Thursday, November 28, 2019

Only data can save airlines operations now

The International Airline Transport Association pegs the maximum net post-tax profit margin for any region in the year 2019 at a meagre 5.5 % at best. The aviation business is cutthroat with very little margin and heavy competition. Airlines unwilling to change are closing shop. India is quite familiar with this phenomenon and has witnessed the closure of several airlines, starting with Modiluft, Eastwest, Kingfisher and recently, Jet Airways.

 The data revolution seems like the most obvious answer to the industry’s woes. Data science has made headway into the airline industry but only in spaces such as ticketing and revenues. Airline direct operating costs are at 50% of total revenue and not much has been done in the area due to a lack of bandwidth and connectivity. But, we are in very interesting times, as SpaceX and other organizations are ready to give the airline industry a boost with low latency gigabit internet connectivity. SpaceX is currently working with the US Department of Defense and has already demonstrated throughput of 610 megabits per second to the cockpit of a U.S. Military C-12 twin-engine turboprop aircraft. In comparison, the fastest internet connection available worldwide on aircrafts is approximately 12 megabit per second and considered a premium service for business jets and a few airliners.
 Airline operating cost can be loosely categorized into Ownership, Maintenance, Fuel and Crew. The life or airworthiness of an aircraft is measured in pressure cycles endured, meaning a flight from Srinagar to Chennai will cost almost the same as a flight from Mumbai to Pune from an ownership point of view. Dynamically optimizing city pairs, rotation of aircraft, and reducing downtime gives maximum utility and also makes it a challenging data problem that will now have an element of live data streams, making decisions more realistic and long term. Operators with multiple fleets can take advantage of planning based on sales forecasting by interchanging aircraft type depending on the requirement. If an airline has both a Boeing 777 and a Boeing 737, they carry approximately 400 and 200 passengers respectively. The airline could deploy the Boeing 777 if there is an increase in demand for a sector, which is normally operated with a Boeing 737 or vice versa. Time is indeed money for an airline operator and a single aircraft that’s not being utilized optimally can deliver quite a hefty punch on their bottom lines.
28/11/19 Vinod Joe/Analytics India Mag
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