29.12.2019 Aviation, Low Cost, Management

Why Do Airlines Keep Failing

Recently, I attended the ISHKA conference Investing in Aviation Finance: Germany in Munich where one session addressed Why are airline bankruptcies still happening in a booming environment?

There are some, very few, very common reasons. And auditing airline business plans, start-ups and established, I keep raising the same questions.

What’s Your Business?

Back in the 90’s, I became the honorary member of the Airline Sales Representatives Association in Frankfurt. Aside the narrow-minded thinking of sales managers denying to understand that the emerging Internet was about sales channels, it kept and keeps bugging me, that they focused on their “sales channels”, denying responsibility for the new channels, as they had to be handled “by others”. In the beginning and to date, many if not most airlines have no personal e-Mail-contacts for their customers, be it travelers, travel agencies or online portals. The same applies to their smartphone numbers.

My former boss Louis Arnitz used a historic lesson to explain the change we faced converting FAO Travel, a “classic” business travel agency into i:FAO, the first European business travel portal. In the 19th century, rail companies built the railroads of America. Replacing the Pony Express. Then came those crazy flyers, “aviators”, in their small machines transporting mail. To date rail and air travel are not “connected” (very few exceptions). Because the managers understood the building of steel railroads as their business. Not the transport of people. And they still focus on the wrong priorities. Airline and Rail managers alike.

11 years ago, I wrote about the revival of the sales manager.

Know Your Cost

Speaking about Sales Managers ignorance to the cost of their airline’s operation, I found the fish stinks from the head first being a true proverb. I’ve met too many investors, airline managers, airport managers, not understanding the cost involved. Then they try to compete on the price with the large, established airlines. I have no idea, what those managers learned, I heavily doubt the quality of university education…

The recent failure of Ernest is a “classic”. They take little money, rent Boeing 737 or Airbus A320 family airplanes, in case of Ernest 1 A319 and 3 A320. Then they buy software licenses (COTS, Commercial Off The Shelf). They buy ground handling and maintenance. Something I learned studying Whole Sale & Foreign Economics 35 years ago: If you outsource, it is either more expensive or you they safe from the service levels they provide.

Something I keep telling about consulting. If you need someone with special knowledge for a short time, you “outsource”, you hire a consultant to do the job. If you need something long-term, you hire a consultant to develop the know-how within your company. Again, the job for the consultant is short term.

In both cases you pay for the experience.

Airline managers that do not understand their real CASK, their Cost per Available Seat Kilometer (or mile as CASM), are not doing their job! Airline managers that fire good people because they are “too expensive”, airline managers that save on “service”, don’t understand reputation and brand as important are being doomed from the outset.

So these airline startups come and believe that with some 10 million Euro, leasing the same (but usually older) aircraft, pay for outsourced maintenance, IT, ground handling, etc., etc. They truly believe they can “succeed” in the shark pond where an easyJet owns 70-80% of their fleet. Only some 20-25% being still paid off (until they own them), less than 3% being leased to cover for ad hoc demand. Where they run their own maintenance operation, their own ground handlers where they can. Then they have established processes and understanding of the cost of disruptions and delays – and cover them with an own fleet of spare aircraft. Do those small airline operators have any spare aircraft on hand when their aircraft fails them?

From Cobalt, Germany, Primera (alphabetical order), feedback said “disruption cost”, attributed i.e. to EU261 “passenger rights” to having been a major reason for their financial troubles. Still, most business plans, I was asked to have a look at last year failed to address that issue at all. Or they used “easyJet figures”, neglecting the fact that easyJet has a spare fleet to cover and minimize the effects of flight disruptions.

Even large airlines’ network managers keep ignoring those cost factors and then get surprised when a route fails. Others go to considerable lengths to understand the typical delays they incur on specific routes. Caused by the ground handler, the departure and/or arrival airport, taxi times, the air traffic control – or simply common weather issues like fog in Stuttgart.

So taking all those common and neglected factors into account: What’s your cost? CASK is one value for the entire company – do you understand the performance on the specific route or airport? Why is it often the same airports “failing”? Maybe they shouldn’t be overly optimistic but be more realistic? And yes, that is the same airports believing if they reduce the landing fee, it would have some decision making impact on the airlines’ cost. It’s that level of non-understanding that causes constant and ongoing failures – not just for newcomers or small airlines.

What’s Your USP

Shortly prior their demise, a board member of Cobalt answered my question about their USP: “We’re Cypriot.”
Say what? Competing against easyJet and other low cost and classic network carriers, that is all there is for a USP?

His second answer about USP was “We’re cheaper.”
Okay. You operate 2 A319 and 4 A320. easyJet operates what, more than 330 A320 family aircraft. You think you’re “cheaper”? Really?

Another airline answered my same standard question with: We fly different routes.
Well… Hard to not be nasty. They just wonder that on their most successful routes, the other, bigger carriers kick their butts and take over those routes.

Carolin McCall understood “service” to be a difference maker. Since her leave, very quickly they dropped from my “role model” and preferred airline to “me too”. Taking over aircraft from Air Berlin with additional and “bulkier” seats, I suddenly experienced less leg space. Their airport manager at one of their hubs found himself quickly “obsolete”, the new paradigm being “cost savings”. In turn they seized my (half-sized) cabin bag due to “full overheads”. Aside the seat next to me being empty, there was more than enough space below the seat. Heard meanwhile from many frequent flyers they no longer wait if they have an aisle seat but make sure they have their seat and the cabin baggage with them. Would be indeed interesting to have some statistics how that impacts boarding time.

So what’s your USP? Price? Okay Mr. O’Leary… But what’s an LCC? Ryanair flies into the big airports recently. That’s another story I plan to address in the new year. So again, what’s your USP? How can you secure that people buy your product, that it’s not simply exchangeable with some cheaper airline? Back 35+ years, my boss in whole sale told me: “There’s always someone cheaper.” And several years later, the boss of “low cost airline” Continental Gordon Bethune said:

Interesting enough, in my recent qualification in Online Marketing, P.R., I learned the same values being valid in the online world. Nothing new. What’s your USP? Know your Strengths, Weaknesses, Oportunities and Threats – internally and externally and build your business case. Then you come to your own USPs. And you will likely not invest into some airlines with a few aircraft. Or into aircraft owners with a few A320 or B737 aircraft they try to place in a sated market. If you’re an investor (or know such), send them over to Kolibri.aero ツ

The Virtual Airline

As mentioned above and before and again. I usually don’t believe in the survival of virtual airlines. A few leased aircraft of the same kind than their competitors, outsourced IT, ground handling, maintenance and other “services”, often even the call and service center (to “GSAs”). Then they believe to be competitive to the large players. If you operate in an un- or under-served market, you may be able to ask for the higher ticket prices required by your increased cost levels. Most airlines I see trying to take off or change their business to survive try to compete to the large network and low cost carriers, but without a secure market (using the same aircraft).

Aviation – and the dying continues … Look at the fleet, at complexity at size and type. Do they have spare(s) in case of disruptions? How much do they fly (make money)? Look at the pricing model and if that reflects the higher CASK. I’ve not seen a single failure in the past years that was not clearly a result of those common causes.

Food for Thought
Comments Welcome!

10.12.2019 Aviation, Low Cost

The Financial Impact of Air Travel

Juergen is one of the very few people, I really mean, VERY FEW, people that understand both airlines and airports.

You all know my graphic merging the GFK purchasing power map with the Wikipedia map of airports that I use to visualize the relation between the both.

Now my friend Ged had put together some numbers, simplifying but following mostly what I used myself in discussions with tourism offices, chamber of commerce, politicos and the other stakeholders that in Germany frequently fight against their airports. Those stakeholders keep failing to understand the commercial impact of “their airports”. In Germany, it’s “airport bashing”. Aircraft noise being an enemy. Transportation statistics on environmental issues beautified to condemn the airlines, I just wrote about the #flygskam reality check.

I have some improvements, but maybe you want to see the info about Ged’s presentation first?

https://simpleflying.com/new-airline-routes-are-worth-huge-amounts-to-destinations/

There are some shortcomings that from experience I do address when talking to the local stakeholders beyond airports. But most politicians I found to prefer airport bashing to understanding. And most airports (not all, there is a slow change) work alone on the route development process. Stakeholders like chambers of commerce, tourism boards, politicians or local media focusing on “other things”. And my original use case was Erfurt with Cirrus Airlines, when I tried to attract KLM to Amsterdam with 70-seat aircraft.

So let me quickly adjust Ged’s numbers.

First of all, I prefer frequency over size, so I think we should talk about i.e. a route with 100 seats. Instead of a trice weekly that fails to attract business travelers and suffers such from a higher seasonality, I’d look in turn at a daily service. So let’s keep to the example of an Amsterdam-service with KLM. As operated by KLM will also get you the more attractive ticket prices they can offer.

So over the year, a “daily service” accounts to six weekly flights or about 330 round trips. That accounts (at 100 seats) to 330 days x 1 flight/day x 100 seats x2 (return trip) = 66000 seats. Or slightly more than Ged’s assumption of 29,640 outbound seats we use for typical statistics, we have 33,000. Slightly more, but triggering commercial passengers helps to fill the plane and get some improved ticket revenue.
Talking about 90% load factor – and I agree with Ged, that is minimum what you better plan for nowadays, we need to sell 29,700 seats. For easier calculation, let’s say we must sell 30,000 seats.

Now comes Ged’s mistake, a rather common one, the “inside-out” look.

Passengers never travel only one direction on a plane, ideally they originate on both sides. Different on summer charter flights, I know. But we talk scheduled and low cost services here. So depending on the destination, let’s take the simple equal distribution of in- and outbound travelers. So we talk about 15,000 travelers we target “inbound”.

Next I agree, € 250 total average spend per day for a four day trip is reasonable. But again, I’d adjust slightly here.

Not all travelers go to hotels, there usually is a valuable VFR traffic, visiting friends and relatives. So I’d use only a lower, more conservative €500 for trip spending.
But then Ged fails to use an important multiplier. EU (European Union) usually uses the factor 2.5 (sometimes 3) on the commercial value on any € “spent”. So for any passenger, we talk about 500€ multiplied by 2.5 = 1,250 €. At 15,000 travelers we talk about roughly 19 million € spending by all travelers.

What must be emphasized is the fact that the airline route will also trigger commercial relations with a positive impact to the commerce taxes for the regions as well as the attractivity. Especially on regional airports with such a connection, it will create new jobs, countering the rural exodus so many secondary regions suffer. That is, why the local chamber of commerce (and tourism) have such an impact. If tourism can fill more seats incoming than outgoing, the result becomes even more favorable. A 60/40 in-/outbound results in 3,000 more passengers adding on the incoming value of the flight or 3,750,000 €, totaling the effect to € 22,8 million. Full flights will result in increased frequency or larger airplanes.

If you focus on “holiday flights”, i.e. from an airport like Erfurt-Weimar to the Mediterranean

But given all that, the regions – as mentioned – fail to understand the impact to their commerce. Nor do they understand the financial risk an airline takes, calculating with “competitive” ticket prices they must fill the plane year-in/year-out. If the wonderful biased statistics by the airport marketing fail to materialize the passengers, if the airline looses 10% of the planned revenue, we can quickly talk that many or more million Euros being burned. You may be able to understand why an 80% discount on the “landing fees” are nothing more but an expected risk the airport takes. The brunt of the risk is with the airline.

That said, I remind my readers I am no fan of long-term “airline subsidies”. There are “PSO”-routes, called public service obligation. I would expect the (political) stakeholders of any regional airport to be well advised to fund a PSO-route to one of the big global hubs, but not by “any airline”, but by the hub-carrier. Reminder: German airport association ADV published that most passengers connect online (same airline) or within the airline alliances, there is only negligible numbers of passengers connecting “interline” (between unrelated airlines). Which in my opinion is a result of biased marketing, but it’s like it is now.
But generally, a route shall be set to the right sized aircraft, an attractive frequency and a strong point-to-point demand. Then there can be subsidies, better a real “risk sharing” to establish the route. If the airport/region believes in their own numbers and expectations, they should be willing to guarantee the break even load factor and revenue to the airline. Right? And like any business venture, there must be clear milestones – and an exit scenario if the expectations don’t match the real demand.

Which triggers the other issue. At the ISHKA Investing in Aviation Finance conference we discussed reasons for airline failures. One very common reason is the fact that airline managers don’t calculate according to their own cost base, but try to compete with ticket prices of their competitors. Not just the real ones, also the implied ones. Trying to fly low cost ignoring their different and higher own cost base. Negotiating new flight services, airports but especially the political stakeholders make it worse by “expecting” unrealistic low cost of operation. They demand that tickets must be cheap. If they, like in Germany, add taxes and make flying more expensive, they shoot their own foot.

The financial impact on air travel is a two-sided coin. There is a major impact to commerce and regional income, especially on the incoming travel. But if you focus only on holiday charter flights without incoming, you deprive your region of an important commercial multiplier. In fact, I question your business case. And yes that goes to you Erfurt-Weimar, my prime, sad example.
On the other side, airlines are commercial companies. No airline can keep flying if load and revenue don’t justify.

Food for Thought
Comments welcome!

25.11.2019 IT

Cloud Computing – Truth or Dare?

This week, I received three calls asking me about some new tech. Eventually, all three questions boiled down to one thing: Cloud computing. Food for Thought. I started a blog to address it, when I found I addressed this two years ago in Cloud vs. Security. And the Internet of Things.

Then I got some input about conferences where speakers promoted the need for exchanging data. An issue I addressed as “Open Data” in the same article two years ago.

Same topics obviously resurfacing, but nothing new? So here’s an “update”.

Recent Airline IT Failures

Just to mention recent developments, the first needing mentioning: The latest large IT outages causing thousands of flights to be cancelled were attributed to failures of minor cloud systems, cascading into disaster causing the aviation IT systems to fail, leaving thousands of passengers stranded – not good for reputation.

The CIO of two airlines admitted that their main headaches result from such “SaaS” (Software as a Service), being not controlled by their company. But by some external IT experts who often do not understand the real-world impact of their “ideas”. And lousy interfaces of such “solutions”. Cheap to buy, expensive to manage.

Voice Assistants

Another development is the “voice assistants” at home. To give the example of Alexa. As you know, my beloved daughter is called Alexsandra, so if I would use such device it would listen in, as soon as someone addresses her. Also the Echo Dot alternatives of “Amazon”, “Echo” and “Computer” are not much safer. And meanwhile, press reported how extensive Google, Amazon and others use “their” devices not to just provide a service, but filing your commands and conversations for analysis. An intrusion to my privacy causing me to caution and not buying into them.
Aside, my Android phone has been set up to not react to voice activation, but I found it to react and switch on voice recognition without my doing. I did like Siri and now Android’s voice recognition to send messages from the car to home. But not on voice activation. I do want some privacy left.

Don’t get me wrong. I love Voice Assistants. My friend Alex developed the first Internet Assistants at his company VirtuOz, later sold to Nuance. His next project WIT.ai was about voice recognition and later acquired by Facebook, the basis for their solutions. What I am concerned about is simply the privacy invasion, if those tools file away my communication for unspecified further use. I may talk about confidential issues.

To make it worse, there have been, are and will be attempts – and successes – by governments to access i.e. Alexa and her companions. Privacy? I’m not a criminal, but no, I do quite some thinks to secure my private life. 1984 anyone?

Alternative Cloud

Aside having my “own” Internetserver, I use Nextcloud for two years now (thanks Jens!). To use it properly, like Dropbox, Google, Apple or Microsoft, you need a client program that integrates into your file manager (i.e. the Microsoft Explorer). I neither trust Dropbox not the others (except on encrypted storage), we’ve all learned from Edward Snowden.

In the end, it is a trust thing. I trust my friend who maintains “my server”. Totally. My family trusts me that I have other things to do than sneaking into their mailboxes or files they have in their own Nextcloud on my server.

Cloud Security

Meanwhile and especially with the current president who seems to lack the moral values required for someone elected into such power, the “United States” in my opinion turn from friend to foe for Europe. Or at least someone who doesn’t care about our (common) well-being. Doing the wrong things for the wrong reason. Get me right. As everywhere there are good and bad people. Listen to Billy Joel’s Leningrad if you’re thinking different. And the Merkel-government is not any good either. From shining example for development and engineering, “Made in Germany”, we deteriorated into a “back midfield” in comparison to other states and sell out pioneering developments to China and America. And our corrupt government (it’s called “Lobbying”) strangles personal freedom with laws under the umbrella of “fighting terror”. But as I said about the U.S. – it is good to have a global sheriff, but I’m afraid what happens if the government changes and becomes “bad”. Do I entrust atomic warfare to someone like Trump? In honesty, I have more faith in Putin in that aspect than the lunatic in the White House.

So with governments applying the thumb screws on the IT industry, how save is your data in the cloud?

Privacy

Big Brother watches us and all governments (including the German) undermine privacy and invest heavily into technologies and change the laws to enable further invasion of privacy and inside your own four walls. You trade in convenience with privacy.

The DHS in it’s early days seized the computer of the top-level representative of a large European aircraft maker. In direct competition to date with that U.S. aircraft maker. When the manager denied giving the password, he ran into major trouble, missing his connecting flight. Not given a written confirmation that the content of his laptop wouldn’t make it to the U.S. competitor… That was “friendly” America – not Russia, where I never experienced “security issues”. My computer is secured, my data is not on the computer, only what I need enroute and that’s encrypted on the drive.

Summary

My personal summary is what my friends at ASRA called me paranoid upon my presentation 2007 (a dozen years ago). I am not, but careful. I am a public persona on the Internet. But thinking about governments hacking, falsifying and abusing data, who do I trust my data to? Think about the discussions about Huawei and 5G, do we trust them? If we would use encrypted data communication by default, Tor Browser, SSL, encrypted mails, Huawei would be a no-issue. But I still know too many companies first hand, not using contemporary anti-virus software on their mail servers and mail accounts. Trust Microsoft Onecloud? Apple, Dropbox? No, not really. Trust my own cloud? No, any system can be hacked. Can I protect myself 100%? No. But I can make it more difficult.

Commercially, I believe it a step back to use SaaS, which is another word for “cloud computing”. If you use SaaS, better be prepared and test what happens if the “outsider” provides corrupted data, what happens in case of a link failure – and recovery. Using different computer systems, often lousy connected increases the dependency on “others”. I can’t tell you, how often I was fighting with SaaS-companies to get access to my own data. Or how they imply that “their” data is always superior to anyone else. A-CDM anyone? CRM tools anyone? I am sure you can sing that tune along…

SaaS, Cloud is like a consultant. You use them in two situations. To cover something to complex and specialized needed for a short time that it does not make sense to develop your own know-how on it. Or to train your own to become better on such. Other issues can be to get an outside view – or to outsource blame or the risk of such. In all other cases, I strongly recommend to hire an employee. Hire software companies to provide a solution that fits your own “cloud”. Your IT environment. Use cloud to back up data into encrypted data vaults. But make sure, you have complete access to your information and raw data.

And don’t believe the SaaS-sales people when they tell you that you have all the access to your data. It’s their interest to fix you to their “environment”. And never let you off their hook. And “real time data integration” with other systems is in reality very low on their priority list. Again that question by SITA about the “source of the most common truth”. If data is in conflict most those SaaS, they assume that “naturally” they are right. And ATC, airline, ground handler, airport, government or whoever comes up with conflicting data is wrong…

Food for Thought
Comments welcome!

Side note: I use a licensed Dilbert comic – for private and single use in a blog they charge $35 plus $10 “processing fee”, totaling to $45. I find that rather expensive and counterproductive, sorry that I don’t promote them…

07.11.2019 Distribution, IT, Management, Sales, Values

SEO, SEM – Who Do You Write For?

As many of you know, from March to June, I attended a full-time qualification in Online-P.R. (public relations), online-marketing, search-engine optimization (SEO), marketing (SEM) and analysis (SEA) and online advertising. Sure this was contemporary in an online class room I had to log-in at prescheduled times.

The motivation to do that was an implied lack of online experience, a missing understanding of the intricacies (details) what makes online different from the classic offline. That this was a bold misperception on my own can be seen in the results. All three exams I finished with 100% (grade 1.0). I was mostly unchallenged, contributed to the topics, explained and even on several occasions proved the tutors wrong.

What surprised me most is the fact that there is an industry that claims that this is all new and you need all new experts and agencies doing it for you. But if you properly learned your business, it is nothing new at all. The rules are all the same! In addition, I found there is simply an industry implying and claiming value where there is none. We talked and learned a lot about analysis, but you can analyse yourself to death. To do an analysis of one simple “advertising” or “website optimization” for the search engines took hours. Aside the need for external (mostly paid) services.

Google Analytics vs. Matomo

I still believe, the tutor on search engine optimization and analysis has been paid to use certain tools. There is no alternative to Google Analytics? Feed the big monster your internal data? By adding Google Analytics, Google learns about “hidden pages” and if they are not password protected, Google can (and does) parse them. Yes, I know many cases where Google had access to pages that were not linked elsewhere. Funny as that is, I have my browser to only accept cookies from the website I visit and not from “third party websites” (like Google Analytics). A not uncommon setting That results in an offset with Google, counting me again and again and again.

Instead of Google Analytics, I prefer Matomo on Premise analytics. They also offer “in the cloud” (on Matomo servers), but that results in the same shortcomings as Google and comes with a price tag. So if you want to become independent of releasing sensitive information to Google, go to Matomo on Premise. If you use WordPress, they are in the process (Beta testing phase) for Matomo for WordPress, which I am about to test on this blog.

As Matomo runs on your own server, the cookies work properly an the analysis are as good – sometimes better, sometimes worse, just like the difference between Apple iOS and Android or Open Office vs. Microsoft.

Who Do You Write For?

If you have subscribed to the RSS or follow my posts on LinkedIn, you may recall my note on the June-post, which I “optimized” for Search Engines (aka. SEO). And analysed. Funny as that is, the website did not appear much better in the real world search engines. Slightly maybe. But I got quite some feedback from my friends reading this, that I shall go back to write “my style”.

Search Engine Analysis

I somewhat expected that, but was quite shocked to the extend of the quality (or lack of it) of search engine analysis. While we looked at real websites, analyzing using several different services (including Google Analytics), we could create success by the selection of analysis results. It was another fantastic example on the proverb usually (incorrectly) attributed to Winston Churchill: “The only statistics you can trust are the once you falsified yourself”. Presented then to managers without the experience, it all looks shiny and good, but is simply Hokus Pokus.

The Fairy Tale of Reach

How do you qualify “Reach”? By the visitors? See above on Google Analytics relying on IP and Cookie – a cookie they never get in my case. At home, I have a new IP every 24 hours (thanks to my internet provider). Talking to Marketing Managers, I keep getting the confirmation of what I learned in the early days of Internet. In the GDS and first online tools we talked about the “Look to Book Ratio”.

In the good old GDS era before Internet, a travel agent looked up an availability (for a flight, hotel, rental car, etc.). Talking to the customer, the booking was confirmed, a “look to book ration of 5 I believe to remember. At the dawn of online travel booking, the processes got instant. First the availability. Then a booking. But to book, the availability was redone. And that is just the tip of the iceberg of the complexities we (I) resolved developing the first online booking tool in Europe. The look to book ratio exploded. Even adding sophisticated caching (reuse of data), the systems had to “evolve” to manage the increase in processing power needed.

But how does that compute with “Reach”? Reach are generally unique visits. Some SEA-experts use simple visits – every time someone visits or revisits a website or page. Even with the more accurate unique visits, a visit does not tell you anything on any revenue being generated. Except if you use banner ads and get paid by vistor. Aside visits, there is clicks. Most advertisements are “per click”, at least that brings a visitor to the targeted website. But while P.R. and Marketing are not Sales, they are not an end to themselves but must result in promoting the product and services and generate revenue. I know many P.R. and Marketing Managers (and their bosses) not understanding the difference.

If you believe “Reach” is your goal and you value “Reach” above all else, I hope that that reach results in revenue. And you can have the best reach with no revenue. So I call reach a fairy tale. In the end, it is all about revenue. For sales, not only the price counts, but also brand, reputation and being in the mind of the customer. But it all boils down to being where the customer is when the customer needs your products or services, to be in the mind and to come up.

Key Performance Indicators

I think this time we got the numbers right … we just don’t know which ones to use.

What are your KPIs, your key performance indicators in Marketing and P.R. qualifying success?

As a Chief Marketing Officer of a now bankrupt airline recently told me: “In Marketing KPIs are a smoke wall. Do you truly believe all those haters visiting your website are lovers? How can you distinguish visitors?”

They had all followers, all fans, all visitors – but not enough sales. Marketing is long term, make sure you’re seen, together with P.R. looking after your reputation, that it is good, but in the end, if they don’t steer sales and help to improve revenue, you can shunt their KPIs. Even “reputation” and “visibility” are only means to generate sales.

If you reach the wrong people, they don’t mean anything. So what’s your KPIs and are they clear? “The good ones in the little pot, the bad ones for your little crop”.

And our tutor showed us how to tamper the statistical outcome in your favor by selecting what confirms the wanted result. I call that cheating your bosses…

Summary

Wow, I already had five super discussions... -- Don't worry, I've not sold anything either...! — Wow, I already had five super discussions… — Don’t worry, I’ve not sold anything either…!

Talk to me if you are interested to discuss this. It’s a complex topic and can (and does) fill books. But to boil it down, the rules of engagement are the same on- or offline.

KPIs were in use long before Internet and mostly used as misleading as I see those agencies use them. And there is a very strong tendency by those agencies to justify their overvalued work as valuable. So they try to tamper the KPIs and the statistics in their favor.

Who do you write for? What is your goal? How can you reach the customer, spread your brand message, stimulate sales and reputation? If you look at it “academically”, you can spend your time analyzing your efforts to death and beautify the results to your liking or the one of your superiors.

Or you get things done, use two or three tools for analysis and make sure you understand KPIs and use them meaningful.

Sales will hardly work if you have no marketing, nor P.R., advertising and branding. But don’t overdo it. And don’t split them up, they got to interact and work together for a common goal. Revenue. Income.

Food for Thought
comments welcome!

04.08.2019 Aviation, Management, Values

#flygskam (FlyShame) Reality Check

All the industry discusses #flygskam (flyshame), but even given sound studies disqualifying the topic, our own lobbyists fail to organize a concerted response to the case. Let’s have a reality check…

There were some reports recently on German television and in the media. German “Welt” (TV + newspaper) reported “Green (party) Demands: Climate Sin Domestic Flight? Abolition Hardly Saves CO₂“.

The use of ships to travel from Scandinavia or Britain to Europe or crossing the Mediterranean I think I don’t need to remind of the extreme emissions of cruise and other ships?

Rail Greenwashing

But there was another article even more to the point: “Where there is a will there is not always a train“. But there are some issues that are unrealistic. The numbers of German Rail are biased and greenwashed. They claim to use only “Green Power”. But in fact, published by the German Federal Environmental Agency, their power comes from the public grid and no matter what “deals” they do, it is grid power. And on the grid, in 2018 only 16.6% has been “Green” (Source). The energy industry accounts for 85% of all Greenhouse Gases of which 98% CO₂, the remainder being mostly Methane (CH₄) and nitrous oxide (N₂O) (Source).

The Myth about Green German Rail — [Image with Link added Oct.21]

So in fact, the amount of greenhouse emissions by German Rail are considerably higher than advertised. As a report from 2018 shows, we talk about up to 83% “dirty energy” on the “green” energy companies… So if we increase the “public” German Rail assumption of 36g per km (greenwashed) and adjust it to reality, we talk about +200 g/km. Suddenly the published 201 g for flights is not so bad at all!

But what also needs to be taken into account is the emission per passenger. Be it rail, in average used 22% only, whereas those passengers are mostly commuters, filling up the trains above their limits in the rush hours. That is not only true for the commuter but also the long-haul routes. This year, the long-haul trains’ punctuality was only 69.8%. For 2018, German Rail reported 16 routes operating above capacity – passengers finding no seat being just another annoyance, half of the delays are a result of those overused routes. That 20% of the trains are in (often unscheduled) repairs, toilets and air condition known to be out of service just being others. Just a reminder, the average load factor of flights according to IATA is about 85%.

e-Mobility: Battery Greenwashing

Given the devastating destruction of the natural environment in Lithium mining, I do not understand that politicians push forward battery-based e-Mobility. Using fuel-cell technology we can use the existing gas stations infrastructure. Refueling takes only about five minutes! And given a broad use will lower the prices and make the technology available on smaller cars too. They can even power scooters, so don’t tell me it doesn’t work for a compact car!

Instead they promote an ecologically catastrophic technology with a completely missing loading infrastructure…?

More information I addressed in September 2021 in the post The e-Mobility Lie. Inspired by a documentary by German ZDF’s Planet(e): Mythos Elektroauto (naturally German). [Added Oct.21]

Ground Sealing

There is an important advantage of air travel to both rail and road that is frequently not addressed. The issue of ground sealing!

Airport

For an airport, about 2,500 x 45m are typically “sealed for the runway, in total about 3,000 by 400 m are required for a regional airport, of which only 25-30% of the ground are “sealed” by infrastructure, 70-75% being grass areas. So we talk about 400,000 m² of an average regional airport being “sealed.

Highway

A highway with four lanes is about 31 m wide with about 24 m being sealed. A 50 km highway such seals about 1.2 million m², so three times as much as a single airport. Highways are known to be an insurmountable obstacle for wildlife.

Rail

For Rail we talk about a minimum of 12 meters sealed width for 2 tracks, up to 20 meters on high speed train routes and and average of about 15 meters. So on 50 km of rail we talk about 600,000 m² of sealed ground. Before we start talking about the railway stations…

Ground Sealing Summary

I don’t have the number, not even for Germany, but it might be an interesting comparison for the aviation industry to compare the total ground sealed for highways (not talking about cities) and rail, compared to airports. I think that will be a devastating result for the ground transportation modes.

My hope on rail is that hyperloop we will not seal more ground, but will be established underground.

Bio-/SynKerosene

Yes, I am a big fan of the CO₂-tax. If it is used to compensate for bio- or better SynKerosene! So far, all eco-taxes are abused to cover up for growing demands of the policos for their “other agendas”. But did you know that the German air traffic accounts for less than 0.3% of the CO₂-emissions in Germany? (Source)

National Geographic last year reported about a development by Canadian Carbon Engineering, using CO₂ with hydrogen (H₂) to create artificial kerosene (and gasoline). Whereas there are industry sources to provide excessive CO₂, hydrogen can be created using solar parks. The resulting bio-kerosene is an independent power storage. As the CO₂ from burning that bio-kerosene equals the amount that was used from the environment, it is a completely climate neutral solution. And using solar energy for the electrolysis and the power needed for the processing, there is a power loss, but that is ecologically irrelevant.

But… Why do the media and politicos actively neglect those developments? Why do they go for dirty Lithium?

Summary

So what is the reality check for #flygskam (flight shame) vs. the “green rail”? Green rail is a myth, the power consumption not close as “green” as they say. Considering the ground sealing also favors aviation. And should we in aviation invest large scale into bio-kerosene, lowering the prices to competitive cost levels, replacing crude-oil-based fuel… A CO₂-tax such might be an enabler for the conversion. If our lobbyists would show balls, which I’m afraid from experience, they don’t have.

But sustainable transport, including air transport is acknowledged as an important factor in the United Nations Sustainable Development Goals to develop regions, counterbalancing inequalities and disparities!

I think it should not be aviation bashing, nor should we greenwash rail, but we should develop a sustainable transport network for everyone. Connect individual transport to rail, hyperloop or flight. It is the mix we need, not enemy stereotypes! And we need funds to support strategic projects selected, not the ones having the biggest lobbies. And “batteries” are no solution but a pest! Lithium mining destroys the planet!

#flyshame is out! Flying is a vital service for a global world. To disqualify it with false facts does not help to make our world a better place.

#railshame is my new buzzword!

Food for Thought!
Comments welcome…

08.07.2019 Aviation

The Crystal Ball: Aviation Reloaded

“Our Heads Are Round so our Thoughts Can Change Direction” [Francis Picabia]

The last weeks, I read a lot of articles about the future of aviation, changes, ideas and how “creative minds” evolve the business model (i.e. Forbes). Evolve. Not change. So they jump short! There were quite some ideas – 30, 60 or more years ago, that are still good, but the politicos clinging to the status quo delay the necessary change.

Now this week a study I saw on TV (in German) questions if we can still stop climate change. Given the melting at the poles, white, reflecting ice is replaced by black residue and dirt, heating up the poles and speeding the ice melt.

Planning the start of a “new”, different airline model, I know I can’t yet start the change, but yes, I can promote it. And ready myself for it. And do what I, me personally, to make the airline as “green” and sustainable as possible.

So that said, what do I see for the future of “Aviation”?

The Electric Flight Bubble

As much as I liked Zunum. The use of batteries in my opinion is a bubble. The economic foot print of batteries is catastrophic. Read about Lithium mining, it’s horrific. Also Lithium is in limited supply and the abusive use without proper recycling shrinks that supply further.

Either some smart minds come up with an eco-friendly, high-energetic battery, or I see that as an interim bubble that will keep some people busy, but has no substance for the future of aviation. Or transportation.

Just mentioning, using electric is no issue for trains though, as they do not rely on batteries.

Hydrogen, WIG + The Offshore-Airport

My answer is more the development of solutions based on hydrogen! As part of my research on the viability of the H₂-WIG (2008), I found “electric” completely insufficient even on short flights, the batteries not holding long enough. But given existing H₂-engines (Mazda, BMW) and the ability to catalyze from water using solar energy, the business case made so much sense that we discussed it with Maldives and Virgin Green Fund. Until Lehman busted the idea!

Discussing that project, I learned also about the idea of the “Offshore-Airport”. Global hubs usually are connecting airports, the minority of passengers ending their flights there. What if you develop a “floating” airport, using aircraft-carrier-sized connected pontoons. By sheer size they stabilize so that aircraft can safely land even during a storm and very rough sea. From the Offshore-Airport, you could connect the neighboring harbor cities with the WIG.

As I wrote this, I was referred to an article about Liquid Hydrogen Powered Aircraft, so I am not the only one thinking that.

Long Haul Ballistic Flight

Another idea, I think originally got published by Arthur C. Clarke or Robert Heinlein, was ballistic flight. Using an electric catapult, like on a modern aircraft carrier, just much, much larger … You can shoot off ballistic aircraft virtually around the globe, creating a network of strategic global connections. In fact, I recall those having been built with large hills or mountains to give the “bullet” the upward angle into high altitude and the catapult to be “common use” likely needs some kilometers of launch run to reduce the G-Force on the passengers.

Hyperloop

As trains, Hyperloop has the opportunity to use electric power without batteries. I assume Hyperloop will use magnetic propulsion and connect large centers. In the very long term, there will be Hyperloop routes taking over train routes between secondary centers. But trains, as well as Hyperloop will require a fixed routes. So they will not and cannot replace regional flights or individual transport very quickly. But in a hundred years?

It’s a start.

The nice thing about that concept is the tunnel system, allowing hyperloops to operate weather independent at high speed underground, connecting the cities.

Side note, the concept of Hyperloop resembles rather closely with the concept visualized by Roger Leloup for his Yoko Tsuno comics back in 1972. And there’s Science Fiction books (from scientific fiction) addressing magnetic tunnel rail long before that.

Regional Transport and The Last Mile

For regional transport and the last mile, there was a recent development in Christchurch, New Zealand. The development of autonomous transport (called Ohmio Lift), that can be combined with additional such vehicles into “trains”.

If you have “cars” like this for 4 or more people with seats and baggage space or for short hops with standing passengers holding i.e. onto poles, depending on the demand, you could pick up the passengers on fixed routes or centralized parking lots at their homes. Once entering the transport grid, integrating on busy routes into “trains”, connecting to the hyperloop station or regional airports. On regional routes, entering a “highway”. Approaching “home”, the vehicles automatically detach into individual transports connecting the hold point for the traveler, then picking up someone else or returning to the garage for servicing or waiting for the next peak demand.

Autonomous Flying

Way before another century is over, I expect pilot free flying. Given that drone operators can operate military drones on the other side of the world, those drones taking off, flying and landing completely autonomous, what does that mean for civil aviation? Air taxi drones are in the making.

Sure, I predict the next step being the removal of the co-pilot from the cockpit, replaced by a drone-pilot. Followed by redundancy of the pilot-in-command. Giving the entire aircraft to the computers, once the systems become fail-safe, with a back-up for the rare cases needed by a drone-operator. Getting a classic cockpit view sitting far away in an airline operations center.

#flygskam

After I addressed Greta Thunberg in Cognitive Dissonance Resolution last March, since #flygskam (FlyShame) evolved. And I was asked to address it.

In my opinion, it will be a short-lived circus, once we start to bring them back to reality. Because the reality check shows the hypocrisy of their arguments. Yes, take the ship to travel, as if they wouldn’t be known to pest the air with their Diesel engines…? Take the train. Where trains are available, that is. If not, sure you take the bus. Compared to the latest aircraft with contemporary engines, that will not be so eco-friendly either. Yes, I’ve seen those “fake statistics” that don’t take the secondary effects into account, like ground sealing building highways, the cost for lithium mining, for recycling.

Aside the time it takes to travel.

What about the rural exodus? More and more people move where they find work. But they also want to travel home to meet their family and friends. Would they want to take the bus, loosing precious hours? Or would they want to fly quickly home for a few days? Yes, I recall the “Mediterranean Völkerwanderung”, friends of mine traveling by car to Italy or Yugoslavia or Spain… The good ol’ time of the “Bully” Volkswagen bus.

It reminds me of my time at Erfurt-Weimar Airport, the “green heart” of Germany. Where the PTBs (powers-that-be if you know me) didn’t support the scheduled service they paid, but flew from Berlin instead, where they didn’t fund setup of a reasonable route (ERF-AMS) but simply cancelled the ERF-MUC flight without a replacement, such taking the airport of the public aviation grid. The “green heart of Germany”. Overgrown with moss.

There is a need and demand for contemporary air travel. And once more, let me remind you of the map image I keep posting, the overlay of purchasing power and airport locations in Germany. Sure, a hen-egg issue, but if you don’t start, you’ll never reach your destination.

Food for Thought
Comments welcome!

21.06.2019 Aviation, Low Cost

Quo Vadis Aviation

Side Note

Dear Readers. I’ve spend a quite large amount of my “free” time on qualifying myself on online-PR, -marketing, SEO, SEM, SEA. All those buzzwords that I summarized a bit in the new SEO-optimized page Unhyping Online Marketing (SEO SEM SEA). So I didn’t have spare time to focus on the topics but made note, what to address in the upcoming blog posts.

As I told a friend, it mostly scratches on the surface only, where I could pour some salt into open wounds. Most fun for me was to make that article SEO-perfect, though it does make it a bit hard to read… And it became so much, that I decided to put it in a page, not a blog article (post). If you didn’t read it yet, if you’re in marketing or online, you might want to after reading this post.

What did trigger is the statistics on active users vs. leechers. I know a lot of you read, though most of you I don’t know who you are. I sure do appreciate anyone “outing” themselves to me that they read my blog. Send me a mail to juergen at barthel eu if you don’t want to comment in the blog.

Quo Vadis Virtual Airlines?

Many new airlines come without business concept. What is the business model? What is the USP? Have you made a sincere SWOT analysis? Know your internal and external strenghts, opportunities, weaknesses and threats? Or do you believe with a small, leased fleet, paid maintenance, some commercial off-the-shelf software and some flights in summer to the secondary holiday destinations you can stand up to the existing big airlines? What’s your niche and is it safe and sufficient enough? Else, you simply build up a market for the big ones and find yourself pushed aside – another “victim” to the ongoing consolidation. Nothing new. Nothing unexpected.

There is the saying about how to make a million in aviation. Start with a billion. While I believe with a billion you can achieve something, the usual “airline startup” is 2-20 million. One or two leased A320 or B737. I call them mayflies. They fly one (high) season, maybe two. Then they have no more funds to sustain another low season and “fail”. A failure with prior announcement.

Regional Airlines vs. Low-Cost

Discussing “Regional Airlines” and “Low-Cost Airlines”, all the “experts” keep separating the two models. What they fail to see is the role of low-cost airlines in the regional aviation market.

“Regional Airlines”

The common “definition” of regional airline is to fly small aircraft, up to 100 seats. Often in a mixed fleet. Always at a high cost per seat. So the tickets by nature are and must be more expensive.

“Low Cost Airlines”

Different from Regional Airlines, the Low Cost airlines fly Airbus A320- or Boeing B737- family aircraft with 150 to 200, recently implementing even larger A321 and B737-9/900 with up to 240 seats.

Regional + Low Cost

Both airline types have something in common. Both fly point-to-point. Both classically focus on short and medium haul.

Both also establish some connecting services as their hubs. And airlines like FlyBE try to reduce the cost by using a single-type-aircraft fleet like FlyBE’s 54 Dash 8 Q400, though they have some other aircraft too. Air Baltic converts to a single-type A220-300, their CEO expressed even adding the A220-100 would complicate and increase the cost base. But the choice of aircraft defines the choice of airports and routes. Which leads to the next topic of this article:

The Passenger Airline Food Chain

30+ years ago, when I started in aviation, there was a very clear “food chain”. First came general aviation and holiday charter flights, feeding the demand for certain commercial routes or holiday destinations. When those flights became successful enough, they lost to regional airlines providing scheduled services at fixed times between A and B. The larger holiday charters lost to scheduled airlines and network carriers, taking over those lucrative routes. At the end of the food chain were the large network carriers, connecting smaller cities to their hubs and through the hubs connecting to the world.

Then came the Low-Cost carriers. And everything changed.
… Everything? Really?

The Rise of the Low Cost

So the model of the Low Cost Airlines was to use a single type aircraft fleet, such minimizing the complexity to operate the fleet. Be it exchange of broken aircraft, be it flight crew training (cabin and cockpit), maintenance, etc. Using the highly effective new Boeing 737 models, later also the A320, they focused on one thing. To provide the lowest cost per seat and such undercut the prices that the network carriers with their far higher complexities asked for.

They did not bother about the complexity of hub-services or – god beware – “interlining”, requiring baggage transfer, the need to secure the connection for the passengers, they connected secondary airports point-to-point. Just like the regional airlines, but at lower cost. All they did in fact, they cannibalized the upper end of the regional airlines and also competed with many regional flights of the network airlines. Given their USP of a very, very low cost per available seat kilometer (CASK) or mile (CASM), they covered their niche well and ate away from the profits of both small regional airlines, as well as the large network carriers.

Regional Airports vs. large Hubs

In the past, there was a clear distinction. Regional airports were small airports that were connected to the global air traffic networks by being connected to the hubs. So a regional airport only served a few scheduled flights, plus vacation charter. I had this concept also at the Erfurt-Weimar airport (ERF) 2009/10. Where they did not even understand their Munich flight they subsidized would connect them via Munich to the world. Cirrus Airlines as the operator was “Lufthansa Partner” without code-share into Star Alliance, not even with other airlines in the Lufthansa Group, so all the airport looked at was the few “Lufthansa connections” they could offer from their airport via Munich. Of which some even didn’t connect. In consequence, the locals did not look at those few connections, but focused to fly from Berlin or Frankfurt, both three hours travel time by train. Or they even took the train to Munich. If you know the added time you need in Berlin and Munich to get from the train station to the airport, you understand why I got upset. Simply to date my example of a gross misperception and belittlement of the airport’s value. Even worse, on my first day at the airport, I had to read an article in the main local newspaper that one political stakeholder promoted Arab stakeholders to come to Thuringia. By flying to Frankfurt and taking a bus (four hours minimum). Instead of flying via Munich…

Working with regional airports, my experience is a very strong tendency to short-sell themselves, belittle the own region. It is not made any easier that there are virtually no regional statistics about travel demand and the IT “solutions” are being biased to make big airports bigger and neglect the small airports. As I explained in the December 2017 article about the bias of route viability analyses.

Evolution of regional hubs

Especially in Europe, the political strategy about aviation is “thinking small”, new airports like Berlin are planned too small from the beginning. Airports that were planned for growth, like Munich when moved from “Riem” to “Erding” face political opposition to execute the expansion, adding the originally planned runways. Even London, instead of a bold move to establish a new airport, decided to just add a new Runway to London-Heathrow. A move that will quickly face the same problems Heathrow has today, of inheritance in terminal structures, slot constraints, a limit to the expansion. Should Boris Johnson in the recent turmoil follow Theresa May, there are some hopes that he revitalizes the “new airport” idea for London.

A necessary step to compete with the new “global hubs” in Istanbul, Dubai, etc., build to size of about 150 million passengers. Berlin? Build to 27 million passengers, when finally ready one day. Current news questions the next opening data in October 2020… As German “Postillon24” satire site published 2015: Archaeologists discover historical ruins of unimaginable dimensions in the south of Berlin (link to Google translated page in English)…

With the large hubs increasingly slot constrained, i.e. Amsterdam simply “out of slots”, the only way is to bypass those airports and increasingly fly to smaller cities. An example can be American Airlines, adding Dubrovnik on the Balkan Adria to their destinations. Sure, the low-cost airlines have a history understanding the value of point-to-point services between smaller, “regional” airports. Basel, as a first base of easyJet evolved into a major hub for the low-cost airline. Business case given, the operation of a regional hub can make sense… And didn’t we joke about easyX when Air Asia X flew to London-Gatwick with majority of travelers connecting onto easyJet…

So far, many of the “low cost airlines” (i.e. Eurowings, Norwegian) focus on larger airports as their hubs; Düsseldorf, Cologne, Barcelona and the likes. Their decision makers obviously are not bold enough to leave the beaten path and go new ways. Ryanair moved into Frankfurt, but it’s said they are not doing well there. Wizz and others establish small bases in regional airports and then grow them, benefiting both the airport, the region and commerce in the regions. Given the slot constraints on the “mega hubs”, we will see a lot more development of regional airports, point-to-point services and hubs. For those airports and their regional development stakeholders, one of the main tasks is to change the perception from “feeder airport” to a bold understanding of their own values and needs – which directly served regional routes make sense? I know, this is a recurring topic on this blog…

The Future of Airports

My friends at Passenger Terminal World, also doing the Passenger Terminal Expo, recently collected views on the future of airports. Personally, I found those views rather conservative. Very focused on the adjusting the status quo, no bold jumps at all. But for several years, some bold ideas keep resurfacing of which I’d like to address two.

The Circular Runway

The Circular Runway on first sight is an intruiging concept. You could land anywhere, never a “runway overrun”, never the wrong wind direction and while one plane takes off on the one side, another lands on the other. But.

There are some questions that I believe this idea will never make it to reality. Usually, there is a given wind direction and airplanes take off and land against the wind. So instead of a straight runway you have a circular one that allows to take off and land exactly against the wind. While the remainder of the runway remains unused. A nice to have? Or a lot of sealed ground for no gain?

The other setback is if you exceed the capacity. Adding another circular runway? If need be crossing runways use less space and allow parallel operations. # And they can be started with one runway, adding as demand requires.

Given both those issues, I think will be good reason to stick to the existing straight runways.

Drive Through Airport Terminal

The Drive Through Terminal is also an interesting concept that the designers invented for large airports. But in fact, there are a lot of setbacks from such a terminal that make it less ideal for such airports, but more ideal for regional airports. What I like is the possibility of weather independent operation thanks to the roof, as well as the guide rail system to transport the aircraft from arrival to departure.

The first problem is on large airports that there are airline using differently sized aircraft. So you have classic terminals and drive-through ones only for certain aircraft? On regional airports and low-cost airports, the terminal could be optimized for standard aircraft from 70 seats up to A320/B737 families with up to 240 passengers. Should there be a larger aircraft, it can be handled on the apron.

The other problem with the proposed design is the ignorance of what any airport operations manager can sing of: Disruptions during the turnaround. Once the airplane enters the process, there are now ways to replace the aircraft (see image left). On a small, regional airport, that can be overcome rather easily using one or two lanes only, allowing the aircraft on any stop to be “extracted” or “added” into the “line”.

The third issue is the issue of parallel handling, supporting connecting flights. While the first aircraft boards, the other just comes in. But what I think can be a practical approach is to have drive through in a two step process. Disembarking, embarking – go. If there is a problem, on both “stations”, the airplane can be pulled out backwards or front. Several airplanes could be managed in parallel.

The last issue is the passenger facilities, including and not limited to contemporary airport cities

Summary

There are a lot of ideas out there, but the main hurdle is the conservatism. Airplanes to date are serviced on the left, boarded on the right. A relic. But to change such requires not only different airports but also different airplanes. I doubt I will live to see such a change. Other issues can and should come. So I see the rise of the regionals, also the drive through terminal.

Food for Thought
Comments welcome

Back to the introduction. I’d love to hear from you. You can out yourself on mail, WhatsApp, Viber, here in the comments, that you’re one of the frequent readers of my blogs. It is motivational, believe me. And if you haven’t read it yet, you might want to smile about my SEO-optimized summary of three months studies: Unhyping Online Marketing (SEO SEM SEA)

19.04.2019 Values

Goodbye Karl Fisch – Hello Karl Fisch?

It is with serious regret that I just learned (a little delayed) about the retirement of Karl Fisch, author of the first ever YouTube video that went viral having a lasting impact on my life. It became the first ever thing I blogged, when I moved over the first articles I wrote elsewhere to the FoodForThought-blog: Shift Happens Narrated. The post contains a short summary of what led to the story, it is the most-read post on my blog ever and keeps being read 5-10 times every months.

Three years ago, Karl wrote an article on his blog I recommend reading; The Shifty Years.

I hope you understand the respect when I quote another famous author for the farewell. May life treat you and yours kindly!

So long and thanks for all the Fisch (Original wallpaper by redditor RWalsky) — So long Karl – and thanks for all the Fisch!

So Long Karl … Thanks for all the Fisch … And I hope it’s not the last I’ve seen of you! Shift Happens.

17.03.2019 America, Aviation, IT, Management, Values

Cognitive Disonance Resolution

Working this week with a group on topics like P.R. and Corporate Strategy, there are some basic rules, again resurfacing on my conscious thinking…

Two topics were in hot, heated discussion these days, especially when we talked bout Cognitive Disonance: Greta Thunberg and Boeing 737MAX.

Greta Thunberg

Not only in the big cities around the globe, also in towns like Brunswick (Braunschweig), the movement Friday for Future is a root movement. Following the example of a little girl from Sweden, kids go demonstrating around the world to promote the need to counter climate change. In Germany, formerly pacemaker of “green development” the government is way behind their own targets, let’s not talk about the Paris world climate targets. In Tirana, the city “stinks” from car gasoline fumes. Scientists believe it’s not five to, but five after twelve already! We can only reduce the impact, no longer avoid it.

So now, surprise surprise, that kid in Sweden went on the street to demonstrate against the political powers that be (PTBs) ignorance. That action triggered a cord and other kids around the world thought it a good idea and joined in the demonstration. Demanding action to secure their future. And all those PTBs can respond with is that they’d be truants? Their only reason to go on the streets is to be skipping school? That’s all you can come up with? Sure there are the one or other camp-followers, but mostly those kids have genuine concern about their planet.

But their activity provides a good example for cognitive dissonance. They put a finger in a wound that most of “us” adults have long found our way to suppress. Because the information does not compute. We know we kill the planet, but let the others start saving it. What can I do?

My personal answer is to support the kids. To not “look away” and “blame the others”. In German history, our people looked away, the blamed others. It caused a holocaust.

Michael Jackson sang about “The Man in the Mirror” to make a change.

In Germany we had a barrel-burst campaign “You are Germany” – what do you do to make things better?

Interesting, what discussions are triggered, discussing cognitive dissonance resolution and how different nationalities and cultural background result in totally different approaches. In Germany, a typical approach is to dissect good ideas and find faults. Can’t tell you, how many “friends” in the past year told me that KOLIBRI.aero cannot work. It did very often remind me of that favorite quote by Lazarus Long (a Robert A. Heinlein character): “Always listen to the experts! They tell you it is impossible and why you can not do it. When you know that: Go Ahead!

Boeing B737MAX

Another very good example and discussion topic this week about cognitive dissonance resolution was the Boeing B737MAX.

Our industry always promotes Safety First. But I have a lot of examples that our industry works on the limits, hoping for the best. Be it my recent post about disruption management or the managing of airport turnaround (A-CDM), we all know that we do not work efficiently. But cognitive dissonances often result in ignorance, suppressing conflicting information. We know the truth, but we suppress it, give ourselves explanations to justify the shortcomings.

Now there was another crash of the Boeing B737MAX after Lion Air Flight 610 crashed in Malaysia half a year ago (29Oct18). While there are also “supporting reasons”, as usual a chain of events that leads to disaster, I personally believe it was mainly the ignorance of Boeing engineers, developing an MCAS, not informing pilots about such an important design change. Combined with a semi-religious faith in their technology. But I believe computers are there to assist us. I remember the Air France flight 447, where the instruments showed wrong data, switched off the computer, in result the flight stalled and crashed into the the Atlantic. We also should be reminded about the “unsinkable” Titanic.

After the recent crash in Ethiopia, there were calls for grounding of the aircraft instantly, given the similarity to Lion Air 610. It is noteworthy and was discussed very controversial, that our own minister responsible for aviation voiced against a grounding, only to be overruled by EASA. But neither America, nor Europe responded “safety first”, but focused on the commercial impacts of a grounding instead. Meanwhile even the U.S. under Donald Trump confirmed the necessity of the grounding and aviation sources expect that grounding to take on for several month. Which does remind again of the pioneer in jetliners, the de Havilland Comet, loosing three aircraft in nine months, which lead to understanding of metal fatigue on the air frame called by the way the metal was connected using bolts – creating micro-fractures.

Oh Gawd... Helpdesk: Final Level. Pray — Boeing MCAS development

Now Boeing implements a new technology to cover up for the new behavior and instead of being transparent, they hide. Then the sh** hits the fan in Malaysia. The event now shows that Boeing did not operate “safety first”, but mismanaged it by delaying the necessary update. A result of cognitive dissonance resolutions? It must not be, so it is not? That backfired now and is a rather pathetic expression of professional disaster management. That the U.S. and Boeing had to be “convinced” to ground the aircraft has proven a big mistake. Today, the media reports that the Ethiopian officials confirm a very similar situation and “many parallelisms” to the Lion Air crash.

We cannot and must not operate on the Principal of Hope! An airliner recently posted that we need a crash to change something. I disagreed, but Boeing did itself and our industry a major disfavor to the reputation of aviation safety. Media today also refers back to the 787-incidents and grounding resulting from batteries catching fire. What I do not understand is that following Lion air Boeing P.R. obviously did not develop a “worse case communication plan”.

From Wikipedia: “On March 11, 2019, in response to the Lion Air and Ethiopian Airlines accidents, China was the first country to order all 96 of its 737 MAX aircraft grounded. In the days following the Ethiopian Airlines crash, airlines and authorities around the world suspended the operation of Boeing 737 MAX 8 aircraft (or in many cases all 737 MAX variants) one after another, contrasting with the usual coordinated approach. Two days later, the U.S. Federal Aviation Administration […] became the last in the world to ground the aircraft, reversing its previous stance. Boeing eventually recommended the grounding to the FAA.”

It must not be! It cannot be! So it is not.
Cognitive Dissonance Resolution at work…

Food for Thought
Comments welcome!

06.02.2019 Aviation, Europe, Low Cost, Management, Values

Aircraft-on-Ground, Disruption Management …

… and the Ongoing Demise of Small and Mid-Sized Airlines

P.S.: While I wrote this article, Germania, an airline that I know from the beginning of my career, who’s team I booked at American Airlines to Seattle to pick up their first 737s, an airline I have had a personal attachment to, went into insolvency grounding all aircraft after many years of financial losses. The demise of Air Berlin 2017 brought easyJet on their home-apron in Berlin in force, no longer some competition, but clear one-on-one. Such the chance to establish lucrative routes in Berlin evaporated. Instead of benefiting from the demise of their largest local competitor, Germania had to sit aside, watching the threat growing.

Germania did, what they had to do, they focused on niches. Niches that were too small, to fragile to give them safety. Routes they developed well always threatened to be taken over by their competitors operating with lower cost. Erbil, under threat of war, Beirut, …? They announced a base in Pristina (Kosovo). They ordered A320neo, in an attempt to stay somewhat competitive to their competitors like easyJet also introducing the modernized aircraft. Else they operated tourism charter flights – which are in great demand in summer, but one after another airline in that market files for bankruptcy at the end of the season. And Germania published financial troubles as early as August 1st, 2018. So they could not do what needed to be done: Generate enough money in summer to succeed across the harsh winter.

You cannot succeed if you play it small, if your cost is not competitive to your competitors. Not the small virtual airline competitors, the other “day flies” lasting one summer season, two at best, but the big ones. The easyJets, Ryanairs, Wizzes, etc. It’s not fuel cost development that kills you. It’s bad management. It’s a strategy without USPs or with very weak ones – there’s reason, the other airlines don’t bother the routes Germania did.
And as I outlined in an article I published on LinkedIn, this was no sudden issue, they lost money for years!

As it is being said, the unexpected increase on EU261-expenses, the “EU passenger rights” also had it’s impact on the financial situation. If you sell a ticket for € 100 and you must compensate € 300, it does impact your revenue. So back to the topic – flight disruptions.

Having worked last year on the business plan for KOLIBRI.aero as well as on projects related to Airport and Airline Operations Control Centers, flight disruptions have reappeared as an ongoing topic of increasing concern. And my experience doing a study a few years ago at delair together with Zürich Airport (ZRH) about the impact of the deicing forecasting and management tool on Swiss (airline) operations at Zürich became a strong source for my advise to airport operations managers.

When working with ZRH “Ice Man” Urs Haldimann on the study, I also got some feedback from Swiss. While managing the deicing in winter is not that much a problem, neither airports, nor passengers understand the rippling effect to the schedule. And often enough, not the airline’s own managers. That in the evening in warm Mallorca, the flight may be late, because of a deicing delay in the morning. So while higher force is accepted for the flight cancelled in Zürich, very often, the airline is required to pay EU Passenger “compensation” multiple the price for the ticket. So a major delay can be far more costly than just related to the immediate flight.

The harsh winter 2013/14 in North America (as likely this recent one) became known in the deicing industry as the Polar Vortex. The accumulating delays forced JetBlue into a “two day network reset”. Crews and airplanes were anywhere but where according to schedule and crew planning they were suppose to be. It took the better part of two days to relocate aircraft and crews back to the planned position, also to make sure the crews received their legally due rest, to then start the new day with a fresh start. As needed as that decision was, imagine the impact to passengers on flights that are booked usually 80-90%.

Disruptions can also be thanks to airport closures for other reasons, delays can be caused by as trivial as a broken baggage belt, a common thunderstorm or a ground handling crew doing a coffee break in the wrong time window – all things I experienced in my professional life. Flight crew duty times and technical delays are more common. Did you know that the Top 10 of “punctual” airlines have 15-20% of their flights delayed? That means 1 out of 5 flights is late. To “celebrate” such achievement is beyond me, I honestly feel embarrassed that our industry cannot do better! Don’t come with the typical “explanations” covering for the incompetence to do better. Needless to mention that this is about “departure delay”, whereas passengers truly don’t care about those as long as the flight arrives on time, right? I was recently on a flight that left “on time”. Doors were close, the aircraft was sitting at the gate, waiting for it’s slot in the deicing and departure.

More recently, Primera Air, Azur Air or Small Planet Airlines closed down. Cobalt Air followed shortly after I published the blog post. At least for two of those airlines the cause was said by their respective CEOs to have been “unexpected” cost for delays and disruptions. Though not reconfirmed, rumors have it such were also the cause for the financial troubles Germania faced in Mid-January 2019, filing insolvency early February (see P.S. above). “Refund portals” organizing refunds for delayed passengers result in higher number of refunds. Small fleets with no spare aircraft causes the ripple-effect to sometimes swap over into the next day(s).

Lesson learned from my research about Zürich delays: It very often is cheaper for the airline to cancel the flight to make sure the further aircraft “rotation” (planned flights for the remaining day/week) are not impacted. Especially if i.e. winter operations allow for “higher force” reasoning of the cancellation. While the airline can show goodwill and help the stranded passengers, in such situation they are not legally forced to add the legal, excessive passenger compensation for delays. It also in fact reduces the overall passenger upset. And Zürich can predict the delays!
What I expected quite a while ago is the information of upcoming delay situation to the inbound planned airlines. The example I keep using: Once Zürich (or any other airport) learns about arrival-, turnaround- or departure-delays would inform KLM before their flight leaves, that it would likely develop delays in Zürich and may have an excessive delay departure, maybe KLM would cancel the flight?
The concern: But if those airlines cancel their flights, then the flights will leave early, so KLM could operate on-time…?
Ain’t that shortsighted? Oh holy dear Saint Florian – don’t burn my house, take the neighbor’s one…
So what would be needed would be a bonus/malus system. If an airline “volunteers” for the sake of the overall operation, to cancel a flight in such a situation, maybe it’s relatively empty, could be merged with the following flight – the airline gets a priority the next time, so the full flight gets an on-time departure. An airline deciding not to join that system will never get prioritized and take what they get – including the delays.

Another ongoing discussion is the promotion of the big players for “SaaS”, Software-as-a-Service, more commonly known as “Cloud Computing”. What in my experience lacks of one vital thing, the fallback for a “line down”. There have been three cases that I (just me) know of last year, where line-down caused major flight delays. Because there is no fall-back in place.

Delta takes weather seriously, with a team of 20+ in-house meteorologists (Photo by Darren Murph / The Points Guy) . Taken from Daniel Stechers LinkedIn article.

That problem is multiplied by data silos. As Daniel, VP at IBS points out, there are too many screens an operations manager in the typical airline Operations Control Center (OCC) or also in the AirPort Operations Center (APOC) have on their desk, using old-style Gantt-charts, weather maps and other “sophisticated tools” that show them what happens out there. Very little tools that analyse the data automatically, giving you decision support on a disruption. Or warning you of potential disruptions giving you decision support how to avoid them.

While we do need to replace those multiple screens with dashboards, highlighting what to look at, I disagree to some extend with Daniel’s implications, as I believe we will need to be able to expand from the problem, onto the relevant Gantt charts, graphs, tables and maps. Worse in my eyes is the underlying reason for those screens, as they are clearly attributed to data silos. And if the left tool does not know what the right does, if the airport, the ground handler, the airline have different “realities”, no wonder we have friction that results in ineffective operation causing “issues” and delays. As I mentioned in my article about APOC, OCC, NMOC five years ago. And if I ask about interfaces and am told “XML” or “ASCII”, we talk about triggered “push” or “pull”, but not about a live interface. Another data silo.

Coming back, to close this FoodForThought-article, let’s come back to Germania and other airlines which we have lost recently. If you have no assets (aircraft leased or sold/leased-back which is the same), if you outsourced everything (to which I include “cloud”), if you don’t have “spares” for covering up disruptions, you make a very good business case on the old joke: “How do I become a millionaire in aviation? I start with a billion.” Or the other one: “Saving, no matter the cost”. It’s called a “virtual airline”. And I predict we see increasingly those virtual airlines to fail, as they lack size, assets and revenue (RASK) to compete with their competitors.

Food for Thought
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