Seabury APG’s vast airline planning experience has resulted in the development of its clearly defined philosophies on aviation planning. To provide insight into the firm’s strategic approach to assignments, we share two of them with you below:

Airline Planning:

• A carrier’s revenues are largely driven by its route and fleet structures. Carriers that focus on achieving both large local traffic and connecting flows are consistently the most successful. The idea that only point-to-point carriers can be successful is in general a myth. Some "experts" look to Southwest as proof that point-to-point routes work. In reality, Southwest’s success is based not on point-to-point routes, but rather on a high-frequency inter-connected network that generates substantial flow traffic as well as local O&D traffic. For large network carriers like United, Lufthansa, Singapore and even AirTran, their success too is explained by maximizing local passenger volumes and supplementing them with valuable network flow traffic while keeping costs at competitive levels.
   
• In general, there is more leverage on the revenue side than on the cost side of the aviation economic equation. For example, start-up carriers fail, not because of high costs, but because of low revenues. Large network carriers, despite relatively high costs, succeed by virtue of strong revenue performance, driven by breadth and depth of service offerings and marketing economies of scale.
   
• Fundamentally, cycles in airline earnings are not the result of fluctuations in GDP or other macro-economic conditions. Rather, success and failure at the industry level is explained by simple measurement of supply and demand. When supply growth exceeds demand, carriers respond by lowering prices to fill otherwise empty seats. While traffic may keep pace with the excess levels of demand, yields suffer due to the vast discounting. For evidence, one can look at falling profits and yields in the North Atlantic, as carriers have tried to keep pace with the double-digit supply growth of the last few years.
   

Airport Planning:

• Although planners at major airlines know they exist, limited resources prohibit planners from evaluating every potential new and profitable route. This situation provides creative and aggressive airports with the opportunity to analyze and present their own route analyses to airline management. While it is unlikely that the airline will take an airport’s analysis at face-value, a well thought-out presentation can often create top-of-mind awareness for the route within the airline, giving it greater potential for future implementation.
   
• Airports are extensions of a community, and airlines in general covet a community’s support. Given this dynamic, airline planners will almost always extend a gracious welcome to community representatives to discuss air service issues. It is imperative however, that the community come to its meeting prepared with information planners will find useful. Solid relationships between communities and airlines are built on mutual respect for the goals each party is trying to accomplish.
   
• As airports undertake their air service development efforts, they should understand that the analyses airline planners will find most compelling are the same analyses that the airlines themselves would perform to study the issue. Thorough route forecasts, pro forma profit and loss estimates, business/leisure traffic splits and the competitive implications of the new service are some data pieces that airline planners will find most compelling.