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Operational Excellence

The majority of airlines are currently enjoying healthy profits. On the cost side, this is partly due to low fuel prices and partly to the fact that airlines had to become more efficient when fuel prices were much less favorable. But of course, the situation is still far from perfect, and many internal and external factors can impact an airline’s performance, depending on the varying levels of influence a company may have.

While low fuel prices will hopefully last for the next few years at least, increased efficiency – which in practice means the maximum utilization of resources and minimum margins for error – is already taking its toll, and increasingly affecting on-time-performance, customer satisfaction and, of course, costs.

All this is happening at a time when companies are still adjusting to modern social media communication and constant connectivity. Response time during any sort of crisis or even minor irregularity has been cut to virtually zero. As a result, dissatisfied customers inundate social media with posts that can quickly catch the attention of the world’s media and significantly damage an airline’s reputation.

To overcome these issues, airline departments need to act collectively. While this is more or less standard practice during the planning phase, there are still many gaps when it comes to executing daily operations. It is therefore essential that airline Operations Control Centers develop in tandem with the general shift in the industry, and become real-time coordinators and communicators who take advantage of technologies and data availability, while still ensuring optimal, cost-effective outcomes by balancing the needs of the airline with those of its customers.

On-time performance 

On-time performance is an important factor that can have a significant impact on costs, as well as on the customer experience. Airlines need to better understand why flights are delayed and what can be done to systematically improve on-time performance by fixing the root causes of operational issues. 

As various analyses show, up to the half of delays at airlines are still hidden behind reactionary delays, which makes the further investigation and systematic management of occurrences almost impossible. At the same time, while airlines like to emphasize the external factors beyond their control, the most commonly identified reasons for delays lie with the airline itself. Ground handling, airport and airspace restrictions and also various weather limitations usually lag far behind.

Managing and communicating irregularities

Professional and pro-active management of irregularities is the key to achieving efficiency and minimizing the impact on customer dissatisfaction. Predicting, planning ahead, applying consistent rules and making use of the appropriate decision support and communication tools are a must, as irregularities will always be a part of an airline’s daily routine.

Communication nowadays does not stop with giving passengers transparent, accurate and regularly updated information through various channels. It also means responding immediately to their needs – whether that means pushing communication to their mobile devices or responding through multiple social media channels.  With all the information and tools available, the need to give the customer real control over the journey, not only during the planning stage, but particularly when something goes wrong, is crucial. This further significantly decreases the workload of front-line staff and in general ensures that every customer is served much faster via a variety of options.

Integrated Operations Control Center – the enabler for top operational performance

The key to handling future operational challenges lies with the Integrated Operations Control Center. The vast majority of airlines have already completed the integration phase, although everyone needs to bear in mind that integration does not mean just putting people together in one room. It also means taking a fresh look at the processes in order to achieve better control and efficiency and have a big picture of what is happening at any given time.

Steps beyond the integration phase are a bit more difficult. While airlines are literally sitting on huge data stores, their willingness and indeed their ability to exploit such data is very limited as it means investing in IT infrastructure and often also admitting that the current one no longer serves its purpose. Predictive intelligence and systems that are continuously learning do not just happen of their own accord. They need to be carefully developed and implemented.

Without this, it is impossible to achieve real automation in the preparation and execution of operations, allowing humans to focus on managing real exceptions, while letting computers handle recurring daily business. The same goes for the pro-active optimization of operations, applying predictability, consistent rules and clear, tested and beneficial scenarios.

Finally, what airlines usually tend to overlook is the need to align human resource capabilities (continuous development) and IT equipment (utilizing systems in the correct manner so they provide maximum output and support). This is particularly important in order to avoid the increasing trend whereby systems provide good output, but human factors may incur unnecessary extra costs as decisions in this area are often based on feelings and assumptions, rather than benefiting from system-supported decision-making.

Only by applying this extensive approach can the Integrated Operations Control Centers have daily operations under real control, achieve efficiency and communicate clearly, particularly in the event of irregularities.

Lufthansa Consulting’s project experience and know-how, tailored to an individual airline’s needs, can support you in reaching Operational Excellence by implementing the latest operational trends and technologies, such as:

• Improvement in on-time performance and asset utilization

• Professional irregularity management to ensure long-term improvements

• Effective and innovative communication with customers

• Innovative Integrated Operations Control Center development

For further information about Lufthansa Consulting’s Operational Excellence approach, please contact mail@lhconsulting.com.