Unlocking the true profit potential with Activity-Based Costing
Cost-to-serve visibility for below-wing operations in Singapore, down to a single flight.
Challenge
Ground handling runs on small margins, and SATS needed both levers in view at once: the cost to serve each airline customer, and whether the handling rate per aircraft matched the work involved, particularly during peak operations or when extra resources were needed to turn an aircraft round faster. Commercial rates were largely derived from experience rather than from measured cost.
Approach
An Activity-Based Costing model for below-wing operations in Singapore, covering ramp, technical ramp, baggage, aircraft interior cleaning, weight and balance, flight operations, and the GSE maintenance centre. Data is pulled automatically each day from deployment systems, GSE telematics, time and attendance, and payroll, so nothing waits on manual input. A proof of concept established that around 70% of costs could be allocated directly to a flight, a figure not known beforehand.
Result
Profitability can be analysed not only by customer but by aircraft type, by department, and down to an individual flight. Commercial teams compare handling rates against a benchmark for the same aircraft type while operations analyse cost to serve against that same benchmark, both working from one set of numbers. Higher overtime, idle time caused by off-schedule flights, and wage rises outpacing annual rate escalations are all measurable and monitored around the clock.
"We're excited about Cohelion's Profitability solution and are eager for the future defined by data-driven operations, that will sharpen our costs and commercial negotiations."
