What is the most efficient and profitable way to plan airline routes?

1 Demand and supply analysis

One of the first steps in planning airline routes is to analyze the demand and supply of passengers in different markets. Demand refers to the number and characteristics of potential travelers who want to fly between two points, while supply refers to the number and characteristics of flights offered by airlines in those markets. Airlines use various sources of data, such as historical traffic, surveys, forecasts, and booking systems, to estimate the demand and supply curves and identify the gaps and opportunities for their routes. They also consider the factors that affect the demand and supply, such as seasonality, price, income, preferences, competition, and regulation.

2 Cost and revenue management

Another important step in planning airline routes is to manage the costs and revenues of operating flights. Costs include the fixed and variable expenses of flying an aircraft, such as fuel, crew, maintenance, landing fees, taxes, and depreciation. Revenues include the income generated from selling tickets, ancillaries, cargo, and partnerships. Airlines use various methods and tools, such as cost-benefit analysis, break-even analysis, yield management, and revenue management, to estimate the costs and revenues of their routes and optimize their pricing and allocation strategies. They also consider the trade-offs and synergies between different routes, such as network effects, hub-and-spoke, and point-to-point.

3 Competition and regulation assessment

A third essential step in planning airline routes is to assess the competition and regulation in different markets. Competition refers to the number and intensity of rival airlines that offer similar or substitute flights in those markets. Regulation refers to the rules and policies that govern the access and operation of airlines in those markets, such as bilateral agreements, slot allocation, antitrust laws, and environmental standards. Airlines use various techniques and models, such as market share analysis, game theory, and scenario planning, to evaluate the competition and regulation of their routes and devise their competitive and cooperative strategies. They also consider the risks and uncertainties that affect the competition and regulation, such as demand shocks, capacity constraints, and political changes.

4 Operational and environmental optimization

A final crucial step in planning airline routes is to optimize the operational and environmental performance of flights. Operational performance refers to the quality and reliability of flying an aircraft, such as safety, punctuality, efficiency, and customer satisfaction. Environmental performance refers to the impact and responsibility of flying an aircraft, such as emissions, noise, waste, and sustainability. Airlines use various measures and indicators, such as operational research, performance management, and key performance indicators, to optimize the operational and environmental performance of their routes and improve their processes and practices. They also consider the challenges and opportunities that affect the operational and environmental performance, such as technology, innovation, and social responsibility.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?