Aviation Industry's Pain Area

Top leadership of any airline keeps close watch on profitability of each route, to answer following 3 questions.

  1. 1

    Which are the routes to kick started in next quarters and how it will impact the overall network of airline

  2. 2

    Which are the routes needs serious attention and what are all data points’ needs to be watched closely.

  3. 3

    Which are the routes needs to shut down and what are all data points going below acceptable thresholds.

Main Lacking Area

Across industry culturing & cultivation of route results and data points takes few weeks and hence quantum of decisions are made on intuition or sheer tribal wisdom. This is a single factor leading to lack of differential decision making.

  1. 1

    There is no centralized decision support system for route parameters

  2. 2

    Due to this approach, route results used to take around 6 weeks

  3. 3

    Reports were extracted from revenue system-of-records and cost system-of-records manually

  4. 4

    After the induction new international operations and multi aircraft fleet, scalability would be a big challenge to tackle for all such analysts.

  5. 5

    Manual intervention was required for fine-tuning and review and corrections.

To tackle this issue, wehave built the data lake for decision making, which captures all the data points (revenue, cost, operation) which impact on profitability.

Factors impacting airline route profitability

Their are almost 200 factors which impact route profitaility. Major points considered while calculating route profitability are

Aircraft related cost parameters

1. Aircraft is major cost for any Airline. Cost of aircraft flying from one destination to another varies depending on the nature of contract. Most of the airlines work on lease rental mode. Lease rentals, Lease rental credits derives the overall aircraft cost for every route monthly.

2. Aircraft maintenance costs is variable cost calculated month on month for each route.

3. Engine cost is specific to the engine types. Fixed cost of engine rental and variable cost of engine maintenance (part of AMO) are equated monthly and normalized across routes.


Flight related revenue/costparameters

1. Revenue from Passengers

2. Revenue from cargo

3. Crew Cost

4. IT Cost (Airline GDS, CUTE and other IT Charges)

5. Catering Cost


Cabin wise revenue/cost parameters

1. Revenue from different cabins (ticket price, upgrade value, any ancillary purchase by the passenger).

2. Catering cost – catering cost varies for every station. It is normalized based on the number of Passengers for each flight and assigned to specific route.

3. Cabin wise profitability is important for high level decision making on LOPA. LOPA defines the seat allocation for different cabin classes. Change in LOPA is very strategic in nature and impacts across all airline-networks planning-decisions.


Sector wise revenue / cost parameters

1. Fuel Cost: Every flight no has its source and destination. At every landing on any station/airport aircraft is refuelled. The fuel rates are linked to the refuelling station.

2. RNFC (Route navigation charge) rates. RNFC differ for each sector.

3. Airport Parking Charges

4. Airport Aerobridge Charges

5. GHA Charges: GHA (Ground handling agent) charges vary from station to station.

6. Ancillary Revenue: revenue generated from ancillary activities like security checks for other airline.


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