Thursday, 22 June 2017

How to make an Airline Profitable

Air New Zealand B787

The Airline Business is the most competitive and toughest business on Earth. The industry requires a lot of Hard work, effort and Money.  it is such a tough Business, very few get it right. The Aviation Industry connects People, Culture and Countries together. Hence, it is important to get it right. Many of us don’t realise what goes through in completing a Flight. It may be a few hours journey for us, but involves many painstaking tasks. In the past, we have seen many Airline companies shutting down or going Bankrupt. They all had different reasons and circumstances. On the other hand, there are some Airline companies which are running for decades. What is the difference?  In this Blog, we will discuss in detail what makes an Airline successful. This will be a long and detailed Blog as we want you to know each and every aspect of Aviation. Let’s get started…….

Airbus A320neo

1.      Type of Airline:  The first thing is to decide what sort of Airline you should have. You can have a Normal Carrier with Premium facility, or a Low-Cost Carrier with No Premium services. If you are focussing on Domestic and short routes, go for a Low-Cost Carrier(LCC). If you are serving Long Haul &International Routes, have a Normal Carrier. The decision may depend on opportunities in the Domestic and International Market. Example: Emirates started off as a Normal Carrier as it had to serve International Routes more than the Domestic ones. On the other hand, Indigo started off as a Low-Cost Carrier as it had more Domestic Routes.

2.      Money: Once the Type of Airline has been decided, it is important to check Funds available. Some Airline companies started off by taking huge Loans, and then turned Bankrupt eating away all the Money. Airline companies should make sure that it has sufficient funds for operations. As an estimate, a Low-Cost Carrier requires at least 10 Billion Dollars to start off. This includes Cost of Planes, Offices, Systems, Ground staff, Pilots, Training, Crew, etc. To start a Normal Carrier, a company requires at least 30 Billion Dollars. An Airline must be started only when it has these Funds. Example: Kingfisher Airlines was started off in 2004 with the help of huge Bank funding. The Airline struggled and closed down in 2012 eating away all the Money.

3.      Government Support: A good Government support is very important. Sometimes, a lack of government support hampers the Airline forcing it to shut down. Government support may include Open Skies Agreements, Airport Clearances, Permissions to use Air Space, Documentations, Low Taxes, Fuel surcharges, etc. All these factors are under Government control. A Good support can help the Airline thrive.

Melbourne Airport

4.      Airport Infrastructure:  The Infrastructure at the Airport you are flying from is very important. It should be convenient for passengers to Navigate around the place. All major amenities must be available for passengers. A good airport experience will encourage passengers to come again and fly with the Airline. Also, the external Infrastructure must be good. This includes regular Bus, Metro and Roads to the Airport from the city.

5.      Type of Aircrafts:  This is one of the most important things that an Airline should make sure. Depending on your type of service, decide which Planes to have in the fleet. A Low-Cost Carrier must have only one type of Aircraft, either Boeing B737s or Airbus A320s. This reduces the cost of Pilots and crew Training dramatically. If you are operating Long Haul and International Routes, 2-3 types of Aircraft are enough. For a Long-Haul operator, A350s, A380s, A330s, B777s and B787s are good. These are the latest most efficient jets. Just select 2 or 3 from them depending on Routes and Traffic. Emirates Airline is a Normal Long Haul International Carrier. It has only Boeing B777s and Airbus A380s in their fleet. This reduces their cost for training Pilots, Crew and Ground staff for different Airliners.

6.      Fuel Negotiations: One of the biggest expenditures in Flight is fuel. An Airline company must have good negotiating powers with Oil Companies. The Price of Oil changes daily, hence it’s important to negotiate well.  Low Fuel Cost will help the Airline in earning Profits and offering cheap tickets.

Southwest Airlines B737

7.      Airport Parking Charges:  Another thing which require Negotiation is Parking Charges. A Low-Cost Carrier must always prefer small Airports. On the other hand, Normal Carriers serve big Airports. While Negotiating with Parking charges, consider the facilities and Infrastructure at the Airport. Example: All LCCs land at London Gatwick, while all Major carriers land at London Heathrow.

8.      Catering: Tie Up with the best Caterers at the best price. Catering is an important part of flight, especially Long Haul. Have regular quality checks and negotiate with the price. Also, make sure caterers are available on time. They should not delay the flight. A one minute delay can lead to missing of take-off slot, having a knock-on effect.

9.      Cleaning staff: Usually LCCs don’t have regular cleaners. On the other hand, big carriers clean after every flight. They should be good enough to clean up the plane in time. Some Airlines have 90 minutes turnaround time; hence time is important.

Paris Airport.

10.   Ground staff: The Ground Crew must be very efficient and punctual, as it depends on them whether the flight will leave in time or not. Have a limited number of ground crew. Too many will increase costs. For example: The person at check-in can also take care of Boarding.  If you have connecting passengers, make sure the ground crew transfers the Bags quickly. All airlines have different Ground Crew. It’s up to them how they differ from others.

11.   Cabin Crew: Cabin Crew are the most important employees of an Airline. They are not only responsible for serving Hot Meals, but also for passenger security. They should undergo hard training programmes to provide safety to the passengers. The Training Programs must be of International standards and according to FAA regulations. The crew must be offered decent Perks. Sometimes Airlines offer them too luxurious perks which increase their costs. Also, Pilots must be trained on state of the art Flight simulators so that they can cope with any situation.

12.   Working Hours: Make sure that your crew has Normal Working Hours. They should not be stressed with Long Hours and unusual timings. No doubt, flights can leave at any time, but that doesn’t mean they don’t get sufficient rest. Some Airlines overburden their crew, resulting in lack of their concentration. In the past, there have been incidents because of Pilot & crew fatigue.

Qatar Airways A380

13.   Efficient Routing: Plan your Routes efficiently. Your routes to all your destinations must be based on Weather, Passenger Demand, Cost of Airspace, Wind Conditions, etc. These factors change daily. Hence, it’s important that these are regularly updated. Allocation of Aircrafts is also important. If flying an A350 to a destination is enough, don’t fly an A380. If a destination has two B777 services one after the other, replace them with an A380 service. Passenger demand and Economics are important.

14.   Cabin Seating: Cabin seating must depend on demand. If there is no demand for First Class seats, replace with more Business class ones. If you are running a LCC, don’t have Entertainment systems, Fancy Packets, Earpieces, Reclining Seats, etc. It increases cost. Facilities must be provided according to demand.


15.   Safety Standards: Airline Safety is of utmost importance. The safest Airlines are only the ones which are Profitable. Safety standards should be of International level, and according to FAA regulations. Do whatever it takes to keep your passengers safe. A single crash is a big disaster for Airline Balance sheet. People still remember how Malaysia Airlines was shattered after the two plane disasters in 2014. It took them a lot of effort to regain back the same safety status. Also, make sure that the Airports you are flying into have advanced safety instruments like Ground Radars, Navigation systems, etc. Sometimes a faulty Airport instrument causes a crash.

16.   Maintenance: Another important aspect of safety is maintenance of your fleet. Make sure all Aircrafts go through regular Maintenance and safety checks. A small maintenance facility should be built having spares of all the types of Aircraft in operation. Even the slightest dents must be examined and fixed. Spare parts must be available at all times to save money and avoid delays.

Turkish Airlines B777

17.   Check-in and Boarding: Check-in and Boarding procedures must be quick and efficient. Any delays will have a knock-on effect on the entire operations. Don’t hesitate in leaving behind lazy passengers. Southwest Airlines has a First Come First Serve seating system. This makes the passengers reach the Boarding Gate early, avoiding delays.

18.   Strong IT System: Recently, British Airways suffered a computer Breakdown leading to massive flight disruptions. It was a PR disaster for BA. An Airline must make sure that its IT Infrastructure is strong enough to process Tickets, Bookings, Flights, Check-ins, Baggage, etc. Computers are the backbone of their operation. Also, it should be strong enough to cope with Cyber Attacks.


19.   Punctuality: Save Time wherever possible. Time is Money in Aviation. Every second counts. A second can lead to massive disruptions. There have been cases of Planes missing their take-off slots due to one minute of delay. Punctuality also gives you room to accommodate more flights in your full day schedule.

20.   Save and Earn Money: Airlines not only earn money from tickets. They can also earn from sale of Food items on board, sale of Duty Free items, Collaborations with sporting events, selling Ads on their website, collaborations with other Airlines and promoting other Brands. An Airline should keep all its options open. Lastly, save money wherever possible. Don’t waste a single penny. 

These were the ways in which you can make an Airline Profitable. If we have forgotten something, comment down below. As this is our longest blog till date, we would love to have you involved in this conversation. Tell us in comments about your views and feedback to this Blog…….


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