How a major US domestic airline was able to significantly improve its profitability by radically redesigning its entire network optimization strategy.
Operating in an industry with slim margins and little room for error, airlines rely heavily on route optimization and planning to assure their profitability. One major domestic US carrier, having already taken on added complexity through a recent diversification of its fleet, wanted to know whether it should also take on certain new routes, and at what price point they'd be competitive. The company turned to PwC to help frame the issues more clearly and make up for lost time in achieving the advanced analytics that would give them the profitable schedules they were seeking.
Two things were immediately apparent. The company was underutilizing the power of the data it was collecting every day. Second, differences of opinions were preventing them from using their own resources as the basis of a long-term, sustainable analytics approach for profitability and to guide future growth. PwC quickly helped the organization bridge the differing points of view and articulate the business and technology needs required to define the airline’s network optimization, scope and size an Operations Support System (OSS) as well as develop the groundwork for a robust information strategy that would support all OSS and optimization requirements.
For the first time ever the airline will be able to include profitability within its network optimization model. The airline will now also be able to factor in the consumer-crucial element of connectivity into its network optimization for the first time. The airline now has a strongly enabled decision-support and information strategy that will continue to provide insight into strategic decisions about markets, customers and the related tradeoffs between revenue and profitability as its network grows and increasingly diversifies.
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