The Clairvoyant Airline
The airline industry should use analytics to make smarter, real-time decisions while also seeking ongoing productivity improvements.
December 2009 | by Jack Kuhlman
You don’t have to look far these days to find an organization that is trying to use data and advanced analytics to improve their customers’ experience and drive operational efficiency. In a wide variety of industry sectors across the globe, market leaders and new entrants alike are investing in data-driven innovation. This is particularly relevant for airlines. The opportunity in this sector is, however, much more substantial than it first appears: we call it “the clairvoyant airline.”
For the last few years there has been considerable media hype about “big data.” We believe that the real value from “clairvoyance” will be found in three areas.
First, it enables customers to go fully digital by giving them ways to interact with the airline in real time on the issues that matter to them. This goes beyond the helpful innovations like smartphone check-in or RFID-tagged luggage. As customers take more control over the way they want to interact with us, airlines will need to ensure they can really understand, and predict, what an individual customer will want either when, or before, they contact us. This won’t just reduce the cost and increase the quality of your customer service; it will also help drive ancillary revenues.
Second, the “clairvoyant airline” will use data analytics to inform better decisions in operations by providing real-time information from multiple sources to frontline employees in a single tool. An airline makes thousands of decisions every hour to keep the network running smoothly. Almost all of those decisions are based on imperfect information. What if an airline could base all of its decisions on real-time, statistically significant data drawn from across the organization? For example, do you hold a flight for a delayed connecting passenger? Imagine there are 10 connecting passengers who are on an in-bound flight and who risk missing their onward leg. Today, operations may judge that it is about 15 minutes connecting time from their arrival gate to their departing flight, so the decision is made to hold the aircraft for them. In reality, it takes the passengers 28 minutes to transfer and their bags 32 minutes. Although not far wrong the operations estimate was inaccurate enough to cause the departing aircraft to miss its slot. This caused a longer taxi, sub-optimal routing and then a holding pattern at the destination airport. In the end the flight entered the “red zone” for the on-bound connections of eight other passengers. The fuel and customer satisfaction cost of this judgement-based decision is substantial. In the clairvoyant future, the operations team will know that the in-bound aircraft will arrive at gate C6, that the average historic walk time from C6 to the connecting flight’s gate is 27 minutes and 34 minutes for bags (and that those bags are held in the fifth container on the in-bound aircraft). They will also know the cost of accommodating the connecting passengers if they let the connecting flight depart on time. They will know in advance the connection details of passengers on the departing flight and the frequent flyer status of the passengers who could be affected at either end of the journey. With this information they can make a data-based decision on whether to hold the flight or not.
Finally, the “clairvoyant airline” creates ongoing productivity improvements by being better able to predict disruptive events that are today considered random. For example, if a cockpit warning light can be resolved 80 percent of the time by one of three parts, why not have those parts waiting for the aircraft on landing? Why not have the cart inventories continually updated with the parts that would resolve the most-frequently occurring issues most of the time? When warning lights appear, why not begin the process of completing the paperwork whilst the aircraft is in-bound, and why not inform operations about the historic average length of time it takes to correct faults when that warning light is triggered so that an early decision can be made about whether to change out the aircraft or alter its boarding time?
Many of these specific examples may seem obvious, or things that airlines are doing already. The difference between today’s airline and the “clairvoyant airline” is that in the future an airline will be able to make thousands of these interventions every day in an automated, consistently accurate way. There is a big leap from the judgement-based decisions of experienced staff on individual flights to the industrialization and provision of insights and recommendations to the front line across the thousands of decisions that need to be made every day. The difference could be worth 5–10 percentage points of margin improvement.
Now, all of this would be very exciting, but the fact is that the industry has been talking about things like this for years. This is not an industry without vision and ideas—why aren’t we doing more?