI BHD MAN MPL LBA AES ZRHCGN NCE ARN FRA STR BLQ MME BIO AAL
LHR FRA NWI MRS BUD BHX NUE DUS TLS BLL BRU BUD CPHHAM CDG LUX FLR BCN HAM MUC NCL BSL BRE MAN AES TXL LHR MAN CGN BCN EDICDG BLL HAJ WAW DOH CDG LYS ZRH TXL HAJ EDI ARN ZRH CDG STR LHR TRD PRGTXL NCL BRE HUY TRD DTW BHX BGO EDI CPH LHR BRU BOD BIO GVA BHX BRS CPH MAD GLAZRH ABZ LHR MME FCO JRO LIN BOD GVA LED HAM NWI NCE TRD SVG NCL NUE GVA FRA LYS HEL GOT
BRU MUC SVG BHX STR MAD CUR BLQ VCE ABZ LIS BRS CDG FLR DMM NTE CWL BSL LIN LHR NTE OTP LIN DUSDUS EDI LIN BRS CWL HEL SEA BOS DUS OSL PRG DTW EWR MAD KRK DXB TRF AAL TXL VIE CDG TRN KBP TRF HUYCGN GVA MAN BOD NUE TRN JFK PDX MSP IST VIE GLA EBB IAD HEL ZAG DTW BGO FRA KRS EDI ARN FCO BOD LIS BGO MMECDG GOT STR TLS BSL VCE YYZ JNB ATL NBO TLS SVG ORD MSP OTP WAW SEA ACC LHR ABZ OSL JFK YYZ BLQ IST ARN BLLPRG OSL CPH BCN FLR OSL IAH UIO HAV DAR SVO GOT YYC ATL LOS BUD MEX YUL CPH PRG NCE ATL PEK ZRH TLS TPE SVO KRSVIE FCO GLA SVO ATH OTP SFO CPT DFW PBM AUH MRS LAX YVR JFK BCN KIX BOS MUC LYS BCN HGH PVG MUC WAW KUL CAI ABZARN MAD BGO DTW ATL KBP LAX GRU SLC GIG JFK ATH LIM PTY DEL FCO NRT MSP GLA GOT MAD HKG NRT BKK CDG LHR FCO SIN TLV ICN NCL
AMS 500 530 600 630 700 730 800 830 900 930 1000 1030 1100 1130 1200 1230 1300 1330 1400 1430 1500 1530 1600 1630 1700 1730 1800 1830 1900 1930 2000 2030 2100 2130 2200 2230 2300
PVG ATL KUL CUR IAH SIN HAV PDX LAX DTW EZE CPT ATL GRU GIG PTY GYE BCN LHR MEX NRT LIM ATH LHR MAN PVG XMN TRD IST OTP CPH OSL ARN BCN MAD FCONBO TPE EBB DAR DFW YYC SEA SFO JFK JNB SLC MRS DTW LAX ATL SEA FLR TRD KIX SVO KBP CDG EDI HKG BUD ATH FCO LHR GVA NCE MUC LHR LHRDTW MSP YYZ ORD PBM ATL TLV LIS YVR MSP OSL ARN YYZ MAD MSP LPI WAW FUK OTP TLS LHR BKK AES SVO PRG FRA LHR VIE CDGLOS JFK KGL IAD DEL IST OTP PRG BOS VIE BGO JFK TLS FCO OSL FLR PEK HEL VIE CTU WAW LIS EDI LINDOH DXB JFK EWR DTW HEL CDG CDG GVA GOT SVG BOD LIN TRN VCE NCE MAD BCN VCE ZAG FLR LED TXL ZRH
DMM ALA YUL BOS MAD LHR HAM EDI MUC GLA CWL STR GOT BGO LIN FCO OSL BGO KRK NCE HEL BSLACC KBP SVO FCO CGN ZRH CPH ABZ BSL BLL SVG BHD BUD BOD GLA TLS MPL MADAUH BOD BUD TRD DUS TXL STR NUE MME LBA ABZ LYS ARN GOT CPH LPI OSL BCNCPH TRF WAW BCN BRU CDG BLL BRS LHR CDG KRS NTE BLQ LYS BSL BOD VCE BIOTXL GOT TLS BIO LHR NCL HAJ MUC GVA BHX SVG BRS GVA BGO ARNNUE SVG BLQ ARN BRE MAN LUX CPH EDI PRG MAN TXL TRF BLQSTR PRG NCE AES BHX AAL ZRH ABZ HAM FRA SVG MRSBLL KRS LPI FLR CDG FRA TXL GVA NWI NTE GOT
HAM AAL OSL MRS HUY DUS NCL EDI BRU MUC LYSHAJ BGO VIE FRA MAN MUC ZRH GLALUX NTE VCE NWI BHX ZRH CDG ABZBRE BSL LIN CGN CDG TXL HUY KRSDUS MAN TRN BRU HAM NUE HAJ CPHBRU BHX LYS NCL BRE AAL
HUY GLA STR NWI CWLFRA ABZ BLL DUS NUENWI GVA CDG BRU BRS
EDI FRA NCLMUC HAJ STRZRH LUX MANCWL BRE BLLBRS DUS MMENCL LBA
MME BHXLBA CDGCDG HAM
LHRLUXCGN
DEP
AR
TUR
ESA
RR
IVA
LS
Network Carrier wave hub or “banked hub”Bank structure spreads arrivals and departures across the day
KLM Amsterdam Operations September 2015
45-60 minute pax
connect timeKLM International
KLM Europe
Air France
Delta
15
Turkish Airlines - Istanbul
Turkish Airlines Operations September 2015
Domestic Single Aisle
International Single Aisle
Domestic Twin Aisle
International Twin Aisle
ADB
OTP ADB ESB
SOF ESB AYT VAR
SKG VIE YKO SOF ADB AER BJV
ATH FCO AYT ADB ADB ATH ESB DIY ADA
SKP VCE GZT ESB ESB ADB SKP AYT HBE STW
ADB ODS TUN ZAG BJV ADB ESB ISE ADB ESB ODS MLX ADB TLV IKA
ESB KIV MXP MLA DLM ESB ASR BJV VAR NKT ESB BJV PRN TZX BJV KYA DNZ AMM KWI
NAV PRN VKO BLQ NOP KYA SJJ ATH NAV AYT ADB BJV ADB AYT AYT TIA EZS GZP AYT DLM CAI JED
DNZ TIA KBP TXL NUE VAS DLM ADA VIE TGD BUS KHE ESB TZX ESB ASR BUD DIY OTP VIE ASR SZF ASR GYD RUH
ESB ECN MUC STR ZRH ADA ADB AYT BUD WAW BEY TBS ADA MLA MSR AYT SZF ADB KBP TXL VAS ZRH AMM GZT TZX UFA PEK
KFS BEG GVA TRN GYD DIY IGD ESB GZT VCE EBL TLV FDH ECN BSL LEJ KCM ADA DNZ TLV SKG FRA ADA CPH MXP TLV TBS ASB JNB
BJV SJJ HAJ FRA NCE TLV GZP AYT VKO VNO PRG FCO LUX ERC MRS NCE DIY OGU BUD ESB ZAG ECN GVA MUC BCN IKA GYD ESB EBL DOH CAN ADB
KYA ASR EZS CGN CPH LYS LJU ASR ADA BJV DUS ZRH MUC MSQ LHR GRZ HEL HAJ KSY HTY ERZ BJV CAI BEG HAM STR JED KWI ARN ESB ESB BJV TBZ NBO HKG ESB
DLM GNY DIY BRU DUS HAM PRG HTY ADF TZX TLL RIX MXP ISU MAD TUN GOT LYS ZRH LJU MQM ECN DLM DUS SJJ BRU HEL OSL BAH SYZ BJV ATH KYA SSH NKC KUL AYT
AYT MQM BUD CDG ARN HEL PSA NAP AJI GOA AMS HAJ TXL BIO DUB BCN ARN CPH FRA NUE NAP GNY AYT NIM VAN AMS RUH LHR MAN DMM DLM ADB KZR MZH ECN ISU MLE TPE SZF
ADA TLV ERZ LHR AMS GOT BSL SZG BGW LED CDG FMO STR ORN BOS YYZ CDG DUS GVA MXP BLQ FCO ASR NAV NSI RTM CDG DXB OSS DOH ASB AYT ESB OTP VKO HTY HRG BKK SIN GZT
FRA KCM CAI TBS MAD BHX BCN BRE KWI IKA BOD AAL BRU FRA BHX JFK IAD ALG BRU HAM STR MUC VCE GZT ADA KGL LHR MAD MCT ISB ALA MHD DIY ADA AYT IKA TLV DMM ICN NRT BEY
BSR MLX CTA LGW DUB MAN OSL ALG AGP BSR VLC TLS AGP HAM MAN IAH ORD LGW AMS COO GYD TXL PRG TZX TZX JRO TSE FRU DEL LHE KHI KRT KZN FCO TZX MED TAS SVX PVG MNL ROV
BRU GZT SZF TZX VAN JFK LIS EDI LGW BGG GRU CMN LHR JED LIS MED LAX SFO NRT FIH OSL ACC CGN LOS VKO VIE JFK DAC ADD DAR BOM BKK KTM FRU LBD ALG BEY IFN JIB DXB KIX CGK YNB
IST 400 430 500 530 600 630 700 730 800 830 900 930 1000 1030 1100 1130 1200 1230 1300 1330 1400 1430 1500 1530 1600 1630 1700 1730 1800 1830 1900 1930 2000 2030 2100 2130 2200 2230 2300 2330 0 30 100 130
LHR NRT CGK KIX ACC LOS IFN ROV ORN ABJ LBV OVB BOM DAR MBA JFK OSL LHR KBP VIE BGG CGN HAJ YYZ BOS IAH LAX ALG LIS BOD AGP LHR JED BLL LUX GRU LIS MAD DUB VKO GZP EZS AYT GZT
AMS MAD MNL SIN TAS FRU MED ESB VKO GYD OUA LHE EBB DXB NSI DAC BRU CDG ADA DIY MUC BLQ TRN LGW KBL NRT SFO BSR EDI LED VLC CDG MED LJU MRS CMN MAN CDG LGW VAN BJV TZX DLM
ARN TPE JFK DXB ADD IKA DIY KSH DYU ISB DEL JED RUH CPH BSR RTM ASR HTY VCE FCO STR BRU CDG IAD ORD IKA LGW TLL TLS BRU TUN KSY BSL AGP LHR AMS OSL CAI MLX BJV
TZX KUL HKG MHD MCT TLV ADA TZX DMM KHI SVX KWI HAM ZRH DUS BGW GZP ADA MLA LJU TXL DUS ARN JFK BKK BGW KWI DUS AMS MSR MLA GNY LEJ BHX ALG BRU CGN TLV SZF ESB
AYT PVG ICN ASB AUH HTY ATH AYT BEY ALA DOH TXL GVA VAN CTA TBS ESB AYT ZAG NAP MXP CPH LYS AMS DKR VNO VKO HAJ FMO HTY DIY ASR NAP ORN BCN DUS VIE DIY ASR
BJV JNB CAN SYZ KRT ASR ADB ESB GZT FRU BCN MXP FRA DIY CAI VAS ADB BJV ADF TLV NUE HAM BSL GOT NBO VCE MUC RIX HAM KCM ADA AYT MQM BIO GOT HAM ZAG SJJ KYA
PEK BKK ALG DOH MZH KZR AYT ASB IKA VCE STR EZS TLV NOP ESB KYA AYT TUN GVA ASR HEL JIB VIE PRG ZRH FRA ASR SZF ERZ ARN CPH GVA KBP ADA
RUH MLE KZN ASF AYT KYA UFA VIE FCO NJF SJJ MQM AYT ESB DLM PSA FRA NAV BRE DUB BEY EBL STR FDH AYT DLM BUD HEL LYS GYD BUD VAS
IKA MAN SSH HRG KYA BJV YNB KCM GNY MUC BEG ERZ DLM ADB YKO SZG NCE BJV BUD MAD ECN WAW TXL ISU OGU BJV GZT HAJ FRA STR BEG
CGN BAH EBL ISU OTP KFS KVD ADA TZX ECN TIA BUD BJV AJI GYD ISE SJJ MAN ADA TLV MXP TZX ESB ECN ADA NCE TXL TIA
HAJ JED CAI TBZ BJV ESB AMM NAV MLX ODS PRN GZT TZX ZRH ESB ATH BHX BJV BUS MSQ ESB DNZ NAV BJV ZRH MUC PRN
NUE KWI AMM STW ESB DNZ TLV ADB ASR SKG KIV ESB GZT VKO ADB AYT LHR ADB ERC FCO ADB ADB AYT MXP PRG ODS
ADA GYD HBE SZF ADB TZX ESB SOF SKP ADB ESB PRG VAR OSL KHE TBS NKT ESB NUE VCE SKP
DLM TBS ADB DNZ SZF ATH IGD ADA BCN ESB GRZ ADB BLQ FCO ATH
ESB BEY AYT OTP GOA AYT TZX ECN AYT
VAR AER DLM ESB TGD SKG SOF OTP
GZT ADB ESB ESB ADB
ECN ADB ADB
DEP
AR
TUR
ESA
RR
IVA
LS
16
Hubs must create value
The ideal airline network creates value
Offer service at a price people will buy
Provide something unique that has value
Hubs make valuable travel options
Spoke city is one-stop to anywhere
Spoke city can participate in trade and commerce
Hubs are cost effective
Most origin & destination pairs attract <10 passengers
(pax) per day
Connecting passengers enables cost-effective use of
airplanes
17
CWBCWB GIG GIGGIG SDU GIG SDU SDU SDU SDU
SDU SDU GIG JOI FLN CWB SDU NVT CNF CWB FLN CWB CNF SDUNVT CWB RAO CWB FLN SDU SDU SDU SDU UDI SDU SDU BSB CNF CWB POA SDU CNF JOI SDU RAO SDU GYN LDB CWB SDU FLNGYN SDU SDU SDU CNF POA NVT SDU GYN NVT IGU CNF LDB SDU CGR VIX GIG BSB CXJ GYN SDU FLN SDU UDI POA GIG SDU POA SDU CNF MGF CGBPOA BSB CNF BSB CXJ BSB CNF BSB POA MGF BSB POA FLN BSB SSA GYN SDU CGB SDU BSB POA NVT CNF POA BSB BSB SDU CNF BSB CNF POA BSB SSA
CGH 600 630 700 730 800 830 900 930 1000 1030 1100 1130 1200 1230 1300 1330 1400 1430 1500 1530 1600 1630 1700 1730 1800 1830 1900 1930 2000 2030 2100 2130 2200
CGB SSA POA SDU FLN BSB SDU CNF BSB BSB POA BSB CNF SSA BSB BSB CGB POA GYN BSB NVT CGR FLN BSB POA BSB CXJ BSB FLN SDU SDU POA BSBUDI CNF SDU POA SDU POA GYN CNF CXJ SDU SDU POA GYN VIX CNF IGU POA SDU BSB SDU CNF SDU SDU NVT POA SDU RAO CNF GYNMGF SDU CWB CNF GIG CNF SDU FLN FLN JOI NVT MGF UDI LDB SDU CNF GIG CNF CWB SDU SDU GYN SDU FLNLDB NVT CWB NVT CWB SDU SDU GIG SDU SDU SDU SDU SDU CWB SDU GIG JOI CNF CWB SDU
SDU RAO SDU GIG GIG CWB GIG SDUCWB CWB
DEP
AR
TUR
ESA
RR
IVA
LS
Low Cost Carrier (LCC) operationsSao Paulo - focus city with high frequencies
Maximum
gate need (7
in a :30 block)
Gol Sao Paulo – Congonhas Operation September 2015Few late night
long haul
departures
Non-Optimized Network Point-to-Point Connectivity Stimulates Low Cost Carrier (LCC)
Operations
More “level
loaded” schedule
(or operations)
18
ESB
EDO ADB
ADB ESB KYA
BJV KYA BJV
AYT ESB ADB GZP AYT
DLM ADB BJV DLM ADB SZF DLM
GZP KYA AYT MUC DLM ASR KYA EDO VAS ASR
ASR ESB BJV EDO PRN ESB STR SZF FCO AYT KYA HTY SZF
VAS DNZ ADB AYT AYT BEG OTP BSL ADA BLQ GZT BJV ESB BJV BJV ADB GZT DNZ ADA
ADA AYT AYT SZF MZH TZX ARN DUS BGY DME TZX ATH ADB ADB DLM TZX AYT TZX BJV ECN GZT
ERC EZS NAV ADA ASR DLM BUD BCN EBU ZRH FRA DIY FCO MXP ESB ESB ADA AYT GZP EZS DLM DIY ASR ESB BEY IKA TZX KRR
ECN ERZ GNY KCM GZT HTY ECN NCE ORY CRL HAM GVA VIE ECN ESB ADB BJV BCN FRA AYT TZX ADB AYT VAN GZT ASR ERZ ECN FRU ADA AYT ADB KWI CGN MRV HRK
HTY MLX VAN MQM TLV TZX LGW TIA SKP MAD STN AMS CPH CGN SXF TLV ADA LWO SJJ ORY DUS BSL STR ADA DLM VIE TZX SZF AMS TLV ALA STN DXB TLV BAH DOH NUE TBS KWI
SAW 500 530 600 630 700 730 800 830 900 930 1000 1030 1100 1130 1200 1230 1300 1330 1400 1430 1500 1530 1600 1630 1700 1730 1800 1830 1900 1930 2000 2030 2100 2130 2200 2230 2300 2330 0
AMS STN CPH KWI BAH DXB FRU KWI TLV MLX TLV MQM VAN TZX ECN TLV TIA BEG SZF ADA BUD GZT TZX NCE TZX BSL BCN LGW MAD ADB TZX ESB FCO ECN MXP ORY ERZ VAS DIY
ARN MRS CGN TZX OSL DOH EDO HTY ECN ERZ GNY KCM GZT SKP BJV PRN ADB ASR AYT ESB ADB MUC BJV STR ARN ORY STN ESB ECN ADA ASR VAN BCN EZS BJV TZX
MRV HRG IKA GZT ADA BEY VAS ADA ERC EZS ADA HTY AYT OTP DLM KYA DIY BGY EBU CPH AMS ADA AYT BJV TZX DUS TZX DNZ GZT
HRK SSH SZF ECN GZP ASR NAV AYT SZF ASR ADB DLM ADA VIE DUS CGN CRL DLM KYA GZT FRA SZF HTY
TBS ASR DLM AYT AYT BJV MZH DLM ESB BJV ZRH SXF HAM AYT ADB SZF BSL GZP ADA
KRR DLM AYT ADB ESB KYA AYT ADB BLQ DME GVA EDO GZP STR DLM ASR
AYT BJV ADB FCO LWO FRA DLM VIE KYA ADB
BJV DNZ EDO TLV ATH SJJ AYT
KYA ADB ESB AYT BJV
ADB ESB ADB
ESB ESB
DEP
AR
TUR
ESA
RR
IVA
LS
Pegasus - Istanbul
Pegasus Istanbul Sabiha Gokcen Operation September 2015
Domestic
International
19
Point-to-point can offer low fare market
stimulation
Local traffic and average yields in three Minneapolis markets
before and after LCC entry
Source: Sabre ADI, 2009-2011
22¢27¢
48¢
30¢
42¢
An
nu
al O
&D
Pas
se
ng
ers
75¢
60¢
45¢
30¢
15¢
16¢
20
Connecting traffic percentage by hub
Sh
are
of
Co
nn
ecti
ng T
raff
ic
LCC Focus Cities
Geographically centered mega-hubs produce significant connections, while LCC
bases attract moderate levels of connectivity
Note- Data includes affiliated airlines operating under primary airline market code
Source: Sabre ADI
21
Forecasting and profitability
Flight #1 has 100 passengers paying
$75 each
Flight costs $10,000 to operate
Profitable or Not?
22
Forecasting and profitability
Flight #2 has 100 passengers paying
$200 each
Flight costs $10,000 to operate
Profitable or Not?
23
Forecasting and
profitability
Flight #1 and #2 share 50 connecting
passengers
If Flight #1 is discontinued and we lose
the 50 passengers, is our network
still profitable?
24
NETWORK AND FLEET
PLANNING
Market
Network
Fleet
Scheduling
25
Fleet planning fundamentals
A flexible fleet is key
Plan for some market failures and more competition in successful
markets
Understand and incorporate the effects of
network fragmentation
Current schedules are vulnerable to competitor actions
Liberalized air service agreements promote service growth
Planning process should be robust enough to accommodate variability
Be aware of changing airplane capabilities
More payload / range can alter competitor behavior
Lower operating costs are good if they’re yours, not if they’re not
Modeling future competition is difficult but
essential!
27
Airplane evaluation for the fleet plan
737
-600
CFMI-700/7
-800/8
-900ER/9
A320
318
CFMI319/neo
320/neo
321/neo
P&W
IAE
Embraer
GE190
195
A350 R-R
-900
-1000
777 GE
-200ER
-200LR
P&W
R-R
A380GP
-800R-R
-300ER
747 -8 GE
787R-R
-8GE
-9
A330GE
-200
-300
P&W
R-R
Short-to-Medium Range
100-200 Seats
Medium-to-Long Range
200-400 SeatsLong Range
400+ Seats
There are many size/engine/performance combinations to consider
P&W
CFM Leap
P&W
GE767
-200ER
-300ER
-400ER
CSeries P&WCS100
CS300
CFM Leap
-10
-800neo
-900neo190-E2
195-E2P&W
-9X
-8X
CRJ GE
-900
-1000
28
Fleet constraints need to be
considered
Matching Network to airplanes
faces a number of challenges
Airline
Network
Airplane
Fleet
Commonality
! Outside Influences
! Availability
Performance
!
! Financing
!
29
Fleet commonality
Larger sub-types for higher demand markets,
business market peak timings and leisure
market lowest per seat cost
Ideal to have
multiple choice for
various markets
Smaller sub-types for lower demand markets,
increased frequency timings and off-peak
market capture (opportunity flying)
Covers more markets, potentially increasing
revenue and reducing cost
Having Common or Near-Common Fleet Types reduces Cost.
30
Right sizing value
(3,000)
(2,000)
(1,000)
0
1,000
2,000
3,000
4,000
5,000
80 90 100 110 120 130 140 150 160Op
erat
ing
Pro
fit
/ Tri
p
Unconstrained Passenger Demand / Flight
• Airplane 1 124 Seats
• Airplane 2 162 Seats
• Marginal Fare: 75%
Number of People Demanding Service
Airplane 2 Value
$1.7M
Right-Sizing is a mix of Market Demand, Yields, and Airplane Economics.
31
Fleet selection should model
seasonality
Minor airplane size changes can make a difference
50%
55%
60%
65%
70%
75%
80%
85%
90%
1Q 2Q 3Q 4Q
Pax
Lo
ad F
acto
r (%
)
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Op
erating
Marg
in (%
)
Season 300-Seat Airplane
250-Seat Airplane
Peak season
profitability isn’t always
the best solution
32
Compare solutions into the future
0
20
40
60
80
100
120
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
NPV $245M
NPV $343M
NPV $379M
NPV $315M
• NPV Discount Rate: 10%
Op
erat
ing
Pro
fit
(Mill
ion
s U
.S. D
olla
rs)
Present Values (PV) Per Network / Fleet Plan Year
33
Fleet phasing
10 737-300
18 737 MAX 8
6 737-900ER
16 737-800
10 737-700
<< Historical Future Fleet Plan >>
Phase Fleet Plan to Support Network Expansion and Airplane Disposals.
34
NETWORK AND FLEET
PLANNING
Market
Network
Fleet
Scheduling
35
The value of effective scheduling
Incremental Revenue
Yield and traffic maximized
Maximizing connections can make marginal services
sustainable
Lower Unit Costs
Optimizing utilization, aircraft assignment
Efficient utilization reduces the per block hour ownership
costs
Increased Profitability
Match capacity with demand
36
Connecting traffic has value
Minimum
Connect
Time DEP 0935
DEP 0940
DEP 0930 ARR 0855
Missed Connection Opportunity
Lost pax due to missed connection
Average fare contributed per pax
Daily revenue leakage
Annual revenue leakage
5 per day
$500
$2,500
$912,500
Service re-timing or use of partner services (code-
sharing) are two ways of minimizing revenue
leakage due to missed connections
Hubs Require Fine Tuning As Traffic Flow Is Highly Sensitive To Connections
37
Point-to-point scheduling
Out & Back Routing
Used with single/dominant base
Simplest scheduling tactic
Isolates impact of irregular
operation
Connect the Dots Routing
Used with multiple bases
Potential for increased
utilization
Can improve time-of-day service
patterns
Increases complexity somewhatSample AirAsia Rotation 8
legs, 11:30 block time
Out
1 KUL 0725 0910 KCH
Back
2 KUL 1115 0935 KCH
Out
3 KUL 1145 1330 KCH
Back
4 KUL 1535 1355 KCH
Out
5 KUL 1615 1735 HKT
Back
6 KUL 1935 1810 HKT
Out
7 KUL 2050 2145 KBR
Back
8 KUL 2310 2210 KBR
Point-to-Point scheduling often focuses on maximizing airplane utilization.
YXY
1220 1300
845 YEG
748
1820 700 - START
1000 1518 1900 YYC
915 YVR 1600 2205 - FINISH
1920
YXX
1955
Sample WestJet Rotation
7 legs, 11:45 block time
38
Turn Times Impact Capital Costs
480460
470
480
490
500
510
520
530
No
. A
irp
lan
es
524
Rotate airplanes with
25-minute min. turn
Current rotation
20-minute min. turn
507
Re-time schedule to
25-minute min. turn
6%
5-mins Saves 6% Flying Stock
Impact of Turn Time
Increased utilization reduces fleet count and therefore capital cost
39
Scheduling for time-of-day demand
Carriers avoid departure hours with a “negative psychology”
~ 80% of the flights that depart in the 5am hour depart at exactly 6am
Flights under 3,000mi/4,825km
40
Change (%) from peak-day: (3%) (10%) (5%) (0%) 0 (25%) (6%)
Day-of-week demand has high impact on
network Operations reduced dramatically all day Saturday and Sunday morning
on reduced business travel demand
Leisure carriers would display different pattern, with peak on weekend
Short Haul
Long Haul
41
Turkish Day of Week Operations
Turkish operations are level loaded throughout the week
Higher content of long haul and international flights drive daily
operations
Change (%) from peak-day: (2%) (3%) (3%) (3%) (4%) (1%) 0
42
Business vs. leisure timing
Business traffic tends to prefer itineraries allowing morning outbound
and early evening inbound departure times
Leisure traffic prefers low fares above all, but also arrival and
departure schedules that conform with hotel check-in / out times
“Business”
Schedule Pattern:
Morning/Evening
Departures Both
Directions; Midday
Frequency Improves
Choice/Flexibility
“Leisure”
Schedule Pattern:
AM Departure
From Origin,
Midday Return
Origin Destination Departure Arrival Frequency Origin Destination Departure Arrival Frequency
HKG KUL 840 1225 1234567 HKG HKT 825 1100 1234567
HKG KUL 1250 1640 1234567 HKG HKT 1520 1745 1234567
HKG KUL 2020 2359 1234567 HKG HKT 2010 2250 1234567
KUL HKG 900 1310 1234567 HKT HKG 1225 1650 1234567
KUL HKG 1330 1725 1234567 HKT HKG 1815 2245 1234567
KUL HKG 1740 2135 1234567 HKT HKG 100 530 1234567KUL = Kuala Lumpur, HKG = Hong Kong, HKT = Phuket
43
Scheduling table questions
Each table has a scheduling exercise
All questions involve maximizing airplane
use (or minimizing number of airplanes)
and scheduling
All times shown are in local time
Be creative
:15 to complete
Each table will report out on their findings
44
How many airplanes are required to serve IST-BUD?
Which city did the airplane start and why?
Scheduling question – Utilization
Network Planning has asked for the new schedule between Istanbul and Budapest to
operate 4 roundtrip flights with 737-800s daily.
Flights should consume the fewest number of airplanes
Turn times are :30 in both Istanbul and Budapest
Departure times are preferred between 06:00 and 22:00
737-800s from other markets can not be used
Block time is 2:00 in both directions
Istanbul to Budapest Budapest to IstanbulDeparts Arrives Departs Arrives
45
How many airplanes are required to serve PHL/SEA-IST?
How good is the connectivity at Istanbul? Why?
Can schedule be minimized further if schedule parameters were relaxed?
Scheduling question - Connections
All flights operate with 787-9 Equipment Daily
Minimum turn time is 2:00 at all stations
Block times are in hours and minutes
No slot controls at any airport
Flights can not leave Istanbul before 13:30 and must
return to Istanbul by 13:00 to make all of the important
connections
Org DesTime
ZoneBlk
IST PHL -7 10:40
PHL IST +7 9:50
IST SEA -10 12:00
SEA IST +10 11:40
Mission:
Schedule both PHL and SEA flights (daily) to minimize the use of airplanes and
maximize connectivity of the IST hub
46
Scheduling Question - Connections
You are scheduling the Hub at Istanbul. To maximize connections, the departures to
PHL/SEA should leave no earlier than 13:30. Airplanes would need to be back by
13:00 the next day
How many airplanes do you need to fly both routes, maximize connections and
minimize the airplane requirement?
HOW MANY AIRPLANES?
IST Time 14 15 16 17 18 19 20 21 22 23 0 1 2 3 4 5 6 7 8 9 10 11 12 14 15 16 17 18 19 20 21 22 23 0 1 2 3 4 5 6 7 8 9 10 11 12
PHL Time 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 0 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 0 1 2 3 4 5
SEA Time 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 0 1 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 0 1 2
Airplane #1
Airplane #2
Airplane #3
Airplane #4
Airplane #5
Airplane #6
First 24 Hours Second 24 Hours
13 13 13
6 6
3 3
6
3
47
Key takeaways
Networks must create value for passengers
Give the most people as much value as you can for the lowest price
Grow the network competitively until passenger and airline
marginal value expires
Base your Fleet Plan on your robust Network Plan
Buying a fleet then adopting a network plan is high risk
Carefully choose a flexible fleet as Networks need to adapt
Look at multiple network scenarios and develop fleet plans for these
Explore leasing, purchase options and commonality considerations
Fine tune the Fleet & Network Plan regularly
Make decisions based on economic return and value to passengers
Effectively schedule to produce significant value