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