A Top Contender a Conversation with … Enrique Cueto, Chief Executive Officer, LAN Page 12

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A Magazine for Airline Executives 2010 Issue No. 2 2010 2010 I ssue ssue N o. 2 o.

T aking your airline to new heights

A Top Contender A Conversation With … Enrique Cueto, Chief www.sabreairlinesolutions.com Executive Officer, LAN Page 12.

Join us on Facebook at sabreairlinesolutions.com/fb Follow us on twitter at twitter.com/SabreAS 18 Cambodia has a new, proud national 41 A new era in airline technology is 76 Introducing new check-in technology using a flag carrier upon us single, robust platform revenue within reach making contact T aking your airline to new heights

2010 Issue No. 2 To suggest a topic for a possible For more information about products Editor in Chief future article, change your and services featured in this issue of Stephani Hawkins address or add someone to the Ascend, please visit our Website at mailing list, please send an www.sabreairlinesolutions.com Art Direction/Design Charles Urich e-mail message to the Ascend or contact one of the following staff at wearelistening@sabre.com. Sabre Airline Solutions regional Managing Editor representatives: 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, Asia/Pacific North America Laura Kerr, Nadja Killisly, Mike King, Anthony David Chambers Mike Douglass Mills, Stephen Packwood, Javier Pezzino, Nancy Vice President Vice President St. Pierre, Nico Stoman, Alan Walker, John Phone: +65 6215 9518 Phone: +1 682 605 5349 Winstead. E-mail: [email protected] E-mail: [email protected] Publisher Europe George Lynch E-mail: [email protected] Alessandro Ciancimino Sabre Airline Solutions, the Sabre www.sabreairlinesolutions.com Vice President Phone: +39 348 3708240 Airline Solutions logo and products E-mail: [email protected] noted in italics in this publication are Awards trademarks and/or service marks of an Latin America affiliate of Sabre Holdings Corp. All Kamal Qatato other trademarks, service marks and Vice President Phone: +1 682 605 5399 trade names are the property of their E-mail: [email protected] respective owners. ©2010 Sabre Inc. Awards for Publication Excellence, 2009, 2008, 2007, 2006, 2005, 2004 All rights reserved. Printed in the USA. Middle East and Africa Address Corrections & Reader Inquiries ECO Awards For Excellence In Maher Koubaa If you have questions about this publication, Environmental Communications: 2009 Vice President suggested topics for future articles or would like Phone: +973 38350001 to change your address, please send an e-mail to Hermes Creative Awards: 2010, 2009, 2008 E-mail: [email protected] [email protected].

International Association of Business Communicators Bronze Quill: 2009, 2008, 2007, 2006, 2005, 2004 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. Innovation Meetings Show Travel Business & *2010 0210 AS-10-11515 All rights reserved. Sabre Inc. Network logo is a trademark and/or service mark of an affiliate Sabre Holdings Corp. ©2010 Travel Sabre The International Association of Business Communicators Gold Quill: 2006, 2005

International Association of Business Communicators Silver Quill: 2008, 2006, Introducing Award-Winning Merchandising Capabilities 2005, 2004 ® TM The Communicator Award: 2010, 2008 Maximize the value of every seat. Sabre AirCommerce 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.

Cert no. SW-COC-002360

powering progress perspective

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 pas- with Tom Klein senger-benefitting capabilities and real-time, President, Sabre Holdings actionable data for better business decision making. Airlines have always been quick to see the value locked up in their data. With the rom a business perspective, it’s critical that applications. What also must remain a focal acquisition of Calidris, and the incorporation executives have direct influence over their point are the platforms on which they run, of the Calidris technology into our business, areas of responsibility. They can’t be bur- the way they are delivered and their ability to airlines are now able to realize value from F dened with barriers. And they must have sustain long term to support new technolo- the combined data in real time — powering the freedom, within reason, of course, to run gies when and how you need them. real-time decision making, real-time actions the business the way they know is best for its In another critical area, airlines house mas- and real-time application of rules. future growth and success as well as that of sive amounts of data that are spread across Flightline specializes in innovative crew customers, shareholders, etc. Every business- their organization. We’re developing ways to scheduling software and services capabili- person should be able to make choices for their give you the ability to easily conduct cross- ties, which brings all phases of the monthly business strategy and initiatives … working in domain analysis to identify trends and make crew schedule bidding process online. In our tandem with partners that help minimize and adjustments accordingly. For instance, if you company section, we unveil the value these eliminate obstacles and unnecessary setbacks. offer a direct routing that customers aren’t two companies bring to airlines around the That’s why it’s crucial that we build technol- choosing, examining combined data from world. ogy that gives you considerable flexibility and reservations and ops, you can analyze the Beyond technology, in our profile section, enables you to execute the choices you make data to determine why — price and schedule three unique carriers — Air Canada, Cambodia and to respond quickly when your customer come to mind — these routes aren’t generat- Angkor Air and Ethiopian Airlines — share needs or the market presents you with oppor- ing business and make necessary future their amazing success stories, each with its tunities. Take, for example, the recent move planning changes. own philosophy on becoming a leading carrier toward ancillary sales on which many carriers In addition, key data should be immedi- in their respective regions and helping better have capitalized. Savvy airlines have spotted ately available to employees across your the economy while supporting the communi- an income opportunity and have unbundled organization when a business event occurs ties they serve. their products to reap additional revenue from so they can respond quickly and effectively And last, but certainly not least, on our the services passengers valued most. (read Checking In on page 76). Something as cover, LAN Chief Executive Officer Enrique And that’s just the type of rapid, profit- simple as automatically upgrading a customer Cueto shares his thoughts about what posi- making change that our solutions strive to to first class during the reservations process tions the Latin America-based carrier as a top support. Our approach gives airlines the abil- when he or she qualifies for the next loyalty contender in the markets it serves. ity to easily change direction, such as evolving tier is an easy way to impress and retain a I hope you enjoy this issue of Ascend, and their business model, successfully complet- customer. I look forward to working with you to ensure ing a merger, joining a new alliance or even There are numerous initiatives underway every aspect of our business brings value to moving from one alliance to another — all that support out overall technology strategy. your airline and your customers alike through while keeping their operation going without One of the more significant evolutions of our ever-evolving technology strategy and interruption or repercussion. our technology strategy includes providing committed role as your preferred partner. Forging technology is the nature of our an infrastructure to enable airlines to achieve business, so pushing the boundaries to con- the necessary business goals that ensure tinually help airlines change and improve success — technology to turn vast stores of is essential. And that’s the essence of our data into actionable intelligence, to act quickly Software-as-a-Service model. in real time and make the most efficient Clearly, we work in an industry that evolves decisions, and to have insight into all business through considerable change, and the role processes. technology plays transcends simply devel- The lead article in the special technology oping new capabilities that supports your section does a deep dive into the basis of business’s needs. It goes beyond software our entire strategy. It discusses why it’s vital ASCEND I TABLE OF CONTENTS

PROFILE INDUSTRY

Air CO Emissions: 6 22 2 36 The Bear Manage And Trade Wisely The Pony Bearskin Airlines started with Beginning in 2012, airlines While world economic recovery very little and evolved into a operating to and from Europe may be lopsided, most regions of leading force in its region must obtain carbon credits to the world see measurable signs of continue operating in Europe an upswing 9 Air Canada: Empowering Airport Staff 25 41 Air Canada leverages new mobile Simplify The Evolution Building Standards technology to help better serve Low-cost carriers, as they evolve to New technology standards promise customers and efficiently manage a hybrid model, add sophistication to provide a customary platform resources without adding complexity and crucial to the way ancillary services costs to the business are leveraged, sold and purchased 12 A Top Contender 28 44 Enrique Cueto talks about what More Smoke Than Fire Don’t Delay makes LAN a top contender in Iceland’s volcanic eruption Under the new tarmac delay laws, the markets it serves created angst and uncertainty airlines face harsh penalties for among airlines, travelers and delayed flights of more than three 18 Cambodia’s numerous businesses hours Pride and Joy Cambodia Angkor Airlines has 32 become Cambodia’s new, proud The New Normal national flag carrier The airline industry can expect a vastly changed landscape with mergers on the rise 6

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SPECIAL SECTION COMPANY SOLUTIONS

64 76 50 The Freedom To Execute Back To School Checking In A new era of execution on Investments to Sabre® Airline New check-in technology enables profitability, nimbleness and University ensure airline airlines to manage end-to-end competitive differentiation has employees are armed with the check-in and departure control emerged knowledge they need to help run operations with precision and ease a successful operation 55 Processes At The Heart 79 O f Competition 68 Crew Balancing Act In-depth analysis of business Satisfaction Guaranteed Carriers have access to a processes provides a balanced Sabre Airline Solutions® acquired complete range of crew recovery strategy that exceeds customer Flightline Data Services for its technology that enables them to expectations and promotes crew scheduling software and retain control over their schedule efficiency across the entire services capabilities and crew recovery processes operation 72 Revenue Integrity: 82 Beyond All Boundaries Get Off The Tarmac 58 The Dogital Pendulum Sabre Holdings® acquired Calidris Airlines have access to innovative Organic Server Management, and to bring airlines the world’s most technology designed to prepare like solutions, will revolutionize the robust, innovative revenue for, avoid and rapidly recover world of midrange, open-systems integrity technology from potentially costly tarmac operations as much as they are delays going to rationalize and bring order to it 76

ascend 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.

ascend 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 revenue- generating 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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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.

By Stephani Hawkins | Ascend Editor Photos: Bearskin Airlines

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very airline has a unique history that II corporate turboprop and designed the aircraft been vital that Bearskin Airlines flies at the precise tells an interesting story from its very specifically to serve the regional airline market. times of day travelers want or need to travel and first flight to present day. What makes According to Friesen, the expansion of the that it provides direct routes that are convenient, the story intriguing is the way each airline, in some cases, had more to do with resulting in time savings for its valued customers. carrier evolves through the years, going judicious timing to meet the needs of market By 2003, Bearskin Airlines had expanded to Efrom a state of infancy to a well-established, demand as opposed to a formal business plan include scheduled service to nearly 40 destina- seasoned operation. or strategy. tions and, today, more than 45 years after it first The journey for Sioux Lookout, Ontario, “I think we helped the company grow one took to the skies as a two-aircraft charter carrier, Canada-based Bearskin Airlines, referred to as the careful step at a time,” he said. the airline offers more than 100 daily flights to 17 “Bear,” is no exception. After all, not many airlines In the early 1980s, the Bear’s biggest com- destinations in Ontario and Manitoba, surpassing can say they started their journey landing on water petitor was bought out and ceased operations to any other carrier serving these key northern for lack of runways. the smaller communities in northwest Ontario. Ontario markets. More than 45 years ago, in 1963, the regional The opportunity to expand simply knocked on For the Bear, however, it’s much more than carrier, named after Bearskin Lake, a remote First the carrier’s door, and the owners promptly linking Northern Ontario’s five largest cities to Nations community positioned 270 miles from took action. Winnipeg, Ottawa and numerous smaller com- Sioux Lookout, came to life, providing charter “We did have to make fairly aggressive munities for the traveling public. The carrier’s services to secluded First Nation reserves in moves at times,” Friesen said. “Back in the executives and more than 250 employees also northern Ontario. early ’80s, one of the airlines that had been place great emphasis on assisting the communi- During the first 14 years, the carrier provided serving the area, and our biggest competitor, ties they serve. air-taxi service using Cessna 180s equipped with was being bought out by Air Ontario. It elected For nearly three decades, via Hope Air, a floats during summer months and skis in the to move out of the smaller communities in national registered charity founded in the mid winter. Given the lack of airfields in this remote northwestern Ontario. We then very quickly 1980s, Bearskin Airlines has provided free air area, the aircraft worked well to charter passen- bought aircraft and expanded to meet all of transportation to Canadians who are in financial gers on the surface of lakes near Sioux Lookout. those needs.” need and require non-emergency medical care However, the landing devices didn’t come without Through the years, the carrier kept a close eye outside of their native communities. challenges. During early winter freeze-ups and on the needs of travelers and expanded where In 1997, Bearskin Airlines Hope Classic, a early spring break-ups, the landing gear couldn’t it made sense. Putting customers first has been curling bonspiel for women, was formed to raise be relied upon. a leading contributor to the carrier’s success. It’s funds to help fight breast cancer. To date, the 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, pres- surized, 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 Prior to taking ownership of Bearskin Airlines in 1977, President Harvey Friesen (left) was a pilot aircraft designer Ed Swearingen, who devel- for the carrier. A year later, his brother, Cliff, purchased shares and is currently the company’s oped them as a stretched version of his Merlin executive vice president.

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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 Bearskin Airlines executives and employees alike take pride in working together to assist the lost a loved one to cancer, those going through communities they serve. Transporting patients with non-emergency medical needs who struggle cancer treatment and those who simply want to financially, raising money for breast cancer research and the Canadian Cancer Society, and help with fund-raising efforts. sponsoring events that support a variety of charities and non-profit organizations are among “We take pride in our role as a community the many ways the carrier’s more than 250 employees contribute to those with less-fortunate supporter,” Friesen said. “We remain committed circumstances. 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-to- finish travel experience. In addition, they rely on modern technology to run an optimal, efficient operation. Bearskin Airlines, which started out with ski- and float-equipped aircraft, offers more than 100 For example, earlier this year, Bearskin Airlines flights to 17 destinations using 19-seat Fairchild Metro 3 and Metro 23twin turboprop planes. became a launch customer for new check-in technology via SabreSonic® Check-in, using a powerful platform that enables the carrier to man- hosted airlines to access the best DCS fea- The new system went live at Bearskin Airlines age end-to-end check-in and departure control tures and allows Sabre Airline Solutions® in July, marking another important milestone for operations with precision and ease (see related to better focus its efforts and resources,” the thriving carrier. article on page 76). The upgraded technology, Friesen said. “We are pleased to be the first To date, Bearskin Airlines has covered a lot which previously supported two check-in sys- to make this move, putting us in a great posi- of ground, made great headway and has left tems that were regionally designated, has been tion to take advantage of revenue-generating quite an impressionable impact in its corner of combined using the best of both to create a and customer-service features, which will the world. single, robust solution capable of supporting soon be available to all airlines hosted by “True, we’ve been around for several every airline business model across all corners Sabre Airline Solutions. It’s a competitive decades, but we’re just getting started, and of the world. landscape, and the faster we are able to we’re definitely here to stay,” Friesen said. a “By combining the features of [the North enhance our systems, the better able we are America and international systems] on one new to compete.” Stephani Hawkins can be contacted platform, SabreSonic Check-in permits all at [email protected].

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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.

By Mike King, Brent O’Brien and Bradley Terrill | Ascend Contributors Photos: Air Canada

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ir Canada’s Ground Task mobile devices, powered by Sabre Airline Solutions® and IBM, provide bi-directional communication capabilities for staff A 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 Air Canada resource planning analysts, leads and frontline employees in Toronto can effectively at their fingertips, but they did not have the communicate in real time with the use of the carrier’s Ground Task and Staff Manager solutions. supporting systems to make their vision a The new technology supports above-the-wing and cabin workgroups and offers a robust, mod- reality. ern method of communicating vital flight and task updates such as gate, equipment and load “Our goal was to provide better service to changes. 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 Using new mobile technology, Air Canada agents can alert airport staff of duty changes, flight Air Canada’s largest hub operation located at delays, wheelchair requirements and other key real-time information to enable them to better the Toronto International Airport. The launch serve the airline’s customers and effectively handle resources on the day of operations. was scheduled to be completed in nine months and required several project tracks “We knew our timelines were aggres- cabin workgroups, providing a powerful and multiple vendors to achieve a successful sive,” said Sophie Georgakakos, senior new means of communication between release. director of airports resource planning for resource planning, leads and frontline Air Canada worked with its partner, IBM, Air Canada. “But we had confidence in our employees. Important flight and task to develop the Ground Task application. The joint project teams, and we were eager updates — such as gate, equipment and other critical tracks included building and to begin realizing the benefits of the new load changes — are instantly and auto- testing all of the carrier’s business rules in automation.” matically communicated without the use Staff Manager and integrating Staff Manager Today, the Ground Task and Staff of phones or radio. with its real-time flight feed plus the Ground Manager solutions are in full swing at A free-flow text component enables Task application. Air Canada’s Toronto above-the-wing and planners to use Staff Manager as an

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instant messaging tool, sending person- alized 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 Air Canada employed advanced technology to empower its airport staff with greater real-time Manager has been the implementation of information through better communications via mobile devices. Its objective was to enhance more consistent standards across our hub customer service, improve the quality of work life for airport staff and develop efficiencies in airports.” airport operations. Air Canada recently added Ground Task mobile devices for its Montreal cabins Task and Sabre AirCentre Airport solution, wanted access to the metrics and reporting group and plans to roll out Ground Task to including: available from having an end-to-end solu- its other hub airports by year’s end. Reduced fuel burn (gate holds, appropri- tion,” said Nick Careen, vice president of Air Canada is not resting on its laurels ate water levels), airports for Air Canada. “Increased visibility after the successful launch of Ground Task Reduced number of passengers arriving into operational and resource metrics will and Staff Manager. without bags, enable Air Canada to improve customer ser- “We see additional opportunities for Reduced overtime, vice and better manage our costs.” a optimizing our resource planning and ros- Improved historic information to better tering as we implement Sabre® AirCentre™ plan operations using Staff Planner, Staff Planner and Sabre® AirCentre™ Roster Improved customer service (especially Mike King is a senior account director, Maker this summer,” said Georgakakos. for passengers requiring assistance), Brent O’Brien is a solutions manager of “The Sabre® AirCentre™ Staff Admin Improved irregular operations handling. Sabre® AirCentre™ Enterprise Operations Employee Self Service module will also “Optimizing our planning and rostering, and Bradley Terrill is a senior IT project enable our airport staff to go online for self-service bidding and trading, and real- manager for Sabre Airline Solutions. self-service shift bidding and trading.” time resource management were key drivers They can be contacted at mike.king@ Air Canada expects to realize several to our decision to implement the Sabre sabre.com, brent.o’brien@sabre. major benefits from the combined Ground AirCentre Airport solution, but we also com and [email protected].

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A Top Contender arlier this year, Latin America- based LAN landed the sixth spot among the region’s most globalized companies, according to the Multilantinas ranking, joining EMexico’s Cemex (cement) and Telmex (tele- communications) 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 per- flight profitability. Additionally, this revenue diversification helps offset seasonal revenue fluctuations and reduces the volatility of its business over time. Looking forward, 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 Photos: LAN adjustments with the aircraft manufacturer

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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 The previous year, LAN held a contest partnered with Boston, Massachusetts- for long-haul routes. called “Fly There Or Bring Them Here!” based Partners In Health, a non-profit The acquisition of the Dreamliner is part The winner received two round-trip tickets, organization that works to bring modern of LAN’s re-fleeting plan that will enable which included the choice of either flying medical care to poor communities in nine it to modernize short- and long-haul fleets to any destination in South America or countries around the world and has a as well as reduce the number of aircraft bringing any two friends or family members 20-year history in Haiti. Partners In Health families it operates. for a visit to the United States. also used the LAN CARGO export ware- In 2004, the company launched a new Keeping its customers and prospects house at Miami International Airport as a brand “LAN,” under which all of its interna- aware, engaged and satisfied is certainly staging point and hub for all relief supplies tional passenger airlines operate. A driving a critical part of LAN’s overall strategy, that were transported to Haiti. objective of the branding effort was to but it also places strong emphasis on the Under the leadership of LAN Chief help customers better identify with the communities it serves and providing aid Executive Officer Enrique Cueto, the air- high standards of service and safety that in times of crises. Earlier this year, LAN line prides itself on keeping its eye on its exist among LAN Airlines and its affiliates. CARGO committed resources to assist customers, employees, shareholders and The new image has improved the vis- aid efforts in Haiti. A LAN CARGO Boeing communities, ensuring continued long- ibility of the LAN brand as well as the cost 767-300 freighter carried approximately term success for all parties involved. In a effectiveness and efficiency of the carrier’s 48 tons of relief items to Port-au-Prince, recent interview with Ascend, Cueto talks marketing efforts as it continues to expand including medical supplies, portable toi- about what makes LAN a top contender in in existing and new markets. lets and water from local and national the markets it serves. The carrier also strives to present a fun organizations such as the Americas Relief environment to its current and prospective Team, The Pan American Development Question: After 60 years as a state- customers. In another creative effort to build Foundation, the University of Miami’s owned enterprise, LAN became privatized brand awareness and bring pleasure to the Project Medishare and The Coca-Cola in 1989 with the sale of 51 percent of its traveling public, LAN holds contests for its cus- Company. equity to local investors and Scandinavian tomers to reward them for their business. Last LAN CARGO team members accompa- Airlines System. In 1994, the process year, more than 145,000 people entered the nied the flight to assist with the unloading was completed when current controlling “LAN invites you to the 2009 Sony Ericsson of cargo on the ground. Additional relief shareholders and other major shareholders Open” sweepstakes, which included two supplies including clothes, water and acquired 98.7 percent of the company’s tickets to the tournament semifinals matches, canned goods collected by LAN Airlines shares. What are the greatest benefits plus a night’s hotel stay in Miami Beach, and LAN CARGO in Miami were also of operating as a private airline versus Florida, along with a two-day car rental. onboard. On the ground in Miami, the airline being government owned? In what ways

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has becoming private contributed to the regional operator with affiliates in different approximately US$120 million and provides growth and financial success of LAN? countries throughout South America. We a service that only a select group of airlines Answer: LAN’s successful expansion is adopted a common corporate image in in the world offer its passengers, featuring based on two key factors: LAN’s growth 2004 under the LAN brand to reflect the full-flat seats that offer complete rest on strategy and its competitive advantages, regional nature of our operations. long-haul flights. This is in addition to a as well as public policies in Chile and in Currently, LAN and its affiliates provide modern onboard entertainment system and countries where LAN has established its passengers and air cargo clients with the a wine list featuring some of the finest affiliates, which have favored the sustain- broadest connectivity for travel within the selections from around the world. able and competitive development of the region, connecting Latin America with airline industry. the United States, Europe and the South Q: In 2007, LAN launched a new busi- Access to international capital markets, Pacific, thus creating the most complete ness model for short-haul operations. What mobility of human resources and materials network of international destinations to is the strategy behind the new model? between countries; free market access and from the region. How has it measured up to the expecta- for different companies; and freedom to LAN and its affiliates have the same philos- tions set forth by LAN executives and determine the supply, quality and reason- ophy, image and common values of service shareholders? able price of airport services have been excellence and the highest international A: The implementation of “low-cost” critical variables in the sustained growth safety standards. Thus, when international practices in domestic operations implied of the airline industry. LAN’s development passengers buy tickets on different routes, a revolutionary change that has broadened would not have been possible without the including domestic routes, they have the transport alternatives in such a way that right public policy environment. certainty that they will experience the same even more people are considering flying product with identical service standards. as a means of transportation. LAN and its Q: Six years ago, the airline officially affiliates renewed their short-haul aircraft adopted the name LAN Airlines S.A. How Q: Why did LAN launch premium busi- and increased aircraft utilization. In addi- has this change supported the company’s ness class four years ago? How has the tion, sales and distribution, onboard service goal to reflect the values and attributes new cabin service brought value to LAN and airport processes were simplified and common to all of the airlines making up the and its customers? expedited, significantly reducing unit costs. LAN alliance and emphasize the organiza- A: We have focused on investing in All these efficiencies were passed on to tion’s internationalization strategy? areas that will provide the best product to passengers through lower fares, which A: During the past 16 years, LAN has our passengers. The new premium busi- have led to an explosion in terms of traffic grown from a purely Chilean airline into a ness class involved a total investment of 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.

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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 A: The approach LAN takes to inte- A: LAN Airlines this year celebrates markets. grating its passenger business with the its 10th anniversary as a member of Q: LAN holds the largest market share transportation of air cargo is a distinctive oneworld, the global alliance that includes of passenger traffic to and from Chile, element of LAN’s business model. We the best airlines in the world. Being part Peru and Ecuador as well as domestic also transport cargo in the belly space of of oneworld has allowed us to offer a truly passenger traffic in both Chile and Peru. passenger aircraft, maximizing the utiliza- global network served by partners with What keeps LAN at the forefront in these tion of the aircraft and increasing the the same belief in high-quality standards, markets? What sets it apart from its main efficiency of our operations. This is a com- which represents an important advantage competitors? petitive advantage for LAN, especially on for our passengers in international travel. A: The pillars of LAN’s management long-haul routes where cargo operations This enables us to offer passengers travel are service, safety and efficiency. In ser- are more significant. As a result, cargo to hundreds of destinations that LAN does vice, the company has worked unflaggingly has historically represented approximately not serve directly, while at the same time to provide a world-class, consistent and one-third of LAN’s consolidated revenues, LAN provides oneworld members with differentiated product on all its routes. a much higher percentage than the indus- the most extensive network within Latin In safety, LAN has incorporated latest- try average. America. For much of its 10 years as part generation aircraft and operates one of the of oneworld, LAN has been the only airline world’s most modern fleets. The efficiency Q: What are LAN’s future expan- in South America to be a member of any of all its production processes, together sion plans for its passenger and cargo of the global airline alliances, playing a with an adequate cost control and tech- operations? key role in establishing oneworld as the nological improvements, has allowed the A: We expect significant growth over leading alliance in the region. company to provide a better service at the next years in both passenger and attractive prices, contributing to the indus- cargo operations. These expansion plans Q: How has LAN’s staggered lease try’s development in the region and directly are based on significant fleet orders, maturities over time created the strategic benefiting consumers. This would not have which contemplate delivery of at least flexibility to expand or reduce capacity been possible without a team dedicated to 45 narrow-body A320 family aircraft, 35 according to market conditions? professional excellence and highly commit- wide-body passenger aircraft and four A: Given attractive financing condi- ted to delivering the best travel experience freighters between now and 2018, with tions, most of our aircraft orders are for to our clients on a daily basis. total fleet capital expenditures of US$5.5 aircraft purchases. Currently, 16 percent billion over this time period. of our fleet is operating leases. These Q: As the leading air cargo operator leases have staggered maturities, with a within, to and from South America, how Q: In what ways has its membership in few coming due each year, allowing us does LAN leverage operating efficien- the oneworld global alliance benefited LAN to reduce the size of our fleet if neces- cies between its passenger and cargo and its customers? What value does LAN sary. This allows us ample flexibility to divisions? bring to other members of oneworld? renew our existing fleet, reducing the

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average age and increasing efficiency. initiatives that will be launched in the near Q: How does LAN support the com- future. munities it serves in terms of volunteer Q: Earlier this year, LAN signed an and fund-raising initiatives? agreement with Boeing to adjust the Q: What role does technology play in A: As a leader in Latin America, LAN delivery of 10 Boeing 787-8 Dreamliners LAN’s immediate and long-term success? has an integral vision that includes sus- to be incorporated into the company’s A: LAN is permanently concerned tainable entrepreneurial management. long-haul fleet, making it the first carrier with innovation, incorporating the most The company is aware of its social role in in the Western Hemisphere to receive the advanced technology to its operations the communities it serves, which is why Dreamliner. How does this help ensure in order to achieve significant efficiency we have focused on promoting sustain- the company’s sustainable growth while improvements and to offer a differentiated able tourism, caring for the environment preserving the environment and incor- product. This is reflected in one of the and heritage of the destinations in the porating state-of-the-art technology to world’s most modern fleets, with latest- region. Added to this is the company’s deliver the best travel experience for generation aircraft such as the Boeing 777 ongoing willingness to collaborate with LAN’s passengers? freighter and the Boeing 787 Dreamliner, different social organizations and support A: LAN will effectively be the first which will be delivered next year. communities in transporting humanitarian airline in the Western Hemisphere and We are constantly developing innova- aid when necessary, especially if they one of the first airlines in the world to tive projects that improve upon existing have been victims of diverse natural receive the Boeing 787 Dreamliner. This technologies, such as a new navigation catastrophes, where air transport can is a significant milestone, allowing us to system using satellite technology that we play a key role. provide the best travel experience for our implemented in the airports of Cusco in passengers and also result in important Peru as well as in Chile, allowing us to Q: During the last five years, while efficiency gains. extend the range of our operations and much of the airline industry has faced The incorporation of the Boeing 787 offer the best punctuality standards. significant competitive and liquidity cri- — considered the world’s most efficient Technological innovation has also ses, how has LAN enjoyed a 20 percent aircraft with a significantly reduced effect compound growth rate in total revenues on global warming — ensures the com- and remained consistently profitable? pany’s sustainable growth through a more A: Airlines are constantly tested as the efficient operation and competitive advan- Highlight industry is affected by the many external tages over the long run. shocks that in one way or another impact demand for passenger and cargo trans- Q: More modern aircraft certainly portation. LAN has successfully faced helps preserve the environment. In what LAN is permanently these challenges due to our geographi- other environmental initiatives does LAN cal and business diversification, efficient participate? concerned with cost structure and flexible operations. A: Even though the impact of commercial aviation on global warming is innovation, incorporat- Q: Airlines around the world are becom- relatively small, responsible for only 2 ing more creative with their marketing percent of CO2 emissions, the industry as ing the most advanced efforts to help build brand awareness and a whole and LAN in particular have sig- pique customer interest. In what unique nificant concern for this matter and have technology to its ways does LAN market its brands to adopted various initiatives and developed remain competitive? new technologies aimed at preserving the operations in order to A: We want to position LAN as the environment. These initiatives include the best way to fly to, from and within South renewal of our fleet and the incorporation achieve significant America, and are focused on constantly of the new 787, energy-saving initiatives, improving our reputation. We believe efficiency in fuel consumption and an efficiency improvements that the way to build a strong brand is extensive recycling program through which through providing the best travel experi- the company processes 90 percent of the ence and communicating efficiently with waste generated on board its flights. We and to offer a differen- our clients. We constantly monitor the have also invested US$70 million in the best way to get our message to our tar- installation of winglets on all our Boeing tiated product. get customers and obviously have been

767 fleet, reducing CO2 emissions. exploring the way to best use online and In addition, LAN has been at the cutting direct marketing tools. For instance, we edge of the industry’s move to electronic — Enrique Cueto, chief executive are learning how to best use the social tickets. More than 95 percent of tickets officer, LAN media revolution. issued by LAN are electronic tickets and LAN CARGO is the first airline in Latin Q: How would you describe LAN to the America and one of the first worldwide to traveling public to win them over? transport cargo using an innovative system A: At LAN, we have a simple promise to process cargo without the need for allowed us to improve efficiency in dif- to the world’s travelers: we will transport printed documents. ferent areas. We have applied the world’s your dreams in a reliable way with all the The company has also decided on the most advanced models to redesign our warmth of South America … fly with us, creation of an environmental manage- aircraft maintenance processes, allowing and you will not only enjoy the accom- ment position. This role will promote and us to achieve a 50 percent reduction in the plishment of your dream, but you will also strengthen these and other environmental time that a plane remains on the ground. enjoy the road to it. a

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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.

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he story of Cambodia Angkor July 27, 2009, Cambodia Angkor Air launched Cambodian Angkor Air. “We had tremendous Air, the new national airline of its inaugural flight from Ho Chi Minh City to pressure to start the operation as soon as the Kingdom of Cambodia, is an Phnom Penh. possible, but we also had to make sure we evolutionary one that continues At the signing ceremony, Vietnam Deputy ran a professional operation.” to be written. In existence for Prime Minister Truong Vinh Trong said the The close cooperation between Vietnam T a little more than a year, the airline was not only a rare joint investment, and Cambodia is largely responsible for the airline is making steady and carefully mea- but also a way to “improve the two Asian continued success of the joint venture. As sured strides to reach its goal of becoming neighbors’ bilateral relations.” Under the the national carrier of Cambodia, the airline a full-service carrier with domestic and US$100 million, three-aircraft venture, the is supported by its government, with essen- international service within the Association Cambodian government holds 51 percent tial business acumen provided by Vietnam of Southeast Asian Nations (ASEAN) and of the national carrier, and Vietnam Airlines Airlines, especially in the early stages. beyond. retains 49 percent. Cambodia Angkor Air receives comprehen- Perhaps even more importantly, the story The idea to launch a Cambodian national sive technical support from Vietnam Airlines, of Cambodia Angkor Air is also one of carrier with assistance from Vietnam Airlines including crew training, aircraft maintenance unprecedented cooperation between two was conceived by Cambodian Prime Minister and flight operations, ensuring its fleet of neighboring, yet traditionally rival, countries. Hun Sen, who recognized Cambodia’s rapid leased ATR 72-500 turboprop planes and After a succession of airline failures, the last economic development — an 8 percent annu- Airbus A321 jets is maintained at the highest of which ceased operations in 2001 under al growth in the gross domestic product from level of safety and reliability. the burden of mounting debt, the Cambodian 2006-2009, increased foreign investments Currently, the Cambodian carrier offers government officially requested assistance and a stabilizing political climate — would domestic and international flights between from the Vietnamese government to estab- further benefit from a vibrant airline industry, its hub in Phnom Penh and Siem Reap and lish a new national carrier. The Cambodian as would its thriving tourism industry. Prime Ho Chi Minh City, with plans to expand to government and Vietnam’s national carrier, Minister Hun Sen tracked the growth of additional destinations in the near future Vietnam Airlines, initially met at the end of Vietnam Airlines and after a review of poten- utilizing the six Airbus A321 jets it now has first quarter 2009 to discuss a possible part- tial opportunities in Cambodia’s market, on order. By 2015, Cambodia Angkor Air nership and investment opportunity. Within approached the Vietnamese government. plans to have a fleet of 16 Airbus A321s. 100 days, a joint-venture agreement was “Those were interesting times,” said All of the airline’s current 110 weekly flights signed by the two parties. The following day, Trinh Ngoc Thanh, chief executive officer of Photos: LAN Cambodia Angkor Air Cambodia Angkor Photo:

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.

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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 that can effectively support it from the initial be further enhanced when we implement Vietnam Airlines. stages through various levels of expansion. another of its solutions, this time to ensure Establishing the new Cambodian national “Cambodia Angkor Air is anxious to become optimum crew management by the end of airline has not been without its challenges. a full-service carrier and expand its interna- the year. Because of limited airline knowledge within tional services as soon as possible,” said Trinh. “We are determined to bring the best of the Cambodian population, which numbers “Judging from Vietnam Airlines’ positive expe- aviation practices to our customers,” he said. 14.5 million people, most of the airline’s rience implementing Sabre Airline Solutions “Every technology that we implement has first employees were actually “on loan” from technology, we are confident SabreSonic CSS the end goal of enhancing our customers’ Vietnam Airlines. Training local employees will similarly drive our plans forward quickly and experience.” required sending them to Vietnam Airlines to successfully.” Cambodian Angkor Air’s goal is to be a learn and master the appropriate skills on a The advanced technology platform sup- “flying ambassador” for the Kingdom of tight timeline. porting SabreSonic CSS will enable the airline Cambodia. With more than 20 foreign airlines Despite the challenges, Cambodian Angkor to cultivate interline and codeshare opportuni- now offering direct flights into the country, Air continues to make steady progress toward ties with other airlines, critical to its expansion Cambodia Angkor Air certainly has competi- establishing itself as a successful, independent plans. The sophisticated reservations system tors, but with the ongoing support of its national carrier. Initially, the carrier’s in-flight will also enhance Cambodia Angkor Air’s reve- neighboring country, it’s the only airline that services were provided by cabin crews from nue through merchandising. With SabreSonic® can proudly call itself the national flag carrier Vietnam Airlines. After completing training in Web, an Internet booking engine, the airline of the Kingdom of Cambodia. a Vietnam, local Cambodian employees began can capitalize on the solution’s new shopping staffing flights a few months ago, marking a services and capabilities to maximize the significant milestone for the national carrier. online channel. In addition, Cambodian Angkor Air recently Later this year, Cambodian Angkor Air began using SabreSonic® Customer Sales & plans to implement a crew management Service in support of its strategy to increase system from Sabre Airline Solutions as well. productivity using the best resources available “The proven solutions will play a large while keeping costs to a minimum. By partner- part in enhancing the operational capability ing with Sabre Airline Solutions®, the carrier has of Cambodia Angkor Air,” said Trinh. “Our access to a comprehensive range of technology cooperation with Sabre Airline Solutions will

20 ascend complete the picture 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 AS-10-12231 All rights reserved. Sabre Inc. Airline Solutions logo are trademarks and/or serviceAirline Solutions and the Sabre marks of an affiliate Sabre Holdings Corp. ©2010 Sabre

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powering progress 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

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he E.U. ETS as related to the Verification Managing Credits And Reporting aviation industry went into effect Data collected by airlines/operators as part As part of submitting emissions reports, in January with the majority of of the emissions reporting must be verified by airlines must also present a request for free airlines filing their emissions track- an independent and accredited verifier. Each allowance by March 31, 2011. Based on the ing plans with their respective member country will publish a list of accred- request and information collected from the T member countries. With these ited verifiers that airlines will be responsible emissions reports, in particular the ton-kilome- plans being approved and airlines tracking for working with to ensure emissions reports ter report, the European Union will determine their emissions for 2010, the stage is set for are certified before they are submitted to the emissions allowance based on historical the next steps of the plan, which, by March the responsible member state agency that emissions. By Sept. 30 of the same year, the 31, 2011, includes: oversees monitoring and managing emissions E.U. Commission will finalize the total quantity Submitting a 2010 ton-kilometer report, tracking. The verifier ensures: of allowable emissions, the free allowance and

Submitting the 2010 CO2 emissions report, Completeness of flight and emissions data quantity to be auctioned. The calculations of Applying for free emissions allowances. compared to air traffic data collected by the individual airline/operator and the associ- The E.U. ETS is a “cap-and-trade” system EUROCONTROL, ated free allowance will be available no later where the emissions in 2012 are capped at 97 Consistency between reported data and than Dec. 31, 2011. percent of the 2004 through 2006 average. In mass and balance documentation, In 2012, with the allocation of free allow- 2013, the cap is further lowered to 95 percent Consistency between aggregated fuel con- ances and requirement to purchase 15 percent of averages for the same period. Each airline, sumption data and data on fuel purchased or of the credits, airlines will need to plan their based on its 2010 ton-kilometer report, will otherwise supplied to the aircraft performing schedule to minimize the impact of emissions be allocated a share of the total emissions the aviation activity. and manage the free allowances. This requires

pie as determined by the European Union. As It also must verify the emissions and ton- understanding the impact of CO2 emissions to an airline’s share is determined, 85 percent is kilometer reports according to the monitoring be able to forecast the requirements of emis- deemed as free allowance while 15 percent is and reporting guidelines (MRG) and issue an sions credits. The forecasting capability requires to be purchased from carbon markets — the opinion stating that reasonable assurance of knowledge of historical data and the use of a

trade aspect of the scheme. Revenue gener- the reports are free of material misstatements CO2 calculation methodology that meets the ated from auctioning the 15-percent credits and non-conformities. In addition, the verifier airline’s requirements. This information will be will go to member countries. Using the sub- is required to provide the details of methodol- used as part of the schedule-planning process mitted ton-kilometers data from all airlines ogy used by the airline/operator and submit it to incorporate the cost of emissions into the and participating operators, the European with the emissions reports to the designated fleet assignment to determine aircraft types to Union will define the benchmark by Sept. 30, agency. operate a given sector. 2011, for determining the allocation for each Getting the report approved by a verifier In addition to incorporating the cost, it will be participating airline/operator. may not be easy for airlines. They’ll need to vital to continuously understand the emissions The scope of this legislation is quite clear collect various documents for each flight from forecast as well as track it against actual flight — any flight departing or arriving into an aero- different sources. If incomplete or inaccurate operations data. This exercise alone can provide drome situated in an E.U. member country is information exists, the verifier will reject the a constant view of the requirements and man- included for purposes of reporting. However, report, causing delays likely to cost airlines age them against the allowance. For example, particular flights are exempt from emissions valuable time and money. a flight between Boston, Massachusetts, reporting, such as: Search and rescue flights; Flights performed exclusively for the pur- pose of checking, testing or certifying air- Emissions Manager Forecasting craft; Public-service obligation flights; Helping understand Increase in overall the impact of Commercial aircraft operators with fewer emissions requires emissions on an than 243 flights per defined period (January borrowing from airline schedule to April, May to August and September to other sectors December). 1.00 Recent events, such as disruptions due 0.97 to volcanic ash and industrial actions, are 0.95 expected to have an impact on airlines as they submit their 2010 ton-kilometer report. Baseline 2012 2013+ CO Emissions: emissions Expected Expected 2 Lufthansa, for example, requested a one-year delay to the inclusion of airlines in Europe’s emissions emissions emission trading scheme due to flight disrup- Manage And Trade Wisely tions 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 E.U. ETS, based on a “cap-and-trade” system, begins with a baseline that is calculated from the

must work with a verifier to ensure accuracy average emissions used between 2004 and 2006. The CO2 emission cap is set at 97 percent in of specific reports as well as properly manage 2012 and reduced to 95 percent in 2013. Airlines need to include an overall E.U. ETS into their credits and reporting. strategic decisions for future development and competitiveness.

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the world adopt emissions trading schemes. Recent actions by the German government Sabre AirCentre Emissions Manager to introduce the Ecological Levy, estimated to be an additional cost of US$1.19 billion, Emissions will require airlines to better manage their management system emissions.

The Solution Rules Alerting Sabre Airline Solutions® recognizes the impor- Schedule and engine module Passenger management tance of effectively and accurately managing aircraft movement and payload information emissions credits and offers state-of-the-art DATABASE technology to help airlines not only comply with the E.U. ETS but also reduce costs and improve operations overall. Fueling information Regulatory data The recently launched Sabre® AirCentre™ Data E.U. ETS Emissions Manager collects, validates, stores retention reporting and reports carbon emissions data, simplifying templates compliance with E.U. ETS requirements. The solution is designed to support requirements ESB for emissions management and reporting such as data collection and storage for 10 years, Third-party verification Emissions forecasting validating the data when multiple sources are regulatory submission available, interfacing with an accredited verifier and reporting data in electronic form or through Designed to help airlines ensure compliance with E.U. ETS regulations, Sabre AirCentre defined reports. The solution provides significant Emissions Manager automates data collection, verification and reporting processes through automation and data validation to ensure correct defined integration with airlines’ operations, airport and reservations systems. data is reported and enables airlines to manage emissions within the defined requirements. Additionally, Sabre Airline Solutions experts Managing Carbon Assets consult with airlines around the world to help Planning to Operations them resolve current challenges related to emissions management. Its consultants are prepared to help airlines develop a strategy to reduce Sabre AirCentre Emissions Manager fuel consumption and emissions as well as Consulting implement the right solutions to comply with Reporting Verification Forecasting emissions reporting requirements. and Support With reducing emissions in mind, these experts also assist airlines in applying for earned Data collection Generating reports Carbon forecasting Update with credits and setting up necessary programs to access to new support their emissions initiatives. They ensure Validation and Connecting with Forecast to actual E.U. ETS schemes alerting verifier comparison airlines are compliant with relevant regulations Consulting and and help them benefit from essential credits to health-check guarantee efficient and environmentally friendly support operations. The E.U. ETS can present numerous chal- ASP offering lenges for airlines around the globe. However, a Proactive Manage by Integration out sound strategy combined with well-trained per- monitoring exception of the box sonnel, robust technology and knowledgeable industry experts can offset unnecessary costs and keep airlines aligned with the new trading 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 scheme. a airline fleet selection processes, network planning and operations.

and Frankfurt, Germany, can generate Operating without sufficient emissions

approximately 125 tons of CO2, costing credits will attract a fine from regulatory more than US$750,000, and with 15 per- authorities (expected to be US$123 per ton Christine Kretschmar is a regional

cent of purchased credits, it would cost of CO2). On the other hand, if the airline has marketing manager of Europe, Brent an additional US$120,000 a year at the excessive credits based on the forecast, O’Brien is solutions manager and Kamal current prevailing rates. A flight between these can be traded within the confines of Singhee is solutions director of Sabre® New Delhi, India, and London can gener- the allocated year. AirCentre™ Enterprise Operations for

ate around 175 tons of CO2, costing more With changing market dynamics, it is Sabre Airline Solutions. They can be than US$1 million, and with 15 percent important for airlines to understand, plan and contacted at christine.kretschmar@ purchased credits, it would cost an addi- manage their emissions footprint to avoid sabre.com, brent.o’[email protected] tional US$170,000 a year. significant costs as other countries around and [email protected].

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Hybrid

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. Airbus

By Alessandro Ciancimino | Ascend Contributor Photo:

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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 Lwas originally and primarily due to the exploita- tion 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 Straying from the original low-fare business model, AirAsia and Wizz Air, as well as low-cost typically do when they serve particular markets. carrier Ryanair, have increased the average stage length of their network – flying longer routes Ryanair is a prime example of a low-cost car- that weren’t part of the initial plan – to successfully grow their geographical footprint and sus- rier that pursues this avenue to sustain growth, tain growth. and, recently, the airline started serving markets that require nearly a four-hour block-time sector low-cost sector. But now that further growing while at the same time keeping the cost basis that originally did not fit into its business model. opportunities in potential LCC “virgin” markets under tight control. This means, of course, increasing the cost base are drying up, these carriers are beginning to Many LCCs and hybrid carriers keep remind- and, hence, having less competitive advantage compete for market share. ing that, first and foremost, they need to keep versus the incumbents. There are actually a few At the same time, winning passengers from or even strengthen their cost-basis advantage LCCs that are successfully pursuing this option traditional, full-service airlines is not easy because (“cost is king”) and then focus on revenue beyond Ryanair, such as AirAsia and Wizz Air. they are fighting back by attacking their cost improvement. On the flipside, other LCCs, such as Air Berlin, base and trying to emulate, with different levels However, in many instances, the LCC cost easyJet, JetBlue Airways, Norwegian Air Shuttle, of success, some features of the LCC business base has already “scratched the bottom of Vueling Airlines and WestJet Airlines, are achiev- model such as unbundling products and boosting the barrel” or, in other instances, some LCCs, ing growth by increasing their customer base. revenue through ancillary sales. due to their smaller size compared to others, This requires them to obtain new passengers in This strategy is based on successfully win- cannot achieve the same cost basis due to addition to those achieved through stimulation ning traffic from the incumbents, which, even if it different economies of scale that can be real- by cheap travel. In doing so, they must have seems strange, was not originally the foundation istically achieved. So while keeping the cost an advantage, aside from low fares, over the of the LCC strategy and success. basis to a minimum is necessary for success, it competition, which presents a new challenge In either case, the ultimate goal is to increase is not sufficient. In addition to maintaining the for LCCs. the available number of revenue sources (through low-cost structure, these carriers must also Until a couple of years ago, LCC direct com- ancillary services obtained by intelligently focus on revenue generation. petition was based on less than 10 percent of unbundling products) or the revenue-generation When two LCCs with a similar cost basis, capacity because these carriers were able to capability (through innovative revenue manage- which cannot be substantially improved fur- avoid, for the most part, competition within the ment coupled with customer-centric functionality) ther, compete in the same markets, long-term

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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 Some low-cost carriers, such as Air Berlin, easyJet and Norwegian Air Shuttle, are increas- only the processes that would deliver a quick ing their customer base to achieve growth. To do so successfully, these carriers must have an and substantial ROI where the investment is advantage that transcends low fares and sets them apart from their competition. minimal or nonexistent, Continually changing processes upon changing market/competition conditions, communication among different applications of The sophistication of the pure LCC model Implementing robust, flexible technology that different providers. is likely unavoidable and highly recommended. can easily adapt to changing conditions well In line with the conventional LCC strategy The key to success for a low-cost airline is into the future with little or no incremental to outsource non-core operations, solutions to tailor the sophistication around its own costs. need to be provided on a Software as a Service strategy, redesign some business processes To achieve this, airlines must apply a cus- (SaaS) basis as the most effective/least expen- accordingly and source technology solutions tomer sales and service approach that includes sive method to source solutions. that support the new processes in the most forward-thinking technology built around the Keep in mind the demand of new technol- effective, efficient way. This indicates that capability of an airline to shape its business ogy has to be driven by changing business solutions providers will have to play an even model according to its own tailored strategy. processes requiring new enablers, and not vice more central role in the industry since they will Important technology elements include open versa. Additional key success factors include: support airlines not just from a pure technol- architecture as well as adaptive capabilities. Evolving processes around a carrier’s own ogy standpoint but also, and maybe primarily, Any solution should offer a futuristic design that strategy, from a business advisory and business support will accept relatively easy customization and Redesigning processes in a manner that perspective. changes as the strategy and the business model minimizes or avoids additional resources/ To that aim, a true partnership between air- of the airline evolves, even in a way completely infrastructure, lines and solutions providers is clearly the most unthinkable at present. To that aim, having a Outsourcing initial business process re-engi- successful way forward. a solution that can be easily modified through neering activities at the time the new solution the implementation of natural language-based is implemented to the solution provider since business rules without having to revert each this typically delivers the most effective out- time to the technology provider is definitely the come at the lowest cost, way forward. Investigating the possibility to partner with This also means service-oriented architec- the solution provider on an ongoing basis to ture must isolate individual capabilities of an outsource the performance of some recur- application so they can be used in multiple ring business processes (e.g. maintenance of Alessandro Ciancimino is vice ways and combined with other services to the business rules) to avoid adding resources president in Europe for Sabre Airline create new functionality deployed across a and infrastructure in house when this proves Solutions®. He can be contacted at service bus that facilitates easier integration and to be economically ineffective. [email protected].

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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

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n March 21, the United Kingdom, Ireland and Iceland awoke to region- wide flight disruptions, travel chaos and potential financial losses due to a seldom active volcano, with the Ounpronounceable 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 inad- vertently 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 Photos: Kolbeinn Arinbjarnarson issuing the flying sanctions.

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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 resort- ed 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. ThinkstockPhotos: 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 re- opened. 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 plenti- fully 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 In the aftermath of Eyjafjallajökull, Iceland’s infamous volcano that erupted earlier this year, predicted due to an increase in international Rome and Madrid became aviation hubs due to the closing of many northern European principle passenger volumes in the wake of the volcanic airports. These southerly hubs transported much higher volumes of passengers to Asia and the eruption. When the restrictions were lifted and United States as a result while many of the continent’s northerly airports were closed and air- flights recommenced, the load factor of many lines grounded.

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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 oper- The eruption of Iceland volcano Eyjafjallajökull caused brief but significantly reduced restrictions ate efficiently. There are the primarily impacted on northern parts of Europe’s air transport industry, with severe warnings of imminent flight businesses in related industries such as airports, disruptions due to the volcano’s history of erupting for months at a time. However, after the ground handlers, freight forwarders, manufactur- initial eruption and airspace closures, there has been little lasting impact. ers, maintenance providers, fuel and catering suppliers, and airline technology suppliers. These flights was near 100 percent for several days due some parts, there was little damage, and after are the chief businesses impacted by aviation to the backlog of passengers eager to reach their seven days, almost all airspaces were re-opened. disruptions. Then, however, there are secondary destinations. There were brief and greatly reduced restrictions stakeholders such as manufacturing businesses, While many airlines have undoubtedly recorded on airspace with the subsequent eruption of retailers, financial institutions and similar firms that losses from the Icelandic volcanic disruption, Eyjafjallajökull and dire warnings of future flight rely heavily on airlines for transportation. These some carriers were winners, and the industry disruptions because the volcano has been known secondary stakeholders are greatly impacted quickly bounced back — especially in markets to erupt for months at a time, but after the initial when airlines are disrupted, even if the impact on such as Asia-Europe where the green shoots of eruption and airspace closures, there has been them is not easy to measure. financial recovery were only temporarily singed by little lasting impact. In the light of this event, Finally, there is the remainder of the population airspace closures. however, there should be lessons learned. that is impacted by macro-economic influences At the tail end of the first week, several airlines The first set of lessons learned should be when airlines are disrupted. Airlines are the first started questioning the validity of the airspace for passengers. Travel insurance is specifically businesses to be hurt in an economic down- closures. The weather in England, of course, did designed to address additional costs in the turn and the quickest businesses to rebound not help this situation. Late March can normally be event of flight disruptions. It doesn’t cost a lot, when economic forces improve. The lives of all counted on for cold drizzle and overcast grey skies mainly because the events it covers are fairly rare. stakeholders, which include most of the world’s — much like the remainder of the year. During the Passengers should purchase travel insurance just population, are improved by a healthy airline busi- volcanic eruption, however, the weather was just for peace of mind unless they are really hooked ness environment. beautiful in England; skies were gloriously blue on the adventure of intra-modal travel. Purchasing The industry will be faced with similar impacts during the day, the sunsets were blood red and travel insurance will allow them to apply the in the future — some foreseeable and some not. spectacular, and temperatures were balmy — second lesson: don’t panic when travel disrup- The ability of airlines to manage these events in a especially for the time of the year. tion occurs. Furthermore, passengers should not calm and efficient manner will provide the confi- Stranded travelers in England were forced into overly worry about returning to work or school; dence to shareholders, regulators and, ultimately, unthinkable acts such as praying for rain in March, everyone will understand. After all, the disruption to the traveling public that airlines are strong which would be similar to praying for extra heat was pretty much the best example of force enterprises that react decisively to threats — even in Dubai in the summer. By the end of the week, majeure impacting myriad lives. those threats from gigantic ash-clouds. a airline executives — including Willie Walsh of The second set of lessons learned should be British Airways — were asking if the airspace for regulators. One event, such as the incident closures were truly necessary. with British Airways Flight 009, should not create Air France, British Airways and Lufthansa, a trend. Regulators should be prompt to apply among other airlines, operated test flights into public safety measures, but they should also be Kay Denton is an account manager in the ash cloud then anxiously examined the air- just as prompt at testing the validity of their safety Europe for Sabre Airline Solutions. She can craft. While they found some advanced wear on concerns. Test flights should have commenced be contacted at [email protected].

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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

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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 T 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 France- KLM 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.

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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 repeat- edly 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 eliminat- Photo: Newcast ing the merger pressure. Low-cost carriers, though not as hard hit, are According to industry analysts, 2011 is ripe for more mergers in the airline industry. In recent not immune to mergers. Last April, Republic months, Qantas Airways Ltd. and Virgin Atlantic Airways Ltd. said they’re open to merger pro- Airways announced the fate of its two holdings: posals and each has a growing list of prospective partners. Frontier Airlines and Midwest Airlines. Both airlines will combine into one, keeping the name Frontier Airlines, although it will retain Midwest’s famous (as in Europe where some cross-border mergers “In the final analysis, the industry tends to chocolate chip cookies. The headlines for possible have been helped by unified legal frameworks) produce seat capacity beyond the level that consolidation talks among Alaska Airlines, JetBlue between an American and a European carrier,” would allow the industry to earn a rate of return and Air Canada could prove interesting. he said. that attracts and maintains shareholder support,” “Given the ferocity of competition in estab- Most industry observers agree consolidation Vaughn Cordle, CFA Airline Forecasts, LLC wrote lished and emerging markets, over capacity on is key to survival. in a June article published by Centre for Asia many key routes, intractable fixed asset costs “Airlines look at consolidation as a solution, Pacific Aviation. and high-leverage fuel pricing and hedging risks, or perhaps just the last arrow they have in the “I term this phenomenon the ‘destructive strong unions, and softening long-haul revenues, quiver,” Wall Street Journal Travel Editor Scott growth prerogative.’ Without capacity discipline it’s no surprise airlines are revisiting their business McCartney wrote in an April post to his blog, — and this requires an elimination of excess models,” said Gary Bowerman, travel writer and The Middle Seat. “In a network business, like capacity in the system — the industry will con- industry observer. aviation or phones or banks for that matter, the tinue to destroy economic and shareholder value bigger and broader your network is, the more and, as a result, the quality of the product will only Consolidation Is Inevitable revenue you can capture. Two airlines combin- get worse. Pro-merger advocates argue consolidation ing their customer bases and networks can do “Letting the number of legacy carriers shrink through mergers is inevitable for an industry that better, especially since they aren’t competing to a sustainable level of as few as three healthy can’t get to sustained profitability even after more against each other.” ones might be the best way to ensure that fliers than a decade of cost slashing, capacity cutting Adding to the ripe environment for mergers can get services they have lacked for so long,” and postponing investments in aircraft, facilities is the number of open labor contracts. The Air Cordle wrote. and other expenditures. Line Pilots Association is in bargaining with half “Mergers and consolidation is a must,” said of the 38 airlines where it represents pilots. Bad For Consumers Giovanni Bisignani, IATA’s director general and Perhaps, surprisingly, ALPA head Captain John Merger opponents argue that mergers don’t chief executive officer. “No other industry is so Prater told reporters early this year that consoli- always work to fix what ails the airline industry, fragmented, so we have to consolidate in order to dation is “inevitable.” that they cannibalize market share and are harmful build more efficiency.” “We’re for the right consolidation, consolida- to the flying public. Bisignani has called for regulatory support for tion that actually protects and enhances jobs A long-time and vocal opponent to consolida- barrier-free mergers across borders, explaining and creates a profitable carrier,” he told report- tion is James Oberstar, representative of the U.S. that different legal frameworks have hindered ers in New York. state of Minnesota and chairman of the House extensive global industry consolidation, particularly Some industry experts believe mergers Committee on Transportation and Infrastructure. among U.S. and European carriers. are the only solution to getting rid of what “This is the antithesis of the structure I voted “I am raising the agenda of freedom on con- they say is the underlying industry problem: for when Congress deregulated the industry solidation because we cannot do the same thing overcapacity. in 1978,” he said in a May editorial released

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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

Photo: Newcast 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

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 Lynne Clark can be contacted at passengers annually. [email protected].

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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

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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 F 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 pre-

dicted earlier this year by many cautious Photo: Airbus 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. Photo: Airbus “The recovery from this crisis is asym- metrical. Worsening conditions in Europe are Low-cost carriers, such as AirAsia and Tiger Airways, have been instrumental in the rise of in sharp contrast to improvements in all other passenger growth by growing network expansion, introducing additional international routes regions,” Bisignani said. and increasing flight frequency, completely changing the dynamics of Asian aviation.

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Asia/Pacific Leading the recovery charge is the Asia/Pacific region. Kunal Sinha, aerospace and defense con- sultant 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 Photo: Boeing market share continues to be whittled away by Along with many other airlines around the world, carriers in Central America are experiencing a low-cost carriers such as Southwest Airlines. positive shift in the economy. Panama-based Copa Airlines late last year boosted to 15 its order “They are forging new alliances with Asian for Boeing 737-800 aircraft. airlines, increasing flights to major cities and are competing to launch services in fast-growing mar- “Recoveries from a financial crisis are Most major U.S. carriers forecast double- kets in the region, like Malaysia,” he explained. slow,” said Nigel Gault, chief U.S. economist digit gains in average revenue for the second Growing network expansion, inauguration of with IHS Global Insight. quarter, helped by more corporate travel after the new international routes and increased flight U.S. corporate earnings are likely to remain unprecedented declines of as much as 40 per- frequency by low-cost carriers such as AirAsia, impressive, business analysts predict. As earn- cent seen a year ago. The revenue picture has Firefly, SilkAir, Tiger Airways and Jetstar Airways ings season begins to heat up, the spotlight strengthened through the quarter, with United have played a major role in the surge of passenger will likely shift from the trouble overseas to Airlines’ parent UAL Corp. leading the industry growth. the relative strength at home, especially in with a forecast for an increase of 26 percent to “The low-cost movement, which has now the wake of heavy cost cutting that has made 27 percent in the three months to June 30 from become an integral part of the mainstream of the companies much leaner. a year earlier. industry in Asia, has completely changed the Asian Earnings “have been outstanding across “We’re also seeing corporations beginning to aviation dynamics,” said Sinha. “Considering the virtually all sectors,” Peter Kenny, manag- allow their employees to travel in the premium benign regulatory stance, the LCC movement will ing director at Knight Capital Group, told cabins,” said Gerard Arpey, chairman and chief prosper, driving economic integration and a more Fox Business. “That’s the rebound story. executive of American Airlines parent AMR widespread network of air transport services Companies are delivering on the earnings.” Corp. throughout Asia. In the future, the interests of For the airline sector, IATA forecasts Some executives, however, remain cautious economic development and the region’s growing American carriers will return a profit of US$1.9 despite the positive trends. tourism sector are expected to be better served billion, a major improvement over the US$2.7 “Business travel, although it’s improving, is by LCCs than full-service carriers.” billion the region lost in 2009. Driving the still nowhere close to fully recovered,” said recovery are improved efficiencies as a result Southwest Airlines’ treasurer Laura Wright. North America of demand in growth, capacity cuts and domes- “Unemployment remains very high.” Economists with Kiplinger said in June they tic mergers. expect a 3 percent gain in gross domestic product Speaking at a June Bank of America Merrill Latin America this year for the U.S. economy with a net gain of 1 Lynch Transportation Conference, airline “Latin American countries weathered the million jobs. That will be a welcome change after executives said recovery in business travel has global economic crisis of 2009 relatively well, two years of job losses, but the payroll gains will accelerated alongside gains in international and with GDP contracting 3 percent overall, a decline still leave the unemployment rate at close to 10 domestic passenger revenue, bucking linger- largely attributed to Mexico’s exceptionally dif- percent. ing concerns about higher fuel prices. ficult year,” said Shelly Shetty, senior director

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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 Photo: Boeing Leasing, a branch of China Development Bank, for A significant indicator that the airline industry is returning to good health is the increase in new regional aircraft destined for Chinese airlines. aircraft orders from the main manufacturers. For example, earlier this year, Emirates Airlines Last September, Embraer reported that its aircraft announced it would purchase 32 Airbus A380 aircraft at a list cost of US$11.5 billion. This brings order backlog added up to US$18.6 billion and that to 90 the firm orders Emirates has placed for the super jumbo jets. it was on track to close the year with a company record of 232 units delivered. In Panama, Copa gain market share through their hubs in Europe largest economies in the region and the highest Airlines announced toward the end of 2009 that and Asia/Pacific even as capacity is being added number of projects under way. it had increased a previous order to 15 Boeing at a more cautious rate. 737-800 aircraft. Willis Aerospace executive director Stephen Africa Other signs of progress come from commercial Doyle told reporters in June that all signs point to African carriers are expected to post a US$100 airline flight expansion. For example, in Uruguay, strong economic recovery. He said that, particularly million profit, their first since 2002. This reverses the Civil Aeronautics Board has presented to the in the Middle East, low-cost carriers could play a the US$100 million loss previously forecast in executive branch a “free skies” policy proposal for major role in boosting the industry’s growth. March and the US$100 million that the region the Punta del Este airport. If passed, the measure “It could be said that the low-cost carrier seg- lost in 2009. would largely open traffic to all non-regular flights ment has benefited from the challenges of the The turnaround can be attributed to an increase at the country’s second-largest airfield. legacy carriers,” he said. “The Middle East and in Africa’s average GDP growth, which is predicted But while profits are up, ongoing safety con- parts of Asia have not been hit as hard as other to rise to 4.5 percent this year and 5.2 percent next cerns make a sustained recovery shaky. Last parts of the world, and it will be interesting to year, according to a report by the Organization for October, ALTA members, representing some 40 watch how the recovery develops.” Economic Co-operation and Development. Latin American and Caribbean airlines and govern- One indicator that the industry might be turning “The good news is that the continent has ment organizations, addressed the concern and the corner is Emirates Airlines’ recent announce- proved resilient to the crisis,” said Henri-Bernard issued a set of resolutions for 2010. The top ment that it will buy 32 Airbus A380 Super Jumbo Solignac-Lecomte, head of the Europe, Africa concern was air safety. They agreed to establish a Jets at a list cost of US$11.5 billion. and Middle East desk at the OECD Development centralized entity to develop and oversee technical “It’s very good news, and Emirates is a strong Centre. “The bad news is that, despite rebound- certification standards and improve international customer,” said Airbus spokeswoman Maryanne ing growth next year, the downturn could make it aviation relationships. Greczyn. “It is a strong airline in a greatly emerg- more difficult for some African countries to meet ing economy. So it’s a good bellwether for the the Millennium Development Goal of halving the Middle East industry.” number of people living in poverty by 2015.” Most of the Middle Eastern economies are A survey by MEED of senior management The recovery will not come at the same expected to enjoy a recovery in 2010 as oil executives at firms with business interests in the rate across Africa: Southern Africa, which was prices stabilize and OPEC increases production. Middle East revealed 62 percent of companies affected the most by the crisis, is forecasting only The Middle East and North Africa together are expected to spend more on business travel in 4 percent growth this year and next, while East predicted to grow by 4.5 percent this year and 4.8 2010 than last year, another sign the region is on Africa, which fared best on the continent, could percent next year. the road to recovery. achieve 6 percent on average during the same IATA said Middle Eastern carriers are expected The majority of companies surveyed expected period. to post a profit of US$100 million — their first to make up to 25 visits to countries in the Middle There are many outside influences spurring since 2005. This is significantly better than the East and North Africa this year. Of the Gulf this growth. China is investing heavily in Africa previously forecasted US$400 million loss and the Cooperation Council (GCC) countries planned to to procure natural resources needed to fuel its US$600 million that the region’s carriers lost in be visited, the United Arab Emirates ranks the ever-hungry economic engine. U.S. companies 2009. GDP growth of 4.3 percent is outstripping highest, followed by Saudi Arabia and Qatar. This also have longstanding relationships built on busi- the global average, and Gulf carriers continue to reflects the fact that these countries have the ness surrounding oil and other resources. Tourism

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is strong and growing, and trans-Atlantic flight operating officer Bram Steller told AFRAA prices recovered in June to US$75 per bar- frequencies are increasing. conferees. rel. Conflicting signals from the Middle East Still, there are hindrances that could slow contribute to the uncertainty of which direction aviation growth. While the U.S. Trade and Europe oil prices will head. IATA expects 2010 oil prices Development Agency has estimated that nearly Economic growth in the European Union will to average US$79 per barrel. However, David 90 projects worth US$2.6 billion will modernize solidify toward the end of the year and accelerate Greely, chief commodities strategist at Goldman African airport infrastructure in the next three in 2011, according to Economic and Monetary Sachs Group Inc., told reporters in June that oil years, the continent still has significant safety Affairs Commissioner Olli Rehn. prices will return to a higher-price environment, issues. “We assume that economic growth will be trading between US$85 and US$95 a barrel by In a December 2009 interview with around 1 percent in 2010, which will solidify the end of this year. Oil may reach US$100 by Aviation & Allied Business, Manoj Ujoodha, toward the end of the year so that next year, 2014 on future supply constraints, he said. chief executive officer of Air Mauritius, said economic growth would be on a scale of 1.75 “Unfortunately, there is a risk that the fuel that African airlines also suffer from the percent in the European Union,” he said. goes up faster than the economy, and so this competition of major network carriers as According to IATA, European carriers will be creates a problem,” said IATA’s Bisignani. “It will well as from the Middle East. the only ones in the red with a US$2.8 billion be difficult to apply fuel surcharge in this weak “These carriers operate hubs and have loss. This is a downgrading from the US$2.2 bil- environment. synergies with partners worldwide,” he lion loss previously forecast in March, although it “Seeing black on the bottom line is a great said. “Their competitive advantage is exac- is an improvement on the US$4.3 billion that the achievement. The resilience of the industry has erbated by the economies of scale they region lost in 2009. GDP growth of 0.9 percent been strengthened by a decade of cost-cutting, benefit from, and many African carriers find is not enough to support a recovery, and the cur- restructuring and re-engineering processes,” it difficult to compete. rency crisis clouds the future with uncertainty. Bisignani said. “But even with all of our hard “The latter operate within limited iso- April’s eruption of the Eyjafjallajökull volcano in work, the result is just a 0.5 percent margin that lated markets and don’t have access to Iceland and the subsequent closure of European does not even cover our cost of capital. The the critical mass that would give them the airspace because of the ash cloud drove profits industry is fragile. The challenge to build a means to attract the resources and operat- down in Europe. IATA’s Steve Lott said the Greek healthy industry requires even greater alignment ing capabilities that would enable them to economic crisis and the fall of the Euro against of governments, labor and industry partners. compete on a level playing field,” Ujoodha the dollar have also slowed profits in Europe. They must all understand that this industry said. “African carriers would only be able to “Europe has seemed to have lagged the rest needs to continue to reduce costs, gain efficien- compete if they can find synergies among of the world in terms of economic recovery,” he cies and be able to restructure itself if it is to be themselves and benefit from the support said. “Some of that is due largely to the Greek sustainably profitable. We must all be prepared of crucial stakeholders like their respective debt crisis and some of the financial problems for a greater change.” a governments.” in other countries. Germany announced major At its November 2009 conference, The budget cuts and problems with its budget. And Africa Airlines Association (AFRAA) urged this is all really accumulating in a weak European the continent’s largest players to work economy.” with smaller carriers to create codeshares, joint ventures, cross-border and equity Wild Card partnerships. The wildcard in a sunnier outlook for air “I think the message of cooperation is carriers is jet fuel prices. After a three-week not a fancy, trendy word, but an absolute slump, which saw the price of WTI crude down Lynne Clark can be contacted at necessity for Africa,” Kenya Airways chief to almost US$60 per barrel in late May, oil [email protected].

+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.

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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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arlier this year, many of the indus- ensures that the information necessary to will become of private fares that don’t follow try’s leading travel management manage this process during the day of travel ATPCO standards such as private fares out- companies, online agencies and is actionable by systems throughout the side the automated fare rule categories of global distribution systems, along lifecycle of the trip, particularly important Cat 15/25/35? And what about existing and with several airlines, proclaimed if there are irregular operations. Finally, in-work projects that certain airlines have Etheir support for plans to implement recently agencies and corporations will also have with third parties to enable merchandising developed, industry-wide technology stan- the data they need to effectively manage capabilities? dards for ancillary services. These standards, travel spend on ancillary services during the To this end, those in favor of the new proposed by a strategic partnership program pre-travel sales period, something that is of standards would remind concerned parties composed of International Air Transport increasing importance. that many capabilities enabling the sale of Association and Airline Tariff Publishing “We hear every day from both our airline ancillary services already exist within the Company members — airlines, travel agen- and agency customers that they want to GDS environment. Take, for instance, the cies and GDS companies — are designed better manage this process,” Moore said. variety of airlines offering branded fare to better enable shopping, booking, pay- “Accomplishing this via standards actually bundles available in the Sabre® GDS in ment and reporting of ancillary services for speeds the introduction of the ancillaries which customers can choose from among airlines, travelers and agencies. around the industry. It’s a smart business the items they value most. Pay-for-seat is Proponents of such open and transparent move for multiple carriers to use the same another example of a merchandised offer- technology standards believe that by driving underlying infrastructure across a wide vari- ing that many travelers take advantage of consistency, these standards will also drive ety of products. Airlines aren’t reinventing today in the Sabre GDS. efficiency through the way ancillary services the wheel over and over and over for each The proposed standards are not tech- are handled, such as accessing ancillaries new ancillary introduced by each and every nology specific. Varying customer touch via GDSs in the same manner as fares are airline. This is true for the simple sale of a points enabling merchandising will exist, accessed today. product, but it is particularly true for more as they should and do today — through the “It is essential that our valued agency complicated situations such as managing Web, ticket offices, GDSs or reservations partners have the ability to sell these prod- post-booking changes, flight cancellations, centers; even on the day of departure. But ucts to our guests in a way that is efficient and refunds and exchanges.” while technology approaches have differed and convenient,” said Catherine Dyer, vice and the products, services and business president of distribution for WestJet. Cross-Channel Value models airlines employ are virtually limit- Matt Beatty, vice president of global Ultimately, these standards are designed less, consistency in the technical approach supplier management for Carlson Wagonlit to make the purchase of ancillaries seam- is becoming the norm. Travel agrees that “with the GDSs providing less and easy for the end traveler — and “Delta supports this development of quick and easy access to ancillary prod- that is good news for the industry. Travelers technology that facilitates the potential ucts and services, we can help our clients rarely book trips through the same chan- distribution of new ancillary products and and their travelers make better-informed nel for all of their travel needs. Business services,” said Jim Cron, senior vice presi- choices.” trips, for example, are often booked through dent of global sales and distribution for corporate travel management companies, Delta Air Lines. “We are continuously Standards Methodology whereas leisure trips are commonly booked seeking distribution methods that satisfy The standards utilize the ATPCO cat- through a consumer-oriented agency or the marketplace, and this technology is an egory for optional services (OC) fare filing website. Offering ancillary services in a option we are considering. It is important capabilities along with a complementary consistent manner through all channels is that we work with our agency partners technology — electronic miscellaneous docu- one way to improve customer satisfaction. If to find the best possible solution for our ments (EMDs). When combined, these filing properly used, the proposed standards could customers.” capabilities will give airlines the ability to benefit the airline that leverages them. And that is exactly what the industry — quickly introduce ancillaries to the broadest Supporters of the new standards believe airlines and agencies alike — will continue travel audience through both direct and indi- consistency will enable airlines to imple- to do. a rect channels — supporting easy-to-manage ment these services and products quickly “à la carte pricing.” — rolling out new revenue opportunities in a For airlines selling in both their indirect matter of weeks and to all channels, online and direct channels as well as for travel and off. agents selling in the indirect channel, the ability to offer an ancillary product and settle Defining “Standard” the payment for it in an efficient manner is Like the launch of many previous technol- key. ogy undertakings that were yet to be proven, “Both ATPCO OC and EMDs offer tre- the announcement of these standards has mendous opportunities,” said Kyle Moore, not come without questions. vice president of information technology During the past year, many airlines have and consulting services for Sabre Holdings®. evolved their business model in an effort “The OC fare filing enables an airline to to generate incremental revenue by either quickly and easily put its product on the creating product bundles that differentiate shelf in the GDS, readying it for shopping their offerings or by unbundling various and booking, while EMDs enable the pay- products and services, such as premium Benjamin Mussler is an airline ment and funds settlement for the OC-filed seating or baggage fees. Given myriad ways distribution solutions marketing product. This cohesive combination creates this merchandising has been accomplished, partner for Sabre Travel Network®. an end-to-end solution — from shopping critics question whether the standards pro- He can be contacted at benjamin. and booking through fulfillment. It also posed will be truly open. For example, what [email protected].

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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.

By Michael Clarke | Ascend Contributor Photos: Shutterstock.com he U.S. domestic airline industry cancelled or diverted. Of those flights arriving Not far behind are major hub airports such has experienced phenomenal late, passengers experienced an average delay as Hartsfield-Jackson Atlanta International growth during the past 30 years of 57 minutes. Airport, Chicago O’Hare International Airport since deregulation. In spite of The majority of flight delays in the United and Miami International Airport. Since a large major geopolitical events that have States result from network effects across number of flights are connected to these caused temporary reductions in passenger the system driven by problems in the nation- chronically impacted airports, flight delays are traffic, the number of passengers traveling al airspace and aircraft routings. When a prone to propagate throughout the entire U.S. within the domestic market as well as the weather pattern develops, air traffic control national airspace. number of aircraft movements has increased authorities introduce a traffic management An alarming and disturbing trend observed three fold. program depending on the severity of the in delayed flights is a significant increase in At the same time, there has been little disruption. This includes, for instance, a ground duration of taxi-in and taxi-out times, in some growth in the underlying airport and air traf- delay program where all scheduled flights are cases exceeding five hours. With limited gate fic control system necessary to support this metered into an impacted airport and given a availability at major hub airports, airlines are immense growth. As a result, there has been specified arrival time to reduce the demand often forced to board flights and reposition a consistent increase in the number of delayed on the airport. Alternately, ATC authorities aircraft to holding areas until they receive and cancelled flights as measured by the U.S. would initiate a ground stop that prohibits any departure clearance. On arrival, inbound flights Department of Transportation. flights from departing to a given airport until often end up waiting until gates open, where, in Year over year, there has been a pro- a prescribed time and/or restrict a flight from some cases, outbound flights at the occupied nounced increase in the number of cancelled departing until a required airspace sector is gates are waiting for delayed crewmembers flights. Looking back at the month of May, for available. The distribution of flight delays is on inbound flights. example, there were 6,716 cancelled flights strongly correlated to the level of scheduled These tarmac delays, signifying any addi- reported by the 12 major carriers, represent- flights, which has pronounced bias toward the tional time a passenger sits on an aircraft while ing a 40 percent increase in cancelled flights eastern seaboard of the United States, with it’s on the ground and away from the terminal, versus May 2009. During the first half of 2010, the New York City area airports experiencing are measured from the time the aircraft door is nearly 25 percent of flights were delayed, the worst delays. locked or unlocked. ASCEND I INDUSTRY

Based on observed data collected by the processes and procedures to better manage with 160 passengers, an airline is now subject U.S. DOT, the majority of these excessive tar- and track flight diversions to help reduce to a penalty of US$4.4 million for any flight mac delays occur during flight departure. While excessive tarmac delays. violating the tarmac delay rule. the occurrence of such extreme delays are Nonetheless, there was a growing call for Ironically, in many situations, such exces- small relative to the number of scheduled com- governmental regulation and/or oversight to sive delays on departure are due to factors mercial flights in the U.S. domestic network, be implemented to improve the overall pas- beyond an airline’s control, such as prevail- when they occur, there is a lot of visibility and senger travel experience. In the aftermath of ing weather conditions, U.S. Federal Aviation media coverage. several high levels of tarmac delays observed Administration-instituted air traffic flow Last year, less than 0.20 percent of sched- in December 2008, June 2009 and July 2009, management programs and limited airport uled flights were subject to excessive delays, the U.S. Congress published legislation to resources including de-icing equipment and with the majority of those (91.5 percent) penalize airlines for situations where there are cleared active runways. observed during departures. In addition, exces- excessive delays beyond three hours. In response to the new legislation, most sive tarmac delays are often observed during In April, the new tarmac delay regulations airlines have become very conservative in flight diversions when the alternate airports officially went into law with severe penalties their operating procedures and often prefer to are not able to support the sudden increase of US$27,500 per passenger on an excessively cancel a flight subject to a rolling delay versus in unplanned operations. After the summer delayed flight (more than three hours). For a continuing their traditional “wait-and-see” of 2009, many airlines developed internal fully booked Airbus A320 or Boeing 737-800 approach for managing delays. As a result,

Number of Tarmac Times of 3 Stage Of Operation Of The 3-Hour Tarmac Time Regularly Hours or Longer Scheduled Period Flights Total Percent Prior To Multiple Gate Taxi- Taxi- At Diversion Cancellation Departure Out In Airport 2010 April 2010 529,330 4 0.00 0 0 1 0 3 March 2010 548,282 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 2008 Dec. 2009 529,269 35 0.01 5 3 22 0 5 Nov. 2009 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 CutlineJan. 2009* to go here. 532,339 87 0.02 7 10 70 0 0 2009 Total 6,450,285 903 0.18 110 112 604 2 75 2008 Dec. 2008 544,956 187 0.03 40 14 116 7 10 Nov. 2008 523,272 7 0.00 0 1 4 0 2 Oct. 2008 556,205 49 0.01 2 6 35 0 6

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.

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an increase in the level of flight cancellations Tarmac Times Of More Than Three Hours 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 300 the aircraft can depart within three hours of 278 block off. Consequently, airlines are being forced to 250 use additional gates and potentially increase their ground resources and staffing levels to 200 187 164 meet the higher level of operations once there is clearance for resumed operations. If an air- 150 line elects not to increase its ground resources (gates, ground equipment, staff, etc.), the 100 88 result could be additional departure delays 87 81 70 61 on flights where passengers are no longer 49 43 50 35 35 stuck on the aircraft but rather in overcrowded 21 25 7 6 12 4 4 terminal buildings. 0 If the current situation continues unchecked, passengers will potentially be exposed to unnecessary additional flight delays and can-

Jan. 2010 Jan. 2010 Feb. cellations unless airlines and regulatory bodies Oct. 2008 Oct. Oct. 2009 Oct. Jan. 2009 Jan. 2009 Feb. July 2009 Dec. 2008 Dec. Dec. 2009 Dec. May 2009 May Nov. 2008 Nov. Nov. 2009 Nov. April 2010 April Aug. 2009 Aug. April 2009 April June 2009 Sept. 2009 Sept. March 2010 March March 2009 March act now to do something to change the rules Source: U.S. DOT Research and Innovative Technology Administration of engagement. For starters, airlines must be better equipped During the course of nearly two years, from October 2008 through April 2010, the U.S. national with the necessary decision-support tools (see airspace has observed excessive tarmac delays where passengers were stranded for three hours related article on page 82) that will enable or more on the tarmac. As a result, the U.S. government has passed a law that will severely them to monitor their operations for prolonged penalize carriers for lengthy tarmac delays in an effort to reduce the number of impacted pas- tarmac delays. They need to be more proactive sengers. 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

Photo: Thinkstock Photo:

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 Michael Clarke is a solutions director of a carrier chooses not to increase its ground resources, there could be further departure delays Sabre® AirCentre™ Enterprise Operations on flights where passengers are no longer stuck on the aircraft but rather in overcrowded for Sabre Airline Solutions®. He can be terminal buildings. contacted at [email protected].

ascend 47 Freedom

50 To Execute The game has changed for airlines, and a new era of execution on profitability, nimbleness and competitive differentiation has emerged.

Processes At The

55 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 The Digital exceeds customer expectations and promotes efficiency 58 Pendulum across the entire Talking Technology ... With operation. Robert Wiseman, Senior Vice President and Chief Technology Officer, Sabre Holdings

48 ascend SPECIAL SECTION

Forging Technology Photo: Thinkstock Photo:

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.

By Tom Klein, President, Sabre Holdings

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 ASCEND I SPECIAL SECTION

safe, secure, sustainable and profitable airline industry that provides good value to customers is in the best interests of our gov- “A ernments, 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,

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2. Flexible applications engineered and tested for the demands of an airline, delivered in a SaaS model, Customer Touchpoints And Applications 3. A services foundation that enables a multi- tenant architecture for integration and real- time analytics. Why focus on these three areas? Because Customer Analytic “open” is not enough. While it is necessary to Insight 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 real-time Natural language Travel data operational data rules engine Warehouse 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 Booking history ease, cost reduction, flexibility and timeliness of • Contact delivery. Clearly, this is the opposite of freedom Ticketing information • Demographic information — it is simply new technology that brought new constraints. • Identification/document Revenue accounting This point was validated in a May meeting • Alliance, loyalty, ID and tier Operational information by our executive advisory board, a body of • Preferences chief information officers and IT executives Check-in from across the industry using multiple technol- • Value score ogy providers. According to discussions during • Targeted ancillary offers Baggage information the meeting, we have the right technology • Service event flags strategy to address the enterprise-wide needs Shopping data of an airline and have been executing. Still, we recognize the need to move even faster. With our unparalleled technology platform, you can use real-time data throughout your opera- Five Radical Shifts tion to ensure all employees have the same information exactly when it’s needed for optimal Further, in a 2010 study called “The Future decision making. of Corporate IT,” conducted by the Corporate Executive Board’s Information Technology Practice, five radical shifts — information over integrate and interpret information, both struc- of business services as the IT function merges processes, IT embedded in business services, tured and unstructured.” into a business-shared services group alongside externalized service delivery, greater business other corporate functions.” partner responsibility and diminished standalone IT Embedded In Business Services IT role — that correlate with our IT strategy and “The corporate center is in flux. All corporate Externalized Service Delivery the way airlines are evolving as businesses are functions have the same problems — their “Externalization of applications develop- addressed. It points to shifts that we embrace, capabilities overlap, they do not control the ment, infrastructure operations and back-office and every enterprise, airlines included, should outcomes they enable and, after many cuts, processes continues, gradually eroding the consider: they struggle to find the next big efficiency. And “factory” side of the IT function. The pace will for organizations growing in emerging markets, accelerate as the cloud enables the externaliza- Information Over Processes many corporate functions lack the scale or tion of up to 80 percent of application lifetime “The rise of technology delivered as a ser- expertise to provide sufficient local support. The spend. As this occurs, internal roles will shift vice, or the cloud, will significantly reduce IT function shares these problems. It has skills from being technology providers to technology sources of competitive advantage from informa- in strategy, program management, business brokers.” tion technology. In theory, a start-up could use process design and sourcing. All are valuable, (Although this came directly from The Future the cloud to obtain the same functionality, scale but none are needed solely for delivering tech- of Corporate IT study, and it may sound like one and quality as an industry leader. Differentiation nology, and so they can all exist elsewhere. of the many pie-in-the-sky promises of technol- will lie in how an organization manages change, Second, no amount of alignment and part- ogy, I believe this one will largely be true, and integrates its service portfolio and, critically, nership changes the fact that the IT function progressive companies are seeing the benefits exploits the information the services generate. enables business outcomes that someone else already.) The nature of demand for information technol- controls. Much value has disappeared down the ogy also is changing. Most employees are now hole that this situation creates. Greater Business Partner knowledge workers. Social media is becoming Finally, cost pressures mean many chief Responsibility vital for customer and internal communication, information officers face the unwelcome choice “Technologies for collaboration, business and data volumes continue to rise. As a result, of cutting delivery resources needed to “build intelligence and the customer interface all in the business areas that drive growth — inno- things right” or management resources that require experimentation and iteration; use non- vation, marketing, sales, customer service — up ensure IT “builds the right things.” linear, user-driven workflows; and offer value to 80 percent of IT enablement opportunities The need for efficiency and joint accountabil- from diversity across the organization. None of relate to business intelligence, collaboration or ity for execution and outcome will change the this is easy for a central function to fulfill. the customer interface. At the heart of each IT function’s delivery model and organizational A generation of business leaders and end of these opportunities is the need to capture, location. Technology will be consumed as part users is emerging with greater technology

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user adoption through application accessibility and configurability via an advanced community corporate travel portal and an enterprise consumption of usable management online travel agency operational data. company 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 real- time data and a rules engine that ensures it travel has an accurate array of knowledge about its wholesalers customers. airline Web site 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 airline call working with us on large-scale transformation center today, small shifts can be made with big gains. travel agent 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 airport direct light applications that are easy to implement. ticket counter We are working with a number of airlines, offering unique operational data services, added applications, helping with methods to create Ancillary sales don’t have to stop at your website. You can sell merchandised offerings through new capabilities from composite services, multiple channels, capturing more revenue for every type of trip your customers take. employing a rules engine and overlaying systems with new configurable user interfaces at points of sale or service, to get out of their knowledge and confidence. They see advanced, in the IT function will organize around build systems what they really want. user-friendly technology as an everyday occur- and run, and adopt an agile operating model A white paper titled “Forecast: Partly Cloudy rence and can recite stories of companies to allow rapid value delivery and resource And A Chance Of Applications” published by gaining industry leadership through technol- mobility. The Keynote Benchmark, a website for mobile ogy. At the same time that business leaders’ Organizations that do not make these shifts and Internet performance review, hints at how expectations, and their ability to articulate those will be left behind as they struggle to effectively customers are navigating new terminology while expectations, are quickly rising, the cloud gives exploit technology and manage an inefficient weighing the advantages of cloud computing at them access to unprecedented technology IT function and an underperforming corporate the same time. Terminology aside, with SaaS, scale and expertise. center. For IT leaders, too, the shifts present the “cloudiness” disappears when the technol- The fact that cloud services cannot be risk and opportunity. Those who do not adapt, ogy is real and applications perform. The paper extensively customized, but offer greater con- face a much diminished role in a group with goes on to say, “speed of implementation is a figurability in most cases, levels the playing little strategic impact. But the opportunity is also real advantage for SaaS.” field; business units cannot customize cloud significant. Leading a business-shared services We continually recognize the real need applications but neither can the IT function. organization offers new levels of resource and airlines have for fast execution, and we relent- Together, these trends point to a greater role for accountability for business outcomes. lessly evaluate our software and infrastructure business partners in areas where the value of Another option is a leadership role in a newly strategy and have been aggressive in delivering differentiation outweighs the need for integra- empowered business unit that thrives on exploit- advanced technology and services to support tion. This is not a return to local control of IT ing technology for competitive advantage.” the growth of airlines. We are also dedicated resources, rather, it is a shift in responsibility for to ensuring world-class delivery of technology technology decision making.” Our Approach and applications — speed being a critical focus. Our current technology approach and the We’ve completed more than 500 successful Diminished Standalone IT Role path forward sync ideally with these objectives, small and large technology deliveries in 2009 “As IT roles migrate to business services, which were taken verbatim from The Future and will do the same this year. Thus, as the larg- evolve into business roles or are externalized, of Corporate IT study. Our ASx exchange as a est SaaS provider to airlines, we have removed the scope of the IT function will diminish, platform and services environment creates an the cloudiness from technology conversations, and its headcount will fall by 75 percent or advantage for an airline. It provides preeminent ironically, with cloud computing. more. Strategy, architecture, risk, program application performance, seamless consump- The objective is to free airlines to focus on management, user support and relationship tion of new capabilities and a leading method flying and running their businesses as well as management will exist at the business- of delivering data between applications and enable changes in strategy, offer the ability to services level, not within the IT function. The points of sale and service. The result is bet- experiment with different models and react CIO position will expand to lead this broader ter combinations of applications and data for quickly to market changes … all enabled by group or shrink to manage technology pro- the businesses within airlines to effectively technology, as opposed to being hindered by curement and integration. Roles remaining execute. In addition, airlines see increased it. We have proven this ability at airlines of all

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that drives innovative customer value scoring that is configurable to fit an airline’s unique cus- Sabre AirVision Sabre AirVision Revenue Manager Sabre AirCentre tomer experience strategy, and it is a landmark In-Flight Flight development. Third, the use of the ASx exchange creates a seamless relationship between an airline’s functional areas such as marketing and planning, Sabre AirVision Sabre AirCentre Schedule Manager Load Manager enterprise operations, and customer sales and service, enabling airlines to connect in a one-to- many 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 Sabre ASx concept of integrated commercial planning is no Third-Party Sabre AirVision e longer just a concept. Creating real-time, action- Airline Se Exchang Applications Cargo rvices able 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 Airline 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 Sabre Airline Solutions Application Airline Third Party 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, A future-ready services-oriented architecture, Sabre ASx technology empowers you to quickly innovation, broad SaaS portfolio and collaboration make the changes you need for your business. This game-changing technology gives you the within the largest global airline community. A freedom to quickly assemble data and capabilities to act on business opportunities as well as technology environment built to evolve through enables you to leverage existing systems while easily integrating new ones. multiple generations, configurable solutions and real-time intelligence is creating freedom to sizes. The importance of SaaS is reinforced faster and adopt them quicker into steady state. evolve. Game changers, service leaders and lead- in the Keynote Benchmark whitepaper. It dis- The added bonus being, they have a solution that ing brands alike are taking note. Customers such cusses other advantages from cloud computing is generationally equipped for the long term — it as Aeroflot, American Airlines, British Airways, and SaaS inherent in the Sabre Airline Solutions is ready for many technology iterations to come. Cathay Pacific Airways, Ethiopian Airlines, Jet mindset, that are a direct correlation to what Additionally, airlines can tap into a robust offer- Airways, JetBlue, Kingfisher, Lufthansa, Volaris, airlines want. ing of business and data analytics applications, WestJet and, soon, Aeromexico and LAN, are It states, “another checkmark in the plus the most advanced revenue integrity capabili- using our services, applications and technology to column is that instead of highly disruptive and ties, intelligent merchandising and e-commerce, bring about this freedom. The industry’s 2.4 billion expensive process of upgrading on-premise, operational data services and airline toolkits that passengers expect it. SaaS upgrades can often happen without disrup- enable some of the world’s most prominent I like to think about it this way. According to an tion to normal business processes.” airlines to improve upon what they have today. article “All Too Much” in the February issue of This means that, over time, technology can Second, airlines need more than just great The Economist, between 2010 and 2015, the more easily evolve with a business, preventing technology to improve customer sales and compounded annual growth rate for global data wholesale changes that are painful or localized. service. They require operations solutions that volumes across all industries will be an astound- There are a number of areas across our broad integrate well with all other systems for a per- ing 60 percent. So, even if you want to believe in portfolio and client base that point to the suc- sistent view of the customer, the disposition only incremental passenger growth and little cess of our future-facing architectural foundation, of aircraft and ground operations. We have put change in consumer behavior, the onslaught of real-time operational data and services-based the ASx exchange to work in creating innovative data is coming. For the airlines that prepare now, applications. irregular operations recovery, dynamic customer it means great results. Is your airline ready, and First, we have delivered the newest solution reaccommodation, state-of-the-art inventory do you have the freedom to do business the way for reservations, departure control and inven- controls and an electronic flight bag solution, to you want? We’re more than ready. a tory to market that enables our airline partners to name a few. evolve or move from rigid customer management More importantly, the data becomes usable platforms and inflexible passenger service sys- in how it is extracted from operations to feed tems (PSS). Up and running at JetBlue, Vietnam other applications that span an airline. Our data Airlines, Volaris, WestJet and, soon, LAN and oth- dashboard aggregates day-of-operations and ers — the combination of platform and SaaS, and moment-of-operations information for faster deci- nimble, configurable applications means airlines sion making. Another example is the combining Tom Klein can be contacted at can see complete enterprise implementations of customer and operational data in a rules engine [email protected].

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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

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here is a constant tension in any If Excess Baggage business between delighting cus- Deny Bag(s) tomers and managing costs. Erring If Excess Baggage too much on the side of pleasing Compute Fee If & Verify Ability customers can result in an unsus- to Pay tainable business model. Leaning Ttoo far on the side of managing costs can Else Process If Baggage bring about a growing dissatisfaction among Locate Check customers. Reservation Baggage In the airline industry, you constantly hear the “process” word with customer interac- tions — “The boarding process will start in 10 Continue with minutes” or “To expedite the security process, Check-in please remove ….” As such, we expect to perform business actions according to set processes (often found in process and policy The traditional check-in process begins with locating a passenger’s reservation prior to checking in manuals), but often technology isn’t leveraged baggage. However, increasingly, arguments about excess baggage fees cause friction and slowdown to its full potential when assisting with process in the check-in process, often causing the agent to waive the excess baggage fee and resulting in development and implementation. lost revenue for the airline. The bottleneck happens in the “unwilling-to-pay” branch of the logic When developing a strategy around key flow and takes valuable time from the check-in agent. An airline can perform data analysis from the processes, several questions come into play, processing engine to gain insight into the impact the current process has on a particular airline. such as: Where are the bottlenecks in the check-in All Reservations With Checked Baggage July 2010 process? Which steps in the baggage loading process 12,000 are the most expensive? Which of your processes generate the most 10,000 criticism from your customers? With the advent of new technologies, should 8,000 you change any of your processes? How will you go about making process changes? 6,000 Does the same process apply for check-in at CHART TO FOLLOW 4,000 every airport (training efficiency versus local custom; large/small/domestic/overseas; local 2,000 regulations/workforce rules, etc.)? Should it? 0 Do you need to take a different flow through Locate Reservation Check Baggage a process dynamically based on current July 1 July 3 July 5 July 7 July 9 July 11 July 17 July 19 data? July 13 July 15 July 21 July 23 July 25 July 27 July 29 July 31 Check-in for “elite” versus non-elite The data analysis showed that in July, less than half of all passengers had checked baggage. Of customers, those that processed checked baggage, a relatively small number had excess baggage fees to pay. Ramp processes for different equip ment types/kinds of load, How to apply rules with processes. All Reservations With Checked Baggage And Excess Baggage To Be Charged In each case, how do you know there’s an issue? What action will you take to address 7,000 it? What will the necessary changes cost? 6,000 There’s a theme here. We need to know what’s working and what’s not working 5,000 with current processes and then employ a method to systematically analyze, make 4,000 decisions and implement changes to processes with specific goals in mind … all 3,000 while keeping the business operating in its CHART TO FOLLOW 2,000 current mode. Enter the world of “business process 1,000 automation and management.” When you buy solutions, you want to implement your 0 processes. When you execute your business Check Baggage Compute Fee And Verify July 1 July 3 July 5 July 7 July 9 July 11 July 17 July 19 July 21 July 23 July 25 July 27 July 29 July 31 processes, you want to be able to measure July 13 July 15 how well those processes are working for you. When you are planning, you want to This prompts the question, “Is the distribution of excess baggage arguments uniform across the be able to redefine your processes, making flights, or are there some flights that tend to have more arguments than others?” informed decisions, with the technology Analysis of the data shows that the top five flights contribute the most arguments and that this being an enabler and not an impediment. is relatively consistent across the entire month.

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The person who completed the step (role Top 5 Unwilling To Pay = 85.37% based or individual based), if it was a human interaction, Of All Unwilling To Pay In July The number of times it was completed normally/abnormally. 140 From a study of these metrics, you can drill down to discover problems. For example, one 120 human step appears to take a lot of time. Why? 100 Or you expected to check in 100 passengers per hour at the premium desk with five people 80 but are only getting 70 passengers per hour 60 checked in. Why? Using the refined processes CHART TO FOLLOW and accompanying metrics, you now have the 40 opportunity to understand what is happening during the execution of the process and then 20 make staffing adjustments accordingly. 0 As a matter of course, many of the interac- tions during check-in are captured on video, so 1-Jul 7-Jul 3-Jul 5-Jul 9-Jul 11-Jul 17-Jul 21-Jul 27-Jul 31-Jul 19-Jul 13-Jul 15-Jul 23-Jul 25-Jul 29-Jul by analysis of the actual numbers taken from the process capture along with video footage of the scene, better insight into the process Unwilling To Pay-All Flights can be discovered, resulting in significant Unwilling To Pay -Top 5 Flights improvements to the process — in customer experience and staffing costs. Without actual numbers, process improvements are simply guesswork — often good It may therefore make sense to change the process so discussions about excess baggage are guesswork based on the experience of the handled by a special team prior to actually retrieving bookings, resulting in a process flow where personnel involved. However, having precise the computation of willingness to pay is handled separately. numbers provides a base for experienced air- Of course, process change requires con- built in. When partnering with your airline, line professionals to make even better process siderable modification in the organization. we’ll begin with our pre-determined reference decisions. Processes need to be redefined, labor nego- processes, which are then refined to optimally While check-in processes have been used tiations undertaken, customer satisfaction support your business needs. The refined pro- as a prime example, the methodology is surveys conducted, IT systems adapted to cess flow uses prebuilt components from our applicable across your entire business. Key to the new process, etc. The changes to IT solutions and other components within your a successful strategy includes: are in some ways the least predictable and, business for execution. The components that Formalizing the process to allow for accurate because the changes often come late in the are embedded in your processes are those measurement, change-management cycle, they are often enabled by the ASx exchange platform. Leveraging the measurements, which pro- rushed and need heroic efforts by IT groups, During the execution of a refined process, vide the baseline data, to make improve- suppliers, domain experts and others — not metrics are captured (business activity moni- ments, exactly a freeing experience. toring) that enable you to see and report on Rapidly implementing those improvements Our vision with the Sabre® ASxSM Airline the flow through the process. Simple metrics via the ASx platform. Services Exchange process management strat- collected for each step in the process include: Business processes across your organiza- egy is that we deliver our solutions on the ASx The length of time taken, tion are vital to your airline’s success. Being exchange platform with reference processes The number of times the step was executed, 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 Unwilling to Pay Deny Bag(s) even, or falling short, and excelling in one of the world’s most competitive industries. a If Excess Baggage Compute Fee If & Verify Ability to Pay

Else Locate Process Reservation Baggage Check If Baggage

Else 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 Chris Bird is chief architect for of flights. It doesn’t require system-wide training; it is only needed by the people who actually Sabre Airline Solutions®. He can be execute it for the trouble flights at the trouble airports. contacted at [email protected].

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

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understand that computers existed impressed by my initiative or annoyed that before I first worked with them, but I’d created a surplus of operators (possibly in the scale of time, certainly in the a little of both I suspect), they moved me scale and pace of computer time, it out of operations and into the program- doesn’t seem as though it was that ming group where I was taught to program Ilong before. reentrant Assembler (a type of Assembler In 1978, I was still in my native England, that allows its code to be executed simul- working at a drill company in the northern taneously by multiple processes, meaning city of Sheffield (where the movie “The that any switch/flag changes need to be Full Monty” was set), at the time, the made outside of the program boundaries). steel capital of the world. Maybe it was a punishment after all. My home was a farming town 15 In the 1980s, I moved to America, still miles away. This was a great distance working on IBM mainframes, still coding by English standards, at least by 1970s Assembler, trying to learn as many details English standards, which amazed many of and nuances as I could about the mature my city-dwelling workmates who would and seldom-changing environment. often ask me how I could stand to travel Then in the late ’80s and early ’90s, a so far each day. big change, called client server, hit the In truth, it wasn’t an easy journey: two computing industry. Almost at once, every buses and a mile walk to get there in new product had to have its own server time for my morning shift as a computer hardware, database, fat-client application operator. The shift started at 7 a.m., so and dedicated team of specialists to main- I had to leave my house by 5 a.m. to tain it. It was around this time that I first get there on time. But waiting for me at began to move out of the mainframe world the end of each epic journey was one of and into this “new” and confusing world those wonderfully mysterious “computer where, it seemed, everyone had a differ- things.” A refrigerator-sized, black, brand ent way of doing what we’d been doing all new IBM 370-135 — and that always kept along on “big iron.” Processing data! me going. I was definitely taken by the cool It didn’t have as many flashing lights presentation capabilities of the newer as I’d first imagined it might, but this was technologies that were vastly superior more than made up for by the fact that to their mainframe/green-screen coun- it had the first CRT (cathode ray tube) terparts. Even today, though, mainframe I’d ever seen plus several mechanical interfaces are still surprisingly popular cabinets that housed those whirring, men- because of their simplicity — this is even acing tapes that never seemed to be able true in places where customers have to decide which way to spin. options between text and GUI — despite My first role as a computer operator being a tad clunky and severely disadvan- consisted of a number of standard manual taged in what they can display. tasks — mostly feeding the giant and vora- The “dumb terminals,” as they were cious chain-link printer that seemed to eat aptly named, had neither sufficient process- its way through endless boxes of green- ing power nor “imagination” to participate striped, three-ply carbon copy paper, which in anything other than an exchange of frequently jammed as it sped through the RUDIMENTARY DIALOGUE, which is how printer’s violent, clanging machinery. it appeared “back in the day.” Once the people there decided I wasn’t The other thing I really liked about a total country bumpkin, I was allowed to the newer technologies was their low touch “the keyboard” to actually control start-up and scaling costs. Now, for the what the computer did — more or less. To first time, companies could get off the be honest, back then at least, operators’ ground with just a few thousand dollars of skills relied mostly on their ability to fol- hardware — and when the Internet revolu- low a simple script that was printed out tion arrived, and brought with it another each morning with instructions such as: wave of technology that would challenge when you get this question, always type the bourgeoning client-server movement, this; when you get this question, always that’s exactly what happened. type this; when you get this question … The biggest concern I had with how you get the idea. client server was evolving, at least in About seven months into my job, I was the company where I worked, was the made shift leader (it was a very small unchecked sprawl. So many vendors, chip company) and immediately looked at ways technologies, hardware models, operating to automate the process so the scripting systems, databases, languages, test tools, tool (job control language) would answer etc. The pendulum, it seemed, had taken a its own rhetorical questions. This resulted long and arching swing away from mono- in very smooth and, frankly, rather more standard to hetero or totally non-standard boring shifts. Three months later, either and, although far less expensive to acquire,

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much of the compute power (very much practices.” At the types of volumes we run if you include the “client” hardware as at Sabre Holdings® — 32,000 transactions well), was grossly underutilized, resulting a second, operating globally, 7x24x365, in wasted capacity, power, space, cooling with agents and airlines of all sizes, and capital. Although probably a slight dependent upon our systems for their exaggeration, it now appeared as though livelihood — our solutions have, to say no one was sharing — initially because of the least, high demands on them. a lack of planning and controls and then We strictly enforce well-proven architec- eventually because respective system tural tenets in all of our systems — tenets incompatibilities and lack of established that improve the resiliency of our software. standards prevented them from doing so. We validate the implementation of those When the Internet revolution came, it tenets every day in our high-performance brought with it many valuable attributes — labs. We ensure that they will scale and and in the context of this discussion, two can withstand volumes at far higher rates really stand out: and for far longer periods than they will 1. The Internet browser. Initially, most ever experience in production. We also do people saw this as just an external, con- this with third-party products. If they can’t sumer-facing tool and kept marching right survive our scalability “boot camps” — along with their client-server plans. But and many don’t — they don’t graduate to early on, a smart colleague of mine asked, our list of approved products. “Why wouldn’t we develop browser solu- These tenets include strong alerting tions for professional agents as well as and reporting so we have clear visibility for consumers?” Others, too, began to into the health and performance of the question: had the pendulum swing from application software as well as the infra- “dumb terminal” to “master terminal” structure on which they run. We make gone too far? Soon, the time and cost sure that something as simple as a bad of maintaining and deploying thick-client log file doesn’t cause threads to back up apps — almost exclusively via floppy During his first four years as chief technology and that failure points (database, memory disks or CDs back then — forced a swing officer for Sabre Holdings, Robert Wiseman capacity, etc.) have been reviewed and correction to the mix of presentation moved the company to its first enterprise- thoroughly tested. solutions we have today: full-client-based wide set of infrastructure standards, which are Three years ago, as part of a continuing applications (MSWord); rich-client applica- managed by his organization. He has 32 years effort to improve system resiliency via tions (Google Earth and MySabre™ agent of experience in information technology; 24 of greater simplification, we implemented booking portal) and an entire range of which have been in the travel industry. a single set of “cookie-cutter” standards browser applications with a variety of across the company — SOA middleware, thicknesses measured by the number blade servers, database and operating and size of downloads (Flash) needed to system. By the end of the year, the vast execute them. majority of our applications will run on 2. Horizontal scalability. New-entrant our single cookie-cutter standard. This is companies, that had missed out on the a significant accomplishment in such a “American Idol” of computer technologies short time. in the early ’90s, were now able to select With this level of interoperable unifor- from a narrowed field of fast-maturing mity in place, the next problem to solve final contestants. This largely meant that is the over isolation of applications on they settled on a single, low-cost “pizza- dedicated server farms that have either box” solution, with the hopes of scaling sprung up independently or were inherited it out for low-cost processing, targeting via acquisition. Getting these systems stability through redundancy and trying onto a standard foundation enables us to to get as much reuse as possible. This benefit from the types of sharing that the was the right plan, of course, but scaling mainframes offer so well, but at a price horizontally is much more difficult than and level of flexibility they traditionally “people” — that is those odd groups of do not. us who tend to think about these kinds Mainframes are still the undisputed, of things — tend to think they will be. It seasoned masters of dependability. If you takes a lot of planning and coordination want something you can count on to run — and it requires telling developers how multiple types of services at very high they need to develop their code. And as volumes, they are the standard by which anyone knows, developers don’t like being all others are measured. Open systems told how to develop their code. I was one will catch up eventually, but they aren’t once — and I know. there yet. Good design practices, such as service- Of course, from a simple unit cost oriented architectures (SOAs), go a long standpoint, every time Moore’s Law does way in terms of enabling the ability to its thing, the number of calculations you scale across thousands of servers, but get for your dollar increases. This is we need much more than just “good incredibly significant to the future of

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computing. I once read on FutureTimeline. The workload of today’s operators is apologetically, I imagine. So maybe we net that in the year 2000, a thousand undoubtedly more complex than when need something else, something better. dollars would have bought you compute I was a lad, following and automating OSM comes with a policy engine that power capable of processing the same simple, rhetorical scripts, but the basic allows us to automate repeatable behav- number of calculations per second that an concepts are still the same. They observe iors — just like we do millions of times insect’s brain processes. This year, that an “action” and then determine the appro- a day in the application software that thousand dollars will buy you compute priate “reaction.” powers our business. We’ve designed it power equivalent to a mouse’s brain. The more skilled and experienced the to evolve organically to introduce itself to That’s a pretty impressive increase in such operators, the better they can recognize its human counterparts gradually, starting a short time. various patterns as they emerge, such as off with suggestions to simple conditions, By 2038, your thousand-dollar computer observing the fact that a set of services is such as: “The Web servers are running at will be comparable to your own brain in slowing down could suggest a number of 70 percent capacity, and we are about to terms of how quickly it will think — and possible conditions to a novice operator enter our peak period. Based on historical if that’s not impressive enough (or scary whereas the more seasoned among them data, which I can show you if you would enough depending on how you look at it), may know that this particular service like, I recommend that we provision an in 2060, your thousand-dollar computer extra 50 percent capacity. Click ‘yes’ if will have enough compute power to go you would like me to do this for you.” Or toe-to-toe with the combined brainpower Highlight maybe something a little less wordy. of every human being on the planet. I’ll be If the operator disagrees with the rec- dead by then and, between you and me, I ommendation, he or she will select “no,” think that’s OK. We strictly enforce well- and the designers and tuners of OSM None of this is true for mainframe will work to understand what correction computers — at least not as they are proven architectural needs to be made so eventually they currently priced. And, as a result, the will say “yes.” At which time, OSM will unit-cost gap between the technologies dynamically provision the servers with will get wider every year. Now I say “unit tenets in all of our systems the appropriate software (OS, DMBS, cost” because it’s important to stress the COTS, OSS, applications, etc.), storage point that the cost of the hardware isn’t all — tenets that improve the and network capabilities, which then you pay for with open systems. With all of come online to begin their day. that equipment, there is simply a lot more resiliency of our software. After the recommendations have been to manage, maintain and operate. Today, successfully accepted a sufficient num- those extra costs eat up much of the cost ber of successive times, the steps will differences between the two environ- be automated and the message changed ments, so that’s where we are currently to read: “Web server farm hit 70 percent focusing our efforts. capacity at 09:02:18, 50 percent extra In 2007, I was with two members of my capacity is currently being added. Click team (let’s call them Jim and Glenn) sitting has an occasional tendency to run out of ‘Cancel’ to abort or ‘Suspend’ to adjust.” in a bar in San Jose, California, postulating available threads at this time and needs to Then, slightly more-complex condi- the maturity gap between mainframe and have them cleared. tions will be tackled: “Pricing Server 14 open systems and what might be done to The operator may notice that a has stalled. Developer team has been bridge it. certain service’s garbage collection pause notified, recommend recycle. Click ‘yes’ One big advantage the mainframe has, times are starting to climb and knows to to continue.” And so on. we all agreed, is that its operating system alert the development team and that he As more and more conditions are has all of its resources laid out before should relieve the situation by recycling automated, the opportunity for human it and can subsequently manage load the server — after first ensuring that it has error is diminished. Stability improves where it best sees fit. Mainframe central completed processing its current workload and, along with it, so does our ability to processing units (CPUs) aren’t dedicated and no more is sent to it. more efficiently use our resources, both to specific tasks and, accordingly, don’t sit The decision processes that operators technical and human. idle while other CPUs are gasping for help. (or in fact any of us) go through are men- Our mainframe costs are already being Some mainframes — indeed some large tally assembled each time they observe a surpassed by our open-systems costs, Unix servers — even offer CPU capacity condition and learn how to respond to it. simply because that’s where our develop- on demand. That is, you don’t buy them More often than not, the more experienced ment and transactional growth resides. until you decide that you need them. the operator, the more likely he is going to More content, more shopping options, Why couldn’t we do the same thing know what to do. And then he leaves the more features equals more servers and, with blade servers? Lots of blade servers! company … either to finish off his days potentially, more complexity. One damp, scribbled napkin and lots and gardening or to get a job at one of our Organic Server Management, and solu- lots of testing later, we have developed an competitors. tions like it, are going to revolutionize the autonomous private cloud concept we call Then the process starts all over again world of midrange, open-systems opera- Organic Server Management, or OSM. with more-junior, less-skilled personnel tions as much as they are going to The dynamic nature of OSM is the key who see the same conditions but either rationalize and bring order to it so we can to its importance because it finally allows don’t have the experience to know what continue to focus more and more of our us to gain consistent quality of operations to do or forget this particular situation resources on those aspects of our busi- by not only recording and retaining valu- because it’s not that common or maybe ness that differentiate each of us from able experience, but also building on it in a they’re just having an off day. It happens. our competition — and fewer resources process of “continuous improvement.” “To err is human,” said the human, rather on those aspects that don’t. a

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Organic Server Management

SM is an autonomous private e.g. Server 102 : HP BL680, 3.2 GHz chip, Container 309, Server 299 Container 309, cloud offering that proposes a 64GB RAM. Server 300 Container 401. policy-managed environment 2. Software Asset Library — A repository of 7. Usage Trends — A record of the hourly that requires minimal human all licensed software including the count, peaks by server and across application intervention — except, pri- expiration date and terms of that software, suite. Data is used to more accurately pre- marily,O for manual tasks such as physically e.g. Oracle 10G, 100 licenses, Effective dict peak and valley forecasts for capacity installing computer equipment, blade server 01/01/2001 Expires 01/01/2020. planning, both server environment increas- installations, etc. 3. Application Configuration Requirements — es and decreases. Why private cloud? Cloud (or Infrastructure A list of all software (COTS, OSS, internal) 8. Alerts — Application and system metric as a Service) solutions that are offered publicly that is required for each application to satis- alerts, e.g. CPU utilization, memory utiliza- definitely have their value, but they are limited fy a request type (or group of requests) that tion, I/O (input/output) utilization, application to non-proprietary, non-sensitive, non-critical will be processed in the OSM environment, errors, warnings, time-outs, etc. uses such as serving up static content such as e.g. Application XXX : Linux 5.0, Oracle 9. Rules — Alert condition rules: every time an photographs of hotel properties. For systems 10G, FUSE ESB 4.0 alert is submitted, the OSM monitoring will that touch (store, process, pass) breach-sensi- 4. Software Container — A collection of soft- execute each rule against the new alert and tive or time-sensitive data, they are the wrong ware, pre-packaged in accordance with the — if a matching condition is found — exe- choice — at least today. requirements specified in the Application cute corresponding script, e.g. IF memory, Why autonomous? OSM’s policy-driven Configuration Requirements table. CPU or I/O utilization is >85%, execute pro- engine will allow us to allocate, reallocate and 5. Change Log — A record of each change vision script for Container XXX. de-allocate our processing load more efficiently that has occurred in the system, e.g. 10. Scripts — A list of scripts that will handle than even mainframes can. 200901012314 Server 300 Provisioned with provisioning, de-provisioning, batch jobs, Allocate: by dynamically provisioning and Container 401. etc., as a result of a rule match condition. making available extra capacity on demand, 6. Run-Time View — A record of the real- 11. Provisioner — A service that will dynami- based on current and forecasted factors. time configuration status of each server cally provision a server with all the software Reallocate: by observing shifts in application- in the OSM environment, e.g. Server 298 (OS, tools, packages, patches, databases, system needs and dynamically re-provision- OSM: Organic Server Management ing servers with new software configura- tions 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.

Application Configuration Messages deposited onto the message oriented middleware (MOM) queue are rapidly pulled Requirements for consumption by the blade server resident clients (the vertical bars, color corresponding to The main components required to support the circular messages), which have been dynamically provisioned to meet the message capacity OSM are: demands observed by the OSM “eye.” The criteria that direct OSM to execute scripts to perform 1. Hardware Asset Library — A record of its actions are controlled by applying each alert to the corresponding rules shown in the top installed hardware and the features of each, three files. The data files at the bottom contain the information necessary for OSM to deploy the correct software onto the appropriate server(s).

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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, The key features of a new automated computing environment takes the main advantages of software assets and software container mainframe computing — simplicity, scalability and the ability to make its resources available on to ensure all building blocks are available demand — and applies them to today’s low-cost, highly redundant blade servers. Adding and initiates provisioning service. intelligent policy-driven controls to this produces an autonomic environment with the types of e. Change log is updated with all activ- stability and efficiency the mainframes offer so well, but at a price point and level of flexibility ity during this process. they traditionally do not. f. Run-time view is updated to reflect the changes. c. Change log is updated to reflect pulls them from the queue as soon as g. In a pull model (where the application the recycle attempts and their success it’s active. In a “push” model, the new pulls message requests from a queue), rate. server’s virtual IP address is passed to the newly provisioned server automati- d. Alerts continue after recycling the the load balancer, which then begins cally begins consuming targeted mes- server “X times,” and the server remains passing it messages. sage requests. unresponsive indicating that server is in 3. Application exceeds maximum h. In a push model (router/load bal- a “down” condition. connections ancer), the provisioner updates the load e. Rules/script engines determine if a. OSM orchestrator gets alerts show- balancer/router routing table with the vir- there is sufficient capacity to support ing sudden velocity increase in con- tual IP address of the newly provisioned the current message volumes, targeted nections, finds a matching rule and server, which then begins receiving traf- at the down server, without replacing executes the associated, applicable fic and consuming its targeted message that server. script. requests. f. If not, the provisioner service is b. Script engine executes the provi- 2. Server Failure — Recycle/Add New called with the container type needed to sioner with the container type needed Server supplement that environment. to supplement that environment (as a. OSM orchestrator sees a rapid suc- g. Provisioner checks hardware assets, above). cession of alerts for timeouts indicating software assets and software container Introduction of OSM is built to be phased in that an abnormal condition or failure has to ensure all building blocks are available organically, starting with no rules in the rules occurred. It executes them against the to begin provisioning. engine with the human operator monitoring rules in the rules table, finds a match h. Change log is updated with all activ- the alerts, responding accordingly and initiat- and executes the associated, matching ity during this process. ing requests to the provisioner as applicable. script. i. Run-time view is updated to reflect Simple rules will be added first and as b. Script engine executes command the changes. In a “pull” model, the confidence and experience grows, more and to locate the unresponsive server and newly provisioned server automatically more human tasks should be migrated to the recycles it X times. begins consuming its messages as it 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

ow much value can an automated training courses and receive similar types of solution provide if the user doesn’t information. fully realize the extent of its capa- Currently, Sabre Airline University hosts four bilities, understand the business it main colleges: supports and envision the scope of Commercial Solutions, Hfuture possibilities? Customer Sales & Service, Based on this premise and a dedication to Operations Excellence, drive value and facilitate the adoption of its solu- Distribution & Merchandising. tions and services into airlines’ operations, Sabre These colleges employ a blended learning Airline Solutions continuously invests in providing approach, offering a mix of classroom training, self- consistently high-quality education, training and paced online courses, workshops and conferences certification programs to its customers. As part facilitated by Sabre Airline Solutions subject matter of this investment, Sabre Airline Solutions has experts with a deep knowledge of the solutions launched the Sabre Airline University virtual cam- and wide range of experience in the travel industry. pus, essential to advanced airline education and All training courses focus on more than just the certification to customers and eventually others in features and functions of Sabre Airline Solutions the aviation industry. products, incorporating information on best prac- Accessible via the Sabre® Community Portal 24 tices and business processes as well. hours a day, 365 days a year, the university is a key In addition, the Colleges of Customer Sales & component of the company’s solution and service Service and Operations Excellence offer basic to offerings. A tour of the virtual university reveals a advanced certification programs in specific solu- clean, modern, eco-friendly campus with exten- tions areas. By yearend, the College of Commercial sive facilities and resources, a networked user Solutions will have incorporated these programs community, numerous training and certification into its curriculum as well. Certification creden- programs, and unprecedented access to subject tials are designed to validate a student’s ability matter experts from Sabre Airline Solutions. to effectively use and manage specific solutions and business functions with a high degree of Today’s Virtual Campus competence. Today, the core student population of Sabre Response from both customers and employees Airline University comprises Sabre Airline Solutions to this year’s educational offerings has been posi- customers, with many of the current training tive. As of this summer, more than 300 attendees and certification programs designed specifically participated in 62 courses, with more than 60 for them. To promote consistency and enhance additional online courses planned by yearend. solution and industry knowledge, Sabre Airline The majority of training currently offered by Solutions employees can also participate in the Sabre Airline University is classroom based and Photos: ThinkstockPhotos:

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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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, In addition to the classroom-based, instructor-led training provided by Sabre Airline University, Significantly shorter training cycle times for large the majority of training content will be accessible online by 2012. Currently, the university offers employee groups trained in stages, such as res- 62 online courses with an additional 60 new online programs planned by the end of the year. ervations staff (the initial training is conducted in The self-paced training courses will be available 24/7 via any computer worldwide, and special the classroom, with refresher courses available provision will be made for those with limited or no Internet access. online, which is especially helpful for staff members trained in the initial stages), instructor led. By 2012, the university’s aggressive technology experts. By partnering with the Sabre Continuous addition of new online courses and growth plan estimates the majority of training Airline University, these educational/training organi- updating of existing ones as necessary. content will be accessible online. zations will have access to subject matter experts Although Sabre Airline University is focused Still in the initial stages, Sabre Airline University in all areas of the travel and technology industries. on aggressively growing its online training and already encompasses more than just training And these subject matter experts will most likely certification programs during the next three years, courses and certification programs. Students can be transferring their knowledge to future airline, there will still be situations when a blended learn- network with other students as well as Sabre travel industry and solutions provider employees. ing approach or the “personal touch” offered by Airline Solutions subject matter experts, retrieve By 2011, the majority of the virtual campus will classroom training is more beneficial and even solution documentation and keep abreast of the be in place, with the establishment of the Business desirable. latest travel industry news. And there’s more to Process & Quality Center and the College of Airline A recent customer training session, for come. Management & Consulting, additional training and example, utilized both instructor-led classroom certification programs, an alumni center, faculty training and online courses from the university. Tomorrow’s Virtual Campus offices, career counseling and a bookstore. The airline’s employees were initially introduced During the next three years, Sabre Airline One idea generating the most buzz is the uni- to the terminology, features, benefits and best University plans to open its doors to prospective versity’s plans to offer “white-label” training sites practices surrounding Sabre® AirVision™ Marketing customers, aviation suppliers and educational/trade to customers, who will choose the courses they & Planning solutions in an online course and were organizations. Both current and potential customers want to offer, brand them with their own names then prepared for the Sabre Airline Solutions team will benefit from training courses and workshops and logos, and allow their employees access. All that provided onsite, hands-on training. focused on the various aspects of managing and sites will link back to the Sabre Community Portal Whatever the venue, the primary objective of operating airlines. Expanded certification programs hub; however, to the student, it will appear to be Sabre Airline University is to be a reliable source of offering basic, advanced and expert credentials the airline’s own training program. consistently high-quality solutions and industry will enable students to not only gain proficiency in training and information that equips airlines to meet certain solutions areas but also better understand Benefits Of Going Virtual the challenges of the volatile industry and economy solutions integration and business process design. The traditional business model has changed — now and in the future. a Armed with greater knowledge about the travel dramatically during the past decade. Economic industry, suppliers, such as aircraft manufacturers downturns worldwide have forced businesses, and caterers, will be able to fine-tune their busi- including airlines, to find more cost-effective ways nesses and produce products and services that of operating such as officing employees remotely more adequately meet carriers’ needs. Airlines, in or even at home, cross-training staff to perform a turn, will most likely prefer to purchase products number of different functions, curtailing travel in and services from suppliers that understand their favor of Web and video conferencing, and increas- Jeanette Frick is vice president of business and its unique challenges. ingly utilizing online resources to market and sell Global Customer Services for Sabre Colleges, universities and specialized train- products and services, networking within the mar- Airline Solutions. She can be contacted ing centers are clamoring for airline industry and ketplace and training employees. at [email protected].

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he Sabre® Airline University virtual campus Faculty Offices: Learn about university staff and training courses will be led by members is accessible to Sabre Airline Solutions® members and instructors who create, manage and of senior executive and consulting teams customers via the Sabre® Community conduct training programs. Post questions and get for Sabre Airline Solutions. Portal. Several of the university’s facili- answers from subject matter experts. Sabre Airline University News: Find the ties have already been established, and Library: Find hundreds of pages of Sabre Airline most up-to-date information related to Sabre T more are in development based on an Solutions product documentation and search Airline Solutions and the university, as well aggressive three-year expansion plan and customer through the most frequently asked questions to as testimonials from other customers. feedback. The campus design is simple, straightfor- find immediate answers. Business Processes & Quality Center: ward and eco-friendly, enabling visitors to easily and Customer Sales & Service: Enroll in training Learn more about solutions implementation quickly navigate among the various facilities free courses and certification programs focused on and support lifecycle, agile development, from distractions. sales, reservations, ticketing, codesharing, airport testing plans and other related processes. check-in, loyalty management and customer ser- Bookstore: Access various airline-related Today’s campus includes: vice, and find documentation related to SabreSonic® publications or sign up for publication sub- Admissions: Welcome to Sabre Airline Customer Sales & Service. scriptions via partnerships with well-known University. Tour the university’s virtual campus Commercial Solutions: Enroll in training online sellers. Books, t-shirts, mugs and and preview its various offerings. courses focused on in-flight services, schedule other university-related items may be Operations Excellence: Enroll in training development and optimization, slot management purchased. courses and certification programs focused on and fares management, and find documentation Events Center: Obtain information regard- airport operations, crew management, flight related to Sabre® AirVision™ Marketing & Planning. ing customer conferences and other events operations and maintenance routing, and find Distribution & Merchandising: Enroll in train- sponsored by Sabre Airline Solutions. documentation related to Sabre® AirCentre™ ing courses focused on the distribution of airline Coffee & Tea House: Take time to relax or Enterprise Operations. products and services, and find documentation compete with others in contests and games Student Community Center: Meet and related to Sabre® AirCommerce™ Distribution & related to the airline industry. Learn about interact with other university students as well as Merchandising. other cultures or fascinating destinations, or Sabre Airline Solutions employees and subject visit with Sabre Airline Solutions profession- matter experts via the Sabre Community Portal Tomorrow’s campus will also include: als in offices throughout the world. hub. Similar to Facebook, the Hub provides Career Counseling: Obtain information Alumni Center: Network with other a forum for members to post questions and on a variety of positions and careers within Sabre Airline Solutions customers that have answers and form groups. airlines and explore the wide variety of basic taken training courses or completed certifi- Industry Relations Center: Link to the and elective training courses available. cation programs. latest aviation industry news from the top Airline Management & Consulting: Administration: Register for instructor- travel magazines and news sources, as well as Explore the complexities of the various led classes or online certification training Ascend. aspects of the airline business. Workshops courses. a

ascend 67 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

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uch of crewmembers’ job satisfaction comes from their schedules — where they fly, how often they fly, whether they fly on weekdays, week- M ends 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 brack- ets 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 unhap- piness 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

Photos: ThinkstockPhotos: empowerment and communication.

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Preferential Bidding: Addressing Work Schedules North American airlines often use seniority- based 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 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 increase crew satisfaction through significant crewmembers increased access to their schedules. When a change has occurred to their sched- pay increases). ule or a desired trip has been made available for trade, crewmembers can be instantaneously About 75 percent of North American airlines notified via their hand-held or mobile devices. still use seniority-based line bidding practices, so these airlines have an opportunity to take advantage of preferential bidding to give their Automated trip trading is enabled, which trips on a day-to-day basis, reducing the peaks crewmembers better control over their sched- allows crewmembers to drop, add, adver- and valleys of unassigned trips throughout ules while increasing productivity. Airlines tise and exchange trips through the Web, the month and decreasing the overall require- outside North America have the opportunity and the crew schedule maintained by the ments for reserve crews. to further satisfy employees and employee airline crew management system is updated Automated trip trading is more popular in groups involved in the control of the planning through automation. North America today, but gaining popularity process without having to revert to adopting In cases where crewmembers are not able globally. hard rules that can impact productivity and to “swap out” portions of their schedule they overall crew costs. cannot or do not want to fly, they are likely Mobility Solutions: Solving to take sick time, leaving the airline with the Communications Challenges 24/7 Automated Trip Trading: daunting task of covering the open flying by Crew communication is an important aspect Empowering Employees either extending the duties for other crew- of daily crew operations. Crewmembers want Trip trading is a global crew management members (and paying premium pay), assigning to have anytime, anywhere access to their practice where crewmembers are allowed to crew on their days off or using reserve crew. schedules and to be notified of schedule drop or add portions of their assigned schedule Each of these possibilities could add up to a changes as quickly as possible. (commonly in the form of unassigned trips) material increaseWith in its crew continuing costs. rapid developmentAirlines want the and ability deployment, to use automation or exchange trips with other crewmembers. Automatedthe trip-trading electronic capabilities flight give bag to notifydoesn’t crewmembers simply of represent schedule changes Based on the agreements in place between crewmembers more control over their sched- as quickly as possible and to get confirmation the airline and crewmembers, and the automa- ule, thus the increasing future. crew Electronic productivity as flight that thebags, crewmember in fact, has are been already notified of tion available at the airline, one of the following crewmemberson look many to proactively commercial change unde -carriers’such schedule flights changes. today. may be true at a particular airline: sirable portions of their schedule. Automated Crewmember alerts and mobile access are Trading is not allowed due to airline over- trip trading also saves crew schedulers time two vital components of providing airlines with head costs to manage legality checks, crew and helps airlines reduce crew-related costs. the ability to quickly and efficiently communi- communications, etc.; Another benefit of automated trip trading cate schedule changes to crewmembers as Manual trip trading is allowed, where crew- is more efficient reserve utilization — this is well as providing crewmembers with increased members call airline crew scheduling staff to accomplished through active reserve balancing. access to (and control over) their schedules. manage trading (this practice costs extra in This feature automatically uses crewmember Alerts can be used to notify crewmembers the form of higher crew scheduler costs); trades to improve the balance of unassigned through their hand-held or mobile devices

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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 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 crewmembers to spot and correct costly lower crew-related costs. bidding mistakes in advance of bid submission; Reserve preferential bidding — Auto- constructs reserve schedules to meet daily according to the airline’s timing requirements Electronic messages — Offers two-way mes- reserve requirements according to work and rules; affected reserve periods are replaced saging capabilities with secure plain-text e-mail; rules and legalities and avoids conflicts with the pairings; messages can be sent between management with carry-in, vacation, training and other Reserve assignment — Crewmembers sub- and crewmembers or crewmember to crew- known events; permits crewmember input mit requests for specific reserve duty periods member; to reserve schedules through preferences as defined by the airline to replace currently Crew mobility services — Offers iPhone and such as specific days off, specific days assigned reserve periods; the solution assigns other mobile device applications, pilot data on, work pattern and maximum number of specific duty periods based on crewmember sheets and trip alerts for airline crews. consecutive work days; may be used as input; remaining crewmembers are assigned Flightline’s crewmember solutions are widely a reserve line generator to create optimal the leftover reserve duty periods; used today with nearly 62,000 active crewmem- reserve schedules; Vacation bidding — Automates annual vacation ber accounts. During a recent, single one-month Open time live — Fully automates and pro- bid process and final award; calculates accruals; period, Flightline supported 1.8 million Web ses- cesses crewmember open-time requests supports instant processing of ongoing vacation sions, totaling 36.5 million minutes. for drops, adds, swaps and trades (with requests for drops, adds, swaps with available Flightline’s crewmember solutions are already another crewmember) interacting live with periods or trades with another crewmember; integrated and work with Sabre Airline Solutions the airline’s crew management system; dis- requires no management intervention; crew management systems at 17 airlines today, plays updated schedules and available open System bid (vacancy/displacement) — Collects helping them lower crew-related costs and pro- time with pairing sort capability; processes crewmember bids for upgrades and/or trans- vide airline management with cost-effective tools requests in real time with optional crew fers by base, equipment and position within to improve crewmember satisfaction. scheduler intervention; includes manage- the company; processes awards using airline The combination of rapid return on investment, ment of reserve buffers; rules; reliability and ease of use represent the hallmark Trade board — Provides an electronic bul- Training bid — Collects crewmember bids for of Flightline’s products and services. a letin board for crewmembers to advertise preferred training dates and processes awards pairing and vacation trade requests, commu- according to airline rules; nicate requests online and view responses Electronic documents — Electronically distrib- from other crewmembers; utes documents to user-directed groups and/ Tom Samuel is director of airline Reserve open time — Crewmembers sub- or classes of crewmembers; enables manage- operations for Sabre Airline mit requests for pairings that operate on ment tracking of mandatory items by individual Solutions. He can be contacted their reserve days; pairings are assigned receipt; at [email protected].

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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

company that sits idle and conducts breakthrough technology with the flexibility Icelandair became the first airline to imple- “business as usual” day after day is to help them generate additional revenue and ment Calidris Integrity, realizing a 24 percent one that likely won’t be around move beyond the traditional processes of sim- decrease in no-shows during the first three long. Building and growing a busi- ply preventing revenue loss. months. Since then, Calidris partnered with ness requires a powerful strategy “Calidris has been validated by some of the numerous carriers including Adria Airways, Athat supports all the current and future needs world’s leading airlines and is a very innovative Aegean Airlines, Austrian Airlines, Avianca, and expectations of a company’s customers, company that has developed some powerful British Airways, Cathay Pacific Airways, Croatia employees, shareholders and communities. technology that will move the airline industry Airlines, CSA Czech Airlines, Emirates, Finnair, Sabre Holdings is no exception. In March, the forward in the area of revenue integrity,” said Malaysia Airlines and Royal Jordanian. technology company acquired Calidris for its Steve Clampett, president of Airline Solutions Each of these carriers has achieved signifi- best-in-class revenue integrity, business intel- and Products for Sabre Airline Solutions®. “This cant results. For example, as the first airline in ligence and data solutions. technology reaches beyond all boundaries in the world to adopt real-time revenue integrity, The acquisition is part of Sabre Holdings’ this particular arena.” Finnair realized total return on investment after long-term growth plans and continued invest- Calidris began developing revenue integrity only two weeks of using the innovative technol- ment in its airline and airport portfolio, and solutions in 1997 (then known as Stonewater ogy, which cleaned the airline’s inventory of bad its main objective is to offer its customers International), and within two short years, bookings. ASCEND I COMPANY

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-to- end 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 Photo: Boeing a significant breakthrough, and we look forward to a successful partnership with Calidris that Icelandair, the first carrier to employ Calidris Ingetrity, achieved a 24 percent decline in no-shows will help keep BA at the forefront of business during the first three months of utilizing the innovative technology. transforming, technology-led innovation in the air transport industry.”

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 Photo: Airbus service support that Avianca expected.” Finnair, the first airline in the world to adopt real-time revenue integrity, attained total ROI after Calidris’ technology has enabled British a short two weeks of using Calidris technology, which successfully eliminated bad bookings Airways to create one of the airline industry’s from the airline’s inventory.

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Highlight “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,

Photo: Airbus business intelligence

For Avianca, Calidris presented the best option for improving its revenue integrity performance. and data collection 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. solutions to our airline partners.” Calidris offers the level of expertise and duplicate tickets. And on the other end of the innovation that is aligned with Sabre Holdings’ spectrum, airlines that have utilized revenue long-term strategy. The enhanced revenue integrity solutions but want to break free from — Steve Clampett, president, Sabre integrity solution allows quick and easy access the limitations of the legacy environment can Airline Solutions to business data, making it an integral part exploit the latest technology to support a new of successful revenue planning and revenue and more competitive business model. generation not previously available. It also gives As part of the acquisition, Calidris’ revenue airlines a more responsive, smarter, well-tuned integrity, business intelligence and data capabili- and fluid customer sales and service environ- ties have become part of Sabre Airline Solutions’ ment. Having this type of access to the world’s broad integrated suite of airline products, and leading revenue integrity solution offers airlines they are now made available to more than myriad different aspects where value can be 300 airlines that currently use the technology measured, such as: company’s solutions. Seats returned, “We understand airlines must have the most Labor cost savings, robust technology available to be true long- Better sales channels liaison, term, forward-thinking leaders in the industry,” Improved agent behavior, Clampett said. “And we are confident the In-flight food savings, acquisition of Calidris is another key driver of Reduced denied boarding, our strategy that will deliver nothing less than Improved forecasting, top-caliber revenue integrity, business intelli- Increased customer satisfaction, gence and data collection solutions to our airline Service improvements. partners.” a 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 Stephani Hawkins can be contacted issues such as ticket firming, fake names and at [email protected].

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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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uring the first 50 years of Complete integration with reservations, scheduled passenger travel, ticketing, inventory and customer pro- the airline industry was slow files; to evolve; however, technology A single unique seat map with an easy-to- and a need to be more efficient use graphical user interface for reserva- Dand economical quickly took over. tions, check-in and load control; Advances in self-service solutions, such One source of data for all flight sched- as online bookings and Web, kiosk and ules; mobile check-in, have been an explosive Real-time updates to PNR and inventory; force in the travel industry. These advances New seating features, such as tier-pre- have caused airlines to build highly desirable ferred seating, zone boarding and adja- self-service tools while reaping the rewards cent seat blocks; of lower employee costs. The impact of the Intuitive GUI that guides check-in agents global recession compelled airlines to find through workflows and reduces training new and innovative ways to generate rev- costs; enue, at which time ancillary services, such Merchandising functionality based on as baggage charges and seat fees, became business rules that enables airlines to col- a necessity for new revenue streams. lect fees, such as baggage and standby, All these advances led to a pioneering as well as delivery of fare families and decision by Sabre Airline Solutions® to bundled services; invent a new check-in system. Self-service processing tools such as For many years, Sabre Airline Solutions Web check-in, self-service kiosks and supported two airline check-in systems mobile check-in using both SMS and — SabreSonic® Check-in on the ACS plat- browser-based check-in; form and SabreSonic Check-in on the ACSI Airport tools including a check-in PDA platform. The two systems traditionally device with a mini boarding pass printer targeted different global markets — ACS for roving agents and a dynamic boarding has been widely used by airlines in the application integrated with the check-in Americas, whereas ACSI was designed for system for gate agents; international carriers in Europe, the Middle Improved data sharing across all cus- East and Africa as well as Asia/Pacific. tomer touchpoints. Sabre Airline Solutions has made a multi- With government mandates and more million dollar investment to merge the advanced technology on the rise, Sabre best of both check-in systems to create Airline Solutions programmers and develop- a single, robust system. With this invest- ers are freed to concentrate on a single ment, SabreSonic Check-in paves the way best-of-breed check-in system, thus avoid- to service all airlines worldwide, from the ing unnecessary replication that previously small, niche, boutique carrier to the mega- took place with two systems and bringing international airline. enhancements to all airlines in a shortened The upgrade of the Sabre Airline Solutions timeframe. departure control system incorporates both Development of the new check-in system SabreSonic Check-in and Sabre® AirCentre™ began in November 2008 after receiving Load Manager, making this an industry- feedback from airlines about precise func- leading airport and passenger processing tional requirements necessary for running solution. their day-to-day operations. Via survey of The advanced SabreSonic Check-in sim- all ACSI customers, a priority of project plifies and improves product management, enhancements was determined. development and delivery practices. It sup- For example, gender and mandatory bag ports foundational check-in, boarding and weight were considered imperative for all load control functions; offers enhanced ACSI customers and were among the first passenger recognition and service; and enhancements to be developed in the new promotes operational efficiency. check-in solution. Workshops were held The flexible, configurable technol- in Bangkok, Moscow and London to help ogy promotes increased revenue-generating define requirements and form development opportunities as well as ensures operational and customer support plans. integrity, delivering industry and security- Since then, programmers, designers and compliant applications on the most reliable, developers have worked hand in hand to stable platform. ensure all necessary features of the two The SabreSonic departure control sys- current systems have been combined to suit tem is truly groundbreaking in terms of a niche carrier, such as Bearskin Airlines, a its graphical user interface, its ability to launch customer for the new check-in sys- handle large volumes of passengers and tem that implemented the solution in July aircraft schedules, and its unique ground- (see related article on page 6). handling capabilities. New features within “Since we first learned that we were Photo: Thinkstock Photo: the upgraded solution include: 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 migra- tions 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. [email protected].

78 ascend ASCEND I SOLUTIONS Crew Balancing Act 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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nexpected disruptions resulting from severe weather patterns, aircraft maintenance issues, security challenges, system congestion and crew unavailability canU 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 Recovery Manager, which minimizes the impact of operational disruptions on aircraft, crews, costs. The quality of the solution is determined flights and maintenance schedules, brings significant benefits to airlines by reducing additional by the airline’s ability to effectively utilize the recovery costs, minimizing lost operating revenue, improving resource allocation and utilization, operational data already available from its com- boosting on-time performance and increasing customer satisfaction. puter systems. To assist with this process, Sabre Airline Solutions® recently introduced Sabre® AirCentre™ Recovery Manager, a robust, comprehensive schedule and crews, which are based in Atlanta Users may also manually input this data real-time decision-support system that integrates and Washington, back online as efficiently as into Recovery Manager from other systems or aircraft routing, crew availability and network possible. processes. Proposed solutions are delivered as constraint information to effectively generate Throughout the design and development of what-if scenarios in easy-to-read Gantt charts optimal crew reassignments for revised sched- Recovery Manager, crew scheduling and tracking for review and further analysis by crew trackers/ ules. By minimizing the impact of operational managers from Atlantic Southeast Airlines and schedulers. Proposed solutions can be manu- disruptions on aircraft, crews, flights and main- Sabre Airline Solutions employees participated ally adjusted using the system’s drag-and-drop tenance schedules and, ultimately, passengers, in a series of workshops based on agile develop- capabilities. Once the user is satisfied with a the proposed solutions help airlines: ment principles to review the airline’s business proposed solution, Recovery Manager seam- Reduce additional recovery costs, requirements and build acceptance criteria for lessly deploys it back to the crew management Minimize lost operating revenue, the solution. As the project progressed, the and movement control systems for publication. Improve resource allocation and utilization, airline provided feedback and suggestions. Improve on-time performance, Features And Capabilities Increase customer satisfaction. The Solution In Action Each time a scheduled flight is disrupted and Recovery Manager also enables carriers to When challenged by a potential or existing subsequently delayed, an airline must determine pre-plan — minutes or even hours ahead — for schedule disruption, crew trackers/schedulers if each crewmember on the flight can complete anticipated schedule disruptions. In the case of in an airline’s operations control center must his or her assignment based on prevailing oper- Atlantic Southeast Airlines, the launch partner work closely with aircraft dispatchers and flight ating conditions and crew-specific needs and for Recovery Manager, both anticipated and control officers to place the carrier’s schedule regulations without becoming illegal. Extending unexpected schedule disruptions are a routine and crews back on track as quickly as pos- duty periods or utilizing move-up, reserve or part of daily operations. sible. Recovery Manager supports this process, deadheading crews may result in significant The airline operates more than 900 scheduled integrating with all Sabre® AirCentre™ crew penalties that translate into equally significant daily flights as a Delta Connection and United management systems and Sabre® AirCentre™ costs. The additional costs must be weighed Express carrier at some of the world’s busiest Movement Control to automatically retrieve and against the revenue contribution of the flight to airports, including Atlanta Hartsfield-Jackson, analyze information vital to generating the most the network, not just the number of passengers Chicago O’Hare and Washington Dulles. These feasible, desirable and cost-effective solutions. on the aircraft, during the schedule rebuilding airports are prone to air traffic congestion coupled Movement Control interfaces with an airline’s process. with extremes in weather conditions, depending reservations system to display real-time flight Using a powerful combination of what-if on the season. Winter storms can be devastating information, including: capabilities, optimization-based algorithms and to Atlantic Southeast Airlines’ Chicago O’Hare Flight number and date, an extendable, flexible rules engine, Recovery and Washington Dulles operations, while spring Aircraft assignment, Manager evaluates these factors and generates and summer thunderstorms can leave the car- Fuel data, proposed solutions based on user-defined param- rier’s Atlanta schedule in shambles. Planned and actual passenger counts, eters, giving airlines full control over the schedule To effectively deal with these disrup- Original, revised, estimated and actual depar- rebuilding process and crew reassignments. tions, Atlantic Southeast Airlines needed a ture and arrival times for each scheduled Unlike other pairing-based solutions in the robust solution to facilitate the return of its flight. marketplace, Recovery Manager solves schedule

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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 reassign- ing 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 Photos: Shutterstock 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 Atlantic Southeast Airlines, which operates more than 900 scheduled flights as Delta Connection crews utilized; number of deadheads and and United Express, is the launch partner for Recovery Manager, a solution designed to help ground transport required; modified pair- airlines optimally manage both anticipated and unexpected schedule disruptions. The ings; and segments and pairings that remain technology enables carriers to pre-plan, minutes or hours in advance, for expected schedule uncovered; disruptions. Consumption report — A summary of the disrupted and moved-up crewmembers (regular crewmembers can be reassigned together as While schedule disruptions will likely always and reserve) and their crew bases and ranks well as augmentation and downranking. be part of “normal” daily airline operations, a as well as the distribution of pairing types for Augmentation involves the assignment of carrier’s ability to effectively manage the chal- each category of reserve crews; crewmembers based on the length of a flight lenges presented will determine its success. Positioning report — A summary of deadhead and/or number of passengers onboard. In Recovery Manager provides airlines with a com- (online and offline) flights and ground trans- some cases, downranking may be used to prehensive set of user-defined parameters, portation required for crews; cover a specified crewmember position with a enabling them to retain control over the schedule Accommodation report — A summary of higher-ranking crewmember, such as when a and crew recovery process and ultimately, their overnight (layover) and daytime hotel rooms captain is assigned to serve as a co-pilot on a entire operation. a required for crews; designated flight. Utilization report — A summary of deadhead To fully experience the benefits of Recovery promotions, trip extensions, unscheduled Manager, airlines may need to rethink their overnights and reserve assignments. existing business processes and current tech- Sabre Airline Solutions will continue to nologies. Solution consulting offered by Sabre expand the capabilities of Recovery Manager Airline Solutions helps carriers facilitate the to meet the needs of various types of airlines integration of the system into their operations worldwide. Future plans call for the addition of to receive the maximum value from their IT Lauren Lovelady can be contacted cross-rank recovery, in which various levels of investments. at [email protected].

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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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n April, the U.S. Department of due to overcrowding of gates, taxiways and/ are not violated. For instance, flights may be Transportation passed a bill prohibit- or runways. delayed in their departure station to prevent ing U.S. airlines operating domestic By explicitly taking into consideration airport overcrowding at an arrival station and a possible flights from permitting an aircraft to constraints, such as air traffic flow control pro- extended wait time on arrival. Furthermore, by I remain on the tarmac for more than grams, Recovery Manager enables airlines to explicitly incorporating posted ground delay three hours without allowing passengers maintain viable operations while not exceeding program slot restriction times into the recovery to deplane (see related article on page 44). operational levels that would result in severe process, Recovery Manager will determine the This also applies to international flights, tarmac delays. During the process of recovering approximate departure time from the gate so operated by U.S. carriers into and out of a flight schedule in response to an irregular an outbound flight is not subject to additional the United States; with the differentiation operation by suggesting flight delays, cancela- tarmac delays during the departure procedure. that the carrier must specify in advance the tions and diversions, Recovery Manager gives Based on the average taxi time at the airport, time limit where passengers will be allowed airline analysts the ability to specify several the flight would be released from the gate in to exit the aircraft. In addition, food, water airport constraints including the maximum num- time to meet its assigned GDP slot time at the and restrooms must be made available after ber of aircraft at gates and on the ground as well arrival station. a delay of two hours. The hefty fines of up as the arrival flow rates. This enables the user to US$27,500 per impacted passenger for to simulate and manage airport flow rates and Movement Management And Control exceeding the threshold make avoidance of manage the impact to ramp congestion. During irregular operations, the operations the three-hour or greater delays imperative. Recovery Manager recommends schedule controller is most likely handling multiple A common alternative used to avoid time adjustments to ensure airport constraints issues. Using technology to quickly identify 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.

Recovery Management 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 recom-

mends real-time schedule adjustments ThinkstockPhotos: and aircraft assignment changes to resolve disruptions. Recovery Manager has valuable A common alternative used to avoid violation of the new tarmac delay laws is to cancel flights features that enable airlines to prevent when extensive taxi delays are anticipated. While the impact on revenue is substantial, it’s pre- situations that could result in tarmac delays ferred to paying steep per-passenger fines.

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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 provide operations control personnel the time-on-the-ground alerts to inform them of controller and decrease the potential for means to easily monitor the status of flights situations that could result in an extended a flight on an extended taxi delay to be and reduce the impact of disruptions to tarmac delay. A special tarmac delay alert overlooked. the schedule, helping ensure a positive can be set, which is triggered if an aircraft Sabre® AirCentre™ Movement Manager travel experience. These solutions provide has an out time but not an off time, an on and Sabre® AirCentre™ Movement Control operations controllers with configurable 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 three- hour threshold.

Airport Operations 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 Among a number of advanced solutions designed to help airlines respond to and overcome on the ground. tarmac delays is Sabre AirCentre Gate Manager, a system that generates an alert when an Sabre® AirCentre™ Airport offers fore- aircraft has landed and its designated gate is occupied. casting and planning technology that uses

ascend 85 demand-driven resourcing to determine the offering real-time situational awareness Utilizing the most advanced technology most efficient resource levels, including to the SOC and supporting the decision- will assist airline operations personnel in airport staff, gates and equipment required making processes of the operator, including recognizing, proactively reacting to and to meet the work demands for a given compliance with new consumer compensa- preventing costly tarmac delays as well as flight schedule. Sabre AirCentre Airport tion legislation for tarmac delays. increasing passenger satisfaction and provides airport controllers with alerts to In conjunction with data and messaging retention. a identify and prevent long tarmac delays. capabilities already available in Movement Users of Sabre® AirCentre™ Staff Manager and Movement Control, airlines will Manager can create alerts based on a have a complete picture of airfield operation threshold of elapsed time since the flight and performance. This new solution, when departed the gate. If the flight is not off the complimented with Sabre® AirCentre™ ground within certain user-defined minutes Flight Explorer, will provide full gate-to-gate from the departure time, the system gener- visualization of an airline’s flight operations. ates an alert. In addition, Sabre® AirCentre™ Flight Explorer offers alerting capabilities to Gate Manager generates an alert when an track the elapsed time from the departure aircraft is on the ground and the gate of the of the aircraft, signified by the out message, aircraft is occupied. until airborne. In the near future, Sabre Airline Solutions There are two alerts in the Events will introduce new ground movement Manager module within Flight Explorer tracking situational awareness technology — Aircraft Taxi-Time Warning and Aircraft designed to take advantage of ASD-B and Taxi-Time Critical. User-definable thresholds other surface surveillance radar to chart have been created as the elapsed time from the position of aircraft maneuvering around departure grows. The two events are dif- Rachel Olson is a solutions manager airfields. The solution will provide visual ferentiated with unique colors. In the future, of Sabre AirCentre Flight for Sabre alerting to the consequences of airfield similar logic will be put in place for arrival Airline Solutions. She can be contacted congestion and ground-stop programs, alerting based on ON and IN messages. at [email protected].

+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 percentage by which air transport The amount in tons of CO2 that are The number of jobs the air transport covers the shortest distance between 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 transport, according to enviro.aero. and 17.1 million direct and indirect jobs through air transport’s catalytic impact on tourism.