Improve Profitability and Risk Reduction in Airline Industry
The aim of this article is how to improve the profitability and to reduce risk in airline industry by applying variance analysis.
Airline industry unveiled a serious number of practices to shape rich and personalized passenger experiences and to create new ways to drive profitability. However, due to economic challenges, the risk of fluctuating profitability must be better understood by the firm to formulate a better strategy.
This article examines how a systematic data collection process and supporting variance analysis will facilitate decision-making and help make an airline more competitive. Variance analysis takes on a myriad of forms ranging from simple to complex, however its basic definition is simple – compare actual revenue or costs with budgeted or like period figures to establish variances.
This article contributes on how a systematic data collection process and supporting variance analysis will facilitate decision-making and help make an airline more competitive.
Variance analysis is a good platform to keep track of exchange variances and manage exchange-related risks. While all airlines, irrespective of their size, practice some form of revenue analysis, the level of detail and investments in technology required will depend on the size of the airline and the transaction complexities it faces in its daily operations.
A well planned and relevant variance analysis could enhance the competitiveness and profitability of the airline in these times of excess capacity, pressure on yields and sky-rocketing costs.
More research is needed to identify effective ways of creating efficiencies which serve the ICAO Performance Based Navigation (PBN).
Further research could determine the impact of operation fluctuations on revenues and costs.