Airlines & Chartered (Non-Scheduled) Operators
Significant progress has been made in reducing non-fuel costs, improving the efficiency of fuel use & regular process improvement leveraging operational advantage, but the challenge is on-going and central to the future prosperity of the industry.
While airlines have made significant progress in restructuring their cost base, they are often faced with a moving target. Low barriers to entry combined with national or regional deregulation, have seen new or restructured no-frills, low-cost operators (LCCs) capture a fast-growing share of regional airline markets. The cost efficiencies available to network airlines are, in many cases, also available or already implemented by the LCCs.
Airline being a Fixed Cost intensive industry, Cost & Operational Efficiency is critical for an airline's ability to compete & survive.
Source: IATA, Airline Cost Performance Report
Therefore, as airlines reduce costs, their LCC competitors on short-haul routes are often doing likewise. As such, with the airline industry still characterized by strong competition and excess capacity, lower costs, while essential, are not always sufficient by themselves to improve profitability.
Top 10 Airline Cost Items
|Cost Item||% Costs|
|Aircraft Fuel & Oil||35.10|
|Flight Equipment, Maint & Ovehaul||8.33|
|Flight Crew Salaries & Expenses||7.27|
|Ticketing Sales & Promotion||7.05|
|Depreciation & Amortisation||6.22|
|General & Administrative||6.11|
|Flight Equipment Rentals||5.84|
When analysed the maintenance cost that an airline incurred, IATA's Maitenance Cost Task Force revealed, DMC - Direct Maintenance Costs for an aircraft* (excluding overheads) $1,082 per FH, $3,518 per FC, $3.06 M per aircraft. The total DMC for a sample of 47 airlines accumulated to $10.62 Billion. This however is the tip of the iceberg, as spends on spares & inventory, Overheads & Maintenance Reserves were $7.8 B, $1.76 B, $454 B respectively.
On average, for every $ spent on maintenance, airlines hold ~$1 of spares & inventory.
Source: IATA, MCTF Group
Colossom, using Ramco Aviation Solution addresses the need of airlines (Scheduled, Non Scheduled & LCC's) to manage, improve and expand their business processes & maximize productivity at lower costs by improving visibility and control across departments. The pre-built solution focuses on enforcing discipline by channeling consistent information across business functions to improve decision-making.
- Offers comprehensive operational process management, including financial, human capital, and enterprise asset management
- User friendly and intuitive application interfaces which guide users to perform transactions even during time-crunched situations
- By increasing availability of aircrafts for operations, revolutionary inventory module and reduced down time achieved in line through the maintenance module
- Effective process improvements, operational control and cost management
- Tracking the life of aircrafts and their components proactively, with precision benefits during lease return
- Instant reliability report generation for effective performance monitoring
- Through increased maintenance efficiency, optimized inventory reduced failures - preventive maintenance & optimized processes
- Achieved with built-in functionalities that help and assist the workforce to adhere to safety and regulatory standards
Ramco's integrated suite of Airline software solutions are in use across Scheduled and Non-Scheduled operators and also is prominent among LCC.