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REVIEW OF AIRLINE PERFORMANCE

REVIEW OF AIRLINE PERFORMANCE . OBJECTIVES. The evaluation of airline performance is done basically across two metrics : 1. Financial performance 2.Operational performance. 1.OPERATIONAL PERFORMANCE .

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REVIEW OF AIRLINE PERFORMANCE

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  1. REVIEW OF AIRLINE PERFORMANCE

  2. OBJECTIVES • The evaluation of airline performance is done basically across two metrics : • 1. Financial performance • 2.Operational performance

  3. 1.OPERATIONAL PERFORMANCE • We base the entire discussion on the performance of AIR INDIA over the years 2003-04 and 2002-03 • There are basically 14 operational metrics across which the operational performance is judged . We’ll discuss some of the imp ones in the coming slides .

  4. AVAILABLE SEAT KILOMETER (ASKM) • Measures capacity • Calculated by multiplying the number of available seats with distance flown(in km) . • For ex. An airline with 100 passenger seats flown a distance of 100 miles represents 10000 available seat kilometers . • ASKM is basically a measure of an airline’s traffic – www.investopedia.com

  5. PASSENGER KILOMETER (PKM) • Defined as the number of passengers in the aircraft multiplied with the distance flown in kilometers . • The number of passengers in the aircraft equals cabin factor multiplied by the passenger capacity for the aircraft type • PKM=(cabin factor %)*(passenger capacity )*(flight distance km )

  6. AVAILABLE TONNE KILOMETER (ATKM) • The sum of the products obtained by multiplying the number of tonnes of capacity available for the carriage of revenue load (passengers ,baggage , freight &mail) . • Status % change is the change over the equivalent month of the previous year. • Can be used to carry any combination of revenue load . • For ex . An airline operates one scheduled international flight per day , Payload =20tonnes , length =1000km Total ATKM =7,300,000(1000*20*365)

  7. REVENUE TONNE KILOMETERS (RTKM) • The sum of the products obtained by multiplying the total number of tonnes of revenue load on each sector multiplied by flight stage distance . • For ax . An airline operates one scheduled international all cargo flight per day • Length = 1000km, 10 tonnes of freight & 1 tonne of mail . Total RTKS performed in a year =4,015,000(1000*365*11)

  8. ON -TIME PERFORMANCE • On Time performance increased from 85% in 1999-00 to 88.5% in 2003-04 . • RTKM/Employee (Revenue tonne kilometer per employee) improved from 84 in 1999-2000 to 113.5 in 2003-04 .

  9. FLIGHT HANDLING Air India handled the following number of flights during 2003-04 Air India : 21,111 Flights of foreign airlines : 20,944 Other Flights : 1,245 The data shows constant improvised increment in the operations and handling of flights during the two years .

  10. AIR INDIA FLEET SIZE & AIRCRAFT UTILISATION • As of September 1,2004 Air India has the following data : Two B727-200 aircraft(VT-EFU & VT-EGB) are grounded since 29th january,2003 and march 6th 2004 . The average age of the fleet (owned and lease) is 14.9 years.

  11. FLEET UTILISATION & DISPATCH RELIABILITY • Utilization is given in terms of average daily utilization per aircraft in block time . • The technical delays of duration 15mintues & above are considered for technical Dispatch reliability . AIRCRAFT AVAILABILTY On an average 85.9% of the fleet was made available for service during April 2003, March 2004.

  12. EQUIPMENT SERVICEABILITY Equipment servicability during the year april 2003-march 2004 on an avarage was 96.34% BAGGAGE DELIVERY Statistics for the period 2003-04 Mumbai -94.17%, delhi – 97.89% ADDITIONAL OPERATIONS 104 additional flights were operated over & above the schedule resulting in , 528 hours of operation .

  13. 2. FINANCIAL PERFORMANCE • During the year2003-04 the total revenue of AIR INDIA consisting of passenger, excess baggage ,mail , cargo ,charter and handling , servicing and the rest represented an increase of 10.2% • The total expenditure for the company represented an increase of 12.3% • Aviation Turbine Fuel (ATF) – due to the various adverse factors affecting the volume of oil production there has been a considerable increase in the amount spent on oil purchases by AIR INDIA.

  14. Factors leading to decline in profitability of AIR INDIA • The SARS (South African Revenue service) outbreak and Pilots Strike during the first quarter , April to June 2003 . • Profitability of operations in the initial phase , in respect of the new routes with dry leased aircraft not in line with new estimates .

  15. REVENUE PROFILE • For every rupee that Air India earned during the year 2003-04 , three vehicles namely passenger, handling and freight constituted the bulk of revenue . • Mail constitutes a very small portion of the total revenue % of the airline • Non operating revenue also constitutes a significant revenue stream .

  16. Excess baggage also warrants an investigation • Over the year 2003-04 ‘passenger’ constituted a major portion of the revenue profile ; approx around 65.3% • In addition to passenger ‘handling and service revenue’ constituted upto 10.6% of the revenue profile . • Followed by passenger and handling revenue were freight , charter revenue , mail , and other non operating revenues.

  17. EXPENSE PROFILE • Personnel costs at 23.1% which is amongst the bulk of expenses . Sometimes this figure is understated because some of the services are contracted by the company . • Fuel and oil expense is the 2nd largest operating cost of the airline . Adds to it are the rising ATF (aviation turbine fuel) prices which have the potential of destroying the company’s profitability .

  18. Depreciation and Obsolescence costs constitute another significant component . The average of Air India fleet being 15.4 years , this cost is going to rise in years to come . • Agency Cost at 5.9% is another significant cost that must be evaluated in terms of portion of revenue generated through the agencies .

  19. PRESENTED BY • KhushbooGodhwani • SumitKuldeepVerma • AbhishekChamyal • SagarShukla • Dipaksingh • Amrita Parashar • NehaShukla

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