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Prepared By: Mohammed Salem Awad Consultant The Worldwide Development of Point-to-Point Operations & its Implications for Asian Airlines 5th & 6th June 2007 JW Marriott Hotel, - Bangkok, Thailand AIRCRAFT FINANCE & FLEET DEVELOPMENT CONFERENCE

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OUTLINES <ul><li>Introduction </li></ul><ul><li>Industry Review </li></ul><ul><li>Deregulations – Liberations – Open sky </li></ul><ul><li>Business Models in Aviation Industry </li></ul><ul><li>Point to Point Vs Hub and Spoke </li></ul><ul><li>Pros and Cons </li></ul><ul><li>Wining Approach . </li></ul><ul><li>Positioning and Repositioning The Fleet . </li></ul><ul><li>Case Studies – Asian Airlines </li></ul><ul><li>Results </li></ul><ul><li>Contacts. </li></ul>

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Introduction <ul><li>A Question arise where the Global Aviation Network tend to , What is the best strategy should apply ? What are the Current business Models used ? </li></ul><ul><li>What are the Mode Of Operations in Aviation Industry ? </li></ul><ul><li>Effects Of Deregulations – Liberations – Open sky . </li></ul>

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Introduction Manufactures Response to Global Market Demands IN TWO DIFFERENT WAYS : Boeing Philosophy – BASED ON FRAGMENT Theory Most Growth will be mid-size airplane B787 Dream Liner Airbus Philosophy – BASED ON CONSOLIDATION Theory Airbus anticipates a dramatic upswing in the very large airplane market. A380

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Industry Review <ul><li>Airline Industry – subjected to many shocks </li></ul><ul><li>The next downturn cycle will be 2013 </li></ul>

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Industry Review <ul><li>Demands, and World Economy drive Air Travel, and Frequency </li></ul><ul><li>Nonstop operations increase </li></ul>

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Industry Review <ul><li>Deregulations </li></ul><ul><li>Liberations </li></ul><ul><li>Open Sky Policy </li></ul>

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Industry Review More than half population of the world

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Business Models <ul><li>According to the Market Demand and Mode Of OPERATION the Business Model can be classified : </li></ul><ul><li>Alliances Low Cost Carriers </li></ul><ul><li>International Carriers Business Jet </li></ul><ul><li>Regional Carriers </li></ul><ul><li>Dominated By Dominated By </li></ul><ul><li>Hub & Spoke Point To Point </li></ul>

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Deregulation <ul><li>Deregulations Of The Airline Industry </li></ul><ul><ul><li>1978 --- “ Airline Deregulation Act.” , US </li></ul></ul><ul><ul><li>1987, 1990, 1992 --- Three EEC “Package” </li></ul></ul>

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Point To Point Vs Hub And Spoke

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Point To Point Vs Hub And Spoke <ul><li>Deregulations - Liberations -Open Sky Policy </li></ul><ul><li>Airport Infrastructure </li></ul><ul><li>Airport Access </li></ul><ul><li>AT 50 Cities Network. </li></ul><ul><li>1200 : 49 </li></ul><ul><li>For Point to Point </li></ul>

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Point To Point Vs Hub And Spoke <ul><li>Demands and Aircraft Technology drive point to point. </li></ul>

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Point To Point Vs Hub And Spoke <ul><li>But Hub & Spoke will reduce of the cost of </li></ul><ul><li>Ground Crews </li></ul><ul><li>Airport Facilities </li></ul><ul><li>Aircrews </li></ul><ul><li>And Aircrafts </li></ul>

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Pros And Cons <ul><li>Passengers View Point. </li></ul><ul><li>Airline / Operators View Point. </li></ul><ul><li>Manufactures View Point. </li></ul><ul><li>Passengers View Point </li></ul><ul><li>Passengers favored point to point traveling which gives more chooses and less traveling time. </li></ul>

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Pros And Cons <ul><li>Airline/ Operators </li></ul><ul><li>Airlines always seek for demand, they started in a multi stops operating Model to generate demand then when the market establish, they look for direct service, so it is a time factor. </li></ul><ul><li>Point To Point Pros </li></ul><ul><li>Higher Service Points </li></ul><ul><li>Less Airport Contingency </li></ul><ul><li>Higher utilization </li></ul><ul><li>Higher Frequency. </li></ul><ul><li>Less turnaround time in Airports. </li></ul><ul><li>Higher Dispatch Reliability. </li></ul><ul><li>Point To Point Cons </li></ul><ul><li>Higher Facility/ crew / handling and maintenance Cost. </li></ul><ul><li>Two Extremely different business mode. </li></ul><ul><li>No continues Connection. </li></ul><ul><li>Hard to Manage Aircraft backup. </li></ul><ul><li>Deflect to manage Fuel Price. </li></ul>

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Pros And Cons <ul><li>Airline/ Operators </li></ul><ul><li>This dominated by Alliances and International Carriers </li></ul><ul><li>Hub & Spoke Pros </li></ul><ul><li>Higher Connection options </li></ul><ul><li>Managing Scheduling Effectively . </li></ul><ul><li>Managing Airport Resources properly </li></ul><ul><li>Easily Fleet Management . </li></ul><ul><li>Feeding low traffic destination by a highest one. </li></ul><ul><li>Generate more revenue streams </li></ul><ul><li>Hub & Spoke Cons </li></ul><ul><li>Higher Airport Contingency </li></ul><ul><li>Delays, missed connection problems. </li></ul><ul><li>More Reliability problems. </li></ul><ul><li>Higher turnaround time in the base. </li></ul><ul><li>Complex Revenue Generation. </li></ul>

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Pros And Cons <ul><li>Aircraft Manufactures - TWO DIFFERENT PHLOSPHY </li></ul><ul><li>BOEING </li></ul><ul><li>AIRBUS </li></ul>

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Wining Approach RIGHT CAPACITY ( Right Aircraft ) – Point to Point Analysis f =

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Repositioning The Fleet using point to point analysis <ul><li>Optimum Operating Curve </li></ul><ul><li>Two Main Factors </li></ul><ul><ul><li>Cost Per ATK </li></ul></ul><ul><ul><li>Capacity in term of Seats </li></ul></ul>

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Case Studies Asian Airlines <ul><li>Case Study – Thai Airways ( Domestic ) </li></ul><ul><li>Case Study – Air Asia – Bangkok Operating Base. </li></ul>

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Case Studies Asian Airlines <ul><li>Case Study – Thai Airways ( Domestic ) </li></ul>

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Case Studies Asian Airlines <ul><li>Case Study – Thai Airways ( Domestic ) </li></ul>

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Case Studies Asian Airlines <ul><li>Case Study – Air Asia – Bangkok Operating Base. </li></ul>

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Case Studies Asian Airlines <ul><li>Case Study – Air Asia – Bangkok Operating Base. </li></ul>

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Case Studies Asian Airlines Thai Airways ( Domestic ) Vs Air Asia – Bangkok Operating Base. The Gap is reflecting due change in Fares As one is legacy and the other is low cost Thai Airways Air Asia

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Case Studies Asian Airlines Thai Airways ( Domestic ) Operating by two type of aircraft 1- B737- 400 2- ATR 72 While Air Asia Will operated by Air Bus 320 Thai Airways Air Asia

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Results <ul><li>The Analysis shows , Legacy Airline operated at lower capacity than low cost, which both are examining point to point model but low cost selling at low price than legacy one, i.e why there a difference between the curves </li></ul><ul><li>Legacy should response to this situation, or will diminish out from the market. </li></ul><ul><li>These cases demonstrated the growing of point to point operation, that reflect by low cost carriers. </li></ul>

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Contacts Further Information: Mohammed Salem Awad : Tel: 00967 734777518 Email: smartdecision2002@yahoo.com www.freewebs.com/wingsofwisdom/ www.freewebs.com/art-of-knowledge/ www.standout-from-the-crowds.webs.com