Key Performance Indicators for SAS Flights

Abstract: Revenue management is a thoroughly researched field of study and it is widely used in several different industries. The Revenue Management Department at the airline SAS (Scandinavian Airline System) serves to maximise the profit of the company’s flights. At their disposal they have a number of tools, which use KPIs (Key Performance Indicators) as a measurement. The KPIs are used in prognosis to determine future initiatives, and to analyse and verify results. SAS does not know if the KPIs they focus on to measure performance are the most relevant for optimisation of revenue for their flights. In an attempt to simplify the use of SAS’ optimisation system we have performed a correlation analysis on a set of selected KPIs and assessed the influence relationships between these KPIs, in order to identify pivotal KPIs. Furthermore, we have researched origindestination control and the network effect to broaden the scope of the investigation. We have presented the work and the results in this thesis. The correlation analysis was performed using data, spanning a two-year period, for domestic flights (within Sweden) provided by SAS. The results of the analysis showed that the assessed KPIs could be divided into three groups; within each group the KPIs are closely correlated. As a result, we concluded that to focus on one KPI in each group should be adequate for evaluating performance. The three pivotal KPIs are revenue passenger kilometre, cabin factor and revenue per available seat kilometre. We have recommended SAS to continue working with origin-destination control and that the pivotal KPIs should be used as a measurement for the network, as well as measurements such as net leg revenue. Additionally, we have suggested that SAS conducts equivalent or similar analyses in other suitable areas to identify or confirm pivotal KPIs.