Aviation Pricing and Revenue Management Report: Financial Analysis

This report provides a comparative analysis of two airlines, Preisleicht and Vipluft, focusing on their expenses, revenues, RASK, and CASK to determine their financial performance. The report delves into the financial data of British Airways and Jet 2 Airways, examining their revenues, finance costs, profit, taxation, and earnings per share for the year 2018. The analysis highlights the differences in performance, attributing them to varying customer numbers and operational strategies. The conclusion suggests Preisleicht's superiority due to lower expenses, while British Airways excels in higher revenues and earnings per share. The report references sources on aviation data analysis, pricing, and revenue management to support its findings.

Aviation Pricing and Revenue Management

Contents
INTRODUCTION.......................................................................................................................................3
MAIN BODY..............................................................................................................................................3
CONCLUSION...........................................................................................................................................5
REFERENCES............................................................................................................................................6

INTRODUCTION
The report is based on making comparison of two airlines named as Preisleicht and
Vipluft. This comparison has been done in terms of expense, revenues, RASK (revenue per
available seat kilometer) and CASK (Cost per available seat kilometer). Under the further section
of report, online financial results of both airlines is done in detailed manner in order to find out
an outcome about which airline is better.
MAIN BODY
 Comparison of expenses of Preisleicht and Vipluft: In accordance of given data related to
cost of both flights, this can be stated that Vipluft seems more expensive compared to
Preisleicht. The rationale behind this is that under each element of cost Vipluft contains
higher data. The major difference in expensive is in passenger service cost that is € 25 in
Preisleicht while in Vipluft it is of €450. It indicates that Vipluft’s cost related to manage
the expense of customer service is too higher. This might be because of mismanagement
of operations and activities.
Though, there are some elements in which cost of Vipluft is lower than Preisleicht. These
activities are cost of Aircraft depreciation and maintenance charges. In terms of overall
expense, this can be found out that total flight cost of Preisleicht is of €7157 while under
Vipluft, it is of €8665. It is not clear to find out the reasons due to which there is
difference in both flights’ expenses but this might be because of some deficiencies or any
other faults.
 Comparison of financial data of British air ways and Jet 2 air ways:
British air ways Jet 2 air ways
Revenues 13021 2391.8
Finance costs 116 21.1
Profit for the year 2091 110.7
Taxation 365 23.9
Earnings per share 184.5 74.59

Analysis: In terms of different airline companies named British air ways and Jet 2 air ways
contain various kinds of information including revenues and cost. This data has been derived in
related to year 2018.
Revenues- In the context of revenues, this can be stated that revenue of British air ways is of £
13021 million. On the other hands, revenue of Jet 2 air Ways Company is of £ 2391.8 million.
This value of revenue shows that there is huge difference in both companies’ performance in
terms of revenues. As well as the reason of this difference in both airline companies can be
because of more number of customers in British air ways or due to lack of control over different
kinds of cost of sales including purchasing, opening stock and closing stock.
Finance cost- The cost of funds, also referred to as cost of grant money, is the rate, interest, and
other costs involved in lending capital for the building or acquisition of properties (Gaul and
Winkler, 2019). In relation to finance cost, this can be gathered that total cost of financer of
British air ways is of £ 116 million on the other hands, finance cost of Jet 2 air ways is of £ 21.1
million. This is so because of lack of revenues in both companies. In terms of British air ways, it
can be gathered that they have large number of operations due to which cost of managing finance
is higher. As well as finance cost contains expense of getting fund from different sources along
with interest. In relation to Jet 2 air ways, their cost finance is too lower that indicates that they
have managed to control their cost of acquiring funds from different operations.
Net profit of year- In regards to net profit of both companies, this can be stated that British air
ways have profit of £ 2091 million. On the other sides, competitive company has net profit of £
110.7 million. It indicates that there is difference in net income and reason of this is because of
fewer amounts of operations, activities and number of customers. Jet 2 air ways company should
focus on increasing overall revenue from different operations so that their net margin can rise in
an effective manner.
Taxation- A tax is a mandatory financial fee or some other form of taxation levied by a political
agency on a citizen to offset government expenses and various public expenses (Helmold, 2020).

In the context of taxation amount paid by both companies’ this can be gathered that British air
Ways Company paid taxation of £ 365 million. On the other hands, Jet 2 air Ways Company paid
taxation amount of £ 23.9 million. The rationale behind this is because of difference in net
income produced by companies. Basically, tax is paid on the basis of amount of net income
generated by companies.
Earnings per share- Earnings per share (EPS) are measured as the earnings of the company
divided by the numbers of the preferred shares that are remaining. The top figure serves as a
measure of the performance of a business. EPS that is calculated for exceptional items and future
equity dilution is normal for a corporation to disclose (Antonio, de Almeida and Nunes, 2019).
The higher the EPS of a business, the further lucrative it is regarded to be. In the context of
earnings per share of both companies, this can be stated that British air Ways Company is able to
produce earnings of 184.5 per share. While Jet 2 air ways company can produce earnings of
74.59 on each share. It shows that there is significant difference in relation to EPS. This is so
because both companies’ have different market share and growth. In order to make higher
earnings per share, Jet 2 air Ways Company should focus on gaining higher market share and
approach from economy.
CONCLUSION
On the basis of above report this can be concluded that both companies have different
types of outcomes due to various numbers of customers and operations. In regards to Preisleicht
and Vipluft, this can be stated that Preisleicht Company is better due to lower expenses. While in
the aspect of British air ways and Jet 2 air ways companies, British air ways is better due to
higher revenues and earnings per share.

REFERENCES
Gaul, W. and Winkler, C., 2019. Aviation Data Analysis by Linear Programming in Airline
Network Revenue Management. In Applications in Statistical Computing (pp. 3-18). Springer,
Cham.
Helmold, M., 2020. Pricing in the Aviation Industry. In Total Revenue Management (TRM) (pp.
129-137). Springer, Cham.
Antonio, N., de Almeida, A. and Nunes, L., 2019. Big data in hotel revenue management:
exploring cancellation drivers to gain insights into booking cancellation behavior. Cornell
Hospitality Quarterly, 60(4), pp.298-319.