How do you select new markets and routes for airline expansion and diversification?

A common mistake made by planners is to rely more on wishful thinking instead of market reality. To avoid recurrence of this mistake, a mandatory prerequisite would be conducting feasibility studies and SWOT analysis, to establish the demand for a new market or route, and project profitability for both cargo and passenger demands. Further, the study will establish the routes that the airlines is authorized to fly, and where slots at origin and destination airports could be available and compatible in terms of fleet, business model, and network structure (point to point or hub and spoke). Other factors to consider include depreciation, taxes, landing fees, maintenance, labor and fuel, as well as interline agreements.

One thing I've found helpful is utilizing social media analytics in addition to traditional data sources. Nowadays, people often share travel experiences and aspirations online. By tuning into these conversations, airlines can gauge emerging trends, like hot destinations or services that travelers are clamoring for. This data can be a treasure trove for understanding customer preferences and can complement traditional metrics. It offers a more holistic view of the market, providing insights that might not be apparent through numbers alone. This approach makes the airline more nimble and responsive to market needs.

It begins with assessing demand by conducting market research to identify potential destinations that align with the airline's business objectives. Factors such as passenger preferences, demographics, and economic trends are taken into account. On top, appraise the competitive landscape and the market's growth potential is crucial. Once potential markets are identified, route planning should prioritize operational feasibility, cost-effectiveness, and the airline's existing infrastructure and network. Collaborations and alliance with other carriers can also open up new opportunities. Ultimately, decisions should be datadriven & aligned with the airline's longterm goals, taking into consideration the unfolding lively of the aviation industry.

A growing number of airlines have gotten involved in airtaxi, helicopter and vertiport management, and work with lenders to offer low cost and low carbon footprint alternatives to personal jets. We work closely with most of them as the post pandemic aerospace industry is recovering and generating smarter, more sustainable business models and technologies.

I'm afraid I have to disagree with relying solely on traditional metrics like yield analysis and revenue management for evaluating route profitability. Sometimes, intangible factors like brand image and long-term customer loyalty can play a significant role. For instance, introducing routes to lesser-known destinations could be less profitable in the short term but elevate the airline's brand as a pioneer, attracting a dedicated traveler base. These strategic moves can only be partially quantified by revenue and cost projections but could offer long-term profitability and strengthen the airline's market position.

Emerging tools like digital twins allow for much more efficient path planning compared to several years ago. Moreover, it allows airlines to diversify their offering and create new partnerships with emerging airtaxi, helicopter and vertiport companies as they gain funding and traction.

One thing I've found helpful is to appreciate the environmental and social impact when choosing an aircraft type. Sure, operational and financial aspects are critical, but in today's world, being eco-conscious isn't just a 'nice-to-have'; it's often a demand from passengers and governing bodies alike. So, when evaluating aircraft, consider the long-term benefits of investing in models with lower emissions and better fuel efficiency. This reduces your carbon footprint and can positively influence public perception, increasing customer loyalty and even some cost savings in the long run.

We use our platform metapilot.co to allow users to see the differences between different emerging aircraft such as airtaxis and assess their fuel efficiency, range, capacity, maintenance costs, number of passengers, noise levels etc. and we work closely with regulators to make sure they are compliant. We can now also simulate different weather conditions to see which models fit best for particular areas.

An example of effective network design is Southwest Airlines' use of the point-to-point model. Unlike traditional hub-and-spoke systems, where flights are funneled through central hubs, the point-to-point structure allows for more direct routes and usually lower costs. This system has not only provided customers with quicker, more convenient travel but has also reduced operational complexities for the airline itself. The key takeaway is that your network design should align with your airline's broader goals and values, whether cost-efficiency, extensive connectivity, or customer convenience.

One thing I have found helpful is to make the vision and goals as concrete as possible. Visionary statements are great, but they can also be ambiguous. Using quantifiable metrics alongside your SWOT or balanced scorecard methods makes the goals more tangible. For example, if the vision is to be the "most customer-centric airline," define what that means through customer satisfaction scores, loyalty program engagement, or reduced complaint ratios. This way, everyone from the C-suite to the ground staff knows what they aim for and how to measure success.

Based on our SWOT analysis, we identified emerging future air mobility options as a market that is close to reaching 1T $ by 2030, which includes by now up to 900 different models of airtaxis, most of which are electric or hydrogen based, as well as solar-powered vertiports. A fully sustainable, cheaper and more efficient form of transportation to fully replace cars and planes in the next decades is vital for our development as a civilization and for bridging the gap to commercial space travel.

Another aspect to consider is the cultural and social factors in the target markets. Understanding passengers' cultural nuances and preferences in new markets can significantly impact route selection and marketing strategies. For example, offering special meals that cater to local tastes or providing in-flight entertainment in the local language can enhance the passenger experience and attract more customers. Additionally, recognizing the importance of social responsibility and sustainability in different regions can influence route decisions as airlines increasingly focus on eco-friendly practices and community engagement.

Competing itineraries: Competing itineraries should be identified, with regard to departure and arrival time, connection duration and location, travel distance, travel time, number of stops, price, as well as departure and arrival time. This way, an airline will determine the most appropriate way to position itself and leverage the competition. To aid in evaluating route profitability, tools and models like scenario planning, yield analysis, revenue management, and network planning could be helpful.

Based on our SWOT analysis using the Metapilot platform, we identified emerging future air mobility options as a market that is close to reaching 1T $ by 2030, which includes by now up to 900 different models of airtaxis, most of which are electric or hydrogen based, as well as solar-powered vertiports. A fully sustainable, cheaper and more efficient form of transportation to fully replace cars and planes in the next decades is vital for our development as a civilization and for bridging the gap to commercial space travel.