Skyteam: Caring More About You a Conversation with … Leo Van Wijk, Chairman, Skyteam Pg

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A MAGAZINE FOR AIRLINE EXECUTIVES 2011 Issue No. 1 2011 Issue No. 1

Taking your airline to new heights

SkyTeam: Caring More About You A Conversation With … Leo van Wijk, Chairman, SkyTeam Pg. 10 www.sabreairlinesolutions.com

18 Strategic commercial planning 46 Avianca-TACA merger changed Latin 63 Merchandising through GDS gives airlines increases airline revenues America aviation additional storefront making contact Taking your airline to new heights

2011 Issue No. 1 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 email www.sabreairlinesolutions.com Art Direction/Design Charles Urich message to the Ascend staff at or contact one of the following wearelistening@sabre.com. Sabre Airline Solutions regional Managing Editor representatives: B. Scott Hunt

Associate Editor Bradley Bennett

Contributors Khaled Al-Eisawi, Elizabeth Bari, Chris Bird, Asia Pacific North America Antonio Diaz, Greg Gilchrist, Helen Harden, David Chambers Mike Douglass Rebecca Herbig, Brian Houser, Beatriz James, General Manager General Manager Anthony Mills, Benjamin Mussler, Dana Netzer, Phone: +65 6215 9518 Phone: +1 682 605 5349 Juan Parra, Kamal Qatato, Nancy St. Pierre, Email: [email protected] Email: [email protected] Chad Tibor, Susan Via.

Publisher Europe Alessandro Ciancimino Sabre Airline Solutions, the Sabre George Lynch General Manager E-mail: [email protected] Airline Solutions logo and products www.sabreairlinesolutions.com Phone: +39 348 3708240 Email: [email protected] noted in italics in this publication are trademarks and/or service marks of an Awards Latin America affiliate of Sabre Holdings Corp. All Kamal Qatato other trademarks, service marks and General Manager Phone: +1 682 605 5399 trade names are the property of their Email: [email protected] respective owners. ©2011 Sabre Inc. All rights reserved. Printed in the USA. Awards for Publication Excellence, Middle East And Africa Address Corrections And Reader Inquiries 2009, 2008, 2007, 2006, 2005, 2004 Maher Koubaa If you have questions about this publication, General Manager suggested topics for future articles or would like ECO Awards For Excellence In Phone: +973 38350001 to change your address, please send an email to Environmental Communications: 2009 Email: [email protected] [email protected].

Hermes Creative Awards: 2010, 2009, 2008 International Association of Business Communicators Bronze Quill: 2009, 2008, 2007, 2006, 2005, 2004 International Association of Business Communicators Gold Quill: 2006, 2005

International Association of Business Communicators Silver Quill: 2008, 2006, 2005, 2004 MarCom Platinum Award: 2010 The Communicator Award: 2010, 2008 perspective

end to its Amadeus reservations technology, as well as various other systems, to provide employees with in-depth customer information, allowing for a personalized, seamless customer experience. A seamless experience far transcends your airline’s end-to-end operations. It spans across all your airline partners as well. For those carriers that have joined forces but continue to operate independently, it’s significant to them as well. And as partners come and go or changes are made among partners, they must be able to link up their technology to provide that seamless customer experience. It’s simply the way forward in our highly competitive industry. with Tom Klein On our cover, SkyTeam Chairman Leo President, Sabre Holdings van Wijk discusses how joint service standards are required of its members to ensure their customers have a seamless ears ago moving passengers from point the tools you need to outperform your travel experience. He talks about how A to point B was the main focus of an greatest expectations today, tomorrow IT link ups are the basis for providing Y airline. While that is still a primary objec- and always. quality services and meeting customers’ tive, today, passengers want more. They That’s why in recent years we’ve expectations. want to get what they pay for, and they want acquired a number of businesses such In our special section about industry alli- to have control over the financial side of their as EB2, f:wz, Calidris, Flight Explorer, ances, mergers and consolidation, we talk experience. But it goes far beyond finances Flightline and others to enable more about new revenue optimization business and value. They want to move seamlessly capabilities. Some of the key technology processes that help carriers maximize through their journey from start to finish. we needed to move our vision forward global revenue of mergers and joint ven- For that to happen, technology must, already existed. So rather than reinvent- tures rather than the local revenue of too, be seamless. Airlines have tradition- ing the wheel, we brought some of the individual member airlines. ally developed and deployed technology most advanced systems into Sabre Airline We also focus on the overall theme of to address specific needs or areas of their Solutions so we could provide you with partnerships — identifying which airlines business. However, that has led to divi- solid, end-to-end solutions and services make suitable partners, how partnering sions and silos among the systems and that work well together as well as with and alliance membership makes sense across departments. We need to remove external applications. for the survival of some airlines, and the barriers that exist between systems to Calidris, for example, brought real-time knowledge and tools that make these allow airlines to operate more efficiently revenue integrity to our portfolio. During business shifts successful. and respond proactively to the changing the first four months of using our real-time I hope you enjoy this issue of Ascend, dynamics of the marketplace. revenue integrity technology, SriLankan and I look forward to working with you That’s our focus — technology that Airlines generated more than US$11 mil- to ensure your airline has what it needs frees you to conduct business seamlessly lion from the release of seats back to to make every one of your customers’ across your entire organization with a sales. And Kuwait Airways gained US$26 journeys as seamless and pleasurable as platform that enables you to do business million in value benefits during the first possible. the way you want and need to without five months of implementing the soft- constraints. We may not know exactly ware. Those are the kinds of results we Tom what the airline industry will look like 10 expect to deliver. And it’s only possible if years down the road, but what we do we move away from technology platforms know is that technology has to evolve that lock you into a single approach and before the industry evolves … not after onto one that is completely open and the fact. transparent. Whether you work with our systems, We know that most airlines in the your own systems or those of a third- future will continue to rely on a mix of party provider, we want to make sure all in-house technology in addition to technol- your systems work together smoothly. ogy from Sabre Airline Solutions and other Providing that level of seamlessness and providers. What’s important is that we transparency is our vision not only near offer solutions and a technology platform term, but well into the future. It’s a new that will link to any and all systems … not way of doing business and managing just our own. technology, and we’ve built it into our For example, British Airways uses our long-term strategy to ensure you have business process solutions as the front ASCEND I TABLE OF CONTENTS

PROFILE INDUSTRY

6 18Air Stategic Commercial 33 Peacock Proud Planning: A Winning Strategy Betting The Company SriLankan Airlines generates A sound commercial planning Airbus and Boeing have made more than US$11 million using strategy reaps monetary benefits massive investments in the revenue integrity technology development of their new flagship 22 Load Planning: aircraft 10 SkyTeam: Caring Harnessing Aerodynamics More About You Effective load planning saves Leo van Wijk shares his ideas airlines time and money about several key aspects of the SkyTeam alliance 26 Air Traffic Modernization: A NextGen Update 14 Big plans are underway to secure Manmade Diamond a better ATC environment Kuwait Airways makes millions using its new real-time revenue 30 Airline Merchandising integrity system Evolution Technology helps airlines and corporate travel programs achieve their respective goals 6

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SPECIAL SECTION COMPANY SOLUTIONS

54 63 38 Silver Lining The Game Changer Air Extras Identifying suitable airline Sabre Airlines Solutions acquired Merchandising through GDSs with partners can be simplified with f:wz for its extraordinary flight new technology gives airlines an appropriate knowledge and tools planning technology additional storefront from which to market and sell products and 43 Growing Revenue Globally, 57 services Acting Locally Let’s Talk … Anytime New revenue optimization Effective communication through business processes help a number of vehicles ensures 66 Aerodynamics Don’t Change; maximize the global revenue of airline customers’ needs are Aircraft Load Planning Does joint ventures and mergers being met Weight and balance and center of gravity are critical to legally and 46 Two Is Better 60 efficiently operating aircraft Than One Pushing Boundaries The Avianca-TACA merger Technology must be easily 69 changed the landscape of Latin adaptable for future modifications Up In The Air America’s aviation industry The Sabre Qik Solution boosts customer service and operational 50 efficiency The Sports Car Southwest Airlines’ purchase of AirTran Holdings gives the airline access to new markets that 43 appeal to leisure and business travelers alike

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. We’ve not only included this section, but we’ve appended a QR code to other areas throughout the magazine whereby additional information can be found.

ascend High-Level View

TRIP Linhas Aéreas selects SabreSonic ® Customer Sales & Service to help continue its aggressive expansion plans.

® ® SM Air New Zealand and Sabre Travel Network introduce Sabre Branded Fares to Sabre Connected travel agents to market its products consistently.

Shanghai-based China Eastern Airlines, one of China’s largest airlines, has reported greater efficiency after automating its fleet planning and scheduling processes with the industry’s leading, flexible technology from Sabre Airline Solutions.

Virgin America selects SabreSonic Customer Sales & Service to power its reservations system and Sabre ® AirCentre ™ Enterprise Operations to integrate its flight operations and crew scheduling functions.

US Airways signs a multi-year, full content distribution and merchandising agreement with Sabre Travel Network, making all of its fares and schedules available to Sabre Connected travel agents, including its ancillaries.

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Peacock Proud

SriLankan Airlines continues making moves to prosper, such as the recent implementation of a revenue integrity system that generated more than US$11M during the ﬁ rst four full months of use. .

By Lynne Bowers-Dodson | Ascend Staff Photo: Shutterstock

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pplause! Applause! The Platinum Award from the International Air as co-host to the ICC Cricket World Cup in accolades keep coming in for Transport Association as one of the first 2011, the country anticipates 750,000 visi- SriLankan Airlines Limited. airlines in the world to introduce a major tors this year. The Sri Lankan government Last December, the carrier innovation to tickets; doesn’t expect the numbers to drop and featuring a stylized peacock A Merit Award at the National Best Quality has declared a target of 2.5 million tourists inA its logo was the proud winner of the Software Awards 2010 (NBQSA). annually through 2016. United States EFFIE award for travel and The awards are remarkable considering that To prepare for the influx of tourists dur- tourism for its hot-seat marketing cam- its home country has recently emerged from a ing the next few years, the tear-dropped paign. The campaign offered Sri Lankans 26-year-long civil war that ended in 2009. Sri shaped island off the southern coast of and friends traveling to and from Sri Lanka Lanka has suffered a SARS epidemic, survived India is transforming Sri Lanka into a the best fares for travel on designated a terrorist attack at its international airline hub hub for aviation in the region. Colombo- tickets purchased in advance. and recovered from the 2004 Indian earth- Bandaranaike International Airport (BIA) is This latest award reaffirms SriLankan quake that produced a devastating tsunami. It the only international airport located in Sri Airlines’ reputation as a leader among claimed thousands of lives and is one of the Lanka. Asian airlines in: 10-worst earthquakes in recorded history. It’s already the finest airport in the Service, region with its modern aerobridges, plush Comfort (most seats have 18-channel seat- Paradise Prevails lounges and well-stocked duty-free collec- back televisions, 22-channel audio channels Despite these overwhelming tragedies, tion. Even so, it is presently in the middle and 16 video games), Sri Lanka’s economy is expected to grow of a major program to expand and upgrade Reliability, 9 percent this year — rates usually seen its facilities. A second international airport Punctuality. in China. The recovery can be attributed is now under construction at Mattala in the In addition to its EFFIE award, SriLankan to Sri Lanka’s legendary beauty, fragrant southern Hambantota District. It is sched- Airlines has in recent months won a series spices, precious gems, rare pearls, sublime uled to be commissioned in 2012. of international and national awards in culture and hospitable people, all of which fields ranging from passenger transport to attract tourists from around the globe. Spanning Out marketing and Internet technology. They Sri Lanka is called the Pearl of the SriLankan Airlines, formerly known as include: Indian Ocean because of its position at the Air Lanka, was set up by the government of The Presidential Award for Airline of the southern tip of the Indian subcontinent. Sri Lanka in July 1979 following the closure Year; For more than a thousand years, travel- of Air Ceylon in 1978. The Presidential Award for Outbound Tour ers from around the world came upon As the country’s flagship carrier, Operator of the Year; Sri Lanka or made the happy discovery SriLankan Airlines is crucial to the country’s First Runner-up in Global Breakthrough by accident. Thus, this island paradise tourism goals. Shortly after its manage- Business Intelligence Initiatives at the CIMA was also called SERENDIP, giving rise to ment changed hands, the carrier began Global Awards; the word “serendipity,” meaning “making a re-fleeting program in April 2008. It Top Airline by Growth in South Asia from happy discoveries by accident.” acquired three Airbus A320s in 2008 and Singapore’s Changi Airport; Whether by choice or happy accident, 2009 to replace old aircraft. Foreign Carrier of the Year for South Asia 600,000 visitors came to Sri Lanka in 2010, SriLankan Airlines expects the delivery for the fifth consecutive time at the Kuala setting a record. Thanks to its “Visit Sri of seven new aircraft by the end of 2011. Lumpur International Airport Awards; Lanka 2011” initiative, along with its role They include five Airbus A320s and two SriLankan Airlines Photo:

EFFIE Award Winner SriLankan Airlines is a leader among Asian airlines in service, comfort, reliability and punctuality.

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Twin Otter float planes for the re-launch of its domestic service “SriLankan Air Taxi” Seats Returned By Sabre AirVision Revenue Integrity this winter. “The three brand-new aircraft are sched- 350,000 uled to be acquired from May-November 2011, and will sport the latest comforts 300,000 and entertainment systems, including audio-video on demand (AVOD) in both business and economy classes,” SriLankan 250,000 Airlines Chief Executive Officer Manoj Gunawardena told reporters. “This will 200,000 allow us to significantly enhance passenger service and give us the ability to fly 150,000 to more cities in the Subcontinent, Middle East and Southeast Asia, and to also 100,000 increase capacity to existing destinations in these regions.” 50,000 The airline is also exploring the possibil- 1,047,809 seats During the first four full months of using Sabre Revenue Integrity, SriLankan Airlines ity of obtaining at least one more long-haul, returned more0 than a million seats to sales. wide-body aircraft to launch services to August September October November December more new destinations in Europe and the Far East, Gunawardena said. In addition to increasing its fleet and Fictious Names Duplicate Booking Redundant Itinerary Ticket Firming destinations, SriLankan Airlines made significant investments in technology. Last year, the carrier contracted with Calidris 1,047,809 Seats During the first four full months of using Revenue Integrity, SriLankan Airlines returned (since acquired by Sabre Airline Solutions) more than a million seats to sales. via a partnership with Mercator for its Jupiter product. Mercator’s Jupiter product shows as well as increases in load-factor knowing its inventory is as clean as is a hosted end-to-end passenger services percentages on their critical flights. In possible.” solution that provides a fully integrated addition, there is better discipline enforced real-time revenue integrity system. through their travel agents, and various An Iridescent Future Subsequently, Sabre®AirVisionTM Revenue costs savings are seen through reduction In 1998, SriLankan Airlines replaced the Integrity was implemented last July. in specific areas such as: name Air Lanka. The logo featuring the During the first four months, it generated GDS booking fees from unproductive book- peacock bird was redesigned to better value benefits of approximately US$11.7 ings, suit the airline’s new identity as a modern, million from the release of seats back to Denied boarding compensation, progressive carrier. sales. Mercator has worked with Calidris Push-back penalties, Due to folklore and superstition, (now Sabre® Iceland) for several years as Churn, some Sri Lankans believed that the new a vendor of the real-time revenue integrity Meal wastage, SriLankan Airlines logo — featuring the solution. Employee costs. peacock flying away from the aircraft — “The partnership ensures that Mercator However, the real value the solution would bring misfortune to the airline, as has the best revenue integrity solution for delivers is normally calculated on the opposed to the old logo that showed the our customers on the Jupiter platform,” number of seats that it returns back to peacock facing the direction of the aircraft said Mercator Vice President Duncan sales. During the first four full months in flight. Alexander. “Our airline partners work in of using Revenue Integrity, SriLankan Despite the direction in which it is fly- challenging markets, and they need the Airlines returned 1,047,809 seats to sales, ing, Feng Shui practitioners maintain that best revenue integrity solution in place to resulting in an estimated value benefit of the peacock motif signifies growth, fame handle all deliberate revenue abuse.” US$11.7 million. and abundance. If its recent successes and Revenue Integrity, a process automation This does not even take into account the awards serve as a bellwether, SriLankan system, removes bad bookings from the numbers of warnings the system sends Airlines has a future as iridescent as its carrier’s inventory to help ensure seats are that are acted on by agents or other airline mascot’s spectacular plumage. a not occupied by false or spurious bookings. staff. The solution looks at business problems “Choosing the correct partner for including: our upgraded revenue integrity solution Ticket time limits, was important for SriLankan Airlines,” Fake names, Alexander said. “Not only was the airline Duplicate bookings and duplicate segments looking for maximum value generation within a booking, from a solution, but ongoing service sup- Fake or duplicate ticket numbers. port was also something it considered to Performing this in real time ensures be very important for future success. that all new and changed bookings are “Working with the best-in-class real- pushed to Revenue Integrity at the end of time revenue integrity solution with the a transaction. Using the solution, carriers support of Mercator and Sabre Iceland Lynne Bowers-Dodson can be contacted typically see significant decreases in no gives SriLankan this peace of mind ... at [email protected].

8 ascend The Sabre Travel Network logo is a trademark and/or service mark of an affi liate of Sabre Holdings Corp. ©2010 Sabre Inc. All rights reserved. AS-10-11515 0210 *2011 Business & Travel Meetings Show Innovation Award. your airline’s success.Visit www.sabretravelnetwork.com/sabreaircommerce today. and travelersworldwide.DiscoverhowSabreAirCommercecantake afrontseatin by merchandisingbrandedfares,seats,bagsandotherancillaryservices tocorporations provides youaward-winning*capabilities.Differentiateyourairline andgrowrevenue Maximize thevalueofeveryseat.Sabre powering progress Introducing Award-Winning MerchandisingCapabilities revenue withinreach ®

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SkyTeam: Caring More About You Photos: SkyTeam ASCEND I PROFILE

uring its first decade, SkyTeam, the including expansion plans, technology strategies global travelers, you look at markets that most industry’s youngest global alliance, and industry consolidation. frequently serve your country. Linking to carriers more than tripled its membership Question: While most airlines have some from those countries will offer new feeds to your and doubled its number of daily form of partnership with other airlines, such as system. flights. What began in 2000 as codeshare agreements, many have yet to join You can do this on a bilateral basis, but given Da four-member alliance, including founders a global alliance. Why is now a good time for an that the most important global airlines operate Aeroméxico, Air France, Delta Air Lines and airline to join a global alliance? in alliances, it’s not always easy to just have Korean Air, now has 13 member airlines with Answer: It’s not necessary, or possible, that bilateral relationships. Most of these airlines look several newcomers scheduled to join this year all airlines will join a global alliance. It depends at these questions in the alliance perspective. and next. very much on your strategy. If you have a local Coinciding with its 10-year anniversary, strategy, then an alliance is not necessarily the Q: What does SkyTeam deem most important SkyTeam made tremendous strides toward thing to do. But if you want to participate in the when determining which carriers are ideal for expanding its global network last year. In June, global game, or if you have a customer base that membership? it welcomed Vietnam Airlines and TAROM. increasingly has global travel requirements, then A: On behalf of the membership, we look for This year, China Eastern and China Airlines will joining an alliance makes a lot of sense. the right spots. Which markets are not currently climb aboard, along with China Eastern-owned Given that alliances during the last decade served by our members? In which markets do Shanghai Airlines. have shaped up to a size that there are no longer they have an interest because their customers Next year, Aerolíneas Argentinas, Garuda many empty spots, it makes sense for airlines travel to these parts of the world? Indonesia, Middle East Airlines and Saudi that have that global ambition or global need to To give you two very clear examples for Arabian Airlines will establish SkyTeam mem- consider joining an alliance now to not miss the SkyTeam, one is India. We don’t have a partner bership. Going forward, the alliance plans to boat, so to speak. in India. It’s an important subcontinent with further strengthen its footprint in additional potentially large growth, a lot of international regions including Southeast Asia, India and Latin global businesses and growing businesses. Highlight America. New, domestic carriers are becoming inter- SkyTeam’s continued growth is paramount national players, so that market is of particular to its 395 million annual passengers who cur- “ ... if you want to interest to us from a joined membership posi- rently have access to 13,000 daily flights to 898 tion. In that market, an Indian carrier makes destinations in 169 countries. Adding carriers participate in the sense for SkyTeam. from untapped locations will give its customers Currently, we don’t have a South American access to many more markets at lower fares. partner. Aerolíneas Argentinas will effectively join SkyTeam’s slogan, “Caring more about you,” global game, or if in 2012. And it makes sense to look for additional is heartfelt. The alliance diligently focuses on partners in that region. the needs and desires of its customers and you have a customer strives to provide the best possible service Q: How involved is the process of joining your across its network, which has paid off. For five base that increasingly alliance? consecutive years, SkyTeam has earned Best A: We currently have more than 100 member- Airline Alliance by Global Traveler magazine. has global travel ship requirements that cover multiple areas. The magazine conducts an annual reader They range from creating bilateral relationships survey to determine the best airlines and airports requirements, then to codeshare agreements and frequent flyer in the world. In 2009, nearly 26,000 readers program linkage. These are key attributes for responded to the survey, which included 60 joining an alliance customers to really have benefits from an alli- categories. SkyTeam continues to win this pres- ance. But we also have requirements about the tigious award based on the results of the survey. signage of SkyTeam to be available in airport “We are honored that the readers of makes a lot of sense. areas, on publications of airlines, et cetera. Global Traveler have selected SkyTeam as Another important element is the joint service Best Airline Alliance for the fifth consecu- standards that we have to make sure customers tive time,” said Fatima da Gloria de Sousa, — Leo van Wijk, chairman, SkyTeam have as seamless as possible travel experience. SkyTeam’s director of brand and communica- Last and certainly not least are the requirements tions, who accepted the 2009 award on for IT link ups because they are the basis for pro- behalf of the alliance. “This confirms that our viding service and giving customers the benefit premium customers continue to value the of having a seamless experience. benefits of our strong global network, which It’s not an easy process. That’s why it takes offers them unparalleled connectivity and time. It depends on the level of bilateral relation- seamless travel. As we continue to focus on Q: When selecting an alliance, what are an ships that have already been developed by the steady growth and meeting our customers’ airline’s main considerations in determining the time a carrier enters the alliance. needs, we are confident that we will be back right fit? for more awards in the future.” A: From an airline perspective, you must Q: What services does SkyTeam offer that Clearly, it’s nothing but a success story for determine what your customer base really assist airlines early on so they understand the SkyTeam, its member airlines and its most- requires in terms of access to markets. That considerations of joining the alliance and what valued asset … its customers. may be different for various airlines around the the process involves? In a recent interview with Gordon Locke, globe. Then you look for the alliance whose A: We provide assistance through the vice president of portfolio marketing and members offer the best fit and the best access SkyTeam office, by helping airlines understand strategy for Sabre Airline Solutions®, SkyTeam to those markets. the requirements. In some cases we also assign Chairman Leo van Wijk shares his ideas about At the same time, if you operate in a cer- within the membership a particular sponsor of several key aspects of the SkyTeam alliance tain part of the world that serves a lot of the new member. The member airline helps the

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new member fulfill any requirements. There are … where it goes way beyond these types of process and work in the best interest of the a team of specialists from the various members things. group. to provide support throughout the entire process We really have come as close as possible It also requires anti-trust immunity because of entering SkyTeam. to the seamless travel experience by aligning entering into joint sales requires an attitude that It’s not just a quick, simple process. Quite a our processes. We have created much broader is not necessarily easily adopted by independent few things have to be arranged. But there is a lot IT links to exchange information about passen- allies that have tried to survive in difficult times. of experience and support available within the gers who are traveling throughout the alliance That really is an important element to make fur- membership to help a new airline member. network. ther progress in better serving your customers. I think that’s the way forward, but there’s Naturally, we have made our mistakes, but Q: Many airlines have the perception that it’s a lot still to be developed to compete for the over the years, we have developed a scheme too expensive for small and mid-size carriers same customers. In essence, global alliances are that is not easy to replicate because it’s not nec- to join a global alliance, yet they may need it overlapping to a large extent in major markets. essarily in documents. It’s very much in attitude to effectively compete. What are options for Q: SkyTeam earned the “Best Airline Alliance” and behavior, and that’s why I strongly believe smaller carriers to join an alliance without taking Global Traveler Award five years in a row. How that to be the main differentiator over time. a hard hit on the bottom line? does SkyTeam differentiate itself from oneworld A: We conduct an extensive analysis to deter- and Star Alliance? What are the top selling Q: Of the three global alliances, SkyTeam mine the potential benefits an alliance can offer points of SkyTeam versus the other two global currently falls in the middle in terms of annual to a particular airline. That varies from airline to alliances? passengers, destinations, number of members, airline. We have different levels of membership A: I strongly believe the differentiator is etc. What are the advantages of not being the to accommodate smaller airlines so they aren’t going to be in the degree of cooperation and largest global alliance? Why, in terms of size, is overburdened with requirements and costs. That seamlessness you can achieve within the alli- bigger not always better when it comes to airline ensures the hurdle rate for smaller airlines is as ance. That’s why our strategy involves closing alliances? low as possible. the gaps as well as creating the highest level of A: I don’t believe that size beyond a certain seamlessness. point matters. As I said, we have the No. 1 carrier Q: How has your alliance transformed since it Pointing again to the experience we have in the United States. We have the No. 1 carrier in began a little more than a decade ago? between KLM and Northwest, we have devel- Europe. And with our Chinese partners, we have A: SkyTeam started with four members in oped that already … for almost 20 years. Of the strongest position in the Chinese market. 2000. During the first decade, we grew to 13 course, that’s not been an easy process. It’s dif- Whether we have 40 airlines or 28, or members. By 2012, we’ll have more than 20 ficult to give up part of your own decision-making whether we have 10 percent more passengers airlines. We have covered most parts of the world, but there are still some white spots. So, in terms of size, we have grown significantly. During the last couple of years, we have invested a lot of energy in creating a strong position in China … the strongest thinkable. Also, there’s an area that hasn’t gotten a lot of attention but makes SkyTeam quite unique. The North Atlantic joint venture that was created in 1992 between KLM and Northwest Airlines was considered the most developed alliance in the world. As members of SkyTeam, we basically now have the oldest and most developed partnership. That has now been extended to Delta after taking over Northwest and Air France as well as Alitalia on the North Atlantic. So we have a very strong and deep alliance that goes well beyond just having codeshares in exchange of frequent flyer miles. I think that is really where the emphasis is going to be in the future … offering better services.

Q: What are some untapped benefits that could be gained as your alliance continues to grow and evolve? A: There are many limitations to the exchange of frequent flyer miles and, generally speaking, there are more opportunities within a frequent flyer program than in between frequent flyer programs. That’s where a significant step forward can be made. Also, when looking at the management pro-

cess of interlining, alliances so far have not gone Photos: Shutterstock all the way to the point where they do it for themselves. That’s where KLM and Northwest SkyTeam Expands In 2000, SkyTeam comprised four founders, Aeroméxico, Air France, Delta Air have really developed the joint venture to a point Lines and Korean Air. By next year, the alliance will have nearly five times its original membership.

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doesn’t matter. At this point, size does not create There are significant savings we can achieve to say the least. It’s not impossible, but it’s a differentiator. in this area. That means we’ll use a limited not easy. number of vendors that can provide the best So, a deep understanding of the processes, Q: Technology is vital to the success of any connectivity to the most common existing plat- and they’re very much linked. It’s not easy carrier, and synching up systems among alliance forms. And then you end up with less than a to delink, for instance, the engineering and members often presents a challenge. What handful. maintenance process from operating an airline. plans do you have for increased future integra- It can be done, but given the marginal business, tion of IT systems among your member airlines? Q: Airline mergers and acquisitions have you have to be extremely careful if you do that What are your thoughts about an alliance need- become more and more prevalent. What are because you can easily lose a lot of money rather ing a common platform? your overall views about mergers and industry than gain by outsourcing. A: Having started out 40 years ago at KLM in consolidation? It’s been helpful that I’ve been able to be in the IT department, it’s one of my main areas of A: Mergers between airlines on the same different positions during the first 20 years of my interest. I strongly believe that we’re living in a continent make a lot of sense because there is career. I started out in IT. Then I moved to cargo world where it is impossible to think that all the a lot to be gained. There are a lot of synergies. handling, cargo marketing, passenger marketing, airlines will migrate to the same IT platform. Mergers between carriers on different conti- and then strategy and corporate development When we developed the Air France-KLM- nents have a significant amount of complexity. In before I became one of the top executives for Northwest relationship, there was a need for principle, they’re still not allowed, and I don’t see KLM. I know the business in detail inside out, a much greater exchange of information than that changing very quickly. I don’t see that the and that helps to understand where you have to was necessary in a normal hierarchal interline Chinese government will allow Chinese carriers move it forward. relationship. In the early days, we developed to be taken over or merged into Delta Air Lines hard-wired links that have proven to be inflexible or Air France-KLM, and vice versa. Q: What key objectives would you like to over the years if you have to allow for changes, achieve during your stint as SkyTeam chairman? developments or new carriers. Q: What impact do mergers have on the What do you want to see SkyTeam achieve long Moreover, we have a situation where we link industry as a whole? term? our systems progressively with more and more A: In the past, a large number of airlines were A: We operate in a regulatory environment partners outside the airline industry. This requires basically dictated by regulators that didn’t allow that has shaped airlines in a way that they’re not all kinds of link ups and has basically led to the cross-national airlines to really operate. While easy to transform into airlines that can also be whole debate about open architecture, which this is disappearing, and alliances are filling in the successful in this time and day. That requires a has to be the basis for a free-serve relationship. gaps to a large extent, the normal line carriers good understanding of how you can transform That is basically what we work on in SkyTeam that try to do the same thing in terms of network that airline. It requires a good visionary mind … to create open-architecture solutions among operators will have significant difficulties to sur- to see where the opportunities are to be more the airlines. vive because they don’t enjoy the same benefits. successful than others. We still see possibilities for the part of soft- If you’re a regional niche carrier such as These are two key attributes I’m trying to ware that is required to support the connectivity Alaska Airlines, the chances of survival are bring to SkyTeam. I’m trying to bring that experi- and the management of the processes among greater. But, if you’re a relatively small carrier ence and know how to build SkyTeam into the the airlines on a joint basis. We are able and will- in Europe, for instance, your chances to survive best alliance for the future. ing to develop joint software for the membership outside an alliance are next to none. if that is the best solution. But that will still be in So you likely have to come in with a different Q: Given 2010 was SkyTeam’s 10th anniver- an open-architecture environment where it will business model such as the low-cost carrier. sary … and we congratulate you … tell us what be connected through open architecture with the Although after so many years, we’re seeing that 2020 will look like for SkyTeam. existing platform of the airlines. low-cost carriers over time have lost their com- A: I see an alliance that is not necessarily That goes back to your earlier question about petitive advantage. Some are becoming hybrids much larger. I think in numbers, we’ll be over smaller airlines. They don’t necessarily have and others are thinking about developing net- 20 members. But I don’t see it in 2020 to be the same sophisticated systems as Delta and works to continue to have the growth they have 50 because the other 30 airlines, except for a Air France. New members with a relatively low previously enjoyed. In most cases, certainly in few white spots that I already pointed at, are level of IT sophistication require quite a bit. And the United States, they have lost their advantage not going to add a lot. it could make a lot of sense for these airlines over network carriers. Managing overlapping airlines make it to develop jointly the type of software that is In the end, in 10 years from now, we will difficult to manage in an alliance, because required to increase the seamlessness of our have, in my opinion, a significantly lesser number they don’t have the same interest. They’re cooperation. of carriers. The survivors will either be in an alli- competing more than there are synergies in ance, part of an alliance or operating in a different incorporating. Q: SkyTeam members use a number of business formula. Our main mission for the next 10 years is to systems from Sabre Airline Solutions®. How make sure that the customer benefits we can important is it that member airlines forge part- Q: This marks your 40th year in the airline offer as an alliance will increase beyond code- nerships with single vendors when possible, industry. In what way has your extensive airline share and frequent flyer programs and that we including technology, catering, ground handling, background contributed to your success in lead- really try to create as much as possible a etc.? ing the SkyTeam alliance? What are the guiding seamless service. And there’s a lot to be A: It’s important that when a new mem- principles you set forth for the alliance? gained there, but it is a complex issue … cer- ber joins an alliance and has a requirement to A: I can only speak about my own experi- tainly in different cultures managing such a upgrade its IT, that it doesn’t do it in isolation. ence, and that has served me well over the process. But we have a template that we have In doing so, however, it should work with a years. A deep understanding of this complex developed on the North Atlantic and that limited number of vendors that are commonly industry is very helpful. We have seen in serves SkyTeam well to really use it as the way used within the alliance. It makes a lot of sense many carriers that relative outsiders have forward to become a stronger and, in my for new things to be developed to support the come in and tried to come to grips with the opinion, hopefully the leading alliance at the alliance. complexity of our industry. That’s not easy end of this decade. a

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ManmadeKuwait Airways makes millions using its new Diamond real-time revenue integrity system

Kuwait Airways gained US$26 million in value benefits during the first five months of implementing real-time revenue integrity technology.

By Lynne Bowers-Dodson | Ascend Staff ASCEND I PROFILE

Manmade Diamond ewelers determine the value of a diamond by examining the “four Cs” — cut, color, clarity and carat. During the next few years, investors will assess the value of Kuwait Airlines by examining a different set of “four Cs — commitment, competition, capacity and capital improvements. Perhaps these investors will count to its credit the carrier’sJ remarkable comeback despite a recent past marked by intense heat and pressure reminiscent of diamond creation.

Diamond Formation When asked about the future of his airline in March 2010, Kuwait Airways Chairman Hamad Abdullatif Al Falah described the carrier as a diamond. A look at the carrier’s 57-year history bares some striking similarities to one of nature’s most durable substances. Diamonds begin their journey as unpretentious elements of carbon. So too, Kuwait Airways had a modest start. In 1954, two local businessmen launched the Kuwait National Airways Company with US$72,979 in start-up capital and a fleet of three Douglas DC-3s. Flight operations began on March 16, 1954, connecting Kuwait City with Abadan, Iran; Beirut, Lebanon; Damascus, Syria; and Jerusalem. The company was renamed Kuwait Airways Corp. (KAC) the following year as the government acquired a half interest. The route network was expanded throughout the Gulf region with the addition of leased, four-engine Vickers Viscount aircraft in 1958. The government of Kuwait, which became independent from Great Britain in 1961, bought the remainder of KAC’s shares in May 1962 after the launch of rival Trans Arabian Airways made the competitive situation difficult. The government acquired a controlling interest in Trans Arabian in April 1964 and folded its Douglas DC-6 aircraft into the KAC fleet. In the meantime, KAC had begun operating its first jet aircraft, de Havilland Comets, in 1962. This allowed the company to venture into Europe with a six-hour nonstop to London. Newer planes, including Hawker Siddeley Tridents and BAC One- Elevens, soon joined the fleet. The One-Elevens were leased off within a couple of years, but the Tridents were successful flying routes in the Middle East. KAC bought its first Boeing aircraft when it acquired three 707 airliners in November 1968 at a cost of about US$25 million. By 1976, the airline had retired its earlier jets and turboprops and was flying a fleet of eight 707s. Soon the company added midsize Boeing 737s and 727s, one of which was operated exclusively for the government. KAC received the first of four Boeing 747 jumbo jets in August 1978. The long-range aircraft allowed the airline to extend the London service to New York City as well as start service to Manila in the Philippines. In the 1980s, KAC took delivery

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and lost revenues; Seats Returned By Sabre AirVision Revenue Seizure by Iraq of one dozen of the airline’s 20 Integrity For Kuwait Airways In 2010. planes, and another three owned by the Kuwaiti government (several of these planes were 500,000 destroyed in the war); A spare parts inventory valued at US$150 mil- 450,000 lion confiscated by the Iraqis; A loss of US$133 million in the 1990-91 fiscal 400,000 years. Six of KAC’s Airbuses survived the invasion and 350,000 were flown to Iran during the occupation. Following the war, KAC filed an insurance claim for US$694 300,000 million for loss of the planes; however, Lloyd’s of London limited its payout to US$300 million, its 250,000 maximum for a single event. The dispute between KAC and Iraqi Airways (IAC) continues today and is 200,000 the longest-running commercial case in the history of the English courts. Nearly 12 years of previous decisions have 150,000 been dismissed by higher courts due to a series of findings of perjury and fraud against IAC. KAC 100,000 now holds judgments totaling nearly US$1.2 billion against IAC and US$83.5 million against the State 50,000 of Iraq. 1,047,809 seats During the first four full months of using Sabre Revenue Integrity, SriLankan Airlines returned more than a million seats to sales. 0 “Adámas” April May June July Aug. Sept. Oct. Nov. Dec. The name “diamond” is derived from the ancient Greek “adámas,” which can be interpreted as “unbreakable.” During the invasion, and despite Duplicate Bookings Fictious Names Redundant Itinerary Ticket Firming the odds, KAC adopted an unbreakable posture. The carrier conducted operations from a tem- Solving Real Problems Revenue Integrity solves business problems for Kuwait Airways such as ticket porary base in Cairo even while its homeland was time limits, fake names, duplicate bookings, and fake or duplicate ticket numbers. under occupation. Half of its employees, including then-Chairman Ahmad Hamad al-Mishari, had been out of the country during the invasion. of four Boeing 727-200s; eight Airbus A310s; one US$1.6 billion in losses due to damage to the KAC was operating a fleet of nine aircraft imme- Airbus A300-600; and three Boeing 767-200 ER carrier’s fleet, computer reservations system diately after the war; all but one of these planes aircraft.

Diamond Interrupted According to science, the carbon that makes 100 diamonds comes from the melting of pre-existing rocks in the Earth’s upper mantle. There is an abundance of carbon atoms in the mantle. 80 Temperature changes in the upper mantle force the carbon atoms to go deeper where it melts and finally becomes new rock, when the tem- 60 perature reduces. If other conditions such as pressure and chemistry are right, the carbon atoms in the melting crustal rock bond to build 40 diamond crystals.

However, there is no guarantee that these % Availability carbon atoms will turn into diamonds. If the 20 temperature rises or the pressure drops then the diamond crystals may melt partially or totally dissolve. For KAC, rising temperatures from the Aug. 2, 1990, invasion by Iraq nearly destroyed 0 the chemistry that was working to turn the carrier 120 75 45 30 20 8 4 0 0 into a diamond to be admired throughout the Middle East. Days before departure In the seven months following the invasion, Airliner World reported that more than 85 per- Before using Revenue Integrity Using real-time Revenue Integrity Demand for seats cent of KAC’s assets were destroyed or stolen. Among devastating wartime loses reported by Real-Time Revenue Integrity Real-time Revenue Integrity achieves significant results over other the Financial Times: revenue integrity robots.

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had been out of the country during the invasion, according to the Financial Times. Reservations and maintenance operations were shifted to outside facilities. Following the seven-month-long Gulf War, a Kuwait Airways spokesperson summed up the carrier’s intent: “Kuwait Airways aims to re-establish its network to reach more than 47 countries around the globe with a firm commitment to providing the finest service and comfort to passengers while continuing to rank safety as one of our highest priorities.” With that, the carrier began a massive rebuilding

project. It ordered 17 new aircraft worth US$1.44 Airways billion delivered in 1996. These included two new Boeing 747s to replace the old ones. KAC lost buildings as well as aircraft during the occupation. Construction of a new US$37 million, two-story headquarters began in 1993, and the Photo: Kuwait airline moved into it in 1998. New hangars also were erected. The cost of rebuilding the ground US$26 Million Kuwait Airways realized significant gains during its first five months of using Revenue infrastructure was reported at up to US$250 million Integrity. by Airline Business. Capacity exceeded demand in the Mideast air 20 percent will be reserved for state-run institu- sold to paying guests when there is demand for travel market during the 1990s, setting up intense tions, them. Real-time handling of the revenue integrity competitive pressure. In response, KAC developed 5 percent will be distributed free to Kuwaiti air- discipline ensures that maximum value benefits are limited alliances with other regional carriers such lines employees. gained by the airline. as Syrian Airlines, Middle East Airlines, Cyprus In an interview with Marcopolis last March, The flexibility of creating and defining the pro- Airways and Thai International. Chairman Hamad Abdullatif Al Falah said, “Kuwait cess rules in the solution enables airlines to focus In addition, the Kuwaiti government instituted Airways is a diamond, and whoever buys with on generating maximum value. Airlines can tailor an open-skies policy in 2006, and since then has Kuwait Airways will be a winner. We have the best processes to any attribute in the PNR down to the signed open-skies agreements with the United pilots, engineers, technicians and training center point of sale and segment-related information to States, Singapore, Cambodia, Myanmar, Laos, that serve many Arab countries. ensure that: Brunei, Thailand, Austria, Poland, Georgia, the “Kuwait Airways is ahead of our competitors Revenue leakage is kept to a minimum, Czech Republic, Kyrgyzstan, Finland and Iceland. with regard to all of these aspects. Kuwait Airways No-shows are reduced, New market conditions have birthed new com- is at the end because our aircraft are older and Variation in no-shows is less volatile. petitors. The airline that once held a monopoly in smaller in number. If we have a bigger number of The actual conditions for finding problem Kuwait now competes against newcomer Jazeera aircraft we can offer more destinations and with bookings are separate from the actions taken on Airways. newer aircraft we will be more competitive and we those bookings. This gives the airline more control can capture more of the market.” through process automation management rather Diamond Mining Kuwait is clearly taking positive steps to improve than a simple robotic script. As the airline is in full Today, KAC operates a fleet of 22 aircraft, its infrastructure and technology, which is key to control of its revenue integrity processes through mostly Boeing 777-200 ER, Boeing 747-400M, boosting revenue for all its carriers. Last November, Web clients, the carrier can change and create Airbus A340-300, Airbus A330-200, Airbus A320- the government signed a contract to equip Kuwait processes to solve revenue leakage business 200 and Airbus A300-600R. The airline plans to with a new air traffic control system. In addition, problems. include more aircraft in its fleet, bringing the total it is developing a new terminal at KIA and new “We were going through a major problem of to 80 by 2012. airports are under construction to support the no shows, which led to a huge number of seats Before the invasion, Kuwait Airways enjoyed growing aviation market. spoilage,” said Hisham Alsuraye, Kuwait Airways’ a reputation for excellent in-flight service. As the To help with capacity improvements, Kuwait senior expert for pricing and revenue management. flag carrier of a Muslim country, KAC did not offer Airways has contracted with Calidris (since pur- “It affected our profitability by 7 percent to 10 alcoholic drinks, and meals were prepared accord- chased by Sabre Airline Solutions®) via a partnership percent on the network. Not only has it increased ing to Halal dietary principles. with Mercator to provide a real-time revenue integ- our profitability on the network by freeing resalable Current Kuwait Airways Chairman Hamad rity system. Sabre® AirVisionTM Revenue Integrity seats, but it has also decreased manpower. We Abdullatif Al Falah believes the carrier can regain was implemented in April 2010. During the first highly recommend the system for implementing its reputation with an influx of investment capital five months, it delivered value benefits to the airline real-time revenue integrity.” spurred by privatization. The Kuwaiti parliament from release of seats to the tune of US$26 million. Kuwait Airways continues to leverage technol- agrees and last year approved a budget that Revenue Integrity removes bad bookings from ogy — such as modern aircraft and advanced IT will transform the state-owned carrier into a the airline’s inventory to help ensure that seats are systems — as part of its strategy to stake a claim private entity called Kuwait Investment Authority not occupied by false bookings from fake names, as one of the world’s most successful airlines. a (KIA) with a number of local and international duplicate bookings and non-ticketed bookings stakeholders: (enforcing ticket time limits). Performing analysis 35 percent will be sold at auction to foreign or in real time means that all new and changed local investors, bookings are pushed to the solution at the end 40 percent will be sold to Kuwaiti citizens at an of the transaction. This ensures that the airline’s Lynne Bowers-Dodson can be contacted Photos: LAN initial public offering, inventory is as clean as possible and seats can be at [email protected].

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Strategic Commercial Planning: A Winning Strategy

Airlines that build a sound commercial planning strategy reap signifi cant monetary benefi ts.

By Darren Rickey and Kevin Woods | Ascend Contributors Photo: Shutterstock

or most airlines, performance What Is Strategic Commercial within and between functions. Finally, add- improvement comes from small, Planning? ing decision-support technology enables the well-timed adjustments rather Strategic commercial planning is a holis- entire system to work together. than large sweeping changes. tic approach to the commercial planning Unfortunately, most airlines have yet to Commercial planning is full of function that marries world-class business realize the full value of strategic commercial F small adjustments and fine-tun- processes with advanced decision systems. planning. ing that, when viewed collectively, can make Taking a holistic approach means viewing Departments within commercial plan- a significant impact on an airline’s profitability. commercial planning as a set of interde- ning, such as revenue management and What are these small changes, and how can pendent functions that must coordinate network planning, consist of silos where airlines take advantage of them? The answer seamlessly. Next, layer on top of those information is lost among these highly is strategic commercial planning. functions best practices that both work dependent departments.

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In other cases, an airline fails to incor- Long-Range To Close-In Because of the strategic nature, seam- porate best practices, especially around Strategic commercial planning covers the less coordination among departments scheduling, revenue management and pric- full spectrum of planning. It begins years during Phase 2 becomes most critical. ing. Advanced decision-support systems can before departure with fleet planning by creating Each department must optimize within its help, but they are less effective without close schedule scenarios and determining the optimal responsibilities while ensuring that other coordination among departments, as well as fleet to maximize profitability for those future departments are heading in the same business process best practices. schedules. From long-range plans to pricing direction. and inventory adjustments just days before To maximize the effectiveness of this Why Strategic Commercial Planning? departure, and everything in between, strategic coordination, a business intelligence solu- Strategic commercial planning is the best way commercial planning looks at the process from tion is essential for viewing consolidated for an airline to achieve maximum profitability. beginning to end. In general, strategic commer- network and market performance data First, there is a core principle of seamless coordi- cial planning breaks down into three phases. across all of commercial planning. This nation. The advantage of seamless coordination facilitates coordination while helping iden- By Darren Rickey and Kevin Woods | Ascend Contributors is best understood through an example. Take a Phase 1 tify revenue improvement opportunities. situation where a large market is underperform- Phase 1 is long-range planning and takes ing. It could have several causes, for example: place more than a year before departure. Phase 3 Has network planning added too much capac- This includes fleet planning, network Phase 3 begins three months out and ity? restructuring, new market development and ends at day of departure. It includes sched- Has schedules timed the flights such that they alliance opportunities. Close coordination ule modifications based on changes in misconnect on a major O&D? among departments plays a lesser role to the operating groups, revenue management Is the revenue management strategy spoiling systems integration where multiple sce- closing lower-class inventory and pricing seats? nario analyses are made easier by allowing implementing its strategy by market. There are many possible culprits for the data to flow among forecasting, fleeting Due to the short timeframe and the need market’s poor performance. If each department and scheduling systems. That said, market to fine tune the commercial function, both evaluates the problem and makes adjustments insights from revenue management and seamless coordination and systems integra- independent of the others, the result would likely pricing experts can be extremely helpful tion play vital roles: be even worse performance. when identifying new market opportunities Linking the route forecasting and sched- Utilizing strategic commercial planning would and hub structures. ules systems to allow for quick and effec- enable representatives from each commercial tive evaluation of flight changes, planning group to analyze the causes of poor per- Phase 2 Communicating schedule and aircraft formance as a group and collectively decide upon Phase 2 takes the planning from one year gauge changes across functions, making the proper course of action. The result would be to roughly three months before departure. any necessary adjustments immediately, enhanced decision making and a coordinated It represents coordinated strategy among Enabling close-in re-fleeting between the approach that uses the most effective levers to commercial planning departments. Phase 2 fleet assignment and revenue manage- improve performance. Expand this process from includes the addition of new routes, sched- ment systems, one market to the entire network and the airline’s ule connectivity and fleeting, and revenue Linking revenue management and pric- profitability would improve substantially. management and pricing strategies based ing systems to adjust inventory controls There are a number of best practices on seasonal factors and market forecasts. based on current fares, not historical, employed throughout the commercial planning process. The business rules around revenue management represent one example. In a recent study, a European carrier compared its revenue management system with using analyst-defined business rules to the same system without any analyst intervention. It turns out that the system without analyst-defined business rules was superior. Diving deeper into the results, the business rules performed marginally better on peak flights but significantly worse on off-peak flights. The best practice is a robust set of business rules that allow the revenue management system to set inventory while only overriding the system based on analyst insights for high load factor flights. The final piece that brings strategic commercial planning together is systems integration. One powerful example is close-in re-fleeting (or demand-driven dispatch). A few weeks prior to departure, close-in re-fleeting uses forecasted demand from the revenue management system to upgauge high-demand flights and downgauge lower-demand flights in the fleet Strategic Commercial Planning A holistic approach to the commercial planning function leverages assignment system. The result is an increase in world-class best practices with advanced decision systems among and between groups to enable close network revenue of up to 1 percent. coordination.

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Commercial Planning Processes There are multiple points of coordination including close-in re-fleeting revenue management using real-time fares and schedule development.

Enhancing inventory availability through real- activities. However, strategic commercial plan- dependent groups is a core feature of strategic time links between revenue management ning leverages technology to help drive additional commercial planning. It is also an attribute and reservations inventory systems. revenue otherwise lost to an airline in three that more and more airlines require from their important ways: systems. These airlines have recognized the More Than Passenger Revenue Scheduling, fleeting, pricing and revenue man- ability to capture lost revenue, as well as the For most airlines, ancillary and cargo revenue agement systems enable airlines to optimize improved effectiveness and productivity of play large roles in their financial performance. revenue-generation capabilities of the airline. their people. Ultimately, they need not worry As such, strategic commercial planning includes This gets back to doing those small things that, about transferring data or making sure data is these two areas throughout the planning pro- over time, result in significant value for the air- accurate. cess. This has two important impacts: line. For example, with scheduling, it is critical Seamless coordination needs to reach both to maximize the amount of aircraft time during Strategy Driver And Enabler cargo and merchandising groups, areas that peak demand periods. By properly sequenc- Strategic commercial planning must drive have traditionally been afterthoughts in the ing at a hub, airlines limit taxi times. Similarly, and enable an airline’s strategy. By leveraging planning process, carriers can satisfy more demand by keeping integrated systems and best practices from Systems integration greatly enhances seam- aircraft turns at minimum ground time during throughout the industry, airlines can deter- less coordination. peak demand, then recover the operation dur- mine the optimal business model to fit their When cargo demand is included in the fleet ing off-peak periods. unique market circumstances. assignment process, the performance of cargo Technology can play a key role in long-term The move toward hybrid business mod- revenue is significantly improved. Similarly, fore- planning. Through the use of forecasting, fleet- els by network and low-cost carriers is an casts from passenger revenue management give ing and scheduling systems, airlines can evalu- important trend. Network carriers have been the best estimate for cargo capacity availability, ate numerous scenarios more robustly than simplifying their operations in markets lacking thereby enabling the cargo function to maximize they ever could without these systems. Three- profitability, while LCCs are adding complexity its revenue. or five-year plans become much more insight- to capture additional profits. Both business With merchandising, it’s becoming increasingly ful and helpful in guiding the airline through models require route planning systems important that new route forecasts and revenue key decisions around new markets and new to evaluate fleet changes and completely management availability take into account the aircraft. new network structures or markets. These total revenue generated by passenger classes. In one situation, a major North American strategic adjustments also invariably involve As ancillary revenue grows in proportion to seat carrier used network technology from Sabre changes in revenue management and pricing revenue, it will become imperative that airlines Airline Solutions® to evaluate a major restruc- strategies. optimize around total passenger value. turing of its largest hub in a way that would What does it mean to enable an airline’s have been virtually impossible without these strategy? Technology As Strategic applications. Technology proved invaluable First, executives must have confidence in Many people think of technology as a tactical in helping the carrier identify the hub struc- the systems and processes. To do so, several tool, something that can automate repetitive ture that best fit its profit potential. questions must be answered: and tedious tasks. That is undoubtedly true Capitalizing on revenue opportunities by inte- Can revenue management adjust to a new and enables people to focus on more strategic grating systems so data flows between inter- pricing structure?

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Can new markets, beyond traditional routes, Pricing Schedules Network Planning Fare-matching, off-tariff, Connectivity, local market Frequency and gauge for existing be added that will be competitive in the mar- and fare sales actions times, operating constraints routes, identify new routes ketplace? Will the systems be able to scale to meet the demands of a larger business? With strategic commercial planning in place, including seamless coordination and best practic- Revenue Management Sales Availability adjustments Corporate and travel es, the executive team will have the confidence based on spoilage and agency promotions, to implement improved strategies that will drive up-sell opportunities market intelligence profitability. Strategic commercial planning also relies on robust technology that can adapt to changing circumstances, including significant growth. Unfortunately, this is where too many technologies fall down, leaving airlines to manage manually while the demands are even greater. Through seamless coordination, best practices and robust systems, an airline should have the confidence to push the envelope in terms of capabilities that drive value. While it is important to have a solid strategy and the confidence to implement it, the market is constantly changing, whether it is passenger demand or competitor adjustments. Revenue Analysis Cargo Marketing As a result, strategic commercial planning O&D performance, competitive Identify incremental revenue Promotions, loyalty analysis, optimal fl ight timing opportunities programs, etc. must enable the commercial planning area to quickly identify changes in the marketplace and respond effectively. Commercial Planning Requiring close coordination across multiple functions, each needs a seat at the This means having business intelligence table for regular planning meetings. systems with a mix of external and internal data that is one version of the truth shared throughout commercial planning. The information must be evaluated regularly, across all commercial functions, using sophisticated systems that allow scenario analysis. After evaluating the situation as a team, a coordi- Preparing For Strategic nated response is essential. Commercial Planning Again, it comes down to shared data, best practices and seamless coordination. It’s a given that the marketplace is ever-changing, When implementing strategic commercial Are your fare classes aligned such that and with strategic commercial planning, an planning, airline executives must consider higher-level fare classes have higher fares airline can stay several steps ahead of its several aspects, including: (if you don’t know the answer, you may be competition. surprised by what you find)? Strategic commercial planning is the next Coordination Is your pricing strategy driven by your rela- generation of methods and practices to Do all functions within commercial plan- tive competitive position in the specific improve revenue and ultimately profitability. ning have regular coordination meetings market? It combines best practices from across the for problem markets and new market Do you regularly review your codeshare airline industry with seamless coordination opportunities? flights for revenue maximization and mon- across the commercial planning groups, includ- Does the strategic planning process repre- itor them to ensure connectivity? ing cargo and ancillary revenue. sent every function? As more airlines adopt strategic commercial Integration planning, it is becoming a critical component Best Practices Does your airline fleet its schedule close for airlines to succeed and win in the market- Do you have a three- or five-year network to departure based on actual forecasted place, ultimately driving an airline forward. a plan? demand from revenue management? Have you optimized connectivity at your Do you revenue manage based on current hubs? fares in the marketplace and not historical Is your fleet optimally assigned based on fares? operational constraints and unconstrained Do you incorporate cargo and ancillary demand? revenue into your commercial planning Darren Rickey is vice president for Sabre® In revenue management, do you have a decision making? AirVisionTM Marketing & Planning and strategy for when to override the revenue Do you have a business intelligence solu- Kevin Woods is a solution marketing management system and when to not? tion that provides “one version of the partner for Sabre Airline Solutions. They Do you look at competitors’ available fares truth” across all commercial planning can be contacted at darren.rickey@sabre. to determine your inventory availability? groups? com and [email protected].

ascend 21 Load Planning: Harnessing Aerodynamics The forces of aerodynamics never change; however, the ability to manage them continues to evolve, saving airlines time and money while ensuring customers’ safety.

By Dana Knight and Dave Roberts | Ascend Contributors ASCEND I INDUSTRY

ransportation — from walking in the aviation industry cannot define or the aircraft to the actual operation of a to driving to sailing to flying. provide the full meaning. For example, flight. They all have several common- weight and balance, load planning, load alities — movement from one control, center of gravity, lift, takeoff 100 Years point to another and the laws weight, zero fuel weight, and performance The laws of physics and aerodynamics T of physics. In the case of avia- data. have not changed since the Wright brothers tion, the law of physics is aerodynamics. Would it surprise you to know that a first lifted off more than 100 years ago. This is not about aerodynamics, but departure control system by definition is However, all of the other components of fly- rather a view of: more than a passenger check-in system? ing have grown by tremendous proportions How aerodynamics affects aviation, A departure control system also includes a — size, weight, distance flown and speed. The components that help deal with weight and balance system that interfaces Of course, fuel continues to be the aerodynamics, with the passenger check-in system. source of energy that produces power that How to make a flight more efficient First and foremost when considering accelerates the aircraft down the runway considering the law of physics. aerodynamics and the movement of an and through the air. The price of fuel has Too scientific? Before talking about aircraft, whether on the ground or in the air grown in even greater proportions today aerodynamics let’s identify other terms (including takeoffs and landings), the major compared to the other items listed above, in airline operations that are affected by concern is safety. Safety is the common and airlines are searching for any way pos- aerodynamics; terms many people even factor that is inherent from the design of sible to reduce their fuel costs.

Build-up Of Weight Associated With The Operations Of An Aircraft

+ + Catering, oil, Basic weight of aircraft Crew and crew baggage water, equipment for flight = Dry operating weight +

Payload (passengers, baggage, cargo) = Zero fuel weight +

Takeoff fuel =

Burn-off - or trip fuel = Takeoff weight Landing weight

Weight Calculations There are multiple calculations to go from the basic weight of an aircraft to a flight’s takeoff and landing weights.

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weight limit for a flight are based on Center Of Gravity several conditions, including: Air temperature, Wind velocity, Length of the runway, Slope of the runway, Height of any obstacles along the takeoff or landing flight path. - Lift + Unlike the structural limits of the aircraft, these operating limits change with conditions such as weather and airport. 15 m Load planners must calculate these condi- 10 m tions at the time of takeoff and landing. In general, the higher the aircraft weight, the more runway length that is required and, obviously, this must not exceed the runway length available. When operating from relatively short runways, it is not uncommon for an aircraft operator 200 kg 300 kg to reduce the operating weight or payload of a flight to accommodate operating conditions. It is important, therefore, to know the structural and operating weight limits for Aircraft Balance The balance of an aircraft can be achieved by maintaining its center of gravity through each aircraft and for each flight. This is the the proper distribution of payload, such as passengers, bags and cargo. first important aspect of load planning — to accurately calculate the limits and compare Adherence to proper load planning Aerodynamics them to the planned and actual flight techniques and actual loading of air- As stated earlier there are four forces weights. craft to these plans reduces fuel burn. that make up the principals of aerodynam- The second major component to con- Allowing the aircraft to operate at the ics — lift, thrust, gravity and drag. The sider in the safe operation of an aircraft is optimum flight attitude reduces drag aircraft, which is the focal point of these the distribution of the payload (passengers, and improves lift. Many airlines use forces, must be able to provide sufficient bags and cargo) and fuel. A datum point automated load planning applications to lift and thrust to counter the force of grav- called center of gravity balances an aircraft. generate the most-efficient load plans. ity and drag. Manufacturers design aircraft so that While the principals of aerodynamics Rounded edges and smooth surfaces when adding fuel and payload to the air- have been with us forever, we have reduce the drag effect while the aircraft is in craft in the proper manner, it will be within become more aware of their effects since flight. The design of the leading edge and top balance. In other words, the aircraft will the beginning of mechanized flight in the of an aircraft wing force air to curve above the not tip forward or aft when loaded with early 1900s. Aircraft have two positive wing and move faster. This creates lift and payload and fuel. forces of aerodynamics — lift and thrust. allows the aircraft to fly through the air. The Balance refers to the location of the cen- An aircraft must be designed so lift design and size of the engine, therefore, cre- ter of gravity along the longitudinal axis. and thrust will overcome the other two ate the thrust to counter the force of gravity. In loading an aircraft, the center of gravity counter forces of aerodynamics — drag The unfortunate reality is that by producing must be within the permissible range and and gravity. lift and thrust, there is an inherent creation of remain so throughout the flight to ensure To overcome these forces safely, an drag. But the smart designers of the aircraft stability and maneuverability. aircraft, when loaded with payload and ensure that there is enough lift and thrust to The airplane’s center of gravity is the fuel, must account for the weight of the counteract the drag created by producing the precise point on the aircraft where all aircraft while on the ground and in the air lift and the thrust. A true vicious circle if you weight is theoretically concentrated or as well as the operational balance of the take a step back and look at it. balanced. You can balance a model airplane aircraft. Hence, the creation of the term Before discussing how an airline plans the on your finger to locate the center of grav- weight and balance used to describe the passenger and cargo loading of an aircraft, it’s ity. The exact weight and location of each loading of an aircraft. necessary to further analyze these two major variable item on the aircraft, such as the To better understand the many factors components of aerodynamics of the aircraft tail, wings, doors and windows along with that are involved in the operation and — the aircraft weight and balance. their resulting center of gravity, is critical to flight of an aircraft, it’s necessary to There are several weight limits that must the aircraft’s performance characteristics examine the effects of aerodynamics, be adhered to for an aircraft. First is the maxi- and stability. including: mum structural weight limit that an aircraft Improperly loaded aircraft with a center The weight of the aircraft, can weigh while on the ground or in the air. of gravity outside the acceptable range can The methods to determine the balance The three principal structural limits are the cause damage to the aircraft on the ground and center of gravity of the aircraft, basic weight of the aircraft, the operating or instability issues when in the air. This Load planning on the day of operation, or dry empty weight, and the zero fuel could potentially lead to a major mishap. How to use these areas to improve weight. For this reason, it is extremely important airline performance and manage opera- An aircraft’s takeoff and landing perfor- to load aircraft within the acceptable center tional costs. mance data and the resulting operating of gravity limits as determined by aircraft

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manufacturers and airline engineering the fuel burn of a flight. Saving fuel is Load planning systems automate the departments. naturally a major goal of airlines in their process of load control and provide a Aircraft weight decreases with fuel con- cost-reduction efforts. consistent, accurate and straightforward sumption while en route. The distribution Load planning and weight and balance means of performing required weight and of weight also changes and therefore the calculations have improved exponentially balance tasks. center of gravity changes. The load planner with the introduction of automated sys- These systems, installed locally or must take this into account and calculate tems. They calculate a flight’s performance hosted, provide user-friendly graphical the weight and balance not only for the data that determines maximum weights interfaces and online help. They can be beginning of the flight but also for the time based on weather and runway conditions. deployed in centralized (system operations in flight and the landing. Being able to dynamically calculate perfor- control center) or distributed load plan- Finally, for an aircraft and flight there is mance data has enabled load planners to ning (airport) environments. Included in an ideal center of gravity that produces the optimize the payload potential of a flight these systems is a full range of features, optimum attitude for an aircraft in flight based on the aircraft type, field conditions including: to achieve a greater lift capability for the and performance data. Load planning management tools, wings and reduce the drag effect. Another key advantage to an automated Calculation of maximum and actual struc- The closer the load planner can plan the system is the interface between the load tural weight limits (zero fuel weight, load on the aircraft to include fuel, pas- planning calculations and the planned and takeoff weight and landing weight) for sengers, baggage and cargo to achieve this actual passenger counts for a given flight. each flight section scheduled, ideal position, the more efficient the flight The number of passengers on a flight is Adherence to IATA and industry stan- will be in reducing fuel consumption. Less the most flexible component of the flight. dards and aircraft design specifications. drag and more lift reduce the effort of the Accurate forecasting of the number of In some of these solutions, the system engines and fuel burn. passengers by the load planning system is graphically displays the ideal center of key to determining the amount of fuel and gravity for the flight. The load planner can Load Planning cargo an aircraft can carry on a particular also view an illustrated representation of For an airline, the placement of the air- flight segment. the current weight and balance status of craft load and the determination of aircraft Working together, the passenger check- the zero fuel, take-off, landing and ramp weights and center of gravity location in and load planning solutions form a limits in the selected aircraft. is the responsibility of the load planner. departure control system (DCS). The opti- Harnessing the forces of aerodynamics To arrive at the most-effective and safe mum DCS provides a tight link between to achieve the optimum results during aircraft load plan, the load planner must the two systems to better forecast and a flight has been a goal of airlines since coordinate with: calculate the flight weights and aircraft the early days of powered aircraft. These The flight crew, balance based on passenger seating forces have not changed, but aircraft have Dispatchers, distribution. evolved in design, style, power, speed, Fuelers, An additional advantage of automated weight and size. Cargo agents, systems is the increase in resource pro- Automated systems continue to evolve Check-in agents, ductivity. The automated solution must to help airlines and load planners prepare Ramp personnel. provide a consistent, accurate and easy way more efficient and cost-effective load plans Load planning is the detailed process of to perform required weight-and-balance using more graphics to help visualize flight gathering data on items to be loaded on tasks for multiple flights simultaneously, data and limits. While the forces will never the aircraft and calculating the load plan. thus increasing productivity. change, the ability to manage them contin- It is calculated based on dry operating The number of flights a load planner can ues to improve significantly. a weight (without fuel). Booked passengers, work has increased with automation ver- estimated bags, mail and cargo for a sus the older, manual methods. The time particular flight segment are included in the to complete a load plan has decreased, calculation. and the load planner can now spend more An aircraft is in balance before any fuel, time on more complex flights that may cargo, passengers, bags or crewmembers require more finite load planning. are loaded. When adding fuel, passengers Graphical displays provide information and cargo, aircraft load planners must about: monitor balance and structural weight lim- Planned and required fuel; its to ensure the limits are not exceeded. Maximum planning weights and perfor- In addition to the safety factor, an airline mance weight limits; can load an aircraft for a flight to improve Pertinent data for each aircraft fuel tank; its operational efficiency and lower its Current weight-and-balance status of operating costs. It can also load pas- the zero fuel, takeoff, landing and ramp sengers’ bags strategically so they are the limits of selected aircraft. first items off loaded at the arrival airport. The system identifies special loads and This improves the speed of delivery to dangerous goods. Alerts display if the passengers or to their connecting flights. balance is out of limits. Dana Knight is a solution director Improved baggage delivery times leads to Improving an airline’s load planning and Dave Roberts is senior principal better customer service and potential for functions while increasing profitability is in airline and flight operations increased revenue. an ongoing process. In doing so, it can strategic planning for Sabre Airline The load planner can prepare a load plan strengthen its entire operations, increase Solutions®. They can be contacted that has a more aft center of gravity that integration and reduce fuel, all while at [email protected] and helps reduce the drag effect and improves maximizing payload. [email protected].

ascend 25 Air Traffic Modernization Photos: Shutterstock ASCEND I INDUSTRY

t’s no surprise that programs as complex and impactful as the U.S. Federal Aviation Administration’s NextGen air transportation system don’t move quickly or smoothly. Today, we often focus on what is happening Imonth-to-month, day-to-day and minute-to-minute. So it’s no revelation that we lose track of programs that won’t be fully implemented for 10 years. But these programs are going to impact our industry in a significant manner. Therefore, it’s important to remain updated and informed on the progress and the issues associated with the programs. Traffic The focus on NextGen during the past year has Air Modernization been on determining which companies would be awarded NextGen contracts and continuing to focus A NextGen Update on the mid-term (2018) implementation plan. Last year, the FAA awarded umbrella contracts totaling more than US$6 billion to demonstrate the While the Next Generation Air Transportation System progresses slowly, big plans are commitment of the U.S. government to the NextGen underway to secure a better ATC environment. initiative. The contracts were awarded under an umbrella portfolio called System Engineering 2020 (SE-2020). SE-2020 has a ceiling of US$6.5 billion covering By Jon Hedblom | Ascend Contributor 10 years, making it the largest set of awards in the FAA’s history. Companies with the best and bright- est aviation and systems engineering experts were awarded the contracts. The NextGen program cannot be accomplished solely by the government. Rather, it needs to be a collaborative effort between government and the aviation industry. This is required to successfully join emerging technologies with new policies and procedures into operational reality. Several companies were awarded SE-2020 contracts.

Boeing Boeing was awarded up to US$1.7 billion. It will focus on: Air traffic management modeling and simulation, Integration of ground and airborne technologies, Operations for all vehicle types (commercial and military aircraft, general aviation, unmanned aerial systems, and rotorcraft). Boeing will perform work to demonstrate NextGen procedures in real time on a large scale within the current air traffic system.

General Dynamics General Dynamics was awarded up to US$1.2 billion. It will perform mission-analysis support in areas such as: Air traffic management automation, Airplane design and analysis, Avionics systems operations and maintenance, Cost-benefit analysis, National Airspace System security, Large-scale demonstrations and NAS air- traffic facility certification. The company will provide systems integration, development and operations expertise, modeling and simulation, and ground and air-based information and communications systems upgrades.

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ITT Corp. ITT Corp. was awarded up to US$1.4 billion. It will conduct leading-edge concept development work across all dimensions of air traffic control including: Ground systems, Avionics, Aircraft equipage, Air traffic control rules and procedures, Human factors, Safety and security, Environmental, Safety and security standards.

Metron Aviation Metron Aviation was awarded US$1.15 billion. The work performed by Metron Aviation will complement the work of Boeing, General Dynamics and ITT under their SE-2020 contracts. The collective organizations will conduct large-scale demonstrations to see how NextGen concepts, procedures and technologies integrate into the current system.

Booz Allen Hamilton Booz Allen Hamilton was awarded US$700 million. It will evaluate emerging procedures and technologies and perform systems engineering to ATC Progress The FAA awarded umbrella contracts of more than US$6 billion to show the U.S. govern- determine the best way to deploy NextGen initia- ment’s devotion to the NextGen program. tives on a wide scale. It plans to bring to the program a broad range of: Systems engineering; between aircraft and more optimized landing and to stress is the concept of “best equipped, best Investment and business-case analysis; take-off paths. served.” Planning; According to experts who gathered at a recent This concept is in place to encourage early Forecasting; global PBN summit, PBN objectives include: adoption of the equipment to support NextGen Business, financial and information manage- A 3 percent to 10 percent increase in airport by incentivizing those aircraft with priority in the ment support services. capacity, NAS. The best-equipped aircraft will receive priority A 10 percent reduction in delays, routing and handling by FAA air traffic controllers. CSSI 8 percent to 10 percent reduction in fuel How this will work given the mix of equipped and CSSI was awarded US$280 million. CSSI and burn, non-equipped aircraft, especially in the highest traffic Flatirons Solutions will provide similar services as Up to a 30 percent decrease in overall noise areas, is still a work in progress. Booz Allen Hamilton. patterns. How well the incentives are working is question- FAA Administrator Randy Babbitt voiced his These efficiencies should spill over into the able at this point, but the FAA remains steadfast in support of the industry participation in the program. area of airport planning and capacity manage- support of it. The FAA has even recently encour- “Partnership is absolutely critical to our suc- ment, according to Dan Elwell, former assistant aged the airline community to invest through some cess in NextGen,” he said. “With these [contract] FAA administrator and current vice president unique financing methods. awards, we’re partnering with some of the most of civil aviation for the Aerospace Industries “We are working very hard to come up with qualified companies in the aviation community.” Association. ideas to really speed up the implementation of Work performed under the SE-2020 umbrella “The implementation of more precise flight NextGen,” said John L. Mica, the new U.S. House of will complement NextGen programs that are operations should reduce the need to continue Representatives aviation subcommittee chairman. already in full deployment such as Automatic to add costly airport capacity,” he said. He said the House is considering “loan guar- Dependent Surveillance Broadcast (ADS-B). However, for that to occur, aircraft operators antees and other ways” to help airlines finance Satellite-based system controllers use ADS-B to must be ready and willing to equip their aircraft equipage in the latest version of FAA reauthorization monitor and separate aircraft in the skies over with the new, certified avionics necessary to legislation under development. In addition, the FAA certain parts of the country. It will be deployed realize the planned benefits. recently announced it would spend US$4.2 million nationwide in 2013. The FAA and operators understand the to equip 35 JetBlue aircraft with certain onboard Companies awarded contracts under SE-2020 importance of having NextGen equipment on equipment. This is part of a program designed to will research emerging procedures and technolo- the aircraft to reap the desired benefits. Herein convince other carriers that day-to-day operational gies and perform systems engineering to determine lies one of the many conundrums that currently savings justify such investments. the best way to deploy the NextGen initiatives on exist within the NextGen implementation plan. Also, an investment group led by ITT Corp. has a wide scale. It is apparent that significant benefits, The FAA maintains that the 2009 governing developed a novel funding mechanism aimed at such as safety, performance and efficiency, can be principles for accelerating NextGen equipage supporting airlines in buying and installing NextGen gained through the implementation of NextGen. remain in effect. avionics beginning next year. The funding mecha- In the area of efficiency, performance-based However, there is no defined direct govern- nism, involving a mix of commercial borrowing navigation (PBN) operations will bring “green” effi- ment assistance coming to the operators, and and private equity in excess of US$1 billion, would ciencies to the overall system. This is achieved by business case development is in its infancy. finance new avionics for up to 5,600 Part 121 permitting more direct routing and closer spacing One of these principles that Babbitt continues aircraft, the majority of the United States fleet.

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The equipment would be leased to air carriers. Provide data access for modeling and analysis. begin to see detailed development and implementa- Repayments would be based on the FAA reaching The FAA Office of Inspector General noted in tion plans from the companies and the FAA during agreed milestones for supporting ground infrastruc- a report late last year that FAA’s policy challenges the next few months. ture. The commercial financing solution, in the include adopting the best-equipped, best-served This activity is critical to the goal of keeping the works for more than a year, comes as other options policy. The FAA currently requires aircraft to be overall mid-term implementation plan on track for are being discussed to fund NextGen equipage, cleared for landing on a first-come, first-served basis the benefits expected by 2018. Key providers and mainly involving federal dollars. regardless of equipage. officials continue to worry that the programs will The Aerospace Industries Association has pro- The best-equipped, best-served policy would bog down due to a lack of integration among the posed a “Cash for Carbon” program that would see give priority to users equipped with new systems, programs and the FAA leadership. government grants or government-backed loans which would encourage airspace users to equip their All of this activity is further clouded by the fact issued in exchange for a commitment by airlines to aircraft with advanced avionics and thereby advance that the leadership in the U.S. Congress has been achieve carbon-neutral growth from 2020 onward. NextGen. Extensive analyses will determine if passed from long-time committee chairman Jim The business-case generation will not be straight- the policy can be safely implemented. This would Oberstar to John Mica. forward. It will initially require several assumptions to include addressing concerns about mixed equipage Finding a clear path forward for the operators be made as well as having the systems engineering as aircraft transition to the NextGen system. and their solutions providers remains a difficult but component firm up requirements. Simulations and In addition, solution providers need to work in necessary task to support the future generation of human-in-the-loop experiments will be necessary tandem with airlines and the NextGen program global air traffic systems and to realize the savings to build sufficient business cases for operators to to ensure legacy flight planning applications are in dollars, air quality and time that NextGen offers. a invest in the necessary upgrades. updated with new parameters and algorithms. Once In addition, solutions providers will need to mod- the aircraft completes the optimized flight profile, the ify their current flight planning applications to take airport and ground handling support must be linked into account new parameters. Solution providers, into the ground-based communications systems to such as Sabre Airline Solutions®, with an extensive complete the full cycle of efficiency. solutions portfolio and knowledge of the industry Full benefits of optimizing flight profiles cannot can benefit airline operators by using a combination be achieved if the same efficiencies are not planned of current solutions along with new algorithms for and implemented in the cockpit and airline associated with NextGen to: operations control centers. The most efficient, best- Estimate optimal flight plans by user class planned ATC system will not achieve the stated (major airline, regional airline, business gen- objectives if the system breaks down once the eral aviation), aircraft lands and cannot get to the gate and offload Compute optimal flight plans for new best- passengers efficiently. equipped, best-served scenarios (such as A holistic approach will require that airline opera- unconstrained flight plans), tions centers are upgraded. Solutions providers will Jon Hedblom is partner for government Visualize best-equipped, best-served ben- need to be involved in the planning and implementa- sales and business development for efits mechanisms using Sabre® AirCentre™ tion of the NextGen program. With the awarding of Sabre Airline Solutions. He can be Flight Explorer, the umbrella contracts in 2010, the industry should contacted at [email protected].

+count it up

43,300+ 1,200 tons 0.2 The approximate combined number The amount of roses Lufthansa Cargo The percentage of cancelled flights of daily departures by oneworld, transported for delivery on Feb. 14, in 2010 by U.S. carrier Hawaiian SkyTeam and Star alliance members. equivalent to 34 million roses or 14 Airlines. The carrier held the lowest Members for the three global fully booked MD-11Fs. percentage of canceled flights for the alliances carry approximately 1.4 year, followed by Frontier Airlines billion passengers a year. with 0.6 percent and Alaska Airlines with 0.8 percent, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics.

ascend 29 Airline Merchandising Evolution Airlines can help ensure business travelers embrace ancillary products As the industry embraces the era of ancillaries, technology keeps pace, delivering the best of both worlds to help airlines and corporate travel programs achieve their respective goals.

By Shelly Terry | Ascend Contributor Photos: Shutterstock ASCEND I INDUSTRY

s airlines continue to develop and explore new ways to cater to business travelers and build customer loyalty through stellar service and A product offerings, they could be overlooking one of the most important things corporations and business travelers crave: simplicity and transparency in airline shopping. Airlines are being innovative in attempts to grow and create new revenue streams with unbundled pricing models and a renewed emphasis on merchandising. But there are critical behind-the-scenes elements to effectively serving business travelers that some airlines may not have considered. Agencies need to help corporations effectively manage travel budgets. Doing so is best achieved through efficient processes around shopping, booking, fulfillment, itinerary management and reporting. Corporations need to apply travel policies to help maintain budgets and ensure the safety of employees. They must have access to com- Corporate Travelers Nearly 60 percent of all travel transactions are made by business travelers. plete, transparent flight information to help keep business travel expenses manageable and viewed by executives as worth the costs. needs of airlines, agencies and corporate travel want to make informed decisions, agencies want Technology companies are eager to make programs. to provide optimum service and value, and corpo- it all happen and keep everyone happy. The Travel distribution technology has histori- rations want to apply policy. reality … it can be done. As complex as cally led the way in enabling airlines to connect And corporations like it to take place during merchandising can be to effectively execute in to a wide reach of consumers. Global distribution the shopping process. Post-booking add-ons lead your daily operations, corporations have similar systems connect directly to airlines, facilitating to surprises en route and purchases corporations concerns. millions of interactive selling capabilities on a can’t track, report on or build into company travel daily basis such as real-time availability access policy. Merchandising Q&A and interactive seat maps. For example, XML Here are some questions to consider when connectivity alone drives 160 million transactions Do GDSs, Agencies And Corporations thinking about merchandising and its implications a day in the Sabre® global distribution system. Support It? for corporate travel programs. This volume and reach includes those who Change can appear painful and costly at first, book nearly 60 percent of all travel transactions but when taking a closer look, it’s understandable Is Airline Merchandising New For — corporate travelers. Significant investments are that airlines want to compete on product. GDSs Corporations? being made to ensure airlines are able to broadly, and agencies are in the business of supporting Merchandising is top of mind today, but it’s rapidly and efficiently distribute ancillaries to this airlines. A healthy airline industry benefits all the not really new. Of course, corporations want to high-yield customer base, utilizing new industry travel industry constituents, including agencies know how to integrate new options into their technical standards through ATPCO, ARC and and corporations. travel programs while still tracking and controlling IATA. It’s the GDSs’ role and the basis for the purchase behavior. And they want data in hand functionality they provide to support airlines in to provide a complete view of travel spend Do Industry Technology Standards efficiently distributing their full product line to the for program governance and preferred airline Preclude Airline Differentiation? broadest range of buyers possible. The GDSs performance tracking. For airlines, technology standards allow them for years have been leveraging technology to Airline merchandising has existed for many to quickly implement new products and services facilitate efficient distribution of the complete years in the form of corporate negotiated fares, in all sales channels to help differentiate their range of airline products in the corporate market. bundled fares, differential pricing for non-stop offerings and generate additional revenue. For The model is already proven, and if the technol- versus connecting service, bulk fares, different business travelers, technology standards allow ogy is in place and costs don’t rise, agencies will cabin classes and more. The ancillary approach disparate systems to communicate and present embrace it. represents a new layer of fare add-ons in a information side-by-side in an efficient, transparent model that is already built to sustain a complex manner to help them make informed decisions. The Corporate Travel Buyer marketing mix. With the right technology, airlines When the dialogue takes place about industry Airlines understandably seek to control costs can market and sell their products to millions of standards, it’s not about standardizing product. It’s and grow revenues. Exploring the ancillary model travelers while corporations can offer ancillaries about standardizing the technology that provides with unbundled pricing, product differentiation within the existing framework of their travel airline product information to travel agencies, and add-on features is one way. Another way is to program, helping them stay on budget. corporations and consumers. consider the economics surrounding how product is distributed and channeled to corporations. Can Technology Support It? Is Merchandising Just About Post- “On average, for a major network carrier, two- Technology to support merchandising within Booking? thirds of the airline’s revenue is realized through the corporate marketplace has been around for Corporate buyers need transparent product indirect channels including traditional travel agen- many years. It has kept pace and evolved with the information and pricing before booking. Travelers cies and online distributors,” said David Gross,

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senior vice president of airline distribution for travel policy and travel management workflow. offers, growing revenue for airlines and maintain- Sabre Travel Network ®. When it comes to an unbundled merchandising ing efficiencies for agencies and corporations. Indirect channels help provide airline prod- approach, the GDS has already implemented pay- Appropriately developed and deployed, these ucts to the broadest consumer base possible for-seats products. Airlines can promote premium standards lay the foundation for virtually limitless worldwide. And when talking about the broad seat products and charges, and shoppers can product differentiation — exactly what airlines are consumer base, 60 percent of it is business purchase. seeking.” travelers who provide significantly higher yields, For example, United Airlines’ Economy Plus The current fare filing system facilitated via resulting in even higher ROI on distribution costs. seats are accessible to travel agents and corpora- the Airline Tariff Publishing Company (ATPCO) Corporations need aggregated content tions using the Sabre GDS and GetThere online enables airlines to push both public and private (the majority of airlines in one channel) avail- booking tool. fares to GDS shopping engines used by agencies able through an efficient shopping process that “United has been very thoughtful about its and corporate booking tools around the world. enables complete visibility into their travel spend. Economy Plus strategy, and it understands the Hundreds of millions of fares are searched and The features included in corporate booking value the Sabre GDS provides,” said Suzanne sorted through in a matter of seconds to deliver tools such as GetThere ® are especially relevant Neufang, general manager of GetThere. “By product responses to corporate travel shoppers to corporate buyers. These systems are built offering its Economy Plus seats directly to cor- that align with corporate policy. specifically to support business travel policy, with porations, we believe that United will continue to Additionally, ATPCO recently implemented an features not found on disparate, direct airline better serve its customers and see an increase in optional services category, the OC field, enabling sites. Consider just a few examples: Economy Plus sales.” airlines to promote à la carte offerings in all sales Aggregated unused ticket information, United Airlines intends to leverage the tech- channels to gain new sources of revenue. The Corporate policy and preference icons, nology to boost sales through Economy Plus. ability to use this new ancillary fare filing capabil- Travel arranger user portals for executive assis- “Three out of four customers who purchase ity ensures travel booking data is integrated into tants and administrators responsible for mul- Economy Plus say they will do so again, and agency and corporate workflows. It provides vast tiple business travelers, we are pleased to build upon our current capa- differentiation opportunities for airlines to offer Customer profiles and complex itineraries, bilities in the Sabre GDS and make these popular customized products. Account code validation fields. seats available to even more customers through Consider that ATPCO supports nine frequent GetThere,” said Robert McDowell, managing flyer tiers and 130 currently defined ancillary cat- Solution Close-Up director of sales and distribution for United. egories. The custom merchandising scenarios are How is it done today? While industry standards “Extending this service agreement to our cor- virtually boundless. Airlines can use any number were in development, airlines already had the porate customers will provide more options for and combination of the 130 ancillary categories ability to distribute branded fares through the GDS business travelers to customize their trips.” across multiple frequent flyer tiers. This equates via unique functionality designed by Sabre Travel to billions upon billions of differentiated end prod- Network. With GDS technology, agents can see Merchandising Today And Tomorrow ucts — more than the number of people on the features attributable to bundled fares such as: With the strides GDSs and technology com- planet. This means current technology standards Premium cabin and service; panies have already made in a non-standard, can support the ultimate custom merchandising Refund rules; customized-by-customer merchandising world, scenario — granular, one-to-one marketing to the Change fees or restrictions; imagine what could be accomplished when the individual traveler. Other purchase features and requirements industry comes together to adopt existing tech- Collectively, it appears the corporate travel such as bundled seats, baggage and frequent nology standards. industry can and will support new airline merchan- flyer miles. “Again, we’re talking about technology dising initiatives that add value and are effectively These fares and attributes are available in the standards, not airline product standards,” said integrated into the corporate procurement pro- corporate environment via an online booking tool Gross. “Technology standards enable broad cess. Industry players including agencies and so companies can integrate the fare features into and rapid deployment of new merchandising corporations seek options as well as transparency and efficiency in the shopping and buying process. The marketplace will decide which airline merchandising initiatives and product offerings are the most successful. There are solutions at hand that some technology companies aim to provide without additional fees. Sabre Travel Network has made it clear it will distribute ancillaries across its user base, using the industry standards, at no additional cost. Airlines can differentiate and grow revenue, and agencies, corporations and consumers can provide and receive great service and value when travel shopping via the distribution channel they choose. a

Shelly Terry is senior director of airline merchandising for Sabre Transparency During the shopping phase, prior to booking, corporate buyers want transparent product Travel Network. She can be contacted information and pricing. at [email protected].

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BETTING THE COMPANY Aircraft manufacturers bet their success on two flagship products

During the halcyon days prior to the global financial crisis, both Airbus and Boeing made massive investments in the development of their new flagship products.

By Kay Denton I Ascend Contributor

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igh profile, widely anticipated launches of new aircraft attract attention. Every flaw and delay is subject to media commentary H and scrutiny. This begs a key question, “Are the start-up costs and risks of developing new-generation aircraft so great that a manufacturer has to bet the company on the success of its delivery?” In the days of high passenger-demand growth — 2005 through 2007 — airlines around the world ordered more than 6,500 aircraft. That included more than 200 Airbus A380s and more than 750 Boeing 787s, even though these two aircraft had never flown a single commercial flight. Then, however, the global financial crisis prompted airlines to rethink capacity decisions. Manufacturing defects coupled with production delays gave these airlines the

excuse to blame Airbus and Boeing for their Photo: Airbus continued financial woes. Both manufacturers have paid massive Airbus Delivers Despite lengthy delays, the Airbus A380 has been delivered to launch customer penalties on the two most innovative and Singapore Airlines along with several other carriers around the world. majestic aircraft to be conceived in recent history. The A380 and B787 aircraft have experienced serious delays. From this, amount of criticism for passenger displace- seller and a workhorse aircraft for airlines Airbus was the first to pay large penalties ment during the holiday season. across the globe. for manufacturing defects and its failure to Airbus invested between US$15 billion Launch customer ANA planned to unveil deliver. and US$20 billion since 1991 to develop the Boeing 787 in September 2009. However, The A380 entered into service with the A380. The manufacturer’s aim when delivery delays caused a setback until the Singapore Airlines in October 2007 after a developing this model was initially to build third quarter 2010. But before delivery could delay of more than two years due to produc- an ultra-high-capacity airliner and challenge occur, there was a fire onboard a test flight tion issues. Since then, it has been delivered Boeing’s dominance of the market. One in November 2010, which has pushed back to various customers including Air France, could argue that it has achieved both of delivery to the third quarter. Emirates, Lufthansa and Qantas Airways, these objectives in providing the largest ANA has ordered 55 B787s for operation often to operate high-profile routes. capacity carrier ever as well as increasing on both long-haul and domestic flights. The In the case of Emirates, it has proven its market share and decreasing that of airline plans to start operating the first B787 hugely popular with customers, resulting in Boeing’s. within one week of receipt. consistently high load factors. Customers In 2009, Airbus achieved 54 percent of “The move into commercial service takes seem keen to fly on an aircraft that offers market share in aircraft that have more a very short time,” said ANA President and spacious seats and aisles as well as a than 100 seats. Nonetheless, its new-found Chief Executive Officer Shinichiro Ito. “It smooth journey. leadership in this sector has come with could just be one week from the delivery.” Air France similarly flies the A380 on substantial cost. The A380 is a high-profile, Because of long delivery delays, ANA prestigious routes to New York, Tokyo and desirable flagship for the Airbus fleet. seeks compensation from Boeing despite Johannesburg. The carrier will serve Beijing, However, the complexity of manufactur- acknowledging that this is a regular occur- Mexico City and Washington Dulles, following has led to delays that have cost the rence in the industry between the airline and ing upcoming deliveries of the super jet. Toulouse, France-based company an untold the manufacturer. Ito believes that once the The downside to using the A380 for but very large amount of profits paid out to aircraft arrives it will be worth it, provided high-profile services occurs when there is airlines in penalties for late delivery. Boeing delivers what it has promised. an aircraft out of service without an A380 In January, Airbus announced the biggest Other carriers with orders for the B787 spare as demand exceeds the capacity of sale in aviation history when Indian airline include Ethiopian Airlines, JAL, Kenya replacement aircraft. The A380 capacity is IndiGo placed an order for 180 planes (30 Airways, Korean Air and Qatar Airways. almost double that of another aircraft. A320 “classics” and 150 A320-neos). Such The aircraft has more pre-production orders In November, following an uncontained an order early in the year gives a huge boost than any new aircraft. The aircraft model engine failure, Qantas Airways’ A380 fleet to the company; however, none of these should help transform, develop and grow the was grounded. Its entire network was orders are for the A380. airlines’ international operations. fraught with chaos while trying to provide “It’s definitely an attractive flagship for Ethiopian was set to be the launch cus- sufficient capacity in lieu of the super jet. airlines, but it will never be the mainstay of tomer for the B787 for Africa. Despite two It took a lot of time to reaccommodate anyone’s fleet,” said Richard Aboulafia, vice years of delays, the carrier also believes the displaced passengers. president of U.S.-based Teal Group. outcome will be worth the wait. However, Qantas only started reemploying its A380 This prompts the question, “Should the carrier has voiced concerns about the on the Los Angeles route on Jan. 16, Airbus have spent less money investing in handling of the delays. while the London route recommenced in the A380 and more funds in aircraft such as “Unfortunately, Boeing is not run by com- November. The airline received a substantial the A320-neo?” It has the ability to be a best mercial people,” said Akbar Al Bakar, CEO

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of Qatar Airways. “Boeing is run by bean counters and lawyers. We have some serious issues with them, and if they do not play ball with us, they will be in for a serious surprise.” Despite these concerns, as late as last December, Al Bakar maintained his confidence in Boeing in spite of his disap- pointment by the delays. As it looks like Boeing may now delay the delivery of the first B787 for production use until the third quarter there will undoubtedly be substantial penalties owed to its customers. Penalties certainly impact manufacturers’ bottom lines; however, airlines are not able to easily cancel orders. They typically must pay about 40 percent of the list price of an aircraft in pre-delivery payments. These payments are paid well in advance of the aircraft being delivered and are forfeited by the airline if the order is cancelled. Additionally, the payments acquire inflation costs. So, as the economy recovers, even airlines that have made orders are Photo: Boeing already seeing the cost of their aircraft ANA Compensation Dreamliner launch customer ANA seeks compensation after extended delivery increase in pace with inflation. The increases delays. in aircraft costs will undoubtedly offset some of the penalties. significantly with reference to their flagship the same number of passengers over the Because there are only two main suppli- developments. same distance as a conventional aircraft. ers of wide-body aircraft in the industry, it is Airbus sought to focus on specific high- The future looks promising for both the not a buyer’s market with unlimited choice. density routes where airport space and slots A380 and the B787. Orders are on the So airlines experiencing delays can only go to are constrained. It wanted a large aircraft increase as air traffic demand continues to the other competitor to secure a better deal. that could provide unprecedented lift and rise. The A380 has 40 aircraft in operation In doing so, they might experience a similar low costs per seat to service these dense with a further 234 on order, and the B787 delay for a flagship product. markets. has 847 orders to fulfill during the next While Airbus and Boeing are the only via- Boeing’s outlook with the conceptualiza- decade. ble options for wide-body aircraft, there will tion of its B787 Dreamliner was to construct Given the unprecedented attention both be fewer risks associated with these delays an aircraft of medium size but very long range aircraft have garnered and the substantial and manufacturing defects for suppliers. with outstanding operating cost characteris- impact they will have on the industry, it is Regardless of these penalties and the tics. (The aircraft is predominantly carbon fair to say that the manufacturers can focus potential loss of reputation, it appears that fiber, making it much lighter.) This would on more standard aircraft for the coming the introduction of these two innovative support point-to-point operations between years because they have delivered their aircraft were good decisions by the manufac- cities that are not super-high demand. showpieces. turers despite the massive risks. Airbus maintains that its approach serves Airbus and Boeing have had to bet their First, airlines and passengers have short the most markets, allowing connectivity success on these two flagship products. memories. Delivery difficulties were soon over major hubs. Boeing can point to a more However, it appears the investment is well forgotten when the A380 was finally deliv- tailored customer experience, resulting from worth the risk. Both aircraft types have ered. History will undoubtedly repeat itself an excellent travel experience between cit- sparked huge interest in the airline industry once the B787 goes into operation. ies where the true demand is growing. and advanced aviation into a new century of Second, critics aren’t always right. They Both companies are right. There is room in innovation. a thought the Boeing 747 would be short lived. the marketplace for both of these aircraft They believed production would cease after for exactly the reasons intended by the 400 aircraft. Despite skepticism, it exceeded manufacturers. the production of 1,000 aircraft in 1993. Furthermore, these aircraft both have Today, it remains a popular aircraft. outstanding “green” credentials at a time The Boeing 737, with production in when environmentally friendly transport is excess of 6,600 aircraft and more than 2,000 garnering a great deal of public attention. still to be delivered, is regarded the most The A380 is green because it carries up successful commercial airplane. These dif- to 800 passengers on a single flight. It is ferent examples show that flagship products less damaging to the environment because such as the A380 and the B787 have a good fewer flights are necessary to carry the chance for success even if there are difficul- same amount of traffic. Kay Denton is an account manager ties early in their introduction. Meanwhile, the all-carbon-fiber construc- in Europe for Sabre Airline The philosophies of the two major tion of the B787 makes the aircraft lighter so Solutions®. She can be contacted wide-body aircraft manufacturers differ it uses about 20 percent less fuel for flying at [email protected].

ascend 35 Growing Revenue 38 Silver Lining 43 Globally, Acting Locally Identifying suitable airlines with Joint ventures and equity partici- which to partner is multifaceted. pation across alliance members The process can be simplified with require new revenue optimization appropriate knowledge and tools. business processes to maximize the “global” revenue of mergers and joint ventures as opposed to the “local” revenue of each single member.

Two Is Better 58 46 Than One 50 The Sports Car The “merger of equals” between Southwest Airlines’ purchase of Avianca and TACA substantially AirTran Holdings gives the airline changed the landscape of access to new markets that appeal Latin America’s aviation industry. to leisure and business travelers alike. SPECIAL SECTION

Joint Ventures, Alliances, Mergers, Acquisitions, Consolidation Photo: Shutterstock SILVER LINING

Identifying suitable airlines with which to partner is multifaceted. The process can be simplified with appropriate knowledge and tools.

By Geoffrey Southgate | Ascend Contributor ASCEND I SPECIAL SECTION

he past decade has been challenging for the airline industry. But behind that dark cloud there’s a silver lining. It just had to be found. Many carriers around the Tworld found it through building strong, long- term partnerships with one another. Partnerships and mergers present an opportunity for strengthening airlines’ chances of long-term survival because they boost revenue generation through network sharing. They also promote cost reductions as a result of collective buying power and economies of scale. Most airlines have reached out to other carriers to build that ideal global partnership, whether through basic interline or codeshare agreements or through a more- formal alliance relationship with one of the three global alliances. Each solution offers pros and cons, but not all partnerships are right for all airlines. For some, it’s more than aligning. It’s a question of, “Why join them if I can buy them?” That’s where a merger or mega- Photo: TACA merger comes into play. “The trend toward consolidation will become more intercontinental in the next Latin Forces Airline mergers have been more popular in the United States and Europe until now with years than is currently the case,” said Latin America’s LAN-TAM and Avianca-TACA following suit. Stefan Lauer, the head of Lufthansa’s subsidiary airline brands. “It remains an While all airlines focus on many of these philosophies, as well as quickly create exciting topic.” drivers for success, attempting to do this on revenue opportunities, are essential to the The industry has witnessed a lot of con- their own presents significant challenges. success of the merger. solidation during the past 10 years among Uniting with others helps share the risk The prospective airline should also have some of the most powerful airline brands. and ultimately increases the opportunity similar processes and a culture that is eas- It has experienced higher intensity in recent for success. Merging with another airline is ily adaptable to ensure a smooth transition years with the announcement of multiple one way an airline can strengthen its market between companies. Speed for merging mergers … whether through investment or position, secure economics and have a seems to be a lesson from the past. The mutual agreement. Those most prominent tighter control over its destiny. longer the merger process, the more chal- being: lenges. Good examples of mergers that Air France-KLM, Making It Work have moved rapidly include Delta Air Lines- America West-US Airways, Shopping for an airline to buy or part- Northwest, where technology, processes American Airlines-TWA, ner with is not an everyday occurrence. and logistical locations were completed well Avianca-TACA, The investigative process can be lengthy within a two-year period. United-Continental British Airways-Iberia, and involves multiple interest groups. In expects to complete their merger in 12 to Delta Air Lines-Northwest, addition, there are legal and government 18 months. But for some airlines, such as LAN-TAM, regulatory concerns to be considered. US Airways, pilot contracts have dragged Southwest-AirTran Airways, Added to these daunting hurdles is the out for more than five years, creating many United-Continental. unfortunate knowledge that history is lit- challenges for employees and the new tered with mergers or partnerships that merged company. Key Drivers have, for many reasons, failed. “There have been more bad mergers Through extensive research studies, Choosing the right partner or partners is than good ones,” said Gordon Bethune, Sabre Airline Solutions® revealed several therefore paramount to the success of the former chairman and chief executive officer key drivers for airline mergers, including: merger. There are various factors to take of Continental. “It can take decades for Improves capacity utilization, into account in finding that right partner or airlines to fully merge operations, and many Enhances coverage of sales force, potential takeover candidate before con- mergers fail to produce the benefits that Provides the opportunity to consolidate sidering the overall cost and investment managers foresee and end up only eliminat- staffing levels, needed. ing flights and opening up opportunities to Improves economies of scale, To be successful, the ideal candidate more nimble competitors.” Smoothes out seasonal sales trends, should have a network or schedule struc- Using a consulting service to investigate Offers access to new suppliers or dis- ture that is compatible. It must possess and research the possibilities of a poten- tributors, markets with potential growth opportuni- tial partnership can help objectively look Provides a gateway to new technology, ties. Expanding a network is costly, so at potential candidates. An experienced Potentially reduces tax obligations, successfully leveraging existing markets consultant will delve deep to uncover his- Streamlines maintenance. that blend with an airline’s own business torical details, trends, successes, failures

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and potential future opportunities that will bad. But in the long term, public sentiment processes and services. Combining two provide valuable content to identify a viable can affect the potential success of the pro- previously competing cultures presents candidate and help move forward with the posed airline merger no matter how perfect a major challenge. As seen with British merger. the situation appears. This drives the need Airways-Iberia, it was made easier because Consultants from Sabre Airline Solutions for prospective partners to proceed with both airlines operated within the oneworld can determine how well a potential partner caution and take all aspects of the joining alliance under common service practices. will logistically integrate within the estab- businesses, including the social side, under Air France and KLM also worked together lished airline. They also identify possible extreme consideration. as members of the SkyTeam alliance prior challenges that could loom on the horizon. to merging. Thus, from the onset, they had The Perfect Partner like standards that made the merging of Public Perception Mergers have multiple faces, but general- cultures slightly easier through common While the theoretical review of what ly speaking, a merger is buying a controlling alliance standards. makes a merger work is important, one interest in or outright purchasing another Merging with a partner in an alliance other area is often overlooked. How will airline or even making a mutual investment appears to be a theme. Perhaps this is a key public perception view this merger? Public in each other. ingredient for identifying a potential partner perception can factor into the success — or Generally, airline mergers have an ami- that understands and operates using similar failure — of a joint venture. cable approach, after all this is not viewed service processes and has a complimentary In the past, the media has been critical as some hostile takeover bid, which is network. of airlines, and businesses in general, that witnessed in other areas of the corporate Compatibility is the key for establishing want to partner with their competition. world. Strategically, merging needs to make a smooth, successful airline merger. This Especially damaging is the idea that air- sense for both airlines to gain synergies is especially true when addressing another lines are “buying” competitors to create and improved efficiencies. It must be deter- critical factor … technology. an “unfair” advantage in the marketplace, mined, when weighing all factors, which which contributes to negative public companies make ideal partners. Merging Technology sentiment. Networks are the bread and butter Combined airlines can and do represent An article printed in London’s Telegraph for airlines, and this is the first area they better buying power, one of the main ben- in September harshly criticized British must consider when defining their merger efits of a merger. Increased buying power Airways and its merger with Iberia, claiming ambitions. The Delta Air Lines-Northwest equals reduced costs, whether for modern the merger wouldn’t work. merger, and even the United-Continental aircraft or IT systems. But what happens “Mr. [British Airways CEO Willie] Walsh’s merger, highlight clear, distinct network when these joining entities have two of pursuit of consolidation is more aggressive synergies that, when combined, comple- everything once they merge? than most, but his belief that it is the answer ment each other. Airline technology can be complicated to the industry’s chronic problems is widely The new Delta Air Lines was able to given that it spans all areas across the shared,” the article said. “The rationale add to existing trans-Pacific routes that organization — from reservations, airport goes like this: there is too much capacity. would support its domestic operations and check-in and aircraft support to planning Too many airlines, too many planes. Only strengthen its European presence, rounding and scheduling, network management, and by making acquisitions will airlines be able off a solid global network, which comple- Web services. These are all duplicated to cut costs sufficiently to restore profit- ments its alliance membership in SkyTeam. when two or more airlines come together. ability. The economic slowdown has already The United-Continental merger leverages Essentially, there are four technology spurred a renewed push for consolidation: Continental’s solid South America services options to consider with a merger: as well as the BA-Iberia deal, United Airlines and intra-Pacific/Asia connections with 1. Dominant partner — The governing and Continental are joining forces in the United’s trans-Pacific presence. airline in the merger dictates or directs United States. Will it work? I wouldn’t count Added to these market offerings, both that its solutions and processes are the on it.” merged airline groups have a strong alliance new standard. And then there are those who believe association that now can truly capture new 2. Best-of-both — Both airlines collectively passengers are victims of consolidation. market segments while effectively leverag- identify the best solutions from their “Perhaps the biggest losers among any ing combined fleets, crews, maintenance existing systems and create a new plat- merger are the die-hard loyalists — the elite operations and technologies. form based on the combined technol- frequent flyer who has sacrificed to main- For mergers such as British Airways and ogy. tain allegiance to one airline,” wrote Joel Iberia, which have mutually formed a coop- 3. The consultant — Industry experts work Widzer in a Forbes.com article. “Elite flyers erative operation via holding company IBA, on behalf of the joining carriers to iden- can suffer much the same way that employ- networks are closer linked or even overlap tify a proven alternative that provides ees will suffer from reduced seniority. The in some key markets. It was their com- a complete, fully managed, supported newly merged airline will transport a larger bined international services that made for turnkey solution. The consultants pro- pool of elite flyers with reduced capacity, a robust business against the competition, vide a fully integrated platform that meaning that the real prize of elite member- keeping customers within a single, shared, addresses all requirements of the new ship — first-class upgrades — will become seamless journey for longer, thus maximiz- organization. Going forward, the new harder to get. Essentially, any airline merger ing revenue opportunities for the holding organization would utilize and leverage will downgrade elite membership with over company. This can also be said of Air France new technologies and integrate new capacity, upsetting the already tenuous and KLM, which share many similarities of processes as part of the continuing solu- relationship between elite frequent flyers operation but are now strengthening both tion evolution. and loyalty programs. This could lead to a airlines through shared European services 4. Standalone — The airlines operate as loss of loyalty that airlines can ill afford.” and international operations. separate entities, running independently, You can count on everyone having an Another factor when identifying the but seamlessly, as partners of a joint opinion about this industry whether good or right partner is how to achieve seamless venture. They would continue using their

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existing platforms and processes the same in-sourcing program or they can subcontract it involved. Many airlines view this as a way to as many airlines do today within alliances. through a number of outsourcing options. take full control of their destiny. For example, Once the technology direction has been set, Air New Zealand has its own reservations and airlines must focus on how to implement the In Sourcing departure control systems that have evolved IT strategy to benefit the new organization(s). The new airline structure may elect to build through the years, integrating with new industry They can opt to do it themselves through an its own technology platform to suit all airlines requirements and taking advantage of new technologies such as the Web. Similarly, Emirates operates its own in-house solution called Mercator. Many airlines have also developed their own loyalty solutions. A downside to this approach is that technology is extremely dependent on the overall success of the airline and has to compete with other business units for valuable investment and operational dollars. It requires a capital outlay as well as dedicated resources for maintenance, upgrades, enhancements, etc., to remain modern.

Outsourcing: External Suppliers Airlines often partner with external suppliers, such as Sabre Airline Solutions, that employ industry-experienced experts with an in-depth understanding of airlines’ needs and requirements. A substantial benefit includes being part of a large airline community. This gives member airlines an opportunity to help define the direction of the solutions they use and offers a cost-shared option for acquiring advanced technology. External suppliers offer a wider range of services and solutions, allowing an airline to

Photo: Airbus better align its IT strategy with its business objectives and goals. External suppliers also offer consultative services that help identify areas for cutting costs.

Alliance Outsourcing An alliance can outsource services to an external supplier or to another member airline, the latter scenario a rare but nonetheless viable option. For example, it would work with other member carriers to determine if there’s a solution that can be utilized by another member airline or mimicked. The alliance could instigate on behalf of its members to develop a necessary solution. The airline then being a single point of contact can decide whether or not to subscribe to that solution. Additionally, the alliance could recommend services or platforms to its current or potential members to ensure consistency across the organization. Finally, the alliance could mandate services as part of an airline membership, again, to remain consistent throughout the organization.

Outsourcing: Airline To Airline Photo: American Airlines Although a rare option, there are situations where an airline outsources certain Top Airline Brands Merging isn’t new to carriers such as American Airlines and Air France, and it areas to another airline. In some Asian continues to be a popular practice among some of the most prominent airline brands. countries where the home airline owns the

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GDS or dominates the market, it can also To avoid angst among workers, leaders a cultural plus for employees in both camps supply the systems for other local airlines. from all joining entities must open the lines as well as opportunities within the new Within a merger scenario, it’s possible of communication with employees. They organization for enhancing careers. for two airlines in a cooperation to swap should always be spoken to in a direct, New opportunities for employees of the or share solutions within the merged orga- upfront manner. Employees shouldn’t read merged organization can abound. Airlines nization. This typically is part of the initial about a major event impacting their com- can better leverage employees from many negotiation that occurs between airlines in pany or hear it on the news. countries to contribute to the new sales and the process of merging. Executives from joining airlines should marketing organization, thereby addressing Even for what outwardly appears to be a any cultural sensitivities. simple passenger-service solution, the com- If the new organization deems it best plexity is massive. It spans many involved Highlight to implement a completely new technol- and adjacent service components that make ogy platform that is most suitable for up a fully rounded solution. the combined carriers, there are opportu- Sabre Airline Solutions has made sig- “The trend toward nities to overcome cultural differences. nificant investments to help solve some of For example, if all employees are facing these challenges, including: consolidation will retraining due to an overhaul of technology The Sabre® ASxSM Airline Services and processes, unification could be quicker Exchange offers a state-of-the-art cus- become more and smoother, given that now everyone is tom-domain rules engine, toolkit and equal in the new organization. application standards that utilize real-time intercontinental in data across an airline’s enterprise. This A Smooth Ride approach allows airlines to detect and Merging airlines is a complicated, com- proactively manage patterns in its busi- the next years than plex process. Juggling myriad aspects ness. This applies to both merged airlines can create a nightmare for prospective that need superior data models to help is currently the case investors. However, those who learn from strengthen their integration, or to airlines others’ mistakes as well as take advantage that need to marry their application to ... It remains an of industry expertise will find that joining existing Sabre Airline Solutions technol- forces can be a smoother exercise. ogy. exciting topic.” The consulting team at Sabre Airline SabreSonic® Customer Sales & Service Solutions is prepared to fully support air- multi-carrier platform capabilities enable a lines and their goals for growth or group of airlines to operate within a com- expansion. When joining an alliance or mon umbrella seamlessly. In doing so, — Stefan Lauer, head of Lufthansa’s acquiring another airline, these industry they still maintain their individual identi- subsidiary brands experts provide objective consultation to ties. This solution is ideal for airlines that, aid in the decision-making process through- for regulatory requirements, must remain out the engagement. They will help identify independent but need to operate seam- the right technology platforms that best lessly within a family group or holding suit the new organization and its goals, company. come together as a unified executive team whether in house or outsourced. a when addressing employees. They should Merging Cultures be as forthcoming as possible about the Merging cultures of two previous details, and they should give ample oppor- competitors into a single, unified team tunities for employees to ask questions. can present numerous challenges. For From the onset, employees should feel instance, if a work group, such as pilots like part of a winning team. That comes and flight crews, becomes disgruntled directly from the trust they have for man- as a result of the joint venture, they can agement and the enthusiasm that has been block merger talks and refuse to sign displayed by managers. new contracts in protest of perceived Next would be to get through the pro- disadvantages from the proposed merger. cess quickly. Lengthy, protracted mergers It took US Airways five years to resolve a lead to an increase in disgruntled employ- pilots’ dispute over seniority following the ees and a loss of productivity. The need merger with America West. to rapidly provide a sense of unity within Employees have considerable influ- the new organization, again, through open ence on the successful outcome of conversations with clear direction, aids a merger. Often times, one group of the creation of team spirit as the merger employees feels like the underdog; as if progresses forward. the group is at a disadvantage compared Those that acquire their competitors to the other group. And there’s always outright must determine the location of the fear of layoffs due to duplication of the new organization. For example, Delta resources. That type of negative environ- Air Lines defined its existing headquarters Geoffrey Southgate is a solutions ment causes anxiety and insecurity as in Atlanta, Georgia, as the new combined manager of alliances and well as puts a damper on morale. It breeds location. Similarly, United and Continental partnerships for Sabre Airline negativity, which leads to a dysfunctional will share locations for specific functions in Solutions. He can be contacted at environment. both Chicago and Houston, thus providing [email protected].

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Growing Revenue Globally, Acting Locally New revenue optimization business processes maximize global revenue for airline partners

Joint ventures and equity participation across alliance members require new revenue optimization business processes to maximize the “global” revenue of mergers and joint ventures as opposed to the “local” revenue of each single member.

By Alessandro Ciancimino | Ascend Contributor Photos: Shutterstock

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he revenue management system Sabre ASx Environment of each airline in an alliance, with few exceptions, maximizes the revenue of that particular airline. Therefore, an airline may reject an itineraryT if the transfer price undervalues the real-time value of its seats. This is true even Products if the total revenue from the itinerary, across Airline SOA Mash-up Mash-up Application A Application B Application C multiple carriers, is large. Orchestration Container A Container B (e.g. Revenue (e.g. Revenue (e.g. (A-is Management) Integrity) Airline.com) Thus, inventory control rules in a global salesforce.com) alliance environment are often dictated by the local, single-airline-related, revenue-optimiza- Componet Systems tion procedures. Itinerary Analyzer Show-up Forecaster Fake Name Analyzer Availability Given the deficiencies of such static Demand Forecaster Pricing schemes, some airlines are considering Event Process Availability Optimizer dynamic methods including the use of the and Services real-time opportunity costs of seats (or bid Core Platforms Repository prices) as transfer prices. In this industry, there Business Process Mgmt Data Analysis Framework Data Viewers Data Synchronizer is interest in such dynamic schemes but also much uncertainty. Event Publishing Data Services Action Services There are certainly technical and regulatory barriers to implementation. However, another ODS significant barrier is uncertainty over how revenue-maximizing airlines would respond Extended data and react to dynamic schemes. Standard data At times, accepting a booking on a segment is profitable for the alliance but not for the operating carrier. Therefore, procedures and Integration a real-time proration methodology must be Data Feeds Actions agreed upon. Alliance revenue optimization is question- able when alliance partners are insulated from

each other and there is no joint venture in Operational Systems place. However, when there is equity participa- Ticketing, tion among carriers or for markets operated Inventory Distribution Reservations Revenue Fulfilling (Check-in) under a joint venture agreement, global opti- Accounting mization becomes a must. In fact, when airlines scratch the bottom of the revenue barrel to exploit the full commercial potential of markets, leaving revenue Revenue Generation The evolution of industry consolidation, mergers and acquisitions, joint ventures, opportunities on the table due to inadequate and alliances poses business challenges to airlines. Revenue management processes can address such business processes or technology barriers is challenges to exploit the full potential from a revenue-generation standpoint of global entities while act- unacceptable. ing locally at each individual airline level. Sabre ASx Environment can be leveraged in this respect. Though such a statement seems straightforward, its implication in the operational environments of the individual airlines is not Air operator certificates (AOCs), from a pure operations perspective but also straightforward at all. It requires a whole new Employment contracts, from an IT perspective. set of capabilities from a technology viewpoint Different (to some extent) IT systems. The same issue is valid for joint ventures to enable new business processes. British Airways and Iberia represent a where, by the nature of the agreement itself, Airlines must understand the new set of merger where the International Airlines the carriers keep their operational indepen- business requirements and how technology Group (IAG) is the TopCo and British Airways dence. What this means from a revenue has evolved to address them. To do this, it’s and Iberia are the OpCos. The extent and management perspective, for example, is how best to start from a high-level picture of the timeframe in which the IT systems of to optimize the TopCo’s or joint venture’s rev- how consolidation is shaping up in the airline the OpCos are and will be kept distinct is enue when the OpCos or the operating carriers industry. still to be seen and understood. of the joint venture operate distinct inventories The corporate structure of airline mergers This certainly won’t be established in a through different IT systems. is often designed to have a “top company” short period of time and will depend on the Optimizing revenue generation locally, for (TopCo). It typically includes all corporate com- structure of the merger. There are examples instance, performing the revenue manage- mercial functions of the merged entity and at in the industry of entities that merged ment function independently and locally within least two operating subsidiaries (OpCos) that almost a decade ago where OpCos are still each distinct inventory, maximizes the revenue are the capacity providers of the TopCo. almost insulated from each others’ core IT of the OpCos individually. This, though, clearly OpCos incorporate operations-related func- systems. does not represent the revenue maximization tions of the merged entity and often are A key priority is addressing how to run of the TopCo, which ultimately in joint ventures kept as separate operating entities with, for the commercial function of the TopCo when and mergers is the shareholders’ objective. example, different: the OpCos behave not just independently This is a straightforward, practical example

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of the well-known difference in mathematical business process management tools to enable events, and enables applications to sub- programming between local and global optima, sophisticated performance analysis and the scribe to and generate new events. where the objective function value (in this case design and implementation of new processes. Data Services enable applications to get the alliance or joint venture revenue) at the This holistic approach liberates airlines from data from the domain layer in standard XML local optima is worse than or equal to the value the constraints of legacy systems, enabling format by a variety of criteria. It also allows at the global optimum. In other words, the them to enhance operational effectiveness applications to define new entities/attributes global optimum (the TopCo revenue maximiza- and align IT to support key business objectives and modify that data. tion) does not coincide with the maximization and goals. Action Services provides a unified manner to of the revenue of the OpCos independently. Operational systems implement the stan- execute actions on the operational system. The same rationale about revenue manage- dard airline processes. These include areas These actions are sent to the integration ment holds for mergers and joint ventures such as: layer, which executes them using system around other functions as well, such as cus- Reservations, plug-ins. tomer service, FFPs and any customer data. Ticketing, Other components are there to simplify All in all, the requirement that manifests Fulfillment, writing certain classes of applications. They itself as one of the key success factors for Revenue management, include: mergers and joint ventures is how to share, Revenue integrity, Business process management, access and act upon OpCos (or joint venture Revenue accounting, Data analysis framework, carriers’) data across the board and in real Movements, Data viewers, time. Simply put, the new mantra for mergers Schedules. Data synchronization. and joint ventures is how to make any OpCos The ASx exchange does not replace the Business process management enables data available and actionable by any other operational systems of OpCos. Rather, it pulls creation of multi-step rule-based applications. OpCo in real time and at a reasonable, if not out valuable services and applications to be Each step consists of a condition and a set of negligible, cost. implemented at higher levels with a uniform actions that are executed when the condition In the prior revenue management example, software development kit and data model. is fulfilled. Between process steps, there exist such capability would translate into sharing bid This enables viewing the order as a whole states that allow waiting for a certain time until prices in real time across OpCos or joint ven- as opposed to breaking it up into processes/ the next step is executed. The steps can be ture carriers. Or, to an extreme, it would make silos. The operational systems are integrated executed automatically or with manual inter- OpCos‘ inventories available to the TopCo to into the ASx architecture through the integra- vention. BPM is event based and executed allow it to perform global revenue manage- tion layer, which abstracts the systems and whenever the data changes. ment and provide globally optimized bid prices provides a common interface to the higher The data analysis framework provides a to the OpCos. layers. programming model to implement modules Beyond revenue management, the need is There are two directions to integrate the that analyze incoming data elements for for sharing real-time data such as passenger flow of incoming data as well as actions on the specific situations (such as cancellations and name records, ticketing data, FFP data, etc., operational system. no-shows). It also adds the result of the to overcome the barriers of OpCos operating analysis to the data elements using dynamic different systems. Domain Layer attributes. The Sabre® ASx SM Airline Services Exchange The domain layer consists of a near real- The domain and core platform layers enable can be leveraged in this respect. Such tech- time database as well as the population and airlines or vendors to build components and nology changes the paradigm for realizing data integration logic. This layer provides a applications in the ASx architecture. The goal is real-time availability of actionable data when common data model for the airline industry. to allow extending applications by interchang- coming from different sources within the same It is the basis for writing applications that ing components. For example, an airline or organization or across different enterprises. require information derived from multiple a vendor might provide a good forecasting The ASx advanced environment for appli- systems. module that an airline would like to incorporate cations and integration increases airlines’ The data model is not affected by old into its revenue management system. business performance and agility by removing legacy data models (such as PNRs). It pro- Airlines or vendors are free to use any the constraints of legacy systems, associated vides better support for automation. The technology to implement their applications, silo processes and sub-optimal workflows. It core data can be extended to higher lay- provided they can communicate with the stan- provides technology for designing, implement- ers by adding attributes to existing entities dard Web services in the domain layer. ing, managing and automating new processes (dynamic attributes) and introducing new The ASx exchange has the potential to to optimize operational effectiveness and sup- entities (dynamic entities). empower commercial, planning and opera- port the introduction of differentiated services Thus, applications do not need to maintain tional processes across different OpCos. For that enhance the travel experience, improve their own copy of the data elements and mergers to run global processes maintaining passenger loyalty and increase revenues. added attributes with the benefit that the distinct operating environments, it’s a must Legacy systems have created operational added data automatically becomes available have. a silos within airline organizations. This pre- to other applications. vents data sharing and leads to sub-optimal processes and workflows. As a consequence, Core Platform Layer carriers are restricted by the capabilities of The core platform layer provides basic these systems and associated working prac- services to applications in the ASx environ- tices. As a result, they are unable to effect ment. Applications do not directly access strategic business change. the database. They access data through The ASx exchange breaks down these silos services. Alessandro Ciancimino is general by layering over existing systems to create The three core components include: manager in Europe for Sabre Airline a unified data layer and common process Event Publisher generates core events Solutions. He can be contacted at platform. It provides business intelligence and as data changes, allows defining custom [email protected].

ascend 45 Two Is Better Than One Avianca-TACA merger forever alters Latin America’s airline environment The “merger of equals” between Avianca and TACA substantially changed the landscape of Latin America’s aviation industry.

By Lauren Lovelady | Ascend Staff ASCEND I SPECIAL SECTION

hile much of the world’s avia- partnership draws equally from both carriers. tion industry has struggled Despite the seemingly inequitable share dis- in recent years, the emerg- tribution, the partnership has been called a ing Latin American airline merger of equals. It is specified as such under industry has experienced the shareholder agreement governing it. Wabove-average traffic growth. Many industry “Avianca and TACA are successful brands analysts and the region’s airline executives in very distinct markets,” said Estuardo Ortiz, believe there is still significant growth potential, chief operating officer for Avianca-TACA. “Both especially for carriers willing to rethink their airlines have unique strengths, and each makes strategies and operate proactively. an equal contribution apart from pure numbers.” As with the rest of the global market, TACA brings to the table international opera- the current trend in Latin America is toward tions experience, with O&D networks across airline consolidation. This would result in fewer, South, Central and, particularly, North America. bigger and stronger carriers that are better The carrier also has expertise in the manageable to withstand competitive pressures, eco- ment of a multi-carrier and multi-hub business nomic downturns, volatile fuel prices and other model across a number of countries. Avianca challenges. has a strong presence in Colombia and other Even airlines with successful individual South American markets. Its wide-body aircraft brand identities, such as Avianca and TACA, are operations open the door to new passenger forming partnerships to capitalize on opportuni- and cargo opportunities from San Salvador and ties to: Lima. Obtain stronger market position, More than operational compatibility, the car- Develop geographically diversified networks, riers also share similar customer and brand Offer increased choices and more efficient strategies, including a commitment to high- connections to passengers, quality service. In addition, both airline cultures Enable reinvestment in product offerings to focus on talent development within their improve customer service. respective operations. “The talent and commitment of the people Merging Strategically of Avianca and TACA, aligned with the same In February 2010, privately owned Colombian objectives and similar cultures, is a major advan- flag carrier Avianca formed a strategic merger tage,” said Ortiz. “With these shared strengths with Grupo TACA, an El Salvador-based airline and values, the new airline group will be able that has been owned by the Kriete family to capture synergies faster and create value since 1961. Avianca holds a 67-percent stake sooner. in the partnership, while TACA has 33 percent. “The partnership will capitalize on two of The new management team overseeing the the best-known airline brands in Latin America

Avianca-TACA merger forever alters Latin America’s airline environment Photo: TACA

TACA And Avianca The new merger partners seldom compete for customers given that there is only a 1 percent overlap between their route networks.

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increased demand for air travel. It makes sense for airlines to continue to look for partnerships to capture most of the ever-growing markets.” Recent acceptance of Avianca-TACA into the Star Alliance further solidifies the partnership’s standing in Latin America. And it opens the door to myriad global opportunities through the 28-member alliance. “Becoming part of the largest and most important global alliance is a major step forward in our commitment to establish our airline as the best in the region, supported by our operational standards and exceptional service,” Ortiz said. “We will be able to offer our passengers travel alternatives to approximately 200 countries.” The carriers project a continued growth in passenger traffic resulting largely from its ability to capture new market opportunities and

Highlight “We operate in an

Photo: Avianca emerging region with a Merger Of Equals While Avianca holds a 67-percent stake in the partnership with TACA, the two still growing economy, consider it a merger of equals. resulting in an with world-class product offerings, strong hubs replace them with newer, more efficient planes and complementary networks, as well as two in terms of capacity and fuel consumption. increased demand for uniquely entrepreneurial and service-oriented “We are in the process of defining a single cultures with highly motivated employees.” Airbus A320 configuration for the partnership The strategic merger, however, does not that utilizes each airline’s best practices in terms air travel. It makes create a single airline — at least at this time. of avionics and interiors,” Ortiz said. “This will Both TACA and Avianca have strong customer provide us with great synergies. However, sense for airlines to bases. This makes their individual brands we don’t feel it’s necessary to move to a valuable assets that they plan to retain for single fleet type. Instead, we are looking into continue to look for the foreseeable future. Because there is an optimal combination of aircraft to serve our only a 1 percent overlap between the two five-year and long-term network plans.” partnerships to capture carriers’ route networks, Avianca and TACA rarely compete for the same passengers or Altering Latin America Aviation most of the ever-growing revenues. The impact of the merger — the first in “We are focusing on harmonizing the Latin America — reaches well beyond the two markets.” service levels and standards so we can deliver carriers’ daily operations. It significantly alters the exact same customer experience at both the landscape of the region’s aviation industry airlines,” Ortiz said. “Then, and only then, and creates an airline network comparable to will we consider having only one brand, and the size and scope of some U.S. and European — Estuardo Ortiz, chief operating it will be based on customer research and in carriers. officer, Avianca-TACA the best interest and success of the airlines.” Together, the airlines offer more than 100 Instead, the focus is on the creation of destinations throughout Latin America — the synergies to build a financially strong partner- largest number of any airline. In addition, there ship with the opportunity to generate myriad are further opportunities for more efficient improve service offerings rather than from synergies and provide more stability for the connections, increased frequencies and the drawing market share away from other Latin approximately 12,000 employees now part expansion of services within the Americas and American carriers. While the merger provides of the new airline company. The merger will to Europe through Avianca-TACA’s Bogota, San Avianca-TACA with a competitive edge in the also generate new cost savings in the range Salvador, San Jose de Costa Rica and Lima region, particularly if seat capacity eventually of 2 percent to 3 percent as the two carriers hubs. outpaces demand for travel, the focus is more renegotiate supplier contracts. “Avianca-TACA took the first step in Latin on building a profitable network and stimulating A key step in the creation of uniform America,” Ortiz said. “And we expect to see economic growth. The combined airlines carry service standards is the simplification and that trend continuing as we did last year with around 15.4 million passengers annually, and upgrade of the airlines’ combined fleet of 129 the announcement of a merger between an effort is being made to communicate the aircraft. A fleet renovation process will phase LAN and TAM. We operate in an emerging benefits of the merger to each one. Customer out Avianca’s current Fokker aircraft and region with a growing economy, resulting in an reaction, Ortiz noted, has been very positive.

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“We recently entered the Peru domestic mar- partnership, this includes a comprehensive three- from each airline,” Ortiz said. “Growth oppor- ket, for example, with the objective of developing year synergy plan detailing specific priorities tunities are increased, and protection against a that market to reach its full potential by offer- and resources. A continued focus on the base volatile industry is enhanced. When a merger is ing more options to passengers and therefore business of operating an airline is important well executed, competitive advantages can be positively stimulating tourism and business travel throughout the transition as well. enormous and truly strengthen the airlines.” within the country,” he said. “The key success factor,” Ortiz emphasized, As for the Avianca-TACA strategic partnership, “As we grow, we naturally increase employ- “is about people and change management. You the roadmap has been developed, the journey is ment opportunities in the countries where we must prioritize, focus, watch the day-to-day opera- underway, and the destination determined. operate,” Ortiz said. “Our employees benefit from tions and take care of people.” “We have a short-term focus with a long-term the partnership’s greater geographical diversity vision. Our vision is clear: To be the preferred Latin and stronger platform for career development.” Envisioning The Future American airline around the world and the best Many aviation industry analysts and airline place to work while generating superior value for Key To Success executives worldwide, including Ortiz, believe our shareholders,” Ortiz said. “We believe we Both airlines have previous experience with the the industry will further consolidate as increas- have all the elements to fulfill that vision. acquisition and consolidation of several smaller ing numbers of carriers realize the benefits of “We have been very successful in the past as carriers into their current business models. Even mergers, alliances and partnerships. In the Latin separate airlines, but we are convinced we are so, the strategic merger of the two Latin American America region alone, there will most likely be more competitive and more sustainable after the carriers has not been without challenges. two or three major carriers in the years to come. merger.” a “Without a doubt, a multi-carrier business In addition, revenue-sharing and joint-venture model has several complexities,” Ortiz said. initiatives with U.S. and European carriers may “However, our past experiences have taught soon develop in the region. This provides Latin us how to manage this type of model, and we American airlines with the benefits of partnerships believe we are very well positioned to unite without the complexities of traditional mergers Avianca-TACA under a similar business model.” and acquisitions. A critical component in the success of any “Partnering two compatible airlines allows the merger, he said, is a well-designed roadmap parties to combine the best practices, the best tal- Lauren Lovelady may be contacted of the implementation. For the Avianca-TACA ent, the best strategies and the best experiences at [email protected]

+count it up

87.6 0.2 3,754 The percentage of 2010 on-time The percentage increase of workers The approximate number of airports arrivals for U.S. carrier Hawaiian employed in December 2010 over the served by airlines through a route Airlines, which had the highest same period in 2009 by U.S. scheduled network of several million kilometers on-time performance last year passenger airlines, according to the U.S. managed by approximately 160 air followed by United Airlines with 83.1 Bureau of Transportation Statistics. navigation service providers, percent and AirTran Airways with according to enviro.aero. 82.1 percent, according to the U.S. Bureau of Transportation Statistics.

25 6.7 million 20 decibels The percentage of which all company’s The approximate number of direct The amount by which aircraft entering sales are dependent on air transport, tourism jobs that are supported by the today’s fleet are quieter compared to according to enviro.aero. The website spending of international visitors aircraft 40 years ago, according to said 70 percent of businesses report arriving by air, according to enviro.aero. enviro.aero. A further 50 percent that serving a bigger market is a key As such, air transport helps improve reduction in noise during takeoff and benefit of using air services. living standards and alleviate poverty. landing is expected by 2020.

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The Sports Car Southwest Airlines’ acquisition of AirTran Airways opens new opportunities

Southwest Airlines’ purchase of AirTran Holdings gives the airline access to new markets that appeal to leisure and business travelers alike.

By Mark Hess | Ascend Contributor and Lynne Bowers-Dodson | Ascend Staff Photos: Shutterstock

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uying a flashy sports car has long share at Boston Logan and New York LaGuardia. fundamental changes that have occurred and will been held as a tell-tale sign that a Southwest expects the acquisition will generate occur in the U.S. airline industry over the next man is speeding toward a mid-life roughly US$400 million in annual savings by 2013. few years is the dramatic growth of low-cost crisis. The stereotypical event is “Combining with AirTran makes good business Southwest Airlines.” triggered usually when the man sense for Southwest; it can add 38 cities relatively Southwest grew organically and through acqui- realizes he wants to take a new quickly, and many of these new markets are on the sitions during the 1980s and 1990s. In the mid Bdirection in life rather than traveling down the East Coast, where Southwest has had weak cover- 1980s, it bought Dallas, Texas-based Muse Air. same path. Similarly, does AirTran Airways age,” said Tom Parsons, CEO of BestFares.com. Nearly 10 years later, it acquired Salt Lake City, represent the “sports car” that signals a new “Without this acquisition, it would take Southwest Utah-based Morris Air. phase in the life of Southwest Airlines? eight to 10 years to add that many new cities.” In 2005, it purchased assets from bankrupt ATA, Business experts acknowledge that at some but in 2009 it suffered a setback when it lost a point in the lifecycle of every business, stake- The Maturing Maverick bankruptcy court-sponsored auction to buy Frontier holders come to the realization that fundamental From its modest beginnings, linking Houston, Airlines Holdings, Inc. Undeterred, CEO Gary Kelly change is needed. The first course of action is Dallas and San Antonio, Southwest Airlines was said the carrier was still in the market for another coming up with a vision of where the business is a maverick set on revolutionizing air travel. It was deal. So it’s puzzling that the AirTran Airways headed. affordable and it was fun. Its freewheeling culture, acquisition last fall took much of the industry by For Southwest Airlines, the US$1.4 billion which famously showcased “hostesses” wearing surprise. Their route structures are complementary. AirTran Holding purchase last year signals that it skimpy hot pants who kept up an exuberant banter And of their combined 604 unique markets, only 26 envisions a future where extended service to new with passengers, was in stark contrast to the but- are served by both, less than a 5 percent overlap. domestic and international markets will accelerate toned up network carriers. In a PBS interview, USA Today columnist and its goal to boost profits and achieve financial Throughout the 1980s, Southwest remained industry analyst Ben Mutzabaugh said the merger targets. the scrappy upstart, pioneering a new type of makes it apparent that Southwest plans to trans- The blockbuster deal will create the most expan- low-cost, low-fare, low-frills flying experience. It form itself from a no-frills carrier into one that is sive network of any low-cost carrier in the United disproved the prevailing notion that passengers more focused on business travelers. States. It will also give the airline a chance to grab preferred service over price and stole market share “If you are going to be a serious business business travelers in the nation’s busiest markets. from major carriers. travel [carrier], you have got to be in the markets Through the merger, Southwest, which already The carrier’s “cookie-cutter” method of mov- like Washington Reagan National, New York La carries more domestic flyers than any other U.S. ing into a new city and sharply cutting fares and Guardia, Boston and Atlanta,” he said. “And this airline, will for the first time go head-to-head driving up traffic was a driving force for dropping merger really positions them for that.” with Delta Air Lines on its home turf at Atlanta’s overall fares in its new markets. The so-called Wall Street Journal analysts observed that Hartsfield-Jackson International Airport, the busiest “Southwest Effect” was a phenomenon studied Southwest has hinted for some time that it wants passenger airport in the world. It will also gain in business schools and by the U.S. Department to shed its mantle as a traditional low-cost car- access to Reagan Washington National Airport in of Transportation. In a 1993 report, DOT observed, rier. When the merger was announced, the news Washington, D.C., as well as capture increased “The principal driving force behind dramatic agency remarked that Southwest “is planning Photo: Southwest Airlines

LCCs Consolidate Southwest Airlines’ purchase of AirTran Airways forms the most expansive network of any U.S. low-cost carrier.

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a raft of measures as it seeks to transition from a discount airline. The moves include a recently unveiled revamp of its frequent-flyer program to boost its appeal to high-value business travelers, a new reservations system, its planned US$1.4 billion takeover of discount carrier AirTran and the purchase of bigger planes.” Still, Southwest executives say they have no plans to stray too far from the essential elements that have allowed the airline to post profits for the past 37 consecutive years. “We have open seating; we have no plans to change that,” said Gary Kelly in a press release announcing the merger. “We don’t charge for bags; we have no plans to change that. We have single-class service; we have no plans to change that.”

Driving Change Conventional management wisdom says that companies, like people, must pass through a life cycle. Blogger Donald Sull, faculty director of executive education at London Business School, describes the progression. “Start-ups begin their life in a period of rapid- fire experimentation, pass into the organizational Photo: Shutterstock equivalent of adolescence as the company scales US$1.4 billion purchase The purchase of AirTran Airways last year offers Southwest Airlines immedi- its business model, eventually mature into the ate access to 38 cities on the U.S. East Coast. dull reliability of middle age, and then lapse into unavoidable decline,” he said. Sull rejects the inevitability of the metaphor, A merger will also open up more choices Southwest no longer seems as low-priced as it had pointing out that companies do not pass through to budget-conscious leisure travelers since the been. Perhaps that change is already under way.” lifecycles. Opportunities do. Companies can avoid Southwest Effect most likely will compel other David Grossman, veteran business traveler and mid-life crisis and decline simply by seizing oppor- carriers to match its low fares to virtually every former airline executive, also voiced concern that tunities. And that’s exactly what Southwest and corner of the country. the Southwest-AirTran Airways deal may have AirTran Airways executives did last year as they Last September, Parsons told USA Today implications beyond the merger of two airlines. read the handwriting on the recessionary wall. reporters, “America needs this now. With this By agreeing to merge with Southwest, Both carriers recognized that a flurry of leg- deal you can now go just about anywhere in the Grossman posits that AirTran Airways executives acy consolidations, such as Delta-Northwest country, and to the Caribbean and Mexico, on have conceded that their business as a stand-alone and Continental-United, as well as the expan- Southwest. All the legacy airlines will have to set airline was at risk. If other low-cost carriers concur, sion of alliances, had created behemoth their prices based on whatever Southwest does.” he said in an article he wrote for USA Today, “this competitors for low-cost carriers. That com- will likely not be the last merger or major action bined with rising oil prices left stand-alone, The End Of An Era? taken by an LCC. It could spell the end of LCCs low-cost carriers particularly vulnerable. Not all industry insiders agree with Parsons’ as we know them if more consolidate, join alli- When the merger announcement came, assessment that fares will remain competitive ances or morph into something better resembling AirTran Airways CEO Bob Fornaro stressed in with a new super-sized Southwest. In fact, some traditional network airlines. That may not bode well a conference call with reporters that his airline think the opposite is just as likely. for those who have enjoyed an extended spell of had “done a lot with not much” in terms of Chief among the naysayers is blogger Carl low airfares.” financial resources, but that it was becoming Unger, who writes for Today in Travel. Only time will tell if Southwest Airlines’ midlife less clear that AirTran Airways had the ability “Southwest’s costs have risen dramatically opportunity becomes a midlife crisis for a struggling to grow and remain competitive in an industry over the past 18 months, and are currently the low-cost carrier business model. Or perhaps the where the size of a carrier’s route network is highest among low-cost carriers,” he wrote last merger is added to the long list of things the carrier increasingly important. October. “Its costs are still well below those of has done well throughout its impressive history. a “Southwest has, relative to AirTran, vast United, Delta or American, but the gap is shrink- resources,” Fornaro said. It became clear ing. More and more, too, Southwest seems to that “we could do more with Southwest be morphing into a somewhat traditional network resources” than AirTran Airways could do on carrier. its own. “Southwest has major hubs, especially in The combined airline will fly more than Baltimore, Chicago and Houston, and funnels 100 million passengers a year out of more much of its cross-country traffic through those than 100 airports in the United States, the cities. All of this — plus the fact that Southwest Mark Hess is manager of airline planning Caribbean and Mexico. And by creating a truly is eliminating a major low-cost competitor — sug- consulting for Sabre Airline Solutions. nationwide low-cost carrier, the merger will gests Southwest’s role in the airline industry could He can be contacted at mark.hess@ make Southwest a tougher competitor in the be on the verge of changing. Even before the sabre.com. Lynne Bowers-Dodson can be lucrative domestic business-travel market. merger, SmarterTravel readers were noting that contacted at [email protected].

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The Game Changer History was made in the world of flight planning as Sabre Airline Solutions® acquired Austria-based f:wz and incorporated its flight planning software and services into its enterprise operations business.

By Michael Hoppin I Ascend Contributor Photos: Shutterstock

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n average flight planning system Highlight by Capt. Raimund Zopp, Capt. Gregor Resch, simply isn’t enough … not for Peter Radler and Christoph Prinz, who were the world’s most successful air- quickly considered innovation leaders. They lines. They need advanced flight “f:wz is an outstanding built a strong customer base of more than planning technology to support 20 airlines with operations around the globe. one of the most important aspects of their company that has set new, They continued to set the standard for flight Abusiness. And that’s why it was critical for plan cost efficiency, building on the collective Sabre Airline Solutions to embark on a large talents of an employee group with real-world investment project to ensure airlines around innovative standards in airline experience. the world had access to leading flight planning The benefits for airlines around the world solutions. cost reduction and fuel come from combining Sabre Airline Solutions’ As part of the initiative, the technology large customer base and the industry’s most company conducted a build-versus-buy analy- optimization within the capable and comprehensive enterprise opera- sis to determine the best approach to offering tions portfolio of products and services with airlines an unmatched flight planning solution. flight planning industry.” one of the industry’s premier flight planning The analysis indicated an acquisition was the products. best approach for the future of flight planning, As a result, airlines have access to and after an extensive search, f:wz presented unmatched flight planning technology in addi- a perfect match, offering a best-of-breed flight — Steve Clampett, president of airline tion to Sabre Airline Solutions’ industry-leading planning solution. In September, f:wz was products and services, Sabre Airline crew management and crew services, flight acquired, and its solutions were incorporated Solutions operations and tracking, and airport resource into Sabre® AirCentre™ Enterprise Operations. planning and management products and Sabre Airlines Solutions will leverage the services. strengths that both systems bring — its The incorporation of f:wz’s technology and previous flight planning system along with services into the Sabre AirCentre Enterprise the newly added technology — and continue has the opportunity to support the combined Operations portfolio has been described as investing in the combined system to offer the United/Continental merger. It is impressive “game changing” by current and prospective most powerful flight planning solution avail- that a large carrier such as United has selected customers alike. able in the industry. Through the acquisition, a small entrepreneurial company like f:wz, and Several global carriers support the value of the company now offers a “connected” data now United has Sabre Airline Solutions behind the acquisition, including: service bureau offering to provide multiple lev- it to provide a new foundation for growth as it els of support services and outsourced flight becomes the largest airline in the world with Virgin Atlantic Airways planning services. It will continue to leverage the Continental merger.” “Virgin Atlantic Airways considered the the SaaS (Software-as-a-Service) model in A relatively small company of 60 employ- acquisition a very positive move for f:wz and combination with data and flight planning ees based in Vienna, Austria, f:wz was a fairly Sabre Airline Solutions and looks forward services to provide a cost-effective overall new player to the flight planning industry, hav- to the ongoing support of Sabre in Virgin technology solution to its customers. ing entered the ring in 1987. It was founded Atlantic Airways’ operations. We, along with The f:wz solution has been renamed Sabre® AirCentre™ Flight Plan Manager and has a solid, forward-thinking reputation in the industry as one of the first flight planning systems to offer four-dimensional cost optimization. This means route, altitude, speed and time are all analyzed simultaneously against fixed operating and over-flight costs to produce flight plans that are less costly on a flight- by-flight basis. f:wz has been successful in marketing this capability and set a new theme in the industry regarding the value of this new- generation flight planning system. “f:wz is an outstanding company that has set new, innovative standards in cost reduction and fuel optimization within the flight planning industry,” said Steve Clampett, president of airline products and services for Sabre Airline Solutions. “We already offer airlines some of the best-in-class flight planning tools, so as we integrate f:wz’s offerings into our portfolio, we will have flight planning solutions and services that are second to none. “f:wz has established a very solid reputation in the industry as a flight planning market Photo: Hawaiian Airlines leader,” he said. “United Airlines selected f:wz as its mainframe replacement flight planning solution a few years ago, and now, f:wz Strategic Move Hawaiian Airlines supports the combining of f:wz technology with Sabre Airline Solutions.

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our subsidiaries such as Virgin America, need overall value Sabre will bring to its operation able to resolve all operational cost factors to consider a common vendor going forward with the integration of Flight Plan Manager to simultaneously to calculate an optimized for our operational solutions.” Sabre® AirCentre™ Flight Explorer. Sabre can four-dimensional flight path. All cost factors — David Kistruck, general manager of flight now combine Flight Plan Manager with its are taken into account by the algorithms operations other solutions to provide United Airlines with to resolve the lowest-cost arrival time that technology that can scale and support the meets specific mission requirements at the Hawaiian Airlines largest airline in the world. lowest possible fuel burn. “The acquisition of f:wz by Sabre was a Sabre Airline Solutions also received sup- Multi-routing comparison — The system nice move and should work out well.” portive comments from Air India, Atlas, Iberia provides functionality that allows for mul- — Marc Kup, senior director of flight opera- and Turkish as these existing customers look tiple routing permutations and combina- tions engineering forward to what Sabre and f:wz together can tions to be calculated for any flight using bring to the aviation industry. upper-wind data and aircraft performance. United Airlines Unique features, functions and services The optimal vertical and horizontal profile is United is currently an f:wz customer. Based within Flight Plan Manager include: determined on a flight-by-flight basis, taking on a recent conversation with Sabre Airline Variable cost optimization — The tool’s advantage of airways and direct routing, Solutions, the airline is excited about the distinctive route-selection algorithms are accounting for FIR fee impact, and comply- ing with restrictions and FAR or JAR OPS 1.255 requirements and customer policy. Results are ranked by cost, allowing decision makers to choose the lowest-cost options when solving complex operational flight planning problems. Delay cost management — These capabilities integrate a cost model for flight delays as a non-linear time-cost input to the flight profile optimizer, enabling an airline analyst to apply complete mission management to all flight operations. Auto optimization — This feature allows the system to be set to control all flight plan calculations and to run them automatically based on time or other event triggers. It significantly reduces dispatcher workload in the preparation of flight plan calculations. NOTAM management — This is available as a stand-alone NOTAM management system or as an integrated component. This service provides for the management Photos: Shutterstock and distribution of all state system (Class I) NOTAMs plus tools for creating and publishing internal company NOTAMs. Acquiring f:wz is much more than just bringing in another solution to fill a gap. “The acquisition is game changing because it takes a world-class software tool and places it inside an organization that has adopted world-class delivery and support models,” said Greg Gilchrist, senior vice president of global sales for Sabre Airline Solutions. “It catapults our Sabre AirCentre conversations into large SOC projects that span many of the key business functions across an airline’s operations.” a

Michael Hoppin is a solutions manager Overwhelming Support United Airlines and Virgin Atlantic Airways both view the acquisition of f:wz for Sabre Airline Solutions. He can be by Sabre Airline Solutions to be a positive move for the airline industry. contacted at [email protected].

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Let’s Talk ... Anytime

Sabre Airline Solutions communicates with customers

Finding every means possible to communicate with customers to ensure their needs are being met is critical. It’s an effective way to create goodwill with customers as well as boost productivity and build confidence in the relationship.

By Anita Allen | Ascend Contributor Photos: Shutterstock

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hen it comes to running a successful business, it ® pays to know your cus- Sabre Community Portal Hub tomers. It seems simple

enough in theory, but Airline Executive truly knowing who they Advisory Board are,W what they want or need, where they Conferences want to go, and how you can help them get Product Planning there is more complex. Running a success- And Usability ful business takes ongoing communication, Studies commitment and collaboration. For Sabre Sabre® Airline Solutions®, this takes a community Community Portal — the Sabre community. We recognize the value of communicat- Implementation Your airline ing with our customers, not just “to” them. Feedback And Training Over the years, we have invested time and resources to create an airline community 380+ Airlines Collaborating Customer Councils that is unparalleled in the industry. At every level of engagement — from airline executives to end users — we provide a way for Customer Care our customers to engage with and among the largest airline community in the world Sabre Airline University 24 hours a day, seven days a week. Today, more than 380 airline industry companies www.SabreAirlineSolutions.com Ascend Magazine partake in some facet of our community.

The Community: Then And Now World’s Largest Airline Network Nearly 400 airline industry companies share, learn and engage In our early days, customer commu- with each other through the Sabre community. nication primarily consisted of teletype, queue messaging and printed newsletters. frank discussions occur between airline then posted for customers to view on the Except for conferences and phone calls, executives and our company. The first Sabre® Community Portal. communications were more one-sided, not executive advisory board was held in 2007 The Community Portal is a central online collaborative. to candidly discuss business strategy and resource that enables customers to have Today, we use technological advances direction, obtain feedback, and provide single-sign-on access to their solutions to enhance customer communication at networking opportunities. These forums and profile-driven information. More than every level. Customers participate in vari- are held twice a year, with memberships 20,000 users access the Community Portal ous on- and off-line community forums to rotating every few years to ensure we have for their: give opinions, preferences and suggestions new voices in the discussions. Applications, about the solutions they use. Because For airline end users and managers, com- Customer care, these discussions occur in a password- munity conferences and events are held Delivery, protected environment or by invitation only, throughout the year. These ongoing events Training, the conversations tend to be candid and the provide in-person opportunities to: Solution management expertise, level of detail explicit. Collaborate in small or large groups, Business networking. Engage with frontline development and This figure has more than doubled during Frank Community Discussions product managers, the last year. One of the more common ways we Exchange ideas, “When you consider the number and connect with customers is through our Learn from and network with airlines different types of airlines we have in our customer council calls, which occur on a around the world. community — all the various solutions and regular basis to provide insight for solution The “voice of the customer” is a specific offerings these customers have as well as enhancements, upgrades, releases, devel- forum held during conferences with a group their different needs — it makes our com- opment and any range of other solution of airline customers, one or two Sabre munity experience very unique,” said Susan development activity. executives, and a correspondent to capture Via, manager of community marketing and “It was always my personal goal to topics of discussion. These discussions are engagement for Sabre Airline Solutions. be very transparent with our customers, extremely direct and often result in action “The fact that these airlines regularly especially during customer council calls,” items to do, research or enhance. come together to help each other based said Alicia Probasco, former Customer Care For nearly 10 years, our customers have on their knowledge and experience is not manager and now client delivery executive also been able to submit, prioritize and vote only impressive, it’s also quite innovative. for Sabre Airline Solutions. “Despite times on ideas for future solution enhancements. We’re building solutions that evolve airlines of harsh criticism, we stuck to our objec- Each year, customers outline their list of and honor their uniqueness in channels tives and adjusted our support processes enhancement ideas that are later voted on that would historically be closed lines of to get the best for everyone. A tough job and prioritized by the entire airline commu- communications.” — and often a thankless one — but we play nity. Since many enhancement ideas require Our community also helps “put a to win for our customers.” development work, customers are regularly face with a name” through the Sabre® The Sabre Airline Solutions Executive asked for their input on functional require- Community Portal Hub, our online busi- Advisory Board is another forum where ments. Enhancement rollout schedules are ness networking tool that helps customers

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stay connected with industry colleagues. At better solutions that benefit our customers Service Trends For 2011,” the customer- customers’ request, we created the Hub in and the industry overall. service market has continued to evolve, with 2009 so customers could: an increasing number of companies focused Ask or answer questions, Customer Comments on improving customer support. In fact, Discuss ideas for future enhancements, It’s one thing to hear it from us, but it’s more than 80 percent of North American Share perspectives and knowledge, another to hear direct feedback from our companies use customer experience as an Obtain information about their solution, customers through a variety of communica- area of differentiation. On the watch list for Network with other members of the com- tions such as surveys, conferences, advisory 2011, the report cites continued: munity. boards and on the Community Portal. A few Growth of self-service adoption by cus- Last year, we realized a year-to-date remarks we have received from our airline tomers, increase of 141 percent in membership community members include: Use of social media for customer service, profiles. “Thank you for providing us the oppor- Challenge in viewing a customer across “Not every customer is always going to tunity to share ideas and gain knowl- all communications channels, engage in an online forum or community edge through each others’ experienc- Power to customers through their actions, discussion due to the competitive nature es,” said Kashif Karim, assistant man- voice and social media channels, of the business,” Via said. “Many times, ager of revenue management for Pakistan Focus to make customer service an even customers prefer to contact us directly, International Airlines. bigger differentiator, Increase in customer-to-customer support. Highlight “Social media is still a growing trend, but we are ahead of the trend, and we offer advanced tools to boot,” said Gordon Locke, vice president of portfolio marketing Today, we use technological advances to enhance and strategy for Sabre Airline Solutions. “We take great pride in our community customer communication at every level. and the differentiator it is for us. Whether it’s having an automatic customer call-back feature for customers to use or the ability to Customers participate in various on- and off-line report their contractual metrics online, our focus is to help airlines increase revenue, community forums to give opinions, preferences reduce costs and provide a better customer experience through our expertise and lead- and suggestions about the solutions they use. ing technology.” Collaboration doesn’t have to be limited to the confines of a conference room or an online meeting. At Sabre, community conversations and knowledge sharing occur in person and in virtual environments all but the thoughts and postings found in the “The networking was good, and under- around the globe, with no cubes or confer- community can promote more meaningful standing each other’s businesses makes it ence rooms required. We’re available to discussions, insight and direction.” easier to interact and know where some- chat … anytime. a Customers can also develop their skills one is coming from,” said Mike Croucher, through individual courses and self-paced head of IT architecture and delivery for learning via Sabre® Airline University, located British Airways. “I have seen Sabre take on the Community Portal. Depending on the on some of the previous suggestions. It solutions purchased, customers may have makes you want to contribute more. It’s on- and off-line resources available 24 hours worthwhile.” a day, seven days a week. A bookstore and “I am relatively new to the airline indus- certification programs are available. try,” said Kris Kutchera, vice president of Through the Alumni Group on the Sabre information technology for Alaska Airlines. Community Portal Hub, individuals who are “I wanted to meet others in the industry. certified in at least one course are first to I enjoyed the amount of networking, and hear about new training courses that are the discussions have been better than I available as well as have a voice in what is expected.” coming next. Last year, visitors to the site increased more than 50 percent with recent At Your Service enhancements, such as adding a virtual cam- Social media has seen explosive growth pus and an increased number of self-paced during the last few years, signaling it is (computer-based) learning opportunities. dynamic, demanding and here to stay. These are just a few of our Sabre com- Having a plan and knowing how to engage munity components and how we leverage customers to your mutual benefit is critical Anita Allen is a member of the Sabre them to move the industry forward through to harvesting loyalty, customer satisfaction Airline Solutions community marketing aviation technology, services and programs. and sustained growth. team, which is primarily focused on Through customer insight and suggestions, According to the recently published customer engagement. She can be we are able to streamline, enhance or create Customer1 report, “Top 10 Customer contacted at [email protected].

ascend 59 as wellbeeasilyadaptableforfuturemodifi Technology mustworkeffectivelyinanairline’s currentenvironment Powering Airlines WithFuture-Ready Technology Today Pushing Boundaries

Photos: Shutterstock By Gordon LockeI cations. Ascend Contributor ASCEND I COMPANY

singular threats have been the 2. Becoming alliance-ready faster than ever mainstay of reactive business before, planning. However, three distinct 3. Realizing a better total cost of ownership from challenges have emerged that solutions adopted to solve the industry’s many all airlines must now grapple challenges. A with and plan proactively to be prepared for the future. User Experience The converging challenges harness the true At first blush, user experience applies only to promise of: travelers’ needs and does not transcend to the Better performance and profitability; needs of customer-facing airline employees. To Rapid growth of mergers, acquisitions and the contrary, the experience of using a solution new partnership models; on the employee side of an airline is just as More passenger traffic. important as the customer side. Both will signifi- Travelio.net recently featured an article, cantly determine the success of a point-of-sale sourced from Travel Daily News, called and point-of-service strategy. “Airlines: Surviving In A Changing World.” The science of user experience is also far The article looked at 2011 and beyond and more complex than examining and changing summarized the challenges and opportunities navigation. The ability to address the changes in two ways: needed for most airlines has been daunting until In most parts of the world, the international now. Why? Because airlines have not been able airline industry is evolving from a heavily pro- to marry real-time and near-real-time data with tected business with government-run activity superior, flexible user interfaces that offer a to a commercial hybrid business, presenting unique no-touch to high-touch brand experience. airlines with massive challenges. Changing and adapting the user experience Some airlines adapt more effectively by tack- on the personnel side of the equation is critical. ling one or more of the following: The ability to flexibly set business rules or learn, Rapid fleet and network development; adopt and administer solutions quickly defines a A new business model; “fast” airline from a slow-to-respond one. Innovative products and services; It’s the difference in how a customer: Consolidation or cross-border joint-ven- Sees fares, ture activity; Receives a promotion, Financial outperformance (or financial Gets availability, distress). Has a unique value score assigned to him, At Sabre Airline Solutions®, we offer many Views his experience at the airport (via self airlines the solutions and expertise they need service or full service). to flex their business models and see the rapid, We currently provide a number of airlines competitive profit-making change they need. with a combination of strategy-enabling capa- Our strategy is to help ensure airlines are ready bilities. They range from up-to-the-second data today for tomorrow’s challenges. to easier consumption of that same data through In doing so, we make it possible for them to advanced GUIs. Our Sabre® ASxsm Airline Services put in place the capabilities they uniquely need Exchange platform helps airlines implement or for the way they want to do business — without build user interfaces with state-of-the-art toolkits. having to make sluggish, expensive wholesale Thus, end to end, we help airlines: technology platform changes. Granted, some 1. Launch the user experience and supporting airlines need wholesale technology changes interfaces they want more rapidly, end to end. We can make that happen as well 2. Use valuable data they otherwise find hard to with faster implementation timeframes. That access, s airlines around the world entered 2011, and is the premise of powering airlines today with 3. Empower airline staff with relevant customer view 2012, they have done so with more com- future-ready technology. or operational data, monality in a cadre of challenges than perhaps Three examples best illustrate this, including: 4. Support on-the-fly configurable scenarios at any other point in aviation history. In the past, 1. Evolving the user experience, using an advanced rules engine.

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As this footprint continues to grow with customer and operational data. It helps deter- Highlight SkyTeam, and other global alliances, we con- mine how to best use the information across tinually look well into the future to ensure we the enterprise. Our platform represents an As the largest SaaS provide an unmatched, cohesive alliance tech- environment for better total cost of ownership nology model. It must be one that addresses that includes the right architecture and toolkits provider with airline airlines’ needs across the entire operation. an airline needs to create new capabilities on Succeeding in an alliance means: its own or teaming with us to do it. domain expertise and Fast adoption of technology, The result? Better workflows, improved inter- Flexibility in how the data is used across all faces and configurable solutions that drive fast solutions (not just reservations), adoption and can serve long term. a powerful portfolio, Configurability to meet alliance needs while Beyond technology, we provide expertise to not erasing a member’s unique brand. support an airline. As the largest SaaS provider our value proposition We are helping airlines such as Aeroflot, with airline domain expertise and a powerful port- Aeromexico, Ethiopian Airlines, Kingfisher folio, our value proposition goes beyond lower goes beyond lower total Airlines and Vietnam Airlines maximize their total cost of ownership. We also place great alliance presence or join one. emphasis on total benefits of ownership. cost of ownership. We Our employment of the ASx exchange With our solutions, the benefits continue well proves that to innovate, an airline doesn’t after the initial return is measured. We provide also place great emphasis always have to replace technology or change healthier IT operations so airlines can focus on platforms. With a powerful platform and flying and operating their businesses. At the Software-as-a-Service model, you can also same time, they benefit from a nimble platform on total benefits of tap into and configure new business rules and whereby new capabilities can be augmented create new outcomes with data and, therefore, long term. This, coupled with clear, transparent ownership. execute faster. Since forging great technology pricing, means airlines can predict costs and is the nature of our business, we utilize SaaS enjoy benefits with greater clarity. applications and platforms that will define the The ASx exchange creates that reality. By next decade of solutions for the industry. the end of the year, close to 70 airlines will lever- While this is achievable with our complete The case is also there for groundbreaking age our ASx platform and realize its powerful customer sales and service solution, we also technology that empowers new types of alli- capabilities. Some already doing this include support an airline’s current environment with ances. One example is our partnership with Aegean, Aeroflot, Emirates, Air New Zealand, these options should it be locked into an LAN and our new multi-carrier platform that British Airways, Cathay Pacific Airways, Croatia, inflexible technology platform that needs to be enables all airlines under LAN ownership to Qantas and Virgin Blue. “opened up.” work together as one. The LAN group of The decade ahead is about business model airlines must maintain independent opera- adaptation when needed and proactive competi- Alliance Readiness tions while also creating a seamless customer tive response as a day-to-day way of operating. Joining an alliance is a considerable change for experience among its airlines and oneworld Consumer expectations are already shifting more an airline. The attractiveness, and sometimes members. Our new technology supports that rapidly, thus airlines need online storefronts necessity, of joining an alliance to compete need. and a service experience that caters to airline and drive loyalty, also falls into the aforemen- customers and their respective cultures. tioned scenario of the user experience and Total Cost Of Ownership Airline employees need advanced tools that supporting interfaces. There is more at stake Finally, there is the dimension of total cost are easy to use. This enables them to seamlessly though. Alliance membership impacts the of ownership. To adapt and rapidly evolve assist loyal customers traveling from one alliance entire airline enterprise across commercial capabilities in step with consumer trends (staff member to another. planning; customer sales and service; and productivity or requirements for new business Additionally, given the volatility of oil prices airport, crew and flight operations. relationships), change must be affordable and and other converging challenges, airlines cannot Achieving alliance membership has typi- deliver a faster return. afford to use technology that is restrictive, has cally been slowed by what may appear to be The value of technology is not only in its a limited lifecycle or drives unpredictable costs. an endless sea of business process changes flexible features and functions. It must serve We are onboard with these needs. And we and hype about the need for an alliance long term and offer the ability to adapt with are committed to innovation and transparency to platform. The real challenge simply involves evolving capability needs. Without this, an help you push boundaries today and see a clear customer and operations data within and inflexible platform or hard-to-configure applica- path into the future. a among airlines. tions can paralyze an airline. Further, the The premise of an alliance is not just a solutions also must have a transparent com- common reservations platform. It’s about gain- mercial model so total cost of ownership is ing more passengers and creating a customer clear. Otherwise hidden costs, polling charges, experience across multiple airlines. Alliance inefficient workflow and added integration membership is typically a long-term commit- create an opaque commercial relationship that ment, and effective adoption is paramount to greatly stalls progress. success and a quicker return on investment. Today, many airlines face long migrations, Therefore, it is crucial that we provide software impractical business process changes and and services that help airlines look at the entire protracted adoption. This makes the cost of picture. For example, if you look at our partner- owning and benefits hard to measure short Gordon Locke is Vice president of ships across SkyTeam, you see that the majority term. portfolio marketing and strategy for share of members in the alliance use some 118 We take a different approach. Our model Sabre Airline Solutions. He can be solutions from across our portfolio. provides a complete view of an airline’s contacted at [email protected].

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Merchandising through GDSs with new technology gives airlines an additional storefront from which to market and sell products and services. In doing so, customers get what they want, when they want it.

By Lauren Lovelady I Ascend Staff Photos: Shutterstock ASCEND I SOLUTIONS

fter suffering through years Processed nearly three-quarters of all to different market segments and/or regions of financial losses and almost online and traditional travel agency sales of the world. It also provides an additional every conceivable cost-cutting in the United States in 2008; venue for marketing those offerings and program, carriers are evolving Accounted for 21 percent of all European generating revenues. their business models. In doing travel revenue and 47 percent of airline Once an airline has in place the internal A so, they augment fare- and bookings that same year. processes and support systems necessary schedule-led selling with merchandising In short, a GDS is a robust platform for the to introduce a new ancillary service through techniques to generate incremental revenue. wide distribution of airlines’ merchandising the Sabre GDS, it can simply file the offer- These techniques usually do not involve programs. Sabre Travel Network® supports ing and associated fee through the ATPCO large-scale investments but instead focus two merchandising techniques through the OC category using the standardized format. on airlines’ current and potential product and Sabre® global distribution system. The intro- Sabre Air Extras reads the filing and service offerings in relationship to consumer duction of Sabre® Branded Fares, or bundled displays the offering in the GDS. This con- demand. fares, in 2007 enabled airlines to promote sistent, user-friendly filing method greatly and “sell up” to a higher fare family with reduces the time once necessary to prepare How Was Your Travel Experience? pre-defined services included in the cost of carriers’ products and services for display An airline doesn’t just sell a seat on a the airfare. and subsequent fulfillment through GDSs. flight; it sells a travel experience. In fact, the The following year, Sabre® Air Extras, or The enhancements also enable carriers question, “How was your flight?” can more unbundled fares, enabled carriers to offer to quickly modify their offerings in response accurately be phrased, “How was your total optional services to travelers for additional to competitors’ actions. For example, an travel experience?” because passengers’ fees plus the cost of airfare. In essence, airline may offer a premium seat in a answers usually take into consideration passengers can choose the services they specified market for a US$40 fee. However, every aspect of the trip. Of course, many value most. the competition is offering premium seats passengers still focus on getting from point in the same market for US$30. With a A to point B at the lowest possible cost. Empowering Airlines few simple clicks, the airline can almost However, others are willing to pay additional Recent enhancements to Sabre Air instantaneously adjust its price in the Sabre fees for the little extras that help make air Extras support diverse airline operations as GDS to enhance its competitive position in travel more pleasurable. well as the global airline industry by utilizing that market. These extras, or ancillary services, ATPCO’s optional services (OC) product as Fulfillment of Sabre Air Extras is done via include, but are not limited to: well as an electronic miscellaneous docu- electronic miscellaneous documents, tech- Additional legroom, ment (EMD) to facilitate fulfillment of the nology complementary to ATPCO’s filing Premium seats, optional service. services. Similar to electronic tickets, EMDs Meals, The flexible, yet standardized, format are stored electronically in the issuing air- Headphones, enables airlines to remain competitive while line’s database and detail each ancillary On-demand movies, tailoring their product and service offerings service purchased and the associated fee. WiFi access, Supervising unaccompanied minors, Pets in the cabin, Upgrades, Lounge passes, Checked baggage. Leveraging this ever-expanding array of products and services, airlines are finding they can differentiate themselves by bundling or unbundling their offerings. They can do so even further by charging additional fees or not collecting fees at all.

The GDS: A Powerful Merchandising Tool Recent innovations in the technology that supports merchandising through global distribution systems provides carriers with an additional storefront from which to market and sell products and services. This further defines consumers’ choices. GDSs are an integral part of airlines’ overall marketing efforts, which also include travel management companies, travel agents and online travel agencies. According to travel industry research authority PhoCusWright, GDSs: Powered more than US$268 billion in travel revenue worldwide in 2008 through 1.1 billion transactions, the equivalent of Enabling Travel Agents Sabre Air Extras helps agents efficiently offer complete service to their 2,100 transactions per minute; customers and fulfill special requests without the need to contact the airline during the process.

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Because carriers can now immediately the service were informed it was no longer their customers and fulfill specific requests process electronic bookings and payments, available. If one or two passengers decided without the need to contact the airline during trends are more easily identified and rev- at the last minute not to bring a pet onboard the process. As a result, agent productivity is enues realized earlier in the process. An but did not notify the airline in advance, both significantly increased. airline can determine why premium seats planned and potential revenues were lost. are selling well in some markets, but not in Empowering Travelers others. Empowering Agents Most airlines readily acknowledge that the Are the fees for this service too high Sabre Travel Network implemented majority of travelers seek the fastest and in those markets? Or perhaps, passenger enhancements that provide a seamless, con- cheapest way to reach their destinations. demand for this offering is not as great as sistent solution for displaying, booking and Conversely, most travelers do not rate an the demand for another service, such as now selling Sabre Air Extras to travel agents airline on price alone. extra legroom. With the enhanced filing through the GDS. Introduced in a phased With this in mind, Sabre Air Extras was capabilities, airlines can easily adjust the lev- approach to the travel agent and OTA com- designed as a one-stop shopping resource for els and fees of service offerings in individual munities, Sabre Air Extras can be accessed via travelers, giving them the ability to prioritize, markets. several touch points, including: choose and enjoy the services they value The electronic process also helps airlines City pair availability, most. The information is now readily available generate more accurate forecasts and identify Shopping, to agents in a format that is quick and easy to potentially lost revenue sources. For instance, Pricing, display, book and fulfill, allowing travelers to an airline may have a rule stating only two pets Booking, purchase these ancillaries from travel agencies are allowed in the cabin per flight segment. PNR, worldwide. Previously, when a passenger booked a Fulfillment. flight and requested to bring a pet onboard, Prior to the enhancements, travel agents Simple Steps a message was placed in his or her itinerary and OTAs could view services and fees filed It’s simple: travel agents and OTAs can’t noting the request. This was the case even by airlines but were unable to fulfill pas- sell what they can’t see, and travelers can’t though the service fee was not collected until sengers’ requests or collect fees in advance. choose if they don’t know they have a choice. the traveler arrived at the airport. Today, Sabre Air Extras provides agents with Whether an airline offers a wide array of ancil- Once the two pet-in-cabin limit per flight was the content and automated tools necessary lary products and services with varying fees reached, subsequent passengers requesting to efficiently provide end-to-end service to for different market segments, simply charges a flat US$25 for every checked bag or even chooses to provide these services at no extra cost to customers, Sabre Air Extras provides a valuable channel for carriers to differentiate themselves from the rest of the playing field and realize additional revenues earlier in the game. Even if a carrier’s merchandising roadmap is not fully implemented, Sabre Travel Network will partner with an airline to begin selling ancillary services one step at a time. With the standardized, flexible filing capabilities of Sabre Air Extras, a carrier can continue to develop and diversify its plans and easily add services as they become available to remain competitive. Even the smallest steps can lead to great results. a

Giving Customers Choice While many airline customers simply focus on getting to their destinations, Lauren Lovelady can be contacted a good portion are willing to pay for extra amenities such as lounge access. at [email protected].

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Aerodynamics Don’t Change; Aircraft Load Planning Does Strict aircraft and flight limits must be considered during flight preparation With its continuing rapid development and deployment, the electronic fl ight bag doesn’t simply represent Weight and balance and center of gravity are critical to legally and effi ciently operating aircraft while reducing costs and maximizingthe future. revenue. Electronic fl ight bags, in fact, are already on Bymany Lauren commercial Lovelady I Ascend carriers’ Contributor fl ights today. By William Kikuchi, Dana Knight and Photos: Shutterstock Dave Roberts I Ascend Contributors

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aw of physics and aerodynamics that apply to aviation don’t change. However, other components of flying, such as size, weight, distance Lflown and speed continually evolve (see related article on page 22). Therefore, preparation for a flight must adhere to strict aircraft and flight limits. Aircraft must be loaded so structural limits are not exceeded. It must be loaded correctly so it maintains its balance from takeoff through landing and unloading. Consideration must be given to each component being added to aircraft. This includes the additional weight and distribution of fuel, cargo, bags and passengers. Load planners use Sabre® AirCentre™ Load Manager to manage the loading of flights for an efficient, legal and on-time departure while maximizing flight revenue. Load controllers plan multiple flights within a short time frame to accommodate passengers, bags, cargo and required fuel. In addition to planning flights, Load Passenger Data The cabin summary screen includes passenger data used by a load planner to retrieve Manager can transmit a series of informa- the number of passengers booked on a flight from the corresponding passenger check-in system. tive messages about passenger and cargo loading on aircraft to downline cities. of flights, Load Manager contains four populate the four basic screens of Load Load Manager provides a load plan that basic software screens that a load planner Manager. determines distribution of cargo and bags. completes to produce a flight load sheet. It also accounts for passenger seating dis- The load sheet is a printed document Dry Operating Weight Screen tribution by evaluating the balance effect that captures necessary load information The dry operating weight screen enables based on assigned seating. It does the used by flight crews to set their takeoff, load planners to adjust aircraft weight based same for the distribution of fuel. en route and landing weights. To produce on the number of flight crewmembers, To accurately and efficiently plan the the load sheet for crew, load planners catering supplies and any other factors that loading of an aircraft for a flight or series accumulate various pieces of data and affect the dry operating weight and center of gravity index of the aircraft.

Cabin Summary Screen The cabin summary screen contains passenger data for a flight. The load planner retrieves the number of passengers booked on the flight from the corresponding passenger check-in system. Load Manager can interface with the passenger check-in system to retrieve both booked and checked-in passengers. This is dependent on the planning stage of the flight. The number of passengers and their seat assignment changes the flight’s weight and balance. City pair or origin city determine passenger and bag weights. Non- listed city pairs default to a predetermined value. The benefits of having these options increase the accuracy of the calculations for each flight.

Deadload Screen A critical aspect of weight and balance is the planning and placement of cargo and baggage. The deadload screen provides an automated tool to plan the aircraft bin Cargo And Baggage Placement The deadload screen contains a robotic tool to plan the aircraft bin locations for baggage, mail and cargo. Using locations for baggage, mail and cargo. While planning the flight, the screen enables a load planner to this screen while planning the flight, the easily monitor shifts in the center of gravity as cargo or baggage are added to the load plan. load planner can easily monitor shifts in the

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delivery or transfer to another connecting flight. Fuel savings achieved through proper load planning and adherence to the load plan is extremely important to an airline’s operational costs. Load Manager provides an aft center of gravity, which reduces fuel consumption in flight. Successful airlines carefully calculate passenger, cargo and fuel weights to attain the most effective load plans that reduce fuel burn en route. These airlines create optimal aircraft center of gravity balance to meet these goals as well as save fuel. Load Manager improves weight calculations by allocating weight according to passenger type: adult male or female, child or infant. Unused weight allowance is reallocated for additional revenue passengers or cargo. Load Manager is an integral component of the Sabre® AirCentre™ Enterprise Operations solution. It helps airlines manage change while reducing costs in fuel and labor. The solution helps deliver your promise to your passengers, employees and stake holders to provide the best day of operations. a

Adjusting Aircraft Weight Using the dry operating weight screen, load planners can adjust aircraft weight based on the number of flight crewmembers, catering supplies and any other factors that impact the dry operating weight and center of gravity index of the aircraft.

center of gravity as cargo or baggage are Plan Manager to provide an automated added to the load plan. population of fuel information. A key benefit of Load Manager is that it Once these four screens are com- is configurable to interface with cargo and pleted, the load planner produces the load check-in systems, resulting in an efficient sheet for flight crews to determine takeoff process and significant cost savings. The speed, flap setting and other important type of deadload screen depends on the air- aspects of takeoff and landing. craft type. Separate screens are designed The primary importance of exact load for narrow- or wide-body aircraft and their planning for an airline is legality and corresponding container positioning. efficiency. Efficient loading and unloading William Kikuchi is senior business of cargo and bags is extremely important systems analyst, Dana Knight is a Flight Plan Airport Analysis to an airline’s ground operations and good solution director and Dave Roberts is Screen passenger service. senior principal in airline and flight The flight plan airport analysis screen Load Manager optimizing algorithms operations strategic planning for identifies the amount of fuel that prioritize baggage and cargo locations Sabre Airline Solutions®. They can is required for the flight based on the on the aircraft. The correct placement of be contacted at william.kikuchi@ calculated flight plan. Load Manager is cargo and baggage on the aircraft can sabre.com, dana.knight@sabre. integrated with Sabre® AirCentre™ Flight expedite unloading for quicker baggage com and [email protected].

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Technology such as Sabre® Qik® Solution enables airlines and other travel-related companies to paint the illusion that successful customer service — and profitable, efficient operations — are as natural as a smile. Photos: Shutterstock

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ll the things you probably hate about travelling — the recycled air, the artificial lighting, the digital juice dispensers, the cheap sushi — are warm remind- “Aers that I’m home,” said Ryan Bingham, a modern road warrior portrayed by George Clooney in the 2009 blockbuster hit movie “Up In The Air.” “Up in the Air” offers a fictional view of modern-day air travel, portraying carriers as powerful, on-time machines with: Smiling gate agents, Pleasant first-class attributes, Slick technology. The ideal does exist, although real road warriors would say it doesn’t exist every day. But as more and more carriers and travel-related companies invest in the “slick” technology it takes to deliver consistently on the promise of on-time arrivals, smiling gate agents and a pleasant travel experience, fiction comes closer to reality. Importantly, the technology also reduces costs and increases revenue. Reduces Time And Costs The Developer Tool significantly decreases processing time with fewer errors as well as reduces time and telephony costs. A “Qik” Solution To Complex Processes Today, more than ever, companies in the travel companies worldwide for call center/ & Service user interface for reservations cen- travel industry are seeking to simplify opera- reservations, ticketing, check-in, ramp/ ters and airports. tions to reduce costs and remain competitive. weight and balance and many other business Because the solution is customizable, the They do so while striving to increase revenue functions. benefits vary by company. However, all would and maintain high-quality customer service. In fact, it is the tool used to create the agree the technology is a profit enhancer when In a business environment that demands Interact interface, the highly configurable, it comes to productivity, training costs and change, frontline personnel must have imme- workflow-driven SabreSonic ® Customer Sales overall cost reduction. diate access to the right information to win and keep a customer’s business. In addition, the need to reduce costs — especially through reductions in data entry and process errors — is imperative. However, as new initiatives are put in place to achieve these goals, companies face the challenge of readily accessing data that snakes across multiple databases, operating systems and platforms. Automated offline processes are necessary for a company to increase sales and revenue, improve operational efficiency, cut costs, and raise customer service levels. That’s why many airlines turn to the Sabre Qik Solution. The solution offers a combination of latest technology and process, application development, and interface design consulting. This enables companies to create and deploy effective applications. The combination facilitates better customer service and meets specific business needs at the lowest possible lifetime cost.

Qik Benefits The Sabre Qik Solution is widely considered the industry pacesetter for the creation of intelligent user interfaces. It includes software and a variety of profes- Airport Application The tabs in the runtime screen provide easy access to basic airport functions sional services preferred by more than 300 such as check-in, seating and boarding.

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Enhanced Job And Customer Satisfaction By doing away with long data entry formats and streamlining job functions, the Qik Solution eliminates the need to gather relevant data from multiple data sources and applications. The solution instantly pulls together the information. This enables employees to serve customers better, faster and with fewer mistakes — increasing the number of satisfied customers.

A “Qik” Tour The Qik Solution offers components that complete the end-to-end business management technology solution.

Developer Tool The Developer Tool, a component of the Sabre Qik Solution, enables companies to more cost- effectively integrate data and systems into their intelligent user interface. As a result, the right Airline Availability Display The tabs in a reservations application provide easy access to basic reservations functions such as selling air, car or hotel segments, pricing the itinerary or adding information is accessible to the right customer- passenger details. facing employees at the right time via a flexible technical platform. Increased Productivity providing customer service. By delivering The Developer Tool is used by Sabre’s own By integrating specific business process- graphical user interface front ends, or intel- development teams, airlines, call centers, tour and es and rules into the Qik applications, users ligent user interfaces, that are easier to travel agencies, government entities and other are presented with decisions based on their use than traditional host systems, the Qik travel-related companies around the world. It sup- company’s specific business rules. The Qik Solution significantly reduces training time ports two scripting languages, a variety of graphics Solution: and increases productivity. Instead of memo- formats and a fully graphical screen painter. The Simplifies complex procedures, rizing system commands, users can focus on flexible, powerful tool enables developers to quickly Eliminates the need for users to consult customers. create graphically rich applications specific to the job aids, In addition, when data from multiple sys- travel and transport industries. Reduces error frequencies, tems is required, the solution seamlessly Users report the tool’s intuitive user interface Automates multi-step processes. integrates the data. This eliminates the need framework and the option for developing interfaces The solution facilitates the integration of for users to switch among systems by for automated repetitive tasks have significantly Internet and intranet content into business using multiple access procedures. According reduced processing time with fewer errors. It has processes by presenting a single, focused to airlines that have recently implemented also reduced time and telephony costs. user interface. The end results are increased the system, its use has reduced new- productivity, improved accuracy and higher hire training by as much as 50 percent Peripheral Manager/Multitask Manager sales conversion rates. while increasing employee productivity. Peripheral Manager, another component of When British Airways needed to increase the Sabre Qik Solution, allows for effective com- productivity and customize how ramp and Reduced Costs munication with airline backend systems. It also airport agents work, it looked to the Sabre Sabre Qik Solution performs local error supports interaction with the many and varied Qik Solution to deliver the right informa- checking, retains host reservations informa- physical devices required to run airline back office, tion to its agents at the best time to serve tion and combines host transactions, all airport, reservations, and other locations. Printers, customers. significantly reducing host communication scanners, card swipes and gate-boarding devices “The Sabre Qik Solution met important costs. Customers that use the suite of tools can be incorporated into a company’s end-user needs as we moved our current customer report seeing a return on investment in as solution using Peripheral Manager. systems forward, and is an integral part of little as three months. To round out the software suite, Multitask our service-oriented architecture and multi- Manager, another component of the solution, channel strategy,” said Mike Croucher, head Expanded Sales Solicitations allows for sophisticated control and management of IT architecture and delivery for British The Qik Solution lets companies create of “robotic” applications created using the Qik Airways. “What we like best about the applications that provide easy access to data Solution. Robotic applications automate manual solution is that it’s a truly innovative tool and present the data at the appropriate time tasks and free up employees, thus increasing that is completely configurable and simple to during the user’s workflow. This enhances efficiency and accuracy while saving labor costs. use. We can customize how agents work by the effectiveness of sales personnel by Multitask Manager gave Travelocity® the delivering the information they need most at improving information accessibility and pro- ability to create its own solution where- the right time to best serve our customers.” viding more up-sell opportunities. by 98 percent of bookings are ticketed In addition, sales prompts are used to automatically. Reduced Training Costs assist frontline employees in closing the “The Qik Solution is the life blood of our Training users to operate complex sale. Finally, the applications eliminate the mid-office system,” said Rob Mabry, senior native host systems is both labor and time need to memorize or search for seldom-used manager for Travelocity. “Every booking intensive. As a result, users focus more transactions, such as those required for car made on our website is routed through on how to operate the system than on hire and hotel booking. our Sabre Qik applications running on the

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Multitask Manager system. Of those, 98 reservations and departure control systems Southwest Airlines called on Sabre Qik percent are ticketed by robotics and never ‘agnostic,’” said Ellen Ehrlich, senior vice Solution when it wanted to rapidly enable Web require human intervention. president of SabreSonic Customer Sales & service and redesign the look and feel of its “We also have more than 2,500 users in call Service for Sabre Airline Solutions. “So not existing application. centers around the globe managing customer only do our SabreSonic airlines derive great “The Sabre Qik Solution enabled us to contacts with customized versions of Turbo value in the Qik Solution such as the Interact rapidly move forward technologically by tran- Sabre® desktop application and other Sabre interface they use in reservations and airports, sitioning from legacy formats to services,” Qik tools. These applications support both the but non-SabreSonic carriers globally can also said Southwest Airlines. “Our new intelligent Travelocity leisure business and its corporate see similar benefits regardless of what reser- interface is more visually appealing. But more brand, Travelocity Business®. It’s an incredibly vations or departure control system they use. importantly, it allows our staff to be more pro- flexible application development environment This also gives the extra benefit of a unique ductive. This new application has positioned that has allowed us to support a dynamic busi- and very strong Qik Solution user community customer service and support for the future.” ness with more than a million tickets a month comprising not only SabreSonic airlines but As seamless as it looks, the “Up In The Air” with a small team of developers.” other airlines and affiliated companies world- experience is a fine-tuned symphony of tech- wide using virtually any reservations, DCS, nological triumphs performed from the Consulting Services frequent flyer or other back-end solution from moment a ticket is booked until a bag is deliv- The Developer Tool, combined with Sabre Airline Solutions or other vendors.” ered. And that’s what Ryan Bingham and the power and flexibility of Sabre® Qik® countless other travelers are counting on. So Professional Services, provides a complete Custom Solutions Delivered too, are the thousands of airline industry pro- solution with rapid returns. This transcends The scope of a solution using the Qik fessionals who depend on loyal, repeat a typical technology solution with an off-the- Solution and the Developer Tool crosses customers for their survival. a shelf application development environment. a broad range of functionality and deliv- Incorporating industrial engineering and busi- ers unique benefits to each company. For ness processing expertise allows efficient example, company “A” may use a Qik solutions designed to meet the unique needs solution that completes a single automated of many diverse customers. task, such as a quality control check before The solution is backed by technical exper- ticketing. tise of architects and developers. This ensures Company “B” may utilize a Qik solu- that it remains ahead of customer and travel tion for its call center interface that industry needs. Customers enjoy 24-hour and incorporates computer telephony integra- 365-day online and telephone support for their tion functionality, access to multiple CRSs development teams as well as various com- and a productivity-focused workflow. munity offerings to interact with fellow Sabre Company “C” may use a Qik solution as a Qik Solution users. CRM enabler to pull information from multiple Paul Feheley is a principal of the “One of the key differentiators for our data sources, access multiple host systems, Sabre Qik Solution for Sabre Airline Sabre Qik Solution is the fact that it’s been use automated tasks, interact with third-party Solutions. He can be contacted engineered from the ground up to be applications and integrate Web content. at [email protected].

+count it up

2020 3.5 liters 8 The year by which industry research The amount per 100 passenger The percentage by which the programs aim to achieve a further 50 kilometers modern aircraft achieve in fuel European Union is committed to

percent fuel and CO2 savings and an efficiencies, according to enviro.aero. reducing its emissions from 1990 80 percent reduction in oxides The next-generation aircraft (Airbus A380 levels by 2012 under the Kyoto of nitrogen (NOx), according to and Boeing 787) use less than 3 liters of protocol. The E.U.’s emissions trading enviro.aero. fuel per 100 passenger kilometers (78 scheme is Europe’s principle passenger miles per U.S. gallon), mechanism to achieve its Kyoto exceeding the efficiency of any modern targets. compact car on the market.

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Juan Chad The Way You Want

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2009, Our systems work well together and with ECO yours. And we have more ways to help you drive proﬁ tability, increase productivity of your team and deliver the customer experience 2007, you want. With solutions that evolve as your business evolves, you’ll have a tremendous advantage over your competition.

2005, To see more ways to set your

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