Operations Management

In today’s airline world cost competitiveness shapes the level of success more than ever before.

 

Effective disruption management plays a vital role. Research shows the cost of irregular operations can affect the bottom line as much as 20%. Major airlines report costs from $110 million (USD) to as high as $500 million (USD) per year, with some of the largest global airlines experiencing even higher costs.

 

Given the scale of the impact, the potential value to your airline can be huge.

If you manage to increase your efficiency by 0.5%-1% in dealing with IRROPS, this will unlock significant crucial benefits and will greatly improve customers experience.

 

We can help you to identify the level of maturity of your operations control in comparison to your competitors. We also support you in defining adequate and feasible measures and – if required – we help you implement them in the best way.

 

We will be happy to give you an example:

Customer problem

We were asked by one of our customers, who is part of one of the biggest airline conglomerates in South America, to identify the key cost drivers in their airline operations and to help implement adequate measures to tackle these costs.


Approach

We have defined a set of five KPIs which guide our initiatives and helped our customer to gain significant savings.

 

Implementation

  • Together with the Executive Management, we initiated a new incentive model in addition to kicking off a Management of Change program.
  • We implemented a set of operational instructions and standards.
  • We defined and implemented a training and coaching concept.
  • We demonstrated a quick win in optimizing the OTP of just four flights per day for the airlines.

 

Impact on client’s business

At that time, the average OTP of the airline was around 70%. They operated around 80 flights per day, which means around twenty-four flights were delayed more than fifteen minutes per day. The airline calculated a network average cost ATFM delay of 91 USD per minute. Calculating with this estimated value, the minimum cost for a delayed flight (minimum 15 min.) per day is 1,365 USD, which means the cost for twenty-four delayed flights per day were 32,760 USD. In one year, the airline would lose around 12 million USD. We started to bring down the number of delayed flights per day from twenty-four to twenty. This resulted in calculated savings of two million USD per year, just for this little initiative.

In the end, the airline was able to save round about 30 million USD based on our recommendations and involvement in implementing them.

 

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