This article is a guest perspective by Nicolas Bernier, a student at Embry Riddle. Follow him on Twitter.
Airlines around the world are constantly looking to add new destinations to their route network. They perform multiple route evaluations in order to know if a route will be profitable in the long term or not. Air carriers use many programs and tools to perform their route studies. They look at passenger demand forecasts, hub connectivity, aircraft availability, and other competitors. Here are the four key considerations that an airline must make while both tweaking existing routes and planning new ones.
Demand forecasting
Before starting a new route, airlines want to know how many passengers will travel on their flight. Most airlines use aviation market intelligence tools to parse and analzye all available data.
This data comes from within the airline itself, as well as industry-wide passenger data that identifies trends in traffic. Essential data points to consider are fares, routes, airlines, and connections. Airlines deploy this data to determine how many passengers are traveling each day (including connections) between airport pairs.
There is only one daily flight between DAB and JFK (operated by JetBlue) but passengers also travel on other airlines between these two cities. You might have a passenger that has a frequent flyer status with American Airlines and will decide to fly on American, even if it has a connection in Charlotte. From a large collection of databases, airlines can see the city in which each passenger connects, the airline they flew on, and the average fare they paid for the leg.
By knowing the average traffic flow per day, airlines will determine which type of aircraft is most suitable for the route. An airline will definitely not start a route and fly a Boeing 777 where there are only a few passengers traveling every day between point A and B. It would simply not make any sense to operate an aircraft of such capacity.
Connectivity at the Hub
Most airlines have one or more hubs where they operate most of their flights. The job of the Network Planning team at an airline is to ensure that most passenger will be able to go to the destination of their choice in the airline’s route network.
For example, if you are flying out of Daytona Beach International Airport, the only nonstop flights are to Atlanta, Charlotte, and New York-JFK. At these airports, the flights are timed to allow passengers to connect to another flight which will eventually bring them to their final destination. Local traffic between point A and point B is important, but airlines can also get more traffic flow by getting passengers from connecting flights at the hub.
Airlines can predict revenue and profitability on a route depending on different times of the day. If the flight is scheduled at a time of the day where there are no possibility of connections to other cities, then the airline might not do as good as a flight that is timed for inbound and outbound connections. Some flights have an optimal time for local traffic while other flights are timed for passenger connectivity.
When an airlines fly multiple times a day between two cities, the flights are usually evenly spread out during the day. Business travelers usually enjoy taking a flight early in the morning and return home at the end of the day after their meetings.
Aircraft availability
An airline will have to source an aircraft when deciding to fly to a new destination. A major airline with a large fleet of aircraft might be able to find a spare aircraft and assign it to the new route.
It will be easier for an airline to pull an aircraft from its fleet for a 1-hour domestic flight than a 15-hour international flight. A regional aircraft might fly four to five flights a day to different cities while a wide-body airplane might only fly once a day on an 8-hour oversea flight.
Not all aircraft can fly on a particular route. Aircraft limitations are taken into account when aircraft are assigned to a route. For example, a 70-seater regional jet cannot fly from North America to Europe because it simply does not have the range to do such missions. Some aircraft perform better than others at airports with high temperatures and higher elevation.
Matching the competition
Opening a new route that is already flown by another air carrier is not unusual since there are thousands of airlines operating in the world. The route between New York (JFK) to London (LHR) is flown by many different airlines flying multiple times a day. Starting this new route will be a challenge for an airline.
However, flying to a smaller city with no airline competition might be a better option.
Some airlines might have an advantage over smaller ones. Large airlines, as mentioned earlier, can feed their flights at their hubs with connecting passenger traffic. On the other hand, smaller airlines who do not operate many flights at their home airport might mostly rely on local traffic to fill their flights.
January 3, 2017