Airline value drivers

Profitability and the air transport value chain 10 Despite the clear value being created for customers, the airline industry has found it dif cult to make an adequate level of pro ts. Last year was a fairly typical point in the middle of the cycle. Airlines generated revenues averaging a little over $ per passenger. That included just over $  · Teresa Cederholm. November 3, , PM. Assessing the key drivers of global airline industry growth (Part 2 of 8) (Continued from Part Estimated Reading Time: 2 mins.  · Value drivers: in recent time, the approach that has been significantly gaining the increased recognition is identifying the key elements standing out as vital in shareholders value creation of the specific organization. From the standpoint of owners, the key value drivers may be the growth potential company’s key services and products, key technology capabilities providing the competitive .

Profitability and the air transport value chain 10 Despite the clear value being created for customers, the airline industry has found it dif cult to make an adequate level of pro ts. Last year was a fairly typical point in the middle of the cycle. Airlines generated revenues averaging a little over $ per passenger. That included just over $ There are three categories of value drivers: growth drivers, efficiency drivers, and financial drivers. As shown in Figure 1, companies tend to manage these value drivers in four ways. By focusing on value drivers, management can prioritize the specific activities that will affect performance in each area. Profit Pools of the Airline Industry. These are all the profits earned by the airline industry’s value chain at all points. In order to survive and make a profit in the tough environment, airlines manipulate three key variables: cost, which is calculated by dividing of the total operating expenses by ASM (available seat miles); yield, this is calculated by dividing of the total operating.

١٣‏/٠٧‏/٢٠١٧ Aggregate views of airline costs have their limitations. A better approach looks in depth at cost drivers. While having to manage all these challenges, airlines are always facing strong competition, more so since the appearance of low cost carriers. One way to. driver of airline expenses and profitability. After being relatively stable for over 20 years, fuel costs have doubled over the past five years (see Figure 4).