PLF During A Record-Setting Holiday Air Travel Season

More people than ever before will fly on U.S. airlines this Christmas holiday season – nearly 46 million of them – according to a new projection from the industry’s Washington trade group. With less than a month left in 2018 it now is almost certain that the average inflation-adjusted domestic round-trip air fare in America this year will be the lowest it has been in at least nine years. In order to accommodate the expected demand and to predict customer demand for specific flights on specific days, airlines should use advanced data analytics.

PLF (Passenger Load Factor) has always been an important metric for profitability which is highly effected by this holiday season. PLF measures the capacity utilization for airlines. It indicates the efficiency of the airline; filling seats and generating revenues. 80% of passenger load factor is considered as standard in the domestic airline industry.

PLF can be increased by improved forecasting of future demand or more appealing offerings. A high load factor, in itself, does not necessarily mean profitability. But in general, the lower the load factor, the lower the profit.

Considering the airline industry dynamics as cancellations of reservations, multi-leg flights complexity and the openings of new flight routes, forecasting PLF becomes even harder. Yet it is attainable by building airline-specific models to forecast the aggregate passenger traffic in a certain time frame, region or an individual flight. The model delivers an optimum revenue and enables the business units to cleverly act on price and campaigns.

The improvement of PLF is a direct impact on the bottom line. The bettering of this KPI effects the plan and costs of complimentary functions; such as workforce, fuel, catering and ground services.

Take a look at our PLF solution, which is developed on R and the visualizations are developed with MicroStrategy, to see how we can help you grow your business.

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Don’t Cover Under Your Shelf(!) During the Christmas Shopping

There is no official start date for retailers to begin launching their Christmas holiday season sales. In fact, each year, different retailers set new standards to follow so the Christmas/holiday retail sales season is dynamic and continues to evolve. Retailers should be prepared for holiday shopping seasons.

On Shelf Availability(OSA) is one of the important metric for every retailer’s performance measurement during these seasons. OSA is defined as availability of product for sale to a shopper, in the right place he expects and at the time he wants to buy it. OSA is impacted by many different factors, all along the supply chain.

Collaborative Planning, Forecasting and Replenishment are mostly used collaboration efforts between retailers and manufacturers in order to reduce the out-of-stock rates. While there are some marginal improvements, the truth is that many of the problems are self-inflicted wounds. Retailers are not constantly putting the right products on the shelves. Key reasons for this are:

  • Store replenishment procedures fail to replenishing shelves on a timely basis
  • In-store inventory counts are inaccurate
  • Forecasting and assortment processes and systems do not adequately account for local demand
  • Space planning and planogram processes are not readily adaptable to local store footprints and demand

As a result, the consumer does one of four things: buy another brand at the same store; buy a completely different type of product; look for that brand in another store; or, simply, not buy anything. If the consumer does not (and cannot) buy your product because it is out of stock, you don’t sell. And, provide an opportunity for your competitors to gain your consumers business and loyalty.

There is a lot that retailers can do to get their own store in order for better on-shelf availability while they pursue collaborative supply chain efforts. The time is now! The complexities of delivering on consumers’ omni-channel demands for seamless and consistent shopping journeys will not go away, they will only become more complex. And as more retailers gear up to satisfy these demands, consumers are becoming even less tolerant of delivery failures. The time to transition planning and store operations to accommodate these increasing demands is now, or else you will be left behind as customers shift their loyalty to those retailers who best meet their expectations. For more information on improving on-shelf availability, check Obase Replenishment – Smart Inventory Management solution.

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