Airline networks block 5
Week 1, lecture 1
The airline network choices for an aircraft type and the related operations to effectively match the
demand and supply. You will learn how to apply logistical theories to airline networks and define
indicators to measure the effectiveness of the processes. This part of the module focuses on the
normal operations within an airlines network and provides tools to cope with disruptions on a daily
basis.
Keywords:
airline networks, supply chain, hub-spoke system, delay codes, key
performance indicators, aircraft utilization, supply and demand, route
and network determinants, economic trade-offs, scheduling, crew
planning, maintenance planning, tactical planning, supply and demand,
aircraft cost, aircraft life-cycle.
5 learning objectives:
1. Analyze supply and demand
2. Calculate aircraft costs
3. Manage the aircraft life cycle
4. Understand of network planning parameters
5. Understand the principles of supply chain
Recap logistic goals:
- Improve the customer service level with a reduction of the costs
- External
o Delivery time reduction
o Deliver reliability improvement
o Increase flexibility
- Internal
o Cost reduction
o Throughput reduction
A supply chain is the flow of physical goods (or SLF) between the supplier (sender) and receiver.
Supply chain structure
From a → b with a ‘pipeline’. Within this pipeline there are activities.
Loading – Transit – Receiving (A – B – C – D)
Management of every activity between the supplier and customer in such a way that its efficient and
effective. To achieve this:
- Standard times are determined for loading, transit, receiving
- Continuously measure the performance
- Evaluate actual vs standard times
Determining standard times is a responsibility of the organization for internal and external
stakeholders. Possible deviations:
- Loading: processing speed to high, no transport capacity
- Transit: complexity of the route
- Receiving: not enough space, slots, capacity
Meeting delivery conditions can only be proven with measurements of the processes, using KPIs
,Cargo supply chain:
1. Exporters
2. Trucking
3. Freight forwarders
4. Handling agent
5. Airline
6. Handling agent
7. Freight forwarders
8. Trucking
9. Importers
Consignors (sender) / consignees (receiver)
Freight forwarders
Airports & airport services providers
Airlines & general sales agent
Large cargo airports are mostly connected to their main carrier.
Different carriage of air cargos:
- Belly hold of passenger aircraft
- All cargo aircraft
- Combi aircraft
Why there is demand for air cargo?
- Emergency goods
- Ultra-high value goods
- Perishable goods, medical samples (blood), time sensitivity
- Routine, non-perishable goods
The integrated carriers:
- Federal Express, UPS, DHL
- Originated in US, overnight delivery market
- Premium product
- One-stop delivery (door to door)
- Schedules designed around customers’ needs
- Guaranteed delivery within a time frame
- Service integrity
Aircraft have high speed, but high costs.
Trucks have lower unit costs.
Vans have higher speed.
Week 1, lecture 2
Logistics strives for:
a. Meet customers’ demands, customer service
b. Time is money, time reduction
c. Go where it is needed, globalization
d. Collaborate, organizational integration
, HUB airport:
- Air traffic % transfer (about 30% O/D required)
- Dominant carrier!
- Waves and banks
- Geographic location
- Structure of the airport
- Concentration of airport in and around the main city
o Parallel runways
o Centrally places terminal
Secondary airport:
- Low cost / no frills airlines
Cargo airport:
- Passenger/base hubs
- Integrator hubs
o FedEx: Memphis
o UPS: Louisville
o DHL: Cincinnati
o TNT: Liège
- Other cargo airports
O/D small hubs:
- Two parallel runways: Oslo, Munich
Aviation globalization (alliances, STAR ALLIANCE, ONEWORLD, SKYTEAM):
- Increase of market sale
- Increase of destinations
- Increase in scale to reduce costs
- National border are still an obstacle
Hub developments:
- Hubs/super-hubs
- Expansion existing airport: LAX, Dubai, Istanbul
- New hubs are created: Detroit, Houston
Expectations:
- Growth will concentrate around mega-hubs and very attractive O/D airports
- Secondary hubs will reduce in size
- Airport classification
o Intercontinental hubs >40 mln pax (18 airports)
o International OD >20 mln pax (32 airports)
o Secondary hubs & OD 20 mln pax (150 airports)
o Regionals < 10 mln pax (2.400 airports)
EU HUBS:
- National hubs
- Dependent on national carrier
- Capacity issues, congestion
- Capacity expansion take long e.g. Amsterdam, London, Frankfurt
One of the EU Super HUBS is Paris Charles de Gaulle.
Week 1, lecture 1
The airline network choices for an aircraft type and the related operations to effectively match the
demand and supply. You will learn how to apply logistical theories to airline networks and define
indicators to measure the effectiveness of the processes. This part of the module focuses on the
normal operations within an airlines network and provides tools to cope with disruptions on a daily
basis.
Keywords:
airline networks, supply chain, hub-spoke system, delay codes, key
performance indicators, aircraft utilization, supply and demand, route
and network determinants, economic trade-offs, scheduling, crew
planning, maintenance planning, tactical planning, supply and demand,
aircraft cost, aircraft life-cycle.
5 learning objectives:
1. Analyze supply and demand
2. Calculate aircraft costs
3. Manage the aircraft life cycle
4. Understand of network planning parameters
5. Understand the principles of supply chain
Recap logistic goals:
- Improve the customer service level with a reduction of the costs
- External
o Delivery time reduction
o Deliver reliability improvement
o Increase flexibility
- Internal
o Cost reduction
o Throughput reduction
A supply chain is the flow of physical goods (or SLF) between the supplier (sender) and receiver.
Supply chain structure
From a → b with a ‘pipeline’. Within this pipeline there are activities.
Loading – Transit – Receiving (A – B – C – D)
Management of every activity between the supplier and customer in such a way that its efficient and
effective. To achieve this:
- Standard times are determined for loading, transit, receiving
- Continuously measure the performance
- Evaluate actual vs standard times
Determining standard times is a responsibility of the organization for internal and external
stakeholders. Possible deviations:
- Loading: processing speed to high, no transport capacity
- Transit: complexity of the route
- Receiving: not enough space, slots, capacity
Meeting delivery conditions can only be proven with measurements of the processes, using KPIs
,Cargo supply chain:
1. Exporters
2. Trucking
3. Freight forwarders
4. Handling agent
5. Airline
6. Handling agent
7. Freight forwarders
8. Trucking
9. Importers
Consignors (sender) / consignees (receiver)
Freight forwarders
Airports & airport services providers
Airlines & general sales agent
Large cargo airports are mostly connected to their main carrier.
Different carriage of air cargos:
- Belly hold of passenger aircraft
- All cargo aircraft
- Combi aircraft
Why there is demand for air cargo?
- Emergency goods
- Ultra-high value goods
- Perishable goods, medical samples (blood), time sensitivity
- Routine, non-perishable goods
The integrated carriers:
- Federal Express, UPS, DHL
- Originated in US, overnight delivery market
- Premium product
- One-stop delivery (door to door)
- Schedules designed around customers’ needs
- Guaranteed delivery within a time frame
- Service integrity
Aircraft have high speed, but high costs.
Trucks have lower unit costs.
Vans have higher speed.
Week 1, lecture 2
Logistics strives for:
a. Meet customers’ demands, customer service
b. Time is money, time reduction
c. Go where it is needed, globalization
d. Collaborate, organizational integration
, HUB airport:
- Air traffic % transfer (about 30% O/D required)
- Dominant carrier!
- Waves and banks
- Geographic location
- Structure of the airport
- Concentration of airport in and around the main city
o Parallel runways
o Centrally places terminal
Secondary airport:
- Low cost / no frills airlines
Cargo airport:
- Passenger/base hubs
- Integrator hubs
o FedEx: Memphis
o UPS: Louisville
o DHL: Cincinnati
o TNT: Liège
- Other cargo airports
O/D small hubs:
- Two parallel runways: Oslo, Munich
Aviation globalization (alliances, STAR ALLIANCE, ONEWORLD, SKYTEAM):
- Increase of market sale
- Increase of destinations
- Increase in scale to reduce costs
- National border are still an obstacle
Hub developments:
- Hubs/super-hubs
- Expansion existing airport: LAX, Dubai, Istanbul
- New hubs are created: Detroit, Houston
Expectations:
- Growth will concentrate around mega-hubs and very attractive O/D airports
- Secondary hubs will reduce in size
- Airport classification
o Intercontinental hubs >40 mln pax (18 airports)
o International OD >20 mln pax (32 airports)
o Secondary hubs & OD 20 mln pax (150 airports)
o Regionals < 10 mln pax (2.400 airports)
EU HUBS:
- National hubs
- Dependent on national carrier
- Capacity issues, congestion
- Capacity expansion take long e.g. Amsterdam, London, Frankfurt
One of the EU Super HUBS is Paris Charles de Gaulle.
