Airport Route Development

Route development and hub optimization are major planning challenges for airports. To identify routes that airlines would find attractive, you need to know what factors airlines consider when deciding on new routes. You also need the evidence and backup to persuade them to add the route to their network.

We can help you by sharing what we’ve learned from advising other global and regional airlines. We can tailor our approach to individual routes, to overall route development strategy (types of carriers, desired set of destinations) and to strategies for working with a hub carrier (key factors to encourage buildup at your hub). Our involvement in route development stems not only from single-carrier engagements, but also from some of the industry’s most successful mergers and joint ventures.

Using proprietary analytics, we examine the potential routes both from an O&D and a connecting basis. This way, we can uncover valuable opportunities to add or adjust scheduled flights that the airport can promote. Meanwhile, you gain recommendations that are based on rigorous analysis, strengthening the proposition to the target airlines.

Network planning suite

With our proprietary Network Planning Suite, L.E.K. takes a holistic approach to route development. We work with both airlines and airports to identify new O&D routes, optimize existing routes, consider connection opportunities and build an entire strategic outlook.

• Elasticity and passenger demand model: Starting with an industry-standard O&D demand forecast, we layer in proprietary enhancements and potential LCC stimulation to ensure the most robust market demand forecast.

• L.E.K. CompetiShare QSI model: For tactical and strategic initiatives, we use our proprietary CompetiShare modified QSI model to project the potential market share impact of each move.

• Schedule development: We work with you to determine your route development strategy and goals, and jointly create a route development priority hierarchy. We then use demand-matching and connectivity-checking tools to structure the revenue and profit-maximizing schedule.

• Route profitability analysis: We estimate future route contribution and profitability by estimating RASK and measuring contribution after variable, fleet and fixed costs. Our cost allocation model helps identify the most effective profit-maximizing route entry/adjustment strategy.

Airport route development successes

Airport route development: A prominent APAC airport was looking to attract service from low-cost carriers. We identified the viability of routes from the airport, the potential profitability of those routes and optimal carriers to contact. We then worked with the airport to develop targeted incentives to ensure a positive outcome for all stakeholders.

Top 25 U.S. airport development strategy: Our client was considering investing in a top 25 U.S. airport under a design, build, finance, operate and maintain concession agreement. As part of this effort, they needed to understand the airport’s full traffic potential over 20-plus years. We assessed potential new route viability for both existing and potential new carriers, ultimately identifying more than 50 domestic and international high-probability new routes that the airport could pursue with the airlines. What’s more, we provided a detailed and executable report assessing the full traffic potential of the airport, plus key recommendations on which carriers to pursue first and strategies for winning their business.

Airline network planning successes

A hub optimization strategy: A major North American carrier, facing increased competition from domestic LCCs and carriers from adjacent geographies on transborder routes, wanted to re-establish a competitive advantage. We assessed projected demand on a route-by-route basis for new and potential routes, then completed a high-level redesign of the client’s schedule at its primary and secondary airport hubs. The result? More connections and improved connection time between key passenger flows.

An LCC startup: Using our proprietary network tools, we developed the initial route structure and five-year route development plan for a highly successful European LCC.

A network growth strategy: For a U.S. value carrier, we identified a set of explanatory variables that determine the success of our client’s current routes. For example, we found that connectivity was a less influential variable for our client than it was for other carriers. On this basis, we performed a point-to-point analysis — incorporating elasticity considerations — to develop an organic network growth strategy, resulting in a 5% annual profitable ASM growth (versus the market declining at 1%).