The Most Essential Airline KPIs — At Least in a pre-Pandemic World.
To set the context for our re-assessment, we quickly introduced the KPIs we considered essential three years ago. Back in 2017, we analyzed roughly 20 different airlines according to their KPI usage. The list of airlines included large network carriers, regional airlines, low-cost, and cargo carriers. The result reflected six most often operations KPIs:
#6 — Misconnex Quota
#5 — Arrival Punctuality
#4 — Seat Load Factor
#3 — Delay Reasons
#2 — Regularity
#1 — Departure Punctuality
So, let’s go through each of the KPIs and assess whether it is still relevant or not.
Misconnex Quota — An Airline KPI With Massively Reduced Relevance
Misconnex Quota calculates the percentage of connecting passengers who miss their onward flight related to the complete number of connecting passengers.
It definitely represents a KPI that has massively lost relevance since Corona hit the industry. Here are the two reasons why:
- With Corona, the overall number of global passengers dropped sharply. However, according to IATA, the number of connex passengers fell even harder.
- Business travelers represented a significant amount of connex passengers, whereas leisure travelers prefer point-to-point connections. And we all know that business travel is one of the sectors with the most significant decrease.
On top of that, flight schedules are less tense due to the reduced number of flights. Accordingly, the risk of missing the onward flight is also reduced.
Accordingly, from our perspective, the Misconnex Quota KPI’s importance is much lower than a pre-COVID time. Although some network carriers will continue to monitor the KPI, many shift their focus to other KPIs.
Arrival Punctuality Always Counts — But Passenger Needs are Different.
The arrival punctuality KPI, for sure, will always play an essential role for airlines and customer satisfaction. Nevertheless, we believe the relevance of this KPI has decreased during Corona.
First of all, after 12 months of the pandemic, many people are eager to fly. They want to go on vacation and want to travel. So I would argue that most of them don’t care about a 30-minute delay, as long as they can finally go on vacation.
On the other side, many business trips will likely stay virtual in the future. Accordingly, arrival punctuality will still play an important role for the remaining trips. However, overall the relevance slightly decreases.
Summing it up: Arrival punctuality will always remain an essential airline KPI. However, for the next 12-24 months, we forecast a slightly reduced relevance.
Seat Load Factor — An Airline KPI That is More Essential Than Ever.
So here’s a KPI with a massively grown importance. We calculate the Seat Load Factor as the percentage of checked-in passengers in relation to an aircraft’s available seats. Accordingly, it is an important metric for profitability, network planning, aircraft utilization, etc.
Of course, this KPI played a vital role in a pre-pandemic world. Nonetheless, the biggest challenge for airlines in the upcoming months is creating demand and motivating passengers to travel. In that context, the Seat Load Factor will play an essential role in monitoring the success of measures.
Accordingly, we forecast that the importance will steadily grow over the next month. Moreover, we advise airlines to pay close attention to Seat Load Factor and set up corresponding real-time tracking measures.
Delay Reasons — Still an Essential Airline KPI but in a Different Way!
From our point of view, the Delay Reasons KPIs will remain essential in the future. Nevertheless, the way airlines look at that KPI might slightly change. We believe that the focus will slightly shift from a “pure delay reduction” to “identifying inefficiencies” in the future. Thus, the KPI is likely to identify improvement potential during the turn-around process to improve efficiency and reduce costs.
As a result, we forecast that the KPI remains essential in a post-pandemic world.
Regularity — The Evergreen KPI
Alright, this one is a no-brainer. Regularity has always been and will always be one of the most essential airline operations KPIs. The Regularity KPI reflects the percentage of operated flights concerning planned flights. Or, in other words: The KPI tells you how many flights an airline cancels.
Obviously, no one likes cancellations — neither in a pre- nor in a post-pandemic world. Therefore, this KPI’s relevance hasn’t changed over the last couple of months and will remain essential in the future
Departure Punctuality — Update Required!
Departure Punctuality calculates the percentage of flights that depart on time at the planned origin airport concerning all operated flights. Similar to the Arrival Punctuality KPI, we predict a reduced relevance.
To be frank: The world is changing, and airlines must acknowledge re-examining certain long-held beliefs. Undoubtedly, no one blames airlines for the current situation due to COVID-19. However, many airlines are stuck doing things in an outdated way that leads to inefficiency. For example, one thing I often observe when talking to airlines is the quasi-religious focus on punctuality.
Therefore, we genuinely believe that it is time to update the Departure Punctuality KPI simply because departure punctuality is a very “Airline-selfish” quality indicator that puts an airline’s flight in the center of analysis — instead of the passenger!
I am a big advocate of the “punctuality-enrichment concept.” Step-by-step, airlines should add more aspects to the punctuality indicator. The number of passengers, lost baggage, waiting times, etc. Ultimately, a so-called passenger satisfaction index could replace on-time performance — or at least serve as an additional quality indicator.
However, the traditional Departure Punctuality will always be there — but the relevance will decrease — hopefully!