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Airlines and Route Planning

"Defining market structures should allow airlines to analyse and predict demand within a market."[ CITATION Mur15 l 5129 ]. This market demand will represent the expected number of air travellers intending to travel from point A to point B (OD demand) for the given route. With this information the market characteristics can be determined to see if the majority of passengers are on business or pleasure. Using this information and comparing it to any competition on the route the airline can begin to tailor its service to capture the majority of the market, this is achieved by adjusting key passenger determinants such as price, total trip time, on board services and the range of passenger classes on board (economy/ business first).
             The OD market demand is only the beginning of the equation if the route services a HUB. As the hub may connect the origin to 40 or 50 more destinations the market demand grows as a result. This may allow an otherwise unprofitable O-D market to make up its losses with the added revenue from the subsequent connecting passenger fares. These main airline HUBs can be further strengthened by having connecting flights to their own or an alliance airlines main HUB which will further increase the possible market share that is able to be captured just from adding but a single route. This is known as HUB strengthening and with today's airline super alliances, airlines are able to work together to not only increase revenue for themselves and their partners but also open up exponentially more routes to their passengers. This is the logical future of airline strategic routes as uneconomical direct routes can be terminated in favour alliance market sharing.
             Route Profitability is calculated using complex programs able to compute all the data input and produce a route profitability report/forecast complete with expected statistics and KPIs of the routes financial undertaking.


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