Nominal Operating Profit Simulation in Airline Business Model:

Model 1:

Model 2:

Model 3:

Suggestions from Model 1, 2 and 3

  • Model 1: if high norminal unit cost cannot be reduced, increasing the norminal yield will lead to diminishing norminal operatiing profit and tend to be hard to survive in the airline market because the revenune cannot cover the opeartional cost finally
  • Model 2: if high norminal unit cost cannot be reduced,decreasing the norminal yield will help increase norminal operatiing profit in less negative in value.; that helps to prolong the survival period longer.
  • Model 3 : increasing norminal operating profit can either increasing norminal yield and/or reducing norminal unit cost. The non-negative norminal operating profit increases with norminal yield , provided that the load factor should be greater than 0.5.
  • Increasing price ticket for inelastic business travelers can increase revenues
  • Decreasing price ticket for elastic leisure travelers can increase revenues