AIRLINE
KEY PERFORMANCE INDICATORS
KEY PERFORMANCE INDICATORS
Which airline indicators are essential for the owner and management team to monitor on a regular basis?
To effectively manage, plan, and set goals, each functional area within an airline needs its own key performance indicators (KPIs)
It’s important to remember that an airline is, above all, a business entity, where the owner's personal interests should be secondary. These personal interests may sometimes diverge from the business’s primary objectives.
Like any business, an airline must focus on two crucial indicators: revenue and costs. Ideally, revenue should exceed costs in absolute terms. However, this alone is not enough to ensure success.
Like any business, an airline must focus on two crucial indicators: revenue and costs. Ideally, revenue should exceed costs in absolute terms. However, this alone is not enough to ensure success.
AIRLINE KPIs
Key indicators that the owner and management team should regularly monitor in an airline include
Total Revenue
Total Profit
EBIDTA
ACMIO/BH
Total BH/FH
Utilization/Month/AC
Market Share
Payload Factor
Customers Claims
SPI
Technical Availability/AC/Day
On Time Performance
Regularity
Salary/Revenue Growth
It's important to distinguish between primary and secondary indicators. If discrepancies are found in the primary indicators, it's essential to analyze the secondary indicators to identify underlying issues. For example, if the utilization rate is falling short, possible causes could include:
- Insufficient Market Demand: There may not be enough demand to fill more hours, kilos, or seats.
- Crew Shortages: There may be enough crew members willing to fly, but flight time limitations restrict their availability.
- AOG (Aircraft on Ground) Issues: Technical problems such as a lack of spare parts, serious malfunctions, or scheduled maintenance can prevent flights from operating.
- Poor Airport Services: Extended transit times and inconsistencies in airport service can affect overall efficiency.
When is an airline operating at peak efficiency?
Airline business models can vary significantly, encompassing low-cost carriers, VIP airlines, full-service airlines, and cargo operations, each targeting a specific market niche.
Beyond economic fundamentals, peak efficiency for an airline is achieved when it operates frequently with a high average payload. Alternatively, operating a smaller number of flights at a higher price point can also drive efficiency. In both scenarios, these strategies positively influence other key performance indicators, enhancing overall operational success.
Airline business models can vary significantly, encompassing low-cost carriers, VIP airlines, full-service airlines, and cargo operations, each targeting a specific market niche.
Beyond economic fundamentals, peak efficiency for an airline is achieved when it operates frequently with a high average payload. Alternatively, operating a smaller number of flights at a higher price point can also drive efficiency. In both scenarios, these strategies positively influence other key performance indicators, enhancing overall operational success.