Comprehensive Analysis of European Short Haul Route Profitability

This report provides a comprehensive analysis of the profitability of European short haul routes, focusing on both leisure and business travel. It begins with an introduction to air route planning and its success rates, followed by a detailed description of various flight routes, including those from London to Tenerife, Madrid to Ibiza, London to Frankfurt, and Geneva to Brussels, detailing the airlines involved, aircraft types, flight durations, and departure times. The report delves into the revenue management strategies of airlines like Ryanair, Jet2, Air Europa, Iberia Express, British Airways, Lufthansa, and EasyJet, examining price fluctuations and trends across different routes. It also assesses the cheapest periods for booking tickets, comparing leisure and business routes, and analyzing the differences in price trends between low-cost carriers and full-service networks. The report concludes with an analysis of total revenue, operational costs, and the factors influencing profitability, offering valuable insights into the airline industry's financial dynamics. The data is provided in the form of tables and graphs.

European Short Haul
Profitability

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
REPORT .........................................................................................................................................1
Description of flights operating in every leisure and business routes ........................................1
Analysis of the revenue management strategies..........................................................................3
Total Revenue from flight and total operational costs. ...............................................................6
CONCLUSION ...............................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Air route planning is described as process of evaluating and identifying feasibility of the
new routes for airport by given airline. Numbers are shared on success rates of the new routes.
Rate is defined as percentage of the new developed routes which remain in the service for 1 or 2
years after the inauguration. As the rate increases, this indicates that airline have capability of
properly anticipating performance of new routes in short term. The report covers the analysis of
profitability of business and leisure routes. The analysis is based on collection of ticket prices of
different airlines for same route. Report will discuss about the routes, revenues management
strategies of airlines, price fluctuations of airlines and operations cost of Easy jet and income
over particular route.
REPORT
Description of flights operating in every leisure and business routes
Leisure routes
Leisure route 1
STN – TFS (London, United Kingdom to Tenerife, Spain )
Airlines Ryanair Jet 2
Aircraft Type B737 -800 B737 - 800
Capacity 189 189
Flight duration 4 hr 30 min 4 hr 40 min
Departure time 06:10:00 14:15:00
Departure Date 26th December' 20 26th December' 20
Rynair is Irish lower cost airline company founded in 1984. It has headquarters in the
Swords, Dublin with primary operational base at London and Dublin. It has fleet size of 271
excluding the subsidiaries.
Jet 2 is low cost British liesure airline that offers scheduled and the charter flights from
UK. It is third largest in the scheduled airlines from UK. It has fleet size of 91 and operates over
82 routes.
Leisure route 2
1

MAD – IBZ (Madrid, Spain to Ibiza, Spain )
Airlines Rynair Air Europa Iberia Express
Aircraft Type B737 -800 B737 -800 B737 -800
Capacity 180 180 180
Flight duration 1 hr 20 min 1 hr 15 min 1 hr 10 min
Departure time 07:10:00 10:10:00 15:50:00
Departure Date 27th December' 20 27th December' 20 27th December' 20
Air Europa is 3rd largest Spanish Airline after the Vueling and Iberia. This airline has
been headquartered in the Llucmajor, Mallorca. It has fleet size of 45 and parent company is
Gloablia.
Iberia Express is Spanish airline company owned by the Iberia that operates over the
medium and short haul routes from parent airline hub at the Adolfo Suarez Madrid (Liao and
et.al.,2020). It has fleet size of 24 and operates over 44 destinations
Business Routes
Business Route 1
LHR – FRA ( London, United Kingdom to Frankfurt, Germany)
Airlines British Airways Lufthansa
Aircraft Type A320 A320 neo
Capacity 160 190
Flight duration 1 hr 45 min 1 hr 35 min
Departure time 15:15:00 17:30:00
Departure Date 7th December' 20 7th December' 20
British Airways is flag carrier online of UK headquartered in the London, England near
the main hub at the Heathrow Airport. Airline has fleet size of 250 and around 183 destinations.
Lufthansa is biggest German airline when combined with subsidiaries it is second biggest
airline of Europe in the terms of passengers. It has headquarters in Cologne, Germany and has
fleet size of 275 and operates over 220 destinations.
2

Business Route 2
GVA – BRU (Geneva, Switzerland to Brussels, Belgium)
Airlines EasyJet Brussels Airlines
Aircraft Type A320 A319
Capacity 170 150
Flight duration 1 hr 20 min 1 hr 15 min
Departure time 11:13:00 11:25:00
Departure Date 6th December' 20 6th December' 20
EasyJet is British multinational lower cost airways company which is headquartered at
Luton Airport, London. It operates both internationally and domestically. It provides services
over the 1000 routes in around 30 countries.
Brussels Airlines is flag carriers and also largest Belgium airline having headquarters at
Brussels. It operates over the 100 destinations of Europe and has fleet size of 38.
Analysis of the revenue management strategies
Revenue management strategies refers to application of the analytics which predicts the
consumer behaviour at micro market levels for optimising product availability and prices for
maximising the revenue growth. Primary aim of revenue management strategies is to sell right
product to right customers at right time for right prices. Airline industry operates highly over the
revenue management strategies (Arora and et.al.,2019). They frame different policies for
different routes for earning maximum revenues, giving tough competition and providing quality
services. Airlines frame the pricing strategies on the basis of season days and the number of
flights available through the routes. EasyJet is big airline company that is operating successfully
by managing its strategies for the ticket prices.
Trend in ticket price
Business Route 1
London to Spain
3

It is the leisure route where Rynair and Jet2 provides the airline services. It could be seen
that there is significant variation in the prices. The ticket prices starts raising from 26th October
and fall slightly after 9th November. It is seen lowering because towards the December as people
avoid going for tours near the Christmas season and stay with families and friends. The price
trends are highly fluctuating. It could be seen that revenues strategies of both the airlines are
moreover same as both are big companies operating over same rate and are strong competitors of
each other. Coming closer to the festive season prices over this routes are falling as rush reduces
over this route at this time.
Madrid to Ibiza
It could be evaluated that it is short-haul leisure route but the prices show high
fluctuations. All the three airlines operating over route are big ones. Air Europs shows declining
trend of prices, Rynair also shows significantly declining trend and Iberia shows increasing
4

trends in the prices. It could be seen that Iberia has highest prices of tickets even though all have
same capacity and flight type. Rynair adopts for penetrating pricing strategy but people trusts
domestic flights for travelling within country. It is the reason why Iberia and Europa has lower
falling ratio.
London to Frankfurt
This is business route travel means people travel over this route for business purposes. It
could be seen that price trend is very less fluctuating over this route. British Airways and
Lufthansa both moreover have same ticket prices over this route. The prices show hike from 25th
November. But the prices of Lufthansa are higher as compared to British Airways as it follows
lower pricing strategy where Luftansa is big German airline company who charges premium
prices for tickets (Jiaming and et.al., 2018). Price trend is moreover stable over most of the
period but it starts rising from November end as the Christmas comes near and also travel
increases for business deals during festive seasons between the countries. It could be seen that
airline company has more than
Geneva to Brussels
5

It could be evaluated that the price trends of the tickets over this route is fluctuating.
Prices have shown increasing trends from 5th November to departure period. Prices of easy jet
tickets are lower as compared with Brussels. Easyjet is low cost airlines and therefore ensures
that its prices are lower than its competitors for attracting new customers. The prices vary over
different period in this route as compared with the others (Sallan and Lordan, 2019). The
revenue management strategies of easy jet are focused over providing the services at lower costs
than its competitors for generating higher revenues. It aims at providing tickets at stable prices
with rise only at peak seasons. As being business route the rush over this route increases from
end of November.
Cheapest period for booking the tickets
Leisure route 1
It can be observed that on the leisure route from London to Spain, the cheapest period for
booking the Ryanair and Jet 2 flights shall be from 5th October till the beginning of the third
week of October. At this time in the year travelling is less and so the airfares are comparatively
lowered down and will be increased by the time of winter break.
Leisure route 2
The given data represents that on the leisure route 2 from Madrid to Ibiza the least priced
period of the year in Ryanair and Air Europa is from 9th to 20th December. On the contrary Iberia
Express has the cheapest flights from September to mid November (Ouyang, Yu and Ding,
2017). On the eve of Christmas and New year when the demand is high the fares Iberia express
increases the rates.
Business route 1
6

It can be interpreted that along the business route 1 from London to Frankfurt the
cheapest flights of British Airways and Lufthansa flying are from the end of the third quarter to
the beginning of the fourth quarter.
Business route 2
It can be assessed that over the business route 2 Easyjet is offering the cheapest flights
from 10th to 15th October in the off season. Whereas the Brussels has the minimum price range in
the last week of October.
Price trends and fluctuations of leisure routes as compared with business routes
It can be ascertained as depicted by the graphs that the price trends are more fluctuating
and variable in the leisure routes as compared to the business routes. The prices on the business
routes are almost constant over the year and rises in the year end as most of the business trips are
planned during the festivities (Waltenberger and Ruff-Stahl, 2018). On the contrary it can be
observed that the price trends in the leisure routes keep varying over the year depending upon the
strategy of the flights. Some airlines use the market penetration strategy and lowers down the
prices at the year end whereas the other sets high prices to capitalize on the festive season.
Difference in price trends and the fluctuations in low cost carriers with full service
networks
It could be evaluated that the price trends and fluctuations are high in full service
networks. This is because these are well trusted brands that focus over providing the quality
services to customers (Lin and Chang, 2018). On the other low cost carriers show less
fluctuations in the prices as they focus they do not change their prices over week but only over
the peak periods but that is also lower than the full service network flights.
Variations in the average ticket prices by the day of week
Average ticket prices fluctuate only of the full service networks and where the low cost
carriers show very low fluctuations. This case is seen more in the business routes. In this it could
also be seen that the leisure routes show high fluctuations on weekends.
Optimum time for buying the tickets
The optimum time for buying tickets is start or mid of the week for leisure routes. For the
business routes prices are moreover same throughout the week. Considering the months for
business routes it can be provided that tickets should be bought before 20th November.
7

Total Revenue from flight and total operational costs.
Operational Cost of Operating in Geneva to Brussels
Currency GBP/CHF 0.8197
Total Revenues per seat 2341
Number of days 80
Total Revenue for specific period 187285
Number of Seats 170
Particulars Cost per seat
Operating Costs
Airports & Ground handling 14.87
Crew 6
Navigation 3.4
Maintenance 1.9
Selling & marketing 1.4
other costs 2.26
other income -0.25
29.58
Ownership costs
Aircraft dry cleaning 0.05
Depreciation 4.61
Amortisation 0.14
Net finance charges 0.35
5.15
Headline costs excluding the fuel 34.73
The total operational costs of the flight per seat is 34.73 pound.
CONCLUSION
It could be concluded from the above report that the price fluctuations are seen higher
over the leisure routes. The prices are high at weekends in the leisure routes and they tend to fall
towards the end of November. It is also evaluated that the fluctuations over business routes are
lower and it seems to rise towards the end of year from November end.
8

REFERENCES
Books and Journals
Liao, X., and et.al., 2020, May. Potentials of UAV Remote Sensing Data Carrier–A Case of
Application in UAV Low Altitude Route—planning. In IOP Conference Series: Earth and
Environmental Science (Vol. 502, No. 1, p. 012009). IOP Publishing.
Arora, D., and et.al., 2019, July. Route planning for cooperative air-ground robots with fuel
constraints: an approach based on CMSA. In Proceedings of the Genetic and Evolutionary
Computation Conference (pp. 207-214).
Lin, D.Y. and Chang, Y.T., 2018. Ship routing and freight assignment problem for liner
shipping: Application to the Northern Sea Route planning problem. Transportation
Research Part E: Logistics and Transportation Review. 110. pp.47-70.
Ouyang, Z., Yu, C. and Ding, F., 2017, July. Task oriented methods of UAV route planning.
In 2017 36th Chinese Control Conference (CCC) (pp. 5015-5019). IEEE.
Jiaming, Z.H.A.N.G., and et.al., 2018. Weapon configuration, allocation and route planning with
time windows for multiple unmanned combat air vehicles. Journal of Systems Engineering
and Electronics. 29(5). pp.953-968.
Waltenberger, J. and Ruff-Stahl, H.J.K., 2018. Implications of Short Scheduled Ground Times
for European Carriers. International Journal of Aviation, Aeronautics, and
Aerospace. 5(3). p.8.
Sallan, J.M. and Lordan, O., 2019. Air Route Networks Through Complex Networks Theory.
Elsevier.
Yulong, D., and et.al., 2017. Path planning of messenger uav in air-ground coordination. IFAC-
PapersOnLine. 50(1). pp.8045-8051.
Luo, J., Boriboonsomsin, K. and Barth, M., 2020. Consideration of exposure to traffic-related air
pollution in bicycle route planning. Journal of Transport & Health. 16. p.100792.
Lim, W.X. and Zhong, Z.W., 2017. Re-planning of flight routes avoiding convective weather
and the “three areas”. IEEE Transactions on Intelligent Transportation Systems. 19(3).
pp.868-877.
Yang, H., and et.al., 2018. The implications of high-speed railways on air passenger flows in
China. Applied geography. 97. pp.1-9.
He, Z. and Zhao, L., 2017, August. The comparison of four UAV path planning algorithms based
on geometry search algorithm. In 2017 9th International Conference on Intelligent
Human-Machine Systems and Cybernetics (IHMSC) (Vol. 2, pp. 33-36). IEEE.
Su, S., and et.al., 2020. Planning of arrival and departure routes in terminal maneuvering area
based on high dimensionality reduction environment modeling method. Aerospace
Systems. 3(4). pp.297-307.
Gelhausen, M.C., and et.al., 2018. A new direct demand model of long-term forecasting air
passengers and air transport movements at German airports. Journal of Air Transport
Management. 71. pp.140-152.
Gerdes, I., Temme, A. and Rataj, J., 2020, October. Self-Structuring Route Network for Free
Route Traffic. In 2020 AIAA/IEEE 39th Digital Avionics Systems Conference (DASC)(pp.
1-10). IEEE.
Online
9

GVA-BRU .2020 [Online] Available trough:
<https://www.easyjet.com/en/cheap-flights/geneva/brussels-intl>
STN -TFS. 2020. [Online] Available trough: <https://www.flightconnections.com/flights-from-
stn-to-tfs>
Operational Costs. 2020. [Online] Available trough:
<https://corporate.easyjet.com/~/media/Files/E/Easyjet/pdf/investors/results-centre/2019/
fy19-presentation.pdf>
10