2008 Issue 2 - Sabre Airline Solutions

Transcription

2008 Issue No. 2
A Magazine for Airline Executives
2008 Issue No. 2
t a k i n g
yo u r
a i r l i n e
to
new
h ei g h ts
Leaps and
Bounds
A Conversation With Pham Ngoc
Minh, President and Chief Executive
Officer, Vietnam Airlines, Pg 18.
www . sabre airl ine solutions.com
Special Section
Airline Mergers
and Consolidation
38
10
American Airlines’ fuel program saves
more than US$200 million a year
31
Integrated systems significantly
enhance revenue
72
Caribbean Nations rely on air
transportation
your
airline
to
n ew
height s
2008 Issue No. 2
Editor in Chief
Stephani Hawkins
Managing Editor
B. Scott Hunt
Art Direction/Design
Charles Urich
Contributors
Venkat Anganagari, Jim Barlow, Randal
Beasley, Nejib Ben-Khedher, Stephanie
Bundick, Jim Carlsen-Landy, Joelle Cuvelier,
Greg Gilchrist, Carla Jensen, Malcolm
Kass, Suzanne Cottraux, Maher Koubaa,
Christine Kretschmar, Gordon Locke, Doug
Maher, Gabriele Mariotti, Kyle Moore, Dave
Roberts, Kamal Singhee, Jeremy Sykes, Emily
Tate, Michelle Williams, John Winstead.
To suggest a topic for a possible
future article, change your address or
add someone to the mailing list, please
send an e-mail message to the Ascend
staff at [email protected].
For more information about products
and services featured in this issue
of Ascend, please visit our Web site
at www.sabreairlinesolutions.com
or contact one of the following
Sabre Airline Solutions regional
representatives:
Asia/Pacific
Publisher
David Chambers
Vice President
3 Church Street, #15-02 Samsung Hub
Singapore 049483 SG
Phone: + 65 6511 3210
E-mail: [email protected]
Awards
Europe
George Lynch
3150 Sabre Drive
Southlake, Texas 76092
www.sabreairlinesolutions.com
2008 Awards for Publication Excellence,
International Association of Business
Communicators Bronze Quill and Silver
Quill, Hermes Creative Award, The
Communicator Award
Communicators Bronze Quill
Communicators Bronze Quill, Silver Quill
and Gold Quill
Quill, and Gold Quill
Communicators Bronze Quill and Silver Quill
Reader Inquiries
If you have questions about this publication
or suggested topics for future articles, please
send an e-mail to [email protected].
Sabre Airline Solutions and the Sabre Airline Solutions logo are trademarks and/or service marks of
an affiliate of Sabre Holdings Corporation. ©2008 Sabre Inc. All rights reserved. AS-08-10282 0708
T a king
making
contact
Murray Smyth
Vice President
23-59 Staines Road
Hounslow, Middlesex
TW3 3HE, United Kingdom
Phone: +44 208 538 8631
India/South Asia
Vish Viswanathan
Vice President
187, Royapettah, High Road, Flat A-7
Mylapore
Chennai, India
Phone: +1 682 605 4544
Cell: United States +1 817 312 2830
Cell: International +91 98404 96765
Latin America
Kamal Qatato
Vice President
3150 Sabre Drive
Phone: +1 682 605 5399
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and loyalty
revenue
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Middle East and Africa
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Phone: +33 1 44 20 7657
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Kristen Fritschel
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Phone: +1 682 605 5335
See how real-time solutions for
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more revenue and maintain the real
value of every customer.
Worldwide
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Phone: +44 7717 495 129
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Airline Solutions logo and products
noted in italics in this publication are
trademarks and/or service marks of an
affiliate of Sabre Holdings Corp. All
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®
perspective
with Tom Klein
Group President, Sabre Airline Solutions/Sabre Travel Network
A
s we have clearly entered a very challenging
time from a macroeconomic standpoint, it is
interesting to look at some of the dynamics in
our industry — like volatile but still very high fuel
costs to something like record-breaking aircraft
orders and how this environment might impact
them both in the near future.
I am writing this in early October, and
while the financial markets seem far from stable,
the price of oil has, for the past several weeks,
fallen rapidly, having just dipped below US$70 a
barrel for the first time in many months. Thank
goodness fuel prices are down a bit since we
are seeing a real softness in both current and
advanced bookings through September and into
early October in most parts of the world. While
US$90-a-barrel oil and softening demand is still
a lethal combination, the industry may skirt the
disastrous effects that seemed likely just weeks
ago when there was an almost 50 percent premium on oil.
This combination of a slowing economy
and high fuel costs are causing airlines to re-look
at capacity reductions that they only recently
put into place, and many are asking, “Did we do
enough? Will we need to take out more?” Many
have already pushed toward a bias of reducing
available seats and focusing on increasing yield.
By the end of the year, 1,029 aircraft will be out
of service due to some airlines retiring aircraft
and others going out of business. And some
carriers that had once envisioned growing their
fleets are now abandoning that strategy and
only taking delivery of new planes to replace
oldergeneration models.
What does that mean for Airbus and
Boeing who in 2005 recorded record aircraft
sales with more than a combined 2,000 orders
for a variety of airframes. Just three years ago,
experts predicted capacity would grow 20.3
percent by 2010, and airlines seeking additional capacity to meet the anticipated demand
responded accordingly. But just about as quickly
as the rising demand made its debut, the economy turned and demand followed suit. During the
fourth quarter, global capacity will have dropped
7 percent compared to last year. That’s about 60
million fewer seats for the three-month period.
So what does the shift in capacity mean
for the two big airframe manufacturers and their
airline clientele?
Simply put, it may not be “business as
usual,” but there will be business. Despite the
reduced capacity, the industry still needs new
planes. More than 1,450 planes have been
ordered so far this year. Airbus has made a large
portion of those sales with more than 700 new
orders, and Boeing follows closely with more
than 620. Of those, the two manufacturers run
neck and neck with 315 deliveries for Airbus so
far this year and 313 for Boeing.
On our cover, we feature Vietnam Airlines,
a prime example of a thriving airline with ambitious goals of operating the most advanced,
efficient aircraft. Last year, the carrier ordered 10
Airbus A350-900 XWBs and 20 Airbus A321s,
which will be delivered during 2014 and 2015.
The expanding airline also plans to receive more
than 30 Boeing 787-9 Dreamliners between
2013 and 2019.
Clearly, business has been reasonably
good for the manufacturers. In fact, Airbus
anticipates a demand for more than 24,300 new
passenger and cargo aircraft between last year
and 2027, with an average delivery rate of around
1,215 deliveries a year during the 20-year period.
And Boeing is estimating a higher demand of
29,400 for passenger and freight planes during
the next two decades.
Many carriers have placed orders for new
aircraft during the last couple of years, but
some airlines didn’t jump on the aircraft-buying
bandwagon. While the rest of the world went
gangbusters with record orders, very few of
them came from North America. And now,
several U.S. carriers are facing competitors with
better, more cost-efficient aircraft and are at a
disadvantage. So, there is some catching up for
these airlines.
American Airlines stepped up earlier this
year, ordering 26 Boeing 737-800s to replace
some of its fuel-guzzling MD-80s, which are 20
percent to 30 percent less fuel efficient than
the newer aircraft — certainly that large MD-80
fleet suggests that more options and orders are
to come. The carrier also recently announced
it would buy as many as 100 Boeing 787 jets
for delivery between 2012 and 2020 as part of
its initiative to increase the fuel efficiency of its
fleet by more than 20 percent by 2020. But it’s
a different story for competitor United Airlines.
As a result of the rapid decrease in passenger
demand and capacity, United Airlines will likely
cancel an order for 42 Airbus A319 and A320
aircraft, forfeiting its US$91 million deposit that
was put down for the US$2.2 billion deal.
There’s no doubt that it’s a tough time
for many carriers to bring new aircraft online,
especially with a need to cut capacity, but at the
same time, these larger carriers can’t afford not
to. The industry is geared toward the introduction of a newer, healthier fleet to replace the
older planes that, sooner than later, will need to
be parked. It’s the only way they will be able to
effectively compete.
Competition aside, these new aircraft
come with an assortment of benefits for airlines.
For instance, they have much lower maintenance
costs, they are much more fuel efficient and
therefore cleaner for our environment. And even
better, they offer myriad benefits to passengers,
such as more overall space and a deeper sense
of security when flying on a new aircraft versus
one that has been in service 18-plus years.
There’s no question our industry is in
need of more modern equipment, and slowly
but surely, we’re moving in the right direction.
Within the next couple of decades, as Airbus
and Boeing have predicted, our skies will be
filled with new, much more fuel efficient planes
and, as a result, our industry as a whole will be a
much healthier one.
We hope you enjoy this issue, and we
look forward to visiting with you again in the
coming months.
Wishing you smooth skies …
Tom
contents
special section
22 Real Time … All The Time
40 Aircraft Shopping Spree
Real-time data integration can
enhance customer relationships,
increase revenue and resource
management, and lower
operational costs.
Aircraft manufacturers have
experienced record-breaking
orders, but several obstacles
many hinder the trend.
profile
industry
22
10
Fuel Smart
American Airlines’ employeedriven Fuel Smart program saves
more than US$200 million in
fuel expenses and reduces its
CO2 emissions by nearly 2 billion
pounds annually.
Redefining
14 Mexicana
Airlines
Mexicana Airlines has
strategically transformed its
commercial business as well as
experienced vast success from
its low-cost subsidiary.
18
Leaps And Bounds
Vietnam Airlines is well poised
to support Vietnam’s anticipated
passenger traffic growth, which
is expected to more than double
to 32.4 million by 2020.
Air Berlin Enters
New Turboprop Era
Air Berlin purchased several
Bombardier Q400 turboprop
aircraft to combat higher fuel
prices and other operating costs.
43
26
Every Brand Counts
Creative fare branding can help
airlines differentiate products and
services.
The Global
28 MRO
Challenge
46 Double-Edge Sword
Successful MRO strategies, from
total outsourcing to developing inhouse MRO expertise, can have a
significant profitability impact.
Because of aircraft delays and
other challenges, reaching
estimated aircraft orders may be
on the lower side of the projected
scope for plane makers Airbus and
Boeing.
On The Same
Wavelength
Integrated systems help airlines
achieve effectiveness and
efficiency throughout their entire
range of activity.
31
40
34
Reach For The Stars
Only six carriers have achieved the
highest level of quality excellence
according to Skytrax.
10
59
ascend
contents
regional
products
company
70
Customer-Centricity
Challenge
Airline leaders should look at
their operations from a traveler’s
perspective to help ensure
superior customer service time
and time again.
Regional airlines in the United
States may have new opportunities
flying 100-seat RJs.
62 Beyond Water Cooler Talk
“Cubeless” software enables
airline employees to quickly
receive answers to some of their
most business-critical questions.
Travel and tourism in the
Caribbean makes up nearly 13
percent of its employment and
provides revenues of US$57
billion a year.
60
50
Breaking The Mold
A recent multi-million-dollar
investment by Sabre Airline
Solutions® to its suite of airline
passenger systems will help
significantly increase airline
revenues and customer-centric
capabilities.
54
Environmental Cool Down
A new model computes CO2
emissions with accuracy
and consistency to support
sustainable travel and tourism.
Rapid Return To
66 The
Skies
A complete set of integrated
solutions can help an airline
quickly recover when its schedule
is disrupted by bad weather or
other unpredictable causes.
Regionals:
70 AU.S.
New Outlook
72 Caribbean Dependency
66
54
ascend
by the numbers
Airline Capacity Changes
Fourth Quarter 2008 Versus Fourth Quarter 2007
By Chris Spidle and Paul Pederson, Ascend Contributors
Beginning in the fourth quarter,
airlines worldwide have adjusted capacity due to increasing fuel prices and changing
economic conditions.
This section compares capacity
changes, based on system
available seat kilometers, for
airlines based in each world
region.
}
Airline Capacity Comparison — Worldwide
System ASKs generated by airlines based in each region
Globally, capacity is down 2.9
percent; however, changes
vary significantly by region.
North America
Top 10 airlines based in North America — System ASKs
Airline
4Q08
4Q07
Change
Percent
American Airlines
66,596,185,843
73,611,502,153
(7,015,316,309)
-9.5%
Delta Air Lines
58,994,351,830
60,887,695,826
(1,893,343,996)
-3.1%
United Airlines
56,319,693,110
63,679,786,346
(7,360,093,236)
-11.6%
Continental Airlines
42,870,232,814
46,276,654,935
(3,406,422,122)
-7.4%
Southwest Airlines
41,383,717,648
40,874,580,692
509,136,955
1.2%
Northwest Airlines
37,153,085,308
37,277,085,661
(124,000,353)
-0.3%
US Airways
32,827,667,489
34,440,355,122
Air Canada
23,933,315,168
24,006,285,638
(72,970,470) -0.3%
12,977,748,053
13,627,880,954
(650,132,901)
-4.8%
Alaska Airlines
10,770,993,565
11,269,932,265
(498,938,700)
-4.4%
Others
56,181,842,519
65,305,227,584
(9,123,385,065)
-14.0%
440,008,833,346
471,256,987,175
(31,248,153,829)
-6.6%
jetBlue
Group Total
ascend
(1,612,687,633)
-4.7%
{
Airlines based in North America
(United States, Canada, Mexico and
Caribbean) decreased capacity 6.6
percent. Large U.S. network carriers
posted the largest decreases. Just
one airline in the top 10, Southwest
Airlines, increased capacity. Change in
the “Others” category is driven by airlines that ceased operations between
2007 and 2008.
by the numbers
Europe
Top 10 airlines based in Europe — System ASKs
Airline
4Q08
4Q07
Change
Percent
Lufthansa
42,883,664,268
40,553,972,466
2,329,691,803
5.7%
Air France
39,920,182,123
39,229,358,346
690,823,777
1.8%
British Airways
37,118,371,956
39,834,711,101
(2,716,339,145)
-6.8%
KLM
22,039,692,775
20,621,099,552
1,418,593,223
6.9%
Iberia
17,350,173,120
17,674,379,296
(324,206,176)
-1.8%
Virgin Atlantic
13,779,981,283
13,667,567,675
112,413,609 0.8%
easyJet
12,289,155,309
10,145,184,836
2,143,970,473
21.1%
Alitalia
10,866,268,965
12,930,818,769
(2,064,549,804) -16.0%
Aeroflot
9,588,308,365
8,140,649,562
1,447,658,802
17.8%
Scandinavian
9,103,909,587
9,286,588,258
(182,678,672)
-2.0%
138,004,537,628
149,210,678,452
(11,206,140,824)
-7.5%
352,944,245,378
361,295,008,312
(8,350,762,933)
-4.2%
Others
Group Total
{
Airlines based in Europe decreased
capacity 2.3 percent, much less
than North America airlines. The gap
between large-and medium-sized airlines continued to grow as the top
three network airlines — Lufthansa,
Air France-KLM and British Airways
— mostly grew, while meduim-sized
airlines typically shrank. Despite slowing growth plans, many low-cost carriers continue to show year-over-year
increases.
Asia
Top 10 airlines based in Asia — System ASKs
Airline
4Q08
4Q07
Change
Percent
Singapore Airlines
30,248,134,693
29,897,522,948
350,611,745
1.2%
Cathay Pacific Airways
27,830,522,813
24,206,001,385
3,624,551,428
15.0%
Japan Airlines
25,526,794,342
24,528,281,783
998,512,559
4.1%
Korean Air
21,229,645,630
20,565,884,281
663,761,349
3.2%
Thai Airways
20,873,858,885
20,975,944,453
(102,085,568)
-0.5%
Air China
19,848,237,551
20,333,192,080
(484,954,529)
-2.4%
All Nippon Airways
19,005,405,968
19,397,437,809
(392,031,842) -2.0%
China Southern Airlines
18,613,328,179
21,586,610,182
(2,973,282,003)
-13.8%
Malaysia Airlines
13,359,721,754
14,610,731,602
(1,251,009,848)
-8.6%
China Eastern Airlines
10,791,529,869
18,483,469,302
(7,691,939,433)
-41.6%
142,909,753,924
150,875,151,081
(7,965,397,157)
-5.3%
350,236,963,607
365,460,226,906
(15,223,263,299)
-4.2%
Others
Group Total
{
Airlines based in Asia decreased
capacity more than European airlines
but less than North American airlines. As in Europe, top airlines posted
increases while the next tier of airlines
posted decreases.
ascend
by the numbers
Middle East
Top 10 airlines based in Middle East — System ASKs
Airline
4Q08
Emirates
4Q07
Change
Percent
35,287,963,935
30,428,426,662
4,859,537,273
16.0%
Qatar Airways
12,391,630,010
10,556,045,312
1,835,584,698
17.4%
Turkish Airlines
11,495,646,393
9,734,260,710
1,761,385,683
18.1%
Etihad Airways
9,638,198,634
8,457,714,506
1,180,484,128
14.0%
Saudia
7,698,917,508
7,488,455,527
210,461,981
2.8%
Gulf Air
4,906,563,183
4,531,591,289
374,971,894 8.3%
El Al Israel
4,397,144,522
5,566,713,755
(1,169,569,233)
-21.0%
Kuwait Airways
2,684,526,899
2,620,929,384
63,597,515 2.4%
Royal Jordanian
2,411,168,729
2,152,761,037
258,407,693
12.0%
1,524,953,786
1,972,256,018
(447,302,232)
-22.7%
10,673,628,610
11,134,962,307
(461,333,696)
-4.1%
103,110,342,210
94,644,116,507
8,466,225,703
8.9%
Iran Air
Others
Group Total
{
Airlines based in the Middle East
posted the strongest growth of any
world region — 8.9 percent, a full
11.8 points above the worldwide total
change. Emirates, Qatar Airways and
Turkish Airlines increased capacity
nearly 20 percent.
Oceania
Top 10 airlines based in Oceania — System ASKs
Airline
4Q08
4Q07
Change
Percent
Qantas Airways
26,503,295,127
26,418,310,247
84,984,880
0.3%
Air New Zealand
9,087,044,297
9,374,556,725
(287,512,428)
-3.1%
Virgin Blue
6,584,533,467
5,354,494,340
1,230,039,127
23.0%
Jetstar Airways
5,681,776,167
5,172,099,924
509,676,243
9.9%
Air Pacific
1,535,103,745
1,286,859,116
248,244,629
19.3%
Air Tahiti Nui
1,186,769,884
1,410,550,973
(223,781,089)
-15.9%
Air Caledonie
578,122,643
539,492,503
38,630,140
7.2%
Tiger Airways Australia
491,452,619
–
491,452,619
NA
Air Niugini
437,699,476
385,054,359
Regional Express
175,675,103
208,753,208
(33,078,106)
-15.8%
Others
878,874,408
782,457,940
96,416,469
12.3%
53,140,346,937
50,932,629,336
2,207,717,601
4.3%
Group Total
ascend
52,645,117 13.7%
{
Airlines based in Oceania — defined
here as Australia, New Zealand and
Pacific Islands — posted a 4.3 percent
increase in capacity. The two large
network carriers, Qantas Airways
and Air New Zealand, show flat to
slightly down, while LCCs and small
airlines typically plan large percentage
growth.
by the numbers
Central And South America
Top 10 airlines based in Central and South America — System ASKs
Airline
4Q08
TAM
4Q07
Change
Percent
12,702,039,935
10,855,955,906
1,846,084,029
17.0%
LAN Group
8,210,199,211
7,794,244,769
415,954,441
5.3%
GOL
7,298,153,672
5,694,659,408
1,603,494,263
28.2%
Aerolineas Argentinas
4,664,691,177
5,064,665,625
(399,974,449)
-7.9%
Copa Airlines
3,635,630,598
3,194,895,774
440,734,824
13.8%
Avianca 3,353,020,745
3,166,625,944
186,394,801 5.9%
Taca
2,255,203,575
2,422,121,130
(166,917,555)
Varig
1,837,284,321
2,461,915,372
(624,631,051) -25.4%
LACSA
1,050,770,619
1,000,872,419
49,898,200
5.0%
Aerosur
504,695,502
172,232,664
332,462,838
193.0%
3,670,444,946
4,582,349,447
(911,904,501)
-19.9%
49,182,134,299
46,410,538,458
2,771,595,841
6.0%
Others
Group Total
{
Airlines based in Central and South
America posted the second-strongest
growth of any world region, 6 percent.
The largest market, Brazil, was very
active as airlines backfilled Varig’s
reduced capacity.
{
Airlines based in Africa increased
capacity by less than 1 percent. Top
airline South African shrank roughly
in line with worldwide trends, while
other airlines in the top five increased
capacity.
-6.9%
Africa
Top 10 airlines based in Africa — System ASKs
Airline
4Q08
4Q07
Change
Percent
South African
8,444,062,973
8,789,159,664
(345,096,690)
-3.9%
Egyptair
6,138,727,918
5,813,019,933
325,707,985
5.6%
Royal Air Maroc
3,193,246,565
3,033,248,965
159,997,599
5.3%
Keyna Airways
3,167,133,022
2,811,601,799
355,531,223
12.6%
Ethiopian Airways
2,886,237,086
2,709,967,552
176,269,533
6.5%
Air Mauritius
2,186,351,796
2,311,685,204
(125,333,408)
- 5.4%
Libyan Arab Airlines
1,437,639,632
600,549,589
837,090,043
139.4%
Tunis Air 1,433,014,516
1,328,208,014
104,806,502 7.9%
Air Austral
999,402,217
1,081,645,177
(82,242,960)
-7.6%
Air Algerie
468,550,417
1,410,599,905
(942,049,489)
-66.8%
10,291,725,492
10,442,169,383
(150,443,891)
-1.4%
40,646,091,632
40,331,855,184
314,236,447
0.8%
Others
Group Total
Chris Spidle is delivery director of research, analysis and modeling and Paul Pederson is an airline research principal
for Sabre Airline Solutions®. They can be contacted at [email protected] and [email protected].
ascend
FUEL SMART
Through its employee-driven Fuel Smart program, American Airlines
gains potential savings of more than US$200 million in fuel expenses
and reduces its CO2 emissions by nearly 2 billion pounds annually.
By Stephani Hawkins | Ascend Editor
10 ascend
Photos courtesy of American Airlines
profile
American Airlines’ mechanics take every cost-saving measure to ensure aircraft are flown
with utmost efficiency. Regularly cleaning aircraft engines, which improves fuel burn, saves
the carrier 3.9 million gallons of fuel a year.
H
ow many airline employees does it take
to save 96 million gallons of fuel a year?
All of them, as demonstrated by Dallas/
Fort Worth, Texas-based American Airlines.
From reservations and cargo representatives
to customer service and top management,
every employee has the ability to help put a
sizeable dent in fuel costs and, in effect, slash
carbon dioxide emissions significantly.
Like most airlines around the world,
American has taken common steps in
recent years to preserve fuel, such as
using a single engine when taxiing and
asking passengers to help keep the cabins
cool by lowering the window shades. But
in 2005, the carrier took it a step further
when it launched Fuel Smart, a fuelconservation program that encourages
employees to get involved by submitting
conservation ideas to the Fuel Smart
team.
“Fuel Smart grew out of the first
run-up in oil prices in 2004 and 2005,” said
American Chairman and Chief Executive
Officer Gerard Arpey. “When oil was
above US$140 per barrel, we needed Fuel
Smart more than ever, but even if oil fell
to, say, US$50 a barrel, we’d still want
to develop fuel-conservation awareness
among every airline employee.”
Last year, more than 500 suggestions were submitted by employees, contributing to a US$204 million savings for
the airline, which paid an average US$2.12
a gallon for fuel.
Since the start of the program,
several fuel-saving initiatives have been
implemented:
Engine wash program: Periodically cleaning aircraft engines promotes improved
fuel consumption, lowers emissions into
the environment and improves the life of
the engine. Projected savings — 3.9 million gallons of fuel annually.
Replacing catering carts: American
Airlines will retire about 19,000 catering
carts and purchase newer models that
are made with lighter materials, reducing
average aircraft weight by 124 pounds.
Projected savings — almost 1.9 million
gallons of fuel annually.
Boeing 737 and 757 winglet installation:
The airline added winglets to its Boeing
737s and will do the same on its Boeing
757 fleet. Projected savings — 25 million
gallons of fuel annually. American Airlines
is also the launch customer for installing
winglets on its Boeing 767-300 fleet,
which will provide 17 million gallons in
annual fuel savings.
Valve removal on MD-80 fleet: The carrier has removed a valve that is no longer
necessary on MD-80 aircraft. Projected
savings — about 70,000 gallons of fuel a
year, or about US$151,000 annually.
Reduce oil leak check time: The procedure for an MD-80 engine oil leak check
took longer than necessary, so the carrier
reduced the amount of time the engine
runs during the check. Projected savings
— between US$50,000 and US$100,000
a year, depending on fuel prices.
Removing unnecessary cabin items: The
carrier has removed all unnecessary inflight items, such as a serving tray that
was no longer being used. Projected savings — 20 gallons of fuel each year for
By adding winglets to certain aircraft, such as the Boeing 737 and Boeing 757, as part of its
Fuel Smart program, American Airlines stands to save 25 million gallons of fuel annually.
ascend 11
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every pound of weight removed from an
aircraft.
MD-80 tailcone manufacturing: The
carrier’s maintenance base in Tulsa,
Oklahoma, is manufacturing and installing low-drag tailcones on its MD-80 fleet.
Producing low-drag tailcones in house,
American Airlines achieves a savings of
US$205,000 on each tailcone. Projected
savings — 1.7 million gallons of fuel
annually.
The tailcones cost US$240,000, and
American can produce them for about
US$35,000 each.
“The economics was to the point
that it just made sense to build them,”
said Richard Lyon, supervisor for American
Airlines’ Composite Repair Center.
In addition, American removed midgalley ovens on its Boeing 767-300 aircraft,
reducing the weight of the planes by 235
pounds. It’s using high-speed tractors at
Dallas/Fort Worth International Airport and
Los Angeles International Airport to tow
aircraft from gates to hangars, a potential
savings of 9 million gallons of fuel a year.
It also received approval from the U.S.
Federal Aviation Administration to reduce
the fuel reserve carried on trans-Atlantic
flights from 10 percent to 5 percent, which
will save an estimated US$10.6 million
annually.
Pinching pennies and squeezing every
bit of costs out of its system is nothing new
for American Airlines. In the 1980s, former Chairman and Chief Executive Officer
Robert Crandall saved the airline US$40,000
a year with his idea to remove a single olive
from every passengers’ dinner salad.
“The point wasn’t the olive,” Crandall
said. “The point was nurturing a cost consciousness among airline managers. Also, it
was a forerunner to the more contemporary
ideas about value engineering — understanding the relative importance customers
assign to elements of service and comparing them to the cost of providing those
elements.”
Something that small and unnoticeable to passengers has saved millions of
dollars for the airline. And Crandall’s legend
lives on. Since then, American Airlines has
sought to achieve savings that are transparent to its passengers, such as an initiative
implemented by the carrier’s mechanics,
who were distraught every time they had to
throw away a dull drill bit and replace it with
a new US$200 bit. Instead, they put their
heads together and designed “Thumping
Ralph,” a drill-bit sharpener made from a
vacuum cleaner belt and a motor from a
science project. Thumping Ralph saves the
airline as much as US$300,000 a year.
The creation of Thumping Ralph was a
direct result of requests to employees from
12 ascend
American Airlines’ flight attendants contribute to the Fuel Smart program in several ways,
including avoiding storing unnecessary catering items on flights and beginning safety
demonstrations on time to prevent departure delays.
American’s management team to bring
their cost-savings ideas to the forefront.
The carrier’s executives clearly understood
that nobody knows its employees’ jobs better than those performing them day in and
day out, so they approached the airline’s
entire workforce and challenged them to
save in every way possible.
“Communication lines were suddenly open,” Justin Fuller, an American
engineer in Tulsa, Oklahoma, told The
Christian Science Monitor, an international
daily newspaper, in 2005. “Before, people
had ideas, but they didn’t know where to
take them. They also thought it wouldn’t
make any difference if they did. Now, the
groundwork has been laid, so people know
where to take their ideas and how to get
them implemented.”
The Fuel Smart program was established in the same vein. It opens an avenue for employees to really get involved
and help their airline fight the uncontrollable battle of rising oil prices. And it’s
paid off.
Since its inception, employees from
all areas within American Airlines have
come out of the woodwork, leaving no
stone unturned, to generate countless fuelsaving initiatives.
The carrier has identified more than
25 ways its employee groups can help save
fuel across nine business areas, including:
Customer service — Customer service
representatives can alert load planners when passenger counts (including
stand-by travelers) change by more than
seven passengers, consistently charge
for overweight baggage and enter child
edits during the check-in process.
Ramp service — Ramp employees can
avoid making an aircraft stop and wait to
be wanded in after arrival, promptly hook
up electrical and ground air on arrival,
and avoid leaving vehicles or ground
equipment idling when not in use.
Maintenance — Aircraft mechanics can
use ground power to reduce auxiliary power unit usage, tow rather than
taxi aircraft when conditions permit,
and reduce aircraft weight by removing
unnecessary items or replacing items
with lighter-weight alternatives.
Cargo — Cargo personnel can use lighterweight unit load devices; cancel reservations when it’s determined that reserved
profile
During 2004/2005 when oil prices really began to spike, American Airlines implemented Fuel
Smart, a fuel conservation employee-driven program, which saves the carrier 96 million
gallons of fuel a year.
cargo will not arrive; and avoid loading
skids that are not attached to the shipment into containers, onto pallets or onto
narrow-body aircraft.
Flight — Cockpit crew can conserve fuel
while on the ground by limiting APU
usage, complete time engine start at the
end of pushback, and single-engine taxi
when safe and operationally possible;
adjust the cost index after departure if
the estimated time of arrival differs from
the scheduled arrival; update flight plans
with new wind, payload and departure
information; and follow cruise trim procedures.
Flight service — Flight attendants can
ask customers to close window shades
and open air vents on warm days to keep
To decrease fuel consumption, ramp employees avoid making planes wait to be wanded in
as well as promptly hook up electrical and ground air upon arrival. They also shut down any
ground equipment while not in use.
the plane cooler for the next departure,
avoid storing extra soda cans or catering
supplies in extra spaces on the aircraft,
indicate any over-provisioning on catering
papers and begin safety demonstrations
promptly to avoid departure delays.
Reservations — Reservations agents can
inform customers of baggage weight
limits so they can pack accordingly or will
be prepared to pay additional charges for
overweight baggage.
Management — Managers can seek ways
to save electricity such as turning off
lights after meetings and shutting down
computers and monitors during non-business hours, avoid unnecessary business
travel, and lead by example and reinforce
Fuel Smart suggestions.
All employees — The entire employee
workforce can flight list as soon as possible when booking non-rev travel and
cancel any non-rev flight listings when
flight plans change.
“One of the reasons Fuel Smart has
been so effective is that it has not been topdown, but has very much been a grassroots
effort, with everyone — pilots, ramp workers, mechanics, dispatchers, planners and
many other work groups — taking responsibility for saving energy,” said Arpey. “And
it’s not just been about the ‘big hits’; even
small changes in procedures or old habits
can yield enormous savings because of the
huge scale of our operation.”
The Fuel Smart program, as the old
adage goes, kills two birds with one stone.
With the current pressures on airlines to
become more environmentally friendly, the
program, in addition to saving millions of
dollars for American Airlines, has helped
reduce its carbon dioxide emissions footprint by 1.9 billion pounds per year. And
that figure will only grow as employees
continue finding ways to conserve fuel.
Considering that a one-cent increase
in a gallon of fuel costs American Airlines
an additional US$33 million a year, Fuel
Smart has become critical to the airline’s
future success.
“Focused cost-reduction programs
like Fuel Smart have become an essential
practice at incumbent airlines like
American,” Crandall said. “They need all
the help they can get.” a
Stephani Hawkins can be contacted
at [email protected].
ascend 13
In response to the many new challenges it’s faced during the past
few years, Mexicana Airlines has made highly strategic changes to its
commercial side of the business as well as experienced great success
from its low-cost subsidiary.
By Michael Mankowski and Michael Reyes | Ascend Contributors
Redefining
1
5
3
2
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4
industry
A
s the world’s fourth-oldest airline still in
operation, Mexicana de Aviación has seen
its share of prosperity and challenges
throughout its 86 years of taking to the skies.
Today, Mexicana Airlines and its wholly owned
low-cost subsidiary, Click de Mexicana, form
Mexico’s largest international airline group and the
region’s leader between Mexico and the United
States. Buoyed by Mexico’s growing economy
and geographically positioned next door to the
world’s largest economic engine, Grupo Mexicana
is poised for great success.
Yet despite this enviable position in the
global airline industry, Grupo Mexicana has faced
some of its toughest challenges in recent years.
In addition to the ever-present and constantly
growing burden of fuel costs, the entire character
of the Mexican marketplace has changed during
the last three years. What was a decades-long
operating environment of stability for Mexico’s
two traditional giants — Mexicana Airlines and
rival AeroMéxico — has today become a free-forall of hyper competition.
“For several years now,
Mexicana Airlines has
been implementing a strict
restructuring plan that
places particular emphasis
on maintaining the quality
of services.”
— Manuel Borja, chief executive officer,
Mexicana Airlines
Growing Headwinds
Photo by shutterstock.com
As has been the case around the world
— from the United States and Brazil to India and
nearly anywhere healthy yields existed — new
operating models have emerged to challenge traditional carriers that had been flying comfortably
for decades. Be it low-cost carriers, niche carriers
with specialized concepts such as all-business
class cabins or value-focused hybrids, there is no
doubt that a new wave of challengers has entered
every major air travel marketplace in the world.
And Mexico is certainly no different — except
perhaps for the speed in which the upstarts have
emerged.
During the last five years, a rapid loosening of regulatory restrictions governing Mexico’s
airlines, coupled with massive foreign investment
in a developing economy only growing as trade
increased with the United States, led to a boom
in new domestic Mexican carriers.
To most local residents who are regularly exposed to saturating billboards and airwaves
from the streets of Tijuana to Cancun and every
major population center in between, the region’s
airline names — Avolar, ALMA, Interjet, Volaris,
VivaAerobus and a handful of others that have
either started flying or have significantly expanded
operations since 2005 — are familiar. As one
airline chief executive officer famously noted,
“The number of airlines operating domestically in
Mexico doubled in a year’s time.”
With so many new faces competing for
traffic, actual domestic capacity grew a staggering
30 percent from 2006 to 2007, which, until now,
was unheard of not only in Mexico, but anywhere
else in the world.
And who is the biggest target of all the
newcomers? The established carriers, of course.
But beyond the added competition at home,
Mexicana Airlines found it was being pressured on
all fronts. No strangers to the perils of well-funded
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profile
Photos coutesy of Mexicana Airlines
domestically hasn’t been a reaction at all, according
to Isaac Volin, Mexicana Airlines’ chief commercial
officer.
“It should be remembered that Mexicana
Airlines launched the country’s first [low-cost carrier]
three years ago: Click de Mexicana,” he said.
In 2005, Mexicana Airlines’ leadership foresaw big changes ahead and proactively made a bold
move, opting to launch Click de Mexicana with a
single fleet of all-economy-class Fokker 100s serving
selected domestic markets.
“Despite difficult market conditions, aggressive competition and high fuel prices, the business
model of this subsidiary has proven extremely successful, maintaining a high occupation factor and
serving routes punctually and efficiently with 100-seat
aircraft in a single ‘Coach Plus’ configuration,” Volin
said.
Volin, who initially came to Grupo Mexicana as
Click’s CEO, is also quick to remind that with a 34-inch
seat pitch, the wholly owned LCC boasts the most
legroom in the industry.
And the Click investment has proved worthwhile, providing Mexicana Airlines with a weapon
against all new domestic entrants. The airline that
started with 10 Fokker 100 aircraft serving 16 destinations will have 25 F100s serving at least 25 cities by
the end of the year.
Redefining Its Commercial Business
Having access to real-time information enables SOC personnel to effectively respond to
unexpected schedule disruptions, making it possible for airlines to quickly recover with the
least impact on customers.
As part of its ongoing, strict restructuring strategy, Mexicana Airlines focuses heavily on
maintaining and enhancing the quality of products and services it offers customers. In doing
so, the carrier will place deep emphasis on improving its internal processes to ensure the
utmost level of service is consistently provided across the entire organization.
competitors with non-legacy business models
(and non-legacy costs to match), the major U.S.
carriers have consistently been slashing domestic
capacity during the last five years to insulate
themselves from revenue-eroding domestic price
wars. Where did all that capacity end up? Much of
it has been shifted to international routes, including many destinations in Mexico, where U.S. network carriers are finding yields to be slightly more
resilient than in the domestic United States.
So during the course of the last two years,
Mexicana Airlines’ management team has been
plunged into what nearly amounts to a worst-case
scenario:
Rapidly expanding domestic capacity (and
declining yields) due to airlines such as Interjet,
Volaris and Aviacsa;
U.S. network carriers fortifying their presence
in Mexico with gateway hubs, such as Delta
Air Lines’ new “mini” hub in Los Angeles,
California, for north/south traffic flow plus
increasing Atlanta, Georgia-Mexico service,
and Continental’s and American’s large and
expanding Mexican networks from George
16 ascend
Bush Intercontinental Airport and Dallas/Fort Worth
International Airport, respectively;
Alaska Airlines’ continued penetration to Mexico’s
beach destinations and entry to Los AngelesMexico City market (Mexicana Airlines’ largest U.S.
route);
Frontier Airlines’ expansion of Mexico service from
Denver, Colorado, and secondary U.S. cities to
Cancun;
Expanded U.S. LCC service to Cancun (jetBlue,
Spirit);
AeroMéxico’s initiation of a Buenos Aires route
(Mexicana Airlines’ only long-haul international service);
Limited slot availability at Mexico City Benito Juarez
International Airport for expansion;
New passport rules by the U.S. government requiring U.S. citizens to carry a passport for travel to and
from Mexico and Canada.
Competing Domestically: Making Things
“Click”
What has Mexicana Airlines done to react to
its many challenges? Its biggest initiative to compete
Beyond building a low-cost option to compete
domestically, Mexicana Airlines recognized the pressing need to completely restructure its commercial
strategy to remain competitive globally.
“For several years now, Mexicana Airlines
has been implementing a strict restructuring plan that
places particular emphasis on maintaining the quality
of services,” said Mexicana Chief Executive Officer
Manuel Borja. “As such, we have chosen to concentrate on improving internal processes.”
Faced with an unprecedented combination
of market forces jeopardizing the airline’s revenue
streams, Mexicana Airlines needed to confront those
significant “internal processes” to protect itself going
forward.
In reinventing its commercial strategy, the carrier chose to build on an asset that any airline around
the world would envy: a hub at the center of a city
with 20 million people.
With a huge source of local demand in the
world’s second-largest metropolis, Mexicana Airlines
had always focused on bringing travelers to and
from Mexico City. But to compete more effectively
with large international carriers, the airline decided to
double down on its Mexico City hub, with a focus
on connecting passengers from its 50 destinations
through Mexico City and “aim to add new routes to
Europe while holding on to its leading position in the
Mexico-U.S. market,” according to Borja.
The airline’s management team responded
with a three-pronged approach aimed at solidifying its
position at Mexico City:
A top-down transformation of its revenue management department,
Midterm network realignment,
profile
Overhaul of its sales and distribution department.
Last year, as part of its revenue management transformation and its commitment to establish
Mexico City as the premier hub for the region,
Mexicana Airlines moved forward with transitioning
from a leg-segment revenue management approach
to an origin-and-destination revenue management
concept.
Aiming to accomplish such an impactful
move, Volin led the revenue management team and
attacked each route, one by one, by creating route
game plans:
Strategic overview,
Specific goals,
Market profile (trend analysis, financial performance),
Current status and SWOT analysis,
New pricing and inventory strategies,
Measurable action plan for every route, including
goals for local and connecting traffic.
This rigorous analytical market approach led to
a reversal of revenue trends during the region’s 2007
summer and established a new standard to manage
market performance within the department.
After the market review process and revenue trend reversal, the revenue management team
focused on internal process improvement centered
on the new O&D revenue management concept,
new pricing procedures and reorganization of the
department along functional lines, managing demand,
flights and pricing from the region-focused structure.
The transformation of the revenue management department lasted seven months and improved
the company’s revenue performance by more than
US$90 million from the depressed revenue position of early 2007. And just as important, it allowed
Mexicana Airlines to avoid the fate of several of its
larger competitors north of the border.
With the revenue management processes in
place to handle increased passenger flows through
the Mexico City hub, the next order of business
was reworking the entire schedule to maximize the
carrier’s revenue in light of the new emphasis on
connections as incremental revenue.
Beginning with the summer of 2008, the
carrier retimed its entire schedule to create more
connection possibilities among domestic Mexico, the
Untied States, Canada and Latin America.
This initiative was not without major challenges. In terms of a global hub, Mexico City is a
relatively small, landlocked, slot-restricted airport
with little opportunity for future capacity growth.
In addition, Mexicana Airlines battles major competitor AeroMéxico at the very same airport, thus
minimizing its own opportunities for expansion.
Nevertheless, Mexicana Airlines’ planning group
reworked the entire schedule to emphasize connecting banks with an expected annual benefit of
millions of dollars in purely incremental revenue.
By the end of 2007, the carrier also looked
to boldly capitalize on its ongoing restructuring by
initiating the consolidation of the Mexican aviation
market; whereby it submitted a bid to purchase
rival AeroMéxico and form a single Mexican international carrier capable of competing with domes-
tic LCCs and the ever-growing international mega
carriers.
Despite presenting a compelling case to the
Mexican aviation authorities, Mexicana Airlines was
rejected from participating in the process and eventually withdrew its offer due to anti-competitive issues
raised by the government.
With the removal of the AeroMéxico offer
and its revenue management transformation and
network planning adjustments in place, Mexicana
Airlines embarked on an overhaul of its sales and
distribution department.
Over a period of eight months, beginning in
November 2007, Mexicana Airlines’ management
focused its efforts on all key areas of the organization
to align it with industry best practices and enable it to
outperform the competition in the new landscape.
To achieve this standard, the management team
focused on:
Defining a new leisure sales strategy for the United
States to Mexico’s beach markets,
Completing a complete review of its city ticket
office distribution network,
Highlight
Click’s growth has
allowed Mexicana
Airlines to redeploy
many aircraft to more
lucrative international
markets ...
Increasing direct distribution capabilities by improving mexicana.com’s structure and usability,
Conducting a re-examination of the carrier’s longstanding preferred travel agency discount program,
Initiating extensive sales training,
Completing a comprehensive overhaul of its sales
organization to a “flatter” structure with betterdefined accountability,
Realigning corporate goals between pricing/
revenue management and sales,
Creating a new travel agency incentive structure
to better align agency revenue performance with
commission payouts this year.
To date, the sales department overhaul has
resulted in millions of dollars in annual benefits due
to quick hits such as organizational streamlining as
well as the aggressive redesign of the commission
program away from the traditional philosophy of
up-front discounts. As Mexicana Airlines continues
implementing its overhaul plan, further benefits will
be driven by improved business processes for gener-
ating sales revenue while simultaneously controlling
the cost of sale.
Charting A New Course
What does the future hold for Mexicana
Airlines? While the redesign of the entire commercial
strategy will remain an ongoing process, the carrier is
already reaping the rewards as it plans for the future.
Thanks to the runaway success of Click, the
carrier has been able to grow the wholly owned LCC
to the point that it is used to replace traditional domestic Mexicana Airlines service in many cities. Click’s
growth has allowed Mexicana Airlines to redeploy
many aircraft to more lucrative international markets
such as Canada, further strengthening its network
with new destinations.
“Grupo Mexicana is in the process of expanding its presence in the international market,” said
Adolfo Crespo, the carrier’s senior vice president of
customer service and corporate communications,
“with new flights to Calgary and Edmonton in the
thriving Canadian province of Alberta, which began
in June.”
And those new routes to Europe that CEO
Manuel Borja referenced? While not yet certain,
trans-Atlantic operations would continue to bolster
Mexicana Airlines’ international presence as it readies
itself for its next big move: repositioning itself in the
global industry by joining the oneworld alliance.
In April, in a strategic move to further bolster
its revenue, Mexicana Airlines, and its Click subsidiary,
were formally invited to join oneworld, a process the
carrier estimates will take 12 to 18 months to complete, and it is sponsored by partners Iberia Airlines
and American Airlines.
This development is expected to strengthen
Mexicana Airlines’ offering for current and future
customers while providing oneworld partners with
an expanded network in Mexico and Central America
flown by the region’s leading airline.
As has been the case around the world, these
are turbulent times to run an airline, and Mexico’s
entire airline industry has felt the pressure more than
others for a variety of reasons. Most importantly, the
speed and depth of domestic Mexico’s structural
changes were more accelerated than perhaps anywhere else in the world. The rapid liberalization of the
country’s air transport market has put tremendous
pressure on incumbent carriers to evolve. Mexicana
Airlines, reinventing itself with its experienced and
nimble management team, has proven willing to
adapt based on its bold moves of the last three years.
Clearly, the carrier is in it for the long haul, as it is finding
new solutions to ensure it not only survives, but
prospers in this difficult and dynamic marketplace. a
Michael Mankowski is project manager
and senior consultant and Michael Reyes
is project manager and management
consultant for Sabre Airline Solutions®
Consulting. They can be contacted
at [email protected]
and [email protected].
ascend 17
profile
profile
Photos courtesy of Vietnam Airlines
A Conversation With …
Pham Ngoc Minh, President and
Chief Executive Officer, Vietnam Airlines
M
ore than five decades ago, Vietnam
Airlines began service with a mere five
aircraft, which, based on its steady
growth and success, was all the foundation it
needed. Since then, the thriving Vietnamese
carrier, once known as Vietnam Civil Aviation, has
grown significantly and continues to do so. Today,
it operates 49 aircraft — with plans to expand to
104 aircraft by 2015 — and serves 20 domestic
and 41 international destinations.
Contributing to the record aircraft orders for
the world’s two largest and most prominent plane
makers, Airbus and Boeing, Vietnam Airlines last
year placed orders for 10 Airbus A350-900 XWBs
— scheduled for delivery during 2014 and 2015
— as well as 20 single-aisle Airbus A321s. It also
expects to receive more than 30 Boeing 787-9
Dreamliners between 2013 and 2019.
The added capacity will support the carrier’s continued progression as well as Vietnam’s
anticipated passenger traffic growth, which is
expected to more than double to 32.4 million by
2020.
Last year, the Vietnam flag carrier provided
air transportation for 8 million passengers and
brought in US$1.25 billion in revenue. That’s a
tremendous leap from the 500,000 passengers it
carried and US$50 million it earned annually nearly
30 years ago. And this year, Vietnam Airlines was
off to an exceptional start with revenues for the
first half of the year of US$728.8 million, a 27
percent increase from the same period last year.
Despite the airline’s many accomplishments and continued evolution, it faces daily challenges such as out-of-control fuel costs, a possible
shortage of pilots, government-regulated domestic fares, aircraft delays and steep competition.
But these issues won’t keep Vietnam
Airlines President and Chief Executive Officer
Pham Ngoc Minh from pushing ahead to brighter
days for his airline. In addition to its regional
subsidiary, Vietnam Air Service Company, and
its booming cargo business that moved 115,380
tons of cargo last year (an 8.5 percent increase
from the previous year), the airline will launch lowcost VietAir later this year to compete with the
region’s budget operators and private start ups.
The introduction of the LCC is one of many
initiatives Minh and his executive team has underway. A priority, given price restrictions enforced by
the local government, is to review and restructure
the carrier’s route network based on profitability.
Minh, who joined Vietnam Airlines 28 years
ago and last year took the reigns as the carrier’s president and CEO, recently visited with
KC Teo, regional director for Vietnam, Singapore
and Indonesia for Sabre Airline Solutions®, to
discuss his methods for maintaining a prosperous
business and overcoming many of the concerns
facing his airline.
Question: Since it began operations in 1956, Vietnam Airlines has truly
transformed into an affluent airline, supporting Vietnam’s ever-growing travel and
tourism industries. What are some of the key
changes the airline has undergone during
the last several decades that has led to such
success?
Answer: Several key initiatives that
contributed to the success of Vietnam Airlines
include adopting the latest technology in fleet
expansion to have a young and modern fleet,
making a strategic investment in major markets
of Vietnam’s tourism, and focusing on a strategically developed network of long-haul flights and
local and regional connections. The airline is fully
ingrained with Vietnamese traditional culture — a
distinctive identity — to be differentiated from
the rest.
Q: What is driving the growth of the
travel and tourism industries in Vietnam,
such that passenger traffic is expected to
more than double by 2020? And what impact
will this growth have on Vietnam’s economy
and future stability?
A: Vietnam is continuously achieving
remarkable macroeconomic performances: its
annual gross domestic product growth forecast
for the next few years is averaging around 7
percent to 8 percent, and foreign trade and foreign direct investment continue to rise sharply.
Vietnam is considered a safe destination in
the region for tourism and investment, staying
untouched by terrorism and tsunami. Our government invests in the development of infrastruc-
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profile
In support of Vietnam’s anticipated passenger traffic growth, which is expected to more than
double to 32.4 during the next decade, Vietnam Airlines will expand its fleet from its current
49 aircraft to 104 planes by 2015.
ture and facilities (travel accommodation, airport)
while continuing to develop distinctive tourism
products. Substantially rising living standards
of the people of Vietnam equates to higher
demand for travel. Being the second-most popu-
lous country in Southeast Asia (currently around
84 million), Vietnam possesses a great opportunity for development, particularly in the transport
industry, which will significantly contribute to the
economy’s stability and growth in return.
Q: You recently compared your airline
to Philippine Airlines and Malaysia Airlines
and stated that your mission is to become
more like Cathay Pacific Airways, Singapore
Airlines or Thai Airways International. What
initiatives have you put in place to achieve
this objective?
A: We have firm plans to expand and
modernize our fleet: 104 and 150 aircraft by
2015 and 2020, respectively, including Boeing
787, Airbus A350, Boeing 777, Airbus A321
and Airbus A320. We will continue to improve
services as well as maintain our current network with convenient schedules and continue to
expand and add new international and domestic
destinations. From now to 2020, we’ll ensure
the average growth rates of 12 percent per year.
We’ll sustain more than 30 percent of the market
share of international tourists flying to and from
Vietnam and over 55 percent of the domestic
market share.
We’ll continue to satisfy all requirements
for an international airline as an International Air
Transport Association member, with a long-term
strategy focused on safety, service quality and
efficiency.
Q: With your recent aircraft orders,
your fleet will nearly double during the next
several years raising concerns about a shortage of pilots to operate these aircraft. What is
your strategy for ensuring there are enough
trained pilots for these additional aircraft as
they arrive?
A: Our main objectives include offering attractive opportunities and good working
environments to pilots (both foreigners and
Vietnamese), setting up a pilot training center in
Vietnam, recruiting students for pilot training, and
employing simulation equipment to shorten training time. We will also enhance cooperation with
international partners to train pilots.
Q: Do you have similar concerns about
staffing your aircraft with flight attendants or
ground personnel? If so, how will you address
these personnel issues?
A: We will address these staffing concerns by offering a good working environment,
leveraging recruitment from different trusted
sources for training and enhancing cooperation with international partners to train flight
attendants.
In August, Vietnam Airlines President and Chief Executive Officer Pham Ngoc Minh (right)
and Tom Klein, Group President of Sabre Airline Solutions® and Sabre Travel Network®
signed two multi-million dollar deals for the carrier to receive advanced technology including
SabreSonic® Customer Sales & Service.
20 ascend
Q: Last year, your fuel expenses represented 24 percent of your total operating
costs, and this year it will likely more than
double. What steps are you taking to offset
these additional costs to help protect your
bottom-line results for the year?
A: We are taking numerous steps to
protect our bottom line, including:
Restructuring and rationalizing our international and domestic flight network by adjust-
profile
A: Apart from the United States, we are
considering opening new routes such as Ho Chi
Minh City/Hanoi, Vietnam-London; Ho Chi Minh
City/Hanoi-Shanghai/Beijing, China; Ho Chi Minh
City-Mumbai, India; Ho Chi Minh City-Brisbane,
Australia; and Ho Chi Minh City-Doha, Qatar.
Q: In addition to codeshare agreements, what are your thoughts about possibly joining one of the three global alliances?
A: Vietnam Airlines doesn’t currently
belong to any airline alliance but has been in
discussions with SkyTeam. Vietnam Airlines
currently codeshares with founding SkyTeam
member Korean Air as well as China Southern
Airlines, which joined last year.
In addition to expanding its fleet to support the rapid air transportation growth in its home
country, Vietnam Airlines also takes steps to ensure its passengers travel in comfort. Its
reclining seats geared with high-tech amenities sets the airline apart from many of its
competitors.
ing flight schedules based on in-depth market analysis, imposing flexible fare policies
and optimizing capacity utilization to increase
sales of passenger and cargo; intensifying
the route efficiency research and analysis to
support the operations and management;
Encouraging measures to increase revenue
in all business sections and subsidiaries of
the corporation;
Reviewing overall investment plans —
Cutting down and deferring investment projects;
Strictly controlling the workforce —
Postponing new recruitment except experts
for long-term service, restructuring workforce to increase productivity; applying 42
working hours a week policy; adjusting and
rationalizing salary structure; and developing
a reward system for economical practices;
Taking drastic measures to cut costs and
increase savings with specific criteria such
as a fuel-saving program; adjusting customer
services that minimized affects on service
quality; cutting down 10 percent to 20 percent regular costs on all items; and developing programs for efficiency in maintenance
and repair of aircraft, engines and spare
parts inventory.
Q: What long-term results do you
expect to realize with the launch of your
low-cost carrier, VietAir? And what impact
do you believe the start-up LCC will have on
your current competition?
A: The LCC will generate new traffic. Generally, the LCC and legacy [carriers]
will focus on different market segments and
support each other to better serve market
demand.
Q: There appears to be a hardship on
domestic routes because the local government sets your fares. What are you doing to
convince the government that this regulation
will have a significant, negative impact on
your balance sheet if rates aren’t adjusted to
reflect the high fuel costs? If the fares aren’t
adequately adjusted and the government
doesn’t allow the proposed fuel surcharge,
what are your options to keep from losing
money on domestic routes?
A: As of Aug. 15, our government has
allowed airlines to collect a fuel surcharge on
domestic routes. Vietnam Airlines is a network
carrier and our financial result is calculated on the
whole network performance (some routes may
themselves make losses, but they contribute
greatly to the whole network). We are also very
much aware of our mission as the national flag
carrier: to contribute to the stability and growth
of the country. There will be an appropriate time
when adequate adjustments will be made by the
government.
Q: Next year, you plan to operate your
own flights to the United States that are currently being operated through your codeshare
agreement with American Airlines. What
additional U.S. routes are you considering?
A: Presently, we are still on course with
our plan to launch service between Ho Chi Minh
City, Vietnam, and Los Angeles, California. After
that, we will study the possibility of directly
operating to another destination in the United
States.
Q: You have codeshare agreements
with a number of other carriers worldwide.
Which other international routes are you
considering operating on your own?
Q: Technology is often essential in
helping an airline evolve and prosper. How
has technology helped your airline succeed?
What role do you feel technology will play in
the future growth of Vietnam Airlines?
A: Adopting the latest technology has
helped Vietnam Airlines ensure safety, service
quality and efficiency as well as refresh its
image as a young, modern airline. In the future,
technology will remain our key component to
move forward and stay competitive.
Q: With a continuing need to cut
costs, how can your employees help reduce
costs and save money for their airline? What
type of employee initiatives do you have or
are you considering implementing to help
control costs?
A: No airline would be successful without its employees’ commitment and contributions toward the company’s goals, especially
in this crisis period of the airline industry. At
Vietnam Airlines, apart from different training
provided, by inspiring a very ambitious vision
and expansion plan from top management to
employees, utilizing technology at work, with
fine-tuned working procedures, implementation
of rationalized salary structure, and reward system for productivity and economical practices,
our employees are highly motivated to dedicate
themselves to the comprehensive cost-saving
program in all business processes of the airline.
Q: With recent aircraft orders, a startup LCC, talk of purchasing a freighter if
the need arises and the many other future
plans you’ve outlined, you’re obviously in
it for the long haul. Where do you see your
airline in five to 10 years, and how will you
get there?
A: With firm orders for latest-technology
aircraft, a clear vision and other ambitious
expansion plans, we are confident and ready to
move forward and remain among the top three
airlines in our region in terms of business scope
and competitive capacity. Above all, the growing
young and modern fleet will be the key component to get us there. a
ascend 21
Real-time data integration across an airline’s respective businesses
enables it to more effectively carry out business initiatives
that can enhance customer relationships, boost revenue and
resource management, and shrink operational costs.
By Scott Healy | Ascend Contributor
22 ascend
Photo by Veer.com
Real-Time ...
All The Time
industry
T
information about dynamic customer purchasing behavior and preferences is a critical factor
in turning around the declining perceptions
toward air carriers.
Solution: A Single View Of The
Customer
As airlines work diligently to differentiate
from a service perspective and build brand loyalty, a single view of the customer is important
to clearly understand buying habits and how he
or she responds to service changes, pricing and
special promotions. But this is not a small technical task. To achieve this single view, airline
personnel throughout the organization need
access to passenger name records, customer
profiles and other information in real time.
Offering customized services is impossible without the historical context of a customer’s dealings with the airline. Equally important
is the most current information in the customer’s profile, current and planned purchases,
profitability, and the impact his or her requests
or needs may have in terms of the airline’s
profits. Therefore, an airline that employs a central data warehouse using historical and near
real-time data together enables accurate and
timely decision making to improve customer
relationships in three key ways:
Mitigate service disruption — Airline employees can mitigate the impact of service
disruption, such as a cancelled flight, in a
timelier manner using up-to-date passenger
information.
Target customers more precisely — Targeted
marketing campaigns can be designed
based on information that the customer
has asked for/looked at but has not yet purchased.
Build brand loyalty — Real-time access to
a single customer view can facilitate other
proactive services to high-value customers.
Recognizing that a frequent flying executive
didn’t receive an upgrade, for instance, a
gate agent can continue to build loyalty with
that customer by quickly issuing coupons
for free drinks, meals or a discount off the
next flight.
Managing Revenue For A Perishable
Service
The airplane seat is unique since it
represents a highly perishable service. While
revenue is contingent on selling seats prior to a
specific time, after that time, those spots cannot generate revenue. An airline incurs a cost
for an individual seat whether it is occupied or
not. Once the aircraft door is closed, that unoccupied seat has zero value.
The additional challenge in managing
perishable services in the airline industry is that
the highest yield in revenue comes just before
inventory value drops to zero. Last-minute
flight tickets are priced much higher than the
tickets purchased months in advance. Typically,
airlines adjust the inventory level available in
each class (price) category at specific time
intervals before the flight, in an attempt to
increase the margins and the revenue as the
price sensitivity decreases for travelers that
are inflexible on flight dates.
Therefore, close monitoring of the rapidly fluctuating supply and demand and the
resulting timely demand re-forecasting are
Photo by shutterstovk.com
he airline industry is facing a host of
external and internal challenges, now
and in the coming years. External events
and trends, such as skyrocketing fuel costs,
economic uncertainty, intense competition
and consolidation, and ever-present concern
of terrorism have caused enduring changes in
how airlines conduct business, such that airline executives are constantly assessing how
to do more to stay aloft, and in the end, remain
profitable. Within the industry, airlines have
undergone major restructuring and continue to
struggle to win and maintain customer loyalty.
Low-cost carriers, such as Southwest Airlines
in the United States, Ryanair in Europe, as
well as a host of Asian carriers, have disrupted
the pricing power of major network airlines
and are pushing them to compete and stop
the flow of red ink, or face the consequences
of their stakeholders: merger, takeover or
perhaps eventual bankruptcy.
There are certainly no lack of hurdles
in the path of making an airline successful
in today’s global economy and geopolitical
landscape. One big hurdle the more nimble
and forward-looking corporations are trying to
address is the enormous data challenges facing today’s modern airline business.
From their early days, airlines developed
information systems to deal with the complexities of their business across several critical
areas, such as reservations, maintenance and
engineering, crew scheduling, aircraft capacity
planning, flight scheduling, fuel requirements,
seat inventory, airfare pricing, food/beverage, frequent flyer programs, and numerous
other functions. These systems have enabled
airlines to process huge data volumes to support multimillion-dollar business decisions.
However, as difficult economic conditions
continue, and technology innovations emerge,
airlines also need information technology
infrastructures that support thousands of the
“thousand-dollar” business decisions faced
on a daily basis by operational staff.
The past several years have been a
struggle for airlines. To survive and grow, they
must continue to take innovative approaches
to effectively answer their unique business
challenges. To do so, every airline must:
Build customer loyalty,
Manage revenue effectively for a perishable
service,
Reduce operational costs.
Building Customer Loyalty
The airline industry has reached an
age of diminishing customer loyalty. The current situation is grimly stated in a Forrester
research study that shows 29 percent of
business travelers are actively disloyal to any
one travel provider. Earning customer mindshare and brand loyalty requires personalized
offerings and simplified online purchasing
processes. Complete, accurate and timely
Because an airline sustains a cost for an individual seat whether it is occupied or not,
managing revenue for this perishable service is of critical importance.
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industry
Photo by veer.com
Real-time access to a single customer view enables airline personnel to offer specific services
to high-value travelers, helping build loyalty and retain the most important customers.
critical for optimizing the revenue for perishable services. This is a common, yet difficult,
data management conundrum for which airline
IT departments invest large sums of financial
and human capital, using existing, legacy systems and tools to solve — yet they struggle
to succeed.
Solution: Real-Time Demand
Analysis For Revenue Management
By leveraging real-time information,
airlines can recalculate class-of-service
inventory levels based on sales thresholds
instead of the less-profitable pre-set time
intervals system prior to the flight. This gives
airlines the opportunity to capture incremental revenue when demand is unexpectedly
high. It also provides the opportunity to spur
incremental sales when demand decreases.
The clear advantage is that an enterprise
data warehouse or revenue management
system that has access to real-time booking information enables identification of any
unusual demand trends. By delivering these
unexpected changes in customer purchasing
behavior in real time to the revenue management system, airlines can recalculate inventory levels based on the event (observed
unusual sales activity) versus a static scheduled date, allowing for dynamic inventory
adjustment.
Near instantaneous information access
also enables carriers to respond to competitors’ pricing changes with more accurate
analysis. When a competitor makes a price
adjustment, airlines typically react by making
their own pricing change based on assump24 ascend
tions and historical data. By having real-time
information on how competitors’ pricing is
impacting current demand, the airline can
assess the competitive threat more accurately.
Using outdated information can result in the
airline responding either too strongly or leaving
money on the table by not responding aggressively enough.
Reducing Operational Costs
The airline business is inherently very
expensive when considering the high capital and operational expense needed to run
operations, including the costs of planes,
fuel, labor and related infrastructure, which
are massive. Proper utilization of aircraft
and management of labor and fuel costs
enables airlines to operate more efficiently.
Through the years, airlines have worked
with IT providers to develop systems to help
control and manage these expenses. Access
to real-time data can help drive costs down
even further.
Solution: Real-Time Decision
Support For Operational Efficiency
Managing these infrastructure challenges and keeping costs down begins with
identifying the expenses that can be controlled or acting quickly to mitigate cost
increases caused by market conditions.
By having concurrent access to different
functions such as crew scheduling, airlines
can benefit tremendously from an expense
and employee morale perspective because
crew assignments can be optimized based
on overall fleet demand. After monthly work
schedules are distributed, schedule disruptions
and crew member illnesses cause changes to
the hours and number of trips flown by a crew
member. Decisions made by operations personnel in staffing flights have a great impact
on operational efficiency and crew member
satisfaction. If a more-rested crew is located
in another region, for instance, the airline must
then fly them to the city needed instead of selling those tickets to customers and collecting
the additional revenue.
By maintaining real-time visibility into the
number of hours flown as well as the desired trip
trades of crewmembers, the operational flight
scheduler can assist operations personnel in making these staffing decisions. Airlines are also looking at their IT infrastructures for operational cost
reductions to improve profitability. The key factor
in improving profitability for airlines is to lower IT
costs while improving IT effectiveness.
To handle the three identified business
challenges, airlines’ chief information officers
face several technology challenges that must
be resolved to enable carriers to compete in the
future. Legacy systems for most major airlines
were built around the mainframe. While highly
effective for many years, these systems are a
source of many of these challenges, including:
Overcoming a batch-oriented infrastructure,
Keeping up with the rate of change in technology,
Having the scalability required for doing business on the Internet.
Escaping The Batch World
The airline industry was an early pioneer
of automating data movement between systems
through batch processing. Having originated from
mainframes that were very expensive to operate,
batch processing was once the only economically
feasible option for migrating transactions to an
offline analytical environment. This distributed
the computing resources and enabled the execution of commands without human intervention.
While batch processing has worked well for
decades, tremendous data growth, high costs
and unrelenting demand for more immediate
data access has rendered it ineffective in many
environments.
Continuing to live in the batch world is
a liability for airlines seeking operational excellence because of their constant demand for
business-critical data. For these environments,
batch processing has outlived its usefulness
because operations no longer run 9 a.m. to 5 p.m.
High degrees of latency caused by moving large
amounts of data with today’s shrinking batch
windows will continue to adversely affect IT’s
ability to support the airlines’ customer-related
initiatives. Knowing the needs of their business
now and in the near future, airline executives
should challenge technology providers to move
beyond batch processing and share data across
the enterprise in near real time to enable timely
and accurate decision making.
industry
Solution: Real-Time CDC Technology
Decreases Data Latency
Some change data capture, or CDC,
technologies provide continuous, real-time
feeds of changed data to the enterprise data
warehouse or operational data store and eliminate the batch window while decreasing data
latency. With their transformation capabilities,
they can be used to directly load a data warehouse from the source production system.
Some real-time CDC vendors can also work
with existing extract, transform, load, or ETL,
tools, which enable airlines to continue to use
their existing ETL processes while decreasing
data latency to minutes or seconds. While
not a complete overhaul, this helps eliminate
batch-window dependency through capturing
changed data in real time and delivering that
data to the ETL tool instead of directly loading
the data warehouse in real time.
Migrating And Consolidating Legacy
IT Systems
Because of their highly specialized applications and demanding performance requirements, airlines have deployed transaction
processing facility, or TPF, systems across
several business areas, many of which have
not changed much in the last 15 to 20 years.
These legacy systems remain in use because
their high performance and high availability
capabilities hold considerable value to airline
operations. As airlines look to modernize their
IT operations, it is possible to retain the value
of stability and performance inherent in a TPF
system by moving to a mixed-platform solution. A mixed-platform solution combines TPF
mainframe systems, traditional open systems
tingencies among systems and the ability to
verify data among the systems.
and service-oriented architecture to create
a flexible, accessible solution with a highavailability core.
Regardless of the modernization strategy, significant amounts of airline data are held
in specialized TPF systems, making it difficult
to migrate to other systems. Migrating from
legacy IT systems — even if it is to newer and
more efficient technology — can present difficulties for any business. The “rip-and-replace”
migration model introduces great risk into the
IT strategy, not to mention the cost involved.
The process can be especially disruptive when
factoring in the airlines’ relentless availability
demands.
Scaling Systems To Meet The
Demands Of Online Shoppers
The advent of online travel Web sites
created high look-to-book ratios. This ratio is
defined by the amount of time spent looking up and sorting through flight possibilities
compared to the time spent actually booking
travel.
Inevitably, as that look-to-book ratio
continues to affect system performance, degradation and availability issues occur either
through sluggish response times or — even
worse — error messages. When competitor
Web sites or other options are just a click
away, availability issues can lead to lost business. To support increased performance and
uptime, airlines can either add more expensive
production database and server infrastructure,
or offload or partition that lookup-type activity
to other lower-cost systems.
Solution: High Availability Solutions
Enable Migration/Consolidation and
“Hot Standby” Without Downtime
Migrating applications, such as pricing
systems, from traditional mainframes to open
or mixed-platform systems requires a phased
migration approach with high availability solutions that will minimize any downtime to
the business. Airlines need to invest in high
availability data migration solutions that eliminate database downtime during these projects
as well as for upgrades and maintenance
activities. Deploying these technologies that
offer real-time, bidirectional data movement
provides critical data synchronization between
source and target systems and can eliminate
any planned downtime.
Rather than continuing to delay a migration to open or mixed-platform systems, airlines can evaluate high-availability technology
solutions that offer live (also known as “hot”)
standby capability that provides failback con-
Solution: Database Tiering Helps
Boost Performance As Demand
Grows
Photo by veer.com
A recent industry study found that 29 percent of business travelers are disloyal to any one
travel provider. Complete, precise and timely data about active customer purchasing behavior
and preferences is essential in turning around the declining perceptions about airlines.
Because Web-based travel booking is
here to stay, airlines need to support these
systems that have high look-to-book ratios
while keeping IT costs from spiraling out of
control. Database tiering can help this effort
by enabling airlines to scale out their growing
databases to open, less expensive IT infrastructures. It helps offload the burden of highperforming production systems since these
lower-cost databases and servers can be kept
synchronized with the production systems and
be used for read-only access by users looking
for that travel bargain or last-minute flight.
The airline industry faces some significant business and technical challenges both
within and outside its control. Implementing
long-term solutions to these industry issues
will depend upon the ability of all parties
across the airline industry to think beyond
current business practices and to implement
innovative processes that leverage real-time
information.
By taking advantage of real-time data
integration across their respective businesses,
airlines place themselves in a better position to
execute business initiatives that can build (or
repair) customer relationships, improve revenue and resource management, and reduce
operational costs. Airline executives, crewmembers, operations personnel and customers alike can agree that at no time in the history
of the industry are these technology issues of a
more critical nature than now. a
Scott Healy is vice president of industry
solutions for GoldenGate Software. He can
be contacted at [email protected].
ascend 25
industry
Every Brand Counts
Branding fares may be a key component to the success of airlines around the
world … perhaps even the “ticket” for survival. As airlines face greater competition
than ever before, compounded by numerous other uncontrollable external
challenges, creative fare branding can help them differentiate their products and
services.
By Mike Llewellyn | Ascend Contributor
T
raditionally, offering the lowest fare has been
the best, if not the only, way for airlines to
get their product noticed by customers.
Carriers have long looked for a means to compete
elsewhere, particularly as the number of low-fare
airlines rises, and many are increasingly turning to
branded fares.
The concept of branded fares is simple.
It involves the collapse of 26 traditional inventory
classes into powerful, customer-focused brands
with memorable brand names and product attributes. Along with these simplified brand names
comes consumer clarity regarding differentiated
services that each of these fare brand segments
offer, enabling customers to select the offering that
best meets their needs.
Think of a world where airlines could:
Brand their fares consistently and seamlessly
across all points of sale,
Distinguish services in fare brands that, in turn,
create customer value,
Increase sales of higher-yield fares, where customers could choose those higher fares,
Create revenue streams that would further promote long-term success.
The idea of creating branded fares or fare
families is certainly not new to the marketplace,
with a number of carriers offering branded fares in
direct channel distribution. Fare branding enables
clarity within what many consider to be a complete
maze of confusion — air pricing. More importantly,
it offers a means to differentiate in a land where
differentiation is difficult, at best.
Today’s travelers have expectations of service offerings, and most of them clearly understand
the difference between coach, business and first
class, but fare branding offers something not limited to cabin distinction, enabling airlines to create
differentiation within a cabin, where appropriate.
Imagine the power of a brand that gives
airlines the ability to bundle services such as:
Unique mileage and other loyalty perks,
26 ascend
Fare refundability,
Change fees,
Baggage allocations,
Advanced seat assignment,
In-flight services,
Lounge access.
Bundling these soft ancillary services provides customers with the information needed
to make the right purchasing decisions across a
variety of elements, rather than a myopic focus
on the fare.
These bundled ancillary services are actually
those items that create distinction for a branded
fare family. The creation of this branded fare grouping, that may include ancillaries offered within the
bundle or sold separately from the bundle, is an
excellent way to create a strong value proposition
for airline customers. For the first time, they can
really understand what their “fare” offers them.
Travelers can much more closely relate to
a brand called “premium,” and that brand offers
them a refundable fare, advanced seat selection,
lounge access and perhaps specialized customer
service numbers. A clear bundle of services offered
within a branded fare enables customers to make
the choices that better reflect their unique travel
needs. The use of a simplified and fully flexible fare
brand structure powerfully emphasizes the desirability of higher fare brand features.
Consider a carrier that has established several unique branded fare tiers — DreamFare,
DreamFlex, Aspire, AspirePlus and VisionElite.
The DreamFare tier contains the lowest
fares and, likewise, it has minimal airline products
and services such as limited or no mileage awards,
no advanced seat selection, and check-in options
limited to kiosk or Web only. But with the top-tier
brand, VisionElite, the traveler receives no charge
for changes, a 200 percent mileage bonus award,
a fully refundable fare, two checked bags free of
additional charges, day-of-departure lounge access
and a “more-leg-room” coach seat. The customer
can now easily discern the product line differentiation, rather than simply two airfares — a high one
and a low one.
The thought of collapsing the traditional
26 booking classes into several brands certainly
makes sense to savvy air shoppers, enabling them
to rapidly gain confidence in their shopping experiences, since the offering creates clear choices.
Graphical displays that include an easy-to-follow
branded matrix provide feature and price clarity that
has previously been missing from the shopping
process. Travelers can now view one simple matrix
to compare fare features, empowering them to
make the right purchase decision based on their
travel requirements.
Arming customers with this branding information allows them to see the value in premium
services offered and, in turn, enables carriers to
increase revenue, all while providing travelers with
the products and services they want and consciously choose to pay extra to receive.
Once brands are established in all distribution channels, customers quickly embrace the ease
and clarity of branded fare shopping and, in fact, will
shop for specific brands by name, demonstrating
the brand equity that can be established by the airline. Now that travelers see the brands they desire,
consumer marketing campaigns can highlight the
benefits of selecting higher-yield brands. These targeted campaigns can refocus consumer attention
on features, benefits and flexibility of the premium
brand tiers as well as provide a platform for airlines
to compete for the most cost-conscience travelers,
offering a value proposition consistent with competitors that may offer only simplified products and
fare structures. This provides the opportunity to
compete on more than just airfare, highlighting an
airline’s distinct services over and above the basic
product and low-fare offerings.
Although merchandising is emerging as
a priority for many airlines around the globe, the
entire practice is somewhat nascent. Not all brand-
industry
Adding to the power of a brand is the ability to display the brand distinctions in a fully graphical matrix presented during the shopping process, making it easy for airline customers to make the choice that best fits their travel needs.
ing strategies are created equal. Balancing revenue
for the airline and value for its customers can
be a difficult task. Creating clear differentiation
across the fare families also requires deep thought.
Distribution, technical and infrastructure issues
complicate the affect on airline business processes,
especially within operations. That is certainly understandable, as the full implications of fulfillment and
operational impacts are not always clear. Because
of the magnitude associated with this type of
transformation, carriers often seek consultants for
assistance.
Sabre Holdings® delivers a suite of products and capabilities that enable airlines to
differentiate, brand, market and merchandise
fares. Fully integrated branding and enhanced
shopping displays offer airlines the ability to
establish and market their branded fares structure, using whichever channel they choose to
make their products available for sale — online,
offline, direct, indirect, corporate or leisure.
The complete end-to-end solution allows shopping for fare families while enabling airlines to
efficiently deliver the appropriate products and
services.
Through these bundled solutions, airlines
can maximize their revenue opportunities by:
Enabling quick, low-cost changes as airlines
respond to market needs,
Maintaining competitive pricing with the potential for a competitive advantage over airlines
without a similar strategy,
Offering higher-yielding premium branded fares,
Creating fare families to represent service offerings and differentiate higher fare classes,
Distributing merchandising strategy across indirect channels to maximize incremental revenue
opportunities while creating a consistent customer experience regardless of channel,
Increasing customer value and loyalty by enabling
customers to select the products and services
that best meet their needs.
Qantas Airways has been instrumental in
changing fare structures for the airline industry and
providing desirable options for customers. It was
the first carrier to implement this dynamic branded
fares technology, setting it apart from its main
competitors.
“Qantas is pleased to be the launch partner
for the new, innovative branded fares technology,”
said Peter Kelly, general manager of distribution
strategy and planning for Qantas Airways. “Qantas
Airways has been on the leading edge of changing the way airlines sell fares. By providing clarity to travelers around the differences they can
expect when purchasing fares across our different
‘fare families,’ this ground-breaking new capability
allows us to more effectively communicate the
Qantas Airways value to Sabre Connected S M travel
agents and their customers.”
These continue to be challenging times for
airlines and the aviation industry as a whole. It is
increasingly clear that as fuel costs continue to
dramatically rise, finding other revenue sources
are mandatory. With record industry pressures on
cost containment and increasingly price-sensitive
customers, airlines continually search for strategies that will drive incremental revenue, reduce
costs and allow differentiation in a commoditized
marketplace.
It is in this environment that many airlines
have pursued, with many more driving toward, the
introduction of branded fares to provide creative,
new revenue sources while also further building
their brands in the eyes of customers. Branded
fares create unique, powerful merchandising
opportunities that will change the way consumers
shop for travel. Branding fills the gap left by low
fares in the competitive marketplace, and targeted
campaigns help airlines increase fare yields, providing revenue opportunities that well may account for
a year marked by success and profitability. a
Mike Llewellyn is marketing manager of
ancillary services for Sabre Holdings. He can
be contacted at [email protected].
ascend 27
Photo by Shutterstock.com
The Global MRO Challenge
Globally, every carrier’s approach to maintenance, repair and overhaul has a major
profitability impact. Successful MRO strategies run the gamut from total outsourcing
to developing in-house MRO expertise, then adapting and marketing that expertise as
an outsourcing profit center — providing MRO service on other carriers’ airframes and
components.
By Allan Bachan | Ascend Contributor
28 ascend
industry
T
he segment of the global airline industry
involving maintenance, repair and overhaul is ever so important, and there are
diverse coping mechanisms employed today.
MRO of aircraft, including the airframe
and aircraft components, is quite an expensive
business. Depending on aircraft age, type and the
maintenance program being applied, costs can
range from US$300 to US$1,800 per flight hour.
Additionally, it is estimated that there is a
supply-chain inventory of US$44 billion to support the global commercial airline fleet of 17,000
aircraft. Aerostrategy estimates that the annual
global commercial aviation market amounts to a
total of more than US$40 billion today.
Any individual airline — anywhere in the
world — averages between 12 percent and 15
percent of its total annual expenditures on MRO.
For U.S. airlines, these figures mean that MRO
represents the third-highest expenditure after
fuel (approximately 26 percent) and labor (approximately 23 percent).
Maintenance items are typically packaged
into four “letter” checks:
“A” check is generally due every 30 days — or
between 300 and 600 hours of flying. The “A”
check can normally be performed on an overnight visit or within a 12-hour ground-time slot.
“A” checks are often segmented, and completion of all segments usually culminates in a “C”
check becoming due.
“B” check happens about every six to eight
months and is an inspection check that fits
between “A” and “C” checks. The “B” check
usually satisfies requirements of the “A” check,
as well, and it is normally accomplished in one
to two days.
“C” check occurs approximately every 12 to 18
months — or between 3,600 and 6,000 flight
hours. The “C” check is considered a “heavy”
check and requires significant dismantling of
the aircraft, which can take from four to 15 days
to complete. “C” checks typically take place in
a maintenance hangar, or they are performed
by an MRO supplier.
“D” check is generally due every six to seven
years — or 15,000 to 18,000 flight hours — and
downtime ranges from 10 to 30 days, or occasionally even more.
Different carriers apply many different
approaches to these letter checks. Some carriers
may have four segments of C checks and 12
A checks. Other carriers can have 12 C checks
and six A checks. The type of aircraft and which
frequency of tasks is packaged into these checks
will determine what is included, how often and
how many segments.
Possibilities from among which to choose
for MRO are broad and varied: A carrier can perform all of its own MRO, or it can outsource all of
it. Probably most common, however, is the carrier
that applies a combination of performing portions
of its own MRO, and also selectively outsources
certain MRO functions that make better economic
sense being completed by an external party.
Of course, any outsourced MRO provider
must be carefully monitored, since the ultimate
responsibility for satisfying frequency requirements
as well as overall accuracy of work performed and
aircraft safety lies with the airline itself.
Photo courtesy of American Airlines
Applying the right blend of MRO services, whether in-house maintenance operations or outsourcing to external providers, varies from carrier to carrier, depending on what makes the
most economic sense. Many low-cost airlines outsource the majority of their MRO needs,
while some larger network carriers, such as American Airlines, run about 80 percent of their
maintenance operations in house.
Nonetheless, in an era of critical airline cost
reduction whenever and wherever possible, outsourcing MRO can bring huge benefits not only in
cost savings, but in MRO performance by suppliers with more expertise and reliable experience
than usually can be economically provided by any
individual carrier on its own account.
MRO providers can be specialist suppliers or — more and more commonly today —
competitor airlines, which are able to turn their
MRO shops into substantive profit centers by
actively seeking maintenance contracts with other
airlines.
A carrier may choose to develop and maintain MRO capability only up to a particular level,
and outsource all other MRO work.
Younger carriers, for example, might only
have capabilities to manage the A check, the most
basic checks of airframe and equipment.
On the other hand, mature carriers can
often develop capabilities to perform more-complex maintenance such as nondestructive testing,
borescopes and landing-gear changes, with the
incentive being to considerably reduce the cost
of these notoriously expensive tasks (especially
when done in the field rather than at an MRO
center). So, for the mature carrier, the potential
cost savings are well worth the investment.
Within the global airline industry, more
than 70 percent of components maintenance
is outsourced. For most carriers, investment in
capabilities and facilities to handle components
maintenance is not economically justifiable.
But there must also always be sufficient
spares to be able to sustain continued operations
when unserviceable units enter the repair cycle.
So a lot of newer carriers either contract for total
support with the original equipment manufacturer or with approved overhaul suppliers. This
approach of total care and service packages is an
emerging trend.
Other carriers may specialize in one or
two MRO areas and exchange MRO services
with another supplier or operator for additional
types of service. For instance, one carrier may
service another’s wide-body aircraft in exchange
for narrow-body service. Or carriers may offer
each other Boeing repairs in exchange for Airbus
repairs.
Similarly, radio components may be serviced by one operator, and instruments may
be serviced by another. Such synergies can
be very cost-effective, helping keep a carrier’s
maintenance skill sets focused and investment
in facilities low.
Wheels, brakes, batteries and headsets
are often the first classes of components a newer
carrier gains expertise in servicing, as these are
generally high-turnover, high-consumption components, and they must always be available.
In both the components- and airframerepair businesses, carriers should strive to “lock
in” labor rates and fixed-cost agreements around
agreed-upon turn times with suppliers, thus making associated costs much more predictable.
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industry
Aircraft maintenance, repair and overhaul is the third-highest expense for airlines; therefore, it’s critical that each carrier determines the
most cost-effective way to maintain planes, whether conducting the service in house, outsourcing all of it or, most commonly, a combination
of the two.
Of course, with any outsourcing agreement, there are risks because airlines have ultimate responsibility for the safety and airworthiness of their aircraft, and they must be diligent
in overseeing the suppliers that provide such
services.
Fortunately, however, the airline industry
is strictly regulated and, as a result, published
standards must be met by each and every MRO
supplier. All MRO suppliers worldwide must
meticulously follow quality-approved procedures.
And regular, frequent audits ensure compliance.
There are approximately 4,200 U.S. Federal
Aviation Administration-approved facilities in the
United States alone and about 700 additional
FAA-approved facilities in 70 other countries.
Oversight of these repair stations is frequently
delegated to local regulatory bodies, and that
level of oversight is then audited by the FAA at
least once a year.
Even carriers that are mature enough to
do most of their own MRO work — and are
also doing a thriving third-party MRO business
— commonly outsource at least some MRO
work to those they consider to offer greater
advantages.
For example, FedEx and Southwest
Airlines have never found it necessary to develop
heavy-maintenance capability or the ability to perform extensive C and D checks that can require
30 ascend
a number of days and considerable aircraft disassembly and reassembly. Yet these are two of
the most profitable airlines in the world, with
extremely high reliability and safety records.
Other carriers, such as American Airlines,
manage up to 80 percent of their own MRO
operations large and small. These carriers — also,
to one extent or another, including Northwest
Airlines, Delta Air Lines and United Airlines —
may run thriving MRO businesses themselves,
but still outsource some 20 percent of their own
needs.
American Airlines, long noted for its maintenance expertise, and Lufthansa are prime
examples of carriers that perform extensive MRO
for many of the world’s airlines. Also globally
renowned for its vast and sophisticated MRO
capabilities is Singapore Airlines.
Regardless of the maintenance approach
and practice by any particular airline, MRO represents a highly labor-intensive activity. The key
in MRO operations is being able to use labor
effectively to better control MRO-labor costs.
Quintessential assets of any maintenance
organization are people skills, the “approvals-andcapability” list (that is, being approved to perform vital MRO functions) and first-rate facilities.
Managing and maintaining these resources to the
optimum degree is the best MRO-profit strategy
any airline or maintenance specialist can adopt.
But, of course, there are many other MRO
approaches that can also bear fruit in the costsensitive carrier’s global context. Outsourcing in
geographic regions with lower labor costs — but
without sacrificing quality — is a strategy that
many carriers strive to adopt, but not all can
economically achieve.
Yet it’s a developing phenomenon that the
most economical, reliable outsourcing services of
certain types are found in specific global regions,
such as, in general, wide-body maintenance
expertise in Asia, narrow-body maintenance in
Latin America and engine maintenance in North
America and Europe.
As carriers may approach their MRO challenges with open minds, they must also maintain
a diligent, stringent commitment to demand the
very best results. Only then can a carrier rest
assured that its MRO is being performed to the
utmost quality standards, but at the extremely
elusive “lowest possible cost” in achieving that
high-quality result. a
Allan Bachan is MRO solutions director
for Sabre Airline Solutions®. He can be
contacted at [email protected].
industry
On The Same Wavelength
Integrated systems as well as business processes can enable airlines globally to
achieve effectiveness and efficiency throughout their entire range of activity —
resulting in significant competitive advantage and enhanced revenue potential.
By Phil Johnson | Ascend Staff
and Lalita Ponnekanti | Ascend Contributor
A
combination of untimely impacts have
converged in the aviation industry —
from rising fuel costs and government
mandates to growing information technology
expenses and increased international flying
— requiring airline executives to more closely examine systems and business process
integration.
The age-old approach to choosing a
religion of best-in-class or best-of-suite buying is going by the wayside. The industry
is seeing a straightforward need to simply
reduce complexity, increase flexibility and
pull in what has typically been a long road
to return on investment and lower cost of
ownership for IT systems and software.
For airlines to win in a new world of
nimble business models and anxious customers and investors, they must understand the
facets of integration. They must also focus on
flying and rely increasingly on their core group
of responsible partners for ensuring people,
processes and systems act as one. In addition,
there are distinct issues that can be mitigated
in operations, commercial, customer sales and
service areas of an airline, with superior synchronization of solutions, data and business processes.
Tackling only one part of the equation will not be
enough to do battle with the impacts the industry
is witnessing.
Airlines striving to succeed under
these challenging economic circumstances
need to make full use of every advantage —
and integrated systems are key.
In its simplest definition, “integration” involves bringing various components
together to form a whole. So a genuinely integrated airline environment requires
the right business processes to properly
make use of the tools, the appropriate support structure and the enabling underlying
technology.
Integrated systems are essential to
allow Sue, an airline revenue analyst, to effi-
ciently and effectively do her job, maximizing
her airline’s revenue opportunities.
The same integrated systems enable
Highlight
While integrated
systems bring substantial benefits to airlines
and the professionals
using them, passengers
also reap the benefits
of a fully integrated
airline.
Ian, an operations manager working in a major
airline’s system operations control center, to
more effectively perform his job of keeping
the airline schedule running smoothly, even
when day-to-day conditions sometimes conspire against it.
And integrated systems are also what
enable airlines of every size, shape and
description to best serve the interests of their
loyal customers such as Priya, who frequently
flies to destinations around the world on business as well as pleasure.
With market conditions and technology
continually changing, integration may never
be complete. But the applicable tools, experience, support and technical leadership that
are available today — and those that will be
available tomorrow — can be adapted with
the business environment, enabling airlines
around the world to become more agile.
Integrated information systems can
provide today’s airlines capabilities that may
have hardly been dreamed of previously, yet
those capabilities are within airlines’ grasp if
they work with a carefully selected vendor to
address relevant business needs.
Possible advantages of a fully integrated airline can best be explored through
the eyes of Sue, Ian and Priya.
Sue, an airline revenue analyst, uses all
of her professional skills in planning flights —
sometimes up to a year in advance, right up
to departure.
Successful revenue planning demands
meticulous analysis to maximize the airline’s
revenue opportunities. Integrated systems
can help provide Sue much of the realtime information she needs in this long-term
process.
For example, she knows it’s always
essential on competitive routes to stay as
informed as possible about a competitor’s
fares as well as current market conditions.
Being unaware of competitive moves in the
marketplace can cost Sue’s airline a lot of
money.
What if Sue, however, were working
with integrated systems in this ultra-competitive environment in which access to competitive fares could help her dynamically alter
revenue decisions and either display, alert or
create automated response actions for routes
across the airline’s markets?
Not only that, but could she benefit
from integrated systems that would help her
re-optimize inventory on a real-time basis?
Consider a group booking that has been confirmed for the holiday season: Such information can drastically affect revenue decisions,
and having access to the information is vital
to Sue’s revenue analysis role.
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industry
Dynamic communication through integrated systems can provide a revenue analyst with the
very latest data needed to make the best decisions for her airline.
And integrated tools are just part
of the picture — they’re important in
providing up-to-the-minute information,
but Sue has to apply all of her own professional expertise to properly use that
data. This is also where an experienced
vendor and business partner can be
invaluable.
As a revenue analyst, Sue must
understand how to set inventory controls, given schedule changes that
potentially upgrade or downgrade aircraft types within the airline’s fleet on
various routes. She concentrates on
booking the right passengers in the right
seats, such as loyalty-club passengers or
last-minute travelers looking for bargains
on the Internet.
In properly performing her job,
Sue is entrusted to maximize the airline’s revenue opportunities on a flight,
and those opportunities are constantly
changing as the flight departure date
gets closer and closer. Only through the
sharing of common data elements can
she truly maximize the flight’s revenue,
because only the latest information can
help in making optimal decisions.
A full flight with the right revenue
mix results from Sue’s capability to
assimilate and analyze the data at hand.
Dynamic communication through integrated systems can provide her with the
very latest data she needs to make the
right decisions for her airline.
Now that the airline’s revenue management function is working at optimal
32 ascend
levels, what about day-to-day operations
and the SOC function? Ian, the airline’s
operations manager, when combining
his expertise with superior integration
across the carrier’s range of solutions,
is also equipped to optimally manage its
operations side of the business.
On a “normal” day when flights are
departing on time, passengers are making their connections, the aircraft fleet
is up to date regarding maintenance, and
crew and ground personnel are where
they need to be, Ian’s job may appear
rather routine.
In his operations management role,
he coordinates operations on the day of
departure to make sure everything runs
smoothly. But when irregular operations
develop due to weather or mechanical
delays, Ian must be able to react quickly
to help get things back on track.
Irregular operations occur every
time a single aircraft is unable to depart
its gate on time due to last-minute
developments. And these unanticipated
events can rapidly become much larger
if there’s a massive weather system that
shuts down any given major airport for a
period of time.
Either way, Ian must work diligently to get the airline back on its routine
schedule, because every irregular incident ripples through an airline’s system
with a multiplier effect. And every minute that an airline schedule is disrupted
costs the airline immense amounts of
money due to canceled flights, reac-
commodating passengers or reassigning
aircraft (see related article on page 64).
Every flight has a necessary crew
assignment, which is based on preferences and pairings decided in advance
according to labor rules and agreements.
So when flights are affected by schedule
changes, those labor rules and agreements still have to be accounted for
when reassigning crews to help get the
airline’s flight schedule back together.
The same principle applies to ground
personnel at the airport. Any flight that
comes in has to be served by the correct
number and types of personnel at the
gate to handle arriving passengers, their
baggage and aircraft preparation for its
next route. And when irregular operations
occur, those ground personnel must be
reassigned and rescheduled according to
flight delays and cancellations.
Appropriate tail assignment of aircraft to serve specific routes is also
vital to recovering from irregular operations. The aircraft must have the correct
capacity, range and equipment to fly the
route.
Additional primary concerns revolve
around fuel and fuel price. Any opportunity to save fuel must be taken into
account when making tail assignments
and plotting or adjusting routes during a
recovery operation.
There are also the obvious effects
of irregular operations on passengers
who may need to be shifted to another of
the airline’s flights, or even to be accommodated by rebooking with an alliancepartner airline.
It’s possible for Ian or others in
operations to perform all of these tasks
by hand, but how long will that take?
Integrated tools and business processes
can help speed up the necessary adjustments by significant measures — significant enough to save the airline millions
of dollars by getting everything back on
schedule in a much quicker timeframe.
Ian’s task is largely to streamline
and minimize the effects of mechanical
delays, gate congestion or developing
adverse-weather conditions. He must
also be able to maximize the airline’s revenue opportunities, and that sometimes
means limiting the dilution of planned
revenue that is threatened by every
increment of delay or flight cancellation,
which alters the schedule due to irregular circumstances.
It is Ian’s responsibility to manage
the disruptions effectively so they don’t
spill over into tonight’s schedule — or
even into tomorrow’s schedule — costing the airline significant amounts of
revenue.
industry
But if Ian is able to work with integrated systems, sharing information that
can change every split second among all
the disparate functions of the airline, he
has tools that can help him work effectively to overcome even the greatest of
delays that can quickly spread throughout his airline’s route system when
irregular operating conditions develop.
While integrated systems bring
substantial benefits to airlines and the
professionals using them, passengers
also reap the benefits of a fully integrated airline.
As an airline passenger, Priya has
traveled around the world and accumulated many frequent-flyer miles and
loyalty points with her favorite airline.
She travels for both business and pleasure, and she enjoys traveling.
However, she doesn’t like to be
burdened by hassles when flying globally. That’s one of the reasons she
appreciates the treatment she’s accustomed to getting from her favorite
airline.
That particular airline is able to
treat Priya like the favored customer
she is through its implementation of
integrated systems. Because of integrated systems, the airline always has
Priya’s personal preferences on hand,
whether she books via telephone, over
the Internet or she has last-minute
schedule changes at the check-in counter at any airport around the world.
Integrated systems enable the airline to keep on record and immediately
call up Priya’s personal traveling data,
ensuring it properly accommodates her
as one of its best customers at every
opportunity.
It’s essential that the airline provides a consistency of quality customer
service for Priya — as well as for every
other highly valued customer — so it
wins and retains her loyalty through all
the years she travels.
For example, Priya recently visited Canada for a business conference,
and when departing Toronto after the
conference, she went online to book
herself on one of her favorite airline’s
alliance partners, which provided service to Vancouver, Canada.
From Vancouver, her latest business assignment necessitated a flight
to Hong Kong. Once again, even though
all of her flights on this particular leg of
her trip were on her favorite airline’s
alliance partners, because of integrated-system connections, her vital traveling preferences were always available
and flawlessly accommodated by the
airlines she flew.
On another trip, when weather
conditions caused a several-hour delay
in Priya’s departure for her next destination, her airline provided her with a
pass to the airline’s VIP lounge at the
airport at which she was temporarily
grounded.
And when her flight was close
to boarding, Priya received a courtesy
reminder on her cell phone so she had
plenty of time to pack up her laptop computer and get down to the gate before
her flight’s departure.
The only way Priya’s favorite airline
was able to provide her these privileged
conveniences was through integrated
systems — always making valuable passenger information available and usable
at a moment’s notice to treat the airline’s
loyal customers the way they expect
(and deserve) to be treated.
So Priya’s passenger experience
is always consistent — and consistently
superb. It’s a function of an airline that
Highlight
Airlines striving to
succeed under these
challenging economic
circumstances need to
make full use of every
advantage — and integrated systems are key.
makes excellent use of integrated systems to help it know and understand its
customers, as well as their needs.
When an airline truly knows its
passengers and has critical customer
information stored within its integrated
systems, it can identify touch points
at which it might, for instance, offer
attractive special merchandising opportunities during the customers’ visit to
its Web site. This might include giving
a customer an opportunity to upgrade to
a better seat at a reasonable fee or to
reserve extras such as a rental car or a
leisure excursion for use during the trip.
All successful businesses understand that it’s forever of paramount
importance to treat their customers
right. Taking that fundamental concept
all the way through its logical reasoning,
of course, it’s of paramount business
importance to treat all customers right.
The personalized passenger experience that Priya enjoys would not be
possible without integrated systems and
business processes — the same systems and processes that enable Sue as a
revenue analyst and Ian as an operations
manager to excel at their jobs. In fact,
many things Sue does — due to integrated systems and processes — affect
Ian, and many things Ian does affect
Sue. And both Sue and Ian help make
Priya’s passenger experience even more
satisfying.
There is no canned answer in providing any particular business solution.
Every business situation demands individual analysis and studied consideration
before recommending and implementing
a desired solution.
But the right solution will always
involve the right tool combinations, the
right business processes and the right
services to properly support a successful
business conclusion. It’s very much like
assembling a giant jigsaw puzzle — but
a puzzle in which all the pieces are not
necessarily perfectly sized and shaped.
And it is an airline’s responsibility, in
partnership with its trusted business
consultants, to make sure the pieces
fit.
The power of integrated systems is
huge. And the capability of an airline —
in company with a well-selected partner
with a comprehensive set of integrated
solutions — to attain positive businessbuilding results through diligent pursuit
of integrated-systems advantages can
genuinely prove of substantial long-term
benefit. a
Phil Johnson can be contacted at
[email protected]. Lalita
Ponnekanti is product marketing
principal for business and operations
planning at Sabre Airline Solutions ®.
She can be contacted at lalita.
[email protected].
ascend 33
Photo by Shutterstock.com
REACH FOR
THE STARS
Airlines around the world aspire to uphold the utmost quality in
the products and services they offer, but when put to the test
by London-based Skytrax, only six carriers have achieved the
highest level of quality excellence.
By Stephani Hawkins | Ascend Editor
34 ascend
industry
Photo courtesy of Airbus
A
Five-star award recipient Malaysia Airlines has recently launched its MH campaign, which
stands for Malaysian hospitality, one of its 125 customer value proposition initiatives. The
campaign captures the true spirit of Malaysia Airlines where all of its customers are treated
as special guests.
personalization of service, in-flight entertainment,
and consistency among staff.
“The agenda is based on frontline product
and service audit studies that we have conducted
for the airline industry during the last 19 years
and is well recognized by carriers as representing
a fair and full quality assessment format,” said
Skytrax Chief Executive Officer Edward Plaisted.
“This is best underwritten by the fact that Skytrax
specializes 100 percent in this market aspect, and
the life of everyone working in our organization
revolves around breathing, measuring and evaluating frontline airline standards.”
The complete process for ranking airlines is based on thorough, hands-on research
conducted by Skytrax. Once the company has
gathered and verified all quality assessments for
the set criteria, an airline becomes eligible for
ranking. Because the criterion is specific to airline
customers’ needs and expectations, and a large
portion of the scoring comes directly from customer feedback, standards for achieving five-star
ranking are quite high.
“Five-star ranking is the pinnacle for which
we have set some fairly stringent quality requirements,” Plaisted said. “In broad terms, the fivePhoto courtesy of Airbus
surefire way to win customer trust and
loyalty is to ensure every customers’
experience, time and time again, is nothing less than exceptional. That’s a lot of people
to please day in and day out, but that’s what it
takes.
It’s every airline’s goal, but amazingly, only
six airlines around the world, according to Skytrax,
currently excel. Asiana Airlines, Cathay Pacific
Airways, Kingfisher Airlines, Malaysia Airlines,
Qatar Airways and Singapore Airlines have all
earned five-star status from Skytrax, the leading
quality advisors to global airlines and airports.
That’s not to say no other airline provides
exceptional customer service, but when analyzing more than 400 airlines, these were the only
six that met the criteria for Skytrax’s five-star
ranking, the most recognized and prestigious
global award to honor airline product and service
quality excellence.
Established in 2000, the star ranking program offers airline members a range of competitive performance analysis studies and a full rating
breakdown. The program applies an internationally recognized evaluation system to assess a
broad range of quality standards put forth by
airlines. Five-star status recognizes those at the
forefront of products and services achievement,
generally setting trends that other carriers aim
to follow.
For Qatar Airways — the Middle East’s
industry leader by virtue of being a step ahead of
the rest — some of its most valuable attributes
that contribute to its five-star status include
fully flat first-class sleeper beds with mattress
enhancers for added comfort as well as the
largest seat pitch and biggest individual television entertainment screens across all cabins on
long-haul routes. But that’s only a fraction of what
makes the carrier shine above some if its main
competitors. The balance of superior products
and its customer-devoted staff are necessary to
reach the high accolade from Skytrax.
“Qatar Airways was awarded five stars in
a number of categories such as onboard catering,
cabin staff service, staff attitude and friendliness,
lounge facilities, transfers, and also on the overall
amenities and services relating to first class,”
Qatar Airways Chief Executive Officer Akbar Al
Baker told New Delhi, India-based The Tribune
Online. “The five-star ranking and our achievement in the popular Airline of the Year survey
demonstrates that we are being acknowledged
as one of the best airlines by the airline industry
and by the traveling public.”
A full star ranking determination examines
more than 800 different areas of product and service delivery for each airline, including core airport
and onboard functions such as long-haul business- and first-class service, staff grooming and
presentation, assistance for families and children,
check-in services, Internet/WiFi options, service
efficiency, staff enthusiasm and attitude, dining
options and food quality, washroom/aircraft cleanliness, seat comfort, priority boarding processes,
Seoul, South Korea-based Asiana Airlines has upheld its Skytrax five-star ranking for two
consecutive years. The carrier excelled in the categories of business and economy class on
its long-haul routes as well as in the areas of staff grooming and assisting families and
children.
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industry
Photos courtesy of Airbus
Cathay Pacific Airways, according to loyal customers, excels in every category across its
organization, including areas such as on-time performance, baggage handling, customer
service and in-flight amenities. The Asian carrier is one of six to hold the five-star airline title.
India’s Kingfisher Airlines, which refers to its customers as guests, credits its five-star status
to its staff’s consistent ability to deliver high standards of service efficiency — in a sincere
and charming manner that makes the airline stand out from the rest.
Qatar Airways, the third carrier in the world to achieve five-star status from Skytrax, offers
fully flat first-class sleeper beds, the largest seat pitch and the biggest individual television
entertainment screens across all cabins on long-haul routes.
36 ascend
star ranking is awarded when an airline meets
our criteria of product and service delivery quality
targets; is able to deliver these standards on a
steady basis; and has some individual strength,
identity, flair, ‘Wow’ factor, etc., that we consider
sets an airline apart — and above its peers.”
For instance, a repeat Cathay Pacific
Airways customer highly recommends the Hong
Kong-based carrier, touting that its service across
the board is excellent, time after time.
“Be warned! Cathay Pacific is not like
other airlines! They depart and land on time,”
James P. Zaworski said about his carrier of
choice in an online forum. “This is unusual in my
experience of flying. Here in Asia, efficiency and
punctuality are the rule, not the exception.
“I have been completely impressed with
the in-flight services offered by Cathay Pacific,”
he said. “I have flown economy class each time
and have been treated as if in first class. The staff
of stewards and stewardesses is kind and cordial
and friendly. They make you feel very welcome
and they cater to any need you have, and no
request is too much.
“In addition, my bags were never lost in
my eight different flights using Cathay Pacific,
and the bags were always waiting for me,
undamaged and on time, when I got to the baggage claim area,” Zaworski said.
The six airlines that currently hold fivestar status are located in Asia/Pacific and the
Middle East. But airlines in other regions of the
world, such as North America and Europe, have
the same opportunities to achieve the highest
ranking.
“There is nothing to exclude an airline in
Europe, North America, South America or any
other region of the world from achieving five-star
ranking,” Plaisted said. “We’ll work with any
airline around the world to help them meet their
goals of providing the highest level of products
and services quality for their customers.”
Regardless of a carrier’s location, Skytrax
must maintain such a strict approach because
when it awards a five-star ranking, it not only
puts the airline’s reputation up for scrutiny, but
its own reputation and credibility are on the line
as well. It has to maintain complete confidence
that a five-star airline lives up to the expectations
of the award. Therefore, the company keeps a
close eye on all five-star award recipients’ quality
fluctuations and spikes.
Skytrax also uses a similar measuring
system to determine lower-ranking levels —
four-star, three-star, two-star and one-star. Each
reduction level reflects a set of product or service
delivery criteria an airline has been unable to
achieve, particularly when inconsistencies exist.
“We cannot award a five-star rating when
an airline might be delivering top-level quality on
eight out of 10 experiences,” Plaisted said. “We
have to seek as near perfection as can be expected for the top tier. It is a customer-facing industry
based around human service, and for that reason,
we know that 100 percent consistency and total
industry
Singapore Airlines, one of six carriers to earn five-star status, also achieved the overall 2007
Airline of the Year title for the quality of its economy- and premium-class services. The
carrier, which flies more passengers every year than the entire population of Singapore,
was recognized for its exceptional food and friendly flight attendants as well as quality
excellence in several other categories.
perfection will never be achieved by any airline in
the world. But those that achieve a five-star rating
must come close.”
An airline that offers a five-star product
(seating, catering, airport services, in-flight entertainment) but fails to deliver in the service area,
or if top-quality service is delivered time and time
again but the product is inconsistent or incomplete, the carrier earns only a four-star ranking.
And as the inconsistencies increase, the status
is reduced.
“The Star Ranking awards are based upon
the ‘total’ travel experience an airline delivers to
its customers,” Plaisted said. “Ranking is not
about whether caviar is served in first class or inflight entertainment offers 100 different channels
— it is the service experience that counts. The
friendliness or efficiency of staff on the ground
and onboard flights are major elements behind
good service, but in a five-star ranking, we look
for service standards that you can describe as
being truly special.”
Today, the largest group of airlines falls
within the three-star ranking, which conforms to
an industry average of acceptable products and
services standards.
“We spend a lot of time discussing our rating system with airlines that believe their threestar rating should be upgraded to four-star status,
but in the end, they understand the importance
of creating a true balance of product and service
quality to determine the ranking,” Plaisted said.
That doesn’t mean the door is closed to
carriers that want to achieve a higher ranking; it’s
quite opposite. Skytrax works with many airlines
to help them identify their weaknesses so they
can make changes to achieve and maintain
higher ratings.
“For some airlines, the catalyst between
four- and five-star ranking may be based on
delivering a better quality product, or it may be
reliant on increasing service consistency or, quite
possibly, it may require the introduction of a new
product,” Plaisted said. “For others, the improvement of frontline staff service standards may be
the feature for change. It tends to be very different from one airline to the next.”
While reaching five-star status posses
challenges for many carriers, it also comes with
some pretty significant, worthwhile benefits.
According to Plaisted, the biggest benefit for an
airline is the exclusivity of the five-star ranking.
With the ongoing exceptional service and product
delivery that’s required to achieve this ranking
level — contributing to customer satisfaction
— five-star airlines naturally benefit.
“Airlines achieving five-star ranking benefit
both internally and externally,” he said. “Internally,
it’s used as a daily measure to which their service
staff must perform and to ensure product quality always meets customers’ expectations. And
externally, an airline will generally want to publicize the five-star ranking award, largely because
they know that it is a unique and globally recognized sign of quality assurance toward their past,
present and future customers.
“Finally, to an airline achieving five-star
status, it is their opportunity to stand up and
shout about their achievement; to demonstrate
to existing and potential customers that they
have reached this level,” he said.
Plaisted said one of the greatest attributes
and strengths of the ranking program is that
Skytrax does nothing to encourage airlines to
achieve five-star status.
“The global recognition of the star ranking
program is now such that airlines will come to
us to establish exactly how they can try to meet
the required quality criteria and to understand
the complexity and requirements,” he said. “As
a quality-based program, it has to remain something that is developed and nurtured within the
internal operations of each individual airline. They
need to want to achieve five-star status and
determine if the right culture and attitude will
work in their organization. We deal directly with
airline presidents, chairmen and CEOs around
the world, with the knowledge, experience and
understanding that they can only develop a true
five-star culture by having 100 percent involvement from top to bottom of the management and
service chains.”
Malaysia Airlines Managing Director and
CEO Idris Jala acknowledges that all employees
across the organization, from top executives to
customer-facing staff, strives to always put their
best foot forward — not only to maintain fivestar status, but most importantly, to constantly
achieve the high service standards their customers deserve.
“This award is indeed a timely recognition of our employees’ continuous commitment
towards maintaining superior standards in product and services delivery to our customers, both
in flight and on the ground,” he told Qantas
Business Travel.
“The competition in the airline industry
will continue to intensify,” he said. “Therefore,
it is imperative that Malaysia Airlines maintains
its high level of product and service quality so
Malaysia Airlines continues to retain its premium
customer business.”
Like the six carriers that have achieved
five-star status, airlines around the world aim
to bring the best possible experience to their
customers, and while there are many options
carriers can use to measure the effectiveness
of their product and service standards, reaching
five-star status for some airlines gives added
assurance that their current practices are aligned
with customers’ expectations.
“Being recognized by Skytrax is an honor,”
said Vijay Mallya, Kingfisher Airlines chairman and
CEO. “It is gratifying to see that our approach of
providing our guests with a delightful and unique
flying experience has been recognized.” a
Stephani Hawkins can be contacted
at [email protected]
ascend 37
Aircraft Shopping Spree
40
Aircraft manufacturers have experienced recordbreaking orders during the last couple of years, but a
decrease in capacity, the need to hold onto operating
cash because of fuel costs and production delays with
new next-generation aircraft could impact the trend.
Air Berlin Enters New Turboprop Era
43
Innovative low-cost carrier Air Berlin has purchased
a number of Bombardier Q400 turboprop aircraft,
laying out an alternative strategy to combat
higher fuel and other operating costs.
Double-Edge Sword
46
38 ascend
While the two major aircraft manufacturers, Boeing
and Airbus, expect to reach projected aircraft
orders this year, the orders may be on the lower
side of the plane makers’ projected scope.
SPECIAL SECTION
Record
Aircraft
Orders
ascend 39
Aircraft
Shopping Spree
Aircraft manufacturers have experienced record-breaking
orders during the last couple of years, but a decrease in
capacity, the need to hold onto operating cash because of
fuel costs and production delays with new next-generation
aircraft could impact the trend.
By Lynne Clark | Ascend Staff
40 ascend
special report
Photo courtesy of Boeing
With current orders for passenger aircraft
through 2011 and delivery dates rapidly
approaching, delays of the next-generation
Boeing 787 Dreamliner pose less of a concern for the manufacturer’s investors, who
are focusing more intently on the impact
today’s oil prices will have on current and
future orders.
I
n 2005, airlines worldwide went on a shopping
spree based on industry assumptions that by
2010 a seating capacity of more than 3.1 million seats would grow 20.3 percent. Fleet planners placed record orders for more than 2,000
aircraft with manufacturers Boeing and Airbus,
notably for the fuel-efficient 787 Dreamliner and
the Airbus A380 models.
At that time, the International Air Transport
Association was predicting industry profits of
US$4 billion. But at its 2008 annual meeting in
Istanbul, Turkey, in June, IATA Chief Executive
Officer Giovanni Bisignani forecast industry losses
Rival Embraer, the world’s fourth-largest aircraft maker, said its first-quarter profit
more than tripled after deliveries jumped 80
percent. The company delivered 45 airplanes
during the quarter and reported backlogs
totaling a record US$20.3 billion by the end
of March.
“The prospects for the company are
good,” said Caio Pereira Dias, an analyst with
Banco Santander SA in São Paulo, Brazil,
before earnings were released. “It increased
its orders backlog, and I don’t see a risk of
a wave of cancellations due to the airlines’
crisis.”
of US$6.1 billion this year if the average price of
oil remained at US$135 a barrel for the rest of the
year. Oil prices hit an all-time high of US$147.27
a barrel on July 11, roughly doubling during the
past year.
IATA said the combination of high fuel
prices, a U.S. recession and accelerated deliveries
of aircraft ordered at the peak of the economic
cycle but delivered during a slowdown meant
the outlook for 2008 was “clouded by the perfect
storm.” The last perfect storm churned as the
result of the Sept. 11 terrorist attacks and restructuring fallout.
“Adding to the downward pressures
on revenue growth from the U.S. recession
will be the acceleration in aircraft deliveries in
2008 and 2009,” IATA said.
Production Delays
New Aircraft, Fewer Passengers
At a time when aircraft deliveries will
rise from 1,041 in 2007 to 1,281 in 2008,
Bisignani said traffic growth in the industry
at best would be 3.9 percent this year, down
from a growth of 5.9 percent last year.
The two largest mainline aircraft manufacturers — Boeing and Airbus — broke all
sales records in 2007. Their combined total
of 2,754 net orders worth US$321 billion beat
the previous high of 2,057 set in 2006.
Regional aircraft manufacturers also
saw a surge in orders for next-generation,
eco-friendly models. One in every three commercial flights worldwide is on regional jets,
and Bombardier aircraft have become the
backbone of many operations. The company
recently has seen a sharp increase in demand
for its 20- through 149-seat C-series and
Q-400 turboprop aircraft. In May, the company released figures that anticipate demand
by 2027 to reach 12,900 new aircraft, valued
at approximately US$528 billion.
Although Airbus has achieved record-breaking orders for the Airbus A380 Superjumbo and
other aircraft during the last couple of years, elevated fuel prices and tightening credit for
many airlines may contribute to a slow down of future orders.
Brian Pierce, IATA chief economist,
told reporters at a December conference
that airlines had done a better job of managing capacity during the current cycle than in
the past. But a flurry of recently announced
capacity cuts and aircraft delivery deferrals
has investors worried if airlines will have the
money to buy more planes for a long while.
“It’s a point of concern, but nothing
unexpected,” Boeing CEO James McNerney
told analysts on May 21 when asked about
the consolidation of airline capacity as the
result of the oil run-up.
The problem for Airbus and Boeing
isn’t too few customers — it’s getting planes
off their production lines fast enough to
meet demand. Even as new orders slow,
passenger jets are mostly sold out through
2011 or even later. Both companies have
wrestled to get new models to the airlines
lining up to buy them.
In May, Boeing pushed back the inaugural flight for its much-anticipated 787
Dreamliner, delaying the test flight until the
end of the second quarter because of supply
chain problems and slow progress on the
assembly line. A September machinist strike
further delayed production, and a new production schedule has not been released.
Airbus’ flagship A380 superjumbo has
been delayed as well, and the company had
to redesign its planned competitor to the
Boeing 787, the Airbus A350.
The delays aren’t the only challenge
facing these larger aircraft makers. Cathay
Pacific Airways, Qantas Airways and Ryanair
have parked planes, reduced capacity and/or
deferred aircraft orders due to a decline in air
travel in some of the world’s highest-traveled
markets.
“There’s no question it’s a difficult
situation,” Randy Tinseth, vice president of
marketing for Boeing’s commercial airplane
division told the Chicago Tribune in June.
The manufacturer’s investors are more
concerned with today’s oil prices and the
impact they’ll have on current and future
orders than with the delays of the Boeing 787
Dreamliner.
ascend 41
special report
Delays: Good News For Some Airlines
The delays are good news for some airlines
struggling to enhance liquidity and defer debt
obligations.
John Leahy, chief operating officer for
Airbus, warned last January that rising oil and
tightening credit could mean that the interest of
airlines in — and their ability to pay for — new
planes could drop off.
“In this kind of market, it’s not just about
booking orders anymore,” he said. “You also have
to be able to manage your order book. There’s a
good chance that some airlines won’t be able to
take delivery of all these aircraft.”
The dire predictions came true just months
after Leahy’s comments. In March, India reported
a steep fall in air traffic growth, from a 2007
yearly average of more than 30 percent to 11.5
percent last January and February. Budget airline
SpiceJet responded and, earlier this year, returned
two Boeing 737s it was leasing. Deccan Air and
Kingfisher Airlines sold delivery spots and also
delayed delivery of previous orders.
Southwest Airlines cut 20 unproductive
routes last year and doesn’t plan to add capacity
for the rest of the year. It will take delivery of 14
aircraft next year, compared to the 23 previously
ordered. For 2010, Southwest will have 22 airplanes on firm delivery with options to buy, down
from 34. It intends to buy 29 aircraft this year, but
it will get rid of 22 other airplanes, for a net growth
of seven planes, unless other airlines’ shrinkage
provides growth opportunities, in which case it
may hold onto some of the 22 it plans to offload.
In May, jetBlue said it would put off buying
21 new Airbus jetliners for four to five years. It
said it would take delivery of nine Airbus A320s
this year and sell the same number by the end of
the year. AirTran Airways also announced it would
defer delivery on 18 Boeing 737s by about four
years. Also in May, the Centre for Asia Pacific
Aviation said it expected Virgin Blue to follow
Quantas Airways and retire or cancel the delivery
of new aircraft.
“In the face of escalating fuel costs, we
believe it is essential to take a more financially
conservative approach to managing our business,” jetBlue CEO Dave Barger said in a statement to reporters. “The aircraft deferrals we
announced today will help us further moderate
our growth rate in 2009 and beyond, which will
enhance liquidity and defer debt obligations.”
Independent aviation consultant Michael
Boyd agrees a deferral strategy makes sense.
“Most of those planes were meant for
expansion,” he told the Associated Press in May.
“You don’t expand at US$4-a-gallon jet fuel. When
you have a downturn, not taking on the debt and
the problems with new airplanes, that’s a good
move.”
Although many airlines are scaling back
their expansion plans, some airlines are looking at
new aircraft to replace their aging fleet.
American Airlines CEO Gerard Arpey told
reporters they are looking at both the Boeing 787
and the competing Airbus A350.
“We continue to look very carefully
at the 787 and the A350, and frankly, the
Boeing production delays have given us more
time to make a decision.”
American has also cut U.S. capacity and
is retiring 85 older jets because of staggering
fuel costs and slowing demand.
Delays Bad For Some Carriers
Boeing said its 787 Dreamliner is perfectly
positioned for a world of pricy petroleum. The
plane will use 20 percent less fuel than today’s
Supply chain issues and a machinist strike have caused Boeing to delay the inaugural flight
of its 787 Dreamliner and, as a result, won’t deliver the first plane later this year as originally
planned.
42 ascend
models because of its lighter-weight composite
fuselage and other advances.
Airbus states the A380 will also use 20
percent less fuel and will fly quieter, cheaper
and more environmentally friendly than the
Boeing 747.
The U.S. Department of Transportation
estimates that the Boeing 767, a plane that
began service in 1982 and is used by many
U.S. carriers on trans-Atlantic flights, burns an
average of US$3,946 worth of fuel and oil per
hour during a 3,000 mile flight, or US$17.85
per passenger hour, based on an average 221
seats. By contrast, a new Airbus A330 used
by Air France and other European carriers
burns and average US$15.72 per passenger
hour, about 12 percent less, under comparable
conditions.
The newer the fleet, the lower the total
cost of operations. Older planes cause airlines
to spend more on parts and maintenance. Big
jets must undergo major checkups every six
to eight years that costs an average US$1.5
million and keeps the plane grounded for up
to a month, according to Adam Pilarski, senior
vice president of the Avitas aviation consulting
firm in Chantilly, Virginia. To avoid that, some
foreign airlines such as Emirates replace their
planes after five or six years.
So it comes as no surprise that some
airlines are counting the days when they can
replace old gas guzzlers with new eco-friendly
models. For them, delays could mean the
difference between declaring bankruptcy and
staying in business.
Northwest Airlines, which is merging
with Delta Air Lines, has 18 Dreamliners on
firm order with options for more. When Boeing
announced earlier rounds of 787 delays, CEO
Douglas Steenland expressed his disappointment. “Given the price of fuel, the impact
and consequences of the delays has gotten
greater.”
Peter Morris, chief economist of
Ascend, a London aviation consulting firm,
believes high fuel prices have benefited aircraft
manufacturers.
“You could argue that high fuel prices
are one of the best things to happen to the
aircraft manufacturing industry,” he said.
“When you look at the large sums of money
spent on fuel, at least on long-haul [flights], the
arguments in favor of re-fleeting become pretty
obvious. The alternative — raising ticket prices
in a weakening environment for air travel — is
probably a losing proposition.” a
Lynne Clark can be contacted at
[email protected].
Air Berlin
Enters New Turboprop Era
Innovative low-cost carrier Air Berlin has purchased a
number of Bombardier Q400 turboprop aircraft, laying
out an alternative strategy to combat higher fuel and
other operating costs.
special report
F
the 76-seat aircraft on Air Berlin’s shorter
European routes and use them to replace
Fokker 100 jets as they become retired.
“These quiet and comfortable turboprops will allow us to round off our fleet
at the lower-capacity end,” said Air Berlin
Chief Executive Officer Joachim Hunold in
a news release issued earlier this year. “We
intend to use the Q400s mainly on shorthaul flights where the passenger volume
is not sufficient for us to operate jets. This
should result not only in a noticeable reduction in costs, but will also allow us to make
an active contribution in terms of protecting
the environment, as the CO 2 emissions of
the Q400 per seat are considerably lower
Photo courtesy of Bombardier
44 ascend
ward in a highly cost-conscious operational
environment.
The newest turboprops accomplish
this remarkable feat of fuel savings while
cruising at what most industry observers
view as a pretty decent speed — up to perhaps a little more than 400-nautical-miles an
hour — which makes one of these modern
turboprops quite viable to economically
serve routes of approximately 400 to 500
nautical miles or less.
These are a few of many reasons
for Air Berlin’s highly strategic order of
Bombardier turboprop aircraft. The Q400s
are actually to be leased by Air Berlin to
its partner LGW, which would then operate
Photo courtesy of Air Berlin
or three decades, Air Berlin has established standards in low-cost airline
service — not just in Europe, but in
the many locations around the world in
which the dynamic airline operates.
And today, the second-largest Germanbased airline (behind Lufthansa) continues
its trendsetting ways. The LCC, which
operates several different Airbus, Boeing
and Fokker jet aircraft models, has placed
firm orders and holds additional options
for a number of Q400 turboprop aircraft
from Canadian manufacturer Bombardier
Aerospace.
During the first half of 2009, Air Berlin
is scheduled to accept delivery of an initial
10 Bombardier Q400 turboprop aircraft, with
options to purchase 10 more. The original
10-aircraft order is estimated to be worth
approximately US$267 million, but if the 10
options are exercised and add-on items are
purchased, the value of the entire deal may
eventually top US$540 million.
In an era that’s generally been dominated by jet aircraft orders from mega suppliers Boeing and Airbus as well as regional
jet aircraft orders from Bombardier and
Embraer, where does the newly minted turboprop popularity fit into the bigger picture?
And why now, when it seemed that airlines
were more or less shunning turboprops as
recently as 10 to 15 years ago?
Complete answers to these questions
may be somewhat more complex, but the
larger sphere of reasoning really comes
down to costs relating to a couple of different primary items.
First, the modern turboprop includes
many features its predecessors did not,
such as running quieter with less overall aircraft vibration and associated noise,
resulting in greater comfort for passengers.
Yet, even the immense improvements in
turboprop features and capabilities have not
caused turboprop price increases to inflate
to the level of its jet aircraft rivals.
Furthermore, particularly in today’s
environment, an additional major cost factor
relates directly to fuel, as in the earnest,
expressed desire of every airline to save
expenses whenever and wherever possible
by burning less of it.
And especially due to the efficiencies
that are now designed into turboprop aircraft
of all shapes and sizes, the turboprop uses
considerably less fuel per distance traveled
than any comparably sized jet aircraft.
In fact, reliable industry estimates
place today’s most efficient turboprop fuel
savings compared to similarly sized new,
fuel-efficient jet aircraft at 30 percent.
That’s the type of opportunity for
significant savings that airlines such as Air
Berlin desperately need to identify and, if
possible, take advantage of to move for-
German-based Air Berlin is scheduled to receive 10 Bombardier Q400 turboprop planes
during the first half of next year with options to buy 10 more.
special report
lage. These devices are called active-tuned
vibration absorbers, or ATVAs, and they’re
mounted directly on the fuselage frame.
The ATVAs essentially produce counter-vibrations of their own, which are, in
this case, good vibrations. And the ATVAs’
counter-vibrations effectively act to cancel
out the “bad” or original vibrations, thus
resulting in much less (if any) vibration and
noise reaching each individual passenger,
promoting overall passenger comfort.
Air Berlin joins airlines around the
world including Horizon Air, Qantas Airways,
Royal Jordanian Airlines, Croatia Airlines,
Frontier Airlines and airBaltic in employing
the latest mode of turboprops on many
shorter routes on which regional jets simply
cannot favorably compare in terms of operating costs.
The Q400 flies fast enough — configured, in this case, to carry 76 passengers (which represents a higher number
of passengers than many of its regional-jet
competitors) — and operates in a reasonable, relatively short-distance range while
promising better return on investment due
to significantly lower fuel usage and greater efficiencies in many other operational
categories.
That seems like the kind of “sure bet”
few airlines could resist making, although
the appeal of comparable jet aircraft —
regional or otherwise — will probably never
completely go away. Study after study
during previous years and eras in the airline
industry has shown that passengers simply
prefer jets.
But if savings in operational costs are
great enough to help minimize necessary
fare increases, even the most skeptical
turboprop passengers may eventually climb
aboard the bandwagon that has ushered in
a new generation of successful turboprops,
featuring technology that rivals the latest
and greatest jet aircraft engineering advances and saving significant measures of fuel
as well as other operational expenditures.
“The selection of the Q400 aircraft
by Air Berlin, a leading-edge and profitable
LCC, is recognition of the significant cost
benefit this aircraft brings to LCCs,” said
Steven Ridolfi, president of Bombardier
Regional Aircraft. “The Q400 offers outstanding performance and economics.”
Air Berlin aims to address a number of
issues with its new turboprop aircraft.
“The Q400 aircraft offers the combination of passenger capacity and comfort,
speed, economy of operation and environmental compatibility that we require,”
Hunold said. a
Phil Johnson can be contacted at
[email protected].
Photo courtesy of Bombardier
than those of the Fokker 100. In comparison
with jets, the flying times on short-haul
flights will only be very slightly longer. Since
our cooperation partner LGW will be operating these aircraft for us, there will not be
an increase in the complexity of our fleet,
either.”
Financial advantages in using the
newer turboprop technology stem from
efficiencies Bombardier promotes in its
Q400 design. Bombardier marketing literature eagerly informs prospective airline
customers that the “Q” stands for “quiet,”
and that the Q400 is known as “the Quiet
One.”
This “quietness” factor is not just
due to greater efficiency in the aircraft’s
Pratt & Whitney state-of-the-art engines.
The Q400’s propellers themselves are of
significantly advanced design, featuring six
longer blades made of composite material,
giving the plane superior lift and propulsion
even while the propeller blades rotate at
a slower speed than that which was commonly associated with the prop technology
of earlier eras.
Bombardier has cleverly engineered
the Q400 with propellers mounted farther
out on the wings, thus somewhat dampening that particular noise source by the
simple design of locating it farther away
from passengers’ ears.
Even more impressive is the manner
in which Bombardier explains that it has
gotten a better handle on aircraft vibration,
which has been an age-old source of passenger complaints and epithets toward previous generations of turboprops — among
choice, unloving passenger descriptions
of the turboprop genre in general — as
“eggbeaters.”
No longer, says Bombardier — for
the company’s scientific thinkers, working
closely with key suppliers, have developed
a fascinating method designed to minimize
vibration and its accompanying noise.
Over the years, the greatest vibration problem in turboprops, according to
meticulous studies, has stemmed from the
pressure pulses generated by the aircraft’s
spinning propellers. Those pulses would,
in turn, beat a steady pattern through the
air currents against the aircraft’s fuselage,
causing both noise and passenger discomfort from a constant hum of vibration.
On Bombardier’s Q400, a uniquely
designed noise-and-vibration-suppression
system, or NVS, essentially cancels out the
vibration and noise effects that would otherwise be felt and heard by passengers.
How? Through nuclear-age computer
analysis, which takes vibration as well
as propeller-speed readings in real time
and converts them into signals to devices
installed at strategic locations in the fuse-
The addition of Bombardier Q400 turboprop aircraft into its fleet provides a blend of passenger
comfort, speed, efficiency and environmental sustainability for Air Berlin.
ascend 45
special report
Double-Edge Sword
While the two major aircraft manufacturers, Boeing and Airbus, expect to reach
projected aircraft orders this year, the orders may be on the lower side of the
plane makers’ projected scope.
By Lynne Clark | Ascend Staff
F
leet planners worldwide are having
the same conversations many families today are having when faced with
higher fuel prices. Do they replace the old
gas-guzzlers with newer, more fuel-efficient models? The answer for both groups
depends on how cash strapped they are.
Global aviation is in crisis, with more
than 20 airlines going bankrupt since the
start of the year. But while soaring fuel
costs are expected to send the airline
industry into a collective loss of as much as
US$6 billion this year, those same fuel costs
are also forcing many carriers to consider
buying new planes to help them retire older
models.
“This crisis is a bit of a two-edge sword,”
Airbus Chief Operating Officer John Leahy told
the Seattle Post-Intelligencer in June.
Both U.S.-based Boeing and Europe’s
Airbus say they still expect to hit earlier planesales projections for 2008, though the orders
may end up coming in at the lower end of the
companies’ projected ranges.
Airbus’ delivery of 453 jetliners in 2007
surpassed its previous year’s total by 19.
Delivery rates this year will reach 34 aircraft
from its Airbus A320 single-aisle family each
month, along with eight Airbus A330 and A340
wide bodies monthly and one Airbus A380
approximately every 30 days.
In its first quarter ending in March,
the Boeing Company reported 115 aircraft
While Airbus orders may end up on the lower end of its projections for the year, the aircraft manufacturer this year will deliver, on average,
34 aircraft from its Airbus A320 single-aisle family each month as well as eight Airbus A330 and A340 wide bodies monthly and one Airbus
A380 approximately every 30 days.
46 ascend
special report
deliveries, up from 106 deliveries during
the same time last year. Most of the deliveries were for 737 next-generation aircraft,
followed by 777, 747 and the 767 models.
The company expects to deliver between
475 and 480 new aircraft by the end of
the year.
Analysts for Boeing attribute the
current upswing in airplane orders to the
aviation market’s growing geographic and
business model diversity. These factors
have been able to successfully counteract
demand cycles driven typically by U.S. and
European network carriers. The record
number of orders during the past three
35 percent compared to May 2007. Asia/
Pacific accounts for the largest share of
new orders with plans for another 2,755
aircraft, according to the OAG. The Middle
East is showing the largest year-on-year
increase at 145 percent (458 more aircraft
on order than a year ago), followed by
Latin America and the Caribbean with an
increase of 52 percent representing 174
more aircraft.
Driving demand in these areas is
growing economic output. In 1970, China
and India accounted for only 5 percent
of the world economy in terms of purchasing power, and all of Asia operated
Highlight
Both U.S.-based Boeing and Europe’s Airbus say
they still expect to hit earlier plane-sales projections for 2008, though the orders may end up
coming in at the lower end of the companies’
projected ranges.
Underserved Markets Lead The
Charge
Globally, there were more than 8,200
aircraft on order in May, a rise of just over
only 5 percent of the global commercial
airplane fleet, according to figures from
Boeing.
By 2000, the combined economies
of India and China had grown to 17 percent
of the global economy, on par with the
economic output of Europe. North America
years has been driven largely by low-cost
carriers and requirements from emerging
economies.
By 2017, North America will be
responsible for less than one-third of new
airliner deliveries, while China will be
approaching 20 percent, predict aviation
consultants with the Boyd Group.
Yet as deliveries loom, worldwide
demand is slowing. The Official Airline
Guide released figures in May that showed
growth in Europe has slowed from 5 percent last year to 2.6 percent for the same
period this year. U.S. airlines contracted
also, offering 1.5 percent fewer domestic
flights this May than last. Flights to and
from Europe were more robust, up 9
percent and 5.2 percent, respectively, as
airlines expanded focus on more lucrative
long-haul international markets.
The slowdowns were biggest in
China and India. Chinese airlines scheduled 153,000 domestic flights in May, up
just 4.3 percent year over year. Indian
growth was down nearly half, from 24.8
percent growth in May 2007 to 12.9 percent this year.
and Europe together still operated 71 percent of the world’s commercial fleet, but
Asia’s share of the fleet had grown to 17
percent.
Projections for the year 2012 show
China’s share of the global economy pulling ahead of Europe’s to match the United
States’ share at 18 percent. India and China
together will generate more than a quarter
of the world’s total economic output. Asia’s
share of the world’s commercial airplane
fleet will become equal to Europe’s share
at 24 percent. Demand for airplanes will be
shared more evenly between three major
economic regions, rather than just two,
Boeing statistics show.
In the Middle East, local carriers and
airports are undergoing massive capacity
expansion plans thanks to the removal of
market restraints instituted more than a
half century ago to protect usually inefficient national airlines.
“What we are witnessing is a change
of seismic proportions, not merely an
evolution that can be tracked by traditional
measures,” said Peter Harbison, executive
chairman of the Centre for Asia Pacific
Aviation, who addressed attendees at the
Inaugural Middle East Aviation Outlook
Summit held in Abu Dhabi in February.
“We will see not only the rapid fire
growth of locally based airlines,” he said.
“We will also see major foreign airlines
establish in the Middle East in order to use
it as a springboard for their future development. Under the emerging regulatory
regimes, this will be possible, where it was
not before.”
“The geographic location of Abu
Dhabi and the region as a whole, situated
During Boeing’s first quarter, the aircraft manufacturer reported 115 aircraft deliveries,
up from 106 during the first quarter 2007. The majority of the orders were for the 737
next-generation model.
ascend 47
special report
between the major economies of the east
and west has helped drive the huge increase
in demand for passenger and cargo capacity,” said Khalifa M. Al Mazrouei, chairman
of the Abu Dhabi Airports Company, at the
Middle East Outlook Summit.
Europe And North America
Lagging
When even the world’s largest airline in terms of international passengers,
Ryanair, warns that fuel costs will wipe
out its operating profit next year, it is clear
these are exceptional times for the airline
industry.
Still, Ryanair took delivery of 16 Boeing
aircraft through May. Those deliveries are
among a total of 45 delivered to European
customers this year including Air France, Air
Europa, KLM Royal Dutch Airlines, Pegasus
Airlines, SkyEurope, SunExpress, Turkish
Airlines and TUI.
Airbus deliveries during May included
all four members of the A320 family. One
A318 was received by LAN Airlines, six A319s
went to CIT Leasing (for Avianca), Boutsen
Aviation, Hamburg International, easyJet,
Germanwings and a private customer.
Lufthansa German Airlines received
two Airbus orders in May — a wide-body
A330 and an A340-600 jetliner. Finnair also
took delivery of an A340-300.
Through May, Boeing had received 10
2008 commercial aircraft orders for European
carriers, including Air France (four 777-300
ERs), Blue Air (two 737-800s and 737-900
ERs) and SAS (one 737-800).
Orders for Airbus during May included
Air France’s order for 12 A320s and six
A321s, adding to the major Airbus fleet of
this carrier. Other single-aisle aircraft orders
included two A320s for British Airways.
In addition, Lufthansa ordered two A330300s.
In North America, Boeing orders
were anemic January through May. Boeing
received only 43 orders from three U.S. carriers. American Airlines placed an order for
one 737-800. Continental ordered 20 737700s and six 777-200ERs, while Southwest
placed orders for 17 737-700s.
According to the Official Airline Guide, worldwide demand is slowing, thereby potentially impacting current and future aircraft
orders. The greatest impact lies in China and India. China grew by only 4 percent from May 2007 to May 2008, and India’s growth
was down almost half, from 24.8 percent to 12.9 percent year over year.
48 ascend
special report
Boeing delivered 61 aircraft to North
American carriers including Air Canada,
AirTran Airways, Alaska Airlines, Continental
Airlines, Delta Air Lines, Southwest Airlines
and WestJet.
Through May, North American total
aircraft orders for Airbus aircraft families were 1,228 and 901 deliveries were
scheduled.
U.S. airline fleets are some of the
oldest in the world — an average of 18.5
years old at Northwest Airlines; about 15
years at American Airlines; almost 14 years
at United Airlines and Delta Air Lines; and
about 10 years at Continental Airlines.
During the next decade, major U.S.
airlines are facing a potentially crippling
bill running more than US$100 billion to
upgrade their aging fleets, according to
industry experts at the aviation consultant
group Ascend. They say airlines face being
stuck with old aircraft for years to come
because they currently do not have enough
firm orders to replace them. Order backlogs at Boeing and Airbus means there is
unlikely to be any quick fix.
“Given the state of the U.S. airline industry, who is going to pay for
these aircraft?” asked Chris Tarry, a British
aviation consultant quoted in a recent
BusinessWeek.com article. “The manufacturers won’t want to provide financing.”
Despite the gloomy economic setting, at least one analyst is optimistic. Joe
D’Cruz, a management professor at the
University of Toronto, said Canadian airlines are in “reasonably good shape.”
“In Canada, the industry is insulated by a couple of things,” D’Cruz told
CTV.ca in June, noting that the overall
Canadian economy is in better shape than
its American counterpart.
“We don’t have the intense [airline]
competition,” he said. “There is competition, but the airlines refrain from destructive competition. [And they] seem to pass
on increases in high oil prices to travelers.
They are hurting, but they are not in a
disastrous shape.”
D’Cruz said that even in the United
States, there have been much worse times
for the industry.
“For example, after the dot-com bust
in the 1990s — when business travel was
the main profit engine of the industry —
that era was much worse than the current
era,” he said.
Soaring fuel costs, grounding of
planes by some airlines and declining
capacity will likely have a substantial impact
on the world’s largest aircraft manufacturers, even if they reach their expected aircraft orders for the year. a
Lynne Clark can be contacted at
[email protected].
+count it up
4.8
40
5
The average annual percentage in
The percentage increase of revenue pas-
The average annual percentage in
which air travel grew during the past
senger kilometers airplanes will carry in
which passenger travel will grow
20 years, despite two major world
2027 versus what aircraft today carry,
during the next 20 years, according
recessions, terrorist acts, the Asian
according to Boeing.
to Boeing. Cargo is estimated to grow
financial crisis of 1997, the severe
5.8 percent a year during the same
acute respiratory syndrome outbreak
period. The fastest-growing econo-
in 2003 and two Gulf wars, according
mies are expected to lead the
to Boeing.
transformation into a more geographically
balanced market.
4
10.5 million
800+
The minimum weight in tons of CO2 the
passenger numbers will grow during
The number of new aircraft scheduled
International Air Transport Association’s
the next two decades, according to
for delivery to various airlines in China
four-pillar strategy saved last year. IATA’s
Boeing.
by 2016, according to Ascend Online.
target is a 25 percent improvement in
The average annual percentage airline
fuel efficiency by 2020.
ascend 49
company
Breaking
The Mold
A recent multi-million-dollar investment by Sabre Airline
®
Solutions to its suite of airline passenger systems will
help significantly build airline revenues and customercentric capabilities as well as support a move to a more
modern, innovative technology platform.
Parag Sanghvi | Ascend Contributor
50 ascend
company
H
ow does an airline remain profitable and position itself for long-term
growth in an environment where fuel
prices have well exceeded US$100 a barrel
and may spike again at any time?
This has become the quintessential
question facing airline executives today.
While every airline will have a unique
approach to dealing with this marketplace
challenge, sustainable airline success is
becoming increasingly connected to two
fundamental business capabilities: knowing every customer better than your competitors do and using this insight to optimize revenue and deliver differentiated
service efficiently. Current reservations and
departure control systems have not been
designed to fully deliver the capabilities
that have taken on increased importance in
today’s environment.
On Sept. 8, Sabre Airline Solutions
announced a major, multi-million-dollar
investment in its SabreSonic® Passenger
Solutions to dramatically build airline revenues and customer-centric capabilities as
well as move to a modern, future-proof
technology platform.
The SabreSonic solutions, the leading
reservations and departure control technology that today serves more than 100 global
airlines, delivers comprehensive airline capabilities ranging from reservations, inventory,
check-in, shopping and pricing, ticketing,
and online booking engine functionality to
help airlines operate profitably. Leveraging
the latest service-oriented architecture and
an open, standards-based environment, the
SabreSonic solutions are evolving further to
deliver more of the specialized capabilities
that airlines need for long-term growth.
In recognition of the many advances associated with this investment, the
SabreSonic solutions have adopted a new
name: the SabreSonic ® Customer Sales
& Service solutions, or SabreSonic CSS.
The focus is on delivering the two needed
attributes for airline success today: revenue
centricity and customer centricity.
Unique among aviation suppliers,
Sabre Airline Solutions has developed both
revenue-centric and customer-centric airline
performance scales that help airlines visualize and define what these often intangible
concepts mean. These scales itemize specific functionality airlines have available to
them to improve their revenue-generation
and customer-focus capabilities. Currently,
every airline possesses some of these
capabilities, but other capabilities such as
advanced revenue management may be
viewed as “next-stage” opportunities for
many. By specifying the functionality airlines can use to improve their overall
performance, from more routine activities
to highly sophisticated ones, carriers can
gauge for themselves where they are on
the revenue-centric and customer-centric
continuums. From there, they can identify
opportunities to implement additional capabilities that will let them become even more
revenue and customer centric.
Today, the SabreSonic solutions
continue to successfully meet the needs
of diverse leading airlines throughout the
world. The further modernization of this
technology will build on this success partly
as an evolution, partly as an expansion and
partly as a transformation based on the introduction of revolutionary new capabilities.
The existing SabreSonic solutions
plan remains intact, and new investment
is supplementing the community model
currently in place, and other areas within
the SabreSonic portfolio will continue to
progress as planned. Existing customers are
well positioned to absorb the new functionality as it becomes available, without any
migration risk. New customers will be able
to employ unique capabilities that deliver
solution versatility and depth, so a carrier
is not limited by system constraints as it
evolves its business model to achieve its
business goals.
SabreSonic CSS offers three major
solution bundles that directly address the
revenue and customer-centric capabilities
that will help airlines thrive:
SabreSonic® CSS Inventory and Revenue
Management,
SabreSonic® CSS Merchandizing,
SabreSonic® CSS Customer Centricity.
SabreSonic CSS Inventory and
Revenue Management leverages Sabre
Airline Solutions’ industry-leading experience with advanced inventory and revenue management algorithms. It is flexible
enough to accommodate third-party revenue management systems, but delivers
even better performance through the Sabre®
AirMax® Revenue Management Suite.
The solution offers several key benefits, including:
The ability for airlines to perform
advanced revenue management,
Sensitivity to fare/schedule changes,
Competitive revenue management,
Revenue management for traditional and
one-way fares,
Customer revenue management.
SabreSonic CSS Inventory And
Revenue Management
Advanced revenue management
coupled with competitive and customer
revenue management will enable airlines
to offer optimized fares that more closely
match a traveler’s value calculation for the
trip. For example, if a customer needs to
fly roundtrip between London, England, and
Hong Kong, China, and would comfortably
pay US$2,500 for that ticket, but the airline
has a discounted fare in the marketplace for
only US$2,000, the revenue management
The SabreSonic CSS Customer Performance Scale helps airlines answer the question: what
does it mean to be “customer centric”? The scale helps airlines identify precise, tangible
activities they can perform to improve customer centricity.
ascend 51
company
capabilities could automatically determine
whether any other competitors are currently
offering a fare below the US$2,500 threshold. If competitors have already exhausted
their supply of discounted fares, SabreSonic
CSS Inventory and Revenue Management
would be advanced enough to automatically pull the US$2,000 fare from available
inventory and replace it with the higher fare
amount. This alone would yield a 25 percent net improvement in collected revenue.
Using this advanced technology, airlines
will be able to recapture money that today
is left on the table and do so in a manner
that equates the final price offered with
the value the customer will derive from the
purchase. Customers will remain happy and
airlines will become more profitable.
SabreSonic CSS Merchandizing
Merchandising refers to the airline’s
ability to push the right product offering to
the right customer at the right price at the
right time in any given channel, whether it
be online, at a call center, through a GDS,
or at check-in at the airport via a kiosk.
SabreSonic CSS Merchandising offers the
industry’s only true multi-channel merchandising control panel. Airlines will have the
ability to improve their rates of upsell and
cross sell in all channels and optimize revenue across their distribution networks. As
significantly, airlines will be able to make
customers aware of product and service
offerings that they will value and may be
happily willing to pay for, which they may
not have otherwise considered. In doing so,
they will increase overall customer satisfaction because travelers will be receiving
exactly what matters to them and what they
value. Nothing more, nothing less.
SabreSonic CSS Merchandising delivers
two key capabilities:
The ability to sell ancillary services, such
as in-flight services, preferred seating
and comfort amenities;
The ability to offer branded fare families.
Branded fares are based on the principle of simplifying an airline’s offering
into branded fare categories that bundle
attributes travelers want, with a branded
fare that most accurately reflects what they
desire in terms of service and product offering (see related article on page 26). This represents an important economic opportunity
for an airline by enabling the upsell to higher
fare categories based on specific services
that the traveler values. For example, if a
customer selects the lowest branded fare
category based on price, but then is advised
that he can obtain a pre-reserved seat, meal
and other amenities if he purchases the
next-higher branded fare category, he may
be inclined to do so because that offering
more accurately matches his preferences
at a palatable incremental price. In offering branded fares, once again the airline is
matching its offering to customer perceptions of value and, in the process, creates
a more satisfied customer while helping
deliver more bottom-line revenue.
Both SabreSonic CSS Inventory and
Revenue Management and SabreSonic
CSS Merchandising can have an appreciable effect on an airline’s revenue outlook. Advanced revenue management has
the potential to create up to a 5 percent
improvement in revenue for the carrier,
while merchandising may produce an incremental 5 percent to 8 percent revenue
increase.
SabreSonic CSS Customer
Centricity
In addition to providing revenue
enhancement functionality, SabreSonic
CSS also offers significant customer-cen-
Airlines can have a holistic view of each passenger through an integrated customer profile and a customer value score available at all customer
touch points. Using an airline-configurable, natural-language rules engine, airlines can segment their customers and differentiate service and
product offerings according to their own unique strategies and preferences.
52 ascend
company
The SabreSonic CSS Revenue Performance Scale helps airlines answer the question: what
does it mean to be “revenue centric”? Airlines can determine where they are on the revenuecentric continuum and, especially, identify specific areas of opportunity for them to improve
their revenue-centric position.
tricity benefits. SabreSonic CSS Customer
Centricity builds on the elements of a
central customer profile and an airline configurable value score calculator that helps
the airline view its traveler base through the
lens of customer value to the airline. It then
uses that value score to optimize revenue
and deliver efficient and appropriate service
that can be used to feed the revenuecreating aspects of SabreSonic CSS as well
as inform decisions about service delivery
and prioritization of customers in actions
such as reaccommodation. The beauty of
the SabreSonic CSS customer value score
calculator is that it is airline configurable via
natural language commands, so the airline
Highlight
The focus of the whole reservations and departure
control system will shift from being passengername-record based to customer-profile based.
across all customer touch points.
The focus of the whole reservations
and departure control system will shift
from being passenger-name-record based to
customer-profile based. The knowledge the
airline accrues about the traveler over time
will give unique insight into preferences,
predispositions and a holistic traveler view
decides what it considers a high-value
customer based on its market strategy,
and it has the flexibility to change valuation
rules as the landscape shifts and markets
evolve.
The customer-centric aspects of
SabreSonic CSS will impact all three areas
of importance for an airline: growing rev-
enue, reducing costs and improving customer experience. The customer profile
and value score calculator help the airline
more effectively perform revenue management and merchandising activity vis-à-vis
the traveler. On the cost side, airlines can
identify their most valuable customers and
dedicate expensive service resources such
as airport staff to them, while automating
all other customers at much lower costs
through self-service capabilities such as
airport kiosks and online check-in. From
a customer experience standpoint, airlines
will have a single view of the customer
across all touch points. If, for example, the
airline lost a traveler’s bag on a prior trip, it
can acknowledge the mistake and compensate for it on the current trip, safeguarding
the traveler’s loyalty and making the traveler
feel valued and at the center of the airline’s
considerations, rather than disappointed
and bitter.
The decision to build out SabreSonic
CSS through a service-oriented architecture
utilizing an enterprise service bus yields
flexibility, inter-operability and what has
been called platform transcendence, letting
airlines use technology platforms that are
best suited for particular jobs. For highvolume transaction processing, such as
ticketing and departure control, airlines can
benefit from a mainframe-based TPF core
upgraded with the latest zTPF software that
in effect allows the mainframe to manifest
properties traditionally associated with open
systems. For other functionality that is
best served by open systems, the service
oriented architecture allows seamless interchange of data across the entire enterprise
and enables the complete infrastructure to
work as a single, high-performing unit.
Today’s airline environment is perhaps
more challenging than at any other time in
history. Sabre Airline Solutions continues its
decades-long commitment to the commercial aviation industry and the people who
keep it moving. Many Sabre Airline Solutions
employees come from airline backgrounds
and have an emotional investment in seeing
airlines succeed in the face of mounting
economic pressures. SabreSonic CSS is the
product of minds devoted to making airlines
successful. With its revenue-centric and
customer-centric capabilities, SabreSonic
CSS provides airlines with the capabilities
they need to not only survive, but to prosper in a brave new world of economic disruption and opportunity. a
Parag Sanghvi is director of strategic
solutions marketing for Sabre Airline
Solutions. He can be contacted
ascend 53
company
Environmental
Cool Down
A new model computes CO2 emissions with accuracy and consistency
to support sustainable travel and tourism.
By Peter Berdy | Ascend Contributor
C
arbon dioxide is the mean, evil molecule
of our time. Belching out from vehicle
exhausts, smokestacks and power plants,
it is the biggest contributor to global warming. Yet
CO2 is not a pollutant. It is a natural component
of the atmosphere, needed by plants to carry out
photosynthesis. The problem is volume: there is
a lot more of it in the industrial age, and it makes
our planet temperature rise just enough to cause
big problems.
For aviation, carbon dioxide is the most
important greenhouse gas, or GHG, accounting
for about 99 percent of aviation GHG emis-
ascend
sions according to the United Nations Framework
Convention on Climate Change reported in April
2005. In fact, everything related to emissions is
usually translated into CO2 equivalent, making it
the benchmark for emissions, and placing a focus
on carbon dioxide.
Aviation emissions come from the combustion of jet fuel. When burned in a jet engine,
fuel is converted into heat, CO2, water vapor and
some particulates.
Corporations and individuals concerned
about measuring their impact on the environment
have come to Sabre Holdings® as a leader in the
travel industry to better understand the detail of
their emissions for air travel, whether that travel is
for business reasons or personal ones.
In an effort to respond to its customers’
needs, Sabre Holdings identifies emissions at two
instances: at the time a booking is made and after
travel has occurred. This is not a small task —
there are hundreds of millions of bookings made
through different distribution channels within the
Sabre® global distribution system.
As the world’s largest distributor of travel
information, Sabre Holdings calculates and reports
carbon dioxide emissions for air travel with dedi-
company
cation and diligence. Until the day comes when
all airlines report their own emissions, Sabre
Holdings will provide this information to all of its
customers with the following principles: provide
complete, reliable, accurate and consistent data
and be transparent to the way it measures and
reports carbon dioxide emissions.
Options For Modeling CO2 Emissions
When closely examined, there were three
options to develop the capability to estimate
aviation emissions. Sabre Holdings’ choices were
to use emissions reported by airlines, use a thirdparty supplier of a “carbon calculator” or develop
its own emissions estimates with a model.
Upon investigation, there was a lack of
consistency of CO2 reporting by airlines, and
many don’t even report at all. There is no requirement for airlines to report their emissions. Fuel
consumption, the basis for determining carbon
dioxide emissions, is not made available by airplane manufacturers. (Engine manufacturers
report fuel consumption for the different components of landing and take off during certification.
However, they do not report fuel consumption
during cruise.) Currently, several airlines provide
estimates of CO2 emissions on their Web sites.
Some of those use calculators developed by third
parties, a few provide emissions based on their
own data, others provide an indication of emissions (such as for a short or long trips) without
specifying an individual’s travel, and many have
not taken steps to show emissions at all. In other
words, the industry lacks a consistent approach to
reporting CO2 emissions.
The International Civil Aviation Organization
released a model aimed at addressing these
concerns about the same time the International
Air Transport Association released guidelines on
emissions modeling. IATA’s document, “Aviation
Carbon Offset Programmes Guidelines And
Toolkit,” which was issued in May, describes an
approach for setting up an offset program that
could be used for airlines as part of their drive to
reduce CO2 emissions.
During the course of these worldwide
efforts, there have been several models developed for estimating aviation emission inventories for global aviation, such as SAGE (from
U.S. Federal Aviation Administration), CORINAIR
(European Union), and AERO2k. Elements of
these models and their output were of interest for
potential use in modeling.
Both IATA and ICAO use CORINAIR
Emissions Inventory Guidebook to estimate fuel
consumption, which in turn, is multiplied by a
factor to convert fuel burned into CO2. However,
CORINAIR is outdated, and models about 50 of
the more than 250 commercial airplanes. The use
of analogies is required to estimate fuel consumption for newer aircraft types.
According to IATA, “The CORINAIR database does not contain fuel burn data for all
existing aircraft types and so-called ‘equivalent’
types may have to be used as a substitute to
approximate the estimated fuel burn for scheduled aircraft types.”
In an example from ICAO, “To model a
B737, CORINAIR contains two choices of older
models, the B737-100 and B737-400. City pair
routes that operate mainly newer, more fuelefficient B737 models (B737-600/700/800/900),
CORINAIR would overestimate the fuel burn
and CO2 production.” As a result of this problem,
Sabre Holdings’ emissions model uses other
sources including FAA-SAGE, which covers most
aircraft types and does not rely on CORINAIR to
model fuel consumption for all types.
When examining third-party vendors,
Sabre Holdings found the vendors’ carbon calculators often had incomplete data or elements
for computing carbon dioxide emissions correctly
and made too many assumptions about aviation.
There were overall concerns about their capability
to model emissions on the scale of millions of
bookings that are made through the Sabre GDS.
After evaluating its own capability to model
emissions, Sabre Holdings chose to build its own
model for estimating carbon dioxide emissions
based on its ready access to extensive aviation
databases, emissions models and their output;
enormous computer resources; a deep knowledge of the airline industry; and a commitment
to get the job done correctly. The task included
an emissions model that could be applied with
consistency and accuracy that will estimate CO2
emissions for an individual traveler on a specific
flight as well as ensure the model can address
enormous volumes of travel bookings.
Getting The Job Done
The project began with a thorough
review of research that has already been
done on aviation emissions, which included
a large volume of excellent research data and
resources, mostly from material sponsored
and developed through efforts by the United
Nations and supporting institutions. Research
has been conducted by scientists around the
world who contribute to U.N. efforts.
In addition, aviation regulatory agencies, such as the International Civil Aviation
Organization, Eurocontrol, NASA and the
U.S. Federal Aviation Administration, have
been involved in modeling emissions.
For example, the Committee on Aviation
Environmental Protection of the ICAO has
formed several working groups to address
aviation environmental emissions.
Available Resources
After finishing the background review,
the next step was to examine which resources and data were readily available to develop
Sabre Holdings’ emissions model. After digging deeper, a repository of data and tools
to use for constructing the model was
developed.
The toolkit behind Sabre Holdings’
emissions model include:
Intergovernmental Panel on Climate
Change: Reference manuals, containing
guidelines on methodology for aviation;
ICAO: An extensive engine emissions
exhaust databank covering almost every jet
engine in use today;
Eurocontrol: Base of Aircraft Data, or
BADA, that contains performance tables on
air speed, rate of climb and descent, and
fuel flow at various flight levels for specific
airplane types (is also used as inputs for
other models);
E.U. Environment Agency: CORINAIR, a
model to estimate pollutants for specific
equipment types for emissions modeling;
U.S. FAA: Output from SAGE, the System
for Assessing Aviation’s Global Emissions,
and EDMS model, the Emissions and
Dispersion Modeling System, which have
data that can be used for determining
emissions formulas for various equipment
types;
U.S. Department of Transportation: Output
from its Form 41 database for cargo ton
miles and passenger ton miles by aircraft
type;
U.S. Environmental Protection Agency:
Conversion factors useful for converting
units;
Existing models required some assumptions because of a lack of specific scientific data
or to keep the complexity of emissions modeling within manageable limits. Typical assumptions
made by existing models included:
Standard atmospheric conditions and no consideration of winds,
Flights with a standard payload and no fuel tankering,
No consideration of delays and holdings,
Simplified routing and trajectory modeling,
No aircraft and engine deterioration, which
takes place as aircraft age.
Assumptions made for Sabre Holdings’
model followed those general assumptions.
In addition, to evaluate the effect of CO2
related to passenger travel, cargo from
the equation for passenger emissions was
removed because airlines have two types
of payload — passenger related (including
passenger weight and weight of bags) and
cargo. The idea behind removing cargo is
that each payload category is responsible for
its share of emissions.
The following information was
required to develop Sabre Holdings’ emissions model:
Details about all scheduled flights worldwide, including origin-destination, airline
and equipment type,
Airline specific, including average seats
per airplane type,
Detailed data on emissions for all aircraft
in scheduled service,
Estimates of unit fuel consumption by aircraft type.
ascend 55
company
be. In other words, take the estimated volume
of CO2 emissions of a trip and multiply it by the
going rate for a ton of CO2.
The emphasis on global warming is to
reduce CO2 emissions overall. However, this is
already taking place in commercial aviation. There
have been ongoing reductions in emissions due
to more advanced engines and airplane design.
800
Economics is driving change as well — the high
price of jet fuel is forcing airlines to ground older
planes that consume more fuel.
There is also work in progress to make
improvements in air traffic control and air traffic management as well as airlines and aircraft manufacturers changing their operational
procedures:
DC-10 Versus Airbus 330 C02 Emissions Per Seat
700
kilograms of Co 2
All these items were located or developed and then placed in the toolkit. There were
hundreds of numbers to analyze with statistical
analysis and correlation just to develop the core
elements for the model.
Once the model was complete and ready
for testing, the emissions output was tested
against several sources, including airline Web
sites for specific flight segments, output from
ICAO, E.U. and FAA models. In addition, fuel
consumption data for specific aircraft available
from selected Sabre Holdings airline clients was
benchmarked.
The model has the capability to estimate
emissions for any commercial flight by estimating fuel consumption for specific airplane type,
and then it converts fuel consumption into carbon dioxide. Finally, it divides the carbon dioxide
for the flight by the number of seats to estimate
CO2 emissions for an individual passenger’s
journey.
Knowing that the CO2 for a seat on a flight
can be measured, test emissions for a short- and
long-distance trip can be examined looking at the
emission for two different aircraft — an older and
new aircraft — on these routes to compare the
differences in their emissions.
When examining a 500-mile flight operated with a DC-9 and comparing CO2 emissions
per seat to a next-generation Boeing 737, the
DC-9 produces about 100 kilograms of CO2
per seat, twice the amount produced by the
Boeing 737.
Similarly, when looking at a 5,000-mile trip
operated with a DC-10 compared to an Airbus
A330, the CO2 per seat for the DC-10 is about
750 kilograms versus 500 for the A330.
600
500
400
300
200
100
0
5,000-mile trip
DC-10
Airbus A330
The CO2 emissions per seat for the DC-10 on a 5,000-mile flight is 750 kilograms
compared to only 500 kilograms of CO2 emissions per seat for the Airbus A330.
120
DC-9 Versus Boeing 737-900 C02 Emissions Per Seat
Solving CO2 Issues
56 ascend
100
kilograms of Co 2
Addressing the problem of reducing carbon dioxide emissions from aviation falls on the
shoulders of specific groups, including government agencies that set targets to reduce emissions and devise mechanisms to enforce and
pay for the reductions; manufacturers that are
working on designing more efficient airplanes
and engines; and the airlines and supporting
infrastructure (air traffic control and airports)
involved in modifying operating procedures to
reduce fuel consumption.
For individual consumers, information
about carbon dioxide emissions can be useful
to understand the order of magnitude of their
own emissions when they travel, and also for
comparison for emissions with other modes
of transportation. However, most travel is conducted by air due to large distances where other
types of transportation can be considerably more
time consuming, and comparisons may not be
relevant.
Since the volume of CO2 emissions can
be identified, one way to understand the potential effects are to look at commodity markets
where CO2 is traded and monetize emissions to
get an idea of what the cost of emissions might
80
60
40
20
0
500-mile trip
DC-9
Boeing 737-900
When comparing CO2 emissions on a 500-mile trip, a Boeing 737-900 produces
about 50 kilograms per seat versus the DC-9, which produces twice as much at
about 100 kilograms per seat.
company
Radiative Forcing (Watts per square meter)
Radiative Forcing
The current level of scientific understanding for key individual radiative forcing
elements indicates that while the effects produced by CO2 and certain elements
appear to be well known, the scientific understanding of the impact of many other
elements on global warming ranges from medium to very low.
An index called radiative forcing index,
or RFI, is used for comparing the effect of different agents causing climate change, notably
CO2. It is used to compare two different time
periods. Radiative forcing can be used to look at
the effects of all historic aviation emissions and
for long-term projections. However, it does not
examine the influence of a single flight.
One misconception is that aviation CO2
is more damaging because it is emitted at high
altitudes. According to the Intergovernmental
Panel on Climate Change, CO2 has a long
For air navigation service providers, this
includes efficient use of airspace, developing
shortest feasible routes, reducing inefficiency
in current flight patterns, taking advantage of
prevailing climate conditions, changing the way
flights are routed and examining separation,
developing continuous descent approaches,
and improving terminal management.
For airlines, this includes careful fleet planning,
using aircraft best suited for particular routes,
optimizing aircraft speed; limiting use of the
auxiliary power units; reducing weight; and
optimizing altitude selection, speed and flap
settings.
For manufacturers, this means working on
technology improvements for airframe and
engine design as well as possible use of alternate fuels.
Sabre Holdings has built a model to estimate CO2 emissions for air travel to provide this
information with consistency and accuracy.
The model reports CO2 emissions only,
since carbon dioxide is the most important greenhouse gas. It will not monetize the emissions
estimates or apply factors such as radiative forcing due to variability and uncertainty.
The aviation industry has a history of
reducing emissions with more efficient aircraft,
engines and improved operating procedures. It
has taken responsibility for continuing to reduce
emissions out of economic necessity, and it will
continue to do so in the future. Further steps to
reduce aviation emissions are already underway,
including better air traffic management as well as
engine and airframe manufacturers that are making improvements to reduce fuel consumption
with technology and airlines that are working to
optimize how they operate.
Sabre Holdings continues to support the
efforts aviation has made to improve its impact
on the environment, and it will continue to work
with its customers to promote tools that will
assist them to promote sustainable travel and
tourism. a
Peter Berdy is a consultant for Sabre
Airline Solutions® and developer of Sabre
Holdings’ emissions model. He can be
atmospheric residence time (about 100 years);
therefore, it becomes well mixed throughout
the atmosphere. The effects of emissions from
aircraft at altitude are indistinguishable from
the same quantity of CO2 emitted by any
other source, according to the IPCC Summary
for Policymakers on Aviation and the Global
Atmosphere, 1999 section 2.
Many scientists now consider that radiative forcing (or a simple multiplier) is not the
correct metric to model the effects of aviation.
As Professor Keith Shine from the Department
of Meteorology at the University of Reading
wrote on carbon offset schemes in a letter to
the Guardian early last year: “The issue of RFI
is a really fractious one, and most of those
that have researched it have concluded that
it is a horrible misapplication of science and
misusing something that was presented in an
IPCC report in 1999 (Towards Greener Skies:
The Surprising Truth About Flying And The
Environment — easyJet, 2007).
“Carbon dioxide has an atmospheric
lifetime of more than 60 years and becomes
well mixed during this period regardless of
where the emission occurred,” said Robert
Sausen, head of the department of atmospheric dynamics at the Institute of Atmospheric
Physics of the German Aerospace Center.
“Hence, CO2 emissions from aviation have the
same effect as emissions from other sources”
(ICAO Environmental Report, 2007, page 123).
Sabre Holdings’ emissions model measures CO2 but does not consider radiative
forcing.
Why Does Co2 Weigh So Much?
CO2 emissions from air travel are related
to fuel consumption. A gallon of jet fuel weighs
about 6.7 pounds. So how can jet fuel produce
21 pounds of the greenhouse gas, carbon dioxide, when it is burned in an airplane’s engines?
Jet fuel is mostly chains of carbon and
hydrogen atoms. A carbon atom has an atomic
weight of 12, and each oxygen atom has a
weight of 16, giving each single molecule of CO2
an atomic weight of 44 (12 from carbon and 32
from oxygen). To calculate the amount of CO2
produced from a gallon of jet fuel, the weight
of the carbon in the gasoline is multiplied by
44 divided by 12 or 3.7. Since gasoline is about
90 percent carbon and 10 percent hydrogen by
weight, the carbon in a gallon of jet fuel weighs
about 6 pounds (90 percent of 6.7 pounds).
Multiply the weight of the carbon (6 pounds) by
3.7, which equals 21 pounds of CO2.
The number used by ICAO and IATA to
convert jet fuel into CO2 is 3.157.
Sources: http://www.fueleconomy.gov/Feg/
co2.shtml and Aviation Carbon Offset Programmes
IATA Guidelines And Toolkit, May 2008.
ascend 57
Introducing a
®
powerful, new window to your future.
For the first time ever, combine customer
information with:
• Targeted revenue management
• Advanced inventory capabilities
• Comprehensive merchandising
functions in every channel
Sabre Airline Solutions, SabreSonic and the Sabre Airline Solutions logo are trademarks and/or service marks
of an affiliate of Sabre Holdings Corporation. ©2008 Sabre Inc. All rights reserved. AS-08-10502 1008
• Interactive customer value scoring
Future proof your airline with
SabreSonic CSS
SabreSonic ® CSS is the industry’s most powerful revenuegenerating customer sales and service solution. By enabling
airlines to uniquely value every passenger, SabreSonic CSS
creates a new intersection for customer value and revenue
growth. From reservations, inventory and departure control
to online direct, loyalty, revenue management and more,
SabreSonic CSS easily adapts to your ever-changing
business needs with a future-proof technology platform.
See how a complete view of your customers opens new
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www.sabresonic.com
products
Customer-Centricity Challenge
When protecting your airline’s most valuable asset — customers — it’s
critical to step back and look at your operation through the eyes of a
traveler to ensure your airline remains aligned with customers’ needs
and expectations.
By Ascend Staff
S
60 ascend
the incline, in steady state compared to
this time last year, in a decline or most
concerning, have customers disappeared
from the radar completely?
List the airline attributes that provide
value according to the customer.
How many customers have valid e-mail
addresses and have indicated that they
would like to hear from you?
Are your marketing campaigns and surveys customer centric? Are they provid-
ing value to the customer and to your
airline?
Equipped with in-depth knowledge of
your airline’s various customer segments and
their associated attributes, buying behaviors,
customer value algorithms, campaign effectiveness and an understanding of your customer’s
perspective of real value, you are ready for the
vacation hat and sunglasses. Challenge yourself
to keep your real job on the shelf and experience your airline through the customer’s eyes.
urely, you, an airline executive,
deserve a vacation every once in a
while. It’s your turn to take a breather, sit back, reflect and relax. However, if
you lean toward being the stereotypical
executive, it just isn’t in your makeup to
turn off your work. If you fall into that
category, then why not take the customercentricity challenge? What a perfect opportunity to exchange your airline executive
hat for the very ordinary customer hat and,
of course, sunglasses.
To be prepared for the customer-centricity challenge, you’ll want to reacquaint
yourself with the airline customer:
Who are your customers? The best way to
understand your customers is to check the
customer data repository.
How many of your customers are current
loyalty members?
What percentage of customers are actually
redeeming loyalty miles/points for travel?
How are the miles/points sourced? By
travel or credit card purchases?
How many customers have preferred car
and hotel vendors? Of those customers
who have provided preferred vendors, how
many have provided associated loyalty programs?
How many customers have provided service preferences when traveling on your
airline?
How does your airline compute customer
value today? Glance at the number of customers your data repository contains and
where they fall using customer value as
the differentiator.
What is the current buying pattern for
each customer type? Are purchases on
To ensure an airline is completely aligned with its customers’ needs and expectations, airline
executives should periodically step back and take a look at the overall operation from the
customers’ perspective.
products
Logging your expectations prior to a trip and
tracking your own encounter is an effective
way to determine the type of experience
your customers can expect from your airline.
rapidly resolve issues, make improvements
and assure overall quality of products and
services. Customer Experience Manager
improves customer satisfaction, increases
customer loyalty and retention, and ultimately enhances and sustains revenue.
Clearly, your customers are your
most valuable asset. Gathering every possible bit of data about your customers and
understanding how to effectively use it to
enhance their end-to-end travel experience
is one of the simplest ways to differentiate
your products and services from your competitors and reap the benefits of obtaining
and maintaining a loyal customer following.
So sit back, enjoy your vacation and know
your airline is in good hands with the most
valuable, integrated technology in the
industry. a
For additional information about
SabreSonic Customer Sales & Service
solutions, please contact John
Winstead, SabreSonic ® Res product
director for Sabre Airline Solutions
Journal your expectations prior to
your trip and then track your unique travel
events and your own customer experience.
Chances are good that you will have an
average customer experience, but pay close
attention as your experience evolves, and
try to determine if what you are experiencing has any weight on your loyalty to the
airline. What is the probability of retaining
you as a customer?
Knowing and understanding your
customer is simple when utilizing the
SabreSonic ® Customer Sales & Service solution’s fully integrated customer-centric portfolio. (see related article on page 50).This
advanced technology provides the capability
to identify and recognize your customers,
collect and distribute customer information
for operational decisions, and provide a
holistic view of your customers to aid your
airline in fulfilling its customer promises.
The Customer Insight option within
SabreSonic® Res, the industry’s first true
operational customer profile, provides a
continuous flow of passenger information
throughout your airline’s disparate operational systems. Customer Insight, accessible through Web services, stores complete
customer information, including destinations, service and seat preferences as well
as historical customer experience data. This
information, along with an actionable customer value score is available at all customer service points, enabling customer-facing
staff and automated passenger processes
to better serve and understand customers
as well as respond to service experiences.
This customer-centric approach enables
your airline to shift focus from merely
processing passengers to providing travelers with personalized customer service
throughout their journey.
The Customer Data Delivery option
offers detailed travel pattern information
through passenger trip data. The data
includes advance booking information on all
active trip records created by your airline,
travel distributors and other airlines, delivering only the data elements relevant to your
airline’s business needs and at a frequency
determined by your airline. The customized
delivery of travel patterns and behavior
information can be used to improve customer service, optimize revenues and provide the foundation for additional marketing
opportunities.
The Sabre ® Traveler Loyalty System
presents a scalable frequent flyer program
that tracks frequent flyer accounts, manages bonuses and awards, offers promotional capabilities, and provides reports
for marketing analysis. The system gives
the precise level of service, security and
convenience your passengers expect while
offering opportunities to reduce costs
associated with servicing loyalty program
members.
Sabre ®
Customer
Experience
Manager, an integral customer management solution, provides the means to continuously monitor customer interactions.
Customer feedback is directly routed to
those accountable, enabling your airline to
Carriers that don’t take the necessary steps to see their operations through the eyes of travelers
are less likely to meet customer expectations and achieve a loyal customer following.
ascend 61
Beyond Water
Cooler Talk
Airlines and other businesses can leverage virtual community
networking opportunities through “cubeless” software, which
enables employees to quickly receive answers to some of their
most business-critical questions.
By Erik Johnson | Ascend Contributor
62 ascend
products
F
irst we clicked. Next we surfed.
Then we Googled. Now we’re building
communities. By now, this term for
connecting with others in a virtual world has
crept into our everyday vocabulary, thanks to
Web sites such as MySpace and Facebook.
And if you thought that virtual community
networking was just for looking up long-lost
friends, think again. Already, it has proven
to be a very effective business networking
tool through Web sites such as LinkedIn,
a business-oriented networking site that
allows registered users to post resumes and
maintain a list of personal online connections
with other friends and colleagues.
While many business people have
been exposed to this virtual networking
environment on a personal level to help
them become the next-generation sales 2.0
salesperson, according to lead analysts, the
next benefactor is the enterprise 2.0.
“Today’s enterprise Web 2.0 market
is small but growing,” said an analyst with
Cambridge, Massachusetts-based Forrester
Research. “While the spending by enterprise-class companies — ﬁrms with 1,000
or more employees — will touch US$764
million in 2008, the collected expenditure
on social networking — RSS, wikis, blogs,
mashups, podcasting and widgets — will
grow at a compound annual rate of 43 percent during the next ﬁve years.”
So what does that mean for airlines
and virtually any other types of business?
It means that they are looking for ways to
bring their employees together and share
information in a new, boundless environment
that was once served by the water cooler.
As many airlines and the businesses they
partner with have grown into global enterprises, their employees are now dispersed
on multiple continents, multiple remote locations — in the office, on the road and in
the home. While it definitely has cost- and
time-saving advantages, the dispersed workforce has made it more difficult for companies to collaborate, aggregate and dispense
critical business knowledge while keeping
a real-time pulse on the operations of the
business.
New research shows the financial and opportunity cost of a dispersed
workforce. For example, recent research
from Framinghan, Massachusetts-based
IDC indicated that up to 30 percent of a
knowledge worker’s time is spent searching for information — at an average cost
of US$18,000 per year for each employee.
This data begs the question of whether or
not enterprises have become too global.
Global companies that have employees spread around the world can take advantage of
technology that enables collaboration and knowledge sharing via a virtual environment with
unlimited access.
ascend 63
products
Sabre Travel Studios within Sabre
Holdings ® asked this very question of its
own employees and discovered a need to
engage each other in a new kind of water
cooler talk. It discovered that this new
collaboration shouldn’t take place in the
limited confines of a conference room or
even in an Internet meeting. This building
of community and sharing of employee
knowledge needed to take place in a
virtual environment, with no cubes, no
conference rooms and no restrictions on
access. This new sense of community
was born in the cubeless world, bringing
to life the community-building system
for companies — appropriately named
cubeless.
What is cubeless? Simply stated,
it’s an online community platform solution
that enables a company to tap into the
collective intelligence of its employees.
The system harnesses the untapped skills
and knowledge of employees to more
quickly and efficiently bring together the
right people, information and resources
necessary to answer questions and solve
business challenges.
At the core of cubeless is a powerful, proprietary relevance engine that
ensures that questions being asked or
information being sought by employees
are proactively delivered directly to those
in the company who are most likely to
have the answers or need the information. The more questions and answers
Employees, no matter where they work, can quickly and easily gain knowledge about an
array of topics through a virtual environment, saving time and money for them and the
companies they support.
provided, the smarter the system gets at
matching the right people with the right
situations. In addition, an easy-to-use
browsing tool and a full-feature search
engine enables users to find exactly what
In previous years, it was common for employees to huddle around the water cooler to have
myriad business discussions. But today’s global companies have personnel stationed in all
corners of the world, making many of these in-person conversations a thing of the past.
64 ascend
and who they require when they need
those resources the most.
The benefits of cubeless are limitless, but first and foremost, cubeless
builds a strong sense of company culture. It’s an inclusive style of technology that allows for internal networking
and placement of a face and personality to names and titles. Cubeless also
provides an easy-to-use application for
capturing, storing and making internal
knowledge easily accessible from within
a single place in real time. It also minimizes new-hire ramp time, reduces communication lag time between employees,
drives collaboration across organizations
and encourages innovation by enabling
users to contribute, post and act on new
concepts.
Most of all, cubeless is fun and easy
to use. Because networking systems are
most valuable when adopted by the largest group of users possible, cubeless
was designed specifically to be a system
that employees look forward to using
every day. It aims to provide value to
the organization in a manner sometimes
transparent to the user. The pictures and
personal sticky notes employees can
leave for each other make cubeless a system users quickly embrace and provide a
platform that employees value.
Because it is easy to use, cubeless
delivers value to just about any department within an organization, from sales
products
and human resources to logistics and
accounting. All of these departments can
share best practices and answer business-critical questions from across the
organization. Even specialized groups,
such as aircraft mechanics, can benefit
from cubeless as employees post the
latest inspection information or can help
direct each other to corporate policy as
well as internal or external resources.
Cubeless is also a good tool to use
if an airline’s corporate communications
team is looking for success stories to
profile in its employee publication. They
could simply post a question throughout
the organization using cubeless. Or if a
vice president was attending an industry
conference in another city and needed to
plan a special customer dinner during this
conference, cubeless presents a great
resource for discovering what other sales
professional in the organization found to
be the best restaurants in that area for
hosting customer events. Perhaps human
resources plans to roll out and track a
new walking program for employees and
wants to set up teams for a little friend-
Network ® and Sabre Airline Solutions ®
businesses. “For those folks that the
road is as much their office as where
their desk is, getting information they
know they can trust is simply invaluable.
“Cubeless facilitates this collaboration so the road warrior business traveler
can quickly, easily and even automatically
get advice from people within their company that do what they do, have the same
travel policies and have been in the same
locations providing their best resource for
getting input about their trip. It can be
anything from finding out about services
to help support their business trip in a
location others have visited and which
nearby restaurants are open all night
for a quick bite to verifying that a hotel
they want to stay in has dependable, fast
wireless Internet access and a gym that
is open early in the morning.”
This licensed software is provided
to airlines and other businesses as a
service; therefore, most of the implementation and maintenance responsibly
for the cubeless system resides with
Sabre Holdings. It is hosted behind a
Highlight
The benefits of cubeless are limitless, but
first and foremost, cubeless builds a strong
sense of company culture.
ly competition. Cubeless would enable
employees around the world to stay connected with their teams.
The ability to manage complex data
and present relevant and usable information to the end user is in the DNA of all
Sabre Holdings solutions, and its developers utilized this history and success to
ensure that the information collected by
the cubeless system is easily translated
into action and results. This type of solution proves to be especially relevant to
airline and travel companies, most of
which have large and largely dispersed
workforces.
“Cubeless enables you to connect
and benefit from the collective experience and expertise of your fellow travelers or colleagues,” said Tom Klein, executive vice president for Sabre Holdings
and group president of the Sabre Travel
secure firewall to ensure that only the
company’s employees have access to
the information on its installation of
cubeless. Sabre Holdings has a history of
securely maintaining mission-critical corporate information and will leverage this
capability in the cubeless system.
Sabre Holdings launched the first
cubeless community for its own internal use, calling the intranet-based tool
SabreTown. Within three months of
installation, 65 percent of its employees
completed an online profile. On average,
90 percent of all questions asked within
the community receive the first response
within the first 24 hours (60 percent
receive the first answer in less than an
hour), and each question posed to the
community receives an average of nine
responses, often with respondents building on each other’s answers. In addition,
more than 300 groups have been formed
since the launch of SabreTown.
“In our own installation of cubeless, I have been amazed by the quantity
and breadth of stories we receive every
week, letting us know how someone has
been helped by our cubeless system,
SabreTown,” Klein said. “It seems every
week another group of individuals finds
new ways for SabreTown to help them
work smarter.”
In one recent example, a group
within Sabre Holdings needed to find an
Italian translator for an upcoming customer visit. Before they spent the money
to hire a translator, they posted the need
to SabreTown. Within a day, they found
an employee, located within the same
office building, who spoke fluent Italian
and was honored to have the opportunity
to help the company with his unique skill.
The same week, an employee needed to
get a file that was important to her job
ported from one format to another, but
didn’t know how. The original file format
was not supported by the company,
so in this case the help desk couldn’t
assist. She posted the question to the
community and received several how-to
responses, including one employee from
a nearby department who volunteered to
help walk her through the process, giving her access to the file and saving her
countless hours of trial-and-error or the
cost of going outside the company.
Cubeless was officially released to
the marketplace on June 2. In future
releases, cubeless will also continue to
add deeper functionality in areas most
used for business purposes, including
richer opportunities to rate and recommend restaurants, hotels and activities in
any city for business or leisure purposes
as well as additional ways for employees
across the organization to help each other
work better. And, maybe, even have a little fun while they are at it. a
Erik Johnson is general manager
of cubeless for Sabre Travel
Studios. He can be contacted
ascend 65
Rapid Return To
The Skies
When an airline’s schedule is disrupted by bad weather or other
unpredictable causes — resulting in irregular operations — avoiding
unacceptable additional costs by getting back on schedule as quickly
as possible is crucial. Sabre Airline Solutions® offers a complete suite
of integrated tools designed specifically for rapid recovery.
and Tom Samuel | Ascend Contributor
66 ascend
industry
I
t’s 8:30 a.m. on a crisp, clear day. A
major airline’s flights have been departing as scheduled, with only a few minor
delays at several airports that have not
amounted to more than a couple of minutes each with no impact to the rest of
the day’s schedule. Flights are arriving on
time at all airports as well, taxiing to their
assigned gates, deplaning passengers and
unloading baggage.
But managers in the airline’s system operations control center continue to
monitor the presence of a large weather
system that seems to be temporarily
stalled out to the west of one of the major
airports it serves. The weather system
could, however, begin moving rapidly
again at any time — potentially interrupting operations.
When managing an airline’s SOC, even
when flight schedules are running smoothly,
airline operations personnel are rarely complacent. They know from experience that a
significant disruption requiring irregular operations management is only a few mechanical
delays or a sudden thunderstorm away.
In this case, it turns out that the
major weather system begins moving rapidly
east during the day, and operations at the
airline’s major airport in the storm’s path
have to be shut down for two hours.
For a major airline, a two-hour disruption can impact 250 or more flights that
are dispatched worldwide. And a shutdown of two hours can mean even more
complications for an airline with shorthaul, high-frequency service — especially
if much of the service touches the directly
affected airport.
A temporary outage of operations at
just one of an airline’s main airports initiates a domino effect throughout its flight
schedule because a flight that is delayed
two hours or even three to four hours (or
canceled) at one airport causes that equipment as well as those passengers and
ascend 67
products
crew members not to arrive in a timely
fashion at connecting points within the
airline’s network.
Passengers and crews miss flights
at connecting airports. Aircraft are not
available to fly other scheduled routes.
Some aircraft fail to make it to scheduled
maintenance destinations, which could
cause a required implementation of costly
ferry operations — flying the aircraft without passengers to its mandatory maintenance location.
All of these cascading, costly effects
continue to accumulate until the airline’s
entire global, national or regional flight
structure can be put back on schedule.
In this instance, what should the
airline do with all of its affected flights?
What should it do with its displaced
crews? What should it do with impacted
passengers? The responsibility to get
back on schedule quickly can become
overwhelming as the cost of an operational disruption increases exponentially
with time.
When irregular operations occur, the
foremost objective of an airline is to
curtail unacceptable costs that will rapidly increase as the irregular operations
continue. The primary overriding goal is to
return the airline to its routine schedule as
quickly as possible — particularly dealing
with the major issues of disruption in aircraft movement throughout its route system, crew assignments and passengers
Highlight
Passengers will
need to be
reaccommodated
quickly and costeffectively and
notified of changes
to their travel
itineraries.
who are justifiably adamant in wanting to
get to their destinations on time or shortly
thereafter.
SOC personnel will need to determine which flights to cancel, delay or reroute to enable the fastest and cheapest
overall recovery.
Aircraft must be re-routed not just in
accordance with required passenger and
cargo destinations, but also with a keen
awareness of any individual aircraft’ss
onboard equipment and capabilities to fly
to the particular destination and using a
particular route.
A two-hour disruption can impact 250 or more global flights for a large carrier. This type of
shutdown can lead to additional problems for an airline with short-haul, high-frequency
service — especially if much of the service touches the directly affected airport.
68 ascend
Crew will need to be reassigned and
quickly notified of any changes to their
work schedules. Also, the entire network
supporting the crew operations, such as
hotels, taxi operations and reservations for
positioning tickets, all need to be updated
in a timely fashion. In addition, with everincreasing security and immigration regulations, it’s critical to have a system that
can send the correct crew information to
the correct station and make updates as
changes occur.
Passengers will need to be reaccommodated quickly and cost-effectively
and notified of changes to their travel
itineraries.
Airlines around the world, of every
size and business model, use advanced
and specialized tools from Sabre Airline
Solutions ® to manage their regular operations and quickly recover from irregular
operations. The airline operations portfolio
includes three fully integrated solutions
that manage aircraft and crew operations:
Sabre ® AirOps ™ Operations Suite and
Sabre ® AirCrews ® Crew Management
Suite,
Sabre ® Flight Control Suite,
Sabre ® Rocade ® Airline Operations
Suite.
Experts from Sabre Airline Solutions
work with individual airlines to recommend the optimum airline operations suite
that best fulfills their specific business
needs. Any of these systems enable SOC
personnel to effectively monitor and manage an airline schedule, aircraft, maintenance requirements, crew and passengers
within the operations arena. The airline
operations system is the core solution in
the SOC, and it is used by SOC controllers
to manage airline operations during normal and irregular operations as well as to
communicate the latest schedule, aircraft
and crew information in real time to all
dependent systems and people.
Sabre Airline Solutions also offers
sophisticated operations recovery tools
that are fully integrated with each of the
airline operations systems.
During an irregular operation, such as
the one described, airlines can use Sabre ®
Recovery Manager, which is designed
specifically to help get back to the planned
schedule as soon as possible. Recovery
Manager uses sophisticated optimization
algorithms to suggest schedule changes,
re-route aircraft as required and repair
crew assignments while ensuring that no
operational constraints or crew work rules
are violated. The recovery solution can be
reviewed by SOC personnel and published
to the specific airline operations system
used by the carrier. The system communicates the changes to all dependent
products
When inclement weather has the potential to cause significant delays throughout an airline’s
entire route system, a complete suite of integrated solutions is the only recourse for rapid
recovery.
A temporary outage of operations at just one of an airline’s main airports initiates a domino
effect throughout its flight schedule, potentially causing severe delays and preventing
passengers and crew members from arriving in a timely fashion at connecting points within
the airline’s network.
systems, such as the airline reservations
system, as well as to all impacted personnel such as gate agents and crew. As
flight schedules are adjusted to aid in the
recovery process, new schedule information can be communicated in real time to
Sabre ® Dispatch Manager, which would
alert dispatchers of a need to create and
file new flight plans. Dispatch Manager
can generate flight plans using sophisticated variable cost index algorithms to
minimize fuel, ensuring a continued focus
on a cost-effective recovery.
Sabre ® Reaccommodation Manager
helps airline personnel effectively manage displaced passengers. The solution
provides viable options for rebooking passengers either on the disrupted airline or
another airline, taking into consideration
all passenger-prioritization factors such as
bookings by loyalty points as well as the
type of ticket each individual passenger
holds. This level of passenger detail not
only minimizes lost revenue due to the
displacement, it also promotes customer
loyalty.
Sabre Airline Solutions’ sophisticated, integrated offerings are an essential part of rapid recovery — along with
veteran airline employee expertise — in
helping airlines save potentially millions of
dollars that could otherwise be lost as the
day goes on and normal operations have
yet to be restored.
In an age in which costs are increasingly critical to profitable airline operations,
the integrated Sabre Airline Solutions
offerings are specifically designed to save
on fuel costs, delay and cancellation costs,
incremental costs due to off-plan crew
schedules, and passenger compensation
and reaccommodation costs while constantly focusing on a quick recovery.
Regardless of where an airline is
based, what business model it uses, its
size or types of aircraft operated, Sabre
Airline Solutions’ integrated operations
systems can help swiftly recover from any
irregular operation, no matter how significant. a
Tom Samuel is director of flight
operations solutions for Sabre Airline
Solutions®. He can be contacted at thomas.
[email protected]. Phil Johnson can be
ascend 69
regional
U.S. Regionals: A New Outlook
Regional airlines are feeling the pain as major carriers reduce flying
on 50-seat regional jets. But pending resolution of labor issues,
regional airlines in the United States may have new opportunities
flying 100-seat RJs.
By Lauren Wolters and Chris Spidle | Ascend Contributors
D
uring a time when major U.S. network
carriers are cutting costs at every turn,
including reducing or, in some cases,
completely eliminating the use of their regional
partners, these regionals must become more
innovative to survive. There are risks — those of
leaving the bad “known” for the possibly worse
“unknown” — for these smaller operators. But
if they are nimble and clever, by inventing a new
role for themselves because their old one that
now depends on 50-seat RJs is shrinking fast,
the door to greater opportunities may open —
opportunities to profitably avoid shrinking
by finding new business models.
Photo courtesy of Eclipse Aviation
The next-generation 100-seat Bombardier CRJ1000 regional jet has 38 signed orders and
options in those contracts for an additional 23 aircraft and is scheduled to enter into
service next year.
70 ascend
Regional airlines have for decades
been an important link with the air transportation system across the United States.
Since deregulation of the airline industry
in 1978 and the founding of the Essential
Air Service, these carriers have connected
people across the region, bringing travel and
tourism to smaller cities and communities.
They have been responsible for virtually
anyone to get from their local runway to the
largest cities around the world.
The critical role of regional airlines has
not diminished during the past 30 years.
Rather, the role of these carriers has grown
in both size and importance.
“The entrepreneurial spirit of regional
carriers has propelled meteoric growth from
humble beginnings before deregulation to
a large share of the U.S. airline industry
today,” said Shane Batt, vice president and
global solutions partner for Sabre Airline
Solutions ®. “Regional carriers are now
a core, integral part of airline networks.
Regionals have grown beyond their domestic roots and now serve Canada, Mexico and
the Caribbean with a modern fleet of more
than 1,000 mostly jet aircraft.”
Last year, regional airlines carried more
than 158 million passengers, and that number continues to increase year over year,
even as costs have risen and service has
been reduced, highlighting the importance of
regional airlines and the dependence of the
communities they serve on them.
The regional airline segment has been
one of the most innovative and chameleonlike airline segments. Many of these carriers
have matured their fleets from prop planes
to regional jets to meet the ever-growing
demand for regional air service.
Currently, 70 percent of airports
nationwide receive scheduled air service
regional
Photo courtesy of Embraer
solely from regional airlines, accounting for
more than 442 airports in the continental
United States, Hawaii and Alaska. In addition, 140 rural communities are reached
only by a single regional airline that operates with some subsidies from the Essential
Air Service of the U.S. Department of
Transportation.
Historically, regional airlines served
airports that were either unreachable by
larger jets or had low traffic density and
were therefore unprofitable for major airlines. But the answer to the question of
when to use a major or regional airline has
also been influenced by cost issues.
When labor rates at majors climbed
in 2000, fuel was inexpensive, and it was
cheaper for majors to push flying to their
regional affiliates, driving significant growth
for these smaller operators. However, now
that fuel costs have soared to painful levels
and majors have lowered their labor rates,
the scales are tilted back. On a per-seat
basis, regional jets are comparatively fuel
inefficient and possess higher operating
costs, so major airlines have more incentive
to take advantage of the lower cost per
seat of flying full Boeing 737s infrequently
in smaller markets rather than offering frequent 50- or 70-seat regional jet service.
As the latter cost shift began to occur,
capacity began to shift back to the majors
— capacity they are now cutting. Also, as
traditional airlines shrink their own capacity
due to rising fuel costs, they are also reducing use of their regional partners.
This shift is redefining the market for
regional airlines and, possibly, changing the
way they operate.
But now the cost see-saw could shift
again. With new, larger regional jets on the
horizon — offering better fuel efficiency and
lower overall operating costs — there could
be new opportunities for regional airlines,
assuming labor issues can be resolved.
As of July, Bombardier had received
39 signed orders for its CRJ1000, a 100seat regional jet and extension of the
CRJ900, with options in those contracts
for an additional 23 jets. The first of these
are expected to be in service next year.
Bombardier’s market analysis indicates the
manufacturer will deliver more than 6,300
new 100- to149-seat regional jets by 2027
as well as 6,100 new 60- to 99-seat aircraft
and 500 new 20- to 59-seaters.
Clearly, Bombardier has identified
huge potential for larger regional jets.
“We anticipated the need for larger
regional aircraft when we introduced the
CRJ700 regional jet in 1997 and the CRJ900
regional jet in 2000,” said Bombardier
Aerospace President and Chief Operating
Officer Pierre Beaudoin in a press release
last year announcing the launch of the
The 100-seat Embraer E-190/195 regional jet, a direct competitor of Bombardier’s CRJ1000,
also competes directly with the Airbus A319 and Boeing’s 717 and 737.
new CRJ1000. “These aircraft are now the
backbones of many airline fleets worldwide. Today, with the CRJ1000 aircraft,
Bombardier continues to build on its ongoing commitment to product innovation. The
CRJ1000 regional jet combines the proven
platform, reliability and flexible cabin configurations of its predecessors, with its closest
competitor having up to 15 percent higher
trip cash operating costs.”
With the better economics of flying larger jets fewer times a day, capacity
regional airlines added earlier this decade
may need to change, and the 100-seat RJ
adds an additional and potentially helpful
option to the menu.
The
CRJ1000
competes
with
Embraer’s E-190/195, which is a 100-seat
regional jet in service at airlines such as jetBlue. These aircraft compete directly with
Airbus’ A319 and Boeing’s 717 and 737,
both of which are staples of many fleets at
major airlines.
The larger-seat-capacity RJs that operate with greater efficiency will likely heighten
regional carriers’ ability to more effectively
compete, thereby becoming more appealing
to their larger airline partners.
During these unpredictable times for
the airline industry, never has it been more
critical for U.S. regional carriers to innovate
and adapt to keep their share of smaller
markets. They need to rethink their entire
operating structure. And only those regional
airlines that can change and lower their
costs will survive. a
Lauren Wolters is the Americas
regional marketing manager and
Chris Spidle is delivery director of
research, analysis and modeling for
Sabre Airline Solutions®. They can be
contacted at [email protected]
and [email protected].
ascend 71
regional
CARIBBEAN
DEPENDENCY
Travel and tourism is essential to the well being of the Caribbean
economy, making up nearly 13 percent of its employment and
bringing in annual revenues of US$57 billion.
By Lauren Wolters | Ascend Contributor
72 ascend
K
nown for its white sand beaches and
crystal-clear waters, the Caribbean has
always been a favorite vacation destination of travelers around the globe.
A new study by the World Travel and
Tourism Council projects a 2008 increase in
travel and tourism to the Caribbean of 2.3 percent, and it estimates that growth to average 3.2
percent a year from 2009 to 2018.
This would bring the total number of
annual Caribbean visitors to more than 48
million. According to the WTTC study, the
Caribbean is the most dependent region
globally on travel and tourism, accounting
for 12.9 percent of the region’s employment
and US$57 billion in yearly
revenue.
The
Caribbean
relies on travel and tourism, and the aviation
industry is responsible
for bringing more than
54 percent of those
tourists to the islands.
The remaining balance
of tourists comes from
cruise ships, and many
of them use air transportation to bring them
to port. Thus, airlines
account for 19.5 million tourists of the projected
35.6 million total visitors.
Caribbean airlines have the same concerns as global carriers, but they have to face
amplified affects.
The rising cost of fuel affects not only
the airlines in the Caribbean but also the prices
of every import. Since the islands don’t produce many goods themselves, they rely on air
transportation to import goods as well as export
their natural resources, such as sugarcane in
the Bahamas, which has driven up the costs of
almost all goods in the Caribbean.
Furthermore, as Caribbean carriers act as
feeders and regional carriers for the larger United
States, European and Latin American carriers,
the effect of reduced routes and higher ticket
prices on the larger carriers is felt strongly.
For example, hurricane season can have
devastating effects on the travel and tourism
industry in the Caribbean — affecting more than
2 million jobs throughout the Caribbean. In most
cases, Caribbean airlines are responsible for
the safe return of travelers to the mainland and
must bear the cost, an impossible expense for
them to endure in this world of
higher fuel prices as
well as reduced
and overbooked
flights.
ascend 73
regional
Because the Caribbean Islands don’t produce many goods, they rely on air transportation to
import goods as well as export their natural resources, such as sugarcane in the Bahamas.
Not only do Caribbean carriers face
these amplified affects, they also must
deal with the challenges of seasonality.
As high fuel prices negatively impact
the profit of an airline on an annual basis, it
is unclear if the revenues generated from
the high season will offset the projected
losses from the low season. The price
sensitivity of the market adds another
dimension of complexity.
With Caribbean carriers, the focus
is not on the bottom-line success of an
airline but rather the economic viability
of 23 individual countries and the millions
who reside in these island nations. These
carriers, however, are in a unique position
to not only serve leisure travelers but also
have a direct affect on their local economy.
Through their stable operations, Caribbean
carriers can ensure that tourists continue
to arrive in the islands and keep providing
valuable tourist income for the Caribbean
economy.
Sabre Airline Solutions ® currently provides customer sales and services technology to Air Jamaica, Bahamasair, Caribbean
Airlines and Cayman Airways as well as
some flight operations solutions. These
flexible, scalable and reliable solutions
enable the airlines to react quickly to the
needs of their customers and provide the
highest level of customer service.
Though no one can predict what will
happen with fuel prices or how the current
hurricane season will unfold, it is clear that
Caribbean carriers play a vital and important role in the travel and tourism industry
in their territory, and its economy will be
greatly affected should the region’s airlines
encounter financial difficulties. a
Lauren Wolters is the Americas regional
marketing manager for Sabre Airline
Solutions. She can be contacted
Travel and tourism is critical to the welfare of the Caribbean, accounting for 13 percent of employment and contributing US$57 billion in
annual revenues.
74 ascend
your
airline
to
n ew
height s
2008 Issue No. 2
Editor in Chief
Stephani Hawkins
Managing Editor
B. Scott Hunt
Art Direction/Design
Charles Urich
Contributors
Venkat Anganagari, Jim Barlow, Randal
Beasley, Nejib Ben-Khedher, Stephanie
Bundick, Jim Carlsen-Landy, Joelle Cuvelier,
Greg Gilchrist, Carla Jensen, Malcolm
Kass, Suzanne Cottraux, Maher Koubaa,
Christine Kretschmar, Gordon Locke, Doug
Maher, Gabriele Mariotti, Kyle Moore, Dave
Roberts, Kamal Singhee, Jeremy Sykes, Emily
Tate, Michelle Williams, John Winstead.
To suggest a topic for a possible
future article, change your address or
add someone to the mailing list, please
send an e-mail message to the Ascend
staff at [email protected].
For more information about products
and services featured in this issue
of Ascend, please visit our Web site
at www.sabreairlinesolutions.com
or contact one of the following
Sabre Airline Solutions regional
representatives:
Asia/Pacific
Publisher
David Chambers
Vice President
3 Church Street, #15-02 Samsung Hub
Singapore 049483 SG
Phone: + 65 6511 3210
Awards
Europe
George Lynch
3150 Sabre Drive
www.sabreairlinesolutions.com
Quill, Hermes Creative Award, The
Communicator Award
Communicators Bronze Quill
Communicators Bronze Quill, Silver Quill
and Gold Quill
Quill, and Gold Quill
Communicators Bronze Quill and Silver Quill
Reader Inquiries
If you have questions about this publication
or suggested topics for future articles, please
send an e-mail to [email protected].
Sabre Airline Solutions and the Sabre Airline Solutions logo are trademarks and/or service marks of
an affiliate of Sabre Holdings Corporation. ©2008 Sabre Inc. All rights reserved. AS-08-10282 0708
T a king
making
contact
Murray Smyth
Vice President
23-59 Staines Road
Hounslow, Middlesex
TW3 3HE, United Kingdom
Phone: +44 208 538 8631
India/South Asia
Vish Viswanathan
Vice President
187, Royapettah, High Road, Flat A-7
Mylapore
Chennai, India
Phone: +1 682 605 4544
Cell: United States +1 817 312 2830
Cell: International +91 98404 96765
Latin America
Kamal Qatato
Vice President
3150 Sabre Drive
Phone: +1 682 605 5399
future proof
solution
flexible points of sale
customer
customer value
and loyalty
revenue
merchandising and
ancillary sales
Middle East and Africa
real-time, choicebased revenue
management
services enabled
business intelligence
automated
re-accommodation
Maher Koubaa
Regional Head
77 Rue de la Boetie
Paris, France 75008
Phone: +33 1 44 20 7657
North America
Kristen Fritschel
Vice President
3150 Sabre Drive
Phone: +1 682 605 5335
See how real-time solutions for
customer sales and service generate
more revenue and maintain the real
value of every customer.
Worldwide
Shane Batt
Global Solutions Partner
Phone: +44 7717 495 129
Get your Customer InfoPac today!
www.sabreairlinesolutions.com/customerservice
Sabre Airline Solutions, the Sabre
Airline Solutions logo and products
noted in italics in this publication are
trademarks and/or service marks of an
affiliate of Sabre Holdings Corp. All
other trademarks, service marks and
trade names are the property of their
respective owners. ©2008 Sabre Inc.
All rights reserved. Printed in the USA.
Address Corrections
Cert no. SW-COC-002360
configurable and open
Please send address corrections via
e-mail to [email protected].
®
2008 Issue No. 2
A Magazine for Airline Executives
2008 Issue No. 2
t a k i n g
yo u r
a i r l i n e
to
new
h ei g h ts
Leaps and
Bounds
A Conversation With Pham Ngoc
Minh, President and Chief Executive
Officer, Vietnam Airlines, Pg 18.
www . sabre airl ine solutions.com
Special Section
Airline Mergers
and Consolidation
38
10
American Airlines’ fuel program saves
more than US$200 million a year
31
Integrated systems significantly
enhance revenue
72
Caribbean Nations rely on air
transportation

2008 Issue 2 - Sabre Airline Solutions

Transcription

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