A Top Contender - Sabre Airline Solutions

2010 I ssue No. 2
A Maga zine for Airline Executives
2010 Issue No. 2
Ta k i n g
yo u r
a i rl i n e
to
n e w
h e i g h t s
A Top
Contender
www .sabreai rl inesol ut ions.com
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A Conversation With …
Enrique Cueto, Chief
Executive Officer, LAN
Page 12.
18 Cambodia has a new, proud national
flag carrier
41 A new era in airline technology is
upon us
76 Introducing new check-in technology using a
single, robust platform
your
airline
to
new
heights
2010 Issue No. 2
Editor in Chief
Stephani Hawkins
Art Direction/Design
Charles Urich
Managing Editor
To suggest a topic for a possible
future article, change your
address or add someone to the
mailing list, please send an
e-mail message to the Ascend
staff at wearelistening@sabre.com.
For more information about products
and services featured in this issue of
Ascend, please visit our Website at
www.sabreairlinesolutions.com
or contact one of the following
Sabre Airline Solutions regional
­representatives:
Asia/Pacific
David Chambers
Vice President
Phone: +65 6215 9518
E-mail: david.chambers@sabre.com
North America
Mike Douglass
Vice President
Phone: +1 682 605 5349
E-mail: mike.douglass@sabre.com
B. Scott Hunt
Contributors
Shaquiq Ahmed, Wendy Albright, Kolbeinn
Arinbjarnarson, Jón Árni Bragason, Roberto
Butendieck, Karen Davis, Greg Gilchrist,
Beatriz James, Barbara Jary, Robin Johnson,
Laura Kerr, Nadja Killisly, Mike King, Anthony
Mills, Stephen Packwood, Javier Pezzino, Nancy
St. Pierre, Nico Stoman, Alan Walker, John
Winstead.
Publisher
George Lynch
E-mail: george.lynch@sabre.com
www.sabreairlinesolutions.com
Awards
Awards for Publication Excellence,
2009, 2008, 2007, 2006, 2005, 2004
ECO Awards For Excellence In
Environmental Communications: 2009
Hermes Creative Awards: 2010, 2009, 2008
Europe
Alessandro Ciancimino
Vice President
Phone: +39 348 3708240
E-mail: alessandro.ciancimino@sabre.com
Latin America
Kamal Qatato
Vice President
Phone: +1 682 605 5399
E-mail: kamal.qatato@sabre.com
Middle East and Africa
Maher Koubaa
Vice President
Phone: +973 38350001
E-mail: maher.koubaa@sabre.com
International Association of Business
Communicators Bronze Quill: 2009, 2008,
2007, 2006, 2005, 2004
Sabre Airline Solutions, the Sabre
Airline Solutions logo and products
noted in italics in this publication are
trademarks and/or service marks of an
affiliate of Sabre Holdings Corp. All
other trademarks, service marks and
trade names are the property of their
respective owners. ©2010 Sabre Inc.
All rights reserved. Printed in the USA.
Address Corrections & Reader Inquiries
If you have questions about this publication,
suggested topics for future articles or would like
to change your address, please send an e-mail to
wearelistening@sabre.com.
The Sabre Travel Network logo is a trademark and/or service mark of an affiliate of Sabre Holdings Corp. ©2010 Sabre Inc. All rights reserved. AS-10-11515 0210 *2010 Business & Travel Meetings Show Innovation Award.
T a king
making
contact
revenue within reach
International Association of Business
Communicators Gold Quill: 2006, 2005
International Association of Business
Communicators Silver Quill: 2008, 2006,
2005, 2004
Introducing Award-Winning Merchandising Capabilities
Maximize the value of every seat. Sabre® AirCommerceTM Distribution & Merchandising
provides you award-winning* capabilities. Differentiate your airline and grow revenue
by merchandising branded fares, seats, bags and other ancillary services to corporations
and travelers worldwide. Discover how Sabre AirCommerce can take a front seat in
your airline’s success. Visit www.sabretravelnetwork.com/sabreaircommerce today.
The Communicator Award: 2010, 2008
Cert no. SW-COC-002360
powering progress
perspective
with Tom Klein
President, Sabre Holdings
rom a business perspective, it’s critical that
executives have direct influence over their
areas of responsibility. They can’t be burdened with barriers. And they must have
the freedom, within reason, of course, to run
the business the way they know is best for its
future growth and success as well as that of
customers, shareholders, etc. Every businessperson should be able to make choices for their
business strategy and initiatives … working in
tandem with partners that help minimize and
eliminate obstacles and unnecessary setbacks.
F
That’s why it’s crucial that we build technology that gives you considerable flexibility and
enables you to execute the choices you make
and to respond quickly when your customer
needs or the market presents you with opportunities. Take, for example, the recent move
toward ancillary sales on which many carriers
have capitalized. Savvy airlines have spotted
an income opportunity and have unbundled
their products to reap additional revenue from
the services passengers valued most.
And that’s just the type of rapid, profitmaking change that our solutions strive to
support. Our approach gives airlines the ability to easily change direction, such as evolving
their business model, successfully completing a merger, joining a new alliance or even
moving from one alliance to another — all
while keeping their operation going without
interruption or repercussion.
Forging technology is the nature of our
business, so pushing the boundaries to continually help airlines change and improve
is essential. And that’s the essence of our
Software-as-a-Service model.
Clearly, we work in an industry that evolves
through considerable change, and the role
technology plays transcends simply developing new capabilities that supports your
business’s needs. It goes beyond software
applications. What also must remain a focal
point are the platforms on which they run,
the way they are delivered and their ability to
sustain long term to support new technologies when and how you need them.
In another critical area, airlines house massive amounts of data that are spread across
their organization. We’re developing ways to
give you the ability to easily conduct crossdomain analysis to identify trends and make
adjustments accordingly. For instance, if you
offer a direct routing that customers aren’t
choosing, examining combined data from
reservations and ops, you can analyze the
data to determine why — price and schedule
come to mind — these routes aren’t generating business and make necessary future
planning changes.
In addition, key data should be immediately available to employees across your
organization when a business event occurs
so they can respond quickly and effectively
(read Checking In on page 76). Something as
simple as automatically upgrading a customer
to first class during the reservations process
when he or she qualifies for the next loyalty
tier is an easy way to impress and retain a
customer.
There are numerous initiatives underway
that support out overall technology strategy.
One of the more significant evolutions of
our technology strategy includes providing
an infrastructure to enable airlines to achieve
the necessary business goals that ensure
success — technology to turn vast stores of
data into actionable intelligence, to act quickly
in real time and make the most efficient
decisions, and to have insight into all business
processes.
The lead article in the special technology
section does a deep dive into the basis of
our entire strategy. It discusses why it’s vital
that we take a multi-faceted approach when
developing applications and the infrastructure
that supports them.
On a business front, we’ve recently acquired
two companies — Calidris and Flightline Data
Services. Iceland-based Calidris is known for
its unmatched revenue integrity technology,
and carriers such as Finnair, the world’s first
airline to adopt real-time revenue integrity,
achieved total return on investment after two
short weeks of using the solution.
Sabre Airline Solutions ® will use the new
capabilities to offer unrivalled technology that
unifies all of a passenger’s travel data (reservations, ticketing, boarding) into a single data
structure. Rules are then applied over this
single structure, allowing for creative passenger-benefitting capabilities and real-time,
actionable data for better business decision
making. Airlines have always been quick to
see the value locked up in their data. With the
acquisition of Calidris, and the incorporation
of the Calidris technology into our business,
airlines are now able to realize value from
the combined data in real time — powering
real-time decision making, real-time actions
and real-time application of rules.
Flightline specializes in innovative crew
scheduling software and services capabilities, which brings all phases of the monthly
crew schedule bidding process online. In our
company section, we unveil the value these
two companies bring to airlines around the
world.
Beyond technology, in our profile section,
three unique carriers — Air Canada, Cambodia
Angkor Air and Ethiopian Airlines — share
their amazing success stories, each with its
own philosophy on becoming a leading carrier
in their respective regions and helping better
the economy while supporting the communities they serve.
And last, but certainly not least, on our
cover, LAN Chief Executive Officer Enrique
Cueto shares his thoughts about what positions the Latin America-based carrier as a top
contender in the markets it serves.
I hope you enjoy this issue of Ascend, and
I look forward to working with you to ensure
every aspect of our business brings value to
your airline and your customers alike through
our ever-evolving technology strategy and
committed role as your preferred partner.
ASCEND I TABLE OF CONTENTS
44
PROFILE
INDUSTRY
6
The Bear
Bearskin Airlines started with
very little and evolved into a
leading force in its region
Air Canada: Empowering
Airport Staff
Air Canada leverages new mobile
technology to help better serve
customers and efficiently manage
resources
9
12
A Top Contender
Enrique Cueto talks about what
makes LAN a top contender in
the markets it serves
Air CO2 Emissions:
22 Manage And Trade Wisely
Beginning in 2012, airlines
operating to and from Europe
must obtain carbon credits to
continue operating in Europe
The Pony
While world economic recovery
may be lopsided, most regions of
the world see measurable signs of
an upswing
25
41
Simplify The Evolution
Low-cost carriers, as they evolve to
a hybrid model, add sophistication
without adding complexity and
costs to the business
Building Standards
New technology standards promise
to provide a customary platform
crucial to the way ancillary services
are leveraged, sold and purchased
28
44
More Smoke Than Fire
Iceland’s volcanic eruption
created angst and uncertainty
among airlines, travelers and
numerous businesses
Cambodia’s
Pride and Joy
Cambodia Angkor Airlines has
become Cambodia’s new, proud
national flag carrier
18
36
Don’t Delay
Under the new tarmac delay laws,
airlines face harsh penalties for
delayed flights of more than three
hours
32
6
The New Normal
The airline industry can expect a
vastly changed landscape with
mergers on the rise
28
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SPECIAL SECTION
50 The Freedom To Execute
A new era of execution on
profitability, nimbleness and
competitive differentiation has
emerged
Processes At The Heart
O f Competition
In-depth analysis of business
processes provides a balanced
strategy that exceeds customer
expectations and promotes
efficiency across the entire
operation
55
58
The Dogital Pendulum
Organic Server Management, and
like solutions, will revolutionize the
world of midrange, open-systems
operations as much as they are
going to rationalize and bring order
to it
COMPANY
64
Back To School
Investments to Sabre® Airline
University ensure airline
employees are armed with the
knowledge they need to help run
a successful operation
SOLUTIONS
76
Checking In
New check-in technology enables
airlines to manage end-to-end
check-in and departure control
operations with precision and ease
68
79 Crew Balancing Act
Satisfaction Guaranteed
Sabre Airline Solutions® acquired
Flightline Data Services for its
crew scheduling software and
services capabilities
Carriers have access to a
complete range of crew recovery
technology that enables them to
retain control over their schedule
and crew recovery processes
Revenue Integrity:
Beyond All Boundaries
Sabre Holdings® acquired Calidris
to bring airlines the world’s most
robust, innovative revenue
integrity technology
82 Get Off The Tarmac
72
Airlines have access to innovative
technology designed to prepare
for, avoid and rapidly recover
from potentially costly tarmac
delays
76
68
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At
magazine, we want to provide you with valuable information that will
be beneficial to your business, but if we were to include an article for every topic,
you’d likely be looking at a novel rather than a magazine. But how can we bring
you important information and still keep
at a reasonable length? It’s simple.
We use Quick Response Codes (QR codes), paper-based hyperlinks, whereby you
can use your smart phone to download additional information that’s attached to a
specific article, ad, news release, etc.
When you come across a QR Code, take a picture of it with your smart phone and
you’ll get redirected to a website using your smart phone’s browser. There, the
information you seek will appear.
If your smart phone doesn’t come equipped with a QR code reader, you can
download a free version from multiple resources, such as AT&T Scanner,
i-nigma or QR Reader, which takes approximately two minutes to download and install.
To the right, are several article synopses that include QR codes. If you want to
read more about how other airlines are using technology, scan the accompanying
QR code for the full story. In future issues, we’ll not only include this section, but
we’ll append a QR code to other areas throughout the magazine whereby additional
information can be found.
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High-Level View
Philippine-based Airphil Express has renewed its partnership with Sabre Airline Solutions® as its
main e-Commerce technology partner to support its business transformation and ambitious expansion
plans.
Cambodia Angkor Air, one of Southeast Asia’s newest airlines and Cambodia’s national flag
carrier, has migrated to SabreSonic® Customer Sales & Service, the industry’s most powerful revenuegenerating and customer-focused reservations system, to underpin its expansion plans and become a
leading airline in its region.
Latin America-based Avior Airlines became the first carrier to use the electronic miscellaneous
document component of the broader Sabre Airline Solutions merchandising platform to support its
emerging fulfillment needs. The solution will also enable the sale of ancillary services for the broader
SabreSonic Customer Sales & Service solution and the Sabre® global distribution system.
British Airways has selected the Developer Tool from Sabre Airline Solutions to help the airline
improve customer service and increase productivity for its ramp and airport agents.
Aeroflot, Russia’s national carrier, has renewed its agreement for SabreSonic Customer Sales &
Service reservations system, including powerful, new website capabilities.
AeroMexico, the global airline of Latin America, has selected SabreSonic Customer Sales & Service
to help boost its growth plans, including its activities within the Sky Team alliance. The airline has also
selected revenue management solutions from Sabre® AirVision™ Marketing & Planning.
Air India, India’s national flag carrier, has teamed with Sabre Airline Solutions to achieve operational
efficiencies in key airline functions in a bid to be more cost efficient.
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ASCEND I PROFILE
The Bear
With its strong brand that sports a bear’s paw print on every
aircraft and its keen ability to weave both professionalism
and compassion into its operations, Bearskin Airlines
represents a first-rate example of a carrier that started out
with very little and evolved into a leading force in its region.
Photos: Bearskin Airlines
By Stephani Hawkins | Ascend Editor
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E
very airline has a unique history that
tells an interesting story from its very
first flight to present day. What makes
the story intriguing is the way each
carrier evolves through the years, going
from a state of infancy to a well-established,
seasoned operation.
The journey for Sioux Lookout, Ontario,
Canada-based Bearskin Airlines, referred to as the
“Bear,” is no exception. After all, not many airlines
can say they started their journey landing on water
for lack of runways.
More than 45 years ago, in 1963, the regional
carrier, named after Bearskin Lake, a remote First
Nations community positioned 270 miles from
Sioux Lookout, came to life, providing charter
services to secluded First Nation reserves in
northern Ontario.
During the first 14 years, the carrier provided
air-taxi service using Cessna 180s equipped with
floats during summer months and skis in the
winter. Given the lack of airfields in this remote
area, the aircraft worked well to charter passengers on the surface of lakes near Sioux Lookout.
However, the landing devices didn’t come without
challenges. During early winter freeze-ups and
early spring break-ups, the landing gear couldn’t
be relied upon.
That started to change in 1977 through the
early ’80s when the Ontario government began
constructing new airfields, making the northern
communities accessible year-round. That’s also
the year one of the carrier’s pilots, Harvey
Friesen, who had purchased 50 percent of the
business five years earlier, bought the previous owner’s shares, giving him control of the
airline. In addition, Bearskin Airlines, that same
year, began its first regular scheduled flights
between Big Trout Lake and Sioux Lookout. And
the evolution for this young charter carrier was
set in motion. From that point, other scheduled
flights were progressively added, starting with
Thunder Bay and then Kenora and Winnipeg.
The move from a solely charter operation
to a regional carrier was a major milestone
for Bearskin Airlines, but it, too, came with
challenges. Part of its fleet had to be converted
to wheeled aircraft to support the new markets it served as well as future expansion. To
serve these communities only accessible via air,
Bearskin Airlines began adding 14-seat Beech
99s to its fleet and then subsequently moved
into the 19-seat Fairchild Metro 3 and Metro
23 aircraft when its northern routes were sold
in 2003.
“We needed the right-size aircraft and, of
course, the aircraft had to be fairly fast, pressurized, comfortable and reliable, so all those
things had to come together to allow us to
provide a good service,” said Harvey Friesen,
president of Bearskin Airlines.
Today, the carrier operates 14 Fairchild
Metroliners, which were created by legendary
aircraft designer Ed Swearingen, who developed them as a stretched version of his Merlin
II corporate turboprop and designed the aircraft
specifically to serve the regional airline market.
According to Friesen, the expansion of the
airline, in some cases, had more to do with
judicious timing to meet the needs of market
demand as opposed to a formal business plan
or strategy.
“I think we helped the company grow one
careful step at a time,” he said.
In the early 1980s, the Bear’s biggest competitor was bought out and ceased operations to
the smaller communities in northwest Ontario.
The opportunity to expand simply knocked on
the carrier’s door, and the owners promptly
took action.
“We did have to make fairly aggressive
moves at times,” Friesen said. “Back in the
early ’80s, one of the airlines that had been
serving the area, and our biggest competitor,
was being bought out by Air Ontario. It elected
to move out of the smaller communities in
northwestern Ontario. We then very quickly
bought aircraft and expanded to meet all of
those needs.”
Through the years, the carrier kept a close eye
on the needs of travelers and expanded where
it made sense. Putting customers first has been
a leading contributor to the carrier’s success. It’s
been vital that Bearskin Airlines flies at the precise
times of day travelers want or need to travel and
that it provides direct routes that are convenient,
resulting in time savings for its valued customers.
By 2003, Bearskin Airlines had expanded to
include scheduled service to nearly 40 destinations and, today, more than 45 years after it first
took to the skies as a two-aircraft charter carrier,
the airline offers more than 100 daily flights to 17
destinations in Ontario and Manitoba, surpassing
any other carrier serving these key northern
Ontario markets.
For the Bear, however, it’s much more than
linking Northern Ontario’s five largest cities to
Winnipeg, Ottawa and numerous smaller communities for the traveling public. The carrier’s
executives and more than 250 employees also
place great emphasis on assisting the communities they serve.
For nearly three decades, via Hope Air, a
national registered charity founded in the mid
1980s, Bearskin Airlines has provided free air
transportation to Canadians who are in financial
need and require non-emergency medical care
outside of their native communities.
In 1997, Bearskin Airlines Hope Classic, a
curling bonspiel for women, was formed to raise
funds to help fight breast cancer. To date, the
Prior to taking ownership of Bearskin Airlines in 1977, President Harvey Friesen (left) was a pilot
for the carrier. A year later, his brother, Cliff, purchased shares and is currently the company’s
executive vice president.
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ASCEND I PROFILE
annual charity event has raised nearly US$2
million that is used to hire research scientists,
purchase state-of-the-art medical equipment and
fund medical facilities and support groups as well
as numerous other projects aimed to help cure
breast cancer.
Through its Charity Golf Classics event, the carrier, along with numerous other sponsors, such as
Avis, Bell, Best Western NorWester Resort Hotel,
ESSO Imperial Oil and PepsiCo, has raised more
than US$1,005,500 since launching the program
in 1999. Proceeds go to a variety of charities
and non-profit organizations including The United
Way of Thunder Bay, Thunder Bay Regional
Health Sciences Foundation and Northern Cancer
Research Foundation/Tamarack House.
Three years ago, the Bear became a regional
sponsor for Relay For Life, supporting the
Canadian Cancer Society. During the annual event,
participants gather for a 12-hour, non-competitive,
overnight relay held at a local track. The occasion
brings together cancer survivors, those who have
lost a loved one to cancer, those going through
cancer treatment and those who simply want to
help with fund-raising efforts.
“We take pride in our role as a community
supporter,” Friesen said. “We remain committed
to investing in the communities we serve and the
people who live there. We continually attempt to
develop new and improved ways to create opportunity. For the past 44 years, we have become
a solid partner in supporting community events
and development projects, building the economy,
creating jobs and establishing important transportation links with communities in the north. Why?
Because we are here for the long haul.”
In its quest to continually provide high-quality
air transportation throughout northern Canada,
support the communities it serves and expand to
meet demand, technology remains a key enabler
for the airline. Its executives don’t sit back and
wait for technological advancements to come to
them. To the contrary, they seek opportunities
to improve their systems to ensure their valued
customers have easy access to their products
and services as well as an exceptional start-tofinish travel experience. In addition, they rely on
modern technology to run an optimal, efficient
operation.
For example, earlier this year, Bearskin Airlines
became a launch customer for new check-in
technology via SabreSonic® Check-in, using a
powerful platform that enables the carrier to manage end-to-end check-in and departure control
operations with precision and ease (see related
article on page 76). The upgraded technology,
which previously supported two check-in systems that were regionally designated, has been
combined using the best of both to create a
single, robust solution capable of supporting
every airline business model across all corners
of the world.
“By combining the features of [the North
America and international systems] on one new
platform, SabreSonic Check-in permits all
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Bearskin Airlines executives and employees alike take pride in working together to assist the
communities they serve. Transporting patients with non-emergency medical needs who struggle
financially, raising money for breast cancer research and the Canadian Cancer Society, and
sponsoring events that support a variety of charities and non-profit organizations are among
the many ways the carrier’s more than 250 employees contribute to those with less-fortunate
circumstances.
Bearskin Airlines, which started out with ski- and float-equipped aircraft, offers more than 100
flights to 17 destinations using 19-seat Fairchild Metro 3 and Metro 23twin turboprop planes.
hosted airlines to access the best DCS features and allows Sabre Airline Solutions ®
to better focus its efforts and resources,”
Friesen said. “We are pleased to be the first
to make this move, putting us in a great position to take advantage of revenue-generating
and customer-service features, which will
soon be available to all airlines hosted by
Sabre Airline Solutions. It’s a competitive
landscape, and the faster we are able to
enhance our systems, the better able we are
to compete.”
The new system went live at Bearskin Airlines
in July, marking another important milestone for
the thriving carrier.
To date, Bearskin Airlines has covered a lot
of ground, made great headway and has left
quite an impressionable impact in its corner of
the world.
“True, we’ve been around for several
decades, but we’re just getting started, and
we’re definitely here to stay,” Friesen said. a
Stephani Hawkins can be contacted
at stephani.hawkins@sabre.com.
ASCEND I PROFILE
Air
Canada:
Empowering Airport Staff
Air Canada’s airport operations team at the Toronto International
Airport is leveraging new mobile technology to notify airport
staff of task changes, flight delays, wheelchair requirements
and other key real-time information to help them better serve
the airline’s customers and efficiently manage resources on the
day of operations.
Photos: Air Canada
By Mike King, Brent O’Brien and Bradley Terrill | Ascend Contributors
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ASCEND I PROFILE
A
ir Canada’s Ground Task mobile
devices, powered by Sabre
Airline Solutions® and IBM,
provide bi-directional communication capabilities for staff
members at the ramp or in the
cabin to notify their scheduling teams when
their assignments are received and when
they begin or complete servicing an aircraft.
“Prior to the launch of our Ground Task
mobile devices, our airport staff had limited capabilities for being notified of new
assignments and tracking schedule changes,
particularly for irregular operations,” said
Jason Stein, manager of resource planning for
Air Canada. “Communications were handled
via radio. We have seen a big improvement in
our ability to respond to operational changes
and reductions in the amount of admin time
needed to manage our staff.”
In 2007, Air Canada’s airport resource management team had a vision of empowering its
airport staff with more real-time information
at their fingertips, but they did not have the
supporting systems to make their vision a
reality.
“Our goal was to provide better service to
our customers, improve the quality of work
life for our airport staff and create efficiencies
in our airport operations,” said Enzo Molino,
Air Canada’s director of resource planning.
Working together, Air Canada and Sabre
Airline Solutions saw an opportunity to leverage the open-system capabilities in the Sabre®
AirCentre™ Airport solution to interface with
the new mobile application that Air Canada
envisioned.
“We selected Sabre Airline Solutions as
a partner because it offered an end-to-end
airport resource management solution with
proven integration to other mobile applications,” Molino said. “We had a vision to
take mobile technology to new levels at our
hub airports, and Sabre Airline Solutions
provided the core system for generating and
receiving messages to and from our mobile
application.”
In early 2008, Air Canada and Sabre Airline
Solutions set aggressive goals for launching
the carrier’s Ground Task mobile application
and the Sabre® AirCentre™ Staff Manager
real-time resource management solution at
Air Canada’s largest hub operation located at
the Toronto International Airport. The launch
was scheduled to be completed in nine
months and required several project tracks
and multiple vendors to achieve a successful
release.
Air Canada worked with its partner, IBM,
to develop the Ground Task application. The
other critical tracks included building and
testing all of the carrier’s business rules in
Staff Manager and integrating Staff Manager
with its real-time flight feed plus the Ground
Task application.
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Air Canada resource planning analysts, leads and frontline employees in Toronto can effectively
communicate in real time with the use of the carrier’s Ground Task and Staff Manager solutions.
The new technology supports above-the-wing and cabin workgroups and offers a robust, modern method of communicating vital flight and task updates such as gate, equipment and load
changes.
Using new mobile technology, Air Canada agents can alert airport staff of duty changes, flight
delays, wheelchair requirements and other key real-time information to enable them to better
serve the airline’s customers and effectively handle resources on the day of operations.
“We knew our timelines were aggressive,” said Sophie Georgakakos, senior
director of airports resource planning for
Air Canada. “But we had confidence in our
joint project teams, and we were eager
to begin realizing the benefits of the new
automation.”
Today, the Ground Task and Staff
Manager solutions are in full swing at
Air Canada’s Toronto above-the-wing and
cabin workgroups, providing a powerful
new means of communication between
resource planning, leads and frontline
employees. Important flight and task
updates — such as gate, equipment and
load changes — are instantly and automatically communicated without the use
of phones or radio.
A free-flow text component enables
planners to use Staff Manager as an
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instant messaging tool, sending personalized notes to an individual employee
or team or to all employees working a
particular flight. Meanwhile, the mobile
device users can acknowledge tasks, react
to new task detail in real time and gain
instant visibility on key task details such
as other team members who are assigned
to the same flight and/or task.
As one would expect with a complex
real-time solution, implementation at a
major hub airport operation was no easy
task and only came together through careful orchestration among all parties.
“We couldn’t have asked for a better
business partner than Air Canada,” said
Bradley Terrill, project manager for Sabre
AirCentre Airport. “The Air Canada project
team and airport staff alike made this
successful implementation possible by
establishing a clear and collective vision,
driving the necessary change management
and maintaining focus to completion.”
What started out as a cool idea a
short time ago is now the driving force
behind real-time operations management
at Air Canada’s largest hub. The successful implementation of Ground Task and
Staff Manager at Toronto International
Airport generated interest from the other
large Air Canada airport operations. This
interest and the experience of the Air
Canada Toronto project team will enable a
fast roll out and adoption of Staff Manager
at Montreal International Airport, Calgary
International Airport and Vancouver
International Airport.
“We have been able to leverage our
Staff Manager implementation experience
in Toronto to put together a skilled team
that has been successful in launching
Staff Manager at our other hub airports in
less than 30 days per airport,” said Stein.
“One of the benefits of launching Staff
Manager has been the implementation of
more consistent standards across our hub
airports.”
Air Canada recently added Ground Task
mobile devices for its Montreal cabins
group and plans to roll out Ground Task to
its other hub airports by year’s end.
Air Canada is not resting on its laurels
after the successful launch of Ground Task
and Staff Manager.
“We see additional opportunities for
optimizing our resource planning and rostering as we implement Sabre ® AirCentre ™
Staff Planner and Sabre ® AirCentre ™ Roster
Maker this summer,” said Georgakakos.
“The Sabre ® AirCentre™ Staff Admin
Employee Self Service module will also
enable our airport staff to go online for
self-service shift bidding and trading.”
Air Canada expects to realize several
major benefits from the combined Ground
Air Canada employed advanced technology to empower its airport staff with greater real-time
information through better communications via mobile devices. Its objective was to enhance
customer service, improve the quality of work life for airport staff and develop efficiencies in
airport operations.
Task and Sabre AirCentre Airport solution,
including:
Reduced fuel burn (gate holds, appropriate water levels),
Reduced number of passengers arriving
without bags,
Reduced overtime,
Improved historic information to better
plan operations using Staff Planner,
Improved customer service (especially
for passengers requiring assistance),
Improved irregular operations handling.
“Optimizing our planning and rostering,
self-service bidding and trading, and realtime resource management were key drivers
to our decision to implement the Sabre
AirCentre Airport solution, but we also
wanted access to the metrics and reporting
available from having an end-to-end solution,” said Nick Careen, vice president of
airports for Air Canada. “Increased visibility
into operational and resource metrics will
enable Air Canada to improve customer service and better manage our costs.” a
Mike King is a senior account director,
Brent O’Brien is a solutions manager of
Sabre ® AirCentre™ Enterprise Operations
and Bradley Terrill is a senior IT project
manager for Sabre Airline Solutions.
They can be contacted at mike.king@
sabre.com, brent.o’brien@sabre.
com and bradley.terrill@sabre.com.
ascend 11
ASCEND I PROFILE
12 ascend
ASCEND I PROFILE
E
Photos: LAN
A Top Contender
arlier this year, Latin Americabased LAN landed the sixth spot
among the region’s most globalized companies, according to
the Multilantinas ranking, joining
Mexico’s Cemex (cement) and Telmex (telecommunications) as well as Brazil’s Gerdau
(steel). It is the most international carrier in
the region and ranks third in Latin America
in foreign investments abroad.
“It is a matter of great pride for LAN
to be the most globalized airline in Latin
America and improve its position in this
category,” said Ignacio Cueto, president
and chief operating officer of LAN, which,
in August, announced a US$3.7 billion
acquisition of Brazil-based TAM. “These
achievements reflect the company’s mission to grow internationally and contribute
to the economic and social development of
the countries in the region.”
The globalization analysis is based on
aspects such as sales volumes, number of
countries with company operations, number
of employees outside of the home country
and financial results, all measured in terms
of the firms’ respective industries.
That’s one of numerous milestones for
the 81-year-old carrier and its sister companies. For example, in April, LAN CARGO
unveiled its new cold storage facility at
Miami International Airport. It’s the largest airline-operated facility of its kind at
a United States airport. The US$4 million
investment doubles the cargo carrier’s
capacity to process perishable goods (the
main export products from Latin America
to the United States, Europe and Asia via
Miami International Airport).
One of LAN’s distinct competitive
advantages is its ability to profitably integrate its scheduled passenger and cargo
operations. It takes into account potential
cargo services when planning passenger
routes and also reserves certain dedicated
cargo routes using freight aircraft. Adding
cargo revenues to its existing passenger service enables LAN to increase the
productivity of its assets and maximize revenue, which has historically covered fixed
operating expenses per flight, lowered
break-even load factors and enhanced perflight profitability. Additionally, this revenue
diversification helps offset seasonal revenue fluctuations and reduces the volatility
of its business over time.
Looking for ward, another sizeable
anticipated achievement is the scheduled
delivery of the Boeing 787-8 Dreamliner
early next year, making LAN among the first
carriers to incorporate the next-generation
aircraft into its fleet. Initially, the airline
expected to begin taking possession of the
Dreamliner in 2014; however, it has made
adjustments with the aircraft manufacturer
ascend 13
ASCEND I PROFILE
Named Latin America’s sixth most globalized company earlier this year by the Multilantinas ranking, LAN is the most international carrier in the
region and ranks third in Latin America in foreign investments abroad.
so it can begin utilizing the wide-body jet
for long-haul routes.
The acquisition of the Dreamliner is part
of LAN’s re-fleeting plan that will enable
it to modernize short- and long-haul fleets
as well as reduce the number of aircraft
families it operates.
In 2004, the company launched a new
brand “LAN,” under which all of its international passenger airlines operate. A driving
objective of the branding effort was to
help customers better identify with the
high standards of service and safety that
exist among LAN Airlines and its affiliates.
The new image has improved the visibility of the LAN brand as well as the cost
effectiveness and efficiency of the carrier’s
marketing efforts as it continues to expand
in existing and new markets.
The carrier also strives to present a fun
environment to its current and prospective
customers. In another creative effort to build
brand awareness and bring pleasure to the
traveling public, LAN holds contests for its customers to reward them for their business. Last
year, more than 145,000 people entered the
“LAN invites you to the 2009 Sony Ericsson
Open” sweepstakes, which included two
tickets to the tournament semifinals matches,
plus a night’s hotel stay in Miami Beach,
Florida, along with a two-day car rental.
14 ascend
The previous year, LAN held a contest
called “Fly There Or Bring Them Here!”
The winner received two round-trip tickets,
which included the choice of either flying
to any destination in South America or
bringing any two friends or family members
for a visit to the United States.
Keeping its customers and prospects
aware, engaged and satisfied is certainly
a critical part of LAN’s overall strategy,
but it also places strong emphasis on the
communities it serves and providing aid
in times of crises. Earlier this year, LAN
CARGO committed resources to assist
aid efforts in Haiti. A LAN CARGO Boeing
767-300 freighter carried approximately
48 tons of relief items to Port-au-Prince,
including medical supplies, portable toilets and water from local and national
organizations such as the Americas Relief
Team, The Pan American Development
Foundation, the University of Miami’s
Project Medishare and The Coca-Cola
Company.
LAN CARGO team members accompanied the flight to assist with the unloading
of cargo on the ground. Additional relief
supplies including clothes, water and
canned goods collected by LAN Airlines
and LAN CARGO in Miami were also
onboard. On the ground in Miami, the airline
partnered with Boston, Massachusettsbased Partners In Health, a non-profit
organization that works to bring modern
medical care to poor communities in nine
countries around the world and has a
20-year history in Haiti. Partners In Health
also used the LAN CARGO export warehouse at Miami International Airport as a
staging point and hub for all relief supplies
that were transported to Haiti.
Under the leadership of LAN Chief
Executive Officer Enrique Cueto, the airline prides itself on keeping its eye on its
customers, employees, shareholders and
communities, ensuring continued longterm success for all parties involved. In a
recent interview with Ascend, Cueto talks
about what makes LAN a top contender in
the markets it serves.
Question: After 60 years as a stateowned enterprise, LAN became privatized
in 1989 with the sale of 51 percent of its
equity to local investors and Scandinavian
Airlines System. In 1994, the process
was completed when current controlling
shareholders and other major shareholders
acquired 98.7 percent of the company’s
shares. What are the greatest benefits
of operating as a private airline versus
being government owned? In what ways
ASCEND I PROFILE
has becoming private contributed to the
growth and financial success of LAN?
Answer: LAN’s successful expansion is
based on two key factors: LAN’s growth
strategy and its competitive advantages,
as well as public policies in Chile and in
countries where LAN has established its
affiliates, which have favored the sustainable and competitive development of the
airline industry.
Access to international capital markets,
mobility of human resources and materials
between countries; free market access
for different companies; and freedom to
determine the supply, quality and reasonable price of airport services have been
critical variables in the sustained growth
of the airline industry. LAN’s development
would not have been possible without the
right public policy environment.
Q: Six years ago, the airline officially
adopted the name LAN Airlines S.A. How
has this change supported the company’s
goal to reflect the values and attributes
common to all of the airlines making up the
LAN alliance and emphasize the organization’s internationalization strategy?
A: During the past 16 years, LAN has
grown from a purely Chilean airline into a
regional operator with affiliates in different
countries throughout South America. We
adopted a common corporate image in
2004 under the LAN brand to reflect the
regional nature of our operations.
Currently, LAN and its affiliates provide
passengers and air cargo clients with the
broadest connectivity for travel within the
region, connecting Latin America with
the United States, Europe and the South
Pacific, thus creating the most complete
network of international destinations to
and from the region.
LAN and its affiliates have the same philosophy, image and common values of service
excellence and the highest international
safety standards. Thus, when international
passengers buy tickets on different routes,
including domestic routes, they have the
certainty that they will experience the same
product with identical service standards.
Q: Why did LAN launch premium business class four years ago? How has the
new cabin service brought value to LAN
and its customers?
A: We have focused on investing in
areas that will provide the best product to
our passengers. The new premium business class involved a total investment of
approximately US$120 million and provides
a service that only a select group of airlines
in the world offer its passengers, featuring
full-flat seats that offer complete rest on
long-haul flights. This is in addition to a
modern onboard entertainment system and
a wine list featuring some of the finest
selections from around the world.
Q: In 2007, LAN launched a new business model for short-haul operations. What
is the strategy behind the new model?
How has it measured up to the expectations set forth by LAN executives and
shareholders?
A: The implementation of “low-cost”
practices in domestic operations implied
a revolutionary change that has broadened
transport alternatives in such a way that
even more people are considering flying
as a means of transportation. LAN and its
affiliates renewed their short-haul aircraft
and increased aircraft utilization. In addition, sales and distribution, onboard service
and airport processes were simplified and
expedited, significantly reducing unit costs.
All these efficiencies were passed on to
passengers through lower fares, which
have led to an explosion in terms of traffic
growth, with three consecutive years of
Earlier this year, LAN CARGO committed resources to assist aid efforts in Haiti, carrying approximately 48 tons of relief items to Port-au-Prince,
including medical supplies, portable toilets and water from local and national organizations. LAN CARGO team members accompanied the flight to
help unload cargo on the ground.
ascend 15
ASCEND I PROFILE
LAN’s new premium business class, an investment of approximately US$120 million, features full-flat seats that offer complete rest on long-haul
flights as well as a modern onboard entertainment system and a wine list that includes some of the finest selections from around the world.
more than 20 percent growth in domestic
markets.
Q: LAN holds the largest market share
of passenger traffic to and from Chile,
Peru and Ecuador as well as domestic
passenger traffic in both Chile and Peru.
What keeps LAN at the forefront in these
markets? What sets it apart from its main
competitors?
A: The pillars of LAN’s management
are service, safety and efficiency. In service, the company has worked unflaggingly
to provide a world-class, consistent and
differentiated product on all its routes.
In safety, LAN has incorporated latestgeneration aircraft and operates one of the
world’s most modern fleets. The efficiency
of all its production processes, together
with an adequate cost control and technological improvements, has allowed the
company to provide a better service at
attractive prices, contributing to the industry’s development in the region and directly
benefiting consumers. This would not have
been possible without a team dedicated to
professional excellence and highly committed to delivering the best travel experience
to our clients on a daily basis.
Q: As the leading air cargo operator
within, to and from South America, how
does LAN leverage operating efficiencies between its passenger and cargo
divisions?
16 ascend
A: The approach LAN takes to integrating its passenger business with the
transportation of air cargo is a distinctive
element of LAN’s business model. We
also transport cargo in the belly space of
passenger aircraft, maximizing the utilization of the aircraft and increasing the
efficiency of our operations. This is a competitive advantage for LAN, especially on
long-haul routes where cargo operations
are more significant. As a result, cargo
has historically represented approximately
one-third of LAN’s consolidated revenues,
a much higher percentage than the industry average.
Q: What are LAN’s future expansion plans for its passenger and cargo
operations?
A: We expect significant growth over
the next years in both passenger and
cargo operations. These expansion plans
are based on significant fleet orders,
which contemplate delivery of at least
45 narrow-body A320 family aircraft, 35
wide-body passenger aircraft and four
freighters between now and 2018, with
total fleet capital expenditures of US$5.5
billion over this time period.
Q: In what ways has its membership in
the oneworld global alliance benefited LAN
and its customers? What value does LAN
bring to other members of oneworld?
A: LAN Airlines this year celebrates
its 10th anniversar y as a member of
oneworld, the global alliance that includes
the best airlines in the world. Being part
of oneworld has allowed us to offer a truly
global network served by partners with
the same belief in high-quality standards,
which represents an important advantage
for our passengers in international travel.
This enables us to offer passengers travel
to hundreds of destinations that LAN does
not serve directly, while at the same time
LAN provides oneworld members with
the most extensive network within Latin
America. For much of its 10 years as part
of oneworld, LAN has been the only airline
in South America to be a member of any
of the global airline alliances, playing a
key role in establishing oneworld as the
leading alliance in the region.
Q: How has LAN’s staggered lease
maturities over time created the strategic
flexibility to expand or reduce capacity
according to market conditions?
A: Given attractive financing conditions, most of our aircraft orders are for
aircraft purchases. Currently, 16 percent
of our fleet is operating leases. These
leases have staggered maturities, with a
few coming due each year, allowing us
to reduce the size of our fleet if necessary. This allows us ample flexibility to
renew our existing fleet, reducing the
ASCEND I PROFILE
average age and increasing efficiency.
Q: Earlier this year, LAN signed an
agreement with Boeing to adjust the
delivery of 10 Boeing 787-8 Dreamliners
to be incorporated into the company’s
long-haul fleet, making it the first carrier
in the Western Hemisphere to receive the
Dreamliner. How does this help ensure
the company’s sustainable growth while
preser ving the environment and incorporating state-of-the-art technology to
deliver the best travel experience for
LAN’s passengers?
A: LAN will effectively be the first
airline in the Western Hemisphere and
one of the first airlines in the world to
receive the Boeing 787 Dreamliner. This
is a significant milestone, allowing us to
provide the best travel experience for our
passengers and also result in important
efficiency gains.
The incorporation of the Boeing 787
— considered the world’s most efficient
aircraft with a significantly reduced effect
on global warming — ensures the company’s sustainable growth through a more
efficient operation and competitive advantages over the long run.
Q: More modern aircraft certainly
helps preserve the environment. In what
other environmental initiatives does LAN
participate?
A: Even though the impact of commercial aviation on global warming is
relatively small, responsible for only 2
percent of CO 2 emissions, the industry as
a whole and LAN in particular have significant concern for this matter and have
adopted various initiatives and developed
new technologies aimed at preserving the
environment. These initiatives include the
renewal of our fleet and the incorporation
of the new 787, energy-saving initiatives,
efficiency in fuel consumption and an
extensive recycling program through which
the company processes 90 percent of the
waste generated on board its flights. We
have also invested US$70 million in the
installation of winglets on all our Boeing
767 fleet, reducing CO 2 emissions.
In addition, LAN has been at the cutting
edge of the industry’s move to electronic
tickets. More than 95 percent of tickets
issued by LAN are electronic tickets and
LAN CARGO is the first airline in Latin
America and one of the first worldwide to
transport cargo using an innovative system
to process cargo without the need for
printed documents.
The company has also decided on the
creation of an environmental management position. This role will promote and
strengthen these and other environmental
initiatives that will be launched in the near
future.
Q: What role does technology play in
LAN’s immediate and long-term success?
A: LAN is permanently concerned
with innovation, incorporating the most
advanced technology to its operations
in order to achieve significant efficiency
improvements and to offer a differentiated
product. This is reflected in one of the
world’s most modern fleets, with latestgeneration aircraft such as the Boeing 777
freighter and the Boeing 787 Dreamliner,
which will be delivered next year.
We are constantly developing innovative projects that improve upon existing
technologies, such as a new navigation
system using satellite technology that we
implemented in the airports of Cusco in
Peru as well as in Chile, allowing us to
extend the range of our operations and
offer the best punctuality standards.
Technological innovation has also
Highlight
LAN is permanently
concerned with
innovation, incorporating the most advanced
technology to its
operations in order to
achieve significant
efficiency improvements
and to offer a differentiated product.
— Enrique Cueto, chief executive
officer, LAN
allowed us to improve efficiency in different areas. We have applied the world’s
most advanced models to redesign our
aircraft maintenance processes, allowing
us to achieve a 50 percent reduction in the
time that a plane remains on the ground.
Q: How does LAN support the communities it serves in terms of volunteer
and fund-raising initiatives?
A: As a leader in Latin America, LAN
has an integral vision that includes sustainable entrepreneurial management.
The company is aware of its social role in
the communities it ser ves, which is why
we have focused on promoting sustainable tourism, caring for the environment
and heritage of the destinations in the
region. Added to this is the company’s
ongoing willingness to collaborate with
different social organizations and support
communities in transporting humanitarian
aid when necessar y, especially if they
have been victims of diverse natural
catastrophes, where air transport can
play a key role.
Q: During the last five years, while
much of the airline industr y has faced
significant competitive and liquidity crises, how has LAN enjoyed a 20 percent
compound growth rate in total revenues
and remained consistently profitable?
A: Airlines are constantly tested as the
industr y is affected by the many external
shocks that in one way or another impact
demand for passenger and cargo transportation. LAN has successfully faced
these challenges due to our geographical and business diversification, efficient
cost structure and flexible operations.
Q: Airlines around the world are becoming more creative with their marketing
efforts to help build brand awareness and
pique customer interest. In what unique
ways does LAN market its brands to
remain competitive?
A: We want to position LAN as the
best way to fly to, from and within South
America, and are focused on constantly
improving our reputation. We believe
that the way to build a strong brand is
through providing the best travel experience and communicating efficiently with
our clients. We constantly monitor the
best way to get our message to our target customers and obviously have been
exploring the way to best use online and
direct marketing tools. For instance, we
are learning how to best use the social
media revolution.
Q: How would you describe LAN to the
traveling public to win them over?
A: At LAN, we have a simple promise
to the world’s travelers: we will transport
your dreams in a reliable way with all the
warmth of South America … fly with us,
and you will not only enjoy the accomplishment of your dream, but you will also
enjoy the road to it. a
ascend 17
ASCEND I PROFILE
cambodia’s
AND
by LAUREN
LOVELADY &
KC TEO
Cambodia Angkor Air, offspring of Cambodian and Vietnam
governments, via Vietnam Airlines, has become Cambodia’s
proud new national flag carrier.
18 ascend
ASCEND I PROFILE
T
July 27, 2009, Cambodia Angkor Air launched
its inaugural flight from Ho Chi Minh City to
Phnom Penh.
At the signing ceremony, Vietnam Deputy
Prime Minister Truong Vinh Trong said the
airline was not only a rare joint investment,
but also a way to “improve the two Asian
neighbors’ bilateral relations.” Under the
US$100 million, three-aircraft venture, the
Cambodian government holds 51 percent
of the national carrier, and Vietnam Airlines
retains 49 percent.
The idea to launch a Cambodian national
carrier with assistance from Vietnam Airlines
was conceived by Cambodian Prime Minister
Hun Sen, who recognized Cambodia’s rapid
economic development — an 8 percent annual growth in the gross domestic product from
2006-2009, increased foreign investments
and a stabilizing political climate — would
further benefit from a vibrant airline industry,
as would its thriving tourism industry. Prime
Minister Hun Sen tracked the growth of
Vietnam Airlines and after a review of potential opportunities in Cambodia’s market,
approached the Vietnamese government.
“Those were interesting times,” said
Trinh Ngoc Thanh, chief executive officer of
Cambodian Angkor Air. “We had tremendous
pressure to start the operation as soon as
possible, but we also had to make sure we
ran a professional operation.”
The close cooperation between Vietnam
and Cambodia is largely responsible for the
continued success of the joint venture. As
the national carrier of Cambodia, the airline
is supported by its government, with essential business acumen provided by Vietnam
Airlines, especially in the early stages.
Cambodia Angkor Air receives comprehensive technical support from Vietnam Airlines,
including crew training, aircraft maintenance
and flight operations, ensuring its fleet of
leased ATR 72-500 turboprop planes and
Airbus A321 jets is maintained at the highest
level of safety and reliability.
Currently, the Cambodian carrier offers
domestic and international flights between
its hub in Phnom Penh and Siem Reap and
Ho Chi Minh City, with plans to expand to
additional destinations in the near future
utilizing the six Airbus A321 jets it now has
on order. By 2015, Cambodia Angkor Air
plans to have a fleet of 16 Airbus A321s.
All of the airline’s current 110 weekly flights
Photo: Cambodia Angkor Air
Photos: LAN
he story of Cambodia Angkor
Air, the new national airline of
the Kingdom of Cambodia, is an
evolutionary one that continues
to be written. In existence for
a little more than a year, the
airline is making steady and carefully measured strides to reach its goal of becoming
a full-service carrier with domestic and
international service within the Association
of Southeast Asian Nations (ASEAN) and
beyond.
Perhaps even more importantly, the story
of Cambodia Angkor Air is also one of
unprecedented cooperation between two
neighboring, yet traditionally rival, countries.
After a succession of airline failures, the last
of which ceased operations in 2001 under
the burden of mounting debt, the Cambodian
government officially requested assistance
from the Vietnamese government to establish a new national carrier. The Cambodian
government and Vietnam’s national carrier,
Vietnam Airlines, initially met at the end of
first quarter 2009 to discuss a possible partnership and investment opportunity. Within
100 days, a joint-venture agreement was
signed by the two parties. The following day,
As part of its long-term expansion plans, Cambodia Angkor Air has ordered six Airbus A321 aircraft, and by 2015, it intends to increase its fleet of
A321s by 10. Currently, the carrier operates two ATR 75-500 turbo props and a single Airbus A321.
ascend 19
Photo: Boeing
ASCEND I PROFILE
Vietnam’s flag carrier, Vietnam Airlines, in a joint venture with Cambodia’s government, owns 49 percent of year-old Cambodia Angkor Air and has
provided comprehensive technical support to the start-up airline, including crew training, aircraft maintenance and flight operations.
operate under a codeshare agreement with
Vietnam Airlines.
Establishing the new Cambodian national
airline has not been without its challenges.
Because of limited airline knowledge within
the Cambodian population, which numbers
14.5 million people, most of the airline’s
first employees were actually “on loan” from
Vietnam Airlines. Training local employees
required sending them to Vietnam Airlines to
learn and master the appropriate skills on a
tight timeline.
Despite the challenges, Cambodian Angkor
Air continues to make steady progress toward
establishing itself as a successful, independent
national carrier. Initially, the carrier’s in-flight
services were provided by cabin crews from
Vietnam Airlines. After completing training in
Vietnam, local Cambodian employees began
staffing flights a few months ago, marking a
significant milestone for the national carrier.
In addition, Cambodian Angkor Air recently
began using SabreSonic® Customer Sales &
Service in support of its strategy to increase
productivity using the best resources available
while keeping costs to a minimum. By partnering with Sabre Airline Solutions® , the carrier has
access to a comprehensive range of technology
20 ascend
that can effectively support it from the initial
stages through various levels of expansion.
“Cambodia Angkor Air is anxious to become
a full-service carrier and expand its international services as soon as possible,” said Trinh.
“Judging from Vietnam Airlines’ positive experience implementing Sabre Airline Solutions
technology, we are confident SabreSonic CSS
will similarly drive our plans forward quickly and
successfully.”
The advanced technology platform supporting SabreSonic CSS will enable the airline
to cultivate interline and codeshare opportunities with other airlines, critical to its expansion
plans. The sophisticated reservations system
will also enhance Cambodia Angkor Air’s revenue through merchandising. With SabreSonic®
Web, an Internet booking engine, the airline
can capitalize on the solution’s new shopping
services and capabilities to maximize the
online channel.
Later this year, Cambodian Angkor Air
plans to implement a crew management
system from Sabre Airline Solutions as well.
“The proven solutions will play a large
part in enhancing the operational capability
of Cambodia Angkor Air,” said Trinh. “Our
cooperation with Sabre Airline Solutions will
be further enhanced when we implement
another of its solutions, this time to ensure
optimum crew management by the end of
the year.
“We are determined to bring the best of
aviation practices to our customers,” he said.
“Every technology that we implement has
the end goal of enhancing our customers’
experience.”
Cambodian Angkor Air’s goal is to be a
“flying ambassador” for the Kingdom of
Cambodia. With more than 20 foreign airlines
now offering direct flights into the country,
Cambodia Angkor Air certainly has competitors, but with the ongoing support of its
neighboring country, it’s the only airline that
can proudly call itself the national flag carrier
of the Kingdom of Cambodia. a
Sabre Airline Solutions and the Sabre Airline Solutions logo are trademarks and/or service marks of an affiliate of Sabre Holdings Corp. ©2010 Sabre Inc. All rights reserved. AS-10-12231 0410
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CO2Emissions:
Manage And Trade Wisely
Under the governance of the European Union Emission Trading System (E.U.
ETS), in 2012, airlines operating to and from Europe will be required to obtain
carbon credits to continue operating in Europe. Airlines will need to report
their CO2 emissions and plan for how their carbon credits will be used, and
advanced technology is in place to assist with these efforts.
By Christine Kretschmar, Brent O’Brien and Kamal Singhee | Ascend Contributors
22 ascend
ASCEND I INDUSTRY
T
he E.U. ETS as related to the
aviation industry went into effect
in January with the majority of
airlines filing their emissions tracking plans with their respective
member countries. With these
plans being approved and airlines tracking
their emissions for 2010, the stage is set for
the next steps of the plan, which, by March
31, 2011, includes:
Submitting a 2010 ton-kilometer report,
Submitting the 2010 CO2 emissions report,
Applying for free emissions allowances.
The E.U. ETS is a “cap-and-trade” system
where the emissions in 2012 are capped at 97
percent of the 2004 through 2006 average. In
2013, the cap is further lowered to 95 percent
of averages for the same period. Each airline,
based on its 2010 ton-kilometer report, will
be allocated a share of the total emissions
pie as determined by the European Union. As
an airline’s share is determined, 85 percent is
deemed as free allowance while 15 percent is
to be purchased from carbon markets — the
trade aspect of the scheme. Revenue generated from auctioning the 15-percent credits
will go to member countries. Using the submitted ton-kilometers data from all airlines
and participating operators, the European
Union will define the benchmark by Sept. 30,
2011, for determining the allocation for each
participating airline/operator.
The scope of this legislation is quite clear
— any flight departing or arriving into an aerodrome situated in an E.U. member country is
included for purposes of reporting. However,
particular flights are exempt from emissions
reporting, such as:
Search and rescue flights;
Flights performed exclusively for the purpose of checking, testing or certifying aircraft;
Public-service obligation flights;
Commercial aircraft operators with fewer
than 243 flights per defined period (January
to April, May to August and September to
December).
Recent events, such as disruptions due
to volcanic ash and industrial actions, are
expected to have an impact on airlines as
they submit their 2010 ton-kilometer report.
Lufthansa, for example, requested a one-year
delay to the inclusion of airlines in Europe’s
emission trading scheme due to flight disruptions from a volcanic ash cloud. The airline
expressed its concern about using 2010 as
the base year, due to the number of forced
cancellations from the recent disruption. The
industry is awaiting the direction from the
European Union on how these events will be
accounted in allocating free credits for 2012.
Through the E.U. ETS process, airlines
must work with a verifier to ensure accuracy
of specific reports as well as properly manage
credits and reporting.
Verification
Data collected by airlines/operators as part
of the emissions reporting must be verified by
an independent and accredited verifier. Each
member country will publish a list of accredited verifiers that airlines will be responsible
for working with to ensure emissions reports
are certified before they are submitted to
the responsible member state agency that
oversees monitoring and managing emissions
tracking. The verifier ensures:
Completeness of flight and emissions data
compared to air traffic data collected by
EUROCONTROL,
Consistency between reported data and
mass and balance documentation,
Consistency between aggregated fuel consumption data and data on fuel purchased or
otherwise supplied to the aircraft performing
the aviation activity.
It also must verify the emissions and tonkilometer reports according to the monitoring
and reporting guidelines (MRG) and issue an
opinion stating that reasonable assurance of
the reports are free of material misstatements
and non-conformities. In addition, the verifier
is required to provide the details of methodology used by the airline/operator and submit it
with the emissions reports to the designated
agency.
Getting the report approved by a verifier
may not be easy for airlines. They’ll need to
collect various documents for each flight from
different sources. If incomplete or inaccurate
information exists, the verifier will reject the
report, causing delays likely to cost airlines
valuable time and money.
Managing Credits And Reporting
As part of submitting emissions reports,
airlines must also present a request for free
allowance by March 31, 2011. Based on the
request and information collected from the
emissions reports, in particular the ton-kilometer report, the European Union will determine
the emissions allowance based on historical
emissions. By Sept. 30 of the same year, the
E.U. Commission will finalize the total quantity
of allowable emissions, the free allowance and
quantity to be auctioned. The calculations of
the individual airline/operator and the associated free allowance will be available no later
than Dec. 31, 2011.
In 2012, with the allocation of free allowances and requirement to purchase 15 percent
of the credits, airlines will need to plan their
schedule to minimize the impact of emissions
and manage the free allowances. This requires
understanding the impact of CO2 emissions to
be able to forecast the requirements of emissions credits. The forecasting capability requires
knowledge of historical data and the use of a
CO2 calculation methodology that meets the
airline’s requirements. This information will be
used as part of the schedule-planning process
to incorporate the cost of emissions into the
fleet assignment to determine aircraft types to
operate a given sector.
In addition to incorporating the cost, it will be
vital to continuously understand the emissions
forecast as well as track it against actual flight
operations data. This exercise alone can provide
a constant view of the requirements and manage them against the allowance. For example,
a flight between Boston, Massachusetts,
Emissions Manager Forecasting
Increase in overall
emissions requires
borrowing from
other sectors
Helping understand
the impact of
emissions on an
airline schedule
1.00
0.97
0.95
Baseline
emissions
2012
Expected
emissions
2013+
Expected
emissions
E.U. ETS, based on a “cap-and-trade” system, begins with a baseline that is calculated from the
average emissions used between 2004 and 2006. The CO2 emission cap is set at 97 percent in
2012 and reduced to 95 percent in 2013. Airlines need to include an overall E.U. ETS into their
strategic decisions for future development and competitiveness.
ascend 23
ASCEND I INDUSTRY
Sabre AirCentre Emissions Manager
Emissions
management system
Rules
engine
Schedule and
aircraft movement
Alerting
module
The Solution
Passenger management
and payload information
DATABASE
Fueling information
Data
retention
E.U. ETS
reporting
templates
Regulatory data
ESB
Third-party verification
regulatory submission
Emissions forecasting
Designed to help airlines ensure compliance with E.U. ETS regulations, Sabre AirCentre
Emissions Manager automates data collection, verification and reporting processes through
defined integration with airlines’ operations, airport and reservations systems.
Managing Carbon Assets
Planning to Operations
Sabre AirCentre Emissions Manager
Reporting
Data collection
Validation and
alerting
Proactive
monitoring
Verification
Forecasting
Generating reports
Connecting with
verifier
Carbon forecasting
Forecast to actual
comparison
Manage by
exception
Integration out
of the box
Consulting
and Support
Update with
access to new
E.U. ETS schemes
Consulting and
health-check
support
ASP offering
When managing CO2 emissions, they must be treated as an asset and their usage must be
monitored from planning processes to operations. This information going forward will influence
airline fleet selection processes, network planning and operations.
and Frankfurt, Germany, can generate
approximately 125 tons of CO 2, costing
more than US$750,000, and with 15 percent of purchased credits, it would cost
an additional US$120,000 a year at the
current prevailing rates. A flight between
New Delhi, India, and London can generate around 175 tons of CO 2, costing more
than US$1 million, and with 15 percent
purchased credits, it would cost an additional US$170,000 a year.
24 ascend
the world adopt emissions trading schemes.
Recent actions by the German government
to introduce the Ecological Levy, estimated
to be an additional cost of US$1.19 billion,
will require airlines to better manage their
emissions.
Operating without sufficient emissions
credits will attract a fine from regulatory
authorities (expected to be US$123 per ton
of CO 2). On the other hand, if the airline has
excessive credits based on the forecast,
these can be traded within the confines of
the allocated year.
With changing market dynamics, it is
important for airlines to understand, plan and
manage their emissions footprint to avoid
significant costs as other countries around
Sabre Airline Solutions® recognizes the importance of effectively and accurately managing
emissions credits and offers state-of-the-art
technology to help airlines not only comply with
the E.U. ETS but also reduce costs and improve
operations overall.
The recently launched Sabre® AirCentre™
Emissions Manager collects, validates, stores
and reports carbon emissions data, simplifying
compliance with E.U. ETS requirements. The
solution is designed to support requirements
for emissions management and reporting such
as data collection and storage for 10 years,
validating the data when multiple sources are
available, interfacing with an accredited verifier
and reporting data in electronic form or through
defined reports. The solution provides significant
automation and data validation to ensure correct
data is reported and enables airlines to manage
emissions within the defined requirements.
Additionally, Sabre Airline Solutions experts
consult with airlines around the world to help
them resolve current challenges related to emissions management. Its consultants are prepared
to help airlines develop a strategy to reduce
fuel consumption and emissions as well as
implement the right solutions to comply with
emissions reporting requirements.
With reducing emissions in mind, these
experts also assist airlines in applying for earned
credits and setting up necessary programs to
support their emissions initiatives. They ensure
airlines are compliant with relevant regulations
and help them benefit from essential credits to
guarantee efficient and environmentally friendly
operations.
The E.U. ETS can present numerous challenges for airlines around the globe. However, a
sound strategy combined with well-trained personnel, robust technology and knowledgeable
industry experts can offset unnecessary costs
and keep airlines aligned with the new trading
scheme. a
Christine Kretschmar is a regional
marketing manager of Europe, Brent
O’Brien is solutions manager and Kamal
Singhee is solutions director of Sabre ®
AirCentre™ Enterprise Operations for
Sabre Airline Solutions. They can be
contacted at christine.kretschmar@
sabre.com, brent.o’brien@sabre.com
and kamal.singhee@sabre.com.
ASCEND I INDUSTRY
id
r
yb
As pure low-cost carriers evolve to a hybrid model, their key concern is
how to add sophistication to their model without adding complexity and
cost to the business, i.e. how to implement more sophisticated solutions
that are able to increase revenue without adding processes and infrastructure
to the business that would increase their cost base. To that aim, the airline
evolution needs to be supported by future-ready technology that is flexible
enough to enable the right and necessary new business processes.
By Alessandro Ciancimino | Ascend Contributor
Photo: Airbus
H
ascend 25
ASCEND I INDUSTRY
L
ow-cost carriers have grown at a tremendous pace during recent years,
and some of them have enjoyed
healthy financial performance relative
to the industry average. This success
was originally and primarily due to the exploitation of latent demand for low-cost travel.
LCCs’ success is based on a steady profitable revenue growth that ensures a continuous
growth of their share value. If at any time the
growth is clouded by events such as an unexpected decrease in load factor, then immediately
the financial community issues a profit warning.
Originally, about 75 percent of LCC passengers were due to stimulation of new traffic
— passengers that did not previously considering flying as a travel option. It is clear though that
such stimulation cannot continue indefinitely and
that LCCs, to keep filling planes, have to find
alternatives to fuel the growth.
Beyond an inorganic growth, which has not
been seen much among LCCs so far, what
is prevalent in the industry are basically two
macro-options by which LCCs can sustain a continuous organic growth: expanding in terms of
the geographical footprint covered by the airline
or increasing the customer base — addressing
different customer segments rather than just the
pure leisure one.
Both options deviate from the pure original
LCC business model. In fact, to grow the geographical footprint, LCCs must increase the
average stage length of their network, which
means flying longer routes that they did not
initially or intentionally choose.
Longer average flight times translate into
less-competitive advantage in terms of aircraft
utilization against the incumbent traditional carriers as well as not being able to “flood” such
markets with many daily frequencies as LCCs
typically do when they serve particular markets.
Ryanair is a prime example of a low-cost carrier that pursues this avenue to sustain growth,
and, recently, the airline started serving markets
that require nearly a four-hour block-time sector
that originally did not fit into its business model.
This means, of course, increasing the cost base
and, hence, having less competitive advantage
versus the incumbents. There are actually a few
LCCs that are successfully pursuing this option
beyond Ryanair, such as AirAsia and Wizz Air.
On the flipside, other LCCs, such as Air Berlin,
easyJet, JetBlue Airways, Norwegian Air Shuttle,
Vueling Airlines and WestJet Airlines, are achieving growth by increasing their customer base.
This requires them to obtain new passengers in
addition to those achieved through stimulation
by cheap travel. In doing so, they must have
an advantage, aside from low fares, over the
competition, which presents a new challenge
for LCCs.
Until a couple of years ago, LCC direct competition was based on less than 10 percent of
capacity because these carriers were able to
avoid, for the most part, competition within the
26 ascend
Straying from the original low-fare business model, AirAsia and Wizz Air, as well as low-cost
carrier Ryanair, have increased the average stage length of their network – flying longer routes
that weren’t part of the initial plan – to successfully grow their geographical footprint and sustain growth.
low-cost sector. But now that further growing
opportunities in potential LCC “virgin” markets
are drying up, these carriers are beginning to
compete for market share.
At the same time, winning passengers from
traditional, full-service airlines is not easy because
they are fighting back by attacking their cost
base and trying to emulate, with different levels
of success, some features of the LCC business
model such as unbundling products and boosting
revenue through ancillary sales.
This strategy is based on successfully winning traffic from the incumbents, which, even if it
seems strange, was not originally the foundation
of the LCC strategy and success.
In either case, the ultimate goal is to increase
the available number of revenue sources (through
ancillary services obtained by intelligently
unbundling products) or the revenue-generation
capability (through innovative revenue management coupled with customer-centric functionality)
while at the same time keeping the cost basis
under tight control.
Many LCCs and hybrid carriers keep reminding that, first and foremost, they need to keep
or even strengthen their cost-basis advantage
(“cost is king”) and then focus on revenue
improvement.
However, in many instances, the LCC cost
base has already “scratched the bottom of
the barrel” or, in other instances, some LCCs,
due to their smaller size compared to others,
cannot achieve the same cost basis due to
different economies of scale that can be realistically achieved. So while keeping the cost
basis to a minimum is necessary for success, it
is not sufficient. In addition to maintaining the
low-cost structure, these carriers must also
focus on revenue generation.
When two LCCs with a similar cost basis,
which cannot be substantially improved further, compete in the same markets, long-term
ASCEND I INDUSTRY
success will be awarded to the carrier that is
able to:
Offer a more-lucrative product to the customer,
Better distribute the product through multiple
channels,
Better revenue manage the market,
Offer the right product to the right customer,
Codeshare where appropriate to offer a wider
network reach without investments,
Provide more-effective customer care that
ultimately translates into a better customer
experience and improved loyalty.
To a certain extent, LCCs will have to focus
more prominently on actions and imperatives
that are well known by the incumbents: finding
new sources and diversification of revenue,
developing new business processes around
pricing and revenue management as well as customer care and, of course, keeping tight control
on costs, all of which ultimately translates into
using traditional paradigms in a non-traditional
and innovative way.
At first sight, these initiatives may appear
to be a mission impossible, but they are not.
Provided that airlines approach the hybridization
(or sophistication) process continuously, with a
sound strategy in place, it’s all well within reach.
Offering a more sophisticated product means
redesigning some business processes and
implementing technology that will support them.
Key challenges include:
Avoiding any “over” redesign, re-engineering
only the processes that would deliver a quick
and substantial ROI where the investment is
minimal or nonexistent,
Continually changing processes upon changing market/competition conditions,
Implementing robust, flexible technology that
can easily adapt to changing conditions well
into the future with little or no incremental
costs.
To achieve this, airlines must apply a customer sales and service approach that includes
forward-thinking technology built around the
capability of an airline to shape its business
model according to its own tailored strategy.
Important technology elements include open
architecture as well as adaptive capabilities.
Any solution should offer a futuristic design that
will accept relatively easy customization and
changes as the strategy and the business model
of the airline evolves, even in a way completely
unthinkable at present. To that aim, having a
solution that can be easily modified through
the implementation of natural language-based
business rules without having to revert each
time to the technology provider is definitely the
way forward.
This also means service-oriented architecture must isolate individual capabilities of an
application so they can be used in multiple
ways and combined with other services to
create new functionality deployed across a
service bus that facilitates easier integration and
Some low-cost carriers, such as Air Berlin, easyJet and Norwegian Air Shuttle, are increasing their customer base to achieve growth. To do so successfully, these carriers must have an
advantage that transcends low fares and sets them apart from their competition.
communication among different applications of
different providers.
In line with the conventional LCC strategy
to outsource non-core operations, solutions
need to be provided on a Software as a Service
(SaaS) basis as the most effective/least expensive method to source solutions.
Keep in mind the demand of new technology has to be driven by changing business
processes requiring new enablers, and not vice
versa. Additional key success factors include:
Evolving processes around a carrier’s own
strategy,
Redesigning processes in a manner that
minimizes or avoids additional resources/
infrastructure,
Outsourcing initial business process re-engineering activities at the time the new solution
is implemented to the solution provider since
this typically delivers the most effective outcome at the lowest cost,
Investigating the possibility to partner with
the solution provider on an ongoing basis to
outsource the performance of some recurring business processes (e.g. maintenance of
the business rules) to avoid adding resources
and infrastructure in house when this proves
to be economically ineffective.
The sophistication of the pure LCC model
is likely unavoidable and highly recommended.
The key to success for a low-cost airline is
to tailor the sophistication around its own
strategy, redesign some business processes
accordingly and source technology solutions
that support the new processes in the most
effective, efficient way. This indicates that
solutions providers will have to play an even
more central role in the industry since they will
support airlines not just from a pure technology standpoint but also, and maybe primarily,
from a business advisory and business support
perspective.
To that aim, a true partnership between airlines and solutions providers is clearly the most
successful way forward. a
Alessandro Ciancimino is vice
president in Europe for Sabre Airline
Solutions®. He can be contacted at
alessandro.ciancimino@sabre.com.
ascend 27
ASCEND I INDUSTRY
More Smoke
Than Fire
The volcanic eruption in Iceland earlier this year created angst and
uncertainty among airlines, travelers and numerous businesses alike.
What could have been a long-term crisis for the air transport industry,
however, was contained, but not without valuable lessons learned.
By Kay Denton | Ascend Contributor
28 ascend
ASCEND I INDUSTRY
Photos: Kolbeinn Arinbjarnarson
O
n March 21, the United Kingdom,
Ireland and Iceland awoke to regionwide flight disruptions, travel chaos
and potential financial losses due to
a seldom active volcano, with the
unpronounceable name “Eyjafjallajökull,” which a
pundit translated as “I laugh at your losses.”
For the aviation industry, only recently on the
road to recovery from the global financial crisis,
the volcanic disruption seemed like a final visit
from the Four Horsemen of the Apocalypse.
During the past decade, the aviation industry
had been hit by war (the terrorist events of Sept.
11, 2001, that triggered wars in both Iraq and
Afghanistan), pestilence (SARS and H1N1) and
famine (in the form of skyrocketing fuel prices
that airlines could not afford), but until March,
the industry had been spared an act of nature
approaching biblical proportions.
The ash cloud slowly spread across Europe,
and an eerie silence fell over the skies and
once-bustling airports. Analysts expressed concerns for the health of Europe’s economies in
the wake of what might be called “volcanic
fever.” It seemed at the time that the rumble
of the eruption might have been the harbinger
of the death of the European aviation industry.
A few months after the event, however, and
the volcanic disruption is only a sharp “V” on
demand, revenue and even profitability graphs
for airlines.
The interesting question arising from this
event is, “Why wasn’t the volcanic disruption
a bigger event?” Afterall, it seemed — at the
time — to be a bigger issue than H1N1, but in
the end, it held little more impact than the Y2K
bug. A decomposition of the event perhaps
sheds light on why the volcanic eruption ended
up being more of a yawn than a roar.
First, there is the matter as to why the
airspace was closed at all this past March. On
June 24, 1982, British Airways flight 009 inadvertently and unknowingly flew into a cloud of
volcanic ash while flying near erupting volcano
Mount Galunggung in Indonesia. During the
course of a frightening hour, all four engines
of the Boeing 747 failed, the windshield of
the aircraft became scored to opaqueness by
volcanic grit, the aircraft filled with smoke and
ash, oxygen levels dropped in the cabin, and the
aircraft hurtled toward the ground.
Due to the bravery and prompt actions of the
flight crew, however, the aircraft was brought
under control and was able to land safely
without the loss of life. This is a notable incident
in aviation history and a point of reference that
dictated the regulations regarding flying through
volcanic ash clouds.
Basically, as a result of this event in 1982,
the civil aviation authorities of Europe have little
tolerance for volcanic ash. At the time, there
were few who questioned the airspace closure
on safety grounds — regulators appeared to
have the public’s best interests in mind when
issuing the flying sanctions.
ascend 29
In the days following the initial eruption, ongoing eruptions caused the ash cloud to spread over
Belgium, Holland, Scandinavia, parts of Germany
and northern France and thousands of passengers
were stranded across the globe. Trans-Atlantic
flights were cancelled and customers bound for
northern Europe had to fly to Rome or Madrid
to make their way to European destinations.
Travel disruption abounded, and ferries and trains
across Europe were oversold as they endeavored
to transport displaced passengers. The Eurostar
terminals in Calais and Paris, France, overflowed
and passengers had to pay for temporary accommodation amidst the uncertainty of when they
could travel.
In an interesting nod to mass psychology (or
“herd mentality”) otherwise calm, experienced
travelers suddenly started treating their existing location as little better than a penal colony.
Business travelers who had enjoyed excellent
weather in London suddenly had to find any
means to leave the city. Of course, everyone
wanted to return home, but many travelers resorted to extraordinary means that were reminiscent
of scenes from “The Great Escape.”
The press played its part in sensationalizing
the extent of the disruption because bad news
is much more interesting than good news. This
is one of the reasons the recent volcanic event
ultimately had little lasting impact.
Unlike most major events to hit the aviation
industry during the past decade, the eruption
of Eyjafjallajökull did not result in a downturn in
airline demand — even temporarily. To be certain,
there was a downturn in capacity as the airlines
were grounded, but there was no downturn in
unconstrained demand.
Instead, the volcanic disruption increased
short-term demand and required several forms
of intra-modal travel that resulted in a sharp uptick
on the backside of the “V” when the airspace reopened. Intra-modal travel occurs when different
forms of travel are mixed to reach the final destination. In the case of a passenger traveling from
London to Dallas, Texas, for example, intra-modal
travel may have required a taxi ride from London
to Dover, a trip on a ferry from Dover to Calais, a
train ride from Calais to Paris, a bus ride to Madrid
and then a flight from Madrid to Dallas.
The airports of Rome and Madrid became
bursting European aviation hubs as traffic plentifully flowed through due to the principal airports
of northern Europe (including Paris, London,
Amsterdam and Frankfurt) being closed. As such,
these southerly hubs experienced an increase in
traffic and certain airlines, such as Alitalia, received
a financial boost as they carried more passengers
than usual to Asia and the United States while
their more northerly competitors were grounded.
In fact, Alitalia released narrower operating
losses at the end of the second quarter than
predicted due to an increase in international
passenger volumes in the wake of the volcanic
eruption. When the restrictions were lifted and
flights recommenced, the load factor of many
30 ascend
Photos: Thinkstock
ASCEND I INDUSTRY
In the aftermath of Eyjafjallajökull, Iceland’s infamous volcano that erupted earlier this year,
Rome and Madrid became aviation hubs due to the closing of many northern European principle
airports. These southerly hubs transported much higher volumes of passengers to Asia and the
United States as a result while many of the continent’s northerly airports were closed and airlines grounded.
ASCEND I INDUSTRY
The eruption of Iceland volcano Eyjafjallajökull caused brief but significantly reduced restrictions
on northern parts of Europe’s air transport industry, with severe warnings of imminent flight
disruptions due to the volcano’s history of erupting for months at a time. However, after the
initial eruption and airspace closures, there has been little lasting impact.
flights was near 100 percent for several days due
to the backlog of passengers eager to reach their
destinations.
While many airlines have undoubtedly recorded
losses from the Icelandic volcanic disruption,
some carriers were winners, and the industry
quickly bounced back — especially in markets
such as Asia-Europe where the green shoots of
financial recovery were only temporarily singed by
airspace closures.
At the tail end of the first week, several airlines
started questioning the validity of the airspace
closures. The weather in England, of course, did
not help this situation. Late March can normally be
counted on for cold drizzle and overcast grey skies
— much like the remainder of the year. During the
volcanic eruption, however, the weather was just
beautiful in England; skies were gloriously blue
during the day, the sunsets were blood red and
spectacular, and temperatures were balmy —
especially for the time of the year.
Stranded travelers in England were forced into
unthinkable acts such as praying for rain in March,
which would be similar to praying for extra heat
in Dubai in the summer. By the end of the week,
airline executives — including Willie Walsh of
British Airways — were asking if the airspace
closures were truly necessary.
Air France, British Airways and Lufthansa,
among other airlines, operated test flights into
the ash cloud then anxiously examined the aircraft. While they found some advanced wear on
some parts, there was little damage, and after
seven days, almost all airspaces were re-opened.
There were brief and greatly reduced restrictions
on airspace with the subsequent eruption of
Eyjafjallajökull and dire warnings of future flight
disruptions because the volcano has been known
to erupt for months at a time, but after the initial
eruption and airspace closures, there has been
little lasting impact. In the light of this event,
however, there should be lessons learned.
The first set of lessons learned should be
for passengers. Travel insurance is specifically
designed to address additional costs in the
event of flight disruptions. It doesn’t cost a lot,
mainly because the events it covers are fairly rare.
Passengers should purchase travel insurance just
for peace of mind unless they are really hooked
on the adventure of intra-modal travel. Purchasing
travel insurance will allow them to apply the
second lesson: don’t panic when travel disruption occurs. Furthermore, passengers should not
overly worry about returning to work or school;
everyone will understand. After all, the disruption
was pretty much the best example of force
majeure impacting myriad lives.
The second set of lessons learned should be
for regulators. One event, such as the incident
with British Airways Flight 009, should not create
a trend. Regulators should be prompt to apply
public safety measures, but they should also be
just as prompt at testing the validity of their safety
concerns. Test flights should have commenced
earlier in cooperation with airlines, and the airspace
should have been opened earlier. Fewer flights
means less taxation, so governments should be
interested in seeing a prompt return to flights.
Cooperation between aviation regulators and the
industry works the best for addressing these
types of issues quickly and efficiently.
The third set of lessons learned should be
for airlines. Airlines should take every step not
to overreact when events are, for the most part,
out of their control. The Great Volcanic Disruption
of 2010 simply did not materialize because the
industry is resilient to crisis, if for no other reason,
simply because it has undergone so many shocks
in the recent past. Of course, the costs of
such disruptions should be contained, and airlines
should be swift to take advantage of short-term
opportunities that result from such challenges.
Automated recovery of passengers, aircraft and
crew can be a great aid to reducing the impact of
disruptions and enabling costs to be contained.
Nonetheless, airlines should not make knee-jerk
reactions to these events simply because the
press does.
A final set of lessons should be understood
by all stakeholders of the airline industry. Airlines
are an economic enabler. When they operate
on schedule, a host of other businesses operate efficiently. There are the primarily impacted
businesses in related industries such as airports,
ground handlers, freight forwarders, manufacturers, maintenance providers, fuel and catering
suppliers, and airline technology suppliers. These
are the chief businesses impacted by aviation
disruptions. Then, however, there are secondary
stakeholders such as manufacturing businesses,
retailers, financial institutions and similar firms that
rely heavily on airlines for transportation. These
secondary stakeholders are greatly impacted
when airlines are disrupted, even if the impact on
them is not easy to measure.
Finally, there is the remainder of the population
that is impacted by macro-economic influences
when airlines are disrupted. Airlines are the first
businesses to be hurt in an economic downturn and the quickest businesses to rebound
when economic forces improve. The lives of all
stakeholders, which include most of the world’s
population, are improved by a healthy airline business environment.
The industry will be faced with similar impacts
in the future — some foreseeable and some not.
The ability of airlines to manage these events in a
calm and efficient manner will provide the confidence to shareholders, regulators and, ultimately,
to the traveling public that airlines are strong
enterprises that react decisively to threats — even
those threats from gigantic ash-clouds. a
Kay Denton is an account manager in
Europe for Sabre Airline Solutions. She can
be contacted at kay.denton@sabre.com.
ascend 31
ASCEND I INDUSTRY
The new
Normal
Barring government intervention,
the airline industry can expect a
vastly changed landscape with
mergers on the rise.
By Lynne Clark | Ascend Staff
32 ascend
ASCEND I INDUSTRY
T
he media’s latest buzz phrase, “the
new normal,” is pithy shorthand
for more off-putting words such
as “change,” “flexibility,” “uncertainty” and “transition.” Roughly
translated, it means when the
recession is over, things won’t go back to the way
they were before.
For the airline industry, which has suffered
losses during the past decade of US$70 billion,
most government leaders, airline executives,
union members, analysts, stockholders and even
the traveling public agree that a new normal
couldn’t possibly be worse than the old normal.
The groups diverge, however, when discussing
how the new normal industry should look in the
coming years. The conversation is heating up now
especially in light of the mergers of UAL Corp.’s
United Airlines and Continental Airlines, Inc., and
British Airways and Iberia.
The United/Continental merger — valued at
more than US$3.2 billion — is moving forward
following shareholder and regulatory approval. It
will create the world’s largest global carrier, with
combined annual revenue of US$29 billion.
The British Airways/Iberia union — valued
at US$7.5 billion — approved by the European
Union, is also expected to close by the end of
the year. Under the merger agreement, British
Airways and Iberia will keep their separate brands
and identities, but a holding company called
International Consolidated Airlines Group SA
would be created with a primary listing in London
and a listing in Spain. The combined airline would
be the third-largest airline in Europe by revenue
and would carry more than 58 million passengers
a year.
Ripe For Mergers
These mergers are just the latest in a spate
of airline consolidations that have grown more
commonplace in the aftermath of crippling events
such as 9/11, SARS and record-breaking fuel
prices. Since late 2008, for example, Lufthansa
— which absorbed Swiss International airlines in
2005 — has acquired Brussels Airlines, Austrian
Airlines and, last year, took full control of its
bmi subsidiary. Delta Air Lines and Northwest
Airlines merged in 2008 and last year reached an
expanded partnership agreement with Air FranceKLM that seeks to control about 25 percent of
passenger flight capacity between the United
States and Europe. And in the last few weeks,
South American carriers LAN and TAM and North
American LCCs Southwest Airlines and AirTran
Airways have announced merger plans.
Analysts say next year is ripe for more merger
deals. In June, Qantas Airways Ltd. and Virgin
Atlantic Airways Ltd. said they’re open to merger
proposals to further efforts to cut costs and boost
traffic. Their list of possible marriage partners is
growing as previously unprofitable smaller carriers shore up their bottom lines. Those open to
courting include Malaysian Airline System Bhd.,
Scandinavia’s SAS and Poland’s LOT.
ascend 33
With most traditional carriers teaming up, the
only obvious U.S. network carrier combination left
is American Airlines and US Airways. Experts who
have studied the industry’s current condition and
future prospects say that unless American and
US Airways can find a way to combine with each
other, their prospects are bleak. But American
Chief Executive Officer Gerard Arpey has repeatedly dismissed the arguments.
“I was asked that question in Los Angeles a
couple weeks ago at a oneworld meeting that we
had,” he told reporters in May when asked about
the inevitability of an American Airlines merger.
“I guess I would express the same view I did
then, which is that I think that we have a strong
network today; I’m confident in our cornerstone
strategy because I think our footprint is in the
most important business markets in the United
States already. We’re not necessarily threatened
by talk of consolidation in the industry; in fact
I think Tom [American Airlines Chief Financial
Officer Thomas Horton] and I both commented
publicly about the fact that consolidation could be
good for the industry.”
He maintains the trans-Atlantic partnerships
with British Airways and Iberia would be “a big
step forward on the revenue side,” thus eliminating the merger pressure.
Low-cost carriers, though not as hard hit, are
not immune to mergers. Last April, Republic
Airways announced the fate of its two holdings:
Frontier Airlines and Midwest Airlines. Both airlines
will combine into one, keeping the name Frontier
Airlines, although it will retain Midwest’s famous
chocolate chip cookies. The headlines for possible
consolidation talks among Alaska Airlines, JetBlue
and Air Canada could prove interesting.
“Given the ferocity of competition in established and emerging markets, over capacity on
many key routes, intractable fixed asset costs
and high-leverage fuel pricing and hedging risks,
strong unions, and softening long-haul revenues,
it’s no surprise airlines are revisiting their business
models,” said Gary Bowerman, travel writer and
industry observer.
Consolidation Is Inevitable
Pro-merger advocates argue consolidation
through mergers is inevitable for an industry that
can’t get to sustained profitability even after more
than a decade of cost slashing, capacity cutting
and postponing investments in aircraft, facilities
and other expenditures.
“Mergers and consolidation is a must,” said
Giovanni Bisignani, IATA’s director general and
chief executive officer. “No other industry is so
fragmented, so we have to consolidate in order to
build more efficiency.”
Bisignani has called for regulatory support for
barrier-free mergers across borders, explaining
that different legal frameworks have hindered
extensive global industry consolidation, particularly
among U.S. and European carriers.
“I am raising the agenda of freedom on consolidation because we cannot do the same thing
34 ascend
Photo: Newcast
ASCEND I INDUSTRY
According to industry analysts, 2011 is ripe for more mergers in the airline industry. In recent
months, Qantas Airways Ltd. and Virgin Atlantic Airways Ltd. said they’re open to merger proposals and each has a growing list of prospective partners.
(as in Europe where some cross-border mergers
have been helped by unified legal frameworks)
between an American and a European carrier,”
he said.
Most industry observers agree consolidation
is key to survival.
“Airlines look at consolidation as a solution,
or perhaps just the last arrow they have in the
quiver,” Wall Street Journal Travel Editor Scott
McCartney wrote in an April post to his blog,
The Middle Seat. “In a network business, like
aviation or phones or banks for that matter, the
bigger and broader your network is, the more
revenue you can capture. Two airlines combining their customer bases and networks can do
better, especially since they aren’t competing
against each other.”
Adding to the ripe environment for mergers
is the number of open labor contracts. The Air
Line Pilots Association is in bargaining with half
of the 38 airlines where it represents pilots.
Perhaps, surprisingly, ALPA head Captain John
Prater told reporters early this year that consolidation is “inevitable.”
“We’re for the right consolidation, consolidation that actually protects and enhances jobs
and creates a profitable carrier,” he told reporters in New York.
Some industry experts believe mergers
are the only solution to getting rid of what
they say is the underlying industry problem:
overcapacity.
“In the final analysis, the industry tends to
produce seat capacity beyond the level that
would allow the industry to earn a rate of return
that attracts and maintains shareholder support,”
Vaughn Cordle, CFA Airline Forecasts, LLC wrote
in a June article published by Centre for Asia
Pacific Aviation.
“I term this phenomenon the ‘destructive
growth prerogative.’ Without capacity discipline
— and this requires an elimination of excess
capacity in the system — the industry will continue to destroy economic and shareholder value
and, as a result, the quality of the product will only
get worse.
“Letting the number of legacy carriers shrink
to a sustainable level of as few as three healthy
ones might be the best way to ensure that fliers
can get services they have lacked for so long,”
Cordle wrote.
Bad For Consumers
Merger opponents argue that mergers don’t
always work to fix what ails the airline industry,
that they cannibalize market share and are harmful
to the flying public.
A long-time and vocal opponent to consolidation is James Oberstar, representative of the U.S.
state of Minnesota and chairman of the House
Committee on Transportation and Infrastructure.
“This is the antithesis of the structure I voted
for when Congress deregulated the industry
in 1978,” he said in a May editorial released
to news organizations. “Deregulation promised
robust competition and innovation — not market
domination by a few powerful carriers.”
His opposition has gone so far as to threaten
industry re-regulation.
“Hardly a day passes by where I don’t walk out
on the floor that someone asks me, ‘When are we
going to re-regulate the airlines?’” he said.
Oberstar’s sentiments were echoed by
machinist union head Robert Roach Jr., who
was the only labor representative to testify at the
House hearings.
“The Machinists Union opposed deregulation
in the 1970s and have been calling for re-regulation ever since,” he said. “It is clear that airline
deregulation has failed to deliver on its promises
of a stable and profitably industry.”
At a June hearing of the U.S. Senate Committee
on Commerce, Science and Transportation, more
than a few senators shared concerns of House
members and those testifying against the United/
Continental merger.
“I have never been a big fan of mergers,”
U.S. Sen. Byron Dorgan told Continental Chief
Executive Officer Jeff Smisek and United CEO
Glenn Tilton, who were testifying before the
committee.
Dorgan said he was concerned about passenger safety, citing the airline practice of outsourcing
flights to smaller subcontractors. He blamed the
process for the 2009 fatal crash of Colgan Flight
3407, marketed as a Continental flight. It crashed
upon approach to Buffalo, N.Y., in a February
winter storm.
“The crash, in many ways, was an issue of
size,” he said.
U.S. Sen. Kay Bailey Hutchison, representative of the U.S. state of Texas, told the CEOs
she was concerned about the merger’s impact
on Continental’s headquarters in Houston.
Under the merger, Continental is moving
its headquarters to Chicago, costing jobs in
Houston. Sen. Hutchison also voiced concern
that the merger would mean loss of service to
smaller community airports.
While many opinions and opposition on the
controversial topic of airline mergers exist, one
thing remains … what was once “the norm” is
now basically unrecognizable. Fasten your
seatbelts and get ready for a “new normal” in
the airline industry. a
Photo: Airbus
Photo: Newcast
ASCEND I INDUSTRY
British Airways and Iberia, under a merger valued at US$7.5 billion, intend to keep their separate
brands and identities, but a holding company called International Consolidated Airlines Group
SA will be created with a primary listing in London and a listing in Spain. The merged carriers
make up the third-largest airline in Europe by revenue and expect to carry more than 58 million
passengers annually.
Lynne Clark can be contacted at
wearelistening@sabre.com.
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ASCEND I INDUSTRY
While world economic recovery may be
lopsided, there appears to be a “pony”
out there with most regions of the world
seeing measurable signs of an upswing.
By Lynne Clark | Ascend Staff
36 ascend
ASCEND I INDUSTRY
Photo: Airbus
Photo: Airbus
F
ormer U.S. President Ronald Reagan’s
favorite story, or joke, lends a buoyant
perspective on dismal world economic
news. The story was published in a
book written by Peter Robinson, who
spent six years as a speechwriter in the Reagan
administration, and President Reagan enjoyed
telling this story over and over again.
“Worried that their son was too optimistic,
the parents of a little boy took him to a psychiatrist. Trying to dampen the boy’s spirits,
the psychiatrist showed him into a room
piled high with nothing but horse manure. Yet
instead of displaying distaste, the little boy
clambered to the top of the pile, dropped to
all fours, and began digging.
‘What do you think you’re doing?’ the
psychiatrist asked. ‘With all this manure,’ the
little boy replied, beaming, ‘there must be a
pony in here somewhere.’”
In a year marked by gloomy headlines
about oil spills, massive worldwide deficits
and stagnant employment rates, it is startling
that a “pony” can be uncovered in news about
the hard-hit, beleaguered airline industry.
However, the “pony’s” arrival was predicted earlier this year by many cautious
prognosticators, but it wasn’t until June that
it was actually spotted.
In June, Paul R. La Monica, editor-at-large
of CNNMoney.com, wrote that a group of
13 leading airlines’ stocks was trading at its
highest level in more than a year.
“The NYSE Arca Airline Index, which
includes U.S. giants such as American Airlines
parent AMR, discounters Southwest Airlines
and international airlines such as Ireland’s
Ryanair and Brazil’s GOL, is up about 9
percent since the end of April,” he wrote.
“What gives?”
The International Air Transport Association
also in June signaled cautious optimism when
it revised a March outlook saying it expected
airlines to post a US$2.5 billion profit this year,
recovering from two years of ailing business.
“What gives” according to IATA is increasing passenger travel, a climb in cargo trade
and effective cost-cutting measures that
will continue to accelerate the industry’s
rebound.
“The global economy is recovering from
the depths of the financial crisis much more
quickly than could have been anticipated,”
IATA Director General Giovanni Bisignani told
reporters. “Airlines are benefiting from a strong
traffic rebound that is pushing the industry into
the black. We thought that it would take at
least three years to recover the US$81 billion
drop in revenues in 2009. But the US$62 billion
top-line improvement this year puts us about
75 percent on the way to pre-crisis levels.
“The recovery from this crisis is asymmetrical. Worsening conditions in Europe are
in sharp contrast to improvements in all other
regions,” Bisignani said.
Low-cost carriers, such as AirAsia and Tiger Airways, have been instrumental in the rise of
passenger growth by growing network expansion, introducing additional international routes
and increasing flight frequency, completely changing the dynamics of Asian aviation.
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ASCEND I INDUSTRY
Leading the recovery charge is the Asia/Pacific
region. Kunal Sinha, aerospace and defense consultant for Frost & Sullivan, said in a press release
that the World Bank forecasts the Asian economy
to grow by an average of 6 percent this year,
translating into an estimated 12 percent growth
in the demand for air services. As a result, the
region’s carriers are expected to deliver the largest
profit at US$2.2 billion.
“Asia/Pacific’s aviation prospects are improving
much faster than other regions, and within Asia/
Pacific, 217 million more passengers are expected
to take to the skies by 2013,” Sinha said. “As with
the industry in the United States, the global economic downturn took its toll on air travel in Asia
as well. However, the APAC region is rebounding
quicker than many parts of the world, largely
attributed to its relatively healthy economy and
rising incomes that make it affordable for people
to fly more frequently.”
He said the region’s two largest markets, China
and India, are expected to expand by 9 percent
annually for the next few years. To accommodate
this growth, airlines will buy nearly 9,000 new
aircraft for service in the Asia/Pacific market during the next 20 years. The relatively fast recovery
and encouraging signs have made the people in
the region more confident about flying.
Sinha said that struggling U.S. and European
airlines are increasingly looking to Asia to bolster
their fortunes. For U.S. carriers, Asia represents
a way to diversify overseas as their domestic
market share continues to be whittled away by
low-cost carriers such as Southwest Airlines.
“They are forging new alliances with Asian
airlines, increasing flights to major cities and are
competing to launch services in fast-growing markets in the region, like Malaysia,” he explained.
Growing network expansion, inauguration of
new international routes and increased flight
frequency by low-cost carriers such as AirAsia,
Firefly, SilkAir, Tiger Airways and Jetstar Airways
have played a major role in the surge of passenger
growth.
“The low-cost movement, which has now
become an integral part of the mainstream of the
industry in Asia, has completely changed the Asian
aviation dynamics,” said Sinha. “Considering the
benign regulatory stance, the LCC movement will
prosper, driving economic integration and a more
widespread network of air transport services
throughout Asia. In the future, the interests of
economic development and the region’s growing
tourism sector are expected to be better served
by LCCs than full-service carriers.”
North America
Economists with Kiplinger said in June they
expect a 3 percent gain in gross domestic product
this year for the U.S. economy with a net gain of 1
million jobs. That will be a welcome change after
two years of job losses, but the payroll gains will
still leave the unemployment rate at close to 10
percent.
38 ascend
Photo: Boeing
Asia/Pacific
Along with many other airlines around the world, carriers in Central America are experiencing a
positive shift in the economy. Panama-based Copa Airlines late last year boosted to 15 its order
for Boeing 737-800 aircraft.
“Recoveries from a financial crisis are
slow,” said Nigel Gault, chief U.S. economist
with IHS Global Insight.
U.S. corporate earnings are likely to remain
impressive, business analysts predict. As earnings season begins to heat up, the spotlight
will likely shift from the trouble overseas to
the relative strength at home, especially in
the wake of heavy cost cutting that has made
companies much leaner.
Earnings “have been outstanding across
virtually all sectors,” Peter Kenny, managing director at Knight Capital Group, told
Fox Business. “That’s the rebound story.
Companies are delivering on the earnings.”
For the airline sector, IATA forecasts
American carriers will return a profit of US$1.9
billion, a major improvement over the US$2.7
billion the region lost in 2009. Driving the
recovery are improved efficiencies as a result
of demand in growth, capacity cuts and domestic mergers.
Speaking at a June Bank of America Merrill
Lynch Transportation Conference, airline
executives said recovery in business travel has
accelerated alongside gains in international and
domestic passenger revenue, bucking lingering concerns about higher fuel prices.
Most major U.S. carriers forecast doubledigit gains in average revenue for the second
quarter, helped by more corporate travel after the
unprecedented declines of as much as 40 percent seen a year ago. The revenue picture has
strengthened through the quarter, with United
Airlines’ parent UAL Corp. leading the industry
with a forecast for an increase of 26 percent to
27 percent in the three months to June 30 from
a year earlier.
“We’re also seeing corporations beginning to
allow their employees to travel in the premium
cabins,” said Gerard Arpey, chairman and chief
executive of American Airlines parent AMR
Corp.
Some executives, however, remain cautious
despite the positive trends.
“Business travel, although it’s improving, is
still nowhere close to fully recovered,” said
Southwest Airlines’ treasurer Laura Wright.
“Unemployment remains very high.”
Latin America
“Latin American countries weathered the
global economic crisis of 2009 relatively well,
with GDP contracting 3 percent overall, a decline
largely attributed to Mexico’s exceptionally difficult year,” said Shelly Shetty, senior director
for Latin American sovereign ratings at Fitch Inc.
in New York. “Latin America has been more of a
spectator in this global crisis.”
The region should recover to 4 percent growth
this year, business analysts estimate. Adding to
the recovery are Latin American carriers, which
are projected to show a profit of US$900 million,
up slightly from the US$800 million previously
forecast. Having posted a US$500 million profit
last year, Latin America will be the only region to
post two consecutive years of profit. The region’s
commodities are closely linked with Asian growth
and supported by a 3.9 percent GDP expansion
this year.
The pervading optimism in Latin American aviation is also demonstrated by the flurry of financial
transactions executed last December. In Brazil,
the region’s largest market, the National Bank for
Economic and Social Development approved an
additional US$640 million for Argentina’s purchase
of 20 Embraer 190 aircraft for Austral Líneas
Aereas.
Embraer also signed a three-year, US$2.2
billion memorandum of understanding with CDB
Leasing, a branch of China Development Bank, for
new regional aircraft destined for Chinese airlines.
Last September, Embraer reported that its aircraft
order backlog added up to US$18.6 billion and that
it was on track to close the year with a company
record of 232 units delivered. In Panama, Copa
Airlines announced toward the end of 2009 that
it had increased a previous order to 15 Boeing
737-800 aircraft.
Other signs of progress come from commercial
airline flight expansion. For example, in Uruguay,
the Civil Aeronautics Board has presented to the
executive branch a “free skies” policy proposal for
the Punta del Este airport. If passed, the measure
would largely open traffic to all non-regular flights
at the country’s second-largest airfield.
But while profits are up, ongoing safety concerns make a sustained recovery shaky. Last
October, ALTA members, representing some 40
Latin American and Caribbean airlines and government organizations, addressed the concern and
issued a set of resolutions for 2010. The top
concern was air safety. They agreed to establish a
centralized entity to develop and oversee technical
certification standards and improve international
aviation relationships.
Middle East
Most of the Middle Eastern economies are
expected to enjoy a recovery in 2010 as oil
prices stabilize and OPEC increases production.
The Middle East and North Africa together are
predicted to grow by 4.5 percent this year and 4.8
percent next year.
IATA said Middle Eastern carriers are expected
to post a profit of US$100 million — their first
since 2005. This is significantly better than the
previously forecasted US$400 million loss and the
US$600 million that the region’s carriers lost in
2009. GDP growth of 4.3 percent is outstripping
the global average, and Gulf carriers continue to
Photo: Boeing
ASCEND I INDUSTRY
A significant indicator that the airline industry is returning to good health is the increase in
aircraft orders from the main manufacturers. For example, earlier this year, Emirates Airlines
announced it would purchase 32 Airbus A380 aircraft at a list cost of US$11.5 billion. This brings
to 90 the firm orders Emirates has placed for the super jumbo jets.
gain market share through their hubs in Europe
and Asia/Pacific even as capacity is being added
at a more cautious rate.
Willis Aerospace executive director Stephen
Doyle told reporters in June that all signs point to
strong economic recovery. He said that, particularly
in the Middle East, low-cost carriers could play a
major role in boosting the industry’s growth.
“It could be said that the low-cost carrier segment has benefited from the challenges of the
legacy carriers,” he said. “The Middle East and
parts of Asia have not been hit as hard as other
parts of the world, and it will be interesting to
watch how the recovery develops.”
One indicator that the industry might be turning
the corner is Emirates Airlines’ recent announcement that it will buy 32 Airbus A380 Super Jumbo
Jets at a list cost of US$11.5 billion.
“It’s very good news, and Emirates is a strong
customer,” said Airbus spokeswoman Maryanne
Greczyn. “It is a strong airline in a greatly emerging economy. So it’s a good bellwether for the
industry.”
A survey by MEED of senior management
executives at firms with business interests in the
Middle East revealed 62 percent of companies
expected to spend more on business travel in
2010 than last year, another sign the region is on
the road to recovery.
The majority of companies surveyed expected
to make up to 25 visits to countries in the Middle
East and North Africa this year. Of the Gulf
Cooperation Council (GCC) countries planned to
be visited, the United Arab Emirates ranks the
highest, followed by Saudi Arabia and Qatar. This
reflects the fact that these countries have the
largest economies in the region and the highest
number of projects under way.
Africa
African carriers are expected to post a US$100
million profit, their first since 2002. This reverses
the US$100 million loss previously forecast in
March and the US$100 million that the region
lost in 2009.
The turnaround can be attributed to an increase
in Africa’s average GDP growth, which is predicted
to rise to 4.5 percent this year and 5.2 percent next
year, according to a report by the Organization for
Economic Co-operation and Development.
“The good news is that the continent has
proved resilient to the crisis,” said Henri-Bernard
Solignac-Lecomte, head of the Europe, Africa
and Middle East desk at the OECD Development
Centre. “The bad news is that, despite rebounding growth next year, the downturn could make it
more difficult for some African countries to meet
the Millennium Development Goal of halving the
number of people living in poverty by 2015.”
The recovery will not come at the same
rate across Africa: Southern Africa, which was
affected the most by the crisis, is forecasting only
4 percent growth this year and next, while East
Africa, which fared best on the continent, could
achieve 6 percent on average during the same
period.
There are many outside influences spurring
this growth. China is investing heavily in Africa
to procure natural resources needed to fuel its
ever-hungry economic engine. U.S. companies
also have longstanding relationships built on business surrounding oil and other resources. Tourism
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is strong and growing, and trans-Atlantic flight
frequencies are increasing.
Still, there are hindrances that could slow
aviation growth. While the U.S. Trade and
Development Agency has estimated that nearly
90 projects worth US$2.6 billion will modernize
African airport infrastructure in the next three
years, the continent still has significant safety
issues.
In a December 2009 interview with
Aviation & Allied Business, Manoj Ujoodha,
chief executive officer of Air Mauritius, said
that African airlines also suffer from the
competition of major network carriers as
well as from the Middle East.
“These carriers operate hubs and have
synergies with partners worldwide,” he
said. “Their competitive advantage is exacerbated by the economies of scale they
benefit from, and many African carriers find
it difficult to compete.
“The latter operate within limited isolated markets and don’t have access to
the critical mass that would give them the
means to attract the resources and operating capabilities that would enable them to
compete on a level playing field,” Ujoodha
said. “African carriers would only be able to
compete if they can find synergies among
themselves and benefit from the support
of crucial stakeholders like their respective
governments.”
At its November 2009 conference, The
Africa Airlines Association (AFRAA) urged
the continent’s largest players to work
with smaller carriers to create codeshares,
joint ventures, cross-border and equity
partnerships.
“I think the message of cooperation is
not a fancy, trendy word, but an absolute
necessity for Africa,” Kenya Airways chief
operating officer Bram Steller told AFRAA
conferees.
Europe
Economic growth in the European Union will
solidify toward the end of the year and accelerate
in 2011, according to Economic and Monetary
Affairs Commissioner Olli Rehn.
“We assume that economic growth will be
around 1 percent in 2010, which will solidify
toward the end of the year so that next year,
economic growth would be on a scale of 1.75
percent in the European Union,” he said.
According to IATA, European carriers will be
the only ones in the red with a US$2.8 billion
loss. This is a downgrading from the US$2.2 billion loss previously forecast in March, although it
is an improvement on the US$4.3 billion that the
region lost in 2009. GDP growth of 0.9 percent
is not enough to support a recovery, and the currency crisis clouds the future with uncertainty.
April’s eruption of the Eyjafjallajökull volcano in
Iceland and the subsequent closure of European
airspace because of the ash cloud drove profits
down in Europe. IATA’s Steve Lott said the Greek
economic crisis and the fall of the Euro against
the dollar have also slowed profits in Europe.
“Europe has seemed to have lagged the rest
of the world in terms of economic recovery,” he
said. “Some of that is due largely to the Greek
debt crisis and some of the financial problems
in other countries. Germany announced major
budget cuts and problems with its budget. And
this is all really accumulating in a weak European
economy.”
prices recovered in June to US$75 per barrel. Conflicting signals from the Middle East
contribute to the uncertainty of which direction
oil prices will head. IATA expects 2010 oil prices
to average US$79 per barrel. However, David
Greely, chief commodities strategist at Goldman
Sachs Group Inc., told reporters in June that oil
prices will return to a higher-price environment,
trading between US$85 and US$95 a barrel by
the end of this year. Oil may reach US$100 by
2014 on future supply constraints, he said.
“Unfortunately, there is a risk that the fuel
goes up faster than the economy, and so this
creates a problem,” said IATA’s Bisignani. “It will
be difficult to apply fuel surcharge in this weak
environment.
“Seeing black on the bottom line is a great
achievement. The resilience of the industry has
been strengthened by a decade of cost-cutting,
restructuring and re-engineering processes,”
Bisignani said. “But even with all of our hard
work, the result is just a 0.5 percent margin that
does not even cover our cost of capital. The
industry is fragile. The challenge to build a
healthy industry requires even greater alignment
of governments, labor and industry partners.
They must all understand that this industry
needs to continue to reduce costs, gain efficiencies and be able to restructure itself if it is to be
sustainably profitable. We must all be prepared
for a greater change.” a
Wild Card
The wildcard in a sunnier outlook for air
carriers is jet fuel prices. After a three-week
slump, which saw the price of WTI crude down
to almost US$60 per barrel in late May, oil
Lynne Clark can be contacted at
wearelistening@sabre.com.
+count it up
7.8 billion
40
40+ billion
The amount in U.S. dollars, U.S.
The percentage of international tourists
The amount in U.S. dollars air
airlines collected in ancillary rev-
who travel by air, according to enviro.
transport pays annually to use air
enue in 2009, according to the U.S.
aero. Aviation now transports more than
transport and air navigation services
Department of Transportation. Of
2.2 billion passengers annually.
infrastructure through specific land-
that amount, US$2.7 billion was from
ing, passenger and air traffic control
baggage fees alone.
fees, according to enviro.aero.
40 ascend
ASCEND I INDUSTRY
By Ben Mussler | Ascend Contributor
New technology standards promise to
provide a customary platform crucial to the
way ancillary services are leveraged by
airlines, sold by agencies and purchased
by travelers.
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ASCEND I INDUSTRY
E
arlier this year, many of the industry’s leading travel management
companies, online agencies and
global distribution systems, along
with several airlines, proclaimed
their support for plans to implement recently
developed, industry-wide technology standards for ancillary services. These standards,
proposed by a strategic partnership program
composed of International Air Transport
Association and Airline Tariff Publishing
Company members — airlines, travel agencies and GDS companies — are designed
to better enable shopping, booking, payment and reporting of ancillary services for
airlines, travelers and agencies.
Proponents of such open and transparent
technology standards believe that by driving
consistency, these standards will also drive
efficiency through the way ancillary services
are handled, such as accessing ancillaries
via GDSs in the same manner as fares are
accessed today.
“It is essential that our valued agency
partners have the ability to sell these products to our guests in a way that is efficient
and convenient,” said Catherine Dyer, vice
president of distribution for WestJet.
Matt Beatty, vice president of global
supplier management for Carlson Wagonlit
Travel agrees that “with the GDSs providing
quick and easy access to ancillary products and services, we can help our clients
and their travelers make better-informed
choices.”
Standards Methodology
The standards utilize the ATPCO category for optional services (OC) fare filing
capabilities along with a complementary
technology — electronic miscellaneous documents (EMDs). When combined, these filing
capabilities will give airlines the ability to
quickly introduce ancillaries to the broadest
travel audience through both direct and indirect channels — supporting easy-to-manage
“à la carte pricing.”
For airlines selling in both their indirect
and direct channels as well as for travel
agents selling in the indirect channel, the
ability to offer an ancillary product and settle
the payment for it in an efficient manner is
key.
“Both ATPCO OC and EMDs offer tremendous opportunities,” said Kyle Moore,
vice president of information technology
and consulting services for Sabre Holdings® .
“The OC fare filing enables an airline to
quickly and easily put its product on the
shelf in the GDS, readying it for shopping
and booking, while EMDs enable the payment and funds settlement for the OC-filed
product. This cohesive combination creates
an end-to-end solution — from shopping
and booking through fulfillment. It also
42 ascend
ensures that the information necessary to
manage this process during the day of travel
is actionable by systems throughout the
lifecycle of the trip, particularly important
if there are irregular operations. Finally,
agencies and corporations will also have
the data they need to effectively manage
travel spend on ancillary services during the
pre-travel sales period, something that is of
increasing importance.
“We hear every day from both our airline
and agency customers that they want to
better manage this process,” Moore said.
“Accomplishing this via standards actually
speeds the introduction of the ancillaries
around the industry. It’s a smart business
move for multiple carriers to use the same
underlying infrastructure across a wide variety of products. Airlines aren’t reinventing
the wheel over and over and over for each
new ancillary introduced by each and every
airline. This is true for the simple sale of a
product, but it is particularly true for more
complicated situations such as managing
post-booking changes, flight cancellations,
and refunds and exchanges.”
Cross-Channel Value
Ultimately, these standards are designed
to make the purchase of ancillaries seamless and easy for the end traveler — and
that is good news for the industry. Travelers
rarely book trips through the same channel for all of their travel needs. Business
trips, for example, are often booked through
corporate travel management companies,
whereas leisure trips are commonly booked
through a consumer-oriented agency or
website. Offering ancillary services in a
consistent manner through all channels is
one way to improve customer satisfaction. If
properly used, the proposed standards could
benefit the airline that leverages them.
Supporters of the new standards believe
consistency will enable airlines to implement these services and products quickly
— rolling out new revenue opportunities in a
matter of weeks and to all channels, online
and off.
will become of private fares that don’t follow
ATPCO standards such as private fares outside the automated fare rule categories of
Cat 15/25/35? And what about existing and
in-work projects that certain airlines have
with third parties to enable merchandising
capabilities?
To this end, those in favor of the new
standards would remind concerned parties
that many capabilities enabling the sale of
ancillary services already exist within the
GDS environment. Take, for instance, the
variety of airlines offering branded fare
bundles available in the Sabre ® GDS in
which customers can choose from among
the items they value most. Pay-for-seat is
another example of a merchandised offering that many travelers take advantage of
today in the Sabre GDS.
The proposed standards are not technology specific. Varying customer touch
points enabling merchandising will exist,
as they should and do today — through the
Web, ticket offices, GDSs or reservations
centers; even on the day of departure. But
while technology approaches have differed
and the products, services and business
models airlines employ are virtually limitless, consistency in the technical approach
is becoming the norm.
“Delta supports this development of
technology that facilitates the potential
distribution of new ancillary products and
services,” said Jim Cron, senior vice president of global sales and distribution for
Delta Air Lines. “We are continuously
seeking distribution methods that satisfy
the marketplace, and this technology is an
option we are considering. It is important
that we work with our agency partners
to find the best possible solution for our
customers.”
And that is exactly what the industry —
airlines and agencies alike — will continue
to do. a
Defining “Standard”
Like the launch of many previous technology undertakings that were yet to be proven,
the announcement of these standards has
not come without questions.
During the past year, many airlines have
evolved their business model in an effort
to generate incremental revenue by either
creating product bundles that differentiate
their offerings or by unbundling various
products and services, such as premium
seating or baggage fees. Given myriad ways
this merchandising has been accomplished,
critics question whether the standards proposed will be truly open. For example, what
Benjamin Mussler is an airline
distribution solutions marketing
partner for Sabre Travel Network ®.
He can be contacted at benjamin.
mussler@sabre.com.
Sabre Airline Solutions and the Sabre Airline Solutions logo are trademarks and/or service marks of an affiliate of Sabre Holdings Corp. ©2010 Sabre Inc. All rights reserved. AS-10-11617 0210
complete the picture
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powering progress
Don’t Delay
Under the new tarmac delay laws, passed by the U.S. Congress in April, airlines
face harsh penalties of approximately US$27,500 per passenger for extraordinarily
delayed flights of more than three hours.
Photos: Shutterstock.com
By Michael Clarke | Ascend Contributor
he U.S. domestic airline industry
has experienced phenomenal
growth during the past 30 years
since deregulation. In spite of
major geopolitical events that have
caused temporary reductions in passenger
traffic, the number of passengers traveling
within the domestic market as well as the
number of aircraft movements has increased
three fold.
At the same time, there has been little
growth in the underlying airport and air traffic control system necessary to support this
immense growth. As a result, there has been
a consistent increase in the number of delayed
and cancelled flights as measured by the U.S.
Department of Transportation.
Year over year, there has been a pronounced increase in the number of cancelled
flights. Looking back at the month of May, for
example, there were 6,716 cancelled flights
reported by the 12 major carriers, representing a 40 percent increase in cancelled flights
versus May 2009. During the first half of 2010,
nearly 25 percent of flights were delayed,
cancelled or diverted. Of those flights arriving
late, passengers experienced an average delay
of 57 minutes.
The majority of flight delays in the United
States result from network effects across
the system driven by problems in the national airspace and aircraft routings. When a
weather pattern develops, air traffic control
authorities introduce a traffic management
program depending on the severity of the
disruption. This includes, for instance, a ground
delay program where all scheduled flights are
metered into an impacted airport and given a
specified arrival time to reduce the demand
on the airport. Alternately, ATC authorities
would initiate a ground stop that prohibits any
flights from departing to a given airport until
a prescribed time and/or restrict a flight from
departing until a required airspace sector is
available. The distribution of flight delays is
strongly correlated to the level of scheduled
flights, which has pronounced bias toward the
eastern seaboard of the United States, with
the New York City area airports experiencing
the worst delays.
Not far behind are major hub airports such
as Hartsfield-Jackson Atlanta International
Airport, Chicago O’Hare International Airport
and Miami International Airport. Since a large
number of flights are connected to these
chronically impacted airports, flight delays are
prone to propagate throughout the entire U.S.
national airspace.
An alarming and disturbing trend observed
in delayed flights is a significant increase in
duration of taxi-in and taxi-out times, in some
cases exceeding five hours. With limited gate
availability at major hub airports, airlines are
often forced to board flights and reposition
aircraft to holding areas until they receive
departure clearance. On arrival, inbound flights
often end up waiting until gates open, where, in
some cases, outbound flights at the occupied
gates are waiting for delayed crewmembers
on inbound flights.
These tarmac delays, signifying any additional time a passenger sits on an aircraft while
it’s on the ground and away from the terminal,
are measured from the time the aircraft door is
locked or unlocked.
ASCEND I INDUSTRY
Based on observed data collected by the
U.S. DOT, the majority of these excessive tarmac delays occur during flight departure. While
the occurrence of such extreme delays are
small relative to the number of scheduled commercial flights in the U.S. domestic network,
when they occur, there is a lot of visibility and
media coverage.
Last year, less than 0.20 percent of scheduled flights were subject to excessive delays,
with the majority of those (91.5 percent)
observed during departures. In addition, excessive tarmac delays are often observed during
flight diversions when the alternate airports
are not able to support the sudden increase
in unplanned operations. After the summer
of 2009, many airlines developed internal
Period
Number of
Regularly
Scheduled
Flights
processes and procedures to better manage
and track flight diversions to help reduce
excessive tarmac delays.
Nonetheless, there was a growing call for
governmental regulation and/or oversight to
be implemented to improve the overall passenger travel experience. In the aftermath of
several high levels of tarmac delays observed
in December 2008, June 2009 and July 2009,
the U.S. Congress published legislation to
penalize airlines for situations where there are
excessive delays beyond three hours.
In April, the new tarmac delay regulations
officially went into law with severe penalties
of US$27,500 per passenger on an excessively
delayed flight (more than three hours). For a
fully booked Airbus A320 or Boeing 737-800
Tarmac Times of 3
Hours or Longer
Total
Percent
with 160 passengers, an airline is now subject
to a penalty of US$4.4 million for any flight
violating the tarmac delay rule.
Ironically, in many situations, such excessive delays on departure are due to factors
beyond an airline’s control, such as prevailing weather conditions, U.S. Federal Aviation
Administration-instituted air traffic flow
management programs and limited airport
resources including de-icing equipment and
cleared active runways.
In response to the new legislation, most
airlines have become very conservative in
their operating procedures and often prefer to
cancel a flight subject to a rolling delay versus
continuing their traditional “wait-and-see”
approach for managing delays. As a result,
Stage Of Operation Of The 3-Hour Tarmac Time
Prior To
Cancellation
Multiple Gate
Departure
TaxiOut
TaxiIn
At Diversion
Airport
2010
April 2010
March 2010
529,330
548,282
4
0.00
0
0
1
0
3
25
0.00
9
2
11
1
2
Feb. 2010
481,988
61
0.01
5
1
53
1
1
Jan. 2010
521,809
21
0.00
2
3
11
2
3
Dec. 2009
529,269
35
0.01
5
3
22
0
5
Nov. 2009
2008
509,540
4
0.00
0
1
2
0
1
Oct. 2009
531,799
12
0.00
0
0
12
0
0
Sept. 2009
510,852
6
0.00
0
0
4
0
2
Aug. 2009
568,301
70
0.01
7
11
45
0
7
July 2009
580,134
164
0.03
21
20
105
0
18
June 2009
557,594
278
0.05
40
42
172
1
23
May 2009
546,832
35
0.01
7
2
25
1
0
April 2009
537,793
81
0.02
12
10
47
0
12
March 2009
557,422
88
0.02
6
9
66
0
7
Feb. 2009
488,410
43
0.01
5
4
34
0
0
Jan. 2009*
Cutline
to go here.
532,339
87
0.02
7
10
70
0
0
6,450,285
903
0.18
110
112
604
2
75
Dec. 2008
544,956
187
0.03
40
14
116
7
10
Nov. 2008
523,272
7
0.00
0
556,205
0.01
2
1
6
4
35
0
49
2
6
2009 Total
2008
Oct. 2008
0
Source: Bureau of Transportation Statistics
The stage of operation by which tarmac delays occurred is broken down by “prior to cancellation” (the flight left the gate but was cancelled at the
origin airport), “multiple gate departure” (the flight left the gate, then returned and then left again to resume normal operation), “taxi-out” (the
time between gate departure and wheels-off), “taxi-in” (the time between wheels-on and gate arrival) and “at diversion airport” (the tarmac time
at the alternate airport). Of which, the majority of excessive tarmac delays occur during departures.
46 ascend
ASCEND I INDUSTRY
Tarmac Times Of More Than Three Hours
300
278
250
200
187
164
150
70
4
25
21
4
April 2010
12
March 2010
Aug. 2009
July 2009
June 2009
May 2009
April 2009
March 2009
Feb. 2009
Jan. 2009
Dec. 2008
Nov. 2008
6
Feb. 2010
7
Jan. 2010
35
0
Oct. 2008
61
35
Dec. 2009
43
Nov. 2009
49
81
Oct. 2009
50
88
87
Sept. 2009
100
Source: U.S. DOT Research and Innovative Technology Administration
Photo: Thinkstock
During the course of nearly two years, from October 2008 through April 2010, the U.S. national
airspace has observed excessive tarmac delays where passengers were stranded for three hours
or more on the tarmac. As a result, the U.S. government has passed a law that will severely
penalize carriers for lengthy tarmac delays in an effort to reduce the number of impacted passengers.
an increase in the level of flight cancellations
as a direct byproduct of this new rule is
anticipated.
Since the penalty only applies to boarded
passengers, airlines have also decided to
postpone the boarding process and keep passengers in the terminal until they are confident
the aircraft can depart within three hours of
block off.
Consequently, airlines are being forced to
use additional gates and potentially increase
their ground resources and staffing levels to
meet the higher level of operations once there
is clearance for resumed operations. If an airline elects not to increase its ground resources
(gates, ground equipment, staff, etc.), the
result could be additional departure delays
on flights where passengers are no longer
stuck on the aircraft but rather in overcrowded
terminal buildings.
If the current situation continues unchecked,
passengers will potentially be exposed to
unnecessary additional flight delays and cancellations unless airlines and regulatory bodies
act now to do something to change the rules
of engagement.
For starters, airlines must be better equipped
with the necessary decision-support tools (see
related article on page 82) that will enable
them to monitor their operations for prolonged
tarmac delays. They need to be more proactive
in making informed decisions about whether
or not to return an aircraft to the gate before
exceeding the three-hour threshold limit.
Working in conjunction with the FAA, airlines
need to better sequence their outbound traffic,
especially at airports with congested taxiways
and/or limited runway capacity. In situations
where there are active ground stops and/
or ground delay programs, flights should be
released from the gate based on the estimated
departure control times that are provided by
the central air traffic control center.
Based on anticipated taxi times and the
number of departing aircraft, airlines and air
traffic control can better manage the flow of
aircraft, thereby reducing the potential of
departure queues developing at the end of
active runways. a
As a result of the new tarmac delay legislation, passed in April, airlines are sometimes forced to
use extra gates, causing a need to potentially increase resources and staffing levels to accommodate the higher level of operations once there is authorization to recommence operations. If
a carrier chooses not to increase its ground resources, there could be further departure delays
on flights where passengers are no longer stuck on the aircraft but rather in overcrowded
terminal buildings.
Michael Clarke is a solutions director of
Sabre ® AirCentre™ Enterprise Operations
for Sabre Airline Solutions ® . He can be
contacted at michael.clarke@sabre.com.
ascend 47
50
Freedom
To Execute
The game has changed for
airlines, and a new era of
execution on profitability,
nimbleness and competitive
differentiation has emerged.
55
58
The Digital
Pendulum
Talking Technology ... With
Robert Wiseman, Senior Vice
President and Chief Technology
Officer, Sabre Holdings
48 ascend
Processes At The
Heart of Competition
An in-depth analysis of an
airline’s business
processes combined with
its ability to make necessary
process adjustments using
specific technology provides
a balanced strategy that
exceeds customer expectations and promotes efficiency
across the entire
operation.
SPECIAL SECTION
Photo: Thinkstock
Forging Technology
ascend 49
THE FREEDOM
TO EXECUTE
The game has changed for airlines, and a new era of execution on profitability,
nimbleness and competitive differentiation has emerged.
The tug of war over embattled Japan Airlines set the stage for
a new order in global airline alliance negotiations and became
a lightning rod for criticism by opponents of antitrust immunity,
who are concerned that the three major alliances will act
as mega-carriers, crushing competition in trans-Atlantic and
trans-Pacific markets.
By Lynne Clark | Ascend Staff
Photos: Airbus, Air Canada, Boeing, Continental,
Delta Air Lines, Jupiter
By Tom Klein, President, Sabre Holdings
ASCEND I SPECIAL SECTION
“A
safe, secure, sustainable and profitable
airline industry that
provides good value to
customers is in the best
interests of our governments, economic
recovery and global competitiveness.”
That premise was shared during a speech
to the U.K. Aviation Club earlier this year by
Air Transport Association Chairman and UAL
Corp. President, Chairman and Chief Executive
Officer Glenn Tilton.
It’s a powerful principle … one we should
all embrace for the betterment of the entire
industry.
Luckily, to help support this call to action, a
new era in airline technology is upon us. And
whether or not your area of expertise is directly
related to technology, you’ll be interested in the
shift we are making to ensure your airline is
prepared for the long term.
At Sabre Airline Solutions®, we have changed
the conversation from an “open-systems”
debate to a higher standard of freedom through
empowering technology, applications and services that create speed-to-execution for airlines
and enable, rather than inhibit, changes to your
airline’s strategy.
Our approach creates freedom for airlines
by combining the leading airline Software as a
Service (SaaS) portfolio, an innovative Platform
as a Service (PaaS) approach for real-time data,
Web services enablement and a progressive
cloud-computing environment.
Our Sabre® ASxSM Airline Services Exchange,
a future-facing PaaS solution, ensures a complete portfolio of service-based solutions built
on integration, scalability, flexibility and performance. Through the ASx exchange, an airline
can leverage a state-of-the art customer domain,
rules engine, toolkit and application standards to
use real-time data across its enterprise to detect
and proactively manage patterns in its business.
Whether strengthening alliance needs through
superior data models and information exchange
or marrying an airline’s applications with ours,
we are changing the foundation of how an
airline can execute.
Our mission is to help airlines gain freedom
from their constraining IT infrastructures to
conduct business today the way they want
and to be prepared for the future. We are
among a small group of software providers
across multiple industry verticals to embrace
this strategy, and we work diligently to make
sure our technology direction meets and
exceeds our customers’ needs. To support a
growing community of customers that need
to boost revenues, increase productivity and
enhance their customers’ experience, we have
invested in and created three distinct technology advantages:
1. A superior cloud-computing environment
through our PaaS strategy,
ascend 51
ASCEND I SPECIAL SECTION
2.Flexible applications engineered and tested
for the demands of an airline, delivered in a
SaaS model,
3.A services foundation that enables a multitenant architecture for integration and realtime analytics.
Why focus on these three areas? Because
“open” is not enough. While it is necessary to
provide open solutions, an open environment
and even open collaboration, the rush to “open
systems” in and of itself has not meant better
execution by and for airlines. For a number of
airlines, an open-systems product was delivered
with a “walled garden” approach. This meant
not being able to use data as intelligence and
has driven compromises in terms of integration
ease, cost reduction, flexibility and timeliness of
delivery. Clearly, this is the opposite of freedom
— it is simply new technology that brought new
constraints.
This point was validated in a May meeting
by our executive advisory board, a body of
chief information officers and IT executives
from across the industry using multiple technology providers. According to discussions during
the meeting, we have the right technology
strategy to address the enterprise-wide needs
of an airline and have been executing. Still,
we recognize the need to move even faster.
Five Radical Shifts
Further, in a 2010 study called “The Future
of Corporate IT,” conducted by the Corporate
Executive Board’s Information Technology
Practice, five radical shifts — information over
processes, IT embedded in business services,
externalized service delivery, greater business
partner responsibility and diminished standalone
IT role — that correlate with our IT strategy and
the way airlines are evolving as businesses are
addressed. It points to shifts that we embrace,
and every enterprise, airlines included, should
consider:
Information Over Processes
“The rise of technology delivered as a service, or the cloud, will significantly reduce
sources of competitive advantage from information technology. In theory, a start-up could use
the cloud to obtain the same functionality, scale
and quality as an industry leader. Differentiation
will lie in how an organization manages change,
integrates its service portfolio and, critically,
exploits the information the services generate.
The nature of demand for information technology also is changing. Most employees are now
knowledge workers. Social media is becoming
vital for customer and internal communication,
and data volumes continue to rise. As a result,
in the business areas that drive growth — innovation, marketing, sales, customer service — up
to 80 percent of IT enablement opportunities
relate to business intelligence, collaboration or
the customer interface. At the heart of each
of these opportunities is the need to capture,
52 ascend
Customer Touchpoints And Applications
Customer
Insight
real-time
operational data
Analytic
Natural language
rules engine
Travel data
Warehouse
Booking history
• Contact
• Demographic information
• Identification/document
• Alliance, loyalty, ID and tier
• Preferences
• Value score
• Targeted ancillary offers
• Service event flags
Ticketing information
Revenue accounting
Operational information
Check-in
Baggage information
Shopping data
With our unparalleled technology platform, you can use real-time data throughout your operation to ensure all employees have the same information exactly when it’s needed for optimal
decision making.
integrate and interpret information, both structured and unstructured.”
IT Embedded In Business Services
“The corporate center is in flux. All corporate
functions have the same problems — their
capabilities overlap, they do not control the
outcomes they enable and, after many cuts,
they struggle to find the next big efficiency. And
for organizations growing in emerging markets,
many corporate functions lack the scale or
expertise to provide sufficient local support. The
IT function shares these problems. It has skills
in strategy, program management, business
process design and sourcing. All are valuable,
but none are needed solely for delivering technology, and so they can all exist elsewhere.
Second, no amount of alignment and partnership changes the fact that the IT function
enables business outcomes that someone else
controls. Much value has disappeared down the
hole that this situation creates.
Finally, cost pressures mean many chief
information officers face the unwelcome choice
of cutting delivery resources needed to “build
things right” or management resources that
ensure IT “builds the right things.”
The need for efficiency and joint accountability for execution and outcome will change the
IT function’s delivery model and organizational
location. Technology will be consumed as part
of business services as the IT function merges
into a business-shared services group alongside
other corporate functions.”
Externalized Service Delivery
“Externalization of applications development, infrastructure operations and back-office
processes continues, gradually eroding the
“factory” side of the IT function. The pace will
accelerate as the cloud enables the externalization of up to 80 percent of application lifetime
spend. As this occurs, internal roles will shift
from being technology providers to technology
brokers.”
(Although this came directly from The Future
of Corporate IT study, and it may sound like one
of the many pie-in-the-sky promises of technology, I believe this one will largely be true, and
progressive companies are seeing the benefits
already.)
Greater Business Partner
Responsibility
“Technologies for collaboration, business
intelligence and the customer interface all
require experimentation and iteration; use nonlinear, user-driven workflows; and offer value
from diversity across the organization. None of
this is easy for a central function to fulfill.
A generation of business leaders and end
users is emerging with greater technology
ASCEND I SPECIAL SECTION
corporate travel
management
company
online travel agency
travel
wholesalers
airline Web site
airline call
center
travel agent
airport direct
ticket counter
Ancillary sales don’t have to stop at your website. You can sell merchandised offerings through
multiple channels, capturing more revenue for every type of trip your customers take.
knowledge and confidence. They see advanced,
user-friendly technology as an everyday occurrence and can recite stories of companies
gaining industry leadership through technology. At the same time that business leaders’
expectations, and their ability to articulate those
expectations, are quickly rising, the cloud gives
them access to unprecedented technology
scale and expertise.
The fact that cloud services cannot be
extensively customized, but offer greater configurability in most cases, levels the playing
field; business units cannot customize cloud
applications but neither can the IT function.
Together, these trends point to a greater role for
business partners in areas where the value of
differentiation outweighs the need for integration. This is not a return to local control of IT
resources, rather, it is a shift in responsibility for
technology decision making.”
Diminished Standalone IT Role
“As IT roles migrate to business services,
evolve into business roles or are externalized,
the scope of the IT function will diminish,
and its headcount will fall by 75 percent or
more. Strategy, architecture, risk, program
management, user support and relationship
management will exist at the businessservices level, not within the IT function. The
CIO position will expand to lead this broader
group or shrink to manage technology procurement and integration. Roles remaining
in the IT function will organize around build
and run, and adopt an agile operating model
to allow rapid value delivery and resource
mobility.
Organizations that do not make these shifts
will be left behind as they struggle to effectively
exploit technology and manage an inefficient
IT function and an underperforming corporate
center. For IT leaders, too, the shifts present
risk and opportunity. Those who do not adapt,
face a much diminished role in a group with
little strategic impact. But the opportunity is also
significant. Leading a business-shared services
organization offers new levels of resource and
accountability for business outcomes.
Another option is a leadership role in a newly
empowered business unit that thrives on exploiting technology for competitive advantage.”
Our Approach
Our current technology approach and the
path forward sync ideally with these objectives,
which were taken verbatim from The Future
of Corporate IT study. Our ASx exchange as a
platform and services environment creates an
advantage for an airline. It provides preeminent
application performance, seamless consumption of new capabilities and a leading method
of delivering data between applications and
points of sale and service. The result is better combinations of applications and data for
the businesses within airlines to effectively
execute. In addition, airlines see increased
user adoption through application accessibility
and configurability via an advanced community
portal and an enterprise consumption of usable
operational data.
Airlines can say goodbye to the old world of
siloed data and welcome true real-time business
intelligence that takes enterprise operations to
a new level. An airline can deliver its promise
to its customers more efficiently with realtime data and a rules engine that ensures it
has an accurate array of knowledge about its
customers.
It is important if airlines feel constrained by
their technology that they look at ways to get
ready now for the future, to think about the
rapid shifts IT is experiencing and the evolution
of smarter customers. While some airlines are
working with us on large-scale transformation
today, small shifts can be made with big gains.
A primary example is how many airlines can look
into our portfolio of service-enabled solutions to
enhance the technology environments they
already have, such as Web services, executive
data dashboard, revenue integrity and other
light applications that are easy to implement.
We are working with a number of airlines,
offering unique operational data services, added
applications, helping with methods to create
new capabilities from composite services,
employing a rules engine and overlaying systems with new configurable user interfaces
at points of sale or service, to get out of their
systems what they really want.
A white paper titled “Forecast: Partly Cloudy
And A Chance Of Applications” published by
The Keynote Benchmark, a website for mobile
and Internet performance review, hints at how
customers are navigating new terminology while
weighing the advantages of cloud computing at
the same time. Terminology aside, with SaaS,
the “cloudiness” disappears when the technology is real and applications perform. The paper
goes on to say, “speed of implementation is a
real advantage for SaaS.”
We continually recognize the real need
airlines have for fast execution, and we relentlessly evaluate our software and infrastructure
strategy and have been aggressive in delivering
advanced technology and services to support
the growth of airlines. We are also dedicated
to ensuring world-class delivery of technology
and applications — speed being a critical focus.
We’ve completed more than 500 successful
small and large technology deliveries in 2009
and will do the same this year. Thus, as the largest SaaS provider to airlines, we have removed
the cloudiness from technology conversations,
ironically, with cloud computing.
The objective is to free airlines to focus on
flying and running their businesses as well as
enable changes in strategy, offer the ability to
experiment with different models and react
quickly to market changes … all enabled by
technology, as opposed to being hindered by
it. We have proven this ability at airlines of all
ascend 53
ASCEND I SPECIAL SECTION
Sabre AirVision
In-Flight
Sabre AirVision
Revenue Manager
Sabre AirCentre
Flight
Sabre AirVision
Schedule Manager
Sabre AirCentre
Load Manager
Sabre ASx
Sabre AirVision
Cargo
Third-Party
Applications
Airline Services Exchange
Airline
Sabre Airline Solutions Application
Airline
Third Party
A future-ready services-oriented architecture, Sabre ASx technology empowers you to quickly
make the changes you need for your business. This game-changing technology gives you the
freedom to quickly assemble data and capabilities to act on business opportunities as well as
enables you to leverage existing systems while easily integrating new ones.
sizes. The importance of SaaS is reinforced
in the Keynote Benchmark whitepaper. It discusses other advantages from cloud computing
and SaaS inherent in the Sabre Airline Solutions
mindset, that are a direct correlation to what
airlines want.
It states, “another checkmark in the plus
column is that instead of highly disruptive and
expensive process of upgrading on-premise,
SaaS upgrades can often happen without disruption to normal business processes.”
This means that, over time, technology can
more easily evolve with a business, preventing
wholesale changes that are painful or localized.
There are a number of areas across our broad
portfolio and client base that point to the success of our future-facing architectural foundation,
real-time operational data and services-based
applications.
First, we have delivered the newest solution
for reservations, departure control and inventory to market that enables our airline partners to
evolve or move from rigid customer management
platforms and inflexible passenger service systems (PSS). Up and running at JetBlue, Vietnam
Airlines, Volaris, WestJet and, soon, LAN and others — the combination of platform and SaaS, and
nimble, configurable applications means airlines
can see complete enterprise implementations
54 ascend
faster and adopt them quicker into steady state.
The added bonus being, they have a solution that
is generationally equipped for the long term — it
is ready for many technology iterations to come.
Additionally, airlines can tap into a robust offering of business and data analytics applications,
the most advanced revenue integrity capabilities, intelligent merchandising and e-commerce,
operational data services and airline toolkits that
enable some of the world’s most prominent
airlines to improve upon what they have today.
Second, airlines need more than just great
technology to improve customer sales and
service. They require operations solutions that
integrate well with all other systems for a persistent view of the customer, the disposition
of aircraft and ground operations. We have put
the ASx exchange to work in creating innovative
irregular operations recovery, dynamic customer
reaccommodation, state-of-the-art inventory
controls and an electronic flight bag solution, to
name a few.
More importantly, the data becomes usable
in how it is extracted from operations to feed
other applications that span an airline. Our data
dashboard aggregates day-of-operations and
moment-of-operations information for faster decision making. Another example is the combining
of customer and operational data in a rules engine
that drives innovative customer value scoring
that is configurable to fit an airline’s unique customer experience strategy, and it is a landmark
development.
Third, the use of the ASx exchange creates
a seamless relationship between an airline’s
functional areas such as marketing and planning,
enterprise operations, and customer sales and
service, enabling airlines to connect in a one-tomany fashion our portfolio with airlines’ existing
systems and other third-party applications. Thus,
data and composite services combine to generate
new capabilities and possibilities. For instance, the
concept of integrated commercial planning is no
longer just a concept. Creating real-time, actionable intelligence across revenue management,
pricing, revenue integrity and revenue accounting
is priceless. This is difficult for various product
providers and airlines to stitch together. The
answer lies within the combination of capabilities
via Web services across the revenue-generating
and tracking spectrum.
Shared actionable data, leading algorithms and
a high-performance Platform as a Service make it
happen, making it possible for airlines to manage
ancillary revenues proactively, compete more
vigorously, price smarter, consider operational
impacts and account for revenue by channel,
flight, market and promotion in time to shift sales
and marketing tactics.
More than 300 airlines depend on our delivery,
innovation, broad SaaS portfolio and collaboration
within the largest global airline community. A
technology environment built to evolve through
multiple generations, configurable solutions
and real-time intelligence is creating freedom to
evolve. Game changers, service leaders and leading brands alike are taking note. Customers such
as Aeroflot, American Airlines, British Airways,
Cathay Pacific Airways, Ethiopian Airlines, Jet
Airways, JetBlue, Kingfisher, Lufthansa, Volaris,
WestJet and, soon, Aeromexico and LAN, are
using our services, applications and technology to
bring about this freedom. The industry’s 2.4 billion
passengers expect it.
I like to think about it this way. According to an
article “All Too Much” in the February issue of
The Economist, between 2010 and 2015, the
compounded annual growth rate for global data
volumes across all industries will be an astounding 60 percent. So, even if you want to believe in
only incremental passenger growth and little
change in consumer behavior, the onslaught of
data is coming. For the airlines that prepare now,
it means great results. Is your airline ready, and
do you have the freedom to do business the way
you want? We’re more than ready. a
Tom Klein can be contacted at
tom.klein@sabre.com.
ASCEND I SPECIAL SECTION
Processes At The
Heart Of Competition
An in-depth analysis of an airline’s business processes combined with its ability
to make necessary process adjustments using specific technology provides a
balanced strategy that exceeds customer expectations and promotes efficiency
across the entire operation.
By Chris Bird | Ascend Contributor
ascend 55
ASCEND I SPECIAL SECTION
T
56 ascend
If Excess Baggage
Deny Bag(s)
If Excess Baggage
Locate
Reservation
If
Compute Fee
& Verify Ability
to Pay
Else
If
Check
Baggage
Process
Baggage
Continue with
Check-in
The traditional check-in process begins with locating a passenger’s reservation prior to checking in
baggage. However, increasingly, arguments about excess baggage fees cause friction and slowdown
in the check-in process, often causing the agent to waive the excess baggage fee and resulting in
lost revenue for the airline. The bottleneck happens in the “unwilling-to-pay” branch of the logic
flow and takes valuable time from the check-in agent. An airline can perform data analysis from the
processing engine to gain insight into the impact the current process has on a particular airline.
All Reservations With Checked Baggage July 2010
Check Baggage
12,000
10,000
8,000
4,000
Locate Reservation
CHART TO FOLLOW
6,000
July 31
July 29
July 27
July 25
July 23
July 21
July 19
July 17
July 15
July 13
July 11
July 9
July 7
July 5
July 3
0
July 1
2,000
The data analysis showed that in July, less than half of all passengers had checked baggage. Of
those that processed checked baggage, a relatively small number had excess baggage fees to pay.
All Reservations With Checked Baggage And Excess Baggage To Be Charged
6,000
5,000
4,000
CHART TO FOLLOW
3,000
2,000
July 31
July 29
July 27
July 25
July 23
July 21
July 19
July 17
July 15
July 13
July 11
July 9
July 7
July 5
0
July 3
1,000
Check Baggage
Compute Fee And Verify
7,000
July 1
here is a constant tension in any
business between delighting customers and managing costs. Erring
too much on the side of pleasing
customers can result in an unsustainable business model. Leaning
too far on the side of managing costs can
bring about a growing dissatisfaction among
customers.
In the airline industry, you constantly hear
the “process” word with customer interactions — “The boarding process will start in 10
minutes” or “To expedite the security process,
please remove ….” As such, we expect to
perform business actions according to set
processes (often found in process and policy
manuals), but often technology isn’t leveraged
to its full potential when assisting with process
development and implementation.
When developing a strategy around key
processes, several questions come into play,
such as:
Where are the bottlenecks in the check-in
process?
Which steps in the baggage loading process
are the most expensive?
Which of your processes generate the most
criticism from your customers?
With the advent of new technologies, should
you change any of your processes? How will
you go about making process changes?
Does the same process apply for check-in at
every airport (training efficiency versus local
custom; large/small/domestic/overseas; local
regulations/workforce rules, etc.)? Should
it?
Do you need to take a different flow through
a process dynamically based on current
data?
Check-in for “elite” versus non-elite customers,
Ramp processes for different equip
ment types/kinds of load,
How to apply rules with processes.
In each case, how do you know there’s an
issue? What action will you take to address
it? What will the necessary changes cost?
There’s a theme here. We need to know
what’s working and what’s not working
with current processes and then employ
a method to systematically analyze, make
decisions and implement changes to processes with specific goals in mind … all
while keeping the business operating in its
current mode.
Enter the world of “business process
automation and management.” When you
buy solutions, you want to implement your
processes. When you execute your business
processes, you want to be able to measure
how well those processes are working for
you. When you are planning, you want to
be able to redefine your processes, making
informed decisions, with the technology
being an enabler and not an impediment.
This prompts the question, “Is the distribution of excess baggage arguments uniform across the
flights, or are there some flights that tend to have more arguments than others?”
Analysis of the data shows that the top five flights contribute the most arguments and that this
is relatively consistent across the entire month.
ASCEND I SPECIAL SECTION
Top 5 Unwilling To Pay = 85.37%
Of All Unwilling To Pay In July
140
120
100
CHART TO FOLLOW
80
60
40
31-Jul
29-Jul
27-Jul
25-Jul
23-Jul
21-Jul
19-Jul
17-Jul
15-Jul
13-Jul
11-Jul
9-Jul
7-Jul
5-Jul
3-Jul
0
1-Jul
20
Unwilling To Pay-All Flights
Unwilling To Pay -Top 5 Flights
It may therefore make sense to change the process so discussions about excess baggage are
handled by a special team prior to actually retrieving bookings, resulting in a process flow where
the computation of willingness to pay is handled separately.
built in. When partnering with your airline,
we’ll begin with our pre-determined reference
processes, which are then refined to optimally
support your business needs. The refined process flow uses prebuilt components from our
solutions and other components within your
business for execution. The components that
are embedded in your processes are those
enabled by the ASx exchange platform.
During the execution of a refined process,
metrics are captured (business activity monitoring) that enable you to see and report on
the flow through the process. Simple metrics
collected for each step in the process include:
The length of time taken,
The number of times the step was executed,
Of course, process change requires considerable modification in the organization.
Processes need to be redefined, labor negotiations undertaken, customer satisfaction
surveys conducted, IT systems adapted to
the new process, etc. The changes to IT
are in some ways the least predictable and,
because the changes often come late in the
change-management cycle, they are often
rushed and need heroic efforts by IT groups,
suppliers, domain experts and others — not
exactly a freeing experience.
Our vision with the Sabre® ASxSM Airline
Services Exchange process management strategy is that we deliver our solutions on the ASx
exchange platform with reference processes
Unwilling to Pay
If Excess Baggage
Compute Fee
& Verify Ability
to Pay
Check
Baggage
If
Else
If
Else
Deny Bag(s)
Locate
Reservation
The person who completed the step (role
based or individual based), if it was a human
interaction,
The number of times it was completed normally/abnormally.
From a study of these metrics, you can drill
down to discover problems. For example, one
human step appears to take a lot of time. Why?
Or you expected to check in 100 passengers
per hour at the premium desk with five people
but are only getting 70 passengers per hour
checked in. Why? Using the refined processes
and accompanying metrics, you now have the
opportunity to understand what is happening
during the execution of the process and then
make staffing adjustments accordingly.
As a matter of course, many of the interactions during check-in are captured on video, so
by analysis of the actual numbers taken from
the process capture along with video footage
of the scene, better insight into the process
can be discovered, resulting in significant
improvements to the process — in customer
experience and staffing costs.
Without actual numbers, process improvements are simply guesswork — often good
guesswork based on the experience of the
personnel involved. However, having precise
numbers provides a base for experienced airline professionals to make even better process
decisions.
While check-in processes have been used
as a prime example, the methodology is
applicable across your entire business. Key to
a successful strategy includes:
Formalizing the process to allow for accurate
measurement,
Leveraging the measurements, which provide the baseline data, to make improvements,
Rapidly implementing those improvements
via the ASx platform.
Business processes across your organization are vital to your airline’s success. Being
able to quickly identify gaps in processes and
refining those processes to collectively meet
the needs of customers and your entire enterprise is the difference between simply breaking
even, or falling short, and excelling in one of
the world’s most competitive industries. a
Process
Baggage
Continue with
Check-in
This process does not have to be standard for all flights or for all airports. The key is that they
have the freedom to quickly describe a new process, place it in limited roll out for a handful
of flights. It doesn’t require system-wide training; it is only needed by the people who actually
execute it for the trouble flights at the trouble airports.
Chris Bird is chief architect for
Sabre Airline Solutions®. He can be
contacted at chris.bird@sabre.com.
ascend 57
ASCEND I INDUSTRY
The Digital Pendulum
Private Cloud Computing
Talking Technology … With Robert Wiseman, Senior Vice President
and Chief Technology Officer, Sabre Holdings
58 ascend
ASCEND I SPECIAL SECTION
I
understand that computers existed
before I first worked with them, but
in the scale of time, certainly in the
scale and pace of computer time, it
doesn’t seem as though it was that
long before.
In 1978, I was still in my native England,
working at a drill company in the northern
city of Sheffield (where the movie “The
Full Monty” was set), at the time, the
steel capital of the world.
My home was a farming town 15
miles away. This was a great distance
by English standards, at least by 1970s
English standards, which amazed many of
my city-dwelling workmates who would
often ask me how I could stand to travel
so far each day.
In truth, it wasn’t an easy journey: two
buses and a mile walk to get there in
time for my morning shift as a computer
operator. The shift started at 7 a.m., so
I had to leave my house by 5 a.m. to
get there on time. But waiting for me at
the end of each epic journey was one of
those wonderfully mysterious “computer
things.” A refrigerator-sized, black, brand
new IBM 370-135 — and that always kept
me going.
It didn’t have as many flashing lights
as I’d first imagined it might, but this was
more than made up for by the fact that
it had the first CRT (cathode ray tube)
I’d ever seen plus several mechanical
cabinets that housed those whirring, menacing tapes that never seemed to be able
to decide which way to spin.
My first role as a computer operator
consisted of a number of standard manual
tasks — mostly feeding the giant and voracious chain-link printer that seemed to eat
its way through endless boxes of greenstriped, three-ply carbon copy paper, which
frequently jammed as it sped through the
printer’s violent, clanging machinery.
Once the people there decided I wasn’t
a total country bumpkin, I was allowed to
touch “the keyboard” to actually control
what the computer did — more or less. To
be honest, back then at least, operators’
skills relied mostly on their ability to follow a simple script that was printed out
each morning with instructions such as:
when you get this question, always type
this; when you get this question, always
type this; when you get this question …
you get the idea.
About seven months into my job, I was
made shift leader (it was a very small
company) and immediately looked at ways
to automate the process so the scripting
tool (job control language) would answer
its own rhetorical questions. This resulted
in very smooth and, frankly, rather more
boring shifts. Three months later, either
impressed by my initiative or annoyed that
I’d created a surplus of operators (possibly
a little of both I suspect), they moved me
out of operations and into the programming group where I was taught to program
reentrant Assembler (a type of Assembler
that allows its code to be executed simultaneously by multiple processes, meaning
that any switch/flag changes need to be
made outside of the program boundaries).
Maybe it was a punishment after all.
In the 1980s, I moved to America, still
working on IBM mainframes, still coding
Assembler, trying to learn as many details
and nuances as I could about the mature
and seldom-changing environment.
Then in the late ’80s and early ’90s, a
big change, called client server, hit the
computing industry. Almost at once, every
new product had to have its own server
hardware, database, fat-client application
and dedicated team of specialists to maintain it. It was around this time that I first
began to move out of the mainframe world
and into this “new” and confusing world
where, it seemed, everyone had a different way of doing what we’d been doing all
along on “big iron.” Processing data!
I was definitely taken by the cool
presentation capabilities of the newer
technologies that were vastly superior
to their mainframe/green-screen counterparts. Even today, though, mainframe
interfaces are still surprisingly popular
because of their simplicity — this is even
true in places where customers have
options between text and GUI — despite
being a tad clunky and severely disadvantaged in what they can display.
The “dumb terminals,” as they were
aptly named, had neither sufficient processing power nor “imagination” to participate
in anything other than an exchange of
RUDIMENTARY DIALOGUE, which is how
it appeared “back in the day.”
The other thing I really liked about
the newer technologies was their low
start-up and scaling costs. Now, for the
first time, companies could get off the
ground with just a few thousand dollars of
hardware — and when the Internet revolution arrived, and brought with it another
wave of technology that would challenge
the bourgeoning client-server movement,
that’s exactly what happened.
The biggest concern I had with how
client server was evolving, at least in
the company where I worked, was the
unchecked sprawl. So many vendors, chip
technologies, hardware models, operating
systems, databases, languages, test tools,
etc. The pendulum, it seemed, had taken a
long and arching swing away from monostandard to hetero or totally non-standard
and, although far less expensive to acquire,
ascend 59
ASCEND I SPECIAL SECTION
much of the compute power (very much
if you include the “client” hardware as
well), was grossly underutilized, resulting
in wasted capacity, power, space, cooling
and capital. Although probably a slight
exaggeration, it now appeared as though
no one was sharing — initially because of
a lack of planning and controls and then
eventually because respective system
incompatibilities and lack of established
standards prevented them from doing so.
When the Internet revolution came, it
brought with it many valuable attributes —
and in the context of this discussion, two
really stand out:
1. The Internet browser. Initially, most
people saw this as just an external, consumer-facing tool and kept marching right
along with their client-server plans. But
early on, a smart colleague of mine asked,
“Why wouldn’t we develop browser solutions for professional agents as well as
for consumers?” Others, too, began to
question: had the pendulum swing from
“dumb terminal” to “master terminal”
gone too far? Soon, the time and cost
of maintaining and deploying thick-client
apps — almost exclusively via floppy
disks or CDs back then — forced a swing
correction to the mix of presentation
solutions we have today: full-client-based
applications (MSWord); rich-client applications (Google Earth and MySabre™ agent
booking portal) and an entire range of
browser applications with a variety of
thicknesses measured by the number
and size of downloads (Flash) needed to
execute them.
2. Horizontal scalability. New-entrant
companies, that had missed out on the
“American Idol” of computer technologies
in the early ’90s, were now able to select
from a narrowed field of fast-maturing
final contestants. This largely meant that
they settled on a single, low-cost “pizzabox” solution, with the hopes of scaling
it out for low-cost processing, targeting
stability through redundancy and trying
to get as much reuse as possible. This
was the right plan, of course, but scaling
horizontally is much more difficult than
“people” — that is those odd groups of
us who tend to think about these kinds
of things — tend to think they will be. It
takes a lot of planning and coordination
— and it requires telling developers how
they need to develop their code. And as
anyone knows, developers don’t like being
told how to develop their code. I was one
once — and I know.
Good design practices, such as serviceoriented architectures (SOAs), go a long
way in terms of enabling the ability to
scale across thousands of servers, but
we need much more than just “good
60 ascend
During his first four years as chief technology
officer for Sabre Holdings, Robert Wiseman
moved the company to its first enterprisewide set of infrastructure standards, which are
managed by his organization. He has 32 years
of experience in information technology; 24 of
which have been in the travel industry.
practices.” At the types of volumes we run
at Sabre Holdings ® — 32,000 transactions
a second, operating globally, 7x24x365,
with agents and airlines of all sizes,
dependent upon our systems for their
livelihood — our solutions have, to say
the least, high demands on them.
We strictly enforce well-proven architectural tenets in all of our systems — tenets
that improve the resiliency of our software.
We validate the implementation of those
tenets every day in our high-performance
labs. We ensure that they will scale and
can withstand volumes at far higher rates
and for far longer periods than they will
ever experience in production. We also do
this with third-party products. If they can’t
survive our scalability “boot camps” —
and many don’t — they don’t graduate to
our list of approved products.
These tenets include strong alerting
and reporting so we have clear visibility
into the health and performance of the
application software as well as the infrastructure on which they run. We make
sure that something as simple as a bad
log file doesn’t cause threads to back up
and that failure points (database, memory
capacity, etc.) have been reviewed and
thoroughly tested.
Three years ago, as part of a continuing
effort to improve system resiliency via
greater simplification, we implemented
a single set of “cookie-cutter” standards
across the company — SOA middleware,
blade ser vers, database and operating
system. By the end of the year, the vast
majority of our applications will run on
our single cookie-cutter standard. This is
a significant accomplishment in such a
short time.
With this level of interoperable uniformity in place, the next problem to solve
is the over isolation of applications on
dedicated server farms that have either
sprung up independently or were inherited
via acquisition. Getting these systems
onto a standard foundation enables us to
benefit from the types of sharing that the
mainframes offer so well, but at a price
and level of flexibility they traditionally
do not.
Mainframes are still the undisputed,
seasoned masters of dependability. If you
want something you can count on to run
multiple types of services at very high
volumes, they are the standard by which
all others are measured. Open systems
will catch up eventually, but they aren’t
there yet.
Of course, from a simple unit cost
standpoint, every time Moore’s Law does
its thing, the number of calculations you
get for your dollar increases. This is
incredibly significant to the future of
ASCEND I SPECIAL SECTION
computing. I once read on FutureTimeline.
net that in the year 2000, a thousand
dollars would have bought you compute
power capable of processing the same
number of calculations per second that an
insect’s brain processes. This year, that
thousand dollars will buy you compute
power equivalent to a mouse’s brain.
That’s a pretty impressive increase in such
a short time.
By 2038, your thousand-dollar computer
will be comparable to your own brain in
terms of how quickly it will think — and
if that’s not impressive enough (or scary
enough depending on how you look at it),
in 2060, your thousand-dollar computer
will have enough compute power to go
toe-to-toe with the combined brainpower
of every human being on the planet. I’ll be
dead by then and, between you and me, I
think that’s OK.
None of this is true for mainframe
computers — at least not as they are
currently priced. And, as a result, the
unit-cost gap between the technologies
will get wider every year. Now I say “unit
cost” because it’s important to stress the
point that the cost of the hardware isn’t all
you pay for with open systems. With all of
that equipment, there is simply a lot more
to manage, maintain and operate. Today,
those extra costs eat up much of the cost
differences between the two environments, so that’s where we are currently
focusing our efforts.
In 2007, I was with two members of my
team (let’s call them Jim and Glenn) sitting
in a bar in San Jose, California, postulating
the maturity gap between mainframe and
open systems and what might be done to
bridge it.
One big advantage the mainframe has,
we all agreed, is that its operating system
has all of its resources laid out before
it and can subsequently manage load
where it best sees fit. Mainframe central
processing units (CPUs) aren’t dedicated
to specific tasks and, accordingly, don’t sit
idle while other CPUs are gasping for help.
Some mainframes — indeed some large
Unix servers — even offer CPU capacity
on demand. That is, you don’t buy them
until you decide that you need them.
Why couldn’t we do the same thing
with blade servers? Lots of blade servers!
One damp, scribbled napkin and lots and
lots of testing later, we have developed an
autonomous private cloud concept we call
Organic Server Management, or OSM.
The dynamic nature of OSM is the key
to its importance because it finally allows
us to gain consistent quality of operations
by not only recording and retaining valuable experience, but also building on it in a
process of “continuous improvement.”
The workload of today’s operators is
undoubtedly more complex than when
I was a lad, following and automating
simple, rhetorical scripts, but the basic
concepts are still the same. They observe
an “action” and then determine the appropriate “reaction.”
The more skilled and experienced the
operators, the better they can recognize
various patterns as they emerge, such as
observing the fact that a set of services is
slowing down could suggest a number of
possible conditions to a novice operator
whereas the more seasoned among them
may know that this particular ser vice
Highlight
We strictly enforce wellproven architectural
tenets in all of our systems
— tenets that improve the
resiliency of our software.
has an occasional tendency to run out of
available threads at this time and needs to
have them cleared.
The operator may notice that a
certain service’s garbage collection pause
times are starting to climb and knows to
alert the development team and that he
should relieve the situation by recycling
the server — after first ensuring that it has
completed processing its current workload
and no more is sent to it.
The decision processes that operators
(or in fact any of us) go through are mentally assembled each time they observe a
condition and learn how to respond to it.
More often than not, the more experienced
the operator, the more likely he is going to
know what to do. And then he leaves the
company … either to finish off his days
gardening or to get a job at one of our
competitors.
Then the process starts all over again
with more-junior, less-skilled personnel
who see the same conditions but either
don’t have the experience to know what
to do or forget this particular situation
because it’s not that common or maybe
they’re just having an off day. It happens.
“To err is human,” said the human, rather
apologetically, I imagine. So maybe we
need something else, something better.
OSM comes with a policy engine that
allows us to automate repeatable behaviors — just like we do millions of times
a day in the application software that
powers our business. We’ve designed it
to evolve organically to introduce itself to
its human counterparts gradually, starting
off with suggestions to simple conditions,
such as: “The Web ser vers are running at
70 percent capacity, and we are about to
enter our peak period. Based on historical
data, which I can show you if you would
like, I recommend that we provision an
extra 50 percent capacity. Click ‘yes’ if
you would like me to do this for you.” Or
maybe something a little less wordy.
If the operator disagrees with the recommendation, he or she will select “no,”
and the designers and tuners of OSM
will work to understand what correction
needs to be made so eventually they
will say “yes.” At which time, OSM will
dynamically provision the ser vers with
the appropriate software (OS, DMBS,
COTS, OSS, applications, etc.), storage
and network capabilities, which then
come online to begin their day.
After the recommendations have been
successfully accepted a sufficient number of successive times, the steps will
be automated and the message changed
to read: “Web ser ver farm hit 70 percent
capacity at 09:02:18, 50 percent extra
capacity is currently being added. Click
‘Cancel’ to abort or ‘Suspend’ to adjust.”
Then, slightly more-complex conditions will be tackled: “Pricing Ser ver 14
has stalled. Developer team has been
notified, recommend recycle. Click ‘yes’
to continue.” And so on.
As more and more conditions are
automated, the opportunity for human
error is diminished. Stability improves
and, along with it, so does our ability to
more efficiently use our resources, both
technical and human.
Our mainframe costs are already being
surpassed by our open-systems costs,
simply because that’s where our development and transactional growth resides.
More content, more shopping options,
more features equals more ser vers and,
potentially, more complexity.
Organic Ser ver Management, and solutions like it, are going to revolutionize the
world of midrange, open-systems operations as much as they are going to
rationalize and bring order to it so we can
continue to focus more and more of our
resources on those aspects of our business that differentiate each of us from
our competition — and fewer resources
on those aspects that don’t. a
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ASCEND I SPECIAL SECTION
Organic Server Management
O
Container 309, Server 299 Container 309,
Server 300 Container 401.
7.Usage Trends — A record of the hourly
peaks by server and across application
suite. Data is used to more accurately predict peak and valley forecasts for capacity
planning, both server environment increases and decreases.
8. Alerts — Application and system metric
alerts, e.g. CPU utilization, memory utilization, I/O (input/output) utilization, application
errors, warnings, time-outs, etc.
9.Rules — Alert condition rules: every time an
alert is submitted, the OSM monitoring will
execute each rule against the new alert and
— if a matching condition is found — execute corresponding script, e.g. IF memory,
CPU or I/O utilization is >85%, execute provision script for Container XXX.
10. Scripts — A list of scripts that will handle
provisioning, de-provisioning, batch jobs,
etc., as a result of a rule match condition.
11. Provisioner — A service that will dynamically provision a server with all the software
(OS, tools, packages, patches, databases,
SM is an autonomous private
cloud offering that proposes a
policy-managed environment
that requires minimal human
intervention — except, primarily, for manual tasks such as physically
installing computer equipment, blade server
installations, etc.
Why private cloud? Cloud (or Infrastructure
as a Service) solutions that are offered publicly
definitely have their value, but they are limited
to non-proprietary, non-sensitive, non-critical
uses such as serving up static content such as
photographs of hotel properties. For systems
that touch (store, process, pass) breach-sensitive or time-sensitive data, they are the wrong
choice — at least today.
Why autonomous? OSM’s policy-driven
engine will allow us to allocate, reallocate and
de-allocate our processing load more efficiently
than even mainframes can.
Allocate: by dynamically provisioning and
making available extra capacity on demand,
based on current and forecasted factors.
Reallocate: by observing shifts in applicationsystem needs and dynamically re-provisioning servers with new software configurations so they can be ready to accept growing
demand from some countries or customers based on service level agreements on
response time or volume requirements — or
as demand throughout the day changes
from one type of service to another.
De-allocate: by dynamically powering down
excess capacity/servers; reducing the carbon footprint by turning down power and
cooling needs outside hours of peak usage.
Primary objectives of OSM include:
Employ policy-driven resource management,
Use capacity-on-demand model,
Achieve maximum server utilization,
Consolidate standby capacity,
Reduce operational management costs and
complexity,
Provide self-managing, self-provisioning,
self-sustaining operational environment,
Minimize human interaction,
Increase availability and uptime leading to
higher SLAs.
e.g. Server 102 : HP BL680, 3.2 GHz chip,
64GB RAM.
2.Software Asset Library — A repository of
all licensed software including the count,
expiration date and terms of that software,
e.g. Oracle 10G, 100 licenses, Effective
01/01/2001 Expires 01/01/2020.
3.Application Configuration Requirements —
A list of all software (COTS, OSS, internal)
that is required for each application to satisfy a request type (or group of requests) that
will be processed in the OSM environment,
e.g. Application XXX : Linux 5.0, Oracle
10G, FUSE ESB 4.0
4.Software Container — A collection of software, pre-packaged in accordance with the
requirements specified in the Application
Configuration Requirements table.
5.Change Log — A record of each change
that has occurred in the system, e.g.
200901012314 Server 300 Provisioned with
Container 401.
6.Run-Time View — A record of the realtime configuration status of each server
in the OSM environment, e.g. Server 298
Application Configuration
Requirements
Messages deposited onto the message oriented middleware (MOM) queue are rapidly pulled
for consumption by the blade server resident clients (the vertical bars, color corresponding to
the circular messages), which have been dynamically provisioned to meet the message capacity
demands observed by the OSM “eye.” The criteria that direct OSM to execute scripts to perform
its actions are controlled by applying each alert to the corresponding rules shown in the top
three files. The data files at the bottom contain the information necessary for OSM to deploy the
correct software onto the appropriate server(s).
The main components required to support
OSM are:
1.Hardware Asset Library — A record of
installed hardware and the features of each,
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OSM: Organic Server Management
ASCEND I SPECIAL SECTION
applications, etc.) it requires to perform its
duties, execute requests, commands, database calls, etc.
12. OSM Orchestration — One or more tools
capable of monitoring the alerts, finding
matching rules, executing those rules and,
as applicable — under match conditions —
any corresponding scripts, as well as the
service calls requested by those scripts.
Example Use Cases
Using the high-level objectives and functional components defined shows how OSM
would handle two fundamental operational
tasks:
1. Insufficient Capacity
a. OSM Orchestrator monitors alerts
and executes each one against the rules
in the rules table.
b. Rules engine finds a matching condition suggesting a capacity threshold has
been reached and executes the associated, applicable script.
c. Script engine executes the provisioner with the container type needed
to supplement that environment.
d. Provisioner checks hardware assets,
software assets and software container
to ensure all building blocks are available
and initiates provisioning service.
e. Change log is updated with all activity during this process.
f. Run-time view is updated to reflect
the changes.
g. In a pull model (where the application
pulls message requests from a queue),
the newly provisioned server automatically begins consuming targeted message requests.
h. In a push model (router/load balancer), the provisioner updates the load
balancer/router routing table with the virtual IP address of the newly provisioned
server, which then begins receiving traffic and consuming its targeted message
requests.
2. Server Failure — Recycle/Add New Server
a. OSM orchestrator sees a rapid succession of alerts for timeouts indicating
that an abnormal condition or failure has
occurred. It executes them against the
rules in the rules table, finds a match
and executes the associated, matching
script.
b. Script engine executes command
to locate the unresponsive server and
recycles it X times.
The key features of a new automated computing environment takes the main advantages of
mainframe computing — simplicity, scalability and the ability to make its resources available on
demand — and applies them to today’s low-cost, highly redundant blade servers. Adding
intelligent policy-driven controls to this produces an autonomic environment with the types of
stability and efficiency the mainframes offer so well, but at a price point and level of flexibility
they traditionally do not.
c. Change log is updated to reflect
the recycle attempts and their success
rate.
d. Alerts continue after recycling the
server “X times,” and the server remains
unresponsive indicating that server is in
a “down” condition.
e. Rules/script engines determine if
there is sufficient capacity to support
the current message volumes, targeted
at the down server, without replacing
that server.
f. If not, the provisioner service is
called with the container type needed to
supplement that environment.
g. Provisioner checks hardware assets,
software assets and software container
to ensure all building blocks are available
to begin provisioning.
h. Change log is updated with all activity during this process.
i. Run-time view is updated to reflect
the changes. In a “pull” model, the
newly provisioned server automatically
begins consuming its messages as it
pulls them from the queue as soon as
it’s active. In a “push” model, the new
server’s virtual IP address is passed to
the load balancer, which then begins
passing it messages.
3. Application exceeds maximum connections
a. OSM orchestrator gets alerts showing sudden velocity increase in connections, finds a matching rule and
executes the associated, applicable
script.
b. Script engine executes the provisioner with the container type needed
to supplement that environment (as
above).
Introduction of OSM is built to be phased in
organically, starting with no rules in the rules
engine with the human operator monitoring
the alerts, responding accordingly and initiating requests to the provisioner as applicable.
Simple rules will be added first and as
confidence and experience grows, more and
more human tasks should be migrated to the
automated OSM rules process.
ascend 63
While technology, industry best practices and sound
processes are a must for airlines around the world, they
are only as good as those employing them. Sabre Airline
Solutions ® continually invests in its training programs, via
the Sabre ® Airline University, to ensure airline employees
are armed with the knowledge they need to help run a
successful operation.
By Jeanette Frick I Ascend Contributor
ASCEND I COMPANY
H
ow much value can an automated
solution provide if the user doesn’t
fully realize the extent of its capabilities, understand the business it
supports and envision the scope of
future possibilities?
Based on this premise and a dedication to
drive value and facilitate the adoption of its solutions and services into airlines’ operations, Sabre
Airline Solutions continuously invests in providing
consistently high-quality education, training and
certification programs to its customers. As part
of this investment, Sabre Airline Solutions has
launched the Sabre Airline University virtual campus, essential to advanced airline education and
certification to customers and eventually others in
the aviation industry.
Accessible via the Sabre® Community Portal 24
hours a day, 365 days a year, the university is a key
component of the company’s solution and service
offerings. A tour of the virtual university reveals a
clean, modern, eco-friendly campus with extensive facilities and resources, a networked user
community, numerous training and certification
programs, and unprecedented access to subject
matter experts from Sabre Airline Solutions.
Today’s Virtual Campus
Photos: Thinkstock
Today, the core student population of Sabre
Airline University comprises Sabre Airline Solutions
customers, with many of the current training
and certification programs designed specifically
for them. To promote consistency and enhance
solution and industry knowledge, Sabre Airline
Solutions employees can also participate in the
training courses and receive similar types of
information.
Currently, Sabre Airline University hosts four
main colleges:
Commercial Solutions,
Customer Sales & Service,
Operations Excellence,
Distribution & Merchandising.
These colleges employ a blended learning
approach, offering a mix of classroom training, selfpaced online courses, workshops and conferences
facilitated by Sabre Airline Solutions subject matter
experts with a deep knowledge of the solutions
and wide range of experience in the travel industry.
All training courses focus on more than just the
features and functions of Sabre Airline Solutions
products, incorporating information on best practices and business processes as well.
In addition, the Colleges of Customer Sales &
Service and Operations Excellence offer basic to
advanced certification programs in specific solutions areas. By yearend, the College of Commercial
Solutions will have incorporated these programs
into its curriculum as well. Certification credentials are designed to validate a student’s ability
to effectively use and manage specific solutions
and business functions with a high degree of
competence.
Response from both customers and employees
to this year’s educational offerings has been positive. As of this summer, more than 300 attendees
participated in 62 courses, with more than 60
additional online courses planned by yearend.
The majority of training currently offered by
Sabre Airline University is classroom based and
Through Sabre Airline University, airline employees can take advantage of a blended learning
approach, leveraging a combination of instructor-led classroom training and online courses
designed to meet the needs of any airline worldwide. Using this approach, airline employees are
first introduced to a solution’s terminology, features, benefits and best practices via Internet to
better prepare for onsite, hands-on training.
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ASCEND I COMPANY
In addition to the classroom-based, instructor-led training provided by Sabre Airline University,
the majority of training content will be accessible online by 2012. Currently, the university offers
62 online courses with an additional 60 new online programs planned by the end of the year.
The self-paced training courses will be available 24/7 via any computer worldwide, and special
provision will be made for those with limited or no Internet access.
instructor led. By 2012, the university’s aggressive
growth plan estimates the majority of training
content will be accessible online.
Still in the initial stages, Sabre Airline University
already encompasses more than just training
courses and certification programs. Students can
network with other students as well as Sabre
Airline Solutions subject matter experts, retrieve
solution documentation and keep abreast of the
latest travel industry news. And there’s more to
come.
Tomorrow’s Virtual Campus
During the next three years, Sabre Airline
University plans to open its doors to prospective
customers, aviation suppliers and educational/trade
organizations. Both current and potential customers
will benefit from training courses and workshops
focused on the various aspects of managing and
operating airlines. Expanded certification programs
offering basic, advanced and expert credentials
will enable students to not only gain proficiency in
certain solutions areas but also better understand
solutions integration and business process design.
Armed with greater knowledge about the travel
industry, suppliers, such as aircraft manufacturers
and caterers, will be able to fine-tune their businesses and produce products and services that
more adequately meet carriers’ needs. Airlines, in
turn, will most likely prefer to purchase products
and services from suppliers that understand their
business and its unique challenges.
Colleges, universities and specialized training centers are clamoring for airline industry and
66 ascend
technology experts. By partnering with the Sabre
Airline University, these educational/training organizations will have access to subject matter experts
in all areas of the travel and technology industries.
And these subject matter experts will most likely
be transferring their knowledge to future airline,
travel industry and solutions provider employees.
By 2011, the majority of the virtual campus will
be in place, with the establishment of the Business
Process & Quality Center and the College of Airline
Management & Consulting, additional training and
certification programs, an alumni center, faculty
offices, career counseling and a bookstore.
One idea generating the most buzz is the university’s plans to offer “white-label” training sites
to customers, who will choose the courses they
want to offer, brand them with their own names
and logos, and allow their employees access. All
sites will link back to the Sabre Community Portal
hub; however, to the student, it will appear to be
the airline’s own training program.
Benefits Of Going Virtual
The traditional business model has changed
dramatically during the past decade. Economic
downturns worldwide have forced businesses,
including airlines, to find more cost-effective ways
of operating such as officing employees remotely
or even at home, cross-training staff to perform a
number of different functions, curtailing travel in
favor of Web and video conferencing, and increasingly utilizing online resources to market and sell
products and services, networking within the marketplace and training employees.
The Sabre Airline University virtual campus
supports these efforts, providing airlines with a
number of tangible benefits in terms of cost savings, efficiency and flexibility, including:
A single source for all Sabre Airline Solutions
training and documentation,
The availability of online, self-paced training
courses via any computer worldwide with an
Internet connection around the clock (special
provisions will be made for airline employees
with limited or no access to the World Wide
Web),
Access to industry and subject matter experts
from Sabre Airline Solutions offices worldwide,
Increased solutions and business process proficiency,
A reduction in travel time to and from offline
training sites and the associated costs, as well
as the amount of time airline employees must
be away from their jobs and carriers must shift
resources to accommodate their absences,
The availability of training to a greater number of
airline personnel than ever before,
The ability to easily cross train airline employees
and cross utilize resources,
Significantly shorter training cycle times for large
employee groups trained in stages, such as reservations staff (the initial training is conducted in
the classroom, with refresher courses available
online, which is especially helpful for staff members trained in the initial stages),
Continuous addition of new online courses and
updating of existing ones as necessary.
Although Sabre Airline University is focused
on aggressively growing its online training and
certification programs during the next three years,
there will still be situations when a blended learning approach or the “personal touch” offered by
classroom training is more beneficial and even
desirable.
A recent customer training session, for
example, utilized both instructor-led classroom
training and online courses from the university.
The airline’s employees were initially introduced
to the terminology, features, benefits and best
practices surrounding Sabre® AirVision™ Marketing
& Planning solutions in an online course and were
then prepared for the Sabre Airline Solutions team
that provided onsite, hands-on training.
Whatever the venue, the primary objective of
Sabre Airline University is to be a reliable source of
consistently high-quality solutions and industry
training and information that equips airlines to meet
the challenges of the volatile industry and economy
— now and in the future. a
Jeanette Frick is vice president of
Global Customer Services for Sabre
Airline Solutions. She can be contacted
at jeanette.frick@sabre.com.
Virtual Campus
T
he Sabre® Airline University virtual campus
is accessible to Sabre Airline Solutions®
customers via the Sabre® Community
Portal. Several of the university’s facilities have already been established, and
more are in development based on an
aggressive three-year expansion plan and customer
feedback. The campus design is simple, straightforward and eco-friendly, enabling visitors to easily and
quickly navigate among the various facilities free
from distractions.
Today’s campus includes:
Admissions: Welcome to Sabre Airline
University. Tour the university’s virtual campus
and preview its various offerings.
Operations Excellence: Enroll in training
courses and certification programs focused on
airport operations, crew management, flight
operations and maintenance routing, and find
documentation related to Sabre® AirCentre™
Enterprise Operations.
Student Community Center: Meet and
interact with other university students as well as
Sabre Airline Solutions employees and subject
matter experts via the Sabre Community Portal
hub. Similar to Facebook, the Hub provides
a forum for members to post questions and
answers and form groups.
Industry Relations Center: Link to the
latest aviation industry news from the top
travel magazines and news sources, as well as
Ascend.
Faculty Offices: Learn about university staff
members and instructors who create, manage and
conduct training programs. Post questions and get
answers from subject matter experts.
Library: Find hundreds of pages of Sabre Airline
Solutions product documentation and search
through the most frequently asked questions to
find immediate answers.
Customer Sales & Service: Enroll in training
courses and certification programs focused on
sales, reservations, ticketing, codesharing, airport
check-in, loyalty management and customer service, and find documentation related to SabreSonic®
Customer Sales & Service.
Commercial Solutions: Enroll in training
courses focused on in-flight services, schedule
development and optimization, slot management
and fares management, and find documentation
related to Sabre® AirVision™ Marketing & Planning.
Distribution & Merchandising: Enroll in training courses focused on the distribution of airline
products and services, and find documentation
related to Sabre® AirCommerce™ Distribution &
Merchandising.
Tomorrow’s campus will also include:
Career Counseling: Obtain information
on a variety of positions and careers within
airlines and explore the wide variety of basic
and elective training courses available.
Airline Management & Consulting:
Explore the complexities of the various
aspects of the airline business. Workshops
and training courses will be led by members
of senior executive and consulting teams
for Sabre Airline Solutions.
Sabre Airline University News: Find the
most up-to-date information related to Sabre
Airline Solutions and the university, as well
as testimonials from other customers.
Business Processes & Quality Center:
Learn more about solutions implementation
and support lifecycle, agile development,
testing plans and other related processes.
Bookstore: Access various airline-related
publications or sign up for publication subscriptions via partnerships with well-known
online sellers. Books, t-shirts, mugs and
other university-related items may be
purchased.
Events Center: Obtain information regarding customer conferences and other events
sponsored by Sabre Airline Solutions.
Coffee & Tea House: Take time to relax or
compete with others in contests and games
related to the airline industry. Learn about
other cultures or fascinating destinations, or
visit with Sabre Airline Solutions professionals in offices throughout the world.
Alumni Center: Network with other
Sabre Airline Solutions customers that have
taken training courses or completed certification programs.
Administration: Register for instructorled classes or online certification training
courses. a
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ASCEND I COMPANY
Satisfaction
Guaranteed
Sabre Airline Solutions ® acquired Flightline Data Services
for its crew scheduling software and services capabilities,
which bring all phases of the monthly crew schedule
bidding process online. The solutions provide automated,
remote management for crew schedulers while
simultaneously enabling real-time schedule bidding
for crewmembers from almost anywhere, anytime.
By Tom Samuel | Ascend Contributor
68 ascend
ASCEND I COMPANY
Photos: Thinkstock
M
uch of crewmembers’ job
satisfaction comes from their
schedules — where they fly,
how often they fly, whether
they fly on weekdays, weekends or holidays, as well as
their typical duty hours and flight patterns.
Crewmember schedules are generally assigned
by airline crew planners using varying levels of
automation. Depending on the specific airline’s
regional crew management practices and the
airline’s crew agreements, the schedule assignment may be based on crewmember seniority,
crewmember preferences, fairness or a combination of those factors. Once a schedule is
assigned, crewmembers can request changes
to their schedules via a process most commonly known as “trip trading.”
Crewmembers who have more control
over their schedules likely experience higher
job satisfaction, and certain industry practices
enable crewmembers to better control their
schedules. Providing crewmember control,
however, often requires airlines to invest
in sophisticated technology, but if optimally
employed, the investment generally pays
back many-fold in terms of crew satisfaction
and productivity, resulting in lower absenteeism, reduced reserve utilization and lower
crew-related costs.
Americans of all ages and income brackets continue to grow increasingly unhappy at
work — a long-term trend that should be a
red flag to employers, according to a report
released in January by The Conference
Board, a not-for-profit organization that has
studied and reported on business management practices for more than 90 years.
The report, based on a survey of 5,000
U.S. households, finds only 45 percent of
those surveyed say they are satisfied with
their jobs, down from 61.1 percent in 1987,
the first year in which the survey was
conducted.
“While one in 10 Americans is now
unemployed, their working compatriots of all
ages and incomes continue to grow increasingly unhappy,” said Lynn Franco, director
of the Consumer Research Center of The
Conference Board. “Through both economic
boom and bust during the past two decades,
our job satisfaction numbers have shown a
consistent downward trend.”
While some may wish to blame the most
recent survey’s low satisfaction numbers
on the current economic downturn, such
an easy answer would be inaccurate. An
analysis of the job satisfaction data produced
by The Conference Board finds that, unlike
the economy, this increasing worker unhappiness is not cyclical. Thanks to technology,
however, airlines have new opportunities to
address three of the most common causes
of job dissatisfaction — work schedules, job
empowerment and communication.
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ASCEND I COMPANY
Preferential Bidding: Addressing
Work Schedules
North American airlines often use senioritybased line bidding or preferential bidding to
determine flying schedules for future months.
While carriers outside North America traditionally follow a “fair and equitable” planning
process, preferential bidding has been implemented by several large carriers in recent years
and is becoming a more common practice.
A preferential bidding system matches
crewmembers to pairings (pre-built trips)
based on individual crewmember preferences
and factors such as airline seniority while
protecting pre-planned events such as training
and vacation. Airlines that use preferential
bidding often need an automated system to
accomplish these complex scheduling tasks.
A preferential bidding system creates
greater crewmember satisfaction due to
crewmembers’ ability to influence their future
assignments. The airline benefits by having reduced attrition and absenteeism from
industry-standard practices, increased crew
utilization (absences have been accounted
for so crews can operate their published
schedule) and greater control over reserve
crew coverage. An airline choosing to implement a preferential bidding system has to
spend some money for automation, but it
achieves increased crewmember satisfaction
and productivity in exchange (without trying to
increase crew satisfaction through significant
pay increases).
About 75 percent of North American airlines
still use seniority-based line bidding practices,
so these airlines have an opportunity to take
advantage of preferential bidding to give their
crewmembers better control over their schedules while increasing productivity. Airlines
outside North America have the opportunity
to further satisfy employees and employee
groups involved in the control of the planning
process without having to revert to adopting
hard rules that can impact productivity and
overall crew costs.
Automated Trip Trading:
Empowering Employees
Trip trading is a global crew management
practice where crewmembers are allowed to
drop or add portions of their assigned schedule
(commonly in the form of unassigned trips)
or exchange trips with other crewmembers.
Based on the agreements in place between
the airline and crewmembers, and the automation available at the airline, one of the following
may be true at a particular airline:
Trading is not allowed due to airline overhead costs to manage legality checks, crew
communications, etc.;
Manual trip trading is allowed, where crewmembers call airline crew scheduling staff to
manage trading (this practice costs extra in
the form of higher crew scheduler costs);
70 ascend
Crewmember alerts and mobile access are critical aspects of daily crew operations, giving airlines the ability to promptly communicate schedule changes to crewmembers as well as offering
crewmembers increased access to their schedules. When a change has occurred to their schedule or a desired trip has been made available for trade, crewmembers can be instantaneously
notified via their hand-held or mobile devices.
Automated trip trading is enabled, which
allows crewmembers to drop, add, advertise and exchange trips through the Web,
and the crew schedule maintained by the
airline crew management system is updated
through automation.
In cases where crewmembers are not able
to “swap out” portions of their schedule they
cannot or do not want to fly, they are likely
to take sick time, leaving the airline with the
daunting task of covering the open flying by
either extending the duties for other crewmembers (and paying premium pay), assigning
crew on their days off or using reserve crew.
Each of these possibilities could add up to a
material increase in crew costs.
Automated trip-trading capabilities give
crewmembers more control over their schedule, thus increasing crew productivity as
crewmembers look to proactively change undesirable portions of their schedule. Automated
trip trading also saves crew schedulers time
and helps airlines reduce crew-related costs.
Another benefit of automated trip trading
is more efficient reserve utilization — this is
accomplished through active reserve balancing.
This feature automatically uses crewmember
trades to improve the balance of unassigned
trips on a day-to-day basis, reducing the peaks
and valleys of unassigned trips throughout
the month and decreasing the overall requirements for reserve crews.
Automated trip trading is more popular in
North America today, but gaining popularity
globally.
Mobility Solutions: Solving
Communications Challenges 24/7
Crew communication is an important aspect
of daily crew operations. Crewmembers want
to have anytime, anywhere access to their
schedules and to be notified of schedule
changes as quickly as possible.
Airlines want the ability to use automation
to notify crewmembers of schedule changes
as quickly as possible and to get confirmation
that the crewmember has been notified of
such schedule changes.
Crewmember alerts and mobile access are
two vital components of providing airlines with
the ability to quickly and efficiently communicate schedule changes to crewmembers as
well as providing crewmembers with increased
access to (and control over) their schedules.
Alerts can be used to notify crewmembers
through their hand-held or mobile devices
With its continuing rapid development and deployment,
the electronic flight bag doesn’t simply represent
the future. Electronic flight bags, in fact, are already
on many commercial carriers’ flights today.
ASCEND I COMPANY
when a change has occurred in their schedules
or when a desired trip has become available
for trade.
Mobile access is an increased area of
focus for airlines and enables crewmembers
to view their schedules, confirm notification
of changes and even request changes to their
schedules. Mobility solutions are another area
of technology that provides crewmembers
with increased visibility and control over their
schedules, resulting in more efficient and
cost-effective communications and airline
operations.
The Acquisition
Through the acquisition of Flightline, Sabre
Airline Solutions is now able to provide airlines
with an array of new capabilities, including:
Initial bidding (line bidding) — Distributes bid
packages online, sorts lines by preferences,
electronically highlights and sorts pairings,
collects bids, and processes and displays
the final award;
Preferential bidding — Supports multiple
crewmember preferences and builds individual custom work schedules avoiding conflicts with carry-in, vacation, training and
other known events; features more than 20
preference types, and each preference can
be combined with up to 10 criteria for powerful trip selection; provides a unique model-as-you-go bid sheet interface, enabling
crewmembers to spot and correct costly
bidding mistakes in advance of bid submission;
Reserve preferential bidding — Autoconstructs reserve schedules to meet daily
reserve requirements according to work
rules and legalities and avoids conflicts
with carry-in, vacation, training and other
known events; permits crewmember input
to reserve schedules through preferences
such as specific days off, specific days
on, work pattern and maximum number of
consecutive work days; may be used as
a reserve line generator to create optimal
reserve schedules;
Open time live — Fully automates and processes crewmember open-time requests
for drops, adds, swaps and trades (with
another crewmember) interacting live with
the airline’s crew management system; displays updated schedules and available open
time with pairing sort capability; processes
requests in real time with optional crew
scheduler intervention; includes management of reserve buffers;
Trade board — Provides an electronic bulletin board for crewmembers to advertise
pairing and vacation trade requests, communicate requests online and view responses
from other crewmembers;
Reserve open time — Crewmembers submit requests for pairings that operate on
their reserve days; pairings are assigned
Giving crewmembers the ability to better control their schedules not only increases job satisfaction and productivity but also results in lower absenteeism, reduced reserve utilization and
lower crew-related costs.
according to the airline’s timing requirements
and rules; affected reserve periods are replaced
with the pairings;
Reserve assignment — Crewmembers submit requests for specific reserve duty periods
as defined by the airline to replace currently
assigned reserve periods; the solution assigns
specific duty periods based on crewmember
input; remaining crewmembers are assigned
the leftover reserve duty periods;
Vacation bidding — Automates annual vacation
bid process and final award; calculates accruals;
supports instant processing of ongoing vacation
requests for drops, adds, swaps with available
periods or trades with another crewmember;
requires no management intervention;
System bid (vacancy/displacement) — Collects
crewmember bids for upgrades and/or transfers by base, equipment and position within
the company; processes awards using airline
rules;
Training bid — Collects crewmember bids for
preferred training dates and processes awards
according to airline rules;
Electronic documents — Electronically distributes documents to user-directed groups and/
or classes of crewmembers; enables management tracking of mandatory items by individual
receipt;
Electronic messages — Offers two-way messaging capabilities with secure plain-text e-mail;
messages can be sent between management
and crewmembers or crewmember to crewmember;
Crew mobility services — Offers iPhone and
other mobile device applications, pilot data
sheets and trip alerts for airline crews.
Flightline’s crewmember solutions are widely
used today with nearly 62,000 active crewmember accounts. During a recent, single one-month
period, Flightline supported 1.8 million Web sessions, totaling 36.5 million minutes.
Flightline’s crewmember solutions are already
integrated and work with Sabre Airline Solutions
crew management systems at 17 airlines today,
helping them lower crew-related costs and provide airline management with cost-effective tools
to improve crewmember satisfaction.
The combination of rapid return on investment,
reliability and ease of use represent the hallmark
of Flightline’s products and services. a
Tom Samuel is director of airline
operations for Sabre Airline
Solutions. He can be contacted
at tom.samuel@sabre.com.
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Revenue Integrity:
Beyond All Boundries
Sabre Holdings® acquired Reykjavík, Iceland-based Calidris ehf to bring airlines
the world’s most robust, innovative revenue integrity technology.
.
By Stephani Hawkins | Ascend Editor
A
company that sits idle and conducts
“business as usual” day after day is
one that likely won’t be around
long. Building and growing a business requires a powerful strategy
that supports all the current and future needs
and expectations of a company’s customers,
employees, shareholders and communities.
Sabre Holdings is no exception. In March, the
technology company acquired Calidris for its
best-in-class revenue integrity, business intelligence and data solutions.
The acquisition is part of Sabre Holdings’
long-term growth plans and continued investment in its airline and airport portfolio, and
its main objective is to offer its customers
breakthrough technology with the flexibility
to help them generate additional revenue and
move beyond the traditional processes of simply preventing revenue loss.
“Calidris has been validated by some of the
world’s leading airlines and is a very innovative
company that has developed some powerful
technology that will move the airline industry
forward in the area of revenue integrity,” said
Steve Clampett, president of Airline Solutions
and Products for Sabre Airline Solutions®. “This
technology reaches beyond all boundaries in
this particular arena.”
Calidris began developing revenue integrity
solutions in 1997 (then known as Stonewater
International), and within two short years,
Icelandair became the first airline to implement Calidris Integrity, realizing a 24 percent
decrease in no-shows during the first three
months. Since then, Calidris partnered with
numerous carriers including Adria Airways,
Aegean Airlines, Austrian Airlines, Avianca,
British Airways, Cathay Pacific Airways, Croatia
Airlines, CSA Czech Airlines, Emirates, Finnair,
Malaysia Airlines and Royal Jordanian.
Each of these carriers has achieved significant results. For example, as the first airline in
the world to adopt real-time revenue integrity,
Finnair realized total return on investment after
only two weeks of using the innovative technology, which cleaned the airline’s inventory of bad
bookings.
Photo: Boeing
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Aegean Airlines aimed to utilize a market
opportunity by offering a low yet well-controlled
fare. Adding a single line to the TTL rule table,
creating one watch item and one relatively
simple process, the carrier was able to successfully offer aggressive fares without running the
risk of flooding its inventory with speculative
bookings.
For Avianca, an opportunity to assess revenue
integrity functionality and standards arose when
the airline decided to migrate from its previous
legacy platform. This presented an ideal time
for the carrier to seek out the best options to
improve its revenue integrity performance.
“Choosing the correct partner for our revenue
integrity solution was important for Avianca,”
said Avianca Chief Executive Officer Fabio
Villegas Ramirez. “Not only were we looking for
maximum value generation from a solution, but
ongoing service support was also something
that we considered to be very important for our
future success. The Calidris integrity solution
provides us with much better tools to manage
and change our business processes and rules
than our previous revenue integrity system.
Calidris also offered the value, flexibility and
service support that Avianca expected.”
Calidris’ technology has enabled British
Airways to create one of the airline industry’s
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Photo: Airbus
Icelandair, the first carrier to employ Calidris Ingetrity, achieved a 24 percent decline in no-shows
during the first three months of utilizing the innovative technology.
first order data stores, which uniquely combines
customer information from across the complete
booking-to-fulfillment lifecycle in a single unified
data layer. Using Calidris’ intelligent process
design and automation tools, the Europe-based
carrier can now implement new business processes that bridge disparate global distribution
systems and passenger service systems and
action sophisticated workflows against end-toend customer orders.
This capability facilitates the implementation
of new business models and helps the airline
accelerate its transformation of the IT function into a business enabler to support key
business goals and initiatives.
“One of the enduring challenges of the airline
industry has been linking data and workflows
between legacy GDSs and passenger systems,”
said British Airways Chief Information Officer
Paul Coby. “The legacy systems are optimized
around servicing individual bookings one at a
time and contain a lot of poorly structured data.
The Calidriss technology allows us to manage
complex processes across multiple customers
and flights in a way that was impossible before,
giving us opportunities to improve customer
service as well as solve operational issues and
address lost revenue opportunities. We believe
the use of this technology to create the ODS is
a significant breakthrough, and we look forward
to a successful partnership with Calidris that
will help keep BA at the forefront of business
transforming, technology-led innovation in the
air transport industry.”
Finnair, the first airline in the world to adopt real-time revenue integrity, attained total ROI after
a short two weeks of using Calidris technology, which successfully eliminated bad bookings
from the airline’s inventory.
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Photo: Airbus
Highlight
For Avianca, Calidris presented the best option for improving its revenue integrity performance.
The solution provides the carrier with advanced tools to manage and change its business processes and rules, which surpass that of its previous revenue integrity system.
Calidris offers the level of expertise and
innovation that is aligned with Sabre Holdings’
long-term strategy. The enhanced revenue
integrity solution allows quick and easy access
to business data, making it an integral part
of successful revenue planning and revenue
generation not previously available. It also gives
airlines a more responsive, smarter, well-tuned
and fluid customer sales and service environment. Having this type of access to the world’s
leading revenue integrity solution offers airlines
myriad different aspects where value can be
measured, such as:
Seats returned,
Labor cost savings,
Better sales channels liaison,
Improved agent behavior,
In-flight food savings,
Reduced denied boarding,
Improved forecasting,
Increased customer satisfaction,
Service improvements.
The technology is based on a wide range
of capabilities depending on an individual
carrier’s needs. For example, newcomers to
revenue integrity that are seeking an immediate
return on investment have access to a strictly
Software as a Service model that manages
issues such as ticket firming, fake names and
duplicate tickets. And on the other end of the
spectrum, airlines that have utilized revenue
integrity solutions but want to break free from
the limitations of the legacy environment can
exploit the latest technology to support a new
and more competitive business model.
As part of the acquisition, Calidris’ revenue
integrity, business intelligence and data capabilities have become part of Sabre Airline Solutions’
broad integrated suite of airline products, and
they are now made available to more than
300 airlines that currently use the technology
company’s solutions.
“We understand airlines must have the most
robust technology available to be true longterm, forward-thinking leaders in the industry,”
Clampett said. “And we are confident the
acquisition of Calidris is another key driver of
our strategy that will deliver nothing less than
top-caliber revenue integrity, business intelligence and data collection solutions to our airline
partners.” a
“And we are confident
the acquisition of
Calidris is another key
driver of our strategy
that will deliver nothing
less than top-caliber
revenue integrity,
business intelligence
and data collection
solutions to our airline
partners.”
— Steve Clampett, president, Sabre
Airline Solutions
Stephani Hawkins can be contacted
at stephani.hawkins@sabre.com.
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Checking In
New check-in technology using a single, robust platform enables airlines around
the world to manage end-to-end check-in and departure control operations with
precision and ease.
By Mavis Borg Conti | Ascend Contributorr
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Photo: Thinkstock
D
uring the first 50 years of
scheduled passenger travel,
the airline industry was slow
to evolve; however, technology
and a need to be more efficient
and economical quickly took over.
Advances in self-service solutions, such
as online bookings and Web, kiosk and
mobile check-in, have been an explosive
force in the travel industry. These advances
have caused airlines to build highly desirable
self-service tools while reaping the rewards
of lower employee costs. The impact of the
global recession compelled airlines to find
new and innovative ways to generate revenue, at which time ancillary services, such
as baggage charges and seat fees, became
a necessity for new revenue streams.
All these advances led to a pioneering
decision by Sabre Airline Solutions ® to
invent a new check-in system.
For many years, Sabre Airline Solutions
supported two airline check-in systems
— SabreSonic® Check-in on the ACS platform and SabreSonic Check-in on the ACSI
platform. The two systems traditionally
targeted different global markets — ACS
has been widely used by airlines in the
Americas, whereas ACSI was designed for
international carriers in Europe, the Middle
East and Africa as well as Asia/Pacific.
Sabre Airline Solutions has made a multimillion dollar investment to merge the
best of both check-in systems to create
a single, robust system. With this investment, SabreSonic Check-in paves the way
to service all airlines worldwide, from the
small, niche, boutique carrier to the megainternational airline.
The upgrade of the Sabre Airline Solutions
departure control system incorporates both
SabreSonic Check-in and Sabre® AirCentre™
Load Manager, making this an industryleading airport and passenger processing
solution.
The advanced SabreSonic Check-in simplifies and improves product management,
development and delivery practices. It supports foundational check-in, boarding and
load control functions; offers enhanced
passenger recognition and service; and
promotes operational efficiency.
The flexible, configurable technology promotes increased revenue-generating
opportunities as well as ensures operational
integrity, delivering industry and securitycompliant applications on the most reliable,
stable platform.
The SabreSonic departure control system is truly groundbreaking in terms of
its graphical user interface, its ability to
handle large volumes of passengers and
aircraft schedules, and its unique groundhandling capabilities. New features within
the upgraded solution include:
Complete integration with reservations,
ticketing, inventory and customer profiles;
A single unique seat map with an easy-touse graphical user interface for reservations, check-in and load control;
One source of data for all flight schedules;
Real-time updates to PNR and inventory;
New seating features, such as tier-preferred seating, zone boarding and adjacent seat blocks;
Intuitive GUI that guides check-in agents
through workflows and reduces training
costs;
Merchandising functionality based on
business rules that enables airlines to collect fees, such as baggage and standby,
as well as delivery of fare families and
bundled services;
Self-service processing tools such as
Web check-in, self-service kiosks and
mobile check-in using both SMS and
browser-based check-in;
Airport tools including a check-in PDA
device with a mini boarding pass printer
for roving agents and a dynamic boarding
application integrated with the check-in
system for gate agents;
Improved data sharing across all customer touchpoints.
With government mandates and more
advanced technology on the rise, Sabre
Airline Solutions programmers and developers are freed to concentrate on a single
best-of-breed check-in system, thus avoiding unnecessary replication that previously
took place with two systems and bringing
enhancements to all airlines in a shortened
timeframe.
Development of the new check-in system
began in November 2008 after receiving
feedback from airlines about precise functional requirements necessary for running
their day-to-day operations. Via survey of
all ACSI customers, a priority of project
enhancements was determined.
For example, gender and mandatory bag
weight were considered imperative for all
ACSI customers and were among the first
enhancements to be developed in the new
check-in solution. Workshops were held
in Bangkok, Moscow and London to help
define requirements and form development
and customer support plans.
Since then, programmers, designers and
developers have worked hand in hand to
ensure all necessary features of the two
current systems have been combined to suit
a niche carrier, such as Bearskin Airlines, a
launch customer for the new check-in system that implemented the solution in July
(see related article on page 6).
“Since we first learned that we were
a launch customer for the project, we
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have been impressed by the potential of
improving our agents’ productivity and customer service at all our locations,” said Dave
McCarthy, project coordinator and training
manager for Bearskin Airlines. “Throughout
the project, we have received great support
from the Sabre Airline Solutions team. The
Interactive Pilot phase provided excellent
product instruction and super supporting
documentation in training our folks for this
conversion. We were also successful with
our testing of the product. We’ve been
more than ready to make the conversion
happen and be on the new platform.”
The SabreSonic Check-in upgrade project comprised teams from Sabre Airline
Solutions marketing, training, development
and delivery. Experts from around the world,
including Dallas, Texas; Phoenix, Arizona;
London; Malta; Buenos Aires, Argentina;
Montevideo, Uruguay; and Bangalore, India;
worked directly with airlines to ensure the
new check-in solution was designed with
every region and culture, as well as government regulations, in mind.
“I am keenly aware of the importance of
this project and the effort involved for our
partner carriers to be successful,” said Karen
Davis, project manager for the SabreSonic
Check-in upgrade initiative. “The check-in
system is the heart of an airline’s operation,
and our goal is to partner with each airline
worldwide to achieve a smooth conversion
and transition to the new platform.”
Carriers on the ACSI platform will migrate
from their existing check-in system to the
upgraded SabreSonic Check-in. Current
customers seamlessly benefit from the
upgrades. Migration is being carried out in
four stages, depending on the complexity
of each airline’s individual requirements as
well as the availability of carrier-critical
features. Carriers will also need to convey
their readiness for the migration in terms of
training and delivery resources. All migrations are expected to be completed by the
end of 2012.
The SabreSonic Check-In departure control system meets and exceeds the standards
required with its core TPF-based solution
and open-systems interface that provides
unsurpassed reliability and availability for all
airlines that use the technology.
A user community of more than 60 airlines make the new SabreSonic Check-in
the world’s largest by volume of passengers
boarded. a
Mavis Borg Conti is a SabreSonic
Check-in solutions marketing
lead for Sabre Airline Solutions.
She can be contacted at mavis.
borgconti.ctr@sabre.com.
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Crew Balancing Act
ASCEND I SOLUTIONS
Carriers, such as Atlantic Southeast
Airlines, have access to a complete
range of crew recovery technology that
enables them to retain control over
their schedule and crew
recovery processes and,
in essence, over their
entire operation, during
schedule disruptions.
By Lauren Lovelady | Ascend Staff
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ASCEND I SOLUTIONS
U
nexpected disruptions resulting
from severe weather patterns,
aircraft maintenance issues,
security challenges, system congestion and crew unavailability
can wreak havoc on an airline’s daily operations.
According to statistics from the U.S. Department
of Transportation, on a typical day, approximately
10 percent of a carrier’s scheduled revenue flights
are affected by some type of irregularity. These
disruptions can impact all aspects of an airline’s
operations but are particularly detrimental to its
basic resources — aircraft and flight crews, both
of which may end up at the wrong place.
Getting a carrier back on schedule requires
those overseeing the airline’s operations to make
real-time decisions, while under pressure, that
may impact flights and crews for hours and even
days to come. Crew recovery, in particular, is a
tedious process that must balance flight schedule
modifications with resource availability to generate a solution that satisfies all operational and
crewmember considerations while minimizing
costs. The quality of the solution is determined
by the airline’s ability to effectively utilize the
operational data already available from its computer systems.
To assist with this process, Sabre Airline
Solutions® recently introduced Sabre® AirCentre™
Recovery Manager, a robust, comprehensive
real-time decision-support system that integrates
aircraft routing, crew availability and network
constraint information to effectively generate
optimal crew reassignments for revised schedules. By minimizing the impact of operational
disruptions on aircraft, crews, flights and maintenance schedules and, ultimately, passengers,
the proposed solutions help airlines:
Reduce additional recovery costs,
Minimize lost operating revenue,
Improve resource allocation and utilization,
Improve on-time performance,
Increase customer satisfaction.
Recovery Manager also enables carriers to
pre-plan — minutes or even hours ahead — for
anticipated schedule disruptions. In the case of
Atlantic Southeast Airlines, the launch partner
for Recovery Manager, both anticipated and
unexpected schedule disruptions are a routine
part of daily operations.
The airline operates more than 900 scheduled
daily flights as a Delta Connection and United
Express carrier at some of the world’s busiest
airports, including Atlanta Hartsfield-Jackson,
Chicago O’Hare and Washington Dulles. These
airports are prone to air traffic congestion coupled
with extremes in weather conditions, depending
on the season. Winter storms can be devastating
to Atlantic Southeast Airlines’ Chicago O’Hare
and Washington Dulles operations, while spring
and summer thunderstorms can leave the carrier’s Atlanta schedule in shambles.
To effectively deal with these disruptions, Atlantic Southeast Airlines needed a
robust solution to facilitate the return of its
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Recovery Manager, which minimizes the impact of operational disruptions on aircraft, crews,
flights and maintenance schedules, brings significant benefits to airlines by reducing additional
recovery costs, minimizing lost operating revenue, improving resource allocation and utilization,
boosting on-time performance and increasing customer satisfaction.
schedule and crews, which are based in Atlanta
and Washington, back online as efficiently as
possible.
Throughout the design and development of
Recovery Manager, crew scheduling and tracking
managers from Atlantic Southeast Airlines and
Sabre Airline Solutions employees participated
in a series of workshops based on agile development principles to review the airline’s business
requirements and build acceptance criteria for
the solution. As the project progressed, the
airline provided feedback and suggestions.
Users may also manually input this data
into Recovery Manager from other systems or
processes. Proposed solutions are delivered as
what-if scenarios in easy-to-read Gantt charts
for review and further analysis by crew trackers/
schedulers. Proposed solutions can be manually adjusted using the system’s drag-and-drop
capabilities. Once the user is satisfied with a
proposed solution, Recovery Manager seamlessly deploys it back to the crew management
and movement control systems for publication.
The Solution In Action
Each time a scheduled flight is disrupted and
subsequently delayed, an airline must determine
if each crewmember on the flight can complete
his or her assignment based on prevailing operating conditions and crew-specific needs and
regulations without becoming illegal. Extending
duty periods or utilizing move-up, reserve or
deadheading crews may result in significant
penalties that translate into equally significant
costs. The additional costs must be weighed
against the revenue contribution of the flight to
the network, not just the number of passengers
on the aircraft, during the schedule rebuilding
process.
Using a powerful combination of what-if
capabilities, optimization-based algorithms and
an extendable, flexible rules engine, Recovery
Manager evaluates these factors and generates
proposed solutions based on user-defined parameters, giving airlines full control over the schedule
rebuilding process and crew reassignments.
Unlike other pairing-based solutions in the
marketplace, Recovery Manager solves schedule
When challenged by a potential or existing
schedule disruption, crew trackers/schedulers
in an airline’s operations control center must
work closely with aircraft dispatchers and flight
control officers to place the carrier’s schedule
and crews back on track as quickly as possible. Recovery Manager supports this process,
integrating with all Sabre® AirCentre™ crew
management systems and Sabre® AirCentre™
Movement Control to automatically retrieve and
analyze information vital to generating the most
feasible, desirable and cost-effective solutions.
Movement Control interfaces with an airline’s
reservations system to display real-time flight
information, including:
Flight number and date,
Aircraft assignment,
Fuel data,
Planned and actual passenger counts,
Original, revised, estimated and actual departure and arrival times for each scheduled
flight.
Features And Capabilities
disruptions at a roster-based level. Proposed
solutions consider crew availability, preferences,
expenditures and pre-assigned activities such
as training, vacation and rest times. The system
also determines the minimum cost of reassigning disrupted crews to revised flight schedules
based on monthly hours flown, current partial
pairings flown and future assignments. Penalties
for extended duty periods and deviation from
planned flight assignments can be incorporated.
Government, business and contractual regulations can also be considered in the process.
In addition, Recovery Manager enables crew
trackers/schedulers to view detailed information about move-up, reserve and deadheading
crewmembers and restrict their selection by
domicile, rank and qualifications as well as the
percentage in each category to include in schedule reconstruction. Specific crewmembers and
deadhead flight candidates can be removed
from the proposed solution as needed.
If an airline decides it is beneficial to extend
crew duty periods, the system will notify crew
trackers/schedulers regarding the allowable
length of the extension before or after assignment periods as well as the penalties for
exceeding these thresholds. Based on the
detailed information available for each crewmember, Recovery Manager also helps users
prioritize the order in which crewmembers
are incorporated into the schedule recovery
process.
Recovery Manager generates multiple
reports, providing crew trackers/schedulers
with a comprehensive view of this information
before deploying the proposed solution back to
Sabre AirCentre crew management systems
and the Sabre AirCentre Movement Control
system. Reports include:
Solution summary report — An overall summary of the proposed solution including the
number of disrupted, move-up and reserve
crews utilized; number of deadheads and
ground transport required; modified pairings; and segments and pairings that remain
uncovered;
Consumption report — A summary of the disrupted and moved-up crewmembers (regular
and reserve) and their crew bases and ranks
as well as the distribution of pairing types for
each category of reserve crews;
Positioning report — A summary of deadhead
(online and offline) flights and ground transportation required for crews;
Accommodation report — A summary of
overnight (layover) and daytime hotel rooms
required for crews;
Utilization report — A summary of deadhead
promotions, trip extensions, unscheduled
overnights and reserve assignments.
Sabre Airline Solutions will continue to
expand the capabilities of Recovery Manager
to meet the needs of various types of airlines
worldwide. Future plans call for the addition of
cross-rank recovery, in which various levels of
Photos: Shutterstock
ASCEND I SOLUTIONS
Atlantic Southeast Airlines, which operates more than 900 scheduled flights as Delta Connection
and United Express, is the launch partner for Recovery Manager, a solution designed to help
airlines optimally manage both anticipated and unexpected schedule disruptions. The
technology enables carriers to pre-plan, minutes or hours in advance, for expected schedule
disruptions.
crewmembers can be reassigned together as
well as augmentation and downranking.
Augmentation involves the assignment of
crewmembers based on the length of a flight
and/or number of passengers onboard. In
some cases, downranking may be used to
cover a specified crewmember position with a
higher-ranking crewmember, such as when a
captain is assigned to serve as a co-pilot on a
designated flight.
To fully experience the benefits of Recovery
Manager, airlines may need to rethink their
existing business processes and current technologies. Solution consulting offered by Sabre
Airline Solutions helps carriers facilitate the
integration of the system into their operations
to receive the maximum value from their IT
investments.
While schedule disruptions will likely always
be part of “normal” daily airline operations, a
carrier’s ability to effectively manage the challenges presented will determine its success.
Recovery Manager provides airlines with a comprehensive set of user-defined parameters,
enabling them to retain control over the schedule
and crew recovery process and ultimately, their
entire operation. a
Lauren Lovelady can be contacted
at wearelistening@sabre.com.
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Get Off The
Tarmac
Airlines have access to the industry’s most innovative technology
designed to prepare for, avoid and rapidly recover from potentially costly tarmac delays, resulting in an efficiently run operation
that promotes customer goodwill.
By Rachel Olson | Ascend Contributor
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I
n April, the U.S. Department of
Transportation passed a bill prohibiting U.S. airlines operating domestic
flights from permitting an aircraft to
remain on the tarmac for more than
three hours without allowing passengers
to deplane (see related article on page 44).
This also applies to international flights,
operated by U.S. carriers into and out of
the United States; with the differentiation
that the carrier must specify in advance the
time limit where passengers will be allowed
to exit the aircraft. In addition, food, water
and restrooms must be made available after
a delay of two hours. The hefty fines of up
to US$27,500 per impacted passenger for
exceeding the threshold make avoidance of
the three-hour or greater delays imperative.
A common alternative used to avoid
violation of the tarmac delay rule is to
cancel flights when extensive taxi delays
are anticipated. While the loss of revenue is
significant, it pales in comparison to facing
significant per-passenger fines.
A much-improved option is available,
however, that enables an airline’s operations
team to anticipate and proactively react to
these delays as well as plan and prepare
in advance to avoid them completely. This
would result in maintaining the revenue for
that flight and facilitating passenger goodwill by providing passengers a smoother
travel experience and less likelihood for
rerouting their itinerary, avoiding frustration
and inconvenience.
Sabre Airline Solutions® offers a variety
of robust technology to assist airline operations centers in handling irregular operations.
These tools can be utilized to prevent long
taxi delays from occurring and identify and
alert operations if a long delay is imminent.
due to overcrowding of gates, taxiways and/
or runways.
By explicitly taking into consideration airport
constraints, such as air traffic flow control programs, Recovery Manager enables airlines to
maintain viable operations while not exceeding
operational levels that would result in severe
tarmac delays. During the process of recovering
a flight schedule in response to an irregular
operation by suggesting flight delays, cancelations and diversions, Recovery Manager gives
airline analysts the ability to specify several
airport constraints including the maximum number of aircraft at gates and on the ground as well
as the arrival flow rates. This enables the user
to simulate and manage airport flow rates and
manage the impact to ramp congestion.
Recovery Manager recommends schedule
time adjustments to ensure airport constraints
are not violated. For instance, flights may be
delayed in their departure station to prevent
overcrowding at an arrival station and a possible
extended wait time on arrival. Furthermore, by
explicitly incorporating posted ground delay
program slot restriction times into the recovery
process, Recovery Manager will determine the
approximate departure time from the gate so
an outbound flight is not subject to additional
tarmac delays during the departure procedure.
Based on the average taxi time at the airport,
the flight would be released from the gate in
time to meet its assigned GDP slot time at the
arrival station.
Movement Management And Control
During irregular operations, the operations
controller is most likely handling multiple
issues. Using technology to quickly identify
The likelihood of tarmac delays increases
with each occurrence of schedule disruption. Airlines that employ technology to
quickly and proactively resolve schedule
disruptions while minimizing overall operational disruptions stand a greater chance of
avoiding tarmac delays.
Sabre ® AirCentre™ Recovery Manager
is an automated, optimization-based flight
operations decision-support system used
to quickly and proactively resolve schedule disruptions while minimizing overall
operational disruptions (see related article
on page 79). Recovery Manager supports
effective decision making, including compliance with new consumer compensation
legislation for tarmac delays, and recommends real-time schedule adjustments
and aircraft assignment changes to resolve
disruptions. Recovery Manager has valuable
features that enable airlines to prevent
situations that could result in tarmac delays
84 ascend
Photos: Thinkstock
Recovery Management
A common alternative used to avoid violation of the new tarmac delay laws is to cancel flights
when extensive taxi delays are anticipated. While the impact on revenue is substantial, it’s preferred to paying steep per-passenger fines.
ASCEND I SOLUTIONS
Under the new laws passed earlier this year by the U.S. DOT, airlines that remain on the tarmac for more than three hours without offloading passengers will be fined US$27,500 per passenger. For tarmac delays of two hours, food, water and restrooms must be made available to all impacted passengers.
issues and analyze options will assist the
controller and decrease the potential for
a flight on an extended taxi delay to be
overlooked.
Sabre® AirCentre™ Movement Manager
and Sabre® AirCentre™ Movement Control
provide operations control personnel the
means to easily monitor the status of flights
and reduce the impact of disruptions to
the schedule, helping ensure a positive
travel experience. These solutions provide
operations controllers with configurable
time-on-the-ground alerts to inform them of
situations that could result in an extended
tarmac delay. A special tarmac delay alert
can be set, which is triggered if an aircraft
has an out time but not an off time, an on
time or an in time after an airline-configurable
time threshold.
In a situation where an aircraft has left
the gate but is not airborne and a designated
period of time has passed, the controller will
receive an alert notifying of an aircraft that
is nearing a potential tarmac delay violation.
This alert will indicate that the controller
needs to monitor the flight and take appropriate action if the flight will not be airborne in
time. In a similar situation where an aircraft
has landed but has not yet made it to the
gate for passengers to deplane and the
alert is generated, the operations controller
knows arrangements must be made with
the appropriate ground personnel to allow
passengers to disembark prior to the threehour threshold.
Airport Operations
Among a number of advanced solutions designed to help airlines respond to and overcome
tarmac delays is Sabre AirCentre Gate Manager, a system that generates an alert when an
aircraft has landed and its designated gate is occupied.
At the airport, inclement weather and
other disruptions can lead to an abundance
of non-scheduled aircraft on the tarmac
and occupying gates. Airports that utilize
technology to streamline their operations are
better equipped to handle unplanned aircraft
on the ground.
Sabre ® AirCentre ™ Airport offers forecasting and planning technology that uses
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demand-driven resourcing to determine the
most efficient resource levels, including
airport staff, gates and equipment required
to meet the work demands for a given
flight schedule. Sabre AirCentre Airport
provides airport controllers with alerts to
identify and prevent long tarmac delays.
Users of Sabre ® AirCentre™ Staff
Manager can create alerts based on a
threshold of elapsed time since the flight
departed the gate. If the flight is not off the
ground within certain user-defined minutes
from the departure time, the system generates an alert. In addition, Sabre ® AirCentre ™
Gate Manager generates an alert when an
aircraft is on the ground and the gate of the
aircraft is occupied.
In the near future, Sabre Airline Solutions
will introduce new ground movement
tracking situational awareness technology
designed to take advantage of ASD-B and
other surface surveillance radar to chart
the position of aircraft maneuvering around
airfields. The solution will provide visual
alerting to the consequences of airfield
congestion and ground-stop programs,
offering real-time situational awareness
to the SOC and supporting the decisionmaking processes of the operator, including
compliance with new consumer compensation legislation for tarmac delays.
In conjunction with data and messaging
capabilities already available in Movement
Manager and Movement Control, airlines will
have a complete picture of airfield operation
and performance. This new solution, when
complimented with Sabre ® AirCentre™
Flight Explorer, will provide full gate-to-gate
visualization of an airline’s flight operations.
Flight Explorer offers alerting capabilities to
track the elapsed time from the departure
of the aircraft, signified by the out message,
until airborne.
There are two alerts in the Events
Manager module within Flight Explorer
— Aircraft Taxi-Time Warning and Aircraft
Taxi-Time Critical. User-definable thresholds
have been created as the elapsed time from
departure grows. The two events are differentiated with unique colors. In the future,
similar logic will be put in place for arrival
alerting based on ON and IN messages.
Utilizing the most advanced technology
will assist airline operations personnel in
recognizing, proactively reacting to and
preventing costly tarmac delays as well as
increasing passenger satisfaction and
retention. a
Rachel Olson is a solutions manager
of Sabre AirCentre Flight for Sabre
Airline Solutions. She can be contacted
at rachel.olson@sabre.com.
+count it up
2050
23
50
The year by which worldwide
The percentage of global greenhouse gas
The percentage by which emissions
aviation’s CO2 emissions from
emissions accounted for by the trans-
of carbon monoxide from aviation
fossil fuel is expected to reach 3
portation industry in general, according
have been reduced during the past
percent, based on a forecast by the
to enviro.aero. Aviation is responsible
40 years, according to enviro.aero.
U.N. International Panel on Climate
for 12 percent of CO2 emissions from
During the same period, emissions
Change. Today, aviation’s CO2
all transport sources, compared to 76
of hydrocarbons from aviation have
emissions footprint is 2 percent.
percent from road transport.
been reduced by 90 percent.
30
73 million
32 million
The amount in tons of CO2 that are
The number of jobs the air transport
wasted every year around the world due
industry generates globally, according
two points compared to the same
to infrastructure inefficiencies, according
to enviro.aero. Of those, 14.7 million
route taken by a form of land
to enviro.aero.
account for direct/indirect/induced jobs
The percentage by which air transport
covers the shortest distance between
transport, according to enviro.aero.
and 17.1 million direct and indirect jobs
through air transport’s catalytic impact
on tourism.