KPI for Airlines
The airline industry has many challenges. There are times when airline managers have to drastically cancel a flight, leading to a mob of angry and anxious passengers. Oftentimes, these scenarios lead to the hassle of refunding airplane tickets and sometimes long term wounds, such as a decline in the number of passengers. The challenges vary from small concerns to serious flight security issues. If these are left unnoticed, these could snow ball into a gigantic problem. When managing an airline company, at whatever level or department, thorough planning must be put in place, particularly with the incorporation of a performance management system. 1KEY KPI comes to the rescue of Airline at such times.
Specific, Measurable, Actionable, Reliable and Time-bound quantitative measures with 1KEY KPI can be used to evaluate the performance of various organizations. Each would have its own specific set of indicators. The progress of an organization operating in an Airlines Industry can be judged along a number of dimensions.
KPIs or key performance indicators are essential for an airline company’s performance management system. Without these indicators, it is utterly impossible for the managers to review and evaluate how effective the company’s strategies are. Moreover, without the indicators, it is also impossible to come up with wise and effective decisions. Some of the KPI’s for managing performance of airline companies with 1KEY KPI are:
Financial KPIs: This would help financial executives in measures used to judge whether the company has been able to match the revenues with the expenses it is incurring or whether funds allocated are used properly. The parameters would comprise of Revenues, Expenses, Profits and Fuel costs. A negative bottom line should be a cause for further investigation and immediate action.
- Revenues – Cash Inflows the airlines enjoys in a particular year
- Expenses – Cash Outflows the organization has to bear for various direct and indirect spending
- ROIC (Return on Invested Capital)
- EBIT (Earnings Before Interests & Taxes)
- Operating profit
- Cash flow
- Outstanding debt
- Level of working capital
- Market value against asset value
- RASK (Revenue Per Available Seat)
Customer KPIs: Customer perspective indicators usually involve passengers in the evaluation process. Customers keep an eye on aspects like Charges, Types of meal offered and Baggage handling to decide on which brand flight would they board. Most of the time, they are given survey, evaluation, or feedback forms to be filled out. Passengers are asked about their perspective on the way the aircrew handles them, their baggage, their inquiries, flight charges, meals, and even during security inspection. More complaints than praises, of course, should be alarming enough to change or improve any flaw in the service.
- Types of cuisine offered – The no. of types of meal offered to cater to a large and broad range of passengers
- Baggage rates Charges customers would have to pay for the standard Quantity of baggage allowed and the amount to be paid if it surpasses the stated quantity
- Response Time for queries
- Cancelled Flights
- Missed Connections
- Yield
- Load factor
- Spill
Flight Operation KPIs: Flight operations, on the other hand, have something to do with airline operational aspects with measures such as the number of passengers per flight, Fleet Utilization, the number of flights per day, the number of flights during unpleasant weather and time available for flying. Fewer flights and more passengers would mean an upgrade, replacement, or addition of aircrafts.
- Flights – Number of flights in a particular year
- Passengers – Number of passengers carried in all the flights in a year
- Available Flying Time
- Aircraft utilization
- Percentage of Flights Departures Delayed > 15 minutes
- Average Minutes Delay for Delayed Flights / All Flights
- Percentage of Flights Delayed Due to Technical / Commercial reasons
- Incidence of maintenance schedule changes
- Crew productivity and cost
- Average turnaround time
- Average block hours per day
- Amount of lost baggage on connecting flights
- Crews per aircraft
- Daily Pilot Utilization
Service KPIs: Service indicators are a parameter used in managing performance of airline companies that typically deals with service oriented activities. Number of passenger seats occupied and partners in supply-chain would add to the efforts of organization for betterment of the service provided. The primary goal in evaluating these activities is to get a good grasp on how each employee in the service department is doing. Moreover, it will give managers the idea as to how new equipment and facilities improve service and eventually sales. An increase or decrease in number of occupied seats means something and should call for immediate action. The addition of new suppliers and partners may also translate to a healthy service.
- Passenger Seats Occupied – Percentage of seats occupied by passengers in a particular flight
- Freight and Mail – Indicates the commercial load of the Airlines
- No. of partners in supply-chain
- No. of accidents
- Number of PAX
- Number of transfer PAX
- Number of Frequent Flyers
Service indicators, flight operations, customer perspective and financial perspective – all these are four crucial airline KPI or key performance indicators that managers should always consider when managing the performance of the company. If there are other concerns that needed to included, then new indicators should be time-bound, reliable, actionable, measurable, and specific.
Posted on November 9th, 2009 by Dhiren Gala
Filed under: Business Intelligence
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