yakima From South Africa, joined Mar 2005, 45 posts, RR: 0 Posted (6 months 1 week ago) and read 2827 times:
How does an airline decide on the viability of a potential new route?
I've been reading the forum for a little while now and have done some searches, but I don't think I have all the pieces of the puzzle yet.
I would think they will start with O&D. But do airliners share this information with one another?
Let's use a completely hypothetical scenario. Let's say SA is looking at a new JNB-AKL direct, non-stop flight. They would probably think that there are many ex-South Africans living in New Zealand and up to now New Zealand is still visa-free for South Africans, which makes things a lot easier and they have seen that introducing new visa regulations have a negative impact on numbers (e.g. CPT-LHR being cancelled a while ago).
Passengers currently flying this route have several choices of airliners, all with connections - EK, SQ, QF etc. If those airlines don't belong to the same program as SA, does SA have access to these records? I'm assuming that within Star Alliance or other programs, information is shared more freely?
I'm sure there is a percentage of people who doesn't know they want to fly to AKL direct, until the opportunity exists. How are they being accounted for. I'm sure airlines don't walk around on the the street asking people what new routes they would like to see?
Do airliners take passengers seriously? Let's say I contact the airline via social media and tell them I would really like to fly to AKL direct. Would they actually pay attention?
I know there are plenty other variables to take into account. Slots, aircraft type etc. etc. I think I'm more asking how an airline would gauge the number of passengers that would potentially be interested, before such a route ever existed.
Is Star Alliance in the position to make recommendations to airliners? Can they approach SA or NZ and tell them that they see an opportunity?
nighthawk From UK - Scotland, joined Sep 2001, 5085 posts, RR: 35
Reply 1, posted (6 months 1 week ago) and read 2766 times:
Business class demand tends to be the most important when looking at launching new routes.
The airline would typically look at local businesses and see what markets they are trading with. In your example, they would look for businesses that have strong links to New Zealand - either they are owned by a New Zealand based parent, have a NZ based subsidiary, or trade heavily with NZ based companies. They would then speak to these businesses and assess what the demand for travel is going to be. This should give them an idea of how much premium demand there is going to be, and also hint on how much cargo demand there is likely to be.
They may also speak to local market research companies, who may have already studied the volumes of trade between the two destinations.
VFR and ex-pat traffic tends to be fairly low yielding, so the size of this market will be a secondary consideration to business demand.
dhr From United Kingdom, joined Jun 2007, 117 posts, RR: 0
Reply 2, posted (6 months 6 days 12 hours ago) and read 2452 times:
Airlines can also tap airport operators for passenger numbers on any number of routes close to the carriers hub for example, that are travelling to the intended destination. These statistics can also include average fare paid, the amount of passengers annually or even monthly over the past few years. This way an airline can also gauge what transfer traffic it could pickup to assist with improving loads. The data is costly but airports that want these services generally cover the costs for airlines.
routeplanner From United States of America, joined Jun 2013, 15 posts, RR: 0
Reply 3, posted (6 months 6 days 9 hours ago) and read 2357 times:
Quoting dhr (Reply 2): Airlines can also tap airport operators for passenger numbers on any number of routes close to the carriers hub for example, that are travelling to the intended destination. These statistics can also include average fare paid, the amount of passengers annually or even monthly over the past few years. This way an airline can also gauge what transfer traffic it could pickup to assist with improving loads. The data is costly but airports that want these services generally cover the costs for airlines.
The same applies for cargo.
We in route planning use a wide variety of means to consider adding city pairs to the route structureof the alirline we work for. Some are as follows...but not limited to this.
Airport Boarding Stats. Yes its true and this is one example that we in route planning look at. Many airports (in fact most) publish boardings and final destination of paying passengers, even though they may be passing through a hub. There are several companies in the marketplace that collate this information and airlines buy or subscribe to their statistical reporting.
Frequent flyer activity is a plethora of info .Frequent Flyer traffic is scrutinized and watched very carefully and shared amongst marketing and route planning. There are times when frequent flyers are polled and sometimes even interviewed about their travels, in an effort to determine possible city pair future routes.
Airline Rewards Credit Cards are another means we use to gather information about possible city pairs etc. Each respective airline that has a credit card receives information stats on customer air travel regardless of whether they travel on that airline or another..if they are the sponsored airline for the credit card, this information is available to them.
This is just a few examples, we utilize anything and everything to determine possible growth of our routes. But everything must be verifiable.
YQBexYHZBGM From Canada, joined May 2009, 200 posts, RR: 1
Reply 4, posted (6 months 6 days 8 hours ago) and read 2293 times:
Transportation planners use a method called [synthetic] trip generation. Formulas are used to estimate possible trips between various city pairs based on population and other characteristics. This can be combined with the all-important analysis of business travel / trade patterns to estimate the potential for high-revenue passengers. Beyond that, airport fees, taxes, fuel prices, and other factors get thrown into the mix. If everything else works out, the operational cost of various aircraft types can be added to determine the viability of the route and the break-even point.
Unless they're trying to go out of business, they take passengers very seriously. They just don't take all passengers as seriously. For example Ryanair would care pretty much only about the low-end market, while BA cares more about business travelers than tourists. It depends on the route as well. Obviously on LHR-HKG business travel rules, while on LGW-MCO you care about the tourists.
An exception to caring about pax would be airlines that exist in a highly regulated market vacuum. The only example I can think of is Air Koryo.
Quoting yakima (Thread starter): Let's say I contact the airline via social media and tell them I would really like to fly to AKL direct. Would they actually pay attention?
Yes, but I think it would only be to a very limited degree. Unless you're running a business that will fly 2-3 pax per week to AKL in Business Class, you're not of much interest as a single data point. Assuming you are flying for pleasure, you'd probably be going at most once a year in monkey class. Not really enough to catapult a 777 across a stormy ocean on a regular service.
The bigger problem is that the information you give has a lot of bias and is a very limited sample. Sure, if 300 people contacted them, it would be different. Still biased, however. That's why airlines poll people and use statistical analysis. Bigger sample size and much less bias.
On a side note, while social media is becoming ever more important, it is still not really seen as a "serious" means of communication like email, not to mention snail mail. If you cared enough, you would spend the money on some stationery and a stamp.
"There are no stupid questions, but there are a lot of inquisitive idiots." - from Citadel by John Ringo