SAS® optimizes route network planning and market forecasts at Deutsche Lufthansa
Deutsche Lufthansa AG is one of the leading airline companies worldwide. Lufthansa transports more than 50 million passengers and nearly 2 million tons of freight and mail each year. The company has more than 90,000 employees worldwide and annual revenue in excess of 16 billion euros.
Competition in air transport is tougher than ever. Around 200 airlines have air rights for flights to and from Germany, all fighting for passengers. To survive in this market, airlines are forced to adjust the route network planning to their customers' specific needs – while using their resources in as profitable a manner as possible.
A case for SAS
Lufthansa has relied on the data management and analytical technology from SAS for its network planning for many years. The company's planning solution allows the company to design flight plans that create a flight network offering passengers optimally coordinated connections. Short travel times, fast connections and sufficient capacity – these are the core factors to remaining competitive.
The ability to quickly adjust to customers' needs is also becoming increasingly important. Where connections were updated semi-annually in the past, today's flight plans are enhanced on an ongoing basis.
In order to keep up with these developments, Lufthansa was looking for ways to expand its network planning systems. The goals were to improve the coordination of connections and especially to reliably forecast the demand for connections – both over the long term and the short term.
How many passengers will fly from Budapest to Chicago next July? Who is also leaving from Budapest but headed to Amsterdam? These are the types of questions airline companies need to be able to answer very early on in order to coordinate their flight plans accordingly.
With its new network planning solution by SAS, Lufthansa has the perfect tool for doing so. Today, the airline can reliably predict the flow of passengers, thereby allowing it to optimally coordinate connections and determine which specific airplanes fly each specific route.
This enables month-specific predictions to be made for a period of a year and a half – even under consideration of individual airport capacities. Lufthansa uses 500,000 pairs of cities for these predictions. An analysis of past activity enables a prognosis for the future. There are three main sources
for the raw data that flows into the analysis: booking data, flight plan data, and information from the Star Alliance partner network. The data is consolidated in SAS, which develops models, analyzes data and creates corresponding forecasts.
Günter Krämer, head of the IT Department at Lufthansa, explains the choice of SAS: "SAS was the natural selection for the expansion of our network planning solution. We have successfully worked with SAS for more than 10 years creating our flight plans. The results were always excellent."
From Lufthansa's point of view, the ability to process very large quantities of data was one of benefits of SAS. Furthermore, all of the data models could be provided from a single platform.
Lufthansa's network management solution grows on a continuous basis, and the company expanded the solution to include "market analyses and market forecasts." Lufthansa uses special market models with SAS for these analyses. The models enable a simulation of how customers choose their flights and connections – and why. Once a flight plan has been created, the airline can use these models to test how the developed offer compares to those of its competition and how it is received by customers.
It can then use the corresponding forecast results to adjust the flight plans, if necessary, and to position them even better. This is a decisive factor for established airlines like Lufthansa, especially when competing against numerous new discount airlines.
The new forecast and analysis capabilities are not, however, used just for network planning. Employees from all parts of the company submit inquiries on a regular basis, when they need information for presentations or to prepare for meetings, for example. How has the Chinese air transport market developed over the past three years? What changes can we expect to see in the next 12 months? And how can Lufthansa best position itself? The new network planning solution always has the answers to these questions.
- Ability to test the success of new flight plans through simulation of passenger decision-making behavior.
- Reliable forecast of passenger numbers 18 months into the future.
- Reduction of planning cycles at Lufthansa for adjustments to customer demands and external factors.
- Opportunity for improved reaction to short-term changes in the market and unforeseeable events.
- Enhanced profitability through better capacity utilization thanks to the creation of optimal flight plans.
- Analytical and forecasting advantage over the competition.
- Provision of the entire company with market analyses and forecasts.
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