CheckIn.com turned into side business

Almost three years since our launch, we could not make CheckIn.com a full scale business.

We knew that targeting airports would not justify the development and were confirmed – airline use is more than 10 times of what airports use our tool. Unfortunately, the majority use is access to our free data. Approaching the existing users, they have no money for such information, though they confirm the value in their day-to-day life. Even a SVP Network Development of a large airline, praising me for the unique value of our tool, knowing from the analysis we keep maintaining for him, that many airports use false “facts” for their catchment areas, confirms he compares with our data as an indicator to the quality of the airport data.

But nevertheless he expects the airports to deliver the (biased) information. “In the end, it’s a look in the Crystal Ball”. Expressing the fact that he does not understand the value of good data, even for the look into that Crystal Ball. Garbage in – garbage out.

Unfortunately, only the network departments of the smaller airlines frequently access our airports, but we suffered some painful losses on the larger airlines of which two have started to use our data. The large airline having recently expressed some interest and receiving some “combined” analyses, now having turned down the discounted flat offer we made. Such we decided to unregister the company and run it as a personal side business only. Yulia takes care of that, I will focus on other projects and only help on demand.

If you need know how in airlines, airports, specifically corporate strategy, marketing and distribution, disruption management you might want to talk to me…

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Primera Air, Azur Air, Small Planet Airlines – and the dying continues

After the demise of Air Berlin, forced by Lufthansa and incompetent if not corrupt politicians, we lost Monarch last fall, but the dying continues. This months we’ve been all “shocked” by the demise of Azur Air (Germany), Small Planet Airlines (Germany) and now Primera Air.

Interesting: None of those airlines had any relevant material assets. Working with leased aircraft as most airlines do today, it minimizes the cash-flow. And aircraft are almost not available for purchase, large aircraft leasing companies and the largest airlines dominating the market. No, neither Primera, nor Air Berlin “owned” aircraft. They were all leased.

Whereas Air Berlin struggled, there was an inherited business model that even ambitious CEOs could not overcome. What was Air Berlin? A holiday charter airline? A low cost airline? A network carrier? While Air Berlin tried to be all of that, they failed to be either “properly”. In a competitive, over-saturated market a death sentense.

Now all those airlines have operated Airbus A320 and/or Boeing 737. An aircraft in surplus, a saturated market, flooded not only by the aircraft makers but also by lease offers from the low-cost airlines seeking utilization for their own surplus. And while everyone wants aircraft in summer, the eroding revenues do not pay enough for those airlines to survive the winter. I learned so long ago, an ice cream shop needs to create enough revenue to survive the winter.

And while aircraft lessors add more and more Airbus 320 and Boeing 737 to their fleets, airlines are established without a long-term concept based on clear USPs, those airlines lease the aircraft out in summer and … oops. And then they go broke and the aircraft lessors sit suddenly on their assets without income. Even scheduled airlines like Volotea ground their aircraft in winter.

Even if the airline operates successful, after usually seven years, their leasing contracts expire. And then they understand the need to invest into more modern aircraft, so they do not extend the leasing contract but return the aircraft to the lessors. Who now need to find “other markets” to take their aircraft… Often below cost to minimize the losses!

In consequence, the aircraft financial funds are known to suffer from year 7, often generating losses over their typical 10-year duration. KPMG earlier this year said the average return on aircraft fund are 4%. While some do better, many smaller ones fault. Another consequence is deteriorating market value for Airbus and 737 aircraft, also usually starting seven years after the aircraft is sold into the markets.

source Wikipedia
A320neo family orders & deliveries (source Wikipedia)

So one of the reason for failure is the attempt to compete in a shark pond, using the same aircraft than the competitors, copying their business model and trying to find a small niche – that upon success is quickly threatened by the big fish.

Primera Air as the most recent failure tried to convert “in a rush” from a safe holiday charter airline operating secure routes for Primera Travel Group, into an – as aero.de said – copy of Norwegian, flying with the smaller A321neoLR across the Atlantic. But also trying to fly a mixed fleet of A321neo and Boeing 737-800, while having orders out for two A321neoLR and 18 Boeing 737 Max 9. As small newcomers do have problem getting access to the new aircraft like the A321neoLR, of which most go to the largest aircraft leasing companies to be placed into the existing fleets of their large (safe) airline customers. Why would they prioritize newcomers that threaten their existing clients they have long, very long relations with?

But which “newcomer” airline can wait for 10 years (at current production rates) for an Airbus or Boeing they order??? Can you plan what is in 10 years?

Then we come to the flight crews. While pilots usually are either type-rated on the Airbus A320-family or Boeing 737-family, a mixed Boeing/Airbus-fleet either requires respective crews for each aircraft or the cross type-rating. While pilots usually pay for their flight training, in return, they require high salaries in order to pay off for their – substantial – investment. Even Ryanair now faces the consequences of their “outsourcing” and slave-kind payments of their pilots. While I keep seeing their pilots recruiters immediately jumping on Primera Air but also trying to convince pilots from South America or Asia, if they don’t change their attitude to their pilots, they will keep having problems. Their recent announcement to close the base in Bremen and Eindhoven and reduce the base in Weeze are simply puffing. As Ralph Anker showed in his Anker Report. Behind each and every dropped route or base are airports, suddenly deprived from services. And pilots and crews, suddenly forced to find work elsewhere, likely move. Ryanair is the airline that does not care. Europe’s favorite airline? I doubt.

Summarizing, I come back to the point I keep emphasizing. Ever since easyJet (1995) and Wizzair (2003) I have not seen a new airline that had a USP and a clear concept. What is your USP? For the investor, the traveler and yourself? Or are you just another copy, trying to cash in?

I believe A320 and B737 families will hit a brick wall. Investing in those aircraft or airline models trying to operate a few of them is high risk. At best.

Food for Thought
Comments welcome!

Side note: Taking all those “natural thoughts” into account, in a team of experts we’ve developed a business model, that now seeks funding. With a unique concept, multiple USPs and under- if not unserved markets. But that does not work with small money. If you want to do it right and lasting, you need to do it right. And invest. Not just building “an airline”, but focusing on development of assets, as a side-effect securing the returns on the investment. If you know potentially interested investors, let me know and I’ll establish the contact to Kolibri. Or refer them to my call for investors.

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Long-Haul Low-Cost? Supersonic? Quo Vadis?

While we work here on a business plan for a new airline, we did discuss and disqualified many of the existing airline models. Is that negative? Or realistic?

These days some news hit me in short succession, that make me rethink the assessment my friend Ndrec and I made when discussing possible, viable business models for a new airline.

I did the picture above a mere year ago. Meanwhile Niki is gone too, as is Virgin America. Mighty Norwegian being said to be likely acquired by IAG shortly. We have “new” players like Blue Air. But the question for any new business case must be:

What is Your (E-)USP?

Now Ray Webster, former CEO of easyJet opened the Routes Europe Conference with a keynote:

“I don’t see long-haul low-cost as a viable model. Operating a small aircraft across the Atlantic is not efficient, and low-cost carriers aren’t going to fill a 787 or an A380”

Ray Webster, former CEO easyJet

Even students traveling on longer flights do want more services the longer the flight gets.

In contradiction to that assessment, Eurowings now opens up New York-services, taken over from the late Air Berlin operating from Düsseldorf. We all looked at Norwegian, though their “success story” also seemingly was bought on the cost of revenue, the airline now is said to be acquired rather shortly by British Airways/Iberia holding IAG (also owning Aer Lingus).

Whereas I simply do not understand the “brand strategy” of either Lufthansa or IAG…

  • IAG: Aer Lingus, British Airways, Iberia, Level, Vueling … Now Norwegian adding to the mix of “it’s not me”?
  • Lufthansa Group: Air Dolomiti, Austrian, Brussels, Eurowings, LGW, CityLine, Swiss, Sun Express. Also “it’s not me”?

The work on a business plan for a new airline was triggered last year initially by some investors, going down the same “me-too”-dead end using old, inefficient Boeing 737-aircraft. Cheap to get, but their fuel consumptions renders them virtually useless.

BlueSwanDaily believes in the future of Supersonic… Are you kidding me? Yes, I believe supersonic will come, but expensive niche for the rich and wealthy. No real change to the Concorde business model.

I myself worked out a “green” concept a few years ago, but we’re neither getting there… The project got grounded in the wake of Lehmann Brother’s and a world financial crisis and the original interested investors gone never took up speed again. [Update: The Korean Wingship seems a ready-to-go WIG, though using conventional fuel, no green hydrogen or battery powered e-engines]

So we looked at models that differ from the existing ones. Where are unservered or underserved markets and why are they not served well? One issue sure is the airline analysis tools misleading their users to “established routes” and airports.

So we started with the original intent of a small scale operation. And recognized why so many such projects are doomed. There is a pilot shortage hovering on the horizon, Ryanair running pilot acquisition as far as South America and Asia. Most airlines do not value their workers but drain them.

And having discussed the very same issue again yesterday with friends who must relocate in the automotive industry as a direct consequence of overpaid managers, back again, using old images:

Maybe. Just maybe. I believe Ndrec and I came up with a sound business idea, which requires far higher investment than we originally envisioned. Coming with a round and sound business plan paying off that major investment in 10 years safe. Because we do have a unique selling proposition (USP). Because we do have an emotional USP. Because we thought it through and instead of failing at the first obstacle, we save cost from day one and make this a company to work for?

And working on that, we learned a big deal about the faults of the airlines we see in the market. And it boils down to the normal questions: What’s your (emotional) USP? What makes you different, why should the intended consumer decide to use your product. We see too much “me too” in the market. Buy your market share in the B737/A320 shark pond?

30+ years ago, my training officer told me that joke:

A man starts a business selling screws.
His friends questions him: “You buy
the screws for 1 €, you sell them for 95c?
How do you want to make money?”
“Oh, the quantity does it!”

My training officer told me to look after yours. Not only in the company, also your supply chain. Make sure you have long-term suppliers selling you the quality you need for a good reputation.

Later I learned the same lesson from space shuttle Challenger, management ignoring their own experts warning them of the temperature being below safety specifications. Shuttle Columbia dying of a piece of foam worth a few cent perforating the heat shield. Of Concorde crashing from a “minor” piece of scrap metal.

I’ve paid very high (in hard Euro) for another lesson. Starting with a sound idea (regional airlines’ franchise concept to share cost and operate a larger scale of operations), it turned out later that the stakeholders did not look for a franchise, but a means to start their own small operation and “share” the cost with the other small players. Clearly understanding the small operations to face obstacles they cannot overcome on their own. Could not. Cannot. Will not. A costly mistake I made. But lesson learned!

Then at delair I learned about airline disruptions and how our industry uses historic processes to “manage” somehow. How airlines use manpower instead of intelligence to cope i.e. with a winter storm.

With Ndrec, I found a seasoned manager understanding the need to either do it right – or don’t do it. And we got surprised how much money we save if we do it right! Not short term, there we need more to invest. But then very shortly, within less than 10 years. Now we reached the point of the reality check: Will we find solvent institutional investors helping us to pull this off? Cross your fingers.

For all those other airlines out there… Do your homework. First and foremost: What’s your USP? What’s the business case?

Food for Thought
Comments welcome

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Quo Vadis Airline & Travel Distribution

Michael Strauss of Pass Consulting, developer of an “aggregator” system for travel distribution systems addressed his thoughts on why the NDC (IATA for “New” Distribution Capability) is already “old” (it’s XML, not contemporary JSON for one) and why we still need the GDS.

I find all those developments Michael addresses to be “baby steps”. And is it 18 months already again since I questioned the very same thing? Quo Vadis OBE?

Carefully tiptoeing around, while I still wait for the first airlines to make the bold step, leave the tangle box, cut the spider webs, dust off the past and make bold moves embracing the possibilities “digital” offers us. The likes of a C.R. and R.B. Smith back when they gave birth to what eventually became CRS,, GDS, PSS. Or Louis Arnitz (and myself) making Internet-Amadeus-booking reality, when all the GDSs told us, this is impossible and tried to protect the holistic, old way. Good, GetThere launched about the same time, but when we started, all it’s infancy could was to take a Sabre-entry and return the GDS-output. But yes, that gave us the idea.

1.44 MB = 0.00144 Gigabyte or 0.00000144 Terrabyte. Those thoughts tell me how old I became…

Now we are “surprised” that Cytric bypasses the GDS-side of Amadeus, linking directly to Altea (Lufthansa direct link). I just happen to wonder if Louis Arnitz also fondly remembers that “white paper” he wrote about “Mozart” (what later became Cytric). Few people remember the evolution from “Woodside Travel Trust” (today Radius) “Hotel Disk” (3.5″ ‘floppy’) to eHotel or that eHotel has been a spin-off of what became Cytric… It just tells me, how the GDSs keep the thumb on the thinking of our self-proclaimed experts. A battle they can’t win if they don’t embrace (carefully) those changes you so nicely summarize. Working on an airline’s business plan, I just emphasized that I see the future of travel distribution with Facebook, LinkedIn, Google, Amazon. Individual like a book. Common as a book.

20 years ago (!) my friend Richard Eastman emphasized disintermediation at ITB Travel Technology congress. And that it is about packaging what the traveler wants.

Voice recognition like “Alexa, book our vacation”. GDSs? Aggregators? Airline seat? Car Rental? Hotel transfer? Restaurant? Or …

  • “Jürgen, this is Alexa, I believe you wanted to go to that “new movie”, they show it tonight at the cinema here in your vacation area, shall I book you two or four tickets?”
  • “Jürgen, this is Siri, there is a Pink Floyd revival concert in xyz, I could book you and Yulia two flight and concert tickets in four hours as well as the babysitter for the girls?”

Things I would have overseen…

Richard emphasized, the consumer does not want to bother about all those detail. They want an offer. And consume. GDS? Aggreggators? NDC? …?
Hey Richard, that was 20 years ago we discussed and envisioned those things. Ain’t it faszinating, how our industry keeps stalling…?

Food for Thought!
Comments welcome…

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Airport Marketing Hide & Seek

Working in aviation marketing on CheckIn.com and recently on research related to airline route development, it makes me mad to see how

airports mismanage their data

Passenger Statistics

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

For more than 10 % of the airports, using two main sources for data (airport, Wikipedia) and cross checking with the industry source, the ANNA.aero “databases” (Excel files, not “data sources) the data does not compute! So we spend an awful amount of time not just collecting that data, mostly from complicated pages that we have to manually scan, but the data we get, proves then to be “approximate” on core numbers like “passengers” handled by the airports. As reported before, ANNA.aero disqualified for us for anything but a cross-check, once we learned that even within their Excel files, the sum of the months does not necessarily compute to the given annual total… The same we found true on the “usual suspect” sources.

Asking the airports for their last passenger numbers, many cannot give them on a monthly basis, many give us numbers that are obviously wrong but most don’t even bother to answer. Where we get numbers, often they are a table in a Word document or an e-Mail, often in a PDF where if you try to copy that very table to a spreadsheet, it comes out as unformatted text, causing more work. Not to talk about image-files, where you must extract them, writing them off that image… With more than 600 airports we happen to have on file at CheckIn.com, that is no fun, that is frustrating.

Know your numbers? Not an issue at airports. Digital? Naaw, why bother?

Landing & Handling Fees

Every landing you walk away from is a good one

The last months, we approached airports under route planning constraints, asking them for a given aircraft type and load (giving also MTOW and seats) for the cost for the landing and handling at their airport. As we did not find their Standard Ground Handling Agreement and fees online. Maybe we missed to find it, but excuse me, is that our problem? Where we found them, they are often outdated (more than three years old), headlining the year of validity, so factual outdated.

Out of 63, only a good dozen replied within three weeks. Out of those replies, only five responses where useful. Five. The others responded sending us their files, often only landing or handling, frequently not both. Only some of those warned us, referring us to the ground handling companies.

Excuse me? We ask an average cost. Even your ground handlers have an average handling cost. You don’t know? So what do you sell me?

That route planning friend I referred to in my December post (promoted Jan 1st) just told me this week, he doesn’t have faith in airport marketing. Only very few would do their job right and focus on facts. Most would focus on fiction. And he reminded me of my December post and Erfurt.

Airport Marketing – Fact of Fiction?

“Wow, I had FIVE super discussions today…” “Don’t worry, I’ve not sold anything either…!”

Honestly, I have no idea. I had faith in my fellow marketing colleagues at airports. But most what I get is “dreamlands”. Digging into the numbers, you find black holes the size of a galaxy. You find logical mistakes. What you don’t find is the numbers you need as an airline. Guesswork. Ideas. Biased ideas at that. Brings me back to my friend. He confirmed, even with their established, substantial size, they had the same problem with airport fees, keep having them with about any new airport they consider flying to. That’s why one day they have to send someone there and inquire on-site. Bug them until the numbers are on the table. And usually he says: “Usually, that takes too much time”.

Are we living in a digital world? We may. Airports still mostly does not.

My friend told me: This is why Routes is such a success. Because you still need to talk to the airports to get what you need. No, they do not provide that on their website. No, they do not understand how to provide data (spread sheet, not Word, PDF or a fancy “image”). Not ANNA.aero, Route Shop or Routes Exchange, where he confirmed to me, he does not find any facts but fancy “marketing” without foundation. Our comparison we did for him of our catchment area findings compared to those sources he said proved most valuable to him – internally and externally. If they don’t even use a free service like ours to compare and qualify their guesstimates, if they cannot respond to the offset, how to trust any figures they provide you?

He calls TheRouteShop and Routes Online the “big show-off stages” (on- and offline). He says, his and his team’s main function is to look behind that show-off, to find out where it’s trustworthy facts and where an empty hull. Assess the risk. “Their job should be to provide us the facts to make sound decisions. All they do is adding smoke screens and to boast.”

Strategic Directions?

Food for Thought…
Comments welcome!

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Polar Vortex + Collaboration

Sure, now that North America again suffers from extreme winter, experts arguing if it’s another “Polar Vortex”, there is some background on Business Insider. Fact is, it hit North America hard again, causing major flight disruptions, not only in the North, but also “down South”. Suddenly I experience a surge of interest in “Deicing Management”.

The major issue I am asked is how to keep the airport operational, whereas that is the wrong approach. You can’t fight Mother Nature, not even Mr. President can, no matter how god-like he believes to be. You can manage the repercussions. You can minimize the impact, optimize the handling to recover quickly from an airport closure.

This must be more seen on a collaborative approach and I just thought to come back to the typical questions once again, as they reappear these days. If you’re interested, there are quite some posts on this blog addressing disruption management or A-CDM.

No, there is no “quick panacea” for this. Any deicing manager should be able to tell you that you cannot change a running winter operation, you implement the changes outside the season, train your staff and improve the processes. Listen to them!

A common question is: “Which software tool?”

Clear as can be, there is no “software panacea” either. In North America, the closest thing in my experience is Saab-Sensis Aerobahn. In most cases of who’s asking, it simply is overkill. First step is to start to collaborate. Deicing is not an issue of the ground handler, or the airline, or the airport, but the ground handler, the airline and the airport. All together. If you don’t collaborate, the tools don’t help you. If your processes are “stand alone” and not integrated into a master process “turn around”, using a software does not help you. There are tools that work that can help you improve your processes, but most my inquiries end here. For some reason, airport (and airline) managers seem to believe (almost a religious faith) that they need software to solve their problems. It is hard to explain that they need to “think”, that it might be more reasonable to invest into a consulting, sitting together, looking at the processes, talking to the stakeholders and in a proper process start the transformation to collaborative decision making, starting potentially with deicing.

Another common question: “But this only works on large airports?”

Yes and no. The large airports are usually more bureaucratic, have developed “structures”, or more accurately “silo structures”. Where on small airports there is a natural collaboration as people have multiple functions and small hierarchies, the large airports have departments that tend to separate themselves from the larger good. Exaggerating, each department is the only valuable, the only one understanding, the hub of the(ir limited) universe. The other departments only interfere and make things difficult. That silo thinking is more common the larger the company. But also small airports have the possibility to establish a collaborative approach. They might not even need software to do that…? Software can overcome the workers reluctance to share information by doing it for them. And speeding up data exchange instead of waiting that someone shares an information. As we discussed in the LinkedIn group CDM@airport many times, A-CDM is not about technology, but about collaboration. That is people first. The technology is a tool.

Aircraft Rotations, Winter Operations and Forecasting

In the discussions, I keep emphasizing to look beyond the individual airport and think about the airlines involved. Their flights get delayed or worse, they get stuck. Bad enough at the airport, the aircraft is expected to fly to more than one city. In 2014, JetBlue had to cancel all flights for a day to “reset” the network, bring aircraft and crews where they were supposed to be (and give the crews the legally required rest). Thousands of travelers were stranded during the 2014 Polar Vortex disruptions. The same year, I discussed with Zürich about the possibility to proactively inform the airlines about the delay forecast, enabling them to cancel a flight to Zürich to avoid it getting stuck there. It lead to the hen-egg issue, if then enough airlines cancel their flights, there would be no delay…? An idea was a penalty/bonus-system, giving an airline that helps avoiding a delay situation today a priority on their departure tomorrow. The idea was disqualified implying the airlines’ inability to understand and agree on the concept…

Just some more

Food for Thought
Comments welcome

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Shattering the American Dream

As for your Future, your task is not to forsee the future, but to enable it!

These weeks I am most disturbed, how U.S. President Trump keeps pushing commerce above life. I can only hope that the world stands united up to him.

Just a few headlines that hit a nerve with me:

“Donald Trump slashes size of national parks in Utah to allow drilling” [Telegraph UK]
“Native Americans to Sue Trump Over National Monument Downsizing” [Voice of America]
“How Trump’s Declaration Inflames a Middle East Already Ablaze” [Mintpress]
“A Brief History Of Donald Trump Stoking Islamophobia” [Huffington Post]
“US: Devastating Impact of Trump’s Immigration Policy” [Human Rights Watch]
“President Trump Calls for Ending Diversity Visa Lottery Program” [Time Magazine]
“Trump’s eldest son questioned in Congress about Russia” [Reuters]
“I’m a Multi-Millionaire So Trump’s Tax Plan Is Great for Me.” [Time Magazine]
“Trump Tax Plan Will Skyrocket National Debt” [Financial Tribune]
“What Will the End of Net Neutrality Do to America?” [Huffington Post]
“What Trump’s Latest Attack on Planned Parenthood” [Vogue]
“Commentary: The Hidden Victim of Trump’s Tax Plan: Your Health …” [Fortune]

All those developments show the excessive greed of Trump, not looking after “the small people”, but about his mighty, his rich friends and his own interests. The U.S. changing to support capitalism at all cost. Who cares? He doesn’t. And this is the head of the most powerful country in the world? While Obama enabled a social security for the poorest, Trump slaughters it. North Korea, Venezuela, Jerusalem, … in my opinion it’s only a question until Trump “wags the dog“. And that man holds that famous suitcase.

I also keep wondering about the U.S. Dollar as a “standard value”. We work on a European business plan, no link to the U.S., but I get quotes in US$, instead of local or Euro-currency, that we use in our calculations. One of the reasons, if not the reason for the U.S. to sustain such high national debt is the “Petro-Dollar” dominance. But that is more and more threatened. And U.S. aggressively enforcing their dominance. How much longer? With Trump isolating the U.S., adding more debt beyond (my) imagination, I predict more and more commerce to move from “US$” to bilateral currency exchange. Quo Vadis U.S. of America?

When I recently won the U.S. Visa in their annual lottery (another Trump target), I said I was not sorry, it couldn’t work out. Having grown up virtually on the premises of the famous U.S. 1st ID Fwd, “America” was a childhood dream. It never worked out. With Sonia having the pacemaker and me at that time recovering from a major surgery ,I likely couldn’t have afforded living in the U.S. under threat to life. And my American Dream is shattered into more pieces day by day. So today I keep it with Pink Floyd’s High Hopes:

Beyond the horizon of the place we lived when we were young
In a world of magnets and miracles
Our thoughts strayed constantly and without boundary
The ringing of the division bell had begun
Along the Long Road and on down the Causeway
Do they still meet there by the Cut
There was a ragged band that followed in our footsteps
Running before times took our dreams away
Leaving the myriad small creatures trying to tie us to the ground
To a life consumed by slow decay
The grass was greener
The light was brighter
When friends surrounded
The nights of wonder
Looking beyond the embers of bridges glowing behind us
To a glimpse of how green it was on the other side
Steps taken forwards but sleepwalking back again
Dragged by the force of some in a tide
At a higher altitude with flag unfurled
We reached the dizzy heights of that dreamed of world
Encumbered forever by desire and ambition
There’s a hunger still unsatisfied
Our weary eyes still stray to the horizon
Though down this road we’ve been so many times
The grass was greener
The light was brighter
The taste was sweeter
The nights of wonder
With friends surrounded
The dawn mist glowing
The water flowing
The endless river
Forever and ever

Food for Thought
Comments welcome…
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The Bias of Route Viability Analyses

Certainly the Game is Rigged. Don't Let That Stop You. If you Don't Bet, You Can't WIN - Lazarus Long

The last months we worked with two regional airport operators on a route viability analysis both airports see as a exceptionally promising: Saarbrücken (SCN) to Reggio Calabria (REG).

Their problem is that it is rather difficult to get the hard-facts on it. Based on our work with CheckIn.com, they thought we might be the right people to look into this.

At first, talking to airline network planners, I was referred to the analysis tool providers. Though interesting, I got the “results” from four of those tools, three “disqualifying” the route, the third one (more correctly) failing with the information of insufficient data. The problem is, that the route in question has never been served before. There are some “comparable” routes, we found the two tools returning results used, from airports in the vicinity of Saarbrücken to Catania (CTA) on Sicily or to Lamezia Terme (SUF) in Calabria.
Then we were referred to the ACI “standard” QSI (Quality Service Indicator), specifying how a route potential is being calculated. There is a very nice introduction to QSI on the website of the North American chapter of ACI Airports Council International. But if you read that introduction, you are going to get very quickly to “factors” and “coefficients”. And that they are variables, subject to interpretation and weighting, they are “relative values”. And while I found my usually very open sources at IATA, OAG and FlightGlobal distinctly tight-lipped, when I called and asked about QSI, they quickly confirmed that their tool follows those principles and how much and why their tool is better than their competitors.

One airline network planning director clearly told me those tools they use, but they are useful only on existing (or to some extend historically existing) routes. As he had provided me his initial impression on that route, I questioned his initial response and he confirmed that they use those tools with an “almost religious” faith. So if they look into a new route, knowing their tools to have a bias towards existing routes, if their tool returns “not viable”, it builds a major obstacle to get them to look into such route.

So we also had a look ourselves into the “route data”, getting statistical data from those other routes from Eurostat (avia_par), the airports, two of the tool providers, as well as three airlines. As discussed in The Numbers Game, we once more were confronted with conflicting data. Public data on Eurostat shows different numbers for outgoing HHN-SUF compared to incoming SUF-HHN. All numbers “close by”, but in most cases, the numbers did not correspond to the other sources! So what “quality” do we talk, if we in a single industry cannot agree to a fixed value?

Okay, so we decided we take the average of the different values we received. Then we compared to the various catchment areas from our CheckIn.com analyses, both the pure isochrone-populations as well as our competitive analysis. Where we found once more that the drive-time zones themselves resulted in major offsets, rendering any attempt to interpret the results as useless. On the competitive reach, we found some “trends”, though it showed clearly that the more routes an airport has, the more choice such is given to the traveler, the lower the average choice of a traveler for a specific route. But even with those constraints, looking at the catchment area confirmed potential interest in the route.

More interesting, I found that aside of Eurowings with about 75-80% load factor on their flights, all other airlines operated with load factors of around 80-85% and up to 90% on an annual basis. Such, it seems that overall, there is very high demand for travel between the regions. But the tools disqualify flights. Hmm.

Working on a viability study, other approaches are to look at the regional demand. Where we got confirmed, what we knew before. There are no reasonable statistics on a regional level. Yes, you get all the statistics on a small scale from Saarbrücken to Italy. Or from Reggio Calabria to Germany. Okay on Luxemburg. But is Italy Northern Italy with higher purchasing power, commerce and industry? Or Calabria? Is Germany Munich, Berlin, Hamburg, Düsseldorf, Stuttgart, Frankfurt – or Saarland or Saarbrücken? You. Got. To. Be. Kidding. Me.

So yes, we can see how much of the industry is where (percentages), how many “Italians” live in the Saarbrücken region, but without there local research (they have done), we could not know that their “Italians” are mostly from not just Calabria (state) but Reggio Calabria (city)… Whereas we talk about many “2nd generation”, having German passports, not showing up in those “statistics”.

So yes, we did the numbers crunching, but those numbers are to be taking with a big grain of salt. Discussing this with my friend, that afore-mentioned airline network planning director, I could “see” his smile. “You check some basics, to get a feeling and have some numbers to confront the [Powers-That-Be, PTBs] in those regions with. Then you travel there and confront them and learn that all you learned is useless and why. Then you talk to the PTBs and learn if and why they believe it makes sense, you question them from your experience and then you decide if it makes sense to take the risk and fly – or not.” And he referred to my 2012 post on the Crystal Ball and told me that he liked my conclusion in it: “I take a big long stick and grope in the dark. It requires expertise, experience and good guesswork to do something with all that information you get. Good luck is part of the business.”

Hmmm… It confirms what I recently told the Minister President of Thuringia, discussing on Facebook about population emigration they suffer. Emphasizing the need to better support the airport to attract incoming business and the necessity for scheduled flights, I told him, it is not the airport acquiring airlines, it is the region. As soon as an airline network planner researches Erfurt and finds all the negative buzz about that small airport there, if they hear the PTBs having promoted bus service from Frankfurt when they had a flight connecting them to Munich, when they learn that the state officials and commercial (state-paid) delegations traveled from Berlin or Frankfurt instead, they understand that the people in the region do not support flight services. They’ll look at the story behind the closure of Altenburg. Then they likely look for locations where the PTBs support flights. Politicians, local industry, tour operators, the people and the media. Discounts on landing fees are a minor factor on the cost and risk of an airline operation. (Except for Ryanair). They are an indicator, if the region is willing to support the flights. I am afraid, that Minister President did not understand that, he instantly fell back into the “airport bashing”, questioning, why in the past the airport’s subsidized flight services did not succeed. No, he did not heed my words. In fact, he was prejudiced and simply did not listen but took his “instinctive” fall-back position on “airport”.

Working with small regional airports over the past years, I know many airports heeding such words, their PTBs in strong and unquestioning support of “their” (regional) airport. Who publicly want their airport and want it to succeed. Who fight for it and take a stand in discussions for their airport. And yes, Connect or Routes Europe are places where you can meet and talk to them. Though there I also heard just recently (again) that many airlines are showing interest in the big airports only and the small have trouble getting a time slot to make their case. Where Connect° had the advantage on the small airports.

Coming back to the issue of this post. My airline friend and I discussed for several hours (thank you!). And rather at the end, he emphasized, why he invests only little time in “analyses”. Because all those analyses will promote the big buddies. They will confirm business potential on the large airports with data silos full of supporting statistics. But they will disqualify any of the small airports solely based on the fact that there are no “supportive statistics”. Following our discussion, he wrote me a very short message: “Jürgen, the game is rigged. Your catchment area stuff is the first thing I saw to give me a somewhat unbiased view on smaller airports in years. Those [other] analysis tools are sold to sell us statistics. Stupid network planners and the ones trying to play it safe and by the books, requesting the QSI. It’s why mostly the small airlines, who can’t afford those tools start new routes.” And why he emphasized to me that he and anyone in his team wouldn’t bother about any route viability studies based on the statistical history of the airport, except for an indicator. “If you play it safe, you just follow the crowd.”

Food for Thought
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