Performance, Profitability and Efficiency of Regional Air Transport

Commercial air transport has always been focused on performance, profitability and efficiency. However, the way these terms have been conceived has changed through commercial air transport history. Profitability has always been pivotal to the success of any commercial activity. Through its history, commercial aviation has gone through several crises. However, COVID-19 outbreak has posed new challenges. Lower traffic volumes and passenger demand have forced air transport operators to reorganize themselves and their activities. The full impact of the pandemic on commercial air transport is yet to be thoroughly assessed. Performance and efficiency have been pursued and implemented in different ways. The last years have seen environmental concerns come up in many countries, with public opinion more concerned about environmental impact of human activities. Aviation has been responding to the call for lower environmental footprint in different ways. Succeeding in reducing environmental footprint will be pivotal for the air transport industry in the upcoming decades. The effects of COVID-19 pandemic and the rising environmental concerns call for a strong, joint effort to assess both issues. All players involved must focus on finding new ways and solutions to cope with the profound changes and the unprecedented challenges commercial aviation has been facing. Bearing these premises in mind, this analysis aims at developing a model to assess performance, profitability and efficiency of regional aircraft in the Italian domestic market. This analysis focuses on propeller-driven regional aircraft, since they offer lower fuel consumption than turbofan aircraft and may operate in environments characterized by low passenger volumes. The model has been developed with a modular pattern. This gives the opportunity to integrate sub-models to better analyze overall results. The model is used to assess performance, profitability and efficiency of different aircraft types in their operating environment. Profitability is assessed with a break-even point analysis considering fixed and variable operating costs and passengers revenues. Fixed and variable operating costs are estimated with a bottom-up cost model taking into account single cost items. This analysis focuses on regional routes connecting islands to the Italian mainland. Insularity poses some issues, in that the need for reliable and fast connections to the mainland may clash with low passenger volumes. The outcomes are then analyzed and commented to identify and assess advantages and drawbacks of different aircraft types in their operating scenarios.