Aeronautical

Bachelor
Network
developments

23rd March 2022

CONTENTS
1. Understanding the macro forces influencing air traffic demand
Where do passengers fly? Why?
What is propensity to fly and what affects propensity to fly?
What is the global air traffic distribution?
What is the impact of COVID-19 traffic on this distribution?

2. Network topology
What are the different types of network?
What are the advantages and disadvantages of a point-to-point strategy? Of a hub-and-
spoke strategy?

3. Network planning
What are the main steps of network planning? Of route openning?
What are the factors influencing network planning?
Which departments are involved?

4. Conclusion
REMINDER: NETWORK & SCHEDULE ARE THE BACKBONE OF AN AIRLINE OFFER

Offer management at a given time =

1 Offer = 1 Product combined to 1 Fare Revenue Management

Products x Fares = Offer

Airlines’ product is not just a Up to 26 different fares for Up to 9 identical offers available in
seat in an aircraft the same product real time

Revenue management teams use

Airlines product combines: Each product can be sold at
algorithms to stimulate demand
- Origin and destination different fares, depending on:
for seats that would otherwise
- Schedule - Estimated demanded
fly empty thanks to dynamic
- Cabin class - Booking time
offer. Airlines’ inventory
- On-board comfort - Competition positioning
management combines the use
- Airport & onboard services - Passengers segments’ price
of past data, present data and
- Ticket flexibility sensitivity
the analysis of trends…

 Airlines product is a perishable commodity that cannot be warehoused or sold another day. An empty
seat is a missed opportunity to generate revenue but will burn cash anyway.
 1. Understanding the macro forces
influencing air traffic demand

© Thomas Pougheon (flickr)

ORGANIZATION OF THE GLOBAL AIR NETWORK – GLOBAL TRAFFIC FLOW

Global air passengers in 2019 = 4.5 Billion

ORGANIZATION OF THE GLOBAL AIR NETWORK – AIR TRAFFIC ORIGIN

Global air traffic & population per region (2019)

Asia + Middle-East Northern America Europe Latin America and the Caribbean Oceania Africa

Air traffic 42% 25% 24% 5% 3%2%

Population 60% 5% 10% 8% 1% 17%

Unequal breakdown of global air traffic:

Asia & Middle-East, Northern America & Europe represent 91% of air traffic, but only 75% of global
population.
Gap between global air traffic and world population:
Europe & Northern America: 15% of global population generate almost half (49%) of global air traffic
Asia and Africa air traffic is expected to boom in the upcoming years.

Sources: Sabre, UN World Population Prospects

 FACTORS INFLUENCING PROPENSITY TO FLY
Economic Having enough money to travel requires a strong economy reflected
health
in healthy growth in GDP.
khi dân số tăng lên và tầng lớp trung lưu mở rộng thì khả năng muốn bay (đi máy bay) của
Demographic người dân cũng sẽ tăng lên.
A growing population and an expanding middle class can increase
changes
propensity to fly.
giảm dần khi thị trường lớn mạnh
Market Propensity to fly growth tapers off as a market matures.
maturity
Factors
influencing
Crisis Crisis can temporarily decrease propensity to fly.
Propensity to
fly
yếu tổ
ảnh hưởng Geographical Propensity to fly is affected by countries’ shape, size, and location. It
khả năng bay features
is for instance greater within island nations.

Competition The rise of a new business model in a market – such as LCCs – can
increase propensity to fly of a given population.
hãng có knang kết nối vượt trội so với kích cỡ của họ nhờ vào ''hub'' -> tăng khả năng bay
Airport hub Countries with air connectivity far out of proportion to their size,
status
because of their airports’ hub status, have a higher propensity to fly.
chuyến bay trên đầu người
 Propensity to fly is defined as the number of flight trips per head of the population, or “trips per capita”,
per annum. It is a useful indicator of the level of air traffic in a country and of the potential for growth.
Nếu chỉ số này tăng theo thời gian, điều này có thể cho thấy ngành hàng không đang phát triển và tiềm năng cho sự tăng trưởng trong tương lai
Sources: PWC Propensity to fly in emerging economies
 PROPENSITY TO FLY IS INTRINSICALLY LINKED TO COUNTRIES’ ECONOMIC HEALTH

Propensity to fly – trips per capita & GDP per capita in 2019
Trips per capita

10.00

Canada
1.00 France
Vietnam China

Brazil

0.10 Kenya
Group 1

Madagascar
0.01 Group 2

Group 3
0.00
- 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000 50 000
Gross Domestic Product per capita

Sources: Airbus GMF 2019-2038

Passengers originating from respective country
PROPENSITY TO FLY IS INTRINSICALLY LINKED TO COUNTRIES’ ECONOMIC HEALTH
Aviation market consolidation là quá trình hợp nhất các doanh
nghiệp, tập đoàn hoặc hãng hàng không trong ngành hàng không để
tạo ra một thị trường hàng không có kích thước lớn hơn và ít đối thủ
hơn. Một aviation market consolidation được xem là đã diễn ra khi
có ít hãng hàng không hơn trong thị trường và các công ty còn lại có
sức mạnh tài chính và thị phần lớn hơn. -> có thể làm giảm sự lựa
• GDP per capita > 15 000 USD chọn của hành khách.
Group 1 • 2 trips per capita per year in average
Countries’ aeronautical • High air transport maturity (deregulated market, market consolidation
transition achieved achieved), leading to a steady traffic growth
• Example: Canada, China

• 5000 USD < GDP per capita < 15 000 USD

Group 2 • From 1 trip per 10 capita per year to 1 trip per capita
Countries’ aeronautical • Rapid growth of GDP per capita
transition in progress • Air transport close to maturity (annual traffic growth from 5% to 10%)
• Example: Brazil, Laos, India, Vietnam

• GDP per capita < 5000 USD

Group 3 • Less than 1 trip per 10 capita
Countries beginning their • Booming GDP growth, mostly African countries
aeronautical transition • Booming air transport growth ( beyond 10%)
• Example: Cambodia, Madagascar, Kenya
 ORGANIZATION OF THE GLOBAL AIR NETWORK – AIR TRAFFIC TYPE

Global air traffic & region origin per traffic type(2019)

Asia North America Europe South America Oceania Middle-East Africa

International 29% 13% 44% 2%2% 7% 3% 44%

Domestic 45% 31% 10% 7% 7%2%2% 56%

Global air traffic is dominated by domestic traffic. Yet, international air traffic is growing faster than domestic
traffic thanks to the continuous effect of globalization, the growth of emerging countries and their opening to
global economy.
Geographical features and geopolitics have a great influence on propensity to travel and routes: passengers
living in relatively small countries will have higher propensity to fly internationally. This explains why almost
1 international pax / 10 comes from Europe.

Sources: Sabre
IN THE SHORT TERM, COVID-19 RESHUFFLED THE TRAFFIC FORECASTS CARDS

GDP & demographics are the fundamental 2021-2025 passenger growth vs 2019
120%

Share of 2019 pax

drivers of air traffic growth. Yet in the short
term, the biggest and most immediate 2019 level
100%
drivers of passenger numbers will be the
governmental restrictions placed on travel. 80%
Not all regions are recovering at the same
pace: 60%
Asia-Pacific will be among the latest regions
to recover due to slow removal of travel 40%
restrictions, especially in China. 2021 2022 2023 2024 2025
Asia-Pacific Europe North America
North-American market is the most
Africa Middle-East South-America
performing market. Domestic market is
expected to return to pre-crisis trends in  Global domestic traffic is expected to surpass
2022. 2019 levels in 2023
 Global int’l traffic is expected to exceed pre-
COVID-19 levels in 2024
Sources: IATA Air Passenger Numbers to Recover in 2024
RUSSIA-UKRAINE CONFLICT: TOO SOON TO ASSESS THE MAGNITUDE OF THE IMPACT ON
TRAFFIC DEMAND

Ukrainian airspace and neighboring airspaces are

At this stage, IATA estimates that this conflict is
closed to all civil flights – Flightradar24
unlikely to impact the long-term growth of air
transport.
In the short-term, it is however too early to
estimate the magnitude of consequences for
global aviation and traffic demand.
Impact on airline costs as a result of
fluctuations in energy prices or rerouting to
avoid Russian airspace could have broad
implications. Jet fuel prices had risen to USD
141 per barrel on 4th March 22, up 27% on the
month, following the launch of the invasion.
Consumer confidence and economic activity  On the 7th March 2022, almost 40 countries,
including EU countries, the UK and the US, have
are likely to be impacted even outside of
closed their airspace to Russian airlines
Eastern Europe. according to IATA.
IN THE MID-TERM, COVID-19 ACCELERATED THE EMERGENCE OF NEW TRENDS

E-commerce demand

 E-commerce demand will drive cargo traffic growth.

 Too early to estimate precisely impact of corporate travel evolution, energy costs and environment
awareness on traffic demand.

Sources: Airbus GMF 2021-2040

WORLD’S BUSIEST AIRPORTS FOR PASSENGER TRAFFIC

Total pax
Rank Airport
2019*
1 Atlanta, US (ATL) 110 531 300 United States have 4 airports of the global Top 10
2 Beijing, CN (PEK) 100 011 438 busiest airports.
3 Los Angeles, US (LAX) 88 068 013
Asia is well represented, with 2 airports in China (PVG,
4 Dubai, AE (DXB) 86 396 757
PEK) and the Japanese capital airport (HND).
5 Tokyo, JP (HND) 85 505 054
6 Chicago, US (ORD) 84 649 115 Dubai, as the home base of the super connector
7 London, GB (LHR) 80 888 305 Emirates, is one of the world mega-hub airports.
8 Shanghai, CN (PVG) 76 153 455
9 Paris, FR (CDG) 76 150 009
10 Dallas/Fort Worth, US (DFW) 75 066 956
Sources: ACI
* Total passengers enplaned and deplaned, passengers in transit counted once
WORLD’S BUSIEST ROUTES FOR PASSENGER TRAFFIC
Asia-Pacific concentrates most busiest routes. The large majority of routes are short, domestic routes and
often served with high frequency (ex: CJU-GMP = 122 daily return flights).
This ranking highlights the role of air transport in territorial development strategies.

Total pax
Rank Route
2019
1 CJU-GMP 11 921 821
2 MEL-SYD 7 694 990
3 HAN-SGN 6 956 926
4 BOM-DEL 6 122 429
5 CTS-HND 5 444 375
6 JED-RUH 5 186 523
7 FUK-HND 4 657 979
8 CGK-DPS 4 541 986
9 HKG-TPE 4 308 876
10 PEK-SHA 4 135 611
Sources: Sabre, OAG
WORLD’S BUSIEST AIRPORTS FOR CARGO TRAFFIC

Cargo (FTK)
Rank Airport
2019*
1 Hong Kong, HK (HKG) 4 809 485
Geographical distribution of top cargo airports
2 Memphis TN, US (MEM) 4 322 740
3 Shanghai, CN (PVG) 3 634 230 depends on several factors:
4 Louisville KY, US (SDF) 2 790 109 Freighter airlines’ base (Memphis for FedEx,
5 Incheon, KR (ICN) 2 764 369 Louisville for UPS)
6 Anchorage AK, US (ANC)** 2 745 348 Proximity of large maritime ports (ANC, and
7 Dubai, AE (DXB) 2 514 918 Asian coasts)
gần cảng lớn

8 Doha, QA (DOH) 2 215 804

Passenger traffic, as belly cargo represents
9 Taipei, TW (TPE) 2 182 342
almost half of total air freight capacity (DOH,
10 Tokyo, JP (NRT) 2 104 063
DXB).
Sources: ACI
Cargo loaded and unloaded freight and mail in metric tons
**Includes transit freight
 2. Network topology

© Thomas Pougheon (flickr)

TYPES OF NETWORK: UNCONNECTED

Low level of connectivity, lack of network continuity, no main base. Traffic is mostly point-to-point
(P2P).
This type of airline network is quite rare because of its cost to operate. Most airlines operating
unconnected networks are focusing on niche markets or serving territorial development strategies.
chiến lược phát triển lãnh thổ

Niche market là một thị trường nhỏ hẹp, tập trung vào một nhóm đối tượng
khách hàng cụ thể có nhu cầu và sở thích đặc biệt.
TYPES OF NETWORK: CLUSTER TREE

Base

Low level of connectivity, flows are mainly from and to the

airline’s base. Traffic is mostly point-to-point.
Historically, this is the first kind of airline network (more
technical stopovers were required).
Still used today in remote locations like in Canada or in
Pacific islands to serve vital needs and connectivity.
TYPES OF NETWORK: MESH NETWORK

độ bao phủ địa lý tuyệt vời

High level of connectivity. Excellent geographical coverage.
Little hierarchy among destinations, all airports benefit from the same level of connectivity.
điểm dừng trung gian
Particularly convenient for P2P pax who benefit from a large range of direct destinations (no stopover)
Yet, this type of network is rare because of its cost to operate. Airlines tend to hierarchize their
destinations by organizing their networks into hubs.
Can be justified in densely populated countries where traffic demand is strong & constant in all points of
the network.
TYPES OF NETWORK: STAR NETWORK

Base

Base

đầu mút
Network is hierarchized: distinction between hubs (operating bases) and spokes. Hubs benefit from excellent
connectivity, low connectivity for spokes. A star network can be organized with several hubs. Depending on
the airline’s strategy, traffic can be both P2P or connecting. hub nằm ở vị trí chiến lược, mật độ lưu lượng khách lớn và
đc kết nối với nhiều địa điểm khác -> excellent connectivity
This network organization meets several constraints:
Some cities are leviathans (ex: Paris in France)
Allows to position operating bases
Allows to develop hub strategies (particularly true for legacy carriers)
TYPES OF NETWORK: NON HUB STAR NETWORK

This organization is favored by P2P carriers

(often low-cost carriers) willing to optimize
their organization. Several destinations can be
connected to the same operating base which
eases operations.
Operating base(s) are often located in densely
populated cities where demand is strong
enough to fill aircraft.
As there is no or little connection
opportunities between secondary markets,
success of a route strongly relies on the local
markets potential, both at departure and
 Volotea, a Spanish low-cost carrier, has 11
destination.
operating bases in Spain, Italy and France. Yet, its
The lack of connection opportunity can be traffic is predominantly P2P.
partly explained because schedules of P2P
carriers do not follow a hub banking rationale.
Sources: Routes
TYPES OF NETWORK: HUB & SPOKE NETWORK

3 markets to distinguish:

Central market: captured from the

A hub’s catchment area
A B
Local destination market: brings traffic
B to the hub (A) and to outlying
destinations

 How many routes can be combined thanks to Outlying markets: traffic connecting at
this mini-hub? the hub A

This network organization allows to connect markets where traffic potential is too low to open a direct
route.
Hubs are often located in densely populated cities (capitals) where demand is strong enough to
guarantee a minimum level of P2P traffic from / to network spokes.
Factors influencing the selection of freight airlines’ hub are different: a central location will often be
favored (ex: FedEx in Memphis and in Anchorage for Asia-North America cargo traffic).
HOW MANY THEORETICAL FLIGHT CONNECTIONS CAN BE DONE ON TURKISH AIRLINES’
NETWORK?

304
destinations served
directly from Istanbul

Theoretical number of connecting flights:

Each destination is connected to 303 other destinations via Istanbul… Which means there are
(304*303=) 92 112 connecting possibilities both ways.
If Turkish Airlines wanted to connect these markets with direct flights, it would have to operate 46
056 routes!

Sources: Routes
TYPES OF NETWORK: PRINCIPLE OF HUB & SPOKE NETWORK // HUB BANKING

Emirates’ Dubai hub organization displays 3 distinct connecting waves

Departing flights

Arriving flights
tập trung các chuyến bay
Airlines operating a hub & spoke network use a system called “hub banking” which clusters flight around
similar times. An average day may have up to 10 'banked' times, in which several flights all leave within
minutes of each other.
The airline co-ordinates arrivals and departures at its hub in order to minimize delays for passengers
continuing through the hub to final destinations.
Sources: airliners.net
HUB & SPOKE NETWORKS BRING A VIRTUOUS DYNAMIC FOR BOTH PASSENGERS AND
OPERATORS

 Connections can generate from 50% to 150% additional traffic for a given route.

CASK reduced, optimized load- Highest number of frequencies,

factors = cheaper to operate larger aircraft, more destination
opportunities

Increased attractiveness of the product =

growth of P2P traffic and connecting traffic
 BUT SOME CAVEATS

Interdependence of routes increases operational risks

and the risk of “domino effect”. If one spoke closes, this
may weaken the whole network
ảnh hưởng tới Product attractiveness: connecting flights may be
hindered by delays (missed connections) and loss of
personal belongings. Disembarking and embarking in a
second aircraft is also an inconvenience passengers are
willing to avoid.
Congestion at hub airport during departure & arrival
 Heathrow is one of the busiest two-
peaks. runway airports in the world with
Hub airport policy and service breakdowns may impact about 1,300 combined take-offs and
landings a day under normal pre-Covid
strongly airlines operations (e.g.: strikes, storms…)
conditions.
From a route perspective, higher station costs and
landing fee at hub airport due to overuse of terminal
staff, gates, and equipment. Hub advantages have to
be considered from a network perspective.
Sources: Heathrow airport
PROS & CONS OF P2P NETWORKS
Advantages Disadvantages

Reduced “domino effect”: routes can be Local demand have to be strong enough to fill
easily interrupted if not profitable. the cabin : low density markets may be
Product attractiveness: direct flights are more excluded.
convenient to passengers: no stopover, Requires more routes for the same market
minimized travel time. Passenger willingness footprint
to pay for a direct flight is higher Congestion at large international airports may
Decreases airport dependency: largest P2P limit the number of required frequencies or
carriers can benefit from airport competition possibilities to capture attractive slots.
willing to attract new carriers (airport Varying frequency and pricing are the only
incentives, facilities…) delays may be limited ways to counter demand variations: varying
to one aircraft’s routes. demand in a given city-pair cannot be offset
From a route perspective, lower operating by demand from other markets.
costs (ground ops, maintenance, fuel, crew…)
Higher utilization of aircraft and crews,
thanks to low TAT and optimized dispatches.
 3. Network planning

© Thomas Pougheon (flickr)

DEPARTEMENTS INVOLVED IN NETWORK PLANNING

Network planning requires a high level of cooperation between operational, commercial & support
departments.
Marketing
Commercial Operational
Ground departments
departments Commercial ops

Revenue
Maintenance
Management

Fleet
Crews
management

Flight
Corporate Financials
ops
Int’l
corporate
NETWORK PLANNING ACCURACY INCREASES WITH TIME
Accuracy

Flight D-Day

OCC adjustments M-1

Published network M-8

Forecasted network Y-1 to Y-x

Time before flight

 FACTORS INFLUENCING NETWORK PLANNING: MARKET DEMAND
• Demographic & economic analysis, population, propensity to travel,
tourism, GDP...
General
• Synthesis of Strength, Weaknesses, insights • Traffic rights, liberalization status
market opportunities & threats Regulatory
SWOT framework

• Identification of potential operating Supplier / Existing • Airport facilities & slot availability
Collaborator
blockers (trained pilots or availability facilities (runway, accessibility…)
mechanics, spares…)

Market
analysis
Market
• Market needs vs current offer Gap • General traffic history & trends at
history &
analysis country / region level, past
trends
attempt & failures

Market Competition
analysis • Competition structure, market share
• Existing travelling passengers & segment & business model
expectations, new segments to stimulate Route
analysis
• Pax & cargo demand analysis, competitors
Source: Airbus Consulting fare positioning & existing schedule
 FACTORS INFLUENCING NETWORK PLANNING: FLEET

Top down approach: influence of fleet on network

Fleet growth / renewal Short to mid-term approach (9 month to 5 years)
Capacity growth Influence on network priorities & adjustments
A/C type and cabin configuration
Fleet & network planning drive each other
Study of A/C performance on each route to allocate
the most adapted A/C
Main driver: Aircraft utilization
Not all ordered aircraft are delivered at the same
time. Network have to be adapted depending on
aircraft deliveries.
In the short term, aircraft maintenance planning is an
important constraint.
Largest airlines have spare aircraft to prevent from
operational disruptions.

Bottom up approach: influence of network on fleet

Long-term approach (> 5 years)
Market demand
Influence on fleet plan & A/C orders
Connecting opportunities
FACTORS INFLUENCING NETWORK PLANNING: OPERATIONS
Pillars of schedule robustness

Schedule
= robustness
Schedule flexibility
+
Schedule stability

Whether airlines are operating hub & spokes or P2P networks, creating a robust schedule is key to avoid
propagated delays.
Schedule stability: commercial carriers’ schedules are as steady as possible
Schedule flexibility: Flight & ground operations (flight time, block-time, embarking and disembarking
constraints at airport are rounded with few additional minutes to anticipate potential disruptions
(weather, technical failure…).
FACTORS INFLUENCING NETWORK PLANNING: AIRPORT SLOTS
Slot allocation principles
A slot is the authorization for a flight to use a
runway at a busy airport for either a takeoff or a 1. Grandfathered slots
landing. These airports are called Level 3 airports
or coordinated airports. 2. Non-grandfathered slots:
Management of airport slots is required at some
airports where the available airport infrastructure Abandoned /
Newly available slots
is insufficient to meet the demand. confiscated slots
Airport coordination parameters are updated
twice each year – in conjunction with the IATA 3. Slot pool
seasons:
IATA winter season: begins on the last
New entrants Existing operators
Sunday of October and ends on the last
Saturday of March.
 In a coordinated airport, slots are allocated
IATA Summer season: begins on the last
by independent coordinators on the basis of
Sunday of March and ends on the last historic rights at the given airport.
Saturday of October.
Sources: IATA Worldwide Slot Guidelines
IN EUROPE, USE-IT OR LOOSE IT RULE WAS AT THE ORIGIN OF GHOST FLIGHTS DURING
PANDEMIC
Grandfather rights, also called the 80-20 rule, are
granted under the condition that airlines use at least
80% of their slots during the season.
Because of this system, airlines reducing their use of
the slots risk losing them. This is the Use it or loose it
rule.
In 2020 during the pandemic, European airlines kept
flying empty flights before the European Commission
decided to suspend the grandfather rule.
In Europe, for the current Winter 2021-2022 period,
the "use it or lose it" threshold was lowered to 50%.
6 criteria determine a slot pair's value: constraint
level, general economic environment, flight time of  Airports slots are extremely valuable for
the day, slots frequency, aircraft turn-around time, airlines. In 2016, Oman Air broke the world
seasonality. record price for a slot pair. Oman Air paid
US$75 million for the right to land at
Heathrow on a early-morning arrival slot.
Sources: Simple Flying
FACTORS INFLUENCING NETWORK PLANNING: SEASONNALITY
xác định thời điểm ít du lịch nhất để tránh operate khoảng tgian đó
-> tiết kiệm đc tiền.
Example of routes monthly traffic
Anticipating the traffic seasonality is a % Total OD traffic

crucial task for any airline. The objective OSL-PAR DXB-PAR BLQ-PAR ORY-TLS
is to balance out the typical low periods 14% Summer Winter Annual

of leisure and / or business demand and

to challenge the status quo of losing 12%
money. It can be answered through 10%
several strategies:
Redeploying aircraft to more profitable 8%
markets during the low season 6%
Lowering the capacity and optimizing
the maintenance planning 4%
Increasing the business travellers mix 2%
during winter season and push into the
visiting friends & relatives market. 0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Operating charter flights for sport
competitions, company events or tour-
operators.
 FACTORS INFLUENCING NETWORK PLANNING: FREEDOM OF THE AIR & TRAFFIC RIGHTS
own country" (quốc gia của chính mình) thường được hiểu là quốc gia nơi hãng hàng không có trụ sở hoặc được đăng ký.

Freedom Description

The right to fly over a foreign country without

1st
landing.

The right to refuel or carry out maintenance in a

2nd foreign country without embarking or disembarking
passengers or cargo.

The right to fly from one's own country to another

3rd
country.

4th The right to fly from another country to one's own.

The right to fly between two foreign countries on a

5th
flight originating or ending in one's own country.

The right to fly from a foreign country to another

6th while stopping in one's own country for non-
technical reasons.

The right to fly between two foreign countries,

7th
where the flights do not touch one's own country.
 The freedoms of the air are a set of commercial
8th
The right to fly inside a foreign country, continuing to aviation rights granting a country's airlines the
one's own country.
privilege to enter and land in another country's
The right to fly within a foreign country without airspace.
9th
continuing to one's own country.
ROUTE OPENING STEPS - KEY MILESTONES
1st
13+ 12 11 10 9 8 7 6 5 4 3 2 1
flight

Commercial route study Commercial

Slots negotiation &

Commercial
approval
Landing and overflight Commercial / Flight ops engineering
permits application
Negotiation & contracts
Procurement + Flight ops / Ground ops / Maintenance /
settlement & with 3rd
parties Commercial

Distribution – Integration
Commercial
to PSS & 1st ticket sale

Risk assessment Safety/ Flight ops

AOC extension
(update of OM-A, OM-C + OM-B Flight ops
OM-D as required)

A/C scheduling Maintenance

Flight ops route study Flight ops

Ground ops assessment Ground ops

Crew
Crew scheduling scheduling

Operation control / flight

dispatch / Crew control OCC
 ROUTE OPENNING STEPS: COMMERCIAL ROUTE STUDY
Involved department: Commercial
Initiation: 12+ months before route
Market opening
demand

Competitive
environment
Hand off to flight ops
Assessment of Detailed
AC & schedule New route (risk and route study)
route financial
planning short list & maintenance
attractiveness assessment
(scheduling)
Bilateral
constraints

Commercial deals
with local airport Deals securing
and stakeholders

Marketing Misc.(Office,
Aeronautical
support / maintenance,
incentives
direct funding etc.)
ROUTE OPENNING STEPS: TRAFFIC FORECAST PRINCIPLE

Traffic estimate
Potential traffic to be captured. Basis for scheduling and
revenue management.

Market reaction
Route stimulation, competition aggressiveness, airline
attractiveness

Route status
Traffic volume & type, growth, competition offer
(fares, capacity, schedule)

Overall market status

GDP, destination attractiveness, propensity to fly…
ROUTE OPENNING STEPS: LANDING AND OVERFLIGHT PERMITS APPLICATION
Involved department: Commercial
Initiation: 12+ months before route
opening

Letter Transport
Int’l Letter CAA to
Ministry to Traffic right
route Letter to CAA transport Local meeting
opening Foreign Affairs confirmation
Ministry
Ministry
 ROUTE OPENNING STEPS: NEGOTIATION & CONTRACTS SETTLEMENT WITH 3RD PARTIES
• Fuel supply
Fuel contract • Fueling and defueling ops

• In-flight assistance, including re-dispatching if needed;

Crew • Post-flight activities, incl. hotels contracts
administration • Health and visa requirements
• Liaison with suppliers and administrative management;
Catering • Storage of food & beverages & of the equipment needed for their preparation;
• Cleaning of this equipment;
• Preparation and delivery of equipment as well as of bar and food supplies.
Contracts
Maintenance • Line & unscheduled maintenance
• Provision and administration of spare parts and suitable equipment;
• Request for or reservation of a suitable parking and/or hangar space.
Taxes and fees • To airports
payment • To CAAs

SPA • GSA (pax and cargo)

• Travel agents

• Ground administration and supervision • Freight and mail handling

Handling • Passenger handling • Ramp handling
• Baggage handling • Aircraft services
• Surface transport
 4. Conclusion

© Thomas Pougheon (flickr)

CONCLUSION

Identifying network development opportunities requires an understanding of global traffic organization and
trends in the forces affecting airlines’ revenue growth. They are both driven primarily by passenger growth
and therefore propensity to fly.
Propensity to fly of a given population is a consequence of demographic, socioeconomic and geographical
forces and is influenced by local air transport maturity.
Europe and North-America generate 49% of global air traffic. Yet, Asia and Africa air traffic is expected to
boom in the upcoming years.
In the long-term, passenger demand and traffic distribution evolutions will follow GDP and demographic
growths. In the short to middle-term however, crisis like COVID-19 or Russian-Ukrainian conflict may
jeopardize airlines’ network development strategies.
Airlines’ network topology should be adapted to market needs and airlines’ capabilities. Hub and spoke
mở rộng phạm vi địa lý, địa bàn hoạt động
networks increases airlines’ geographical footprint while direct flights on a Point-to-Point network are often
more attractive to customers.
Network planning requires high level of cooperation between operational, commercial & support
departments.
Factors influencing network planning are both internal and external. On top of market demand, fleet,
operation, slots, traffic rights and seasonality constraints should be taken into account.
USEFUL SOURCES

Global organization & leading market intelligence sources:

ICAO: https://www.icao.int/sustainability/Pages/economic-analysis.aspx
IATA economics: https://www.iata.org/en/publications/economics/
ACI: https://aci.aero/category/press-releases/
CAPA: https://centreforaviation.com/
Airbus GMF: https://www.airbus.com/en/products-services/commercial-aircraft/market/global-market-forecast
Ideaworks: https://ideaworkscompany.com/reports/

Consultancy firms & other dedicated blogs:

McKinsey: https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights
Oliver Wyman: https://www.oliverwyman.com/our-expertise/industries/transportation/aviation.html
Aviation Week: https://aviationweek.com/
Runway Girl Network: https://runwaygirlnetwork.com/
Simple Flying: https://simpleflying.com/
OAG: https://www.oag.com/insights
Amadeus: https://amadeus.com/en/insights/blog