engleski

Airline Route Profitability Modelling

During the last few years there has been a major change in trends in air transport industry worldwide. The basic aims of the future air transport development are the rising of operating productivity and industry profitability. Liberalization of air traffic, fuel prices and large growth of competition are accelerating the technological processes and the necessity of improving the quality of planning, measuring and modeling financial effects of the route. Various forms of measuring performance indicators (natural and financial) are the subject of professional and scientific research. The paper analyzes the effects according to the methodology of Transport Research Laboratory (38 indicators), which show the trends and results of each individual airline. Revenue optimization per each flight is vital for airlines profitability and it includes the proper application of modern revenue management, revenue integrity and pricing systems together with the improvement of break even analyses methodology. In the core of the route profitability calculations lies the allocation of revenues and expenses to each individual flight and to the whole network accordingly. The paper presents a solution for revenue optimization models taking into account current practice used in applying appropriate business models on the market. Finally, the paper also presents the practical use and achievements of these models in Croatia Airlines.

airline profitability; airline performance indicators; revenue optimisation

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