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Consider the impact on profitability if you could improve network contribution from a flight by just 1%.  Then consider the impact if this could be repeated across the entire network.

Working with Airlines on flight route profitability and network contribution reporting, we have helped them to make clear returns from investment in financial analytic and reporting models.    To illustrate this, if we were to assume an airline round trip contribution of 10% on turnover of $2 billion.  And if Finance could drive an improvement in the airline round trip contribution of just 1%, that would be an increase of $20 million in profits in one year alone. 

Given such clear returns, for me a flight route profitability reporting application, especially for a network airline, is a “must have” and needs to be high on the C level agenda.

The volume of data and complexity of getting into the details of route profitability at flight level has, for a long time, been a major challenge.   Technology advances mean that it is now possible for Airlines to have ‘doors closed’ route profitability reports at the flight level in a matter of minutes.  And near real time scenarios on the entire network in just a few more.  The volume and complexity of data is no longer a barrier.  With flight route contribution and profitability reporting to hand, management are now able to take action that will improve contribution in near real time.

See my next blog for more on why network contribution reporting is vital to Airlines success.

Steve Benham

Steve's passion is to help finance departments become genuine business partners, transforming them from corporate historians into fortune tellers, so that CFOs become relied upon for insights into the effect of decisions on future profitability.Steve qualified as an account, with the ICAEW, and spent 15 years of his early career in CFO roles, before forging a career in cost management consulting, spanning over 20 years. Steve has implemented large cost management projects and developed deep expertise in key sectors including Airlines, Utilities and Manufacturing. Prior to establishing Profit& in 2016, Steve was a Director in PwC Finance Consulting and Cost Management Practice Lead in Vantage Performance Solutions. Steve also led Consulting Practices for Cost Management in technology firms including SAP, Business Objects and ALG Software.

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