Reference no: EM132791020

TH60123E Air Route Planning - University of West London

Assessment - European Short-haul Route Profitability

A key element of a profitable global aviation industry is the ability of airlines to generate a sufficient amount of revenue from passengers on each route and to keep the cost of operations as low as possible. Airlines rely on a team of revenue analysts to ensure that every seat sold is done so at the maximum price possible. When revenue management get it wrong, the airline will either not fill enough seats due to high prices or fill too many seats at low prices. Both scenarios will result in lost revenue. Cost analysts try to minimise cost by keeping operational costs low but ensuring the passenger experience and safety are maintained. Higher revenue and lower costs equate to a profitable route. To maximise revenue, airlines incorporate price discrimination whereby similar seats are sold at different prices depending of passenger demand and time of booking. The general perception amongst passengers is that the earlier you buy the ticket the cheaper it is. However, this is not always the case and dependant on the revenue strategy implemented by the airline.

As part of this assignment, you are assuming the role of a revenue analyst working for easyJet airlines. You have been asked by the revenue manager to analyse the profitability of some leisure and business routes of your choice. To analyse the revenue management strategy of easyJet and the competitor airlines, you will need to collect airline ticket price data for each of your routes on a daily basis. You will then analyse the 2019 easyJet airline financial report to estimate the operating cost. It is important that you correctly chose the route and flights for the data you plan to collect. Poor planning will result in poor data making it difficult for you to get a high mark.

The following is the specification for the data you need to collect:

Select Four European short-haul routes operating in the winter season.
Two of your routes must be a leisure route departing anytime between 16th December 2020 and 6th January 2021.
Two of your routes must be a business route departing anytime between 22nd November 2020 and 12th December 2020.
Select one-way, direct flights only for 1 adult passenger.
Record the lowest available ticket price for a minimum of two airlines per route.
At least one of the flights, in any of the routes, must be operated by easyJet.
Aim to record prices daily for a minimum of 6 weeks before the departure date.
Identify the aircraft types operating the route to estimate the seat capacity.
To be able to compare the competition between airlines, you should:

Select flights departing and arriving at the same airport.
Select similar departure times if possible.
Record ticket prices at a similar time of day.
Only use the airlines own websites to obtain prices. While price comparison sites such as Skyscanner, Expedia, Ebookers etc. can be used to plan the data you intend to collect, do not use these sites for collecting the daily ticket prices.
Delete internet cookies before requesting prices.
Be careful not to choose two airlines operating a codeshare.
Typical European leisure destinations are:

Spanish coast and islands; Greek islands; Cyprus; Turkish coastal resorts; Southern France; Malta; Italy

Typical European business routes are major financial cities such as:

London; Brussels; Paris; Madrid; Frankfurt; Berlin; Munich; Copenhagen; Lisbon; Stockholm; Oslo; Milan; Geneva; Zurich; Amsterdam; Athens; Rome

A data collection template spreadsheet is available in the module on Blackboard. You are strongly advised to check the flights you have selected with the module tutor, before embarking on the daily collection of prices.

Once you have collected all the data, you need to write up a 1500 to 2000-word report of your findings. Your report should:

A brief description of the flights operated in each route including the aircraft types/capacity, flight duration, departure times etc.
Analyse the revenue management strategies used by the various airlines on the route by presenting the ticket price data using clear and appropriate graphical methods. Price fluctuations with time should be clear and you should explain the price trends. Compare the price fluctuations between airlines and routes and suggest possible reasons for the differences. Can you identify the optimum time to buy a ticket? Is there a day of the week when prices are the cheapest?

For one easyJet flight, for which you will have collected ticket price data, estimate the total revenue from the flight and the total operational cost. Estimate the total profit/loss for the route. Your estimate of operational cost should be as accurate as possible and the method clearly explained. Explain how easyJet can make the route more profitable.

You must only use data that you have collected.

The submitted assignment should be structured as a technical report and must be a maximum of 2000 words. You should include a word count at the end of your report. You may use diagrams wherever appropriate to clarify your explanations. You should keep a spreadsheet of the data you have collected but you do not need to include it in the report.

You may find it useful to read airline revenue management books and journal articles to explain your data. Please remember to reference any sources used.

You are to work alone in writing the report and all submissions must be individual.

Assessment

As part of this assignment, you are assuming the role of a revenue analyst working for easyJet airlines. You have been asked by the revenue manager to analyse the profitability of some leisure and business routes of your choice. To analyse the revenue management strategy of easyJet and the competitor airlines, you have been collecting airline ticket price data for each of your chosen routes on a daily basis. You now need to analyse the data you have collected. In addition, you need to analyse the 2019 easyJet airline financial report to estimate the operating cost.

Since the start of the data collection period in October, airlines across Europe have faced uncertainty about which routes they can operate and when. This has had an impact on demand and many airlines have cancelled flights. The cancellation of flights has impacted the quality of the data that students have been able to collect. This is a situation that is beyond the control of students and therefore students will NOT be penalised in terms of marks.

To demonstrate that you made an effort to collect ticket price data as per the assessment brief, you must place a copy of your data collection spreadsheet in the Appendix section of the report. Marks will be allocated for the planning of your routes and flights in accordance with the data specification.

Since the quality of your data on some routes may have been impacted by cancelled flights, ticket price data collected from previous years is available on Blackboard. You can find the spreadsheet of data under:
[Assessments]
> [Assessment A2 Brief and Supporting Documents]
> [Data Collection - Anil Padhra Data]
In addition to the assessment brief, this document provides you with further guidance about how you could conduct the analysis.

Report Guidance

Step One:

From the data that you have collected or from the data collected by Anil Padhra, select 2 leisure routes and 2 business routes for which there is good quality data.

Step Two:

Using Microsoft Excel, produce a scatter graph (with lines) of the Ticket Price against the Price Collection Date. You should have four graphs for the four routes. Each graph should contain multiple lines for each of the airlines operating that route.

Step Three:

Annotate the graphs to highlight any interesting features, patterns or trends. You can do this by inserting a text box and adding an arrow.

Step Four:

Conduct an analysis of the data to identify patterns and trends in the data and to identify any observable revenue management strategies used by the airlines. For each of the routes you should try to answer the following questions:

What is the overall trend in ticket price? Are ticket prices cheaper in advance or cheaper close to the departure date?
When is the cheapest period to book tickets. (e.g. 1 week before departure, 30 days before departure etc.)
How do the price trends and fluctuations for leisure routes compare to the business routes?
Is there a difference in the price trends and fluctuations for low-cost carriers compared to full-service network carriers? If so, what are the differences?
Are there variations in average ticket prices by day of the week? If so, explain the patterns and trends.

Please remember that you must explain the price variations and not describe the variations.

Step Five:

For any one easyJet flight, estimate the total revenue from the flight and the total operational cost. Estimate the total profit/loss for the route. Your estimate of operational cost should be as accurate as possible and the method clearly explained. Explain how easyJet can make the route more profitable.

To estimate the operating cost, a table of data from the 2019 easyJet Financial Report is available on Blackboard. You can find the operating cost table under:
[Assessments]
> [Assessment A2 Brief and Supporting Documents]
> [easyJet Operating Cost Data]

Note that the cost of fuel is not included in the report and you will need to estimate fuel costs based on flight time, using other methods.

Step Six:

Please make sure you check the report to correct spelling, punctuation and grammar.
Ensure graphs are labelled as Figures and include a figure caption.
Ensure you have referenced any information sources used in the report.
Ensure that the appendix section contains a spreadsheet of the data you have collected.

Attachment:- form and Data Collection.rar