We’ve previously written blogs about how airlines can increase the profitability with good fuel management, including: An extra 300,000 passengers? What better fuel management could be worth and Asian airlines: How to survive high fuel costs. But since we wrote those articles, much has changed in the industry and so we thought it was about time we revisited this topic.
This time we’re extending our scope to the management of non-fuel costs too, and asking, what is the true value of fuel and cost management to airlines today?
It’s still the case that better fuel management brings substantial savings for many reasons. For example:
While fuel is still one of an airline’s largest expenses, airport and navigation fees also contribute to a passenger’s ticket price — our internal estimates suggest by as much as 6–10%. So it makes good business sense to tightly control these non-fuel costs in addition to your fuel spend.
In the past, these costs have been hard to forecast and monitor because of the range of factors that affect them, such as the time of day and weight of the aircraft. However, now there is software that can automatically import all of this data, including airport and navigation events from aircraft navigation systems, and perform these complex calculations for you in a matter of seconds. When invoices come in for these airport and navigation services, the system can then automatically check them against the data it already holds and the fees it was expecting.
But how does this help the profitability of your airline? Automating high-volume data capture and complex calculations such as these, reduces low-value administrative tasks and increases accuracy, ensuring you don’t overpay. With the right software, you can keep a much tighter control over your three largest flight-related expenses — fuel, airport charges and navigation fees — using just one solution. This will give you a more complete view of each flight’s costs and profitability.
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Business intelligence or ‘analytics’ software has moved on dramatically in the last few years. Interfaces have become more user-friendly, visual, interactive and able to bring together the disparate, high volumes of data that airlines now process.
Using analytics to connect and query all of your fuel and cost data allows you to easily track Key Performance Indicators (KPIs) such as:
You can also drilldown to uncover the reasons behind the numbers, such as how individual regions, airports, suppliers and even internal processes are performing. This enables you to identify any issues earlier so they can be addressed before the problems grow.
This level of insight, all provided within a matter of seconds, enables you to objectively judge how your airline is performing, make more informed decisions — for example, about routes or suppliers — and bring in changes or interventions that can then be accurately measured. Therefore, business intelligence such as this plays a key role in driving efficiency and profitability.
FuelPlus Analytics is available with a FuelPlus Cloud subscription and we have affordable packages for all sizes of airline.
Carbon reduction and carbon offsetting is now an urgent issue for the aviation industry. Since 1 January 2019, the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) has been requiring airlines to accurately record their CO2 emissions for all applicable international flights.
With the right fuel management software, you can now do this easily and accurately. There are tried and tested systems that will collect, integrate and clean data from various sources and then quantify and report on your airline’s CO2 emissions using any of the calculation methods specified in CORSIA. This is all done automatically requiring minimal effort from you.
Such software has a clear and direct impact on your bottom line, because from 2021, many carriers will need to buy offsets for any growth in their CO2 emissions from 2020 levels. So, if you can automatically calculate your CO2 emissions accurately, you won’t spend more money on carbon offsetting than you need to, and you won’t waste hundreds of staff hours on manual calculations and reports.
Some fuel and cost management software has now adopted IATA’s fuel data standards, which make it easier for airlines and fuel suppliers to do business. By standardizing the way that data is formatted for the key documents in the fueling cycle — Tender / Bid, Operational (fuel orders), Transaction (fuel tickets), and Invoice — IATA has put industry-wide ‘rules’ in place to enable more efficient fuel transactions. IT developers have then applied these rules to their solutions, enabling airlines and fuel suppliers to digitize their processes and exchange e-documents automatically.
This creates the potential for a more efficient, paperless fuel buying and transaction process with fewer errors and disputes. There are clear benefits and savings from this. Time is saved by having less data inputting and reformatting to do and fewer discrepancies to investigate; money is saved by increased staff productivity and fewer errors or overpayments.
The best aviation fuel and cost management solutions are now cloud-based and use the software as a service model. This means that you save a significant amount on IT and infrastructure costs since you don’t need to maintain any physical servers and back-ups; this is all handled for you as part of your subscription.
When software is offered as a service, you can subscribe to just the features you need, scale up or down your subscription as required, and pay based on the volume of fuel you use. This gives you much greater control over your IT costs so you can run a leaner operation.
FuelPlus Cloud has all of the above cost and labor-saving features built-in — and more. The platform has developed so much in the last few years, that it now offers airlines and fuel suppliers an even greater return on their investment. By streamlining and automating many of your fuel and cost management processes, it can increase your airline’s productivity, save you money and free-up your resources.
Find out more about how FuelPlus Cloud could benefit your airline — Book an ROI consultation.