Consider the impact on profitability if you could improve network contribution from a flight by just 1%. Then consider the impact if this could be repeated across the entire network.
Working with Airlines on flight route profitability and network contribution reporting, we have helped them to make clear returns from investment in financial analytics and reporting models. To illustrate this, if we were to assume an airline round trip contribution of 10% on a turnover of $2 billion. And if Finance could drive an improvement in the airline round trip contribution of just 1%, that would be an increase of $20 million in profits in one year alone.
Given such clear returns, for me, a flight route profitability reporting application, especially for a network airline, is a “must-have” and needs to be high on the C-level agenda.
The volume of data and complexity of getting into the details of route profitability at flight level has, for a long time, been a major challenge. Technology advances mean that it is now possible for Airlines to have ‘doors closed’ route profitability reports at the flight level in a matter of minutes. And near real-time scenarios on the entire network in just a few more. The volume and complexity of data is no longer a barrier. With flight route contribution and profitability reporting to hand, management are now able to take action that will improve contribution in near real-time.
See my next blog for more on why network contribution reporting is vital to Airline success.
But before you go, let me know your thoughts in the comments below. Do you think that flight route profitability is a must-have? How high is this on your C-level agenda today?