General forums => General forum => Topic started by: pharmy on September 04, 2009, 06:57:36 PM

Title: Reduce size of route strategies department (Lufthansa consulting example)
Post by: pharmy on September 04, 2009, 06:57:36 PM


I won't disguise my true goal, which is to make small regional (indeed commuter) airlines more viable , but the number of employees in a route strategy department in AWS is way too high. My present small bali airline is a good example, it has 14 planes, 21 routes, and employs 43 people in its route strategies department. Meanwhile in the real world lufthansa consulting ( employs only 90 people who devise route strategies not only for Lufthansa itself but scores of other airlines/airports. Of course they do the feasability studies for routes (and their optimilisation) before the launching of a route, and not the follow up monitoring and adjustment strategies later on, but nevertheless I am sure that the constant monitoring of existing routes does not require a 2 person per route ratio.

At my own company (a 1 billion EUR/annum pharmaceutical company employing 7000 people around the world) we only have about 8 strategic analysts who monitor future trends, and about the same number of marketing analysts who evaluate the market directly before a product launch and then monitor the post launch effectiviness of our campaigns (30 product launches a year, over 500 products already in the market in dozens of countries).

The rest I am not griping about, although it would be nice to see pilot's wages rated according to the size class, but I guess the only way to do it would be to break-up the pilots into three groups as well.

The total headcount of 800+ employees for a 14 fleet airline is just about accurate (I checked Adria airline - 13 a/c - 790 employees).

If the overhead could be made a bit more realistic for small feeder/island airlines then that would open up the below 30 pax a day/routes airports, and perhaps lessen the fight for possesion of the larger hubs. And due to the route fees (they are based on airport size?) it would't  lead to pipers flying out of LHR.
Title: Re: Reduce size of route strategies department (Lufthansa consulting example)
Post by: Sami on September 04, 2009, 07:16:05 PM
First of all, the small airline thing is discussed and will be changed later.

Then secondly you shouldn't look at those staff titles so precisely. Some company may indeed employ X number of people on certain department but the main task of the staff systems here is to generate a lump sum of costs that are divided into different staff groups with certain amount of precision. The numbers depend on the number of planes and routes.

There won't be any changes to the current system but I am planning for a large update to the staff system from the possibility to choose the preferred organization system to more integrated managers that help and guide you and so on. These are only rough ideas though. ..but anyway the updates will be all bundled to that.
Title: Re: Reduce size of route strategies department (Lufthansa consulting example)
Post by: pharmy on September 04, 2009, 08:23:14 PM
Sorry, I did search around the threads, and read a lot about how hard it is to run an airline based on 30pax planes and impossible below that. I just couldn't find any reply from you regarding the fact that it will be changed later.

In truth, I had a lot of work lately. AWS has dramatically lowered my efficiency, so I decided that not playing is the only way I can maintain focus at work. So I started the scenarios late, and was kinda forced to try ( with 3 bankruptcies so far) to build a up a small feeder airline because almost every route with 70x plus pax taken in North America.

I will wait patiently for the upgrade and won't mention this again.

By the way congratulations on the new plane order system. It really allows late joiners to catch up and works superbly.

Title: Re: Reduce size of route strategies department (Lufthansa consulting example)
Post by: Sami on September 04, 2009, 08:42:50 PM
yep, dont get me wrong, suggestions are always welcome. But for staff things the current status is this.
Title: Re: Reduce size of route strategies department (Lufthansa consulting example)
Post by: DenisG on September 05, 2009, 02:22:55 PM
Yes, there have been some funny threads on the personell allocations. However, the operations department of Lufthansa deployes several hundred people on route monitoring, and the same again on financial route controlling. It is quite big, even in times of computer technologies. Lufthansa consulting is an inhouse consulting working on several different issues from technical processes to financial performance improvements. They are not responsible for route analysis nor business development.

In the scenarios running in the 1970s e.g. the high number of personell is understandable. This should be modified later on as computer tech kicks in.

The basic problem with small regional airlines is the undifferentiated route costs. I have flown basically only regional business models here so far and my experience shows that it works above 40pax. Still there are a number of advantages working for us currently. A couple of weeks ago I posted a thread about the calculation of the leasing rates, which were way too low according to my model.

So, we will always find things that appear improvable but can be off-set by other adaptations on the cost side.