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
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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
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Route Financing

Discussing Routes conferences, I recently appreciated several discussions about the imbalance of route financing in Europe. In the discussion, we boiled it down to a simple question:

Who Takes the Risk?

Image courtesy The Economist
Image courtesy The Economist

As we all know, airlines struggle to make money. Which I personally believe is a house-made problem. The use of legacy systems, legacy distribution models make the legacy carriers operate on a cost per seat that’s no longer competitive. In the 70s, a cheap return flight Frankfurt-New York was 2.500 German Marks, about 1.300 Euros. That was 40 years ago. Today the cheap flights sell for below 400 Euros. Return! So the revenue melted away. The cost for aircraft and seats got cheaper too with bigger aircraft. The fixed cost of the flight divided by seats. But that’s another story.

So who are the players in the game.

  • The Airline
  • The Airport
  • The Traveler
  • The Region
Image source
Image source

Let us look at my example I keep using consulting airlines and airports about new routes. At Join! we usually start discussing new routes with airports and quickly learn day in / day out: Everyone wants new Routes, the analyses supporting the case are mostly biased, it all looks sunny-shiny, but no, they don’t want to take the risk. In EU-Europe, they are often not even allowed to take the risk. How stupid is that?

So we usually approach the chamber of commerce, state development agencies and such asking for concrete demand for the routes the airport asks for. All we usually get is some wishful thinking. This company wants flights there? How many seats a year? 4-6… You got to be kidding me…? When we tell them the simple maths, they frequently retreat and have no answer.

The Maths?

Alex Simon was the only passenger aboard and loved it...
Alex Simon was the only passenger aboard and sure loved it… (Picture courtesy Welt.de)

An A319 has 124 seats. At 80% average load (which is low nowadays), we talk about 96 seats. Which have to sell out and inbound. At four flight pairs a day (five to six weekdays, two to four on weekends), we talk about eight legs in average (more is better). At 365 days, we talk about 280 thousand passengers the aircraft should fly every year. Let’s take out some maintenance, but we still get to a target of 250 thousand passengers. For each daily return flight, we talk about 200 seats target. For a double daily, double that.

The A320 or 737-800 is around 189 seats, so roughly 50% more.

From Southwest Airlines - Culture, Values & Operating Practices
From Southwest Airlines – Culture, Values & Operating Practices

Keep in mind there are disruptions. Less frequently on the technical side, the aircraft makers understand the cost involved in a technical grounding. But the airline has to have resources to survive such groundings. But we also talk about weather related flight cancellations. Flights remaining empty for the one or other reasons. Days people tend not to fly (religious holidays), fluctuation in demand… We talk about delays made worse by passenger compensations required by law. The disappearance of interline agreements allowing for involuntary rerouting of the passengers, not to talk about regional routes where the flight might be the only choice.

The cost of aircraft, crew, kerosene, insurance, distribution, maintenance etc. pp. being calculated, adding the “taxes and fees” on top, you talk about a cost per seat per leg at 80% load factor as somewhere between 70 and 100 Euro. On a 99 Euro return fare on the Erfurt-Munich flight in 2010, Cirrus Airlines after taxes and fees had less than seven Euros.

Risk Scenarios

The airports are restricted in what they can do, usually to discounts on the local fees. So the classic:

adding some small change...
adding some small change…

The Airline Takes the Risk. The very common approach. Yes, we give you discount on the landing fees. A drop on a (very) hot stone.

Guaranteed Load. Classically the field of tour operators, purchasing a fixed number of seats on the flights. Works very well in high season, but in the past two decades, the number of flights where the tour operator charters the aircraft became negligible. Even in that market, most flights are “set up” by the airline and then marketed to a number of tour operators. Once the shit hits the fan, as recently i.e. in Turkey, the tour operators cancel their seat allocations leaving the airline suddenly with unfilled air planes. But the aircraft is still there, it costs money!
A similar approach is to get such guaranteed seats from corporate clients, though they usually demand “lowest fare” for the guarantee at “last seat guarantee”, adding difficulty on the pricing games the airline can play. So a good airline sales makes sure to keep the flexibility. We discussed the purchase of (virtual) ticket stock at cost per seat + X, but very few of the corporations demanding a specific route then come up and commit. So we’re back to the airline taking the risk.

So in reality, we can (and have to) look at realistic scenarios.

Who Benefits?

“What are the facts? Again and again and again-what are the facts? Shun wishful thinking, ignore divine revelation, forget what “the stars foretell,” avoid opinion, care not what the neighbors think, never mind the unguessable “verdict of history”–what are the facts, and to how many decimal places? You pilot always into an unknown future; facts are your single clue. Get the facts!” [Lazarus Long]

And even with all the facts, navigating the future is a risk. Get what you can in the best quality. The better and unbiased the data, the less your risk!

Permanent Subsidies

If you know me, I am no fan of subsidies. You got to understand who benefits and to what extend. Get the maths down. then invest.

On the other side, there may be reason for permanent “subsidies” by the region flown from and to. As they benefit from better flight connections, from tourists, business travelers, commerce, taxes. Why is it that I keep asking if anyone has some sound research to share about the impact of a new flight to the economy? Why are the state development agencies “in need” but unable to qualify that impact to their economy? I am still convinced airports like Erfurt-Weimar, Lübeck or Kassel need scheduled services to be connected to the global aviation networks. Not to the nearby hubs that they can reach easily with rail or car. But studies exist that confirm that beyond four hours drive time a flight makes sense.

Temporary Investment

Risk Sharing

Who benefits?

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Delay and Disruption Management

[edited]

Sharing the Bloomberg headline What Do You Want, Cheap Airfare or an On-Time Flight? Daniel (S.) today quoted from the article on LinkedIn:  “An ultra-low-cost carrier will never, ever try to be as punctual as a big legacy #airline. Being on time all or most of the time costs money.”

After an initial misunderstanding we agree: That is stupid!

Delay and disruption management are the single most important influenceable cost factors in aviation today!

Yes, we can make good aircraft deals, we use revenue management to sell out tickets as expensive as we can in the low-cost world. But operations is the single most important cost driver we can influence today. We can neglect it, like many seasoned airline and airport managers do, we can deny and ignore it. And loose money.

While doing the research at late delair for the Zurich Airport case study, focusing on the impact of a contemporary deicing management, just that improvement in (IT-supported) process saved about 20 million in one winter alone there. For Swiss (about 50% of the flights). Now working on a financial summary that thanks to the acquisition of delair by SITA never made it “to market”, I spoke with the OCC (Operations Control Center) manager of Swiss in Zurich. Who confirmed what they all knew (and know), but their management remains blissfully ignorant about: It is all about rotations in an airline. The aircraft starts somewhere in the morning and flies to different places throughout the day. And a disruption or delay anywhere en-route is prone to impact the entire rotation. Worse, a late aircraft usually accumulates more delays as ground handling is also tightly scheduled without spare manpower to cover up for such situations. Then crews fall out of schedule as they have to have their rest times. And while the airline may reduce the financial damage by calling for higher force on a snow event in the morning, on the flights down the line, I am told they tend to pay. And passenger compensation often exceeds the value of a single ticket!

In 2014 I wrote this article about Airport Operations Center (APOC), Airline Operations Control Center (OCC) and ATC’s Network Operations Center (NMOC) and how they do not communicate with each other. I asked just recently about a common airline system with decent, contemporary, f***ing basic interfaces and learned that none of my precious industry expert friends knows such. Worse, I got more feedback than I wanted about the issues all my friends in this industry can tell about; where thanks to missing such data flow, the right hand does not know what the left one is doing. In the process, trying to improve a bad situation, but working with different information, making things often enough worse.

I also heard just this week, how airline managers love the big planes (A380), a Lufthansa manager was quoted that they love the big bird, but that they don’t know if they can ever be operated long-term commercially revenue-making.  Or read a comment, how much these airline “managers” love new inflight entertainment and seats and fancy stuff. But don’t understand, why Windows-XP-machines in their OCC need replacement. It’s “fancy”, touchable, visible to see the airplane or fancy seats, but no-one sees the impact of deicing. Okay, we have a winter-delay. Who cares, we’ve calculated it into our prices forever and it’s been always like this. It can be improved? Who cares.

Source firewalkeraussies.comAnd while the airlines benefit, I hear from the airports that they do not show any interest in A-CDM and A-CDM improvements. While they cut into the flesh on most airport’s fees, while they let them starve; while most airports need to invest heavily to compensate the losses from “aircraft handling” by doing their best to increase “non-aviation revenue”, while this is daily life today, airlines demand airports to invest into those technologies and development and process improvements, but are not willing to pay. Did Swiss pay a Penny (Rappen) for the improved deicing at their home airport? Make a guess.

So while I know that seasoned managers in aviation act that stupid and short-sighted. Delay and Disruption Management is the single most important factor we can influence to save big money.

As I should have known Daniel’s opinion, i.e. from his LinkedIn article about why airlines burn money every day I keep myself referring to.

And if you need someone to discuss such projects or to manage them? Keep me in mind. And Daniel 😉

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The End of the Airport Passenger Fees?

Inflight Shopping

As I outlined in my summary on the Hamburg Aviation Conference, my friend Daniel expressed his believe that within 20 years, there will be no more passengers fees.
At the same time, Michael O’Leary was recently quoted that he expects in very short time they will offer the flights for free.
But flying costs money, no matter how good the aircraft engines become, terminal construction and maintenance, ground handling, air traffic control, gasoline, pilots, cabin crews, aircraft, insurance, it all needs to be paid. And no matter how effective you calculate …

… someone has to pay the bill.

Airlines lower their ticket prices, covering the “loss” with “ancillary revenues”. While those “ancillaries” have been understood as services previously bundled (inflight meal, baggage, flight insurance), they meanwhile extend quite into “inflight shopping”.

At the same time, traditionally airport landing fees, split into the landing and passengers, covered for the airports’ cost of operations and development. This basic, sensible model is now threatened. It will change. But how. When the airline and airports fight for the revenue of the passenger – I believe both will loose.

Airport Duty Free

So currently it is a fight between airport and airline for the money of the traveler. I hear airlines expressing their anger about the airports increasingly draining the pockets of the passengers pre- and post-flight. And the airports upset about architectural changes enforced by the evaporating aviation income, forcing them to add shopping in arrivals halls and rebuilding terminals for improved shopping, i.e. forcing the passenger through the duty free store. Or how to speed up the check-in process to increase the dwell time of the traveler to spend more money shopping. And the shop owners about the increasing pressure to cash in on the passenger in order to pay the expensive rental deals with the airports. And, and, and…

And no, it does not help to imply that the politicos should provide airports similar to train stations. Yes, it is true, airlines bring business to the regions. Airports are important infrastructure. But in the end … someone has to pay the bill.

Source firewalkeraussies.comWhat we will need is a serious, joint discussion about the future business model in aviation. At the moment there is no discussion. There’s the airlines, the airports and business models that cannot work. And we need to have the politicos and the usually government-controlled ATC (and border control, security, etc.), we have to have the ground handlers, the shops and all other players on the table. You can’t reconstruct all the small airports. We don’t need a fight. We got to work together for a sustainable business model. ERA, AAAE, IATA, ICAO, this is your call.

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Some Thoughts about ‘KPIs’

Oh Gawd... Helpdesk: Final Level. Pray
Helpdesk: Final Level

KPIs or “Key Performance Indicators” are considered a vital management tool to measure staff performance. But especially in aviation, we must be very much aware of the weakness of the KPI idea.

Service

An old question on KPIs is “How do you calculate ‘service’?” If the company does good product, service is of low need. Their KPIs are low valued. So service is frequently outsourced by those wise guys (and gals). On the other hand, if you produce crap, “service” covers for it (or should) and is in great demand. Then it is easy to generate good KPIs. Large call volumen, strong problem solving, low loss of customers.

But in both cases, good service usually needs “reserves”, so if you keep your head count low, once something happens (and that’s rarely under controlled circumstances, prepared for or in the responsibility of the service team), you need “all hands on deck”. If you outsourced your service to save money, that’s when the bill backfires on you…

Flight Attendants

Image : -die Welt-
Image: -die Welt-

Another good example are flight attendants. They are not there to serve your every whim, they are not the “Saftschubsen” (juice pushies) they are often disrespectfully named. Once you had your very first inflight emergency, you hopefully start to understand their real value.

Why is it that I know senior airline managers  who still try to argue that you need one or two flight attendants less on the flight for service reasons and they have to be reminded of the requirements by aircraft makers and governmental aviation bodies that that many flight attendants are certainly needed to evacuate aircraft.

So what’s those KPIs all about?

In my experience and not just mine as I see from discussions and comments, KPIs are being (ab)used by accountants (up to CFO or CEO) to “measure” stuff they do not in reality understand. KPIs are also used to discourage staff from working beyond the line of duty, to find “reason” by disqualifying them from benefits and bonuses.

There’s a good reading on KPIs in Marketing. Addressing the immeasurable impact of your competitors action. Or that you hardly ever launch a single marketing campaign, but you’re likely firing on all cylinders, ain’t you?

Very, very few companies understand that KPIs must be used without “threats”, not as a “measure”, but as a means to improve products, services. What’s the number of complaints? How have they de- or increased and not just that, but most important why. Don’t “blame”. The “blame game” is for shortsighted idiots to play. KPIs can be set together in a team for motivation. If they’re dictated (openly or implied) by your boss or worse, used against you, they won’t work.

Airport Control CenterThere was some buzz on LinkedIn this week on Disruption Management. Bringing to mind how an airport I worked with disqualified their own historic KPIs as trash by implementing a check on the reasons for disruptions. Where before the airline was responsible for the brunt of all disruptions and delays, suddenly ATC, weather, ground handling or security became clear problems. But in the past it was so much easier to click “airline” and not research what was the real cause. So the real cause never got addressed. To low on the KPI scale. Whooops.

There was also a very good article about KPIs and triggers on LinkedIn. It clearly votes for “internal triggers and motivation”.

Don’t get me wrong. On any projects I worked on in the past years, I used KPIs and Milestones. My own that is. But if I would have made them my mantra, I’d have achieved nothing ever. As a fire-fighter, you don’t care about the water spent. You blow out the fire. And at least for me, my KPIs and Milestones are taken like all good plans. They hardly ever survive meeting reality. So I don’t take them for granted, I adjust them to reality and use them to measure the planned vs. the achieved performance to identify why I turned out better or worse. Not for blame. But to learn to better forecast… To learn for the next project to apply KPIs that are more realistic.

While Einstein said: “Not everything that can be counted counts. And not everything that counts can be counted.”
Drucker said: “If it cannot be measured. It cannot be improved.”

Crystal Ball Aviation Network PlanningBoth are right, but if you make numbers the only thing that counts for you, you have no vision, will never make a dream come true. KPIs are a tool from a large tool box. It needs an master artist to sculpture something beautiful out of someone’s imagination. It’s so similar to what we do at CheckIn.com. We crunch numbers, but we cannot predict the future. Don’t believe in the numbers only. But use them to solidify (or disqualify) your intuition! But I would have bet against some new routes in the past ten years that turned out surprisingly stable business! It takes guts to sometimes run a controlled risk. If you don’t play, you cannot win. Then use your own previously assumed KPIs (also i.e. load factors, yields) to learn.

What’s your experience with KPIs?

How do you use them?

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Cloud vs. Security. And the Internet of Things

The Travel Industry and the Cloud

GDShosteddistributionBack in 2000, in my presentation at ITB Travel Technology Congress, I addressed the changes e-Commerce brought to our distribution. Aviation and travel have a very strong history in what we today experience as “new”, call “cloud computing”.

Aviation has been a pacemaker in pre-Internet e-Commerce. Since the invention of the first “computerized reservation systems” (CRS), based on American’s ground-breaking development of the “Semi-Automated Business Research Environement” (Sabre). Read the Sabre-History for more. Thanks to the global SITA communications network (yes, those guys I temporarily worked for last year after they acquired my employer), aviation appreciated near instantaneous communication ever since I started working in aviation back in the late 80s. What we call e-Mail today, we called “Queue Messages” back then. To date, bookings, called “Passenger Name Records” (PNR) are created and maintained “in the cloud”. Whereas the “cloud based server” is either one of the Global Distribution Systems (GDS) and/or the airline’s own CRS.

Airline IT-managers celebrating this as the next big thing simply sell you old wine in new barrels. In the mid 90s, just about 20 years ago, the last “dummy terminals” were taken out of service, replaced by PCs with more sophisticated interfaces. Which were meanwhile very much replaced by web-clients working in standard browsers. The only difference being that those browsers often still use closed networks (such as SITA) for data transport instead of the Internet. Aside the obviously more reliable and stable data speed, this directly leads to the next question:

Cloud Security

amadeus 4 tiersWhere the GDS and CRS frequently work in a closed environment reducing the danger of hacking and other insecurities, recent developments make those services available through Internet links. Being a commodity, this is much cheaper. But it also opens the communication to a number of security issues. It needs complex security layers to avoid hacking or other unintended communication disrupting those large host systems. And this is also important to understand. “working in the cloud” is “clouding” (disguising) reality with fuzzy, hip wording. All it is is communicating through the cloud (word used to disguise “the Internet”) with servers that are not local but “elsewhere”.

Amadeus Datacenter Munich
Amadeus Datacenter Munich

The cloud servers of Apple, Amazon, Microsoft, Amadeus, Worldspan or Sabre. Where the “Sabre” computers have been sold to HP and Sabre uses “commercial services”, Amadeus still has it’s own and also publishes quite some diagrams and images I frequently refer to.

But a fact in all such cases: If you believe it’s your data, this is a self-deception. You got to trust the company where you store your data to be trustworthy. Whereas recently there are quite some concerns about governmental insight into data. As I mentioned back in 2008, it’s questionable if a national government demands access to data without guarantee that this confidential commercial information does not reach the company’s competitor in that country. The example was not Russian, but American. Who watches the watcher?

owncloudAs I mentioned in my ITB presentation 2004, there’s possibilities to use alternate services from the Open Source developments. With cloud computing, you’re no longer required to use commercial services: I recently shifted all my personal data, especially calendar and contacts from Google into my OwnCloud. I trust my friend maintaining my own server. It’s in a huge computer center but my friend secures it against “unfriendly” or unauthorized access. And I hope what I have is not interesting to the server center operator to have someone physically accessing my server to steal data. A theoretical possibility. It’s a (semi-constant) assessment, on who to trust.

I also mentioned in my 2013 blog about Big Data, “The first, Big-Data-experts came up with, have been personal profiles, coming from a variety of different sources. That Google and Facebook still offer me young Russian ladies for marriage is a good sign that they are way off even that goal.” It’s a simple question on big data. From the same post: “And as the amount of data grows faster than the processing power, the real problem is predictable.”

Open Data

As much as you want to keep your personal and commercial data in some areas private, there was a mantra in the 90s “My data is my capital”. It was the time the Internet started to make data available to everyone and who “owned” the data could sell it expensively. To date the value of the GDS, the OAGs, Albatross, CH Aviation and other such data collecting companies. Whereas it is relatively easy to process aviation data as most of it is very clearly standardized. But as much as the data processing adds some value, it’s life cycle is ending. More and more “common data” becomes available openly. Where that i.e. started with OpenStreetMap, meanwhile the basic cadaster (land registry) data like street data, administrative boundaries, etc. are made openly available. Others still try to charge horrendous amounts, but they become a minority and will become extinct soon. The value is no longer in “owning” the data, but in meaningful analysis and use of it.

NextVue2Having been pacemakers in e-Commerce, aviation today is light years behind other industries. U.S. tools showing aircraft in-flight on maps like Harris Corp. (Exelis) NextVue does not have access to Canadian data as NAV Canada wants to sell it. Expensively. Not exchange (to also have access to U.S. data). It’s mine. Such, planes not traveling to/from the U.S. airspace simply don’t show. And the NAV Canada data is very often “a problem” for webservices providing such information in other markets. Dear NAV Canada, this is your wake-up call. The same for many other government owned “businesses”. Open Data is here. If you don’t come along, you will find yourself bypassed before long.

The same experience I had in my past years working on Airport Collaborative Decision Making (A-CDM). As long as our industry does not learn that it is in the benefit to the entire business and industry to share work data at reasonable cost. Base data is freely available today. But it’s fascinating how much of the base data we get from the “official sources” (like IATA, ICAO and the likes) is of lousy quality requiring manual review and updates.

That’s aviation. Believe me, working with data from 33 countries in Europe so far, basic data like population on municipality level, associating that to commercial or openly available map data from the same country’s cadastre … It’s a challenge. Many countries where the name of a city is not unique, but a municipality may have three four different names in the country. Not to mention that there are duplicate municipality names even within the same state. Open data is needed, but I think it might be something if a country could decide on unique naming for a given municipality and if EuroStat and the national statistics offices could agree on a unique identifier. And make sure their data matches. Else, a lot of people in the world will have a full time job to repeat the stunt we did. And other such data correcting others did. Again. And again. And again again.

The Internet of Things

Big Data is like teenage sex. Everyone talks about it, nobody really knows how to do it, everyone thinks everyone else is doing it, so everyone claims they are doing it...The last weeks the messages on LinkedIn, hyping the “Internet of Things” (IoT) are “exploding”. At this point, it’s very much like “Big Data”. Because just like big data, the concerns mentioned above apply. As long as everyone does something different and there is no common understanding about how to connect the IoT, it’s a lot of smoke and distracting noise, but not too much on real results. No matter if it’s global players announcing their understanding of IoT. As long as they don’t agree and establish open standards, IoT is a buzz word with not much substance.

As an example from another industry, more common to us all: For many years I have a look at “house IoT”. It would be so nice to be able to have the thermostats and blinds being programmable. Unfortunately, all makers of “intelligent” thermostats have their own “standard”, making it impossible to mix them. So if you want to buy, you got to select the system. And you’re stuck with it… That’s like the times of VHS vs. Betamax or DVD±R, where you usually selected the wrong technology…

Babelfish
Babelfish

Just as “video tape” or “DVD” came, evolved a standard and then became household normality, the IoT will need to develop common standards to allow common tools to exchange information with them in a default way. And not have 150 different “interpreters” trying to talk to all those devices in their language…

Food for Thought
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Redundancy

DLsystemcrash
Image: 103.7 (CBS.com)

New York Times Headline: Delta Malfunction on Land Keeps a Fleet of Planes From the Sky

Voicing that opinion in combination with the related incidents for many years, this is just another example that we rely solely on cloud technologies without proper (working) backup or fallback systems.

Talking about “system failure”, it might not be related to technology here…

Raid1No matter if it was a power failure as initially stated or a malfunction of a power control module, it shows that Delta IT did not do basic precautionary homework. No backup power, no working (tested) system redundancy at a different server location. So one server location (Atlanta) fails and down goes Delta…? I can understand if a home location fails on backup and redundancy, but no serious company should rely on a single location. Redundant Array of Independent Disks (RAID) is a common precaution and on distributed systems can also operate at geographically different locations in order to assure that during an outage at one location, the other location seamlessly takes over.

The secondary system may be slower, less responsive, but it provides the backup.

And Delta cannot claim that to be the first time. The first time I had a similar case was with Northwest (now Delta) back in early 1990, where Northwest was one of the only flights leaving Frankfurt on time during a system outage, as we issued boarding passes by hand, based on the passenger list printed the evening before… I think that was the last time no individually traveling passenger had to sit on the middle seat alone…

Another example I keep referring to was the time in the later 90s, early 2000s during the infancy of online travel booking, when Lufthansa hat to shut down Expedia. As Expedia inquiries for flight availability paralyzed Lufthansa operations. Because from the old logic of the airline CRS (computer logic), the booking process prioritized operational processes. Expedia’s uncached availability requests to the Lufthansa hosts flooded the Lufthansa system to the point where no operational requests could be processed. Good night check-in, good night passenger manifests, good night operations.

In 2004, a system crash paralyzed Lufthansa, which I addressed in my blog about the St. Florian’s Principle: Oh Holy Dear St. Florian, don’t burn my house, take the neighbor’s one.

Those are just major ones, which became noticeable to me. Business Insider reports more cases with JetBlue, American and United. So now it’s Delta. But taken the speed of IT development and the increasing complexity of the systems used, I doubt it takes a long time to hear  about more such crashes. Time for the airline IT to do it’s homework and make sure the host system (CRS) is redundant…

Food For Thought
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A-CDM – why doesn’t it pick-up speed?

This is the question I got confronted with this week, triggering me to think in more detail about it.

As you may remember, I have written a few introductions posts about A-CDM. I still believe in A-CDM and think it is something airports should implement, but much more important, airlines should demand – and jointly invest into it with their main airport partners to steer developments in the right direction.

de-icing bak3

I don’t have any access any more to the base file, but as a result on the presentation of the Zurich case study I’ve put together for WinterOps.ca, I focused on the “cash” savings, I hadn’t addressed then. We did calculate based on the performance improved expressed on slides 3 and 5 and the underlying data. We used conservative figures from IATA, Eurocontrol and FAA about the cost incurred by delay per minute. Our conservative results for Swiss (airline), the hub carrier at ZRH with a 48% market share in the given winter  saved more than 20 million Euros. Even if we consider the delay cost only applicable beyond 15 minutes, the savings were above € 10 million (approx $ 13 million then). If you consider the cost to set up the system from scratch and the necessary interfaces, one single harsh winter covers up for the cost.

Similar are the savings on normal operations on the bigger airports and on all the hub airports of reasonable size.

winterops3+5

Eurocontrol A-CDM Impact Assessment ReportNow my friends in the LinkedIn group CDM@airports celebrate airport Number 20 being A-CDM compliant. And they praise the A-CDM Impact Assessment Study by Eurocontrol. Sorry if I don’t fall into the appraisal and worshiping… The new study again looks very “scientific” at the issue, just “generic” cost savings, no individual example, but such being the argument for the CFO (Chief Financial Officer). In my comments, I got the response that it’s “obvious” and the decision makers are expected to understand the cost savings intuitively. Sorry there, in my experience even when you push their nose on the $ or € amounts they tend to come up with the hen/egg principle. Why should they invest into it, what’s their benefit? And guess what: They’re right!

We got to answer that question to promote the issue.

There’s also a nice animated video about the European ATM master plan linked to the issue. Though looking at the key deliverables, I don’t find the cost savings they promote in the video. It’s again “scientific view point” where executives are to understand the cost savings from the operational improvements. But that’s exactly the point. In my experience, these chief something officers do not spend the time to think that step on their own. As such. Without some company investing into a presentation to convert those operational improvements into cash savings, why would someone want to invest into it?

But the main two questions are: What’s the cost saving for me and who should invest and why? Those questions are not properly addressed I believe.

To rephrase the first question:

Who benefits and what’s the numbers?

Source: Eurocontrol A-CDM Impact Assessment
Source: Eurocontrol A-CDM Impact Assessment

So Swiss at Zurich benefited from an investment by Zurich Airport in the range of what? 20 Million? In one winter alone. But Swiss did not invest. Zurich Airport is. And most airline managers I talk to go “it’s an airport thing”. Sorry. If you’re an airline operations manager and you don’t get the point, you might be over your head on operations and have no vision for your own business’s development. Understandable if you’re a small airline. Not very professional if you work for one of the big shots.

At the right, there’s the “cost savings” slide from the A-CDM Impact Assessment. Back in 2004, the DOT averaged a delay minute with $ 100, more recent figures from Eurostat, IATA or other sources are sometimes substantially higher. The study even addresses the total savings on the fuel side. though 26.8 million on 2.2 million departures don’t sound much. What misses is the amount of delays those 2.2 million departures accumulated. Then you can break it down. Or where and when those delays arose (i.e. during winter operations? ATC delays?

There’s also something we call the A-CDM delay. When flights do not leave “on time”, due to A-CDM constraints. Such your flight could have left “punctual” but sitting duck on the taxi way due to traffic jam. Instead, A-CDM keeps the flight at the gate until the A-CDM system needs it for the now jam-free departure. That’s a change in paradigms! But it’s better for everyone, so you better find a way to solve the resulting repercussions (and yes, there are ideas).

The main benefit is to the airline! Secondary benefit is to the more punctual airport, also thanks to a usual increase in “capacity”. Though it might be noteworthy that even London Heathrow found good reason to invest into A-CDM solutions.

Who should invest – and why?

Priorities
Priorities

There’s two opinions I was confronted over the course of the past two years. Airlines believe, that this is a “single airport issue” and should be the concern of the airport. Whereas most airport managers question, why they should invest, if the airline benefits in dollars & cents from the development. O holy dear St. Florian

There were some good approaches as to implement the technology and charge the airline for the savings. That simply does not work, as usually there’s not a single effort to improve punctuality and airlines after tend to question the cost savings to result from that investment. Or airline managers sit back and expect the airport to be interested to provide improved punctuality. Whereas some airports openly questioned that they make more money from delayed passengers than from punctual ones. And as long as it’s not the airport to blame, why should they care too much?

Don’t get me wrong, I don’t approve either. That is an issue, I believe must be addressed by the players on a global scale! That A-CDM Impact Assessment Study was a good idea, just from a practical point of view a lousy execution. It is my honest believe that airline operations managers must understand that they got to demand A-CDM at their hub airports in order to improve on-time performance for the better of their own network. And airline and airport must find a way to benefit both on an investment. The current trend to have the airport pay and the airline to pick the raisins and savings is neither fair, nor does it help to promote comprehensive A-CDM deployment.

That also means that the airline has to invest into their OCCs (Operations Control Centers) to exchange data with the other players as explained in my post APOC, OCC, NMOC and A-CDM.

Food for Thought
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APOC, OCC, NMOC and A-CDM – a Bigger Picture

IHS Jane's ATC Innovation Award 2014
IHS Jane’s ATC Innovation Award 2014

Returning from World ATM Congress in Barcelona (with the IHS Jane’s ATC Innovation Award in my baggage!), I think it’s time to address some feedback on an issue that I keep discussing in LinkedIn and elsewhere: The need to “link” the Airlines Operations Control Center (OCC) and the APOC (Airport Operations Center), the latter being a vital part in A-CDM.

Unfortunately, I see it happening frequently that these “control centers” live in their own little universe with little to no links to their peers. Talking about “Big Data”, Sabre as well as Amadeus and Travelport are “big data players”, though in danger to keep the silo thinking up too long.

Where Sabre once brought global e-Commerce to aviation, back in the 60s, back in the mid-80s, we installed the first Sabre Terminals in European travel agencies, aviation now stumbles behind on the possibilities of global e-Commerce, thanks mostly to technical limitations. As no-one wants to invest… If AA wouldn’t have invested at the time, where would we all be today? But is TPF (Transaction Processing Facility) still the core of our being? Or is it time to move on?

“When we are taught aviation at university we get the impression of how advanced aviation technology really is. When we start working, we are at awe, how little common sense or state-of-the-art is applied in aviation technologies.”

[a student at DLR German Aerospace Agency I recently talked to]

Today’s Agenda

Some keywords what I mean to address here are definitions such as A-CDM (vs. CDM) and Departure – or concepts like Collaboration or Rotation

What is the difference between an Airline Operations Control Center (OCC) and an Airport Operations Center (APOC)? And what about the Air Traffic Control’s Network Management Operations Center (NMOC)? And where is the “collaborative aspect” in these?

Right now, they are just three different data silos and collaboration, where it exists, is on a very small local level.

The OCC focuses to limit the negative impact any disruptions have on the operation of any single aircraft in the fleet. The OCC is – so far – the only point that has a rotational point of view, looking at the entire rotation of the aircraft and trying to minimize the impact of disruptions not just on the flight in question, but for all the ones following that particular “segment” (flight A to B).

PassengerRights2With increasing legal demand to reimburse passengers on late or canceled flights beyond the value of their net fare they paid, this is were money for the airline is burned. And impact of disruptions and delays at the airport or in the air space may be a nuisance for the work at the airport or the air traffic controllers, but they have a commercial impact on the airline:

They are expensive.

Nevertheless, I seem to be rather alone in that point of view in discussions. Yes, there is an intellectual understanding at airports and ANSPs, but I have a gut-feeling, that it does not “compute” there really: Or why is it, that many ANSPs are not having their representative in the APOC? Not to talk about direct links yet. Or in the OCC? Or why do many APOCs not have direct (data) links to the OCCs of even their most important airlines?

What is … Departure Time?

Eeee...gypt_One discussion a few days ago addressed the definition of “departure”. And it is such a basic difference in definition, it hit me like a hammer, making me understand the impact of that different perception! When air traffic control talks about departure, they talk about the take-off of the aircraft (ATOT). When the airline and airports talk about the departure, they often talk about the time, the aircraft leaves it’s parking position at the terminal or on the apron, the off-block-time (AOBT). I had trouble, understanding, why an airport should invest into a “Pre-Departure Sequencer” instead of a DMAN in the delair-definition. The difference is based on the same subtle misperception of departure. The PDS and most “DMANs” out there focus on the TOBT, taking somewhat into account the delivery of the aircraft “in time” to the runway. Based on a rather “static” assumption of ATC capacity. The DMAN in delair perception optimizes the “real” departure. Taking into account minimum separation of aircraft, depending on the Standard Instrument Departure (SID) route and other highly complex parameters, the DMAN calculates the best TOBT. Thus, no matter the general disruptions at the airport and the real throughput on the runway by ATC, it delivers as many aircraft as possible for departure. That maximises the throughput and in turn minimizing the recovery time after general delays or disruptions.

All that though happens at the given airport, i.e. Zürich. Talking with airports about departure management, the issue is about always that ATC (the ANSP) does not participate in the departure management, does not provide the needed information and – heresy! – how could we just imply that we could sort out the sequence for the air traffic controller? It works in Zurich? Heresy!

Is A-CDM not an FAA and Eurocontrol requirement? Burn it at the stake!

But now we go a step further…

Rotation

The impact of the aircraft rotation and why A-CDM is something airlines should consider linking OCC to APOC, consider to spend time though the ANSPs who initiated the entire process are the ones stumbling behind their once shining visions of collaborative approaches:

Because the ANSP thinks in “Silo” and leg (flight from A to B).

A friend just recently told me about a major market, offering free access to the excellent flight-data for all flights within the region to the ANSP of a neighboring region, giving this to be offered in reverse to them. The neighboring ANSP (smaller) is not interested, the data is for sale. And they don’t see the additional value having access to the live flight data offered to them. Excuse me? That is Silo thinking.

eastman

And that is, why aviation technology today is way behind other industries. Because there is still silo-thinking. “Collaborative Decision Making” is a nice concept, but it fails real life on a large scale for the narrow-minded thinking of the people who’s job it would be to push the idea! It’s not about the bigger picture, but simply about own benefit. People call that “Greed” and it’s a mortal sin.

Food for Thought
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