Chapter 2

Forecasting
Forecasting is defined as predicting or
estimating some future volume of financial
situation matters mostly outside of
managements control.
Forecasting is not a planning , but is an
indispensable part of planning.

Types of Forecasting
Short term Forecasting---covers from 1 month to
1 year and covers day to day activities.
Medium term Forecasting---covers from 1 year
to 5 year and involves route planning decisions.
Long term Forecasting---covers from 5 years to
10 years which includes fleet planning and long
term financial commitments.

FLEET
1. group of aircraft operating together under the
same ownership.
2. group of motor vehicles operating together
under the same ownership
3. a group of steamships operating together under
the same ownership
4. a group of warships organized as a tactical unit

FLEET SIZE

The number of aircraft of a particular make and model. Then, you

can also refer to the fleet as the total numbers of aircraft in the
inventory.
Example, Delta airlines has a fleet of 85 MD-80 aircraft (fictional
number for those of you counting). But the have an overall fleet of
over 500 aircraft (another fictional number for those geeks that
count the number of airplanes everywhere).
Fleet size is the number of planes in a specific fleet. A fleet can be
defined as a group of planes owned by the same person, company,
or military division.

Fleet planning
Fleet planning is a vitally important aspect of any air
transport operation. We determine what aircraft should
be operated and in what numbers to meet the needs of
the business.
Typically, this involves evaluating new and existing
aircraft types, comparing all the costs and checking
compatibility with our existing fleet and route network.
Part of the job is to influence manufacturers to produce
aircraft that will meet future requirements.

SELECTION OF AIRCRAFT

Consideration of design characteristics

Physical performance
Maintenance cost
Acquisition cost
Operating economics

Consideration of design characteristics

Aircraft dimensions
Weight profile
Fuel capacity
Type of power plants
Systems(like electricals, hydraulics, etc)
Seating arrangements
Total volume

Physical performance

Pay load range diagram

Take off and landing
Cruise and approach speed
Runway requirement
Noise performance

Maintenance cost
Spare parts availability
Aircraft compatibility
Product support

Acquisition cost
Cost of the aircraft itself and spare parts
Ground equipment needed
Maintenance and flight training required

Operating economics
Potential aircrafts contribution to the
company's profitability
Revenue potential and direct operating
costs in terms of airplane miles and per
seat miles must be examined.

Aircraft Selection Criteria

Airline costs
Operating costs
Non operating cost

Ticket Price Break down

Typical Long-Range 4-Engine
Passenger Mission

Operating Expenses of the Airline

Industry

http://people.hofstra.edu/geotrans/e
ng/ch3en/conc3en/airlinecosts.html
The above graph underlines the specificities of operating
expenses.
They include flight operations (fuel, pilots),
maintenance (parts and labor),
station expenses (handling passengers,
luggage and freight at terminals),
promotion (advertising, reservations and travel agent
commissions: 80% of all ticket sales are done through travel
agents),
passenger services (food and entertainment),
administration,
equipment depreciation and amortization and transport
related (delivery trucks).

Buying the airplanes

Running an airline is unavoidably
expensive. One of the most basic costs is
the price of buying the airplanes
themselves. For instance, a Boeing 737, a
relatively small passenger jet, costs
around $50 million or more. Larger jets
can approach $300 million in price

Qualified pilots
Hiring qualified pilots to fly the planes is
another major cost. A pilot with 10 years of
experience will earn upwards of $100,000
in annual salary.

Fuel costs
Fuel costs not only take a huge chunk out
of an airline's revenue, they are
notoriously volatile. From month to month,
airlines never know exactly how much fuel
is going to cost. Domestic airlines in the
U.S. spend a combined $2 to $5 billion on
jet fuel every month

Other expenses
Countless other expenses also weigh down an airline's
bottom line:
maintenance costs,
fees paid to airports,
fees paid to the government,
the cost of food served to passengers,
the cost of running computer systems to track bookings,
fees and percentages paid to travel agents and Web sites,
pilot training,
and other incidental costs all add to operating expenses.

long flights cost the airline proportionally more

money?

 that's because they're in the air for a long

while and burn a lot of fuel-- but the
passengers still only pay for a single
ticket. Empty seats represent an additional
cost. The plane has to make the trip for
the paying passengers, but if not all of the
tickets were sold, the airline is not making
the maximum possible profit on that flight.

Operating cost
Direct operating cost including all the flight
expenses, flight crew salaries, fuel and
oil , maintenance cost.
Flight operating cost

Flight operating cost

Flight crew expenses-----with direct salaries and
travelling expenses it also covers allowances,
pensions and insurance.
Fuel and oil cost----it include all the relevant
taxes and duties given by the government.
Airport and en-route charges----includes landing
fees also parking fees
Aircraft insurance cost----less
Other flight operations expenses----costs of flight
crew training also route development

Indirect Operating Costs

Fleet commonality
Aviation commonality describes the
economic and logistic benefits of
operating a standardized fleet of aircraft
that share common parts, training
requirements, or other characteristics.

Boeing, between 757 and 767

families

The 767-400ER shares common features with the 757/767 family of

airplanes, including a common pilot type rating between the 757 and
767.
Which allows any pilot trained to fly one model to be qualified to fly
the other model with minimal additional instruction.
Compatibility with the 757/767 family means that operators can gain
better access to the demanding medium-size market (200-300
seats) by matching the appropriate airplane to variable
requirements.
They can also improve operating efficiency through lower training
requirements, greater flexibility in assigning flight crews, and
reduced spares inventories.

Types of passengers fares

Common fare- point to point fare
Joint fares
Promotional fares normally used when
the load factor are below optimal level.

load factor
Passenger load factor was dened as revenue
passenger miles divided by available seat-miles.
In developing a demand schedule, a pricing
analyst assumes that all of the ASMs produced
by the airline company will not be lled by
RPMs.

RPM Revenue Passenger Miles the basic measure of airline passenger traffic. It
reflects how many of an airline's available seats were actually sold.
RPM = i =1 to all flights (Number of Passengers (Flight i) * Distance Flown (Flight I))

ASM Available Seat Miles is a measure of an airline flight's passenger carrying

capacity. It is equal to the number of seats available multiplied by the number of
miles or kilometers flown. An available seat mile is the fundamental unit of
production for a passenger-carrying airline. A unit in this case is one seat,
available for sale, flown one mile.
ASM = i =1 to all flights (Number of Seats (Flight i) * Distance Flown (Flight I))

ASM RPM LF

Flight plans
Flight plans are documents filed by pilots or a Flight
Dispatcher with the local Civil Aviation Authority (e.g.
FAA in the USA) prior to departure.
Flight plan format is specified in the ICAO Doc 4444.
They generally include basic information such as
departure and arrival points, estimated time en route,
alternate airports in case of bad weather, type of flight
(whether instrument flight rules or visual flight rules), the
pilot's information, number of people on board and
information about the aircraft itself.

Vertical flight management

CRUISE FL

STEP FL

pressurization
segment

SPEED
LIMIT

SPEED
LIMIT
ALTITUDE
CONSTRAINTS
SPEED
CONSTRAINTS
ACCELERATION ALT
THRUST REDUCTION ALT
TAKE-OFF
SPEEDS

IDLE path

ALTITUDE
CONSTRAINTS

geometric path

approach path
SPEED
D
CONSTRAINTS
APPROACH
SPEEDS
TIME
CONSTRAINT
DESTINATION

ORIGIN

TAKEOFF

CLIMB

CRUISE

DESCENT

APPROACH

 In most countries, flight plans are required for flights

under IFR, but may be optional for flying VFR unless
crossing international borders.
Flight plans are highly recommended, especially when
flying over inhospitable areas, such as water, as they
provide a way of alerting rescuers if the flight is overdue.
In the United States and Canada, when an aircraft is
crossing the Air Defense Identification Zone (ADIZ),
either an IFR or a special type of VFR flight plan called a
DVFR flight plan must be filed (the "D" is for Defense).

 Enter your aircraft identification. This is

your tail number including the prefix "N" or
designated call sign.

Enter your aircraft type and special

equipment. The equipment codes are as
follow:

No DME
/X No transponder
/T Transponder with no Mode C /U
Transponder with Mode C

DME
/D No transponder
/B Transponder with no Mode
C /A Transponder with Mode C

TACAN only
/M No transponder
/N Transponder with no Mode
C /P Transponder with Mode C

Area navigation (RNAV with LORAN,

VOR/DME, or INS)
/Y No transponder
/C Transponder with no Mode
C /I Transponder with Mode C

Advanced RNAV with transponder and

Mode C
/E Flight Management System (FMS) with
DME/DME and IRU positioning update
/F FMS with DME/DME position updating
/G Global Navigation Satellite System
(GNSS)
/R Required Navigational Performance
(RNP)

Reduced Vertical Separation Minimum

(RVSM)
/J /E with RVSM
/K /F with RVSM
/L /G with RVSM
/Q /R with RVSM
/W RVSM

Enter the airport identifier code for your departure point.The name of the
airport can be used if you do not know the identifier code. Code lookup
http://flightlodge.com/
11. Enter any remarks to help ATC or clarify other flight plan
information. Such as the registration number if using a designated call sign. If
you are flying IFR and do not wish to use a published departure procedure,
write NO DP in this section. Note you will still need to fly the obstacle departure
procedure for the airport if the weather is below VMC (Visual Meteorological
Conditions) to ensure terrain clearance.