World's Happiest Airline

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A Magazine for Airline Executives 2010 Issue No. 1 2010 2010 I ssue ssue N o. 1 o.

T aking your airline to new heights

www.sabreairlinesolutions.com World’s Happiest Airline A Conversation With … Enrique Beltranena, Volaris Chief Executive Officer and Managing Director Page 10.

Join us on Facebook at sabreairlinesolutions.com/fb 6 Afriqiyah Airways knows when and 32 Significant improvements to air traffic 80 Effectively diagnosing MRO issues and Follow us on twitter at twitter.com/SabreAS where to expand control systems prescribing solutions making contact T aking your airline to new heights

2010 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 www.sabreairlinesolutions.com Art Direction/Design Charles Urich e-mail message to the Ascend or contact one of the following staff at [email protected]. Sabre Airline Solutions regional Managing Editor representatives: B. Scott Hunt

Associate Editor Carla Jensen

Design Manager Yvette Hunt

Contributors Asia/Pacific North America Chris Bird, Patt Bourland, Stephanie Bundick, David Chambers Mike Douglass Dominic Clarke, Greg Gilchrist, Brett Jacobson, Vice President Vice President Gordon Locke, Horacio Mena, Anne-Marie Phone: +65 6215 9518 Phone: +1 682 605 5349 Monahan, Mark Neill, Brent O’Brien, Kamal E-mail: [email protected] E-mail: [email protected] Qatato, Gary Stone, Ben Vinod, Chris Wilding. Europe Publisher Alessandro Ciancimino Sabre Airline Solutions, the Sabre George Lynch Vice President E-mail: [email protected] Phone: +39 348 3708240 Airline Solutions logo and products www.sabreairlinesolutions.com E-mail: [email protected] noted in italics in this publication are

trademarks and/or service marks of an Latin America Awards affiliate of Sabre Holdings Corp. All Kamal Qatato Vice President other trademarks, service marks and Phone: +1 682 605 5399 trade names are the property of their E-mail: [email protected] respective owners. ©2010 Sabre Inc. All rights reserved. Printed in the USA. 2010 Hermes Creative Award Middle East and Africa Address Corrections & Reader Inquiries 2009 Awards for Publication Excellence, Maher Koubaa If you have questions about this publication, International Association of Business Vice President suggested topics for future articles or would like Communicators Bronze Quill, Hermes Phone: +973 38350001 to change your address, please send an e-mail to E-mail: [email protected] Creative Award, ECO Awards [email protected]. For Excellence In Environmental Communications 2008 Awards for Publication Excellence, International Association of Business Communicators Bronze Quill and Silver Quill, Hermes Creative Award, The Communicator Award Introducing Award-Winning Merchandising Capabilities Awards for Publication Excellence, 2007 International Association of Business Maximize the value of every seat. Sabre® AirCommerceTM Distribution & Merchandising Communicators Bronze Quill provides you award-winning* capabilities. Differentiate your airline and grow revenue 2006 Awards for Publication Excellence, by merchandising branded fares, seats, bags and other ancillary services to corporations International Association of Business and travelers worldwide. Discover how Sabre AirCommerce can take a front seat in Communicators Bronze Quill, Silver Quill and Gold Quill your airline’s success. Visit www.sabretravelnetwork.com/sabreaircommerce today. 2005 Awards for Publication Excellence, International Association of Business

Communicators Bronze Quill, Silver Cert no. SW-COC-002360 Quill and Gold Quill

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model and adapt to the constantly evolving industry. So while open systems are essential to our business, there’s much more that must be added to the equation for our technology, or that of any IT provider, to thoroughly support the needs of our airline partners. In our Company section, Barry Vandevier, our chief information officer, discusses several aspects of our technology strategy, including how we use cloud concepts to take SOA to the next level, our Software-as-a-Service offering that supports 119 airlines across 23 open-system solutions and our move to an Agile development methodology. with Tom Klein These are just a few examples that support our commitment to develop President, Sabre Holdings flexible, adaptable solutions that meet your business needs today and grow with you for decades to come. find the speed at which technology in because it doesn’t offer the flexibility On our cover, Latin America-based evolves fascinating, yet it can be to expand with your airline’s changing Volaris explains what makes its Mexico’s I somewhat frustrating when you buy needs. So, for instance, five or 10 years premier low-cost carrier and how tech- the latest in, say, electronics, such as down the road when you want to make nology is one of its top three priorities, televisions, mobile phones and comput- significant changes to your business along with people and aircraft. ers, just to find that you have to make model, you’ll likely be forced to move Your airline runs only as smoothly and additional purchases to get the full to yet another technology platform to efficiently as the technology that sup- benefit of your upgrade. If you don’t support your needs. But why spend the ports it. And that technology must be make the right selection, you can find time and money if it’s not absolutely extremely flexible so as not to restrict that you’ve been boxed in by what was necessary? your business but rather enable your once considered the newest and great- As technology partners for the travel airline to grow without boundaries. est technology but has, in a short period industry, we continuously look at pres- I hope you enjoy this issue of Ascend, of time, become practically obsolete. ent as well as future needs of airlines. and I look forward to working with Technology clearly impacts every And while we produce solutions that are you to ensure your technology strategy aspect of our lives. Mobile phones that built on open systems, we don’t stop doesn’t box you in but rather sets you were once used only to make simple there. We build solutions that are flex- free to do business the way you want to phone calls now function as e-mail and ible and adaptable so they can be taken do business. Internet devices that allow access to apart and reconfigured to fit various everything a person needs to conduct airline requirements, setting you free to everyday business. Televisions that do business exactly the way you want decades ago relied on antennas to get to do business without restrictions or reception to a couple of local channels limitations. We don’t want our airline now use satellite to gain reception to partners to go down a path that works world news and entertainment. And today only to find that it’s outdated in airlines that once conducted most tasks five years and doesn’t support more manually are freed by technological modern technology. They should also advancements that enable them to have the freedom to adapt if business operate at top efficiency. needs change and they want to, say, No doubt technology is a necessity. change business models. We want to But implementing up-to-the-minute, implement solutions, and the platforms best-of-breed systems represents only to support them, that are the best today half of an airline’s technology strat- and remain the best five, 10, 15, 20 egy. And, while extremely vital, open years into the future. systems represent only a portion of Our airline services exchange platform what’s needed to support 100 percent — Sabre ® ASx SM Airline Services Exchange of an airline’s future needs. For several — gives airlines freedom to implement years, we’ve heard the hype about open new technology as it comes available systems being the “way to go” when … without constraints of rebuilding the implementing modern technology. Yes, current platform to conform to new it’s true that open systems should be systems. We’ve developed our solutions a key part of your strategy, but relying to integrate with other systems, support only on open systems will likely box you changes within an airline’s business ASCEND I TABLE OF CONTENTS

PROFILE INDUSTRY

6 16 32 Enjoying The Tailwind In Unison Highways In The Sky Afriqiyah Airways looks beyond Airlines achieve sizeable benefits Airlines can expect to see regional expansion to more by syncing up scheduling significant improvements to air lucrative international routes processes and using integrated traffic control systems in the near decision-support systems and long term 10 World’s Happiest Airline 20 38 Enrique Beltranena explains what The Glass Cockpit Gloves Off makes Volaris Mexico’s premier Electronic flight bag technology The struggle over Japan Airlines set low-cost carrier provides substantial benefits for the stage for a new order in global airlines and their crewmembers airline alliance negotiations

24 42 Play By The Rules Cargo Infusion New revenue management and Carriers that implement a sound pricing processes and IT systems cargo revenue management are needed to effectively strategy will achieve significant compete financial gains

27 46 Chatter Box Year Of The Tiger 10 Carriers can benefit from the right Chinese airlines cope with high- social media strategy speed rail, changing consumer behavior and technology’s pace of change

50 United They Stand The three main global alliances have achieved significant results during the last decade

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SPECIAL SECTION COMPANY SOLUTIONS

Unleashing The Power 68 74 56 Of Choice On “Cloud” Nine Lighten The Load Boosting ancillary revenues Sabre Holdings ® applies cloud Electronic flight bags are already requires a concrete shopping concepts to take SOA to the on many commercial carriers’ strategy that appeals to every next level flights today consumer type 71 77 59 Travel Agent No Blind Spots Gate Manager Of The Future Airline executives provide AirTran Airways leverages Sabre® Travel agents rely on valuable feedback to help evolve AirCentre™ Gate Manager to technological advances to the products and services efficiently gate a flight schedule succeed and survive provided by Sabre Airline and respond to irregular Solutions® operations 62 Channeling China 80 Online travel is expected to Maintaining Control represent 20 percent of China’s Industry consultants from Sabre total travel revenues Airline Solutions® can effectively diagnose MRO issues and 65 prescribe solutions Value Articulation It’s vital that the value of an airline’s 85 products is clear and can be easily Calling All Channels identified to achieve maximum Airlines have recently developed 77 sales potential distribution strategies that have led the way to a set of revenue- generation trends in the greater market

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Industry Fares And Traffic Source: Sabre® AirVision® Market Intelligence

By Kartik Yellepeddi | Ascend Contributor

Average Global Year-Over-Year Traffic and Fares

Based on data from Sabre®

AirVision™ Market Intelligence, in- 2010 2009 2008 cluding all global distribution sys- 2007 760 tems and an estimate of low-cost 320 carrier traffic, year-over-year traf- 740 315 fic continues to improve from 720 January and February 2009 to the 310 same period this year. However, 305 700 the average global airfare contin-

Millions 300 680 ued to decline during the first two 295 months of 2010. The average fare of 660 US$676.43 represents a 10.1 percent 290 640 decrease from the 2008 average fare 285 620 of US$752.52 for the same period. 280

Network-wide traffic Average ticket value

Average Airfare Trend On International Flights Departing Region

Airfare on flights from each region Domestic Oceania Domestic Europe have decreased since 2007, with the Domestic America Domestic ME Domestic Asia exception of Asia, which after falling Domestic Africa 12 percent from 2008 to 2009 has rebounded with a 4 percent increase from 2009 to 2010. 20%

15%

10%

-5%

-10%

-15%

-20%

2007 – 2008 2008 – 2009 2009 – 2010

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Domestic Fare Trends By Region Domestic Oceania Domestic Europe

Most regions experienced an aver- Domestic America Domestic ME Domestic Asia age fare decrease from 2008 to 2009, Domestic Africa led by domestic Africa with an almost 30 percent decrease. The lone exception was the Middle East, which saw 15% average fares increase nearly 10 per- 10% cent. The Middle East, however, is the only region to see average fares 5% decrease from 2009 to 2010, indicat- 0% ing the beginning of a global recovery -5% for the airline industry. -10% -15%

-20%

-25%

-30%

2007 – 2008 2008 – 2009 2009 – 2010

Year-Over-Year Regional International Traffic Domestic Oceania Domestic Europe Domestic America Domestic ME Domestic Asia Domestic Africa From an international perspective, traffic has clearly increased substantially from January/February 2009 to 20% the same period this year. Oceania 15% has led the way with a 17 percent in- 10% crease in the January/February time- 5% frame. 0%

-5%

-10%

2007 – 2008 2008 – 2009 2009 – 2010

Year-Over-Year Regional Domestic Traffic Domestic Oceania Domestic Europe Domestic America Domestic ME Domestic Asia While airlines in Europe and North Domestic Africa America have not added new capacity, the number of domestic passengers per region has grown significant- 20% ly from the first two months in 2009 15% to the same period this year, show- 10% ing substantial discipline on the part 5% of these carriers. Middle East has 0% realized the greatest improvement -5% in traffic at 16.08 percent year over -10% year, followed by the Oceania 11.6 -15% with a percent increase.

2007 – 2008 2008 – 2009 2009 – 2010

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Enjoying The Tailwind

While other carriers in Africa have struggled during difficult times, Afriqiyah Airways has been able to ride the storm out time and time again. It stays true to its objective of linking Africa’s cities together without making its passengers suffer through lengthy layovers, it takes advantage of modern technology, and it knows just when and where to expand in support of future growth and ongoing success.

By Lynne Clark | Ascend Staff

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oman philosopher Seneca said, “Luck is when preparation meets opportunity.” According to that definition, Afriqiyah Airways has been “lucky.” RWhile airlines worldwide have been slashing flights to match dropping demand during the ongoing global recession, Afriqiyah is among the handful of African airlines that have bucked the trend. Instead of slashing flights, the carrier is looking beyond regional expansion and is eyeing more lucrative international destinations. The nine-year-old, state-owned carrier flies once a day between Libya’s capital city, Tripoli, and Benghazi and has no plans to add more domestic routes. Currently, it has direct flights between Tripoli and 17 destinations in north, west and central Africa and the Middle East as well as to European destinations such as Paris, Brussels, London, Rome and Amsterdam. When it was formed, Afriqiyah had hopes to become Africa’s favorite airline, as spelled out in its corporate mission “to link the African countries directly with one another, without the need to suffer through the long connecting flights from Africa and Europe and then back to Africa again.” Afriqiyah Chief Executive Officer Rammah Ettir told reporters last year the airline has largely accomplished that goal. “We have made Tripoli a gateway to and from Africa, shortening routes from Europe and then developing the network to cover a considerable number of African destinations, which will be further extended to Asia and North America,” he said. The most immediate new route extension planned by the airline is to Beijing and Guangzhou, China. In the future, Afriqiyah Airways also plans to introduce new services to Leon and Milan and hopes to expand to the United States — particularly New York’s John F. Kennedy International Airport and Houston, Texas, which has headquarters for many U.S. oil companies. Afriqiyah Airways began positioning itself for international expansion in 2006. Photos: Afriqiyah Airways

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Afriqiyah Airways planes are painted in red, green, yellow and black (Africa’s traditional colors), with the numbers 9.9.99, referring to the birth date (Sept. 9, 1999) of the African Union.

The carrier signed a memorandum of old reservations system was outdated and understanding for the acquisition of six Airbus began searching for a new technology A320s and three A319s, plus an option for partner. In 2005, the airline partnered with three A330-200s. It has already taken delivery Sabre Airline Solutions® and chose compo- of three A319s, and has deployed them on nents within SabreSonic® Customer Sales the new Dubai route. Two of the three A330s & Service to effectively manage its travel- were also delivered last year and used to inau- ers and distribution channels. gurate new routes to Dhaka, Johannesburg “Afriqiyah was aiming to implement a and Kinshasa. state-of-the-art solution for its commercial At the time Afriqiyah was expanding functions, and the technology from Sabre its route service, executives realized the Airline Solutions was the right choice,”

According to Afriqiyah Airways director of commercial operations, Khaled Sawese, the collaboration with Sabre Airline Solutions was critical in helping the carrier gain efficiencies and grow revenues.

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said Khaled Sawese, director of commercial operations for Afriqiyah Airways. “The system we had at the time was unreliable and was unable to connect with other global distribution systems.” Sawese said the partnership with Sabre Airline Solutions was a key element in helping the airline become more efficient and grow revenue to increase its value in a short period of time. The technology company believed in Afriqiyah Airways and was willing to engage in a “risk-reward” initiative. “In addition to the SabreSonic CSS implementation, Sabre Airline Solutions was prepared to share the risk with Afriqiyah and embarked with us in a risk- reward type of engagement, where both companies needed to work hand-in-hand to be where we are today,” he said. “This project was successful, and we are pleased that Sabre Airline Solutions has helped us improve our processes and procedures, which has also helped improve our financial performance.” Afriqiyah Airways’ Airbus A319 aircraft cabins are configured with 16 business-class and 96 Early Headwinds economy-class seats with the latest in in-flight entertainment. Both cabins are designed with In the late 1980s, the country’s air comfortable seats and warm interior lighting. transport sector was feeling the affects of the isolation imposed by United Nations was then politically unacceptable to shut multi-billion-dollar infrastructure development sanctions banning all flights to and from it down. plan focused on the renovation and con- Libya and prohibiting the supply of all avia- “So, many elements came together,” struction of airports, roads, railways, housing, tion equipment. Flag carrier Libyan Arab Shadi said. “The government, therefore, schools, hospitals, and water and sanitation Airlines was on life support having borne decided to establish a new airline specifi- projects. the brunt of sanctions. The year before cally to link Libya with Africa and ultimately Afriqiyah CEO Ettir estimated that 70 percent the imposition of United Nations sanctions, connect Africa with the rest of the world. of the airline’s business consists of passengers the carrier had 35 passenger aircraft, but it This was the thinking behind Afriqiyah transiting Tripoli on their way between Europe shrank to just one operational Fokker F28 Airways. It was possible that Libyan Arab and various African capitals. The most heav- and one Boeing 727 by 1999. Airlines would not recover and, in such a ily traveled routes for business are between “There were many days when we did situation, Afriqiyah was in place to serve Tripoli and Paris, Accra, London and Dubai. not have a single aircraft in the air,” Captain as the state airline.” Only 15 percent of Afriqiyah’s passengers Sabri Shadi, former Afriqiyah Airways chief As it turned out Libyan Arab Airlines are tourists, but Ettir expects that to change executive officer and now chairman of the (now Libyan Airlines) survived and now as the country begins to see results from Libyan African Aviation Holding Company flies to 10 destinations in Europe, five in infrastructure improvements. In Tripoli alone, told Airline Business in a 2008 interview. North Africa and three in the Middle East. 10 five-star hotels are being built and a number “We had 450 pilots in the airline at that time; To resolve the anomaly of two national of four- and three-star hotels are already com- they were not doing anything. airlines, the Libyan government has placed plete. In fact, whole tourist villages are now “The damage done was so great. It was both Libyan Airlines and Afriqiyah Airways operational and many more are being erected really difficult to recover. Although the United under a single state-owned holding com- throughout the country. Nations sanctions had been lifted, the U.S. pany, Libyan African Aviation Holding Libya is undoubtedly ready for takeoff, and embargo carried on for another four years. I Company, with the two carriers expected Afriqiyah Airways is clearly prepared to enjoy tried so hard to find solutions for the fleet, to merge by 2011. the tailwind. a and although we signed a letter of intent with Airbus in late 1999, we were unable to Taking Advantage Of Tailwinds buy new aircraft until early 2006.” Today, Afriqiyah Airways has carried more With questions about the viability of than 1 million passengers and is focused more Libyan Arab Airlines, it seems paradoxical on its arrival than departure. After a long period that the Libyan government would establish of sanctions and isolation, Libya appears to another state-owned airline. have turned a corner and is now occupying “At that time, the Libyan government was the international limelight thanks to the coun- asked to bail out struggling West African try’s booming oil- and gas-driven economy. multinational Air Afrique,” Shadi said. A growing number of foreign investors are Also, Libyan Arab Airlines was not in traveling to the country to take advantage of good shape and was suffering badly from lucrative business opportunities sprouting up Lynne Clark can be contacted at the consequences of the sanctions, but it around oil and gas industries, and an ambitious [email protected].

ascend 9 In response to the many new challenges it’s faced during the past few years, Mexicana Airlines has made highly strategic changes to its commercial side of the business as well as experienced great success from its low-cost subsidiary.

The World’s Happiest Airline A Conversation With … Enrique Beltranena, Chief Executive Officer and Managing Director, Volaris Photos: Volaris rom the time of its inaugural flight in of the carrier’s 38 domestic and two international In addition to providing enjoyable and memo- March 2006, Volaris, known as the destinations. In addition, 21 of the airline’s Airbus rable experiences for its customers, Volaris “World’s Happiest Airline,” has been aircraft now sport the individual winners’ names enriches the lives of those who are less fortunate anything but a typical, ordinary airline. on the fuselage. in the communities it serves. Last year, the carrier The high-efficiency carrier shakes it up “We received over 20,000 story entries from became the official airline of Fundación Televisa Fyear after year, bringing surprise and excitement our customers describing what they would do “Nuestro Destino es AYUDAR,” providing educa- to its customers and employees, who are known if they had one of our airplanes at their disposal tional and motivational opportunities for children as “Ambassadors.” For example, to celebrate its for a year; the selection is a well-represented in two orphanages and foster homes in Mexico. first anniversary, Volaris offered 45,000 tickets group from all over the country,” said Enrique As a reward for outstanding performance or to all of its destinations for a total fare — taxes Beltranena, Volaris chief executive officer and activities at their respective institutions, 65 kids included — of US$20 per ticket. And that was managing director. “We selected the 21 most between the ages of 3 years old and 15 years just the first of many surprises the Mexico-based outstanding stories and are certainly pleased old flew to Monterrey and participated in fun carrier would offer the market during its first four with the tremendous response we got from our activities held at the MARCO Museum and years. clients.” Kidzania Monterrey. In addition, children saw a Volaris uniquely engages with the traveling In 2008, Volaris and Coca-Cola Zero teamed performance by pop singer Tatiana during the public through a series of contests and promotions up to give 60 contest winners a concert that event. that undoubtedly pique the interest of current and was held 30,000 feet above the ground, aboard “For us, it is a true honor to be part of such prospective customers. For the past two years, a Volaris flight. The in-flight concert, Vuelo Zero, significant events that will truly mark the lives of the “Your Name On A Plane” contest has driven featured two of the most popular Mexican rock each and every one of these children, serving as customer participation, generating great results bands, Zoé and Molotov. To enter the contest, a reminder that a promising future does lie ahead for the airline. Last year, 21 Volaris customers participants simply had to register and accumu- for them,” Beltranena said. won the contest, earning a year of free travel for late “Zero Codes” from 400 milliliter and 600 Volaris customers, employees and communi- the winner and a guest on any Volaris flight to any milliliter Coca-Cola Zero bottles. ties aren’t the only beneficiaries of the airline’s ASCEND I PROFILE

thoughtful, giving, responsible ways. The environment is also an issue constantly appearing on the carrier’s radar screen. In 2008, the International Air Transport Association presented Volaris with Latin America’s first Green Airline Award and also granted it the Green Aviation Partner certification. Last year, the airline documented, implemented and achieved certification on an “Environmental Management System” under the ISO 14001 norm awarded by NORMEX, an entity certifying the airline’s environmental program. With this announcement, Volaris became one of the first airlines in Mexico and Latin America to operate in accordance with these regulations. Beltranena follows his conviction that “what makes an executive great is a deep vocation to be and remain human, motivating his team and making sure they move forward, overcoming all hurdles.” As a result of his ability to put his beliefs and work ethics into everyday practice, last October, during the sixth Annual ALTA Airline Leaders Forum in Cartagena, Colombia, Beltranena received the prestigious “Federico Bloch Award.” In a recent interview with Ascend, Beltranena shared his thoughts about what makes Volaris Mexico’s premier low-cost carrier. Volaris ranks No. 34 among the top 100 companies to work for in Mexico because of its pride, Question: In just three short years after teamwork to achieving high-efficiency goals, and executing under moral principles and behavior. Volaris’ inaugural flight, the carrier, in April 2009, was ranked by the Great Place to Work teamwork to achieving high-efficiency goals, and mailing, electronic chats and events each month. Organization as one of the best 100 companies executing under moral principles and behavior. to work for in Mexico. The airline ranked high Q: Part of Volaris’ mission is to enable more in employee pride and comradeship as well as Q: How has the airline built such a strong people to travel “WELL” … placing great empha- respect and credibility. How would you describe culture? What keeps employees satisfied and sis on the term “WELL.” What does this mean Volaris’ corporate culture? motivated? And what impact does this type of for the carrier and its customers? Answer: Fun and happy travelers and employ- culture have on the airline? A: With safety, treating them with fair human ees! When we founded the company, we knew A: We all dreamed of having tons of fun and respect and not just as a reservation number, that one of the most important challenges we being happy doing our work. Our promotional guaranteeing on-time performance or their money faced going forward was managing our talent. campaigns developed by our chief commercial back, at a fair price, well informed, entertained, We started day 1 with an entire philosophy that officer, Holger Blankenstein, supported by our with reliability, receiving more than what we not only applies to our Ambassadors (our employ- marketing director, Jose Calderoni, have to be promised, with credibility (which means integrity ees representing the brand and a lifestyle) but very fun and very close to our targeted client in service), with lots of warmth and reasonable also our customers. As I always said, we shared as well as be born and incubated in our com- comfort. We aim to carry out these actions, the notion that aviation had lost sight of the ability pany environment. When we launch them, we with a lot of creativity before, during and after to treat passengers as real customers. The only guarantee ourselves that our Ambassadors are the flight. For the carrier, this means more and way to shift this behavior is by starting in house. living them. Among one of the most fabulous more training, and for the customers, it means I remember how I dreamed, a year before while achievements we’ve had has been the brand they can fly more … now they can fly rather than certifying, what the culture was supposed to be. penetration in the market. If it worked for the spend hours on a bus. It’s about being a company Our conclusions were laid out in a document public, which is a reflection of our Ambassadors’ that understands and speaks directly and clearly called “Working Together.” This document refers behavior, imagine what it did internally for the to them. to our personnel as “Human Talent,” since we company! I remember a discussion we had when an needed a fresh culture that we could develop, I stand up every morning with the dream of Ambassador suggested to write the legend with passion to execute, focused on common showing Mexico that it is viable to make aviation “Proudly Mexican” below the Mexican flag on goals, generating synergies among the team and in this country a fabulous, enjoyable, effective the tail of the aircraft. It was during the time we committing to becoming an exceptional culture work environment. I start the week planning were opening our U.S. routes. Someone told us and working environment. We never lost sight our Ambassadors communication and how we to be careful because immigration was a sensi- of the fact that we are all humans that must can become one of the top 10 companies for tive issue. We are proud to show the world that be treated fairly: 42 percent of our company’s which to work, an excellent place to develop a we are a Mexican carrier, with a Mexican labor Ambassadors do not hold the same position they professional career in the aviation business. You force, with a huge emphasis on our community had when we started, and they have grown up watch, we will make it … it is another set of travelers. My next step was to walk to the legal with the company; 82 percent of our people sub- guarantees! council office at our company and ask them to mitted their point of view to the Great Place to We found 83.4 percent of our Ambassadors prepare the paperwork to become a naturalized Work Organization, assuring the world we are a feel they are completely informed of what is Mexican carrier. We all show our customers great company to work for — number 34 among happening in the company. We realize 50,000 infor- that they are nothing but a great market that the top 100 in Mexico — because of our pride, mation impacts in our internal network of screens, increasingly needs to be treated fairly and with

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respect. The slogan of the launch campaign was on-time performance, there was no awareness. what happened to the other five airlines that “The U.S., more Mexican every day,” which, by Our variable compensation is very much oriented appeared and already disappeared in the market the way is totally true, and we used a simple to it, with a difference to the drivers of compensa- during the past two-and-a-half years. If company way of writing typical Mexican words and cultural tion based on punctuality. Why? Because we are people enjoy what they do, and if they enjoy their elements, spelled out as they would be read in significantly oriented to it. When we launched work, the natural result is better experiences English. The campaign has ranked among the the airline, not only did we have to communicate providing better service. We do this because best campaigns of the year in Mexico, and cus- well that we were delivering as promised, but working for Volaris is unique in the aviation tomers reacted very positively to it. We became we also needed a product differentiator without industry in Mexico and because we all have great the highest market-share carrier in San Francisco representing a higher cost to the airline. On-time fun doing so. and Oakland, California, after four months. performance is something you can achieve by Have you ever heard a passenger telling his delivering systems, managing airports, etc., but flight experiences after a trip? When you are able Q: Social media, such as Facebook and Twitter, the only real element that makes it happen in to create memorable and positive experiences, is becoming widely used in the airline industry as real life are those people working at the airline, they will be that much more lasting. In fact, we a method to communicate and engage with an incurred cost, not an additional one. When made an ad about it: it was about a little boy who customers. In what innovative ways does Volaris we launched Volaris, the legacy carriers matched went to see the whales in Los Cabos. The kid leverage social media? What impact does it have our pricing levels, so we sent a market message returned from his trip and told a story about hun- on the airline? And in what way does it serve as that pricing with service was not all; you have to dreds of dolphins swimming around the whales part of the airline’s vision? have a differentiator, and one of ours is delivering and, even without having had the experience of A: We need to speak in the same language, on-time performance. touching the whales, he spoke to his peers at form and in the same way those communities school about the size of the whale describing are communicating. Clearly, this is not the only Q: Volaris’ vision is to transcend by creating it as “hu-hu-hu-hu-hu-hu-huuuuuuuuuuuuuuuu- way we communicate with them, but it certainly and living the best travel experiences. What mongous! Humongous!” has become one of the most important ones. does the airline bring to the traveling public that We set out to create unique, unforgettable When we classified our niches, we found that surpasses that of its competition? travel experiences, making dreams come true the least-loyal group of travelers are young, A: It is all precisely part of our flying WELL and then aiming for passengers to retain them between 16 years old and 32 years old. They are notion, as I explained. Our competitors’ mental- as such. We do it with creative people who very much driven by price, but deep down inside, ity did not take us seriously in our goal to develop new ideas in an environment where we they are sensitive to what is aspirational, or what transform the aviation industry by evolving, empower people to do things differently, with is cool. They react much more to feelings and innovating and satisfying. I think the key is less money but without losing sight of safety, increasingly communicate via mobiles and the not only to improve day after day, but also to customer experience and growing with sustain- Web, at their convenience. In terms of media, it is remain as the best. So, when we speak about able profitability. Flying is just part of the travel the niche with highest growth in Mexico. So, we transcending, we mean staying forever in the process, it is not the goal. Traveling is about living speak to them, promote to them, create games, market in the long run, and this was clearly not and dreaming, it invites us to live with joy! So solve their requests and, in general, identify with them through mobiles and social media like Facebook and Twitter. At the airline, this means thinking the way the customer does, in their most comfortable environment, which led us to create a department that communicates with them and prepares campaigns for them using their most appropriate communication tools. The result for the airline vision was again helping them fly WELL, but it has developed twice the loyalty in that niche than before we started. A key result is retention, in a niche where the prevailing mode of transportation is flying as opposed to previous generations who used to consider bus transportation primarily.

Q: Volaris has reached exceptional on-time performance levels, as high as 98.1 percent some months, supporting its on-time guarantee on all flights. From the time a customer arrives at the airport for a flight to the time the flight has landed at its destination, what steps does Volaris take to ensure an on-time departure and arrival? On those rare occasions that Volaris doesn’t deliver on its on-time promise, how are customers compensated? A: When measuring those attributes passengers value most, after pricing and safety, we learned that on-time service was a priority. At the Nearly half of Volaris’ employees, called Ambassadors, do not hold the same positions they had start, we were very price competitive and drew when they started; they have literally grown and expanded with the company. And 82 percent of in lots of customers. But when asked if they the carrier’s people submitted their point of view to the Great Place to Work Organization, realized how successful we were in terms of confirming to the world it’s an excellent company for which to work.

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then, why not aspire to convert the process of In the beginning, and for about the first year, Q: Volaris has clearly moved up the ranks flying into that? Sounds reasonable! we were the only airline certified and, slowly, quickly in Mexico — rated as the nation’s another carrier obtained the certification. It second air passenger transportation company. Q: Airbus has recognized Volaris as the airline has a huge impact in on-time performance In its goal toward total leadership nationwide, with the most efficient use of its Airbus A319 air- and further, the process was worthwhile for what types of innovative products does the craft. How does the airline operate this particular some U.S. airports, where we are already Cat carrier offer its clients that will help make it the aircraft more efficiently than other carriers that III-certified. airline of choice? What role do employees play utilize the same equipment? in growing Volaris’ customer base and gaining A: After our Ambassadors, our fleet is our Q: Volaris has achieved many successes customer loyalty? most important asset. It is costly and, naturally during its short tenure. What are the main A: Our goal of leadership nationwide is because of this, it is essential we use it optimally. contributors to the airline’s overall success? limited to the capacity of what we can do with My great, great grandparents came from Spain A: An extremely disciplined board of direc- our fleet. We already have a decent share during the colonization period with one single tors drives the company to follow the original and, unless we modify the model, I don’t see purpose: to offer efficient transportation in the plan. The management team with most of Volaris being the total leader. This is the case colonies. I remember my grandfather saying that them coming from outside of the industry, and with most low-cost carriers around the world. a still mule never charges for its service. Aircraft most of them being the best in their respective As a result, and based on the Mexican peso are just the same. Why would you have an aircraft fields, learned to be great aviation people, in risk, the company also had planned to create a sitting on a ramp rather than charging for service? addition to the operating shareholder TACA natural income hedge in U.S. dollars to lever- We put them to good use, so we can dilute costs and, clearly, the Volaris team, of whom I have age versus its U.S. dollar cost proportion. The throughout the network. We are flying each referenced throughout. opening of the U.S. market was on the plan aircraft more than 12 hours of actual flight time a since the company’s conception and is stated day per aircraft, which translates to more than 14 Q: Looking back, what are some of the in the original “Concession” (the equivalent of hours a day referred to block times. greatest challenges the airline has faced? How the U.S. Department of Transportation authori- The second element is on-time performance, has it overcome these challenges? What were zation). We now intend to continue providing which we already covered, but as examples it some lessons learned? the same product quality to our targeted mar- encompasses maintenance and reliability, the A: Every day of the past three-and-a-half kets in the United States, and most of the capacity to turn around in less than 22 minutes, years were a challenge, especially last year. growth will come from there. I would say the the network configuration, airports providing We have a saying in Spanish that states more expansion of the current product beyond the efficient service, where and how to maintain the or less, “Fleas stick to the skinniest dog.” Well, Mexican border is the most important step fleet, etc. we were that dog! I think back on those years now. But this comes with a major alliance with The third element is where and how you and really thank God for guiding our team! Southwest Airlines to accomplish our market utilize the fleet. You do not run the most famous The most important lesson besides being objectives. Everything that is necessary to horse race Grand Prix with mules or camels. You committed was remaining humble despite our pair the two airline systems and products is search for the best-fitted horse to win, handling achievements. happening as we speak. top distances, altitude, weather conditions, horse track conditions, etc., all are key. Aircraft are the same. They are fitted to a certain mission, and the more you adapt to these, the better they perform. Selecting the right aircraft was important; designing its features is paying back.

Q: Volaris is the only airline in Mexico certified for very low visibility (Cat III) operations at Toluca Airport. How has it achieved this certification? What does this mean for Volaris? And what impact does it have on the carrier’s local competition? A: When I came to Mexico, Pedro Aspe, chairman of our board, gave me four alternatives to fly to and set a base for the airline. From our market perspective, Toluca was the most appropriate one. But as in the past, and as is still the case, at times, the location sometimes has lots of fog. Since on-time performance, high utilization and fast turnarounds were of the essence — fixing this piece of the puzzle became a basic need. The federal government contracted International Civil Aviation Organization specialists and confirmed that this certification was important. Providing the airport with first-world technology was then a forced step. They did it, and we bought the fleet with the capabilities and training as needed. Volaris, the official airline for Fundación Televisa, further supports the communities it serves Aviation is an extremely complex business that through several initiatives such as Teleton (the largest fund-raising campaign in the country simply does not tolerate improvisation, given that favoring disability patients and this year included children with cancer), transportation of organs it can be so costly. for transplants, and transportation for injured and burned individuals.

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two-and-a-half years. This advantage allows

us to produce fewer CO2 emissions and reduce noise. Flying techniques are very helpful in saving fuel and polluting less, and we have tackled most of them. Finally, recently we certified the company under ISO 14001 standards and started offsetting our corporate office emissions purchasing carbon bonuses. But this is not enough. Our social responsibil- ity campaign carries out a variety of ecological activities to support the community in this goal. We were the first airline in Latin America recognized by IATA in our progress and provided ALTA with a questionnaire that basically helps airlines fulfill many actions, as much as they can, to support the environment. I repeat that the major accomplishment was to filter, convince and make our labor force understand the purpose of the campaign to inherit a better world for our children.

Q: In addition to being the official airline for Francisco was among one of 21 Volaris passengers to win last year’s “Name On A Plane” Fundación Televisa, what unique ways does contest. In addition, he earned one year of free travel for himself and a guest on any Volaris flight. Volaris support the communities it serves in terms of volunteer and fund-raising efforts? Q: The contest to win in-flight seats to the aspiration for the consumer. We afford it based A: We do have educational campaigns, Vuelo Zero rock concert for the Latin American on our capacity to position their products and house building, supplemental hearing aid prod- MTV awards proved extremely successful for the onboard sponsorship opportunity. ucts, nutritional efforts, Teleton (the largest Volaris. What did this promotion involve? What fund-raising campaign in the country favoring impact has it had on the airline? What other Q: Volaris has a codeshare agreement with disability patients and this year included chil- prizes were awarded to contest participants? Southwest Airlines. What does this agree- dren with cancer), transportation of organs for A: Vuelo Zero was the first one. We’ve also ment involve, and how does each partner transplants, etc. We also provide transporta- done the Tigres del Norte, the most popular airline benefit? What requirements must a tion for injured and burned individuals. norteño band in the country. The purposes of carrier meet to partner with Volaris? these activities were explained before, and A: The agreement is essentially that … a Q: What role does technology play in the our results were amazing. With minimal codeshare agreement. The agreement will be success of Volaris? prizes/cost, we generated a ton of publicity expanded upon implementation, and we will A: Wow! Everything! I mentioned our in both cases. The first one associated with announce further reach at that time. people and our aircraft previously as our priori- Coca-Cola and the second with the producers, ties. The third is technology, which is why we Bandamax. It involves lots of coordination, Q: How has the success of Volaris contrib- are moving toward SabreSonic® Customer especially when it comes to guaranteeing uted to Mexico’s economy? Sales & Service and some other components. in-flight safety and security. Authorities were A: We firmly believe that without transporta- Sabre Airline Solutions ® technology is by all fully participating in the planning phases and tion, there is no economical development — a means the foundation for growth and has the that is the huge challenge from the operational simple premise! In the first years, the market systems with which will clearly support the perspective. From the market perspective, domestically grew from 22 million domestic next growing phase. We launched three-and- it involves coordination of advertising, espe- passengers to almost 28 million. In addition, a a-half years ahead with an e-ticket platform. cially in terms of how to position the event and true alternative to Mexico City’s International Distribution for us is direct to the customer related campaign. Doing this well guarantees Airport was developed in Toluca, and the on about 82 percent of our sales. It is clearly a great return on the brand. Most of the State of Mexico, where Toluca is located, a driver to grow in the United States, and we impact is measured by the return in multiples has benefited greatly from the creation of will keep on using it to enhance the customer of the publicity campaign. The prizes were this development. I could add so many more experience and customer research. very simple! Fly and participate in the event. other non-subjective issues, but I prefer to stick to these two. I could also add that a new Q: Where do you see Volaris in the long Q: While other carriers strive to generate category of airline was added to the market, term — five to 10 years down the road? additional revenue through ancillary sales, one based on value, service and style. Plus, A: We are positioned to become a preemi- Volaris offers customers an onboard array of the expansion of electronic commerce. nent value airline for Mexico and in flows to/ snacks and drinks from well-known brands from the United States. The business model such as Coca-Cola, Krispy Kreme, Canel’s, Q: Volaris tackles environmental issues proved itself this year when we achieved our Dove, Cervecería Cuauhtémoc Moctezuma, straight on. What are some of the sustain- first profitable year. The network and the Sanborns and Casa Cuervo at no additional ability initiatives the airline has in place? point-to-point model keeps being the edge for cost. How does the airline afford to offer top What are your greatest environmental profitability, and we will expand in twice our brands on a complimentary basis? accomplishments? actual size during the coming four to five A: It is basically a barter agreement with the A: We firmly support our campaign promot- years. We will continue enabling more people sponsors. They get commercial exposure, we ing our capacities as having the most modern to travel WELL … always placing great empha- get their products, which have to represent an fleet in the Americas, averaging just over sis on the term WELL. a

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Airlines can realize sizeable benefits by syncing up their scheduling processes and leveraging integrated decision-support systems.

By Sergey Shebalov | Ascend Contributor

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irline planning is traditionally per- of the scheduling problems and attain solu- — are not meant to provide a complete pic- formed in several stages. This tions unreachable via consecutive method. ture of the airline scheduling process, but separation happened due to In addition, integration leads to standardiza- rather illustrate several key areas where high complexity of the involved tion of information streams, simplification clear opportunities for integration exist. challenges as well as airlines’ of communication processes and better A business structure where dif- administration of business practices. Demand-Driven Dispatch ferent units are responsible for completion of Integration is a complex concept that A classic example of integration in various tasks. Following this practice, most de- can be realized on several levels, such as decision making is close-in re-fleeting cision-support systems provide solutions for a integration of automated decision-support or demand-driven dispatch. This process specific task. However, scheduling processes systems. To take advantage of all benefits combines fleet assignment and revenue affect each other, and significant benefits can provided by these systems, integration management practices. During the fleet be achieved if decisions are made simultane- on other levels — such as data storage assignment phase, each flight is assigned ously. and manipulations, business objectives and a specific aircraft type so the schedule is Decision-support systems have been performance measurements, organizational operational and produces maximum profit. widely used in the airline industry for structures, and processes — must be This process is usually completed two nearly 50 years. Currently, many of them implemented. to four months before operations and is work as integral parts of the planning done on an aggregated level for a typical and operations control processes. Airline Integration Opportunities day or week. Revenue estimation is based scheduling represents one area that has Airlines can benefit from integrated deci- on strategic passenger demand forecasts probably benefited the most from employ- sion making as it pertains to scheduling that account for influence of competition ing these systems. These benefits are due processes. Four examples — demand- and network effect but does not use fine to the ability of decision-support systems to driven dispatch, network development, adjustments practiced in revenue manage- automatically consider multiple constraints integrated routing and integrated recovery ment. Consequently, close to the date of and objectives and obtain optimal solutions within operationally accepted time limits. However, the full potential of decision-sup- Impact Of OSS On Revenue port systems utilization is far from being realized. The airline scheduling process usually begins at least a year in advance and continues all the way to the day of 20 operations. The goal is to optimally allocate 18 all available resources — aircraft, crew, (4) airport slots, ground equipment, mainte- 16 nance facilities — according to the airline (3) 14 business model. Until recently, complexity (2) of airline operations never allowed creating 12 a complete and computationally tractable (1) model describing creation of a schedule. 10 To overcome this difficulty, the scheduling 8 process is divided into several stages such as network development, fleet assignment, 6 crew scheduling, revenue management (0) and maintenance planning. Following this 4

approach, decisions are made sequentially, Revenue contribution (%) 2 so an output of one stage is used as an input for the next one. Consequently, most 0 of the currently used decision-support 60 62 64 66 68 70 72 74 76 78 systems are specialized in solving one or several closely related problems occurring Load factor (%) within a particular scheduling stage. No YM A major disadvantage of this approach YM is sub optimality of the overall solution. YM+Pricing By fixing some of the decisions on the ODFAM earlier scheduling stages, flexibility of the ODFAM+Pricing later ones is reduced and, therefore, they may yield poor results. On the other hand, ignoring some of the restrictions early often cause infeasibility later, and the process has to go through several manual feedback loops before an acceptable solu- Simulation results demonstrate potential revenue improvement from application of integrated tion is obtained. DSS to airline fleet assignment process. Each curve represents a potential revenue improvement Recent developments in operations as a function of load factor. The lowest curve (0) describes the solution obtained by a stand- research algorithms and improvements in alone leg-based fleet assignment model. Other curves show the effect of consecutive integration quality of accessible hardware resources of revenue management, network connectivity and pricing considerations into this model. As provided an opportunity to combine some a result, revenue grows by 8 percent to 12 percent.

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Thus, serving a particular market might be profit- Airline Scheduling Process able only if frequency is high enough to make an airline competitive. Finally, departure and arrival times of each flight should be chosen so total network connectivity is maximized. These decisions affect not only originating and terminating passengers by providing them service at the most convenient time but also passengers making connections. Instead of evaluating each market individually, a decision-support system should assess performance of the entire network as a whole. Often times local demand is not significant enough to make a market profitable and only contribution from high-yield connecting traffic justifies operations. In addition, block times for each flight can also be optimized by taking into account revenue potential, reliability and cost of the schedule. Clearly, all these decisions affect each other and to achieve maximum results, they should be made simultaneously. There are two main objectives that should be kept in mind while the network is constructed. First, total revenue potential should be maximized. Generally, revenue calculations are based on a forecasting Airline planning is a complicated, multistage process with numerous interdependencies and system that is able to estimate traffic for each feedback loops. Different stages of this process employ specific decision-support systems that available itinerary. Most forecasting systems are often inconsistent in objectives and constraint. Multiple opportunities exist for integration utilize customer choice models and follow a of these systems that would lead to significant improvements in airline profitability and opera- well-structured process: tional robustness. Total market demand is estimated for each market an airline plans to serve. departure, it might become obvious that This idea was first introduced in 1993. All possible itineraries available to a cus- the aircraft type originally assigned to a Since then, several different implementations tomer are constructed. particular flight is not optimal. In this case, have been realized and successfully practiced. Each itinerary is evaluated according to mul- the flight is either under capacitated and Reported results vary depending on sophistica- tiple quality criteria such as total travel time, some of the valuable demand is spilled or tion level of involved scheduling and revenue number of connections and departure time. over capacitated and some of the seats on management practices. The most advanced sys- Total market demand is split among all itin- an aircraft are spoiled. tems provide up to 3 percent revenue increase. eraries according to their utilities and spill, On the other hand, revenue management oper- and a recapture model is used to account ates on a much more detailed level. Compared to Network Development for capacity restrictions and obtain traffic a strategic forecast that includes only average Network development is completed far values. total number of passengers expected to travel in advance and includes several important Second, the resulting network should be on a flight across the entire period of operations, decisions. operational with available resources. It is a forecast produced by revenue management First, network structure is identified by select- impossible to make sure the schedule satisfies systems has information for each flight on a ing new markets that should be served by an detailed resource constraints at this stage of particular departure date for each booking period, airline and current markets where service should the planning process. However, incorporat- fare class and point of sale. In addition, 10 to 20 be discontinued. This decision should be consis- ing major restrictions on an aggregate level days before departure, a significant portion of tent with an airline’s business model that specifies ensures a smooth transition to future stages bookings for the flight is already observed and, either point-to-point or hub-and-spoke network of the planning process. The network should therefore, information about expected load is type. In addition, market performance evaluation be balanced, connected and consistent with much more accurate. is affected by multiple macro-economic and operational characteristics of an airline’s fleet. Using this information, some fleeting deci- service-related factors. Market selection is tightly Required utilization of aircraft, crews, airport sions can be changed so assigned capacity better connected to codeshare agreement optimization. gates and other key recourses have to be matches expected demand. These decisions An airline can serve a market either by using its within realistic limits. In addition, international have to be made carefully since most scheduling own equipment or by marketing flights operated service agreements as well as slots availability, stages following the original fleet assignment by a partner airline. Optimal choice of partner airport curfews and other constraints must be are already completed at this point, and there flights to be marketed by an airline as its own satisfied. is no time to adjust their results for the new and revenue proration schema can significantly Network development is one of the assignment. For this reason, adjustments made improve airline network potential. most difficult areas of the planning process to to a schedule are usually limited. For example, Second, service frequencies should be deter- formalize, and truly integrated decision-support if two aircraft belong to the same crew family, mined for each local market. It is well known that systems are still under development. However, their swap would not disturb crew assignment. dependency between frequency and demand preliminary studies show that overall revenue Aircraft rotations can also be preserved if only shares is described by an S-shape curve. This impact from optimization of an airline’s net- out-and-back cycles in a hub-oriented network means that an airline with higher frequency share work structure can be as high as 8 percent. are swapped. obtains unproportionally high demand share.

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Integrated Routing drastically different on a day of operation when a with each other, the overall performance is far Once the network structure is determined and disrupted schedule has to be recovered in a matter from optimal. fleet assignment decisions are made, flights served of minutes. Delays caused by aircraft mechanical Another issue is consistency in data flows. by aircraft of the same type should be linked failure, crew unavailability and especially weather For different systems to be capable of sharing infor- together. Aircraft routing is a process of sequencing conditions can easily affect all areas of airline opera- mation, their data interfaces should be standardized. flights into lines of flying that later can be assigned tions and propagate through a large part of its Airlines typically use some internally built systems to a particular tail. Crew routing or crew pairing is network. Flights might need to be canceled, diverted and others provided by various external vendors. a process of sequencing flights into pairings that or delayed; aircraft and crew rerouted; and passen- These systems are developed in different periods later can be assigned to a particular pilot or cabin gers reaccommodated. of time and use different data manipulation tech- crewmember. Traditionally, these two processes are If these decisions are made independently, the nologies and data organization principles. Achieving completed sequentially starting with aircraft routing quality of the resulting recovery solution might be consistency in this area is a costly and labor-intensive that is later used as input for crew routing. The low. For example, if a flight is delayed, the crew task, but it is absolutely necessary for the success of idea is to have an assignment with crew following might not be able to operate it any more due to legal the integration effort. an aircraft, so the number of times pilots or flight restrictions on the length of a duty. In this case, a Finally, computational complexities of attendants have to switch aircraft is minimized. reserve crew has to be used, resulting in significant integrated models require application of advanced Many airlines use this approach to reduce the extra expense. In addition, transferring passengers mathematical algorithms, usage of powerful impact of schedule disruptions caused by weather from the flight are likely to miss their connections, computers and, therefore, high qualification of or aircraft maintenance issues. However, fixing flight and they will expect some type of compensation decision-support system users and maintenance connections at the aircraft routing stage significantly such as tickets on another airline or meal and hotel personal. reduces opportunities for crew cost minimization. vouchers. Decision-support systems currently focus on To overcome this limitation, aircraft and crew Multiple recovery options often exist, and they solving problems in specific areas of the plan- routings can be built simultaneously. During this pro- have to be evaluated with respect to all involved fac- ning process. Integration of these systems can cess, flight connections that minimize crew costs, tors in a short amount of time. If an airport’s capacity significantly improve quality of resulting schedules satisfy aircraft operational constraints and maximize is reduced, an airline receives limited number of slots and strategies. However, due to the significant revenue are prioritized in a series of iterations. Thus, and should choose the most critical flights to be length of the scheduling horizon and complexity the system is incentivized to use the maximum operated with all others delayed or cancelled. The of involved processes, it is impossible to collect all number of such connections in a solution, and efficiency of a recovery plan is usually measured by decision making into one model. Instead, individual crews are guaranteed to stay with the same aircraft the time required to bring operations back on plan decision-support systems can be linked together as much as possible. This approach helps reduce and a combination of factors such as number of so a flexible scheduling environment is created. In crew costs by about 1 percent without sacrificing cancelled flights, delayed flights, deadheaded crews this environment, individual systems should be con- schedule robustness. and unaccommodated passengers. An integrated nected to each other through shared objectives and Aircraft routing decisions can also be integrated approach recently tested in a disruption simulation consistent restrictions. Each system should be able with gate assignment and maintenance scheduling environment showed a double-digit percentage to react automatically to internal schedule modifica- processes. Gates at each airport are assigned to improvement — including a 12 percent decrease in tions and external factors. a pair of arriving and departing flights; therefore, passenger delays and 69 percent improvement in Several key conditions have to be satisfied aircraft routing is an input for this problem. However, crew deadheads — in multiple categories compared for the successful integration of decision-support gating decisions are usually subject to many restric- to a sequential recovery method. systems: tions such as time-related constraints, adjacent Standard data interfaces must be established gates availability and custom requirements. In addi- Others between different systems. tion, gate planners usually have their own metrics, There are many other areas where integrated A clear depiction of how the processes flow measuring quality of an assignment. Aircraft routing decision-support systems would provide significant should be established, and operational constraints that is built without any knowledge about these benefits. Systems used in revenue management and objectives should be made consistent across constraints and objectives could result in a poor gate can incorporate decision making in pricing and all integrated areas. assignment or no feasible solution at all. marketing as well as account for auxiliary revenue Administrative resources involved in the integra- In this case, rotations are adjusted manually with opportunities. Airport scheduling systems should tion effort should receive proper training, and their several feedback loops between ground operations simultaneously consider gates, ground equipment, performance metrics must be based on overall and schedule planners. Instead, all gating con- luggage systems and ground crew. Integrated crew system characteristics. straints can be enforced at an aircraft routing step; scheduling needs to combine pairing and roster Despite considerable challenges, benefits of therefore, resulting lines of flying would produce optimizations for both cockpit crew and cabin crew integrated decision-support systems clearly out- a gating solution for each station as a byproduct. and, in addition to costs, take into consideration such weigh implementation costs. In a highly competitive Similarly, if maintenance requirements are taken into factors as crew preferences and fatigue measures. airline industry, staying on the leading edge of tech- account after aircraft rotations are constructed, then nology is essential for successful operations, and multiple schedule adjustments might be necessary Challenges And Opportunities decision-support systems integration is one of the to satisfy existing regulations. These modifications Despite the fact that benefits of integrated most promising directions in this area. a might cause aircraft and crew underutilization as well solutions are obvious, there are several obstacles as maintenance work load imbalance. Therefore, that prevent quick adaptation of those principals simultaneous development of aircraft rotation and in practice. Probably the most prominent is maintenance schedules can significantly reduce the existing organizational structure of airlines’ operational and maintenance costs. planning departments, where different business units are responsible for the completion Integrated Recovery of various tasks. Performance of these units Although it is not optimal, the planning process is evaluated within their silos, and they don’t still can be done in stages as schedulers have include their effect on others. Consequently, Sergey Shebalov is a senior research enough time to coordinate their solutions and reiter- these units tend to optimize their own metrics, analyst for Sabre Holdings®. He can be ate the processes if necessary. The situation is and since these metrics often are not consistent contacted at [email protected].

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The Glass Cockpit From cutting costs and improving revenues to boosting productivity and improving the quality of life for airline employees, electronic flight bag technology provides substantial benefits for airlines and their crewmembers. EFB, part of but not exclusive to the next-generation “glass cockpit,” has eliminated the need for weighty, paper-filled flight bags once carried onboard by pilots and cabin crewmembers.

By Dave Roberts | Ascend Contributor

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echnology has overtaken the cockpit and the manner in which pilots operate and monitor their aircraft and flight. In today’s new aircraft, every component of the plane’s operation is now tracked through technological advances and displayed on monitors on the instrument panel to make the flight safer and more efficient. What about the paper in today’s aircraft? Fortunately, technology is helping with that as well. Airlines are beginning to use electronic versions of the paperwork required for a flight, some of which goes back to when the Wright brothers noted the weather on paper before the launch at Kitty Hawk. Paper in the cockpit was a part of virtually every cockpit function. Pre-taxi and takeoff — paper checklists. En route weather — paper charts. Flight plan and load manifest — paper forms. Engine performance numbers — hardcopy aircraft manual. Warning light in cockpit — hardcopy printed aircraft minimum equipment list (MEL) chart. Airport approach procedures — printed airport charts. It requires a tremendous amount of data, such as manuals, charts and checklists — printed on many different pieces of paper — to operate a single flight. All of this paper must be carried on each flight for safety and operational efficiency. Each flight crewmember must have a copy of all of this paper, and the data must be current. Pilots traditionally carried all of this paper in a personal bag much like that utilized by doc- tors. This personal bag, or flight bag, became a mainstay for pilots everywhere — private, commercial and military. As air travel and aircraft increased in complexity with larger and faster aircraft designed to fly farther, higher and quicker, the amount of paper necessary for operations increased. The flight bag has presented many obstacles over time. To maintain the current data requires separate staff in each airline to print and distribute new charts and manuals. Each pilot then must remove old data pages and insert new ones. Obviously, this can lead to human error and potentially effect flight safety or operational efficiency. Then there is the weight of each of these bags that is carried on each flight. Flight bags can weigh up to 40 pounds when filled. This is for each crewmember and can mean an additional 80 pounds to 120 pounds on the aircraft — weight that increases fuel burn and expense. Evolving technology provides an alternative, called “electronic flight bag” (see related article on page 74), to the physical bag that eliminates the additional weight and the printing and distribution of new data via paper. It also affords a more efficient means of retrieving dynamic as well as static data. Electronic flight bag is Photos: Jupiter an electronic management information storage

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unit much like a laptop computer that can be are direct benefits of communication via EFB messaging and display of live weather. Some affixed to the aircraft or built into the avionics between flight crew and maintenance. Several EFBs will even be fully installed systems with system onboard the aircraft. airlines have confirmed that this difference multiple functions.” This new computing capability in the cockpit alone in time and procedures has justified the According to the U.S. Federal Aviation replaces paper reference material as well as deployment of EFB. Administration, the scope of EFB functionality opens the door for more automated calculations is broad. “EFBs may be portable electronic normally accomplished manually. In addition, Off The Paper Trail devices or installed systems. The physical EFB new software applications can be made avail- The technology evolution leading to EFB display may use various technologies, formats able to flight crews to improve the efficiency of onboard aircraft included the introduction of and forms of communication.” flight operations en route and on the ground. In GPS, weather displays, and electronic approach The FAA’s entire definition of EFB not only many other ways, airlines and crewmembers plates and airfield diagrams. The evolution included installed devices that could be sophis- have adapted to the electronic age through the continued with new ruggedized computers ticated and complex, but it also introduced use of personal computers for other aspects and docking or mounting stations affixed to data link connectivity, a feature of EFBs that of their jobs that go beyond actual flying. For aircraft. Along with these new computers was has significantly broadened the capability of example, crew scheduling to include crew the development of viewers for crewmembers what can be included in information available bidding and crew swaps are just two of the to see and read digitized manuals and charts. to the flight crew. Complex functions require items that can be introduced into the cockpit Eventually, all flight bag documents found an communication with external sources that can rather than having to wait until the crew is on electronic home and can be viewed via EFB. provide real-time weather displays, updated the ground. “There is currently great interest and activity NOTAMS, ground mapping and specific aircraft toward developing small electronic information operational systems. EFB Benefits management devices for use by flight crew in The benefits of adding EFB capability to an performing flight-related tasks,” according to a The Human Factor aircraft for the flight crew varies depending on report prepared by the Operator Performance While the technology is rapidly changing the size of the operation, the type of applica- and Safety Analysis Division of the Office of the scope and boundaries of the EFB, there is tions deployed and the method selected to Research and Analysis at the Volpe Center. still the human factor that must be considered. manage the EFB data and the distribution of “These devices aid pilots and aircraft opera- Ease of use for pilots using the EFB will enable this data. Cost-saving benefits include fuel tors in conducting flights more efficiently and airlines to recognize operational benefits and savings associated with the reduction in weight safely. enhanced situational awareness and safety. The of the onboard flight bags, printing and manual “EFBs were originally seen as a repository FAA and other government agencies around the distribution costs of required operational manu- for electronic documents such as checklists, world have addressed the human factors issues als and charts and, in some cases, reduced operating manuals and navigation publications, and issued guidelines for the safe use of EFB medical costs associated with handling the but now they are seen as multi-function devices applications and functions. (The EFB presenta- physical flight bags. that can support an array of applications beyond tion must not conflict with the crew’s ability to Efficiency benefits are realized through provi- those of a traditional flight bag, including cabin concentrate on other instruments in the cockpit sion of increased amount and accuracy of data surveillance, surface moving map, electronic or on flying the aircraft. The ability to read the available to the flight crew in preparing and conducting operations. Reducing delays and the impact down line is another major EFB benefit. Naturally, an aircraft on the ground does not produce revenue whereas aircraft time in the air is key to an airline’s productivity and bottom-line success. One of the primary ways EFBs help reduce delays is the enhanced communication of data between the flight crew and the airline’s maintenance group. An electronic communication of mechanical issues detected while in flight from the aircraft to maintenance provides mechanics advanced time to determine what is required to correct a problem and locate necessary parts to be changed if warranted. In essence, EFBs now provide an electronic version of the paper-based maintenance techlog. The electronic version accommodates any aircraft type, providing capability to identify and find the mechanical problem and enabling a better picture of the situation to include MEL expiration dates for faster clearance. The results are faster flight turn times by utilizing an electronic techlog to identify problems as well as quicker log corrective actions. There is a significant reduction in time when compar- A key way EFBs help reduce delays is the improved communication of information between ing the EFB approach to the normal manual the flight crew and the maintenance organization. Electronically informing mechanics of issues maintenance procedures used today. Dispatch detected during flight gives them an opportunity to determine the problem and locate necessary reliability, aircraft turn time and reduced expense parts prior to the aircraft arriving.

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EFB Of The Future Electronic flight bags are no longer a thought of the future … they are on the flight deck today, and their scope and capabilities are expanding daily. The provision of regulatory guidelines for EFB is a clear indication of the acceptance by the aviation community and those governing it. Aircraft manufacturers are closely involved with new aircraft equipped with hardware and connectivity capabilities. Government-subsidized organizations continue to analyze the impact of the EFB on human factors and are searching for guidelines to improve safety and efficiency of crewmembers. The original goal of EFB was to replace the large quantity of paper with electronic versions of the same information. However, today, it is apparent that the complexity and features employed by EFB are limited only by imagination and budget. Improved efficiency of flight operations can be demonstrated now with the advent of EFB in the cockpit. However, efficiency alone will not generate the return on investment airlines require for the initial capital outlay for EFB sys- Cost-saving benefits of an electronic flight bag include fuel savings associated with the reduc- tems. The reduction in delays that contribute to tion of weight of the onboard flight bags as well as printing and manual distribution costs. decreased expense and a potential increase in revenue will help. The creation of new systems screen and easily use the touch screen, colors Class 3 — This is an onboard hardware that turn the cockpit into the crew’s office can and night-time operation all must be considered system that is developed as part of the also help decrease costs while improving the when designing and installing an EFB device.) avionics system with components in the efficiency and quality of life for crewmembers. There is sufficient data indicating that the EFB avionics bay. It is subject to airworthiness For example, the time to complete a pre-flight will become an invaluable tool for all aviation and directives just like other onboard systems. check can be reduced by 50 percent in some will provide a more-effective management tool It is part of the “glass cockpit” concept cases with the proper use of EFB. and improved safety of flight. and can provide more approved software EFB solutions designed to drive improved components. customer service and increase revenue are now EFB — Hardware Or Software? being developed and implemented. Providing Regulatory authorities have tried to define EFB Software Types links to the ground data for passenger informa- EFB in terms that include the hardware compo- Type A tion that is readily accessible by the cabin crew nents as they apply to aircraft equipment lists • May be hosted on any of the hardware leads to more personalized service and return and as software applications that support EFB classes; customers. The various reports required by systems. EFB systems are divided into three • Supports static applications such as airlines for cabin crews to complete after the hardware classes and three software types. document viewer (PDF, HTML, XML flight can be submitted via EFB with improved formats); accuracy and submission timing. The cabin EFB Hardware Classes • Offers electronic checklists; crew can also have access to their personal Class 1 — Primarily commercial-off-the-shelf • Eliminates the need for flight crew scheduling information while on the aircraft and equipment that includes laptops and handheld operating manuals and other printed complete bids, swaps or any activities within electronic devices. These devices are not documents such as airport NOTAM. their crew management system. attached to the aircraft and may be stowed Type B Like the evolution of the passenger ticket during segments of a flight. A Class 1 EFB • May be hosted on any of the hardware system from paper to card to e-ticket, the EFB may connect to aircraft power and interface classes; will continue to evolve and move airline flight with other systems through a certified inter- • Provides takeoff, en route, approach operations forward and continue to gain greater face. and landing as well as missed-approach capabilities, improve safety, increase revenue Class 2 — This hardware may also be off the performance calculations; and decrease expenses. Sounds too good to be shelf or specially developed computer sys- • Equipped with power settings for true, but the results during the past decade are tems designed for cockpit and in-flight usage. reduced thrust (major source of reduced beginning to pay significant rewards. a They are normally affixed to the aircraft via a wear of the engines); mounting device or docking station, and the • Provides weight and balance calcula- EFB display can be seen by flight crewmem- tions; bers throughout the flight. These systems • Produces weather and aeronautical connect to aircraft power and data sources data. using interfaces such as ARINC 429. A major Type C Dave Roberts is senior principal in airline advantage of Class 2 is that it may have multi- • Subject to airworthiness requirements, and flight operations strategic planning directional communication capability to send such as software certification; for Sabre Airline Solutions®. He can be and receive data between the air and ground. • Must run on Class 3 EFB hardware. contacted at [email protected].

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Play By The Rules

Traditional revenue management and pricing processes and technology solutions cannot fully cope with the current competitive landscape. Today, demand, capacity and pricing volatility coupled with the ever-more relevant ancillary revenue opportunities are changing the rules of the “revenue game.” New processes and IT systems are needed to effectively compete and pave the way for a successful future.

By Alessandro Ciancimino | Ascend Contributor

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should they change and adapt to the changed market conditions? Traffic Change (Industry) Traditionally, revenue management practices have based inventory control actions on Europe to Europe Europe to North America historical data: deciding what to do tomorrow based on what happened yesterday. This used to work during a stable economy where January-March ‘09 versus ‘08 September-November ‘09 versus ‘08 no big changes happen from one year to another. And it still works fairly well in the few mature markets where unconstrained CHART TO FOLLOW demand could be predicted on the basis of historical data. Additionally, traditional pricing -1.3% practices are based on standard bucketed -1.6% fares, with limited pricing strategy for ancillaries or branded-fares offerings. Much of this is no longer sufficient and/ or adequate. Therefore, it’s clear that revenue management and pricing practices must cope with rapidly changing market conditions -5.1% where new competitors enter and leave markets virtually every week, competitors -6.7% attack the same markets with different business models and demand dramatically varies every month. But there is also another important dimen- Industry showed a considerable decrease in short-haul traffic first (first quarter 2009 versus the sion on the revenue side that needs to same period the previous year) and then in long-haul traffic (September through November be addressed by revenue management and 2009 versus the same period in 2008). The “evaporation” was due to the recession itself and the pricing in an effort to design and offer to threat of an unprecedented impact of such recession. This traffic decline was compensated by airline guests what they individually want an industry capacity cut that has been able to keep industry load factor almost at the same level as opposed to the traditional one-size-fits-all year over year, but at a considerable lower price. model. During the last couple of years, airlines ne thing all airline industry themselves to different paradigms govern- have successfully expanded ancillary offer- executives share is the unprec- ing the industry. And this time, more than ings, unbundling traditional products with edented impact of the global ever, the way out is represented by a the objective of giving their guests the ability recession on their industry. In substantially improved revenue-generation to create their own product without losing fact, some actions being taken capability that airlines need to establish loyal customers or leaving new ones to the are also without precedent: sudden speedup rather than further draconian cost-cutting competition. The overall objective is to shift of consolidation and cross-border investments, initiatives. Controllable costs have been, the business model from being airline-centric development of joint ventures in markets in fact, heavily addressed during the last to customer-centric, allowing each customer where it was not an option just a few months few years as soon as either pressure on to pay for what he cares about and not ago, employees being asked to temporarily yield started or uncontrollable costs, such what other customers deem valuable. Thus, work for free, bailout offering to peers close as fuel, increased dramatically. So now the unbundling the product offering and avoid- to bankruptcy. game has to be more on the revenue side ing revenue dilution has become one new Even though the industry has previously and, to put it in Darwinian terms, airlines rule of the game. Ancillary revenues have shown several instances of demand bounc- need to evolve to survive and have a suc- seen a phenomenal growth in recent years. ing back after a crisis, what is alarming cessful future in the new decade. In 2006, ancillary revenues for the airline this time is that the depth and breadth As a byproduct of the recession and industry totaled US$2.3 billion. In 2008, the of the current recession may leave, once the consequent decline in traffic and yield, total reached US$10.3 billion — a 500 per- the recession has ended, some structural demand has become extremely volatile; this cent growth. For those leading the way in changes in the marketplace. For example, translated into two key outcomes: terms of ancillary services, such as hybrid those traveling in business class or with Market sizes and yields have been chang- and low-cost carriers, ancillary revenues fully flexible economy fares — what was ing considerably year over year, currently represent up to 20 percent of previously considered business traffic — Within most markets, worldwide air trans- their total revenue. have now learned, or have been forced to port capacity has also changed either As ancillary services further expand and learn, that it is feasible and acceptable to because airlines have trimmed their capac- are distributed through additional channels travel with restricted economy fares even ity to try to cope with changing market con- other than the traditional airline.com — for business purposes. Hence, one of the ditions or because airlines have been going either through specific GDS functionality questions currently alarming the industry in and out of markets with a frequency that (such as branded fares and pay-for-seat is to what extent will traditional business rarely was observed in the industry’s his- functionality through the Sabre® global traffic bounce back when the worst part of tory. distribution system) or through the ATPCO the recession is over? Revenue management and pricing prac- Optional Services — ancillary revenues The current downturn could represent tices, in addition to network planning and will definitely continue steady growth, a crucial cornerstone for air transporta- scheduling, are the core drivers of the com- gaining a higher percentage share of total tion, and airlines need to quickly adapt mercial effectiveness of airlines. So how revenue.

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able to capture customer behavior based on the real-time competitive offering, Perform inventory control actions with both Average Fare Change (Industry) restricted and unrestricted fares, even in a single market with restricted fares for peak flights and unrestricted fares for off-peak flights (which requires the ability to manage parallel Europe to Europe Europe to North America mixed-nesting structures from an inventory viewpoint with corresponding parallel pricing structures), Define revenue management decisions on the basis of selling fares as opposed to historical January-March ‘09 versus ‘08 September-November ‘09 versus ‘08 average booking-class revenue, since due to 0.6% the volatility of the market, the average historical booking-class revenue is inaccurate, Define revenue management decisions based not just on revenue driven by fares but also by ancillaries, CHART TO FOLLOW Ultimately, perform revenue management by -5.2% each individual customer and adjust availability based on each individual customer value score, where the value score is uniquely defined by the airline based on its customer relationship management strategy. At the same time, pricing solutions need to be adjusted as well to address: Mix of one-way, restriction-free and restricted return fares for peak/off-peak flights, Branded fares to simplify the pricing structure -21.2% -22.0% from a customer viewpoint but at the same time avoiding any diluting effect as much as possible, Pricing decision-support processes for ancillar- Keeping industry load factor at a level similar to the previous year has been reached at the ies and branded fares definition. expense of the average fare that dropped significantly during the last months of 2009. In a figu- Such a revolution in terms of solutions requires rative way, the industry observed a traffic shift from the business cabin of traditional carriers to both business process review/re-engineering and the economy cabin of the traditional carriers and from the economy cabin of the traditional carri- a corresponding redesign of technology systems ers to the LCC. In the end, the average fares were considerably impacted. as well so new processes will be enabled by new technology. This represents a double challenge. Such busi- Ancillary revenue, therefore, represents a large tional fenced-pricing structures and other ness and technology transformation seems to portion of airline income that so far has not been airlines are instead deploying restriction-free, be inevitable for any airline that wants to set included in the revenue management equation. one-way pricing. the foundation for a sustainable and successful For example, inventory control actions are typi- The revenue value of each potential book- future. cally taken without considering the total revenue ing is not represented only by the associ- The new “revenue game” has laid out new associated with a booking but rather only the pure ated fare-bucket historical value. It needs to rules, and players now need to quickly learn them, fare-related revenue. include any ancillary service associated with interpret them and equip themselves with new In essence, the “next-gen” revenue manage- the booking. game-winning strategy, tactics and tools. ment and pricing processes and solutions need to The impact of the above aspects is that Otherwise, it’s like a traditional poker player pulling address three main aspects: next-gen revenue management solutions need up a chair at a Texas Hold‘em table without a know- Demand is extremely volatile and historical to be able to: ing the new rules: it’s not going to pay off. a PNR data and booking-class revenue value Provide continuous monitoring of competi- may not be as relevant in certain markets to tors’ available entry-level fare at a flight level predict future demand by fare. What is criti- in real time and define the inventory control Alessandro Ciancimino is vice cal in such markets is the real-time offering in actions accordingly, president in Europe for Sabre Airline terms of capacity and fares that competitors Perform real-time revenue management Solutions®. He can be contacted at are deploying, such as the real-time competi- through integrated revenue management, [email protected]. tive landscape that has a substantial impact on inventory and reservations processes to customer behavior when it comes to making a ensure timely reaction to unexpected/unfore- booking. casted events (traditional nightly revenue Within the same markets there are compet- management systems batches are no longer ing airlines that implement different business sufficient), models (network carriers, hybrid carriers and Perform customer choice-model-based fore- LCCs), implying that within the same mar- casting of unconstrained demand in addition kets, some airlines might be offering tradi- to traditional PNR-based forecasting to be

26 ascend Social media vehicles such as Facebook and Twitter have given airline customers a voice, and carriers with the right social media strategy can benefit from these conversations.

By Lauren Lovelady | Ascend Staff Photos: Jupiter ASCEND I INDUSTRY

ot so long ago, an airline customer Social media vehicles were not initially the group can comment on each other’s encountering less-than-satisfactory created as sales tools, but as a means photos and add each other as friends. service on the ground or in-flight for building trust, creating relationships, There are also discussion boards. had little recourse except to relay enhancing reputations and generating While taped safety demonstrations N the experience to family and friends introductions. They function as a magnet, generally don’t attract much attention, and file a complaint with the car- drawing customers to a business, but Delta Air Lines caused quite a buzz by rier’s customer service department — after when used improperly or ignored com- posting a recent in-flight safety video on the fact. And “acts of nature” — flight delays, pletely, these same tools can repel current YouTube. According to FoxNews, admir- cancellations and reroutes due to bad weather and potential customers. ers dubbed the 33-year-old woman host- and other natural disasters — often left flyers “A presence on social media cannot be ing the video “Deltalina,” a combination feeling stranded and alone hundreds of miles created with a view to quickly turn it into of the carrier’s name and Hollywood from home and waiting for information from a revenue stream,” according to a new actress Angelina Jolie, whom they say equally frustrated airline and airport personnel. report by the Innovation Analysis Group she resembles. Delta also uses the site On the other hand, little was heard from pas- titled, ‘The Airline Industry and Social to showcase its new in-flight services sengers receiving top-notch service, especially Media — A Must Have Strategic Guide for and aircraft features and host video after the trip had occurred. Airline Marketing and Sales.’ Social media travel guides created by the carrier’s All of that has changed with meteoric is about relationships first. These systems employees to popular destinations. rise of Web 2.0, or social media, includ- work on referrals.” Southwest Airlines utilizes Twitter exten- ing Facebook, Twitter, YouTube, Flickr sively, especially for issuing travel advi- and millions of personal, professional and sories and addressing customer service special-interest blogs. These social media Hig hlight issues. The carrier estimates its Twitter vehicles are producing an enormous page is growing by 7,000 followers each amount of consumer “chatter,” which day. The airline’s blog, “Nuts about businesses such as airlines can either Social media vehicles Southwest,” is timely, interactive and choose to ignore, react to randomly or features podcasts, internal news, sur- engage in wisely. were not initially veys, videos and photos. Approximately 30 Southwest employees contribute to The Changing Face Of Marketing created as sales tools, the blog, which receives more than Traditional marketing techniques 60,000 unique visitors monthly. (advertising, public relations campaigns, MySkyStatus is a service provided by sponsorships, branding, tradeshows, web- but as a means for Lufthansa that posts by request the sites) have always been and still are an current location of a passenger’s flight integral part of most airlines’ strategic building trust, creating on any number of airlines to Twitter or plans. These techniques generally focus on Facebook so friends and family can track a one-way, top-down approach, with com- relationships, enhancing his or her whereabouts at any time. panies carefully defining their brands and What’s more exciting and engaging then pushing those products and services reputations and gener- than a contest, for both the partici- to their customers in ways that attempt pants and spectators? After creating a to control their brand image. The primary ating introductions. video called “Bare Essentials of Safety goal is to generate sales and increase from Air New Zealand” and posting it revenues for the business. There’s little on YouTube, the carrier’s flight atten- room for customer response. dants and crew members, who wore With the rise of social media, consum- only painted-on uniforms for the video, er-oriented businesses in particular are challenged Southwest Airlines to join finding they are being increasingly defined Follow Their Lead them in producing the world’s first air- by conversations — what consumers and Several airlines have already proven that line safety musical. While Southwest potential consumers are saying and hear- in the right hands, social media can be a employees weren’t quite ready to sport ing about them — in real time. Why should powerful tool. While brand awareness is only painted-on attire, they did create an airline take note? Because after years often the initial goal, there are certainly a “greatest hits” video in response of declining face-to-face communications additional uses and benefits as well: featuring rappers, an Elvis imperson- and the move to automation, consumers Virgin America’s Facebook page is ator providing safety instructions and a are now clamoring for the human interac- designed similar to a website, allow- flight attendant doing backwards flips tion and community building promoted by ing visitors to click links to search down an aircraft aisle. The contest even vehicles such as Facebook and Twitter. flight schedules; check flight status; and caught the attention of local television The once faceless consumer now has an check-in for, change or cancel flights. stations in Southwest’s hub in Dallas, instantaneous platform and a voice. The page also connects to fan photos Texas. Social media marketing is an extension and videos, customer reviews, surveys A number of airlines, including JetBlue of traditional marketing. It encourages and a discussion board, enabling the air- and American Airlines, use social media multi-way dialog, enabling companies to line’s customers to easily interact with tools to offer special discounts. Fans talk to customers, customers to talk to one another. of American’s New York Facebook companies and, perhaps most importantly, Travel is undoubtedly a very visual page received 10-percent-off coupons customers to talk to each other. Most experience, and JetBlue’s sizable Flickr when the page reached 10,000 fans of the content and connections found in group has more than 21,000 photos and last May. JetBlue rewards its follow- Web 2.0 are user-generated rather than videos posted by customers, fans and ers while boosting revenues by post- company-created. employees of the airline. Members of ing last-minute flight deals, known as

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JetBlueCheeps, on Twitter. The carrier’s employees and help customers with the To take full advantage of social media, a Twitter page has well over a million transition. The blog replaced the tradi- carrier should develop a plan for success, followers, and it tracks about 120,000 tional list of frequently asked questions. taking into account the fluid nature of of them. United Airlines also offers With few exceptions, most of these these tools and the associated challenges: Twitter-only fares called “twares.” carriers, as well as others, have quietly Study the landscape — It’s best not Carriers have also begun using network entered into the world of social media, to dive in without first understanding sites to target and develop key mar- actively participating in only two or three the various social media tools and how ket segments. After conducting focus of the most popular vehicles on a limited other companies, not just airlines, are groups with African-American custom- scale. The reason: much of the technology utilizing them. Take advantage of what ers, American Airlines launched a social behind the tools as well as airlines’ use of is already established and easily acces- network called BlackAtlas.com. Users them is largely experimental and may be sible, such as Facebook and Twitter, can search for fares and vacation pack- short-lived. and realize the “next big thing” is yet to ages on the site and find destination “We’re seeing a lot of testing by air- come. information tailored for their interests. lines,” said Forrester Research analyst Develop a plan — For a social media plan AirTran Airways utilizes airtranu.com to Henry Harteveldt. “They are trying to figure to be truly effective, it must clearly align offer 18- to 22-year-old students stand- out, given limited staff and limited budget, with a carrier’s business strategy. Review by fares while Lufthansa has launched what’s going to get them the best return current issues and future marketing cam- GenFlyLounge.com, a social network- from social media.” paigns to create an approach that supports ing site where students who love to the objectives already in place. Don’t view travel internationally can meet and con- Proceed (With Caution) social media simply as a trend or gimmick. nect. KLM’s Club China and Club Africa Social media offers airlines an almost “A smart, strategic approach,” said Ted are virtual business communities for unlimited number of opportunities at mini- Kohnen, vice president of interactive mar- passengers conducting business within mal costs. keting for Stein, Rogan & Partners, “can those regions. “It can be essentially cost-free to get protect and accelerate your brand, position Mergers have become increasingly started, since all one needs to do is open a your company and people as thought lead- commonplace within the airline indus- Facebook, Twitter or YouTube account and ers, improve natural search engine rankings try in recent years, as mounting finan- get creative,” said Adam Ostrow, editor-in- and serve as a quality lead-generation cial losses force some carriers to join chief of the social media guide Mashable. channel.” operations. Merging two different cor- com. “In a down economy, the low cost Keep the pace — By nature, the airline porate cultures is tricky at best. When of entry certainly makes social media even industry is conservative. Decisions are Northwest Airlines merged with Delta more attractive than it might have already often made after much deliberation and Air Lines, Delta utilized its blog, “Under been otherwise.” review by various departments such the Wing,” to welcome Northwest as legal. Social media moves quickly — very quickly. A consumer issue can literally travel several times around the world via cyberspace before an approved response is given by an airline. By that time, an issue may be long forgotten or may have become an enormous problem. Learn to take risks. Determine where the relevant conversations are taking place. Empower employees — It takes manpower to monitor and participate in social media, and in today’s still-struggling economy, most airlines are unwill- ing to invest in resources that are not directly related to operational needs. It’s critical that existing employees clearly understand the carrier’s business strategy and that the carrier divvies up responsibilities, giving employees ownership over specific social media tools and enabling coordinated responses. Engage and continue engaging — While many airlines are willing to begin a social media conversation, customers often complain that few respond in a timely and effective manner once the talk turns to consumer-service issues. Often the issues “fall between the cracks” With the growth of social media, many airlines find they are being increasingly defined by when carriers fail to assign specific conversations — what current and potential customers say and hear about them — in real time. employees or departments to investi- As a result, airlines can take advantage of this method of interacting with customers through gate and respond to them. As a result, vehicles such as Facebook and Twitter. customers are less likely to engage in

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conversations again and more likely to video the airline posted on YouTube latest Nielsen Global Online Consumer express their displeasure. Essentially, attracting more viewers than a typical Survey of more than 25,000 Internet users this approach backfires on airlines. in-flight safety video? While gathering from 50 countries found that 90 percent of Learn from successes and mistakes — and accurately interpreting this informa- people trust the reviews and recommen- As the saying goes, “Not all Tweets are tion appears to be a daunting task, there dations of people they know and a full 70 created equal.” Given limited resources, are individual consultants and compa- percent trust consumer opinions posted there’s no feasible way airlines can nies now offering social media monitor- online. People are talking, and people are effectively listen and respond to every ing and analysis services and training. listening. Is your airline? a conversation. Learn to recognize, often In addition, tools that automate, filter through trial and error, which “chatter” and centralize customer feedback from is significant and which is not. Sudden the Web are now being developed and or gradual shifts in customers’ percep- marketed. tions — either positive or negative — Review strategies often — Social media merit further investigation. Realize from vehicles are developing rapidly and com- the beginning some consumers will panies must be agile enough to advance never be happy — no matter how many with them. times an airline converses with them or It’s easy for businesses such as airlines tries to improve a situation. to become overwhelmed by the rapid Determine metrics — One of an airline’s growth of social technologies and the primary objectives should be to accu- sheer volume of accompanying conversa- rately hear what customers are saying. tions occurring every minute of every day. How will an airline know if its social These businesses are finding they are no media strategy is reaching its target longer in control of their brands — their audience? What is the overall percep- customers are. But thanks to the unique tion of the airline and its services? How opportunities offered via social media, an will this impact its business? Are the airline can engage its customers and guide discounted fares the carrier offered on its brand. It can have a voice in the conver- Lauren Lovelady can be contacted Twitter boosting revenues? Is the safety sation. And that’s important because the at [email protected].

+count it up

217 million 2009 3.5 trillion The number of additional travelers The year in which intra-Asia/Pacific travel The estimated economic impact, in expected to travel via air within eclipsed North America as the world’s U.S. dollars, created by the aviation the Asia/Pacific region by 2013. largest aviation market, reaching 647 industry, equivalent to 7.5 percent of According to IATA, the Asia/Pacific’s million compared to 638 million within world gross domestic product. prospects are “improving faster than North America (including domestic mar- other regions, but it urged regional kets), according to IATA. leaders to ensure that liberalization and air traffic management unifica- tion allow growth to continue.”

2.2+ billion 440 One in seven The number of passengers each year The number of passengers KLM, the The number of passengers worldwide that are transported via the airline world’s oldest airline, carried during who use SabreSonic ® Check-in, more industry, about one-third the popula- its first full year of operation. KLM car- than any other check-in solution in the tion of the entire planet. ried 22 tons of freight during the same world. period. Today, it carries 23 million passengers and 657 tons of freight a year.

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maintain contact lists of business people they know and trust. In addition, employ- ers can post available jobs and search for potential candidates, and job seekers can review jobs and hiring managers searching for possible links on their contact lists. 3. Image and video hosting and sharing websites — Perhaps many people remember the old saying, “A picture is worth a thousand words.” Apparently, this holds true when it comes to social media as well. Flickr is one of the most popular sites available for users to share personal photographs and host images embedded in blogs and other social media. As of last October, the site hosted more than 4 billion images in eight languages. YouTube is the dominant provider of online video in the United States, although three-fourths of the material on the site is uploaded from other countries. It’s estimated that 20 hours of new video are placed on the site every minute. While individuals have uploaded most of the content on YouTube, media corporations and other businesses are now offering their materials via the site as well. YouTube has made it possible for anyone with an Internet connection to post a video that can be viewed worldwide in a matter of minutes. 4. Web logs — Blogs, in short, are sites that provide commentary or news on particular subjects through the use of text and images and give readers an interactive By Lauren Lovelady | Ascend Staff 1. Social networking websites — The format to post comments in response. largest site is Facebook with more than 350 Initially, blogs were primarily maintained by million active users worldwide — approxi- individuals and were often personal online mately 70 percent are outside the United diaries, but many interests groups and he statistics speak for themselves States. At the end of 2009, the site reached businesses are now actively “blogging.” A — social media is today’s fastest- a milestone, logging more than 100 million February 2009 survey estimated there were growing marketing and communi- active American users. If Facebook were a more than 215 million blogs in existence. cations tool, both personally and country, it would now have the third-largest 5. Combination services — The most professionally. More than 80 per- population in the world, encompassing popular service in this category is Twitter, a cent of Americans alone partici- more than 70 languages. Among other well- mobile social networking and micro-blogging pate monthly in some form of social me- known general social networking sites are site. Users send and receive text-based dia through blogs, forums and networking MySpace, Bebo, Friendster and hi5. These messages of up to 140 characters, known sites, with the greatest growth occurring sites are proliferating at an astounding rate as tweets, via the Twitter website, short in the 39-year to 54-year age category. and are becoming increasingly segmented message service or external applications. The percentage is slightly less globally, by interests. In February 2009, Twitter had a monthly but recent studies report that worldwide 2. Professional networking websites growth rate of 1,382 percent. However, the one in every 11 minutes spent online is — With more than 50 million users glob- service only has a 40 percent user-retention now accounted for by social networking ally, LinkedIn is growing at approximately rate. and blog sites. one new member per second. When this Perhaps the fragility of Twitter’s user While most social media vehicles were business-oriented site was initially launched base is indicative of one of the major pitfalls not initially established for business in 2003, it took 477 days to sign up its first of social media vehicles. In addition, the purposes and are still largely experimental, million members. This last million took only technology empowering them is advancing they have quickly become a means 12 days to reach, due in large part to the rapidly, guaranteeing that today’s popular for individuals worldwide to relay their recent economic downturn and staggering mediums will either continue to evolve or experiences and opinions about every job losses worldwide. Approximately half of slip into cyber-afterlife. conceivable subject from toothpaste to LinkedIn’s membership is outside the United “But there will always be something travel in real time, 24/7. And businesses, States. Europe has 11 million members coming up behind it,” said Steven Frischling, including airlines, are increasingly turning alone, and India, with 3 million members, founder of TheTravelStratestic.com and a listening ear to this online chatter. currently has the fastest-growing member- author of the blog, ‘Flying With Fish.’ A rundown of today’s five most popular ship rate. LinkedIn and competitors such as “Airlines need to be there when that social media vehicles includes: IXING and Spoke allow registered users to something shows up.” a

ascend 31 HIGH WAYS In The HIGH WAYS

During the next decade, the air transport industry, based on In The initiatives outlined by several countries around the world, can expect to see significant improvements to current air traffic SKYcontrol systems that will result in numerous benefits. By Dana Knight | Ascend Contributor Photos: Jupiter ASCEND I INDUSTRY

hree initiatives — NextGen and Federal Aviation Administration started discussing unanswered question was how and when could NowGen in the United States and the major overhaul planned for the U.S. air traffic air traffic nirvana be achieved? The date that was SESAR in Europe — are in various control system. The primary focus of NextGen is to floated was 2025 with no phased-in approach states of development as the world shift from ground-based navigation and surveillance conceptualized or at least communicated. The searches for a better way to move systems to a satellite-based system. general perception was that there would be a people by air to where they want to go, when Today, air traffic controllers use traffic manage- technological miracle, and everyone would wake they want to go, in the least amount of time. ment initiatives to reroute or delay aircraft to up at some point in 2025 with airplanes navigating To a large extent, aircraft continue to follow the manage demand with limited capacity resources. via space-based navigation aids, there would be same “highways in the sky” that have been In the ultimate end state of NextGen, operators, no more ATC delays and the world would be a in existence for decades. The GPS navigation such as a scheduled airline, corporate flight depart- happier place. system in an automobile today is far superior ment or aircraft charter company, that use the ATC Initially, the U.S. Joint Planning and Development to the technology that many aircraft currently system will be more responsible for de-conflicted Office was tasked with bringing NextGen to fruition. use to navigate airspace in North America. trajectory-based planning as there will be massive There were initial meetings held with all concerned Some of the emerging technologies being sharing of data between ATC and operators via parties, but the process was not moving quickly, if explored and developed to enhance future air SWIM. Schedules will be built far in advance that at all. Although the JPDO is still ultimately tasked traffic systems include system-wide informa- will consider all imposed limitations. As the actual with making NextGen a reality, the FAA formed tion manager (SWIM), automatic dependent day of operation approaches, additional adjustments a task force to put the process in motion. The surveillance-broadcast (ADS-B), multilateration will be made based on prevailing conditions to task force enlisted the expertise of a broad seg- and trajectory-based planning. These terms will ensure as few disruptions to the schedule as ment of operators from airline, charter, corporate increasingly become familiar as this technology possible. and general aviation as well as government and moves from concept to reality. These were the grandiose ideas that were industry personnel to come up with a plan on how initially presented when NextGen was first dis- some benefits could be realized before this magical NextGen cussed. Airplanes would fly where the operators day in 2025. In mid 2009, this diverse group com- The realization that the air traffic control sys- wanted them to fly, there would be no flight delays mitted a lot of time and energy to produce a plan tem needed an overhaul started during the first and air traffic controllers would know where all that would result in some tangible benefits. There years of the century. Then in 2007, the term aircraft were at all times because they would were guiding principles, and the task force was NextGen began to be widely used as the U.S. be in constant communications via satellite. The committed to:

For decades, aircraft have followed the same “highways in the sky,” but promising new technologies that will include SWIM, ADS-B, multilateration and trajectory-based planning are expected to result in numerous operational benefits for industry operators.

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There are several other current processes and procedures operators currently endure that could be tightened up to realize some operational benefits without making major infrastructure or equipage changes. This naturally led to a discussion about the fact that at some point operators using the U.S. National Airspace System must invest in aircraft equipment to fully take advantage of the benefits that NextGen technology will afford. There will be a push, in the not too distant future, for economic incentives for operators to invest in necessary equipment. This will undoubtedly be in the form of low-interest loans or other incentives such as income tax credits, reductions in fuel taxes or user fees. The concept of “best-equipped, best-served” (BEBS) is also part of the overall plan to encourage operators to participate. Under this concept, operators that have equipped their aircraft with the technology will be afforded as yet undefined, higher levels of service. With the current state of the airlines still in a mode of scaling back, it begs the question, “Why pursue this now?” Delays are not gone by any stretch of the imagination, but with the reduced traffic and investments in airport infrastructures, the delays are far less than they were mid-year 2008. The best analogy is that if the FAA waits to start fixing the ATC system at the time of maximum delays it will be like trying to change the wheels on a moving vehicle … it is as next to impossible as one can imagine. This current period of reduced operations is the exact time for this undertaking. Initiatives, such as Europe’s SESAR and the United States’ NextGen and NowGen, will bring Other countries, such as Australia, are already much-needed change to an air traffic control system that needs a complete overhaul to catch up ahead in this area, and the United States needs to and keep pace with the future direction of the industry. do everything possible to keep pace. NextGen is estimated to cost US$20 billion, and hundreds of Foster collaboration and consensus on critical Airport, John F. Kennedy International Airport and millions of dollars have already been allocated to NextGen issues between now and 2018; other select airports to enable more simultaneous fund various research initiatives and key infrastruc- Focus on maximizing NextGen benefits and approaches to parallel runways. If this carefully ture developments such as the ADS-B network. facilitating a business case for industry invest- controlled test proves as expected, there will be a ment; ripple effect of decreasing delays throughout the SESAR Provide recommendations on strategies and National Airspace System once the concept is put As with the U.S. ATC system, Europe has means to maximize benefits, strategies to into operation. acknowledged that the air traffic control system encourage equipage, and policies and other The task force brought forth some interest- is in dire need of revitalization. In 2004, the Single means to implement governing principles. ing points that potentially make one pause and European Sky initiative was launched with the hopes wonder why some things are as they are. For of harmonizing Europe’s air traffic system. This was NowGen instance, parallel runway approach procedures further refined in 2007 with the establishment of Last September — stemming from the ques- that enable simultaneous approaches to multiple the Single European Sky ATM Research (SESAR) tion, “How can we get to NextGen now?” — in runways are based on the capabilities of man initiative that is the technological dimension of the a report the task force delivered to the FAA, the and aircraft 20 years ago. The term “blunder Single European Sky. It will help create a paradigm term NowGen was introduced. The report high- assumption” — an incorrect assumption that shift, supported by state-of-the-art and innovative lighted some relatively dramatic objectives that, leads to a sizeable mistake — is accepted as technology. The SESAR Joint Undertaking is a body prior to being released to the FAA, went through part of this particular current procedure. There of members that was created in February 2007 an assessment (acid test) to ensure the feasibility is enough leeway in the specified procedure to under European Community law. EUROCONTROL of implementing a particular item and its potential account for possible errors on behalf of interested and the European Community are the founding value. Possibly more groundbreaking were the parties executing or controlling the procedures. members and will manage the SESAR develop- “sponsors” who agreed to take on the implemen- Regardless of other issues that are wrong with ment phase. tation of particular tasks if the opportunity were the system, aircraft operating in the system are In many respects, the SESAR project is available to them. For instance, Alaska Airlines, technically more advanced than they were 20 ahead of NextGen from a planning standpoint. American Airlines, Continental Airlines, Delta Air years ago, and the people operating them and Whereas NextGen is really focused on the tech- Lines and others have agreed to test new proce- the air traffic controllers guiding them are better nology to improve the system in the form of dures at Port Columbus International Airport, Dallas trained so the blunder assumption can probably ADS-B, Multilateration, SWIM and other technol- Love Field, Fort Lauderdale-Hollywood International tighten up without compromising safety. ogy solutions, SESAR is more focused on the fact

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that information sharing and planning are just as Operational/technological research and validation, uninhabited territory of the continent. ASA is important as the systems. Large-scale validation activities for mature con- also rolling out a ground-based augmentation The key to the SESAR concept is the “business/ cepts and solutions such as real-time simulations system that is a satellite-based precision approach mission trajectory” principle in which airspace users, and flight trials, and landing system. It augments GPS signals air navigation service providers and airport operators Prototypes required for pre-operational validations, to provide aircraft with very precise positioning define together, through a collaborative process, the The provision of material to support standardization guidance, both horizontal and vertical, which is optimal flight path from gate to gate. What does and implementing rules, especially critical during the approach and landing that mean? Operators will submit their planned The development, upgrade and integration phase of flight. This allows a safer, more efficient schedules at the time they are conceptualized and required for the validation infrastructure, methods descent and landing. provide continual updates to the day of operation. and tools, Regardless of the different approaches being SESAR has been broken into three phases: The performance assessment (operational and taken by those governing the world’s air traffic definition, development and deployment. system) including the cost benefit analysis. control systems, at some point all these initiatives will need to converge as aircraft operators cannot Definition Phase Deployment Phase be expected to have vastly different equipment The definition phase ran from 2005 through The third and final phase of SESAR is the to navigate from country to country. SESAR and 2008 and produced the SESAR ATM (air traffic deployment phase that will run from 2014 through NextGen have formalized agreements to assure management) master plan. Stakeholders of 2020. This phase includes the large-scale produc- this and ICAO is, of course, keeping a watchful ATM identified the future needs of aviation and tion and implementation of the new air traffic eye on all developments. conceptualized the actions from research to imple- management infrastructure that will approach The main question at this point is whether or mentation that will be required to implement SESAR. the same nirvana state expected in the United not these initiatives will come to fruition. History States in 2025. This infrastructure is expected shows that some programs and initiatives start Development Phase to comprise fully harmonized and interoperable up and never take hold by the larger industry but The development phase will run through 2013. components guaranteeing high-performance air rather are only adopted by a small sector of the This is, by definition, a feasibility study. Some long- transport activities in Europe. Key performance community. ADS-B is definitely a reality and areas term results of this phase will produce criteria and indicators include: such as the Gulf of Mexico in the United States requirements that will be further validated and con- Enable a threefold increase in capacity of the and open areas in Australia are now tracking air- solidated during the next SESAR phase. During the ATM, craft that previously couldn’t be tracked via radar. early stages of this phase, the SJU has broken up the Improve safety by a factor of 10, Going forward, will ATC systems be able to development phase into a series of work packages, Reduce the environmental impact per flight by accommodate double or triple the number of numbering more than 15, that “slice and dice” the 10 percent, operations that now cause gridlock? There are core areas of the SEASAR master plan that will need Cut ATM costs by 50 percent. skeptics, of course, but some benefit can be to be addressed. Four main threads of WPs have expected by migrating from ground-based tech- been identified: transversal, operational, SWIM and Around The World nologies the industry has been relying on since system threads with work packages ranging from China has announced plans to overhaul its air the 1960s. a WP1 that is program management and support to traffic control system that will most likely take WP8 and WP14 that cover the information manage- the region down a similar path as Europe and the ment that will be part of SWIM requirements. There United States. are individual companies as well as consortiums that Australia, with its privatized air traffic control Dana Knight is a solution director for are hard at work to produce: system in Air Services Australia, has unceremo- Sabre Airline Solutions®. He participated Required operational procedures and preparation niously been deploying ADS-B so aircraft can in the RTCA Task Force 5, and he can be of an implementation process, be tracked while over the vast stretches of contacted at [email protected].

+count it up

210 million 1927 841 The number of passengers served The year in which the first concrete The record, held by Edward through Sabre® AirVision™ In-flight runway was built in the United States, Shackleton, for piloting the most last year, equal to serving the fifth- by Henry Ford. aircraft types. largest country in the world behind China, India, Indonesia and the United States.

36 ascend complete the picture

Sabre Airline Solutions and the Sabre Airline Solutions logo are trademarks and/or service marks of an afﬁ liate of Sabre Holdings Corp. ©2010 Inc. All rights reserved. AS-10-11986 0410 Sabre Airline Solutions and the logo are trademarks and/or service marks of an afﬁ What is your airline missing?

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The tug of war over embattled Japan Airlines set the stage for a new order in global airline alliance negotiations and became a lightning rod for criticism by opponents of antitrust immunity, who are concerned that the three major alliances will act as mega-carriers, crushing competition in trans-Atlantic and trans-Pacific markets.

By Lynne Clark | Ascend Staff Photos: Airbus, Air Canada, Boeing, Continental, Delta Air Lines, Jupiter ASCEND I INDUSTRY

arlier this year, as JAL flirted with mov- includes Cathay Pacific Airways, Iberia convenient service for consumers, and carriers ing from oneworld to SkyTeam, the and Qantas Airways. were able to enjoy some cost savings. future of airline alliances stood at a At their inception, alliances were a means to In recent years, airline alliances have worked cross roads. circumvent outdated global aviation regulations to take the process to the next level, ask- If Delta Air Lines had successfully con- that limit cross-border deals by requiring airlines ing governments to grant members antitrust vinced JAL to join its SkyTeam alliance, it to be owned and controlled by nationals of the immunity to jointly plan services and fares would have served to “redraw the alliance country in which they are based. Carriers were over international markets served by the alli- map and reshape the airline industry,” David able to add a few more destinations to their ance. Antitrust immunity opened a panacea of Grossman, a former airline industry executive, route maps and sell tickets on the flights of revenue opportunities, helping steer profitable wrote in a December 2009 column for USA another airline as though the flights were their business travelers through enlarged networks Today. And although the effort was ultimately own. The idea was to provide better and more that shared the spoils. unsuccessful, Grossman wrote the “bold move signals a change in alliance recruitment etiquette where poaching from another alliance is no longer taboo. “Until now, alliance recruitment, though competitive at times, has been quite civil and orderly,” Grossman wrote. “In large countries, like the United States or China, there are enough major airlines to satiate all three alliances. And in a region like Europe, with three dominant airline families (Air France/KLM, British Airways and Lufthansa), each has joined a different alliance. But in most countries with a single major carrier, like Australia, Canada, Thailand or Turkey, only one alliance can win that prize.”

Key To Survival Alliances are a way to give carriers backdoor merger benefits (revenue sharing on trans-Atlantic routes) alongside the efficiencies that come with aligned schedules. So it’s no wonder the white gloves have come off in recruitment. As the carriers see them, global alliances are key to survival, in an industry fraught with increasing financial pressures due to high fuel costs, environmental drives to reduce CO2 emissions, limited landing slots and other challenges. In 2003, the three main alliances combined had 29 member airlines. Their significance wasn’t realized until the 2008 open skies treaty that deregulated flying between the United States and 27 European Union countries. That opened the door for strategic alliances based on geographical locations. Today, 80 percent of the world’s commercial airline capacity is affiliated with one of the three existing alliances, and all but two of the world’s 20 largest carriers are members of Star, SkyTeam or oneworld. The largest, Star, includes 25 airlines that range from names such as United Airlines, Lufthansa and Singapore Airlines to regional carriers such as Finland’s Blue1 and Shanghai Airlines of China. After the loss of Continental, SkyTeam is anchored by Delta and the Air France/KLM conglomerate, but also includes carriers such as Korean Air, Alitalia, Aeroflot and Kenya Airways. While Delta Air Lines’ bold move to recruit JAL away from oneworld to join forces with Besides American Airlines, British SkyTeam was unsuccessful, the message was clear … poaching from another alliance is no Airways and Japan Airlines, oneworld longer forbidden.

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The pervasive scope of alliance reach makes it difficult for non-aligned carriers to access growth opportunities. This reality is forcing even the strongest established national flag carriers to consider trading independence in favor of alliances. Geoff Dixon, former Quantas CEO and oneworld chairman, predicted the current volatile consolidation era. In his 2008 farewell profit- briefing message, he warned shareholders and regulators that the carrier must be freed of legislated ownership and operational restrictions or it would lose its financial leverage to negotiate the creation of a super-regional airline alliance. “It is inevitable,” Dixon said. “I will have moved on, but a new level of maturity and understanding will be needed when this debate takes place, as it inevitably will, because airlines cannot continue on the way they are at the moment. It is the way the industry has been going, and it is the way of the future. The ones that consolidate will be the big survivors in the future.”

Under The Microscope As Asian and European governments recently opened their air travel markets to greater competition, Delta, American and United — along with their alliance partners — began battling over lucrative routes that could reshape international aviation. The competition is fiercest for control of routes between the United States and Japan. Last December, as Delta and American campaigned to partner with JAL, United and Continental moved ahead with a partnership arrangement with Japan’s other large national carrier, All Nippon. The U.S.-based carriers requested antitrust immunity in a Dec. 23 filing with the U.S. Department of Transportation. United also set in motion a bid for landing rights at Tokyo’s Haneda Airport once it opens to U.S. carriers as part of a trade treaty. Alliances are coming together on trans- Atlantic routes as well. In January, United, Continental, Air Canada and Lufthansa began to coordinate passenger perks, plan schedules and prices, and share revenues on flights regardless of which carrier operates the flight. The arrangement is similar to a Delta and Air France/KLM partnership formed last year. In the meantime, American is waiting to hear if its twice-vetoed bid for a tie-up with British Airways will be approved by U.S. regulators. In the past, regulators in Europe and the United States have supported partnerships. Heated competition among alliances has generally resulted in lower ticket prices and enabled carriers to cut costs and generate new revenue. After becoming the newest member of the Star Alliance last October, Continental coordinates However, the recent gloves-off competi- passenger perks, plans schedules and prices, and shares revenues on flights with alliance partners tion for new alliance partners has forced United Airlines, Air Canada and Lufthansa, regardless of which carrier operates the flight. the debate over whether the benefits of

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exercising that power to the exclusion of non-immunized carriers, thereby reducing competition in the international marketplace as well as disrupting domestic competition. This legislation is an important step forward in determining whether the U.S. Department of Transportation’s antitrust policies are sound and whether DOT gives appropriate consideration to the impact that granting antitrust immunity might have on competition here and abroad. If these immunized mega-alliances are allowed to proceed unchecked, the end result may be trading government control in the public interest for private monopoly control in the interests of the industry.” The bill passed in the House by a roll call vote of 277 for and 136 against on May 21, 2009. The U.S. Senate took up the bill in June and referred it to the Committee on Commerce, Science and Transportation where it remains. In the meantime, talks began in February on the second phase of the U.S.-E.U. Rivalry is most fierce for control of routes between Japan and the United States as a result open skies agreement. The second phase, of the Asian government recently opening air travel markets to greater competition. Delta Air which concluded in March, further liberal- Lines, American Airlines and United Airlines, with their partner alliance carriers, began battling ized the trans-Atlantic air transport market. over lucrative routes that could reshape international aviation. The agreement settled, in principle, the dispute on reciprocal liberalization of airline alliances outweigh the costs. Regulators on Transportation and Infrastructure for the ownership and control. It also, pending are worried lax industry oversight could U.S. House of Representatives. Oberstar some changes in the E.U. legal framework, pave the way for the three alliances to act introduced HR 831 last March, which calls for granted seventh freedom rights to E.U. as mega-carriers, crushing competition in the comptroller general to study legal require- carriers. trans-Atlantic and trans-Pacific markets. ments and policies used by the secretary of “Today’s agreement strengthens our Most notable among immunized alliance transportation to decide whether to approve already close aviation relationship with detractors is U.S. Congressman James proposed international airline alliances and our European partners,” U.S. Secretary L. Oberstar, chairman of the Committee grant them antitrust immunity. The bill, which of Transportation Ray LaHood said at the was incorporated into the Federal Aviation time of the agreement. “President Obama Hig hlight Administration’s Reauthorization Act of 2009, promised European leaders that we would also automatically invalidates any prior grant reach an agreement this year, and today of immunity three years after the bill’s effec- we fulfill that promise.” tive date and prohibits renewal unless the European officials agreed. Today, 80 percent of secretary determines whether to adopt any “This draft deal represents a significant recommendations by the comptroller general breakthrough in the process of normalizing the world’s commercial regarding new standards for authorizing inter- the global airline industry,” said Siim Kallas, national airline alliances and granting antitrust E.U. vice president of transport. airline capacity is immunity. The draft agreement will be submitted in “I have become increasingly concerned June by the European Commission for affiliated with one with the decline of competition in interna- approval. If ratified, looser foreign owner- tional markets, particularly between the ship laws could likely pave the way to of the three existing United States and Europe,” Oberstar told cross-border mergers along alliance lines an audience at a March 2009 meeting of and could lead to significantly altered alliances, and all but the International Aviation Club. “These domestic U.S. competition. a markets used to be served by a substantial number of carriers from European coun- two of the world’s tries and the United States. Increasingly, the market has come under control of three 20 largest carriers alliances. “If you believe that deregulation was are members of and is sound public policy, then you cannot afford to be complacent about the Star, SkyTeam or threat to competition posed by immunized airline alliances. As the evidence indicates, oneworld. these immunized alliances hold great mar- Lynne Clark can be contacted at ket power and have the potential for [email protected].

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Cargo Infusion Airlines that implement a sound cargo revenue management strategy coupled with the use of advanced technology and industry best practices will achieve significant financial gains based on the anticipated rapid growth in the air cargo sector.

By Mukundh Parthasarathy | Ascend Contributor Photos: Jupiter ASCEND I INDUSTRY

uring the next decade, air freight growth — particularly driven by the demand for time-sensitive services — will outstrip passenger growth at an average annual rate of 6 percent, according to forecasting research conducted by aircraft manufacturers Airbus and DBoeing. Airlines will face enormous opportunities and challenges presented by an increasingly integrated and fiercely competitive cargo environment. Intense competition means air cargo operators will need to be more efficient to maintain and grow their current market position while focusing on optimized capacity management to grow revenues. Since most passenger aircraft offer belly capacities for air freight, airlines can provide cargo services at low marginal costs. Therefore, competition on a pricing level can easily occur, so effective revenue management principles and systems will become essential for managing capacity and pricing. Air cargo is an important revenue source for airlines and air freight forwarders. On average, the revenue from cargo is 13 percent of the total air traffic revenue — up to 40 percent for some airlines. The global air cargo market is growing in tonnage and sophistication. Alliances among air carriers, multi-user booking portals, international A significant revenue source for airlines, average revenue generated from cargo represents 13 online booking platforms, new freighter and com- percent of the total air traffic revenue, up to 40 percent for some carriers. bination aircraft, time-definite express services and advanced information technology represent from integrators. These challenges limit the ability by IATA to introduce efficiency, achieve cost reduc- significant pieces of the air cargo puzzle. of certain carriers to effectively compete in the tion and improve customer service. It also applies World air freight is expected to grow more marketplace and survive through tough financial to turning around the downward spiraling effect rapidly than mail, averaging annual growth of 6.5 periods. of forwarders demanding lower prices and airlines percent through 2021, and world air cargo traffic The industry also has significant opportunities to providing poor services due to diminshed yields. is expected to exceed 464 billion revenue ton reduce costs, improve service levels and increase The next key strength for cargo carriers comes kilometers in 2021. Boeing predicts the global profits. Initiatives such as Cargo 2000 and eFreight from being visionary and taking the first step in freighter fleet will increase from 1,775 in 2001 to as well as the introduction of cargo portals and improving tools and technologies. These carriers 3,078 in 2021. Medium and large wide-body fleet eBooking focus on improving customer service should empower their employees by providing the share will grow from 39 percent to 60 percent levels; increasing productivity and efficiency of best operational and decision-support capabilities during the same period. information processing, transmission, display and and tools. Unfortunately, the increase in air freight cargo storage; and reducing booking response times. Leveraging these two key strengths could traffic as measured in RTKs does not necessarily The greatest weakness of the cargo indus- potentially transform a business that is struggling mean increase in profit. According to Mercer on try is not being proactive in terms of managing into a win-win situation for freight forwarders and Travel and Transport specialty journal (2004), in the challenges and capitalizing on opportunities. Even carriers, creating substantial growth potential and historical period from 1974 to 2001, the average worse is the high inertia and slow pace in reacting outstanding customer service. annual increase of 5 percent to 7 percent in air to challenges, adapting to changes and adopting Airlines around the world should adopt, auto- cargo traffic translated to an annual cargo yields new initiatives and technologies. Even large cargo mate and streamline business processes to raise decline of 2 percent to 3 percent. According to carriers and their thought leaders have not fully productivity levels and improve revenue. Principles Boeing analysis, the trend for scheduled freight deployed or adopted the International Air Transport of revenue management can help in achieving yields declined 3.4 percent a year from 1985 to Association’s Cargo 2000 initiative to implement such goals. With uncertain economic conditions, 1999, after adjusting for inflation. After 1999, freight processes that are backed by measureable quality cargo profitability is increasingly important to air yields stabilized and slightly increased by the end standards to improve efficiency of air cargo. A num- carriers, who have found that if cargo capacity is of 2001. ber of mid-size carriers still do not have systems not managed successfully, revenue opportunities Why is it difficult to make a profit in the air or technology to accurately sell space, monitor are lost. cargo business? There are several internal and movement and manage customers. Revenue management increases airline cargo external factors affecting profits such as overcapac- The key strength of the air cargo industry profits through effective cargo space manage- ity, demand imbalances, unfavorable cost structure comes from two key partners — airlines and freight ment. Extensive computer models can help and poor revenue management. There are also forwarders. These players either work together for estimate capacity for each departing flight and other challenges or threats such as globalization, success or work separately and fail. This applies to determine the most profitable space allocation for security, rising energy costs and tough competition working together on all initiatives that are put forth various cargo products. Working with real-time

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or fax airlines (and often different offices at the same airline) to find the best price on a specific route. Once the airline’s cargo call center agents receive Sales Call GF-X Other shipment information, they have to refer to various force center systems to obtain information on rates, capacity and loadability checks; IATA regulations; and customs and embargo requirements as well as comply with their own internal regulations. Additional calls to the revenue management or marketing departments may be required before obtaining the final acceptance for the shipment request. Rating Operations A booking engine is one of several components system Booking engine system required to support intelligent booking and inventory control. A booking request can originate from several Operational Commercial channels such as a GF-X or CPS portal; the airline’s call center or website; or messages from forwarders feasibility viability or other airlines. The primary role of the booking engine is to act as the intermediary between the various booking channels and the revenue manage- Route Queue Bid Customer ment system. It also interfaces with the rating and management pricing value generator operations systems and facilitates the evaluation of every booking request. Revenue management system Reports Several key inputs are needed to make a booking decision (to reject or accept). A booking request has to meet both operational feasibility and commercial viability. Operational feasibility is ensured by select- The integrated booking process depicts the workings of a completely automated cargo booking ing routes that are feasible in terms of door size, engine and the interaction between the various cargo IT systems and modules. shipment characteristics, terminal characteristics, loadability, service time, etc. Commercial viability is information, analysts can efficiently manage future along with automation. If revenue management guaranteed by ensuring the rates offered are higher flight capacity. technology is implemented without proper business than the hurdle price (bid prices). Hence, the four In the early 1980s, revenue management dis- process analysis (the solution adoption) trust in most important inputs are routes, capacities, rates ciplines were first applied in the airline industry system numbers can take a long time reiterating the and hurdle prices. Capacities are stored in the as a method to increase revenues resulting from fact of “junk in, junk out” as with any information booking engine or the operations system. Routes passenger sales. With the success of revenue man- technology system. are typically generated using a route selector that agement to improve passenger revenues, these A standard business process analysis study: is either part of the booking engine or revenue techniques were applied to other business areas Identifies business where airlines still maintain management system. In some cases, a stand-alone such as cargo, hotel and car rental industries. some pricing leverage, router is also used. Rates are obtained in real time During the past five years, air cargo thought Ensures airlines provide satisfactory service levels, from the rating/revenue accounting system. Hurdle/ leaders, such as Lufthansa Cargo, Air Canada, Eliminates unprofitable businesses and/or bid prices are generated by the revenue manage- United Airlines and Virgin Atlantic, have successfully routes, ment system. A booking engine essentially acts as implemented cargo revenue management tools to Provides products that meet the needs of the a broker to combine this information to decide on realize revenue improvement and productivity gains. supply chain. booking acceptance. Airlines benefit from revenue management by sell- There should also be a comprehensive review of The benefits of revenue management solutions ing space at a price that maximizes revenue from cargo practices and performance that should con- are well documented, and the custom is rapidly various customers based on their willingness to pay, tain multifaceted diagnostic analysis, quick hits and becoming an industry best practice. The data chal- which varies depending on the product they buy longer-term recommendations, assessing current lenges are still complex in cargo; therefore, the from the airline. The reasons and the characteristics key performance reporting indicators, reports and comparison between passenger revenue manage- of the air cargo business make it a prime candidate decision-support capabilities. The study should also ment techniques with that of cargo is not completely for revenue management: help design an organization structure to support effi- accurate. The current generation of cargo reserva- Cargo carried on passenger aircraft, making it cient business processes related to good revenue tions systems is a mirror image of legacy systems difficult to know available cargo space, management practices. The final recommenda- and still does not help streamline the air cargo pro- Different products are offered at different prices tions should include information systems; human cess, making it essential for carriers to incorporate based on different customer requirements — resources, roles and responsibilities; policies and more automation into their revenue management same-day express shipping versus second-day procedures; and communications policies related practices. a shipping, for example, to cargo operations and revenue management Booking behavior of customer in terms of under/ practices. over tendering, no shows and cancellations. While some carriers grapple with the decision An effective cargo revenue management system to jump on the cargo revenue management band- determines the available capacity on each flight, wagon, thought leaders are in the process of moving identifies the amount of each type of product that toward the next-generation revenue management requires space on each flight and allocates capaci- solution that includes an intelligent reservations Mukundh Parthasarathy is solutions manager ties to the appropriate products to maximize profit. system, or booking engine. The current process of of Sabre® AirVision™ Cargo for Sabre Lessons learned from airlines’ implementations also booking shipments in the air cargo industry requires Airline Solutions®. He can be contacted at emphasize the need for business process analysis a high degree of manual intervention. Agents will call [email protected].

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YEAR OF THE TIGER

High-speed rail, changing consumer behavior, technology’s pace of change — will Chinese airlines be like reeds in the winds of change or will they resemble mighty oaks?

By Siew Hoon | Ascend Contributor

n old Chinese proverb goes, “An international community — confound because fanned new hopes of further liberalization inch of time is an inch of gold, but it’s a wonder how it operates within the of certain sectors of its economy, aviation you can’t buy that inch of time with legacy structures and processes and yet it included. an inch of gold.” does seem to work, and fascinate because There is no doubt the world wants — and Any international company that has ever those who work in China know if they put in needs — a more open China to boost trade in had business dealings with China understands the time and manage to get their foot in the a year that will continue to be slow for most that to be true. To get ahead in any business door, they will “be in readiness for favorable major economies around the world. in China, you have to put in the time, and you winds” and eventually make their pot of Last year, as the world reeled collectively know that no amount of gold can be a substi- gold. from the global financial crisis, the Chinese tute for that time. So will the winds be favorable this year economy held its own, ending the year Just ask those managing the biggest names for the Chinese airline sector? Hope springs with a more than 9 percent growth. This on the Internet — eBay, Yahoo and Google — eternal. The image last November of China year, economists are predicting close to 10 and they will tell you of the trials and tribulations President Hu Jintao and U.S. President percent growth. Its gross domestic product they’ve had in growing their business in China. Barack Obama standing at the Great Wall, is now more than US$5 trillion, making it So, it’s the Chinese airline sector that a structure once built to keep out foreigners the second-largest economy in the world, continues to confound, yet fascinate, the and now draws them in by the millions, displacing Japan.

46 ascend ASCEND I INDUSTRY Photos: Jupiter

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revenues, 70 percent of China Eastern’s and 80 percent of China Southern’s. The government stimulus package to promote domestic travel as well as its declaration to make domestic tourism a key pillar of its economy definitely helped boost numbers. According to Xinhua Economic News, China Southern, China’s largest airline company by fleet size, transported 66.4 million passengers, accounting for 28.7 percent of the civil aviation industry’s total passenger volume and outperforming Air China and China Eastern Airlines. In so doing, China Southern increased its passenger transportation volume by 6.59 million over 2008. An airline source in China told Ascend that domestic air travel in the country grew by 20 percent. “The environment in 2009 was definitely better than in 2008. Oil prices were reasonable and domestic demand rose.” Brett Henry, vice president of marketing for Abacus International, said that in the dark year for airlines in Asia in 2009, “the bright spot really is China. “Chinese carriers’ revenues are up from 2008 by 6 percent in comparison even as yield and average fares are down, capacity and departures are up by 15 percent and the load factor is up by 5 percent,” Henry said. “Most Chinese airlines are reporting a return to profitability. It will only get High-speed rail in China poses a threat to the country’s top carriers. During the next decade, the better for Chinese carriers in 2010.” county will build more than 18,000 kilometers of high-speed track, giving China more than half of the world’s total high-speed railways and significantly impacting domestic air service. Rail Threat Looms But growth notwithstanding, a new Economists are also predicting that the feared the inconveniences of a trip around threat looms in the “Year of the Tiger” major drivers of growth this year will come that period. A spate of natural disasters — the introduction of high-speed rail. not only from China and India, but also the thereafter — from snowstorms to the Last December, the 1,000-kilometer link rest of the Asian region. Global companies devastating earthquake in Sichuan — also between Guangzhou and Wuhan opened, thus know that to develop their business dampened travel demand, both domestic causing sleepless nights at airlines such in the new year, they will have to put in and international. as China Southern, which has the biggest more inches of time in the region. The result: A combined loss of more exposure to the domestic market. than US$4 billion by the country’s three “It will be a tough year,” said a Chinese Gloom Amid The Boom state-owned carriers — Air China, China airline source. “This is bad news for domes- Air travel is one sector that has seen Eastern and China Southern. tic-focused airlines like China Eastern and massive growth in China in the past few Last year, as the global financial cri- China Southern. It will be difficult for years. According to PhoCusWright, in sis took its toll, Chinese airlines were airlines to compete with high-speed rail.” 1985, only 7.5 million people traveled by not spared. According to PhoCusWright, The new rail cuts journey time between air in China. By the end of 2008, this figure China’s airline market was projected to Guangzhou and Wuhan from 10.5 hours to had risen 25 times to about 200 million. decline by 9 percent to US$22.6 billion in 3 hours. Flying time is 90 minutes. Train That’s not to say things have been all 2009. While passenger volumes suggest a tickets cost about 40 percent less than air- rosy for Chinese airlines. Their problems steady year-over-year growth of 8 percent fare, and train stations are more centrally began even before the collapse of Lehman to 10 percent, the decline in premium located than airports and come with fewer Brothers in September 2008 and the sub- international traffic adversely affected the security procedures. sequent implosion of the global banking bottom lines of all three airlines. The Wuhan-Guangzhou link is only sector. the beginning of a grand plan to build The greatest sporting event of the Domestic Travelers To The more than 18,000 kilometers of high- century for China — Beijing Olympics Rescue speed track by 2020. When completed, 2008 — was supposed to generate great But what helped was the strength of China will have more than half of the business, but it didn’t materialize. Security the domestic market, a major contributor world’s total high-speed railways, which concerns and visa hurdles kept foreigners to Chinese airlines’ revenues. Domestic will expand the national rail network to away, including business travelers who travel accounts for 60 percent of Air China’s 120,000 kilometers.

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The lack of focus on yield management and revenue optimization is one key factor that affects profitability of Chinese airlines. According to PhoCusWright, airfares remain virtually the same regardless of the booking horizon. Fixed airfares have also affected consumers’ buying behavior. According to the market research company’s “The Emerging Online Travel Marketplace in China” report, Chinese consumers typically plan their travel early (up to four weeks in advance), but they don’t make a buying decision until the week preceding their date of travel. “The Chinese airline industry has yet to adopt principles of dynamic pricing and selling distressed inventory, accoring to the report.” The Centre for Asia Pacific Aviation, in one of its reports, stated that “for China Southern, an increasing focus on international routes is likely, with the carrier already flagging the possibility of launching more ‘Air Express’ services to Southeast Asia. More long-haul flying from its hubs in Beijing and Guangzhou is a natural evolutionary step for China Southern, although this will pit it against the established players in Beijing, led by Air China.” With its ranking as the second-largest economy in the world, China presents hope for a bright future for many of its businesses, including airlines. But China’s Together, China President Hu Jintao and U.S. President Barack Obama visited the Great Wall Of airline industry is no different than in any China late last year, giving hope to some of further liberalization of certain sectors of the Chinese other region … it’s a constantly evolving economy, including air transportation. environment. “The thing with the Chinese aviation “Wait until the link between Beijing route, citing low demand during the low sector is, you can’t use normal common and Shanghai opens by the second half season. The idea behind the route was sense to figure things out,” said a source of 2010; that’s when we will see the full to entice people who would normally fly who worked within the Chinese airline impact on airlines,” said the airline source. from Beijing to use Tianjin, but schedule system for years. “You have to be flexible “The only thing we can do is cut fares and changes midway through the route opera- because things can change at a moment’s keep our airfares at RMB300 to RMB400 tion made it inconvenient for Beijingers to notice.” (US$44 to US$59). But we have no room catch a morning departure from Tianjin. Or to quote another Chinese proverb, to control our costs such as airport service “Another reason is landing charges “A reed before the wind lives on, while charges. In fact, this will add to our costs — that’s a very significant part of overall mighty oaks do fall.” a because we have to improve our service costs — and landing charges are high in to compete for passengers.” China, even in small airports like Tianjin,” This lack of ability to control costs said the source. “This is one factor that within a regulated environment — not makes it hard for low-cost airlines to really to mention the official intolerance of operate in China.” low-cost independent airlines — is one of the hurdles that stops low-cost carriers New International Focus: from truly taking flight in China. Other E-commerce than Spring Air, based in Shanghai, which Given the competition from high-speed has seen reasonable success, all others rail and other threats and challenges, including Lucky Air (Kunming), China West what are Chinese airlines to do this year Air (Chongqing), United Eagle (Sichuan) to stay afloat? Analysts expect stronger and Viva Macau (Macau) have remained focus on the international market and small and have localized operations. increased investments in technology and Even AirAsia, which has seen phe- e-commerce to drive more direct book- Siew Hoon is editor at large for SHY nomenal success elsewhere, has found ings and international business as well Ventures and Producer of WIT-Web it challenging in China. In December, it as maximize efficiencies and drive higher In Travel. She can be contacted at suspended its Kuala Lumpur to Tianjin yields. [email protected].

ascend 49 United They Stand

In a little more than 10 years since the birth of the three main global network alliances, each, with its own set of objectives, has achieved significant results during the last decade.

By Janet Kimoff | Ascend Contributor ASCEND I INDUSTRY

n the mid to late ’90s, the con- of the vital statistics of revenue, traffic remained oneworld’s largest component cept of the global airline alliance and capacity (over 50 percent more seats at 31 percent (despite an 8 percent drop was conceived as a way to gen- than SkyTeam and over 90 percent more during the previous decade), Asia became erate competitive advantages and than oneworld). Since the beginning of the its second-largest region, representing 28 provide much greater geographical decade, Star membership increased twofold percent of combined seats, while Europe’s presence and reach for carriers of to 26 members, capacity and revenue grew weighting dropped to 19 percent. allI shapes and sizes around the world. by just over two-thirds, and traffic more And oneworld’s presence in Africa and With Lufthansa German Airlines providing than doubled. the Middle East had improved with the addi- much of the impetus and leadership, the Star began its history as the most geo- tion of a Middle Eastern partner, but overall Star Alliance in 1997 was the first truly graphically diverse of the global alliances. only 4 percent of the alliance’s capacity global aggregation of airlines to approach Nearly 10 years ago, 40 percent of Star touched these regions. coordinated marketing and service delivery Alliance capacity was situated within North Throughout the 10-year period starting through broadly accepted techniques includ- America (largely the capacity of United in 2000, much of oneworld’s focus was ing codeshares and honoring one another’s Airlines), 23 percent within Asia and 22 devoted to fighting still-unresolved antitrust loyalty programs on a worldwide allied percent within Europe. Of the remaining 15 battles. Did this overt focus distract atten- scale. percent of seats, just over one-quarter were tion in any way from growing the alliance? But it didn’t take long before the Star Alliance on the lucrative North Atlantic markets. But Or perhaps it was the group’s collective encountered hefty alliance competition with Star had little to no presence in Africa or the philosophy of how best to expand that the 1998 formation of oneworld, led primar- Middle East. effectively limited its membership growth. ily by global mega-carriers American Airlines During the past decade, Star has focused “We’re not about getting to a certain and British Airways. on filling these gaps. And entering fiscal number of member airlines,” oneworld And SkyTeam, originally consisting of year 2010, the 26 members of the Star managing partner John McCulloch told only four carriers and nominally headed by alliance consisted of two African, seven Airline Business in 2004. “Each airline in Delta Air Lines, then joined the simmering Asian, 12 European, one Middle Eastern and oneworld has to have a strong enough global-alliance competition in 2000. four North American carriers. Of Star’s total brand identity in its home country and Now, a full decade into the 21st century, capacity, 10 percent now touches either around the world. So we don’t have to be how are the global alliances performing? Africa or the Middle East. too concerned about filling regional gaps Star’s capacity within North America, with new members.” Different Strokes Asia and Europe still represents more than Five years later, the alliance remains true The three main global alliances each pos- 80 percent of the alliance’s total seats. to its primary objectives. sess a basic difference in their management Asia’s weighting, however, has increased “As we enter our second decade, the alli- approach. Star put together a centralized to 26 percent, while North America’s share ance’s strategy remains the same: focusing management group based in Frankfurt, has dropped to 35 percent and Europe’s on quality rather than quantity and on add- Germany, that today is some 75 strong. share to approximately 20 percent of overall ing value for our member airlines and their SkyTeam and oneworld pointedly avoided Star seats. customers,” McCulloch said in a February creating such a sizable separate alliance 2009 oneworld press release. hierarchy. oneworld’s North Atlantic “We don’t think of the alliance structure Foundation SkyTeam Joins The Fray as ‘loose,’ but rather as ‘self governing’ as From the start, oneworld wagered heav- At the end of 2000, the newly formed opposed to having a central corporate infra- ily on the combined strength of its two SkyTeam alliance consisted of only four structure,” Paul Matsen, then senior vice main carriers, American Airlines and British members. It was the least geographically president of marketing at Delta Air Lines, Airways, and their significant presence on diverse international alliance of the three, told Airline Business in September 2004. the crown-jewel North Atlantic routes — with 67 percent of its seats situated within And in the same article, Mike Lenz, then where, as of July 2000, just over 6 percent North America, 13 percent within Europe a managing director at American Airlines, of the alliance’s capacity was situated. and 9 percent within Asia. The alliance had said, “With us, oneworld is an ‘overlay’ as At the outset, oneworld’s geographical no presence in South America, Africa or the opposed to a structure like that at Star.” composition was somewhat similar to Star’s, Middle East. Management structure is definitely a with 39 percent of oneworld’s combined But during the next several years, point of divergence among the global alli- capacity within North America, a lesser 13 SkyTeam as a group apparently determined ances. Whether structural differences are percent within Asia and 28 percent within to roll up its figurative sleeves and work the reasons for varying results, however, Europe. The oneworld alliance also lacked diligently to make up for its late start. must remain subject to conjecture — par- presence in Africa and the Middle East. By 2009, the alliance had more than ticularly since even the results themselves By the end of last year, oneworld con- doubled its full membership — to nine carri- must be carefully analyzed prior to drawing sisted of 11 members — up from eight ers: two Asian, five European and two North highly subjective conclusions. members in 2000. Despite this fairly small American. The alliance’s traffic and revenue increase in membership, oneworld man- had both more than doubled. Also, SkyTeam Star Out Front aged to grow capacity by almost 30 percent, managed to surpass oneworld in size based While the extent to which management traffic by 80 percent and revenue by 42 on capacity (by 28 percent), passengers (by style has shaped and otherwise influenced percent. 13 percent) and revenue (by 4 percent). the various alliances’ relative levels of As of January, oneworld membership While still the least geographically diverse, success can be debated at length, Star’s consisted of three Asian, four European, SkyTeam reduced its North American con- position as the perennial frontrunner gener- one Middle Eastern and three carriers from centration from an original two-thirds down ally cannot. the Americas. to less than half of overall seats. And it By the final quarter of 2009, Star stood The alliance’s capacity composition had increased Asia and Europe capacity weight- as the largest of the three alliances in terms changed significantly. While North America ings to just over 20 percent each.

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Seat Allocation By Region

STAR ONEWORLD SKYTEAM 2009 + Proposed 2009 + Proposed 2009 + Proposed Region-Pairs 2000 2009 new members 2000 2009 new members 2000 2009 new members Within Africa 0% 2% 2% 0% 1% 1% 0% 1% 1% Africa-Asia 0% 0% 0% 0% 0% 0% 0% 0% 0% Africa-South America 0% 0% 0% 0% 0% 0% 0% 0% 0% Africa-Europe 0% 1% 1% 1% 1% 1% 1% 2% 2% Africa-Middle East 0% 1% 1% 0% 0% 0% 0% 0% 0% Africa-North America 0% 0% 0% 0% 0% 0% 0% 0% 0% Within Asia 23% 26% 26% 13% 28% 29% 9% 22% 24% Asia-South America 0% 0% 0% 0% 0% 0% 0% 0% 0% Asia-Europe 2% 2% 2% 2% 2% 2% 1% 2% 2% Asia-Middle East 0% 0% 1% 0% 0% 0% 0% 0% 0% Asia-North America 2% 2% 2% 1% 2% 2% 2% 1% 2% Within South America 3% 0% 5% 2% 3% 3% 0% 0% 0% South America-Europe 0% 0% 0% 1% 1% 1% 1% 1% 1% South America-North America 1% 1% 1% 5% 5% 5% 1% 1% 1% Within Europe 22% 19% 18% 28% 19% 18% 13% 21% 21% Europe-Middle East 1% 3% 2% 1% 1% 1% 0% 1% 1% Europe-North America 4% 4% 4% 6% 4% 4% 5% 5% 4% CutlineWithin to Middle go here. East 0% 2% 2% 0% 1% 1% 0% 0% 0% Middle East-North America 0% 0% 0% 0% 0% 0% 0% 0% 0% Within North America 40% 35% 31% 39% 31% 31% 67% 41% 40% Grand Total 100% 100% 100% 100% 100% 100% 100% 100% 100%

Source: OAG July 2000 and July 2009 seats

Seat allocation by geographic region for the three global airline alliances, Star, oneworld and SkyTeam, has changed exponentially between July 2000 and July 2009.

The Verdict Based on traffic, the top regions out salient issues, of course, was the mem- Based on expanding alliance com- of 21 defined and reviewed were Asia, bership affiliation of Japan Airlines (JAL position and seat/mile statistics, it’s Europe, North America and South America. announced in February that it would undoubtedly fair to conclude that the Combined, these regions represented more remain a member of oneworld, rather than international alliances have succeeded than 80 percent of worldwide 2009 traffic. switching its membership to SkyTeam). in improving their global reach and Star controlled a greater share of capacity Additionally, numerous carriers are achieving substantial growth for their compared to SkyTeam and oneworld in either strongly considering or are already members. four of the five top region-pairs (the one committed to join the various alliances, But what does each alliance’s geo- exception was South America). either as full-fledged voting members or graphical composition represent in terms Of the top 10 regions (representing 93 as associate (non-voting) members. of future growth potential? And which percent of worldwide traffic), Star com- And a significant shift in outlook for alliance commands the greatest share of manded a larger share in seven, including the different alliances occurs when the the largest and most promising regions? the Middle East. proposed carriers are included. With Asia anticipated by many to even- SkyTeam had the second-largest share Under best-guess (as to near-future tually lead the way out of the recession in five of the top 10 markets and led in one alliance makeup) scenarios, Star domi- — and the Middle East the only region to region (Africa-Europe). nates eight of the 10 top regions. And it’s have shown recent statistical year-over- And oneworld dominated the South second in the other two regions. year growth in double-digit percentages America region and the South America- SkyTeam controls the next-largest — these areas may be reasonably judged North America region pair, and it came in share of capacity in six regions, including to offer the most immediate promise of second for Asia and the Middle East. It Asia, where SkyTeam edges out oneworld further significant short-term growth. held the smallest share in the remaining for the No. 2 ranking. Oneworld’s overall And if that’s the case, Star appears six region pairs. position could deteriorate further as, in best-positioned among the three major Something to watch closely is the addition to the Asia shift, it might lose international alliances to reap the largest continually shifting makeup of the various its dominant position in Latin America share of benefits. global airline alliances. Among recent to Star.

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Alliance Share Of Total Capacity 2009 Region-Pairs STAR ONEWORLD SKYTEAM COMBINED 3 Within Africa 25% 3% 6% 34% Africa-Asia 27% 10% 9% 46% Africa-South America 57% 0% 0% 57% Africa-Europe 14% 7% 19% 40% Africa-Middle East 27% 2% 1% 31% Africa-North America 29% 0% 33% 63% Within Asia 21% 13% 12% 46% Asia-South America 13% 39% 0% 52% Asia-Europe 30% 18% 19% 66% Asia-Middle East 7% 2% 1% 10% Asia-North America 38% 19% 22% 79% Within South America 0% 7% 0% 7% South America-Europe 12% 21% 27% 60% South America-Middle East 0% 0% 0% 0% South America-North America 19% 34% 14% 67% Within Europe 19% 9% 14% 43% Europe-Middle East 28% 6% 7% 42% CutlineEurope-North to go here. America 32% 18% 25% 75% Cutline to go here. Within Middle East 19% 3% 0% 22% Middle East-North America 26% 4% 7% 37% Within North America 29% 13% 22% 64% Grand Total Average 22% 11% 15% 48%

On average, Star Alliance makes up 22 percent of total seat allocation by geographic region, while SkyTeams follows at 15 percent and oneworld with 11 percent. Combined, the three global airline alliances, as of July 2009, comprise nearly half of the industry’s total capacity share.

While membership within each alli- As carriers continue to clash against At least through the current period of ance is far from stable (for example, with government authority over regulatory continuing economic distress, global-alli- Continental Airlines recently moving to issues (including route and/or airport slot ance membership should be considered an Star from SkyTeam and Japan Airlines rights, foreign-investment limits and out- even more critical element of any individual finally deciding to stay with oneworld, after right mergers), international routes and carrier’s survival tactics. And in the broader- months considering a potential switch to flow traffic represent an alternative to range picture, alliance membership could SkyTeam), the three alliances combined trying to compete effectively against low- also prove critical to many carriers’ medi- represent a formidable force. cost carriers in domestic market share. um- and long-term growth strategies. a The members of the three major Also, as carriers reduce capacity in global alliances (including proposed new response to the economic downturn, alli- members) control more than half of the ances offer an option to supplement the world’s capacity and close to half of the carriers’ diminishing schedules. passengers. “In a world where you’re not allowed This significant influence includes to do full mergers, this [forming airline managing 64 percent of capacity within alliances] is the next-best thing,” British North America, 55 percent within Asia, 44 Airways Executive Vice President Simon percent within Europe, 31 percent within Talling-Smith told Reuters last July. Central/South America, 22 percent within And oneworld’s February 2009 state- the Middle East and a whopping 75 percent ment that it had generated more than of seats on the North Atlantic. US$3 billion in incremental revenue Given the alliances’ pervasive scope, it from alliance fares and sales activities Janet Kimoff is senior management becomes more and more difficult to con- alone during the last decade further consultant in Consulting & struct a business hypothesis under which demonstrates the significant potential of Solutions Delivery for Sabre Airline nonaligned carriers will be able to access alliance membership despite regulatory Solutions®. She can be contacted significant global growth opportunities. constraints. at [email protected].

ascend 53 Unleashing The Travel Agent Of 56 Power Of Choice 59 The Future Boosting ancillary revenues As technology continues to isn’t just about offering a few advance inexorably on all fronts, add-on products or services to travel agents and agencies an airline’s website. It’s about continue to evolve, with their implementing a concrete shop- business success anchored ping strategy that appeals to upon and closely tied to tech- every consumer type, ensures a nological advances. As the satisfying customer experience highest-yielding sales channel, and promotes loyalty. it’s essential that these capabilities are developed to support agencies.

Channeling China Value

62 China has experienced signifi- 65 Articulation cant growth in the online travel Not only is it critical for airlines arena and is expected, by the to take advantage of every pos- end of next year, to represent sible distribution channel to sell 20 percent of the country’s total their offerings, it’s also vital that travel revenues. the value of these products is clear and can be easily identified to achieve maximum sales potential.

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Crossing All Channels

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Unleashing The Power Airlines must often evaluate their route network — determining whenOf to add aChoice new route, when to discontinue a route or when to change the frequency on a route. FollowingBoosting some ancillary basic revenues guidelines isn’t just about is key offering a few add-on products or services to an airline’s website. to making sure theIt’s about right implementing markets aare concrete served shopping at the strategy right times. that appeals to every consumer type, ensures a satisfying customer experience and promotes loyalty.

By Brian Borg | Ascend Contributor Photos: Jupiter

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rom buying a car or choosing where the strategies and solutions are agreed upon by item or fare is available, then the consumer to sit in a movie theatre to deciding all stakeholders, only then can a successful solu- will have the option to see it. By providing as on a vacation destination, decision tion be rolled out into the marketplace. There are much information as possible and as many making is everywhere. And, in no several possible shopping strategies that have choices as possible, the consumer makes an other place is there more choice associated benefits and risks. educated choice influenced by an abundance and breadth of opportunities than (perhaps over-abundance) of information. Fin air travel. Price-Only Strategy The benefit is the customer feels as if the For airlines to win in their points of sale, they Designed for the low-fare enthusiast or choice was made truly based on all the need to have a robust solution for their guests as cost-conscious buyer, this strategy provides options available. The risk is more informa- well as a sound strategy. Having an air shopping consumers with the cost of the trip and tion and time to analyze results in longer strategy is often an overlooked but exceptionally allows flight choices to be based on the fare conversion times as the consumer sorts important part of e-commerce business. And, alone. This is the most simplistic approach through various choices and shopping paths. there appears to be growing frustration with and enables the consumer to select flights And, even after analyzing, the consumer airlines that use inflexible and uninspiring shop- and associated fares based on availabil- may find it too difficult a task to decide and ping processes that do little to help consumers ity. Conversion rates are excellent because move on to another site to purchase. uncover the choices they seek. there is a single shopping path, and time to Previous issues of Ascend have included book is quick. However, the risk with this Time-Is-Everything Strategy in-depth features about air merchandising and strategy is perhaps the consumer is less This strategy is aimed at build-your-own- what it takes to implement a successful air price driven when it comes to airfare. And, trip or schedule-driven consumers — those merchandising strategy. Another vital aspect for a full-service airline, the consumer is who don’t really worry about the cost as much of the strategy is effectively taking opportuni- unable to realize the breadth and depth of as convenience or schedule. Predictably, this ties and making them available to consumers. product offerings. is usually geared toward business travelers Airlines must determine which options to offer who operate on a time schedule that has their guests and how best to display them on Informational Strategy been predetermined. It is most valued as their websites so they can be easily identified. It Specific to the analyzer or information- a shopping strategy in a corporate portal, should be considered much more than heuristics; hungry consumer, using this strategy, if the giving consumers quick booking paths, but it’s a complete air shopping strategy. An airline should think of its website as a virtual store. The shopping paths it offers and the creative ways it displays those fares is how customers view the product. Creative displays and easy-to-find merchandise almost always result in sales. They must be attractive to draw the customer into the buying experience. After all, if a shopper is uninspired by a particular website or shopping experience, chances are he won’t buy anything and may not return to that “store” to shop in the future. Finding the balance between offering too much or too little is a delicate process. More content and decision-making paths can result in longer look-to-book times. Too little choice in shopping opportunities can result in consumers feeling they are missing something and lead to shopping multiple sites, particularly if they are successful in finding alternatives in other sites. A carrier needs to determine whether or not its product line is too complicated to allow less air-shopping-savvy consumers to quickly find what they need. The consumer shouldn’t have to be an expert on the airline’s product and fare structure to get through the purchase experience.

Shopping Strategies Establishing a true shopping strategy requires a harmonious union between marketing dollars and information technology solutions. To ensure the shopping strategy is effective and addresses specific business needs, an inside-out approach is required. More specifically, an airline’s information technology group must understand marketing direction enough to suggest technical solutions, An airline’s website, when presented as a virtual store with appealing displays and easy-to-find and its marketing team must understand the merchandise, often results in ancillary sales. An unattractive, difficult-to-navigate site will likely opportunities that are technically possible. Once turn customers away, and they probably won’t return to the site for future shopping.

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inconsistencies in shopping experiences. If consumers know they will get one deal Online Leisure And Unmanaged Business Air Bookings By by calling a reservations office and another Booking Channel by booking directly on the website, they will shop every possible avenue before making a choice. An airline should strive for $120 consistency across all channels to mitigate this risk. A successful shopping strategy will: $100 Boost revenues — The more effective the shopping strategy, the better conversion rates and look-to-book ratios $80 will be. Conversion and look-to-book Online rates all have an impact on the bottom intermediaries line, particularly if the e-commerce site $60 is the primary purchase point for the carrier’s consumer base. $40 Increase loyalty — When a consumer US$ billions Online feels he consistently finds what he is suppliers looking for, at the appropriate price, he $20 will repeatedly return to that particular airline. Empower the customer — Enabling $0 Share of the power of choice means giving con- online air bookings 2008 2009 2010 2011 2012 2013 sumers the opportunity to choose the fares, services and products they value Online intermediaries 31% 30% 28% 26% 25% 23% most. A successful air shopping strategy Online suppliers 69% 70% 72% 74% 75% 77% will enable customers to feel empow- ered by their purchase. (numbers have been rounded) Deliver brand awareness — An airline’s brand begins with its strategy. However customers shop and wherever they shop, the brand should be there to serve them. According to Forrester, 77 percent of air travel booked online in 2013 is expected to be on The answer to having an effective shop- supplier sites, up from an anticipated 72 percent this year and 69 percent five years prior. ping strategy may be a combination of two or more of the specified methods. Careful evaluation needs to take place to discover arguably not broad enough for the leisure process to see the once simple low fare what works best for an airline’s specific traveler. is now 200 percent higher than originally line of business, and it should be consis- thought. tent with its brand promise and customers’ Bundling/Unbundling Strategy expectations. For most, an e-commerce For the pay-as-you-go customer, this Leisure Strategy site is the primary entry point for custom- strategy — one that a large number of Surprisingly, this strategy, designed for ers. It presents an airline’s brand and airlines around the world are increasingly the consumer who wants it all, requires the provides the first opportunity for them to pursuing — may begin with a simple low- most thought. Although leisure consumers purchase a service. Couple this with deliv- fare search that draws the customer into generally provide the least amount of rev- ering the best fares in an easy-to-find but the buying process but provides opportuni- enue on a per-passenger basis, this group creative format, and consumers will reward ties to add other services as the consumer tends to be a mix of cost-conscious guests their airline of choice with a long-term shops. This could be anything from adding who are looking for the best deals but have business relationship. a insurance and pay-for-seat options to add- flexibility in their travel schedule. The ben- ing a rental car or hotel. Alternatively, the efit of this strategy is that it addresses the airline may elect to create a fare-family majority of leisure consumers who shop product with different bundles of prod- the airline’s website. The risk is that these ucts and services that meet the needs of passengers may tend to shop multiple specific customer segments. The primary sites before settling on their purchases. benefit of these strategies is driving additional revenue through better customer The Value segmentation or up sell and cross sell The success of a shopping strategy can of other products and services. But, the be measured in multiple ways. And airlines strategies also offer consumers additional need to consider the various points of sale Brian Borg is the product marketing opportunities to complete their trip and where they will distribute shopping strate- manager of Airline Shopping Solutions create site stickiness. The risk involved gies. Having a product in multiple points for Sabre Travel Network® and is the customer may be confused by the of sale (direct and indirect) is often neces- Sabre Airline Solutions®. He can be choices or be shocked at the end of the sary, but those gains may be offset by contacted at [email protected].

58 ascend TRAVEL AGENT OF THE FUTURE As technology continues to advance inexorably on all fronts, travel agents and agencies continue to evolve, with their business success anchored upon and closely tied to technological advances. As the highest-yielding sales channel, it’s essential that these capabilities are developed to support agencies.

By Jenn Petric | Ascend Contributor Photos: Jupiter ASCEND I SPECIAL SECTION

echnology has always been — and will always be — a mission-critical component of the agency channel within the travel industry. In fact, a strong argument can be made that because of its global demandsT for quick, timely, accurate and highly accessible yet ever-changing information, the travel industry has long been a key element spurring innovation and expansive development in information technology. It’s also quite evident that the broad range of technologies employed by travel agents over the years has helped make the agency sales channel a vital element in the marketing plan of almost every airline. Burgeoning travel technology has enabled the agent to draw up the best itinerary for the individual traveler and efficiently fulfill and service the end-to- end travel-reservations process. And the trend continues. Every day, technology seems to evolve even more rapidly than the day before — changing, among other things, the way significant numbers of people connect and interact. Because of the broad range of information technology used by travel agents, this channel has Some of these changes have effectively become essential to most airlines’ marketing plans. For agents to continue to quickly produce made the technologies that agencies use the best results for travelers and effectively complete the reservations process on behalf of carri- more accessible, scalable and easy to use, ers, technology must be available in a scalable form. and the changes have also enabled “virtual” connections and relationships throughout New sales models such as the corporate call The overall result: greater efficiency and pro- the channel — from airline, to agent, to center and the “remote agent” must have full ductivity, meaning more bookings per agent/ consumer. capability to take advantage of these technolo- hour. gies in the same ways a “traditional” agent can. To accommodate these new sales models, Transparent Assistance Hig hlight the latest applications and functionalities must be Transparent assistance technologies are available in a scalable form. basically intelligent robotics that will be Technology has always The Sabre Travel Network® vision for the employed to manage proactive notifications future captures the emerging technologies that of events and what might be referred to as not only cross through the travel industry but behind-the-scenes intuitiveness of modern been a mission-critical serve to indelibly alter its landscape. These applications. technologies will not only enhance the agent’s The essential importance of transpar- component of the service capabilities in dealing with the end con- ent assistance lies in several levels of sumer but will also continue to elevate the enhancement of the work experience for agency channel within agent’s performance and genuine value as a the individual agent, greatly increasing the sales channel to airlines. capability to automate tasks that the agent the travel industry. There are several major categories of tech- previously performed manually. nological development that are currently in the These technologies essentially streamline process of fundamentally altering the ways in the agent workflow while lessening any which the agency channel works — with what necessary training time and, once again, may often prove to be startlingly positive produc- increasing agent productivity. Enhanced pro- tivity developments. ductivity, of course, means more bookings Nonetheless, for the agency path to remain and completed sales transactions per agent/ the highest-yielding sales channel, which it Multi Touch hour. has traditionally been for carriers worldwide, Multi-touch technologies incorporate multiple this sometimes mind-boggling progression in touch points to enable the travel agent to man- Mobile Commerce technology must be closely associated with age and manipulate applications and data via Mobile commerce represents the greater and directly applied to fundamental needs LCD- or camera-based screen projection. trend in the movement of business and within the travel industry. Because multi-touch technologies are social exchanges from personal computers For example, new communication conduits designed not only to enable but to prompt and to mobile devices. It’s a trend no one can that have recently emerged require instant knowl- encourage greater efficiencies through multi- possibly miss. In fact, the vast majority are edge and answers, virtual relationships, and tasking on the parts of travel agents, these already putting this technological advance constant interaction. So travel agents must be technologies provide critical time-saving booking into high gear simply by adopting and using fully equipped with the appropriate technology capabilities — fostering collaboration-based envi- more and more advanced communications to enable them to effectively participate in these ronments and applications, and introducing new, devices (it’s no longer really even accurate to communications arenas. more-efficient workflow patterns. refer to these devices as cell phones — many

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of them essentially amount to mini-PCs that Social Media increase in bookings per agent, which will people carry everywhere). Social media actively represents and pro- mean more bookings overall. The entire movement toward mobile com- vides methods of communication combining Enabling an agent to achieve multiple merce effectively creates a critical need to technology with social interactions. tasks at once accommodates complex res- think differently about business transactions Once again, social media encompasses ervations and workflows. Changes can be in general — and there’s a further inher- some of the critical places customers are to promptly processed, so the more compli- ent expectation on the parts of consumers be found — both today and in the future. But cated transactions such as refunds and that more-advanced on-the-go applications social media also enhances other vital agency exchanges can be performed quickly and are inevitably in the offering (which they capabilities such as accelerating information with consistent quality. undoubtedly are, although it’s currently deployment and contributing to the growing Operational efficiency in a corporate call unknown what many of those applications trend of viral marketing, which serves to center essentially means that an agency will be). quickly build brand awareness. can be nimble and make policy or workflow But from a standpoint of the traveling In addition, widespread consumer accep- changes (which come down from carriers public, one thing’s for sure: It’s where airline tance of social media has led customers to and client corporations) on the fly. Enabling customers will be, and that makes it abso- pick up the ball and run with it. Consumers greater degrees of consistency and qual- lutely critical that the agent channel have a use social media to discuss products, ity control upfront will effectively prevent strong presence in this space. Many savvy services and the companies that deliver these types of changes from interfering with and resourceful travel agents are already them — those that have tapped into social the agency’s ability to continue productively there. media outlets can enable transparent com- creating reservations. munications and accept direct feedback from Accelerating information deployment Operational Intelligence customers. enables agencies to receive information from Operational intelligence will couple real- And those companies are largely being carriers faster than ever before. Giving an time operational insight with the immediate rewarded for their openness and innovation agent important information enables the ability to act upon critical elements within in communicating with the people who buy agent to make the best possible decision the business. their products and services. In a service when booking within the point of sale. With more immediate capability to act, industry and distribution channel such as With the agency channel being the high- the agent is more likely to achieve posi- that represented by the travel agent, the cus- est-yielding sales channel — particularly in tive results. Overall operational efficiency tomer relationships that can be developed the corporate segment — it is crucial that is thereby enhanced through ever-improved through social media are invaluable. these powerful technologies are molded into decision making. solutions that support agencies. These capa- And streamlined operations are created Fully Embracing Technology bilities will contribute to reducing carriers’ through improved operational intelligence, All of these technologies support a more costs, creating the ideal business scenario elevating customer-service levels and help- productive workflow never previously imag- for all parties in the channel. ing ensure greater consistency in the quality ined and, as a result, agents will be faster Technologies such as mobile check-in of the customer experience. and more efficient. Efficiency will lead to an have the potential to drive operational costs out of a carrier’s business model. And the global distribution system has and will continue to provide powerful capabilities that encompass the content, services and workflow enabling productivity and efficiency in the agency channel, providing carriers what may prove to be enormous returns on their longer-term investment. a

Jenn Petric is senior product Sabre Travel Network’s vision for the future includes the development of superior technologies marketing manager of Point Of Sale that not only support the entire travel industry but also permanently enhance its overall envi- desktop solutions for Sabre Travel ronment. These advancements will continue to boost agents’ performance and true worth as a Network. She can be contacted sales channel to airlines. at [email protected].

ascend 61 China has experienced significant growth in the online travel arena and is expected, by the end of next year, to represent 20 CLIMATEpercent of the country’s total travel revenues. By Siew Hoon and Benjamin Mussler | Ascend Contributors CHANGE Beginning in 2012, all airlines operating to Europe

will be required to report CO2 emissions and will have emissions limits. Airlines need to prepare now to ensure they comply with the new legislation. here’s no question that the growth of the travel market has been a real bright spot for China. One highlight last year was the impressive growth of online travel via online travel agents and supplier websites. “It is projected to grow at double digits for 2011 and 2012, and this should result in online representing 20 percent of total travel revenues by the end of 2011,” said Hans Belle, vice president in the Asia/Pacific region for Sabre Travel Network®. “This will influence adoption of online technologies and enablers such as advanced shopping/pricing platforms, Internet booking platforms, online booking tools, customer relationship management, and airline marketing and merchandising tools.” It is a segment that can only grow. China has the largest base of Internet users in the world (300 million people), of which more than 80 million have broadband capabilities. “The robust telecom infrastructure, greater availability of online payment options (online banking, third-party payment sites, credit/debit cards) and availability of high-quality media content have helped fuel the online adoption in travel,” according to a report by PhoCusWright. “Along with other e-commerce players like Taobao, sina.com, etc., travel meta-search players like Qunar and Kuxun have also experienced rapid growth.”

Drive Toward Direct Web Bookings One supplier that has made great strides in driving direct online bookings has been 7 Days Inn, China’s third-largest budget hotel group. Its Chief Executive Officer Alex Zheng recently outlined expansion plans — from the current 320 hotels to 1,800 during the next five years — and said that more than 60 percent of its sales comes from online reservations. With similar ambitions, Chinese airlines have been investing in their online presence. “Airlines in China have begun to take their online presence more seriously,” said Brett Henry, vice president of marketing for Abacus International. “The growth of the supplier direct is now as fast as the online travel agents. The carriers now appear to be making the right investments in technology, processes and people to leverage and derive benefits from the online environment.” As consumers in China continue to have more travel shopping options, airlines recognize that they have to pay closer attention to the online space to compete with OTAs such as Ctrip. Ctrip caters to the Chinese market — aggregating information on hotels and flights and enabling customers to book online. Like other OTAs, Ctrip also sells packaged tours that include transportation and accommodations. According to PhoCusWright estimates, in 2008, Ctrip sold every tenth air ticket in China, aggregating air bookings of about US$2.5 billion. The value OTAs such as Ctrip provide to consumers can be seen in their immense growth. Ctrip airline ticket sales have skyrocketed in the past three years. In 2008, Ctrip booked more than 14 million air tickets, more than a 350 percent increase from its 2005 air bookings. ASCEND I SPECIAL SECTION

the state-owned GDS, TravelSky, fit into this whole Preferred Mode of Transport scenario?” 1% 1% 5% 1% On its website, it declares its aim to be “a world- 6% 7% 7% 16% class company with international competitiveness.” 40% Air For this to happen, many argue that some sort of deregulation must occur in the Chinese travel Train 46% 44% 54% marketplace. “This will impact both airline distribution and tech- Bus nology in the travel space,” said Henry. “Deregulation 13% 55% 18% will certainly open up the travel industry in China to Own car a high degree of change and push the industry to move at an even faster pace than before.” The decision to deregulate “is not up to TravelSky 40% 46% 26% 41% 26% to decide,” said a TravelSky source. “Our purpose is to compete in all situations, whether the market is open or not. We have to ensure our technology is friendly and easy to use, we help travel Beijing Shanghai Guangzhou Chengdu Xian agents upgrade from green screen, and we offer e-commerce support to our partners to support their Source: PhoCusWright’s The Emerging Online Travel Marketplace in China Report, 2009 Web business.” Record economic growth has stimulated China’s travel industry, which is currently positioned to One area it is focusing on is the corporate travel surpass Japan as Asia’s largest travel market. In terms of passenger volume, China already has market, and it recently signed a partnership with the largest aviation market, and the country is experiencing significant investments in travel, Carlson Wagonlit, in addition to an earlier agreement tourism and infrastructure across all sectors, including rail, road and airports. with American Express. “In China, corporate travel is only beginning,” Abacus’ Henry sees this growth as a win for the the heart of the Web shopper in some other fashion according to TravelSky. “It’s like Europe or the United consumer. to sustain long-term site loyalty. In any case, actions States 20 years ago. More and more companies are “We can expect to see Chinese carriers compet- such as these represent the growth of “choice” for catching on to the idea of corporate travel manage- ing more aggressively with the OTAs in that space,” Chinese consumers. ment practices, and TMCs are looking for solutions he said. “Metasearch will also dramatically increase, Additional actions have included the expansion to suit their customers. They want to develop local which will mean better service and options for both of travel offerings by airlines on their websites. booking tools with the support of TravelSky as they consumers and suppliers.” Air China, for instance, has signed a partnership know they have to adapt to cultural and customer And airlines in China are not waiting to make with Expedia Affiliate Network, which will see the preferences.” changes. For example, Air China and China Southern Expedia hotel product offering available for booking have introduced Web-exclusive fares to drive direct through Air China points of sale across 27 markets Going Global bookings from their websites. Time will tell if exclu- globally. But as the players in the Chinese travel space sive Web fares will work in the Chinese market. In continue to look for ways to expand, entering the the short term, they represent a great way to drive TravelSky And China international e-commerce segment is where they customers to a site. But building loyalty based solely The greatest of intentions can only be realized will face the most challenges. on price may represent only a short-term advantage if supported by the right foundations, and the “For Chinese airlines to succeed in the inter- — if low prices go away, airlines will have to capture biggest question that begs asking is, “How does national online space, they have to compete with global carriers, and they have to work on things such as branding, user experience and customer Top Websites Used For Air Search service,” said a Chinese airline source. 41% baidu.com Likewise, TravelSky remains on the lookout for the right strategic partnership with a global GDS. 35% ctrip.com “We hope to cooperate with other GDSs to forge win-win relationships to help our customers 27% airchina.com.cn expand their business globally. But we won’t just 18% google.cn wait for it to happen — we will also do our best to expand our business globally. We will develop our 14% elong.com own plan.” And if the recent history of the growth of the 9% qunar.com Chinese travel market is any indication — Chinese 8% kuxun.cn carriers, OTAs and TravelSky will put their global growth plans into action sooner rather than later. a 6% mangocity.com 5% sina.com.cn Siew Hoon is editor at large for SHY Ventures and Producer of WIT-Web In Travel. 4% cs-air.com She can be contacted at [email protected]. Benjamin Mussler is an airline distribution Two years ago, Ctrip sold every tenth air ticket in China, collecting about US$2.5 billion in air solutions marketing partner for Sabre bookings. Today, the online travel agency possesses a 35 percent share of the top websites used Travel Network®. He can be contacted for air travel searches in China. at [email protected].

64 ascend Value Articulation

Not only is it critical for airlines to take advantage of every possible distribution channel to sell their offerings, it’s also vital that the value of these products is clear and can be easily identified to achieve maximum sales potential.

By Benjamin Mussler | Ascend Contributor ASCEND I SPECIAL SECTION

n an age where various technologies, tools and channels help direct customers to an airline’s products and Leisure Versus Business Purchases services, how can an airline ensure its value proposition for these items Leisure air passengers is effectively marketed through each Business air passengers methodI of distribution? Decision makers need to ask their marketing and distribution managers about 30% Fee to check baggage value proposition. Just as new technology 30% continues to offer airlines more ways to differentiate their products and services, 19% Meals or snacks on an airplane 21% the Internet gives travelers more ways to research and determine their travel options 11% Fee or service charge to change on their own. While ancillaries may provide 17% a ticket or reservation more ways for a carrier to differentiate its 6% Fee for a better coach seat services online, many consumers base their 9% (e.g. exit row, aisle) decisions on price. Therefore, it’s crucial for 5% Fee to cancel a ticket or reservation an airline to explore ways to ensure that the 8% value of these ancillaries is clearly defined 3% Pillows or blankets on a plane and becomes a key reason consumers 4% choose its offering over the competitions’. 2% Single visit/day lounge pass 4% Ancillaries Or Travel “Fees”? Ancillaries offer a great way to differ- 50% None of the above entiate an airline’s products and generate 45% additional revenue. It is estimated that half of all airline passengers paid a travel fee during the past year and, as Forrester Base: U.S. online air passengers (multiple response accepted) Research suggests, “travel fees such as those to change a ticket or reservation are old hat in the travel industry.” But 2008 saw the emergence of new fees, including Recent data from Forrester Research suggests that there are opportunities to capitalize on items those for checked baggage, seat selec- that are not considered a fee. Carriers that innovate beyond “meals” and offer new ancillaries tion, and in-flight food and beverages. The consistently through all channels will clearly generate additional revenue. data shows that 50 percent of U.S. online airline shoppers have paid for at least one ancillary sales prior to a flight by “re- have already been bought and accounted optional “value-added” service in the past evaluating forms of payment and channels for. 12 months. and website design and navigation” in their Unfortunately, the vast majority of those own direct channel as well as the sites of Shopping Around “value-added” ancillaries purchased are their distribution and travel partners. Online consumers are increasingly price purely labeled and defined as additional sensitive and technology savvy, so it’s “fees.” But it’s not all bad news. The data Pre-Flight Sales imperative the value of ancillary services shows that there are opportunities to capi- Many carriers have had great success is clearly stated in all distribution and mar- talize on items that are not considered a fee with the sale of ancillaries and upgrades on keting channels. “Click words” and other but rather an option or choice. For example, the day of departure and/or in-flight (seat search engine-driven marketing tools can the study showed that 19 percent of leisure upgrades or meals for sale on board). But be expensive and too repetitive to capture and 21 percent of business travelers chose the opportunity to generate more revenue the customer. The typical bid price for key to pay for an in-flight meal or snack. Thus, through the sale of ancillaries during the words ranges between 30 U.S. cents to there is potential for these ancillaries to ticket-purchase and pre-flight phases of the more than US$2. This seems relatively bring true value to customers instead of travel cycle mustn’t be discounted. Their inexpensive but can be misleading because just providing a new way for an airline to importance is two-fold because they: the airline must pay per click (regardless of collect more money on a service that was Present more opportunities to sell the whether it results in a sale). once part of the traditional airfare. Carriers customer on any given trip, A Sabre Holdings® analysis, reported in that innovate beyond meals and offer new, Provide a more convenient shopping an earlier issue of Ascend, estimated a unique ancillaries consistently through all experience for customers because they click-through conversion rate of only 3.37 distribution channels have the potential to can buy the services and “extras” they percent, and showed that it could cost generate a wealth of untapped revenue and value prior to arriving at the airport or in- carriers upwards of US$10 to US$50 per product differentiation. flight. booking when the entire cost of a “click- To succeed in this area, however, airline By offering the extras earlier in the travel- word” Internet search marketing program is distribution and marketing management purchasing process, airlines can help boost allocated to those bookings that are actually teams need to follow a solid multichannel their revenue by selling more ancillaries and purchased. strategy that includes sale of ancillaries in improve the overall customer experience. This cost could be justified if this method all places their seats are sold. Forrester Once on the trip, travelers are able to enjoy of acquisition built strong, loyal relation- suggests that airlines can maximize their their entire trip because all of their “extras” ships with customers. However, this would

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a specific region or country to better Supplier And OTA Air Shoppers Who Also Visit Non-Transactional Categories articulate the value of their products to agents. These types of campaigns have average click-through rates of up to six times higher than the industry average. 45% GDS and travel management company relationships — Although it is essential 40% for a carrier to maintain its own healthy 35% relationship with the TMCs, it is also beneficial to ensure that the GDSs with 30% which an airline participates understand Meals or snacks on an airplane 25% its needs. An airline should meet with its GDS partners on a regular basis to Fee or service charge to change 20% CHART TO FOLLOW ensure they have a good working knowl- a ticket or reservation edge of the carrier’s value proposition. Fee for a better coach seat 15% Questions to ask include: (e.g. exit row, aisle) 10% • Does the GDS help TMCs improve automation? Fee to cancel a ticket or reservation 5% • How is the GDS ensuring that the value of the airline’s products is 0 Pillows or blankets on a plane being communicated? • Can unbundled and ancillary offer- Single visit/day lounge pass ings be distributed through the Metasearch Metasearch GDS? Travel Guides Travel Travel Guides Travel • How can the GDS help target the air- Lead Generators None of the above Lead Generators line’s offering at specific customer Planning and Reviews Planning and Reviews segments? Destination and Tourism Destination and Tourism Online travel agent marketing — OTAs Supplier Air Shoppers OTA Air Shoppers can significantly help carriers increase brand awareness and articulate value 2Q07 2Q08 2Q09 beyond hub cities. In a recent study, after extending its brand through increased 2009 PhoCusWright Inc. All Rights Reserved. OTA presence, one North America-based carrier increased sales of itineraries out- PhoCusWright data indicates that online consumers are not becoming more loyal but are using side its hub city by 25 percent. It’s also even more tools to research travel beyond a carrier’s website. Shoppers often visit supplier essential for airlines to utilize the adver- websites or online travel agents. tising and promotional tools of the OTA in which they participate. require customers to be price insensitive, within the non-transactional categories, As the travel landscape continues to carrier loyal and not prone to shopping such as lead generators and destination evolve, consumers will have more opportu- around for the best deal. This is not the and tourism sites, during the same month nities to research and determine the value case with many travelers, for example, they purchase travel. For shoppers who of each carrier’s offerings. Therefore, it will when one views the growing popularity of generally purchase via a supplier site (air- be imperative for airlines to clearly articulate online travel agencies as search engines. line.com), two types of sites in particular the value of their products. Whether it’s in Recent data from PhoCusWright indi- have experienced growth during the past the form of ancillaries, bundled offerings or cates that shoppers generally start their two years — travel guides and planning a service — carriers must be prepared to searches with an OTA and then go to and review sites. During the past year, capture consumers for the long haul by the supplier website to purchase once even more of the shoppers who use OTA selling them value, no matter where or the cheapest price has been found. The sites to book travel visited planning and when they are shopping. a report, which analyzes online travel pur- review sites. chasing habits from January 2007 through June 2009, found that roughly 70 percent Demonstrating Value of online air, hotel and car rental consum- Increased use of non-transactional sites, ers transact with the respective supplier better technology and more self service sites. indicates that savvy consumers search While this could be considered good for the best deals … those containing the news for the airline’s direct channel, most value. Airlines should clearly display additional research indicates online con- the value of their products in the channels sumers are not becoming more loyal, prospective customers are surfing. There but instead are using even more tools to are several ways airlines can ensure prod- research travel beyond a carrier’s website, uct value is prevalent in each channel: reaching out to travel agent or OTA to find Global distribution system advertising Benjamin Mussler is an airline distri- the best deal. Compete Research reports — While distributing through the GDS, bution solutions marketing partner for a significant portion of air shoppers who tools such as Sabre® GDS Media suite Sabre Travel Network®. He can be con- visit a supplier site or OTA also visit sites enable airlines to target messages to tacted at [email protected].

ascend 67 On “Cloud” Nine Talking Technology with ... Barry Vandevier Moving from a mainframe environment to a service-oriented architecture on open systems represented a major technology jump for Sabre Holdings® and its air transportation customers. But it doesn’t stop there. Next steps include the application of cloud concepts to take SOA to the next level. ASCEND I COMPANY

hrough the early 1990s, life in tech- than 8,000 messages per second and respond- nical operations at Sabre Holdings ing with hundreds of real-time flight options in was relatively straightforward. In a few seconds. a world dominated by mainframe Our Software as a Service, or SaaS, environ- computing, there were few sys- ment, Sabre® eMergo® Web Access, has been T tems with which to worry. And, under development for more than nine years when a production issue occurred, one only and hosts 119 airline customers across 23 had to search in a handful of places to identify open-system applications. a root cause. On behalf of our air transportation custom- The tools available to manage the mainframe ers, we leverage the latest and greatest in environment were mature and robust, enabling development tools. During the last several rapid response time for troubleshooting and years, we have moved all our teams to an Agile resolution. In addition, because all of the sys- development methodology, enabling us to build tem resources in a mainframe environment are our solutions in smaller iterations and incorpo- managed at an extremely granular level, the rate high-quality practices early in the lifecycle fix or removal of an offending piece of code before a line of code is ever written. This focus could take place within minutes. On top of that, has been for the sole purpose of improving the with 100 percent of capacity in a mainframe reliability of our delivery and product quality. environment being shared, scale was easy to In addition, by building our products as small, predict, and planning for additional capacity was discrete services, we are able to greatly increase a straightforward exercise. service reuse and leverage our global develop- Even with all the benefits of a mainframe ment resources more effectively, building more environment, the reasons for our move to a of our components in parallel while reducing service-oriented architecture, or SOA, on open As chief information officer of Sabre Holdings, development bottlenecks. This approach has systems were obvious. Certainly cost and the Barry Vandevier oversees the corporation’s also enabled us to use our solutions for broader commoditization of the midrange hardware varied and complex technology functions purposes by providing better separation of user space were critical considerations, but it wasn’t across three business units (Sabre Airline interfaces and business functionality as well as just a matter of compute cost. In reality, for Solutions ®, Sabre Travel Network ® and enabling more flexibility with the use of rules simple, high-volume, critical transactions in Travelocity ®). Since assuming this role in engines, standard middleware components and steady state, a mainframe environment cost 2006, Sabre Holdings has been recognized for service orchestration. when fully loaded with the cost of operations three consecutive years by InformationWeek Having a sizable SOA environment doesn’t was not outrageously more expensive than as one of the “Top 100 Most Innovative Users come without challenges. All of the system those in a midrange environment (which will of Technology.” management benefits described in the main- continue to be challenged by Moore’s Law). frame environment do not inherently exist in the But, as more and more of the travel market Hig hlight world of SOA. Proper monitoring, scale, redun- moved online, look-to-book ratios skyrocketed dancy and resiliency must all be engineered — consumers demanded much richer content proactively into the environment. Failure to do and many more options within seconds of During the last several so before a product is launched will only result entering their search criteria. Further, the desire in missed expectations. The amount of invest- for personalized content required the ability to years, we have moved ment required to incorporate these engineering inspect and dynamically alter the information principles should not be underestimated. based on the needs of the consumer. all our teams to an In our effort called “Design for Failure,” an For decision-support applications such initiative intended to identify potential points as revenue management, flight scheduling, of failure so they can be avoided, we have crew scheduling and movement control, open Agile development invested millions of dollars building engineering systems opened up a new world of options capabilities required to operate a resilient SOA to support the need for flexibility and the methodology, enabling environment. In addition to dedicated technical importance of usability and the user interface. operations, we have engineering, capacity and Combined with the introduction of extensible us to build our solutions performance teams focused almost exclusively markup language, or XML, and rich open-sys- on our open-systems environments. We have tems development tools, building services on in smaller iterations built test environments to support both indi- commodity hardware provided answers to both vidual product testing as well as end-to-end consumer demands and rising costs. and incorporate integration and performance testing. We have Today, we process more than 700 million incorporated standard monitoring tools and requests per day, peaking at over 32,000 developed minimum operating standards, or transactions per second. Every one of these high-quality practices MOS, that include policy, training and audits to transactions is either entirely or partially pro- ensure products are built to meet operational cessed on open systems. More than 20 percent early in the lifecycle expectations before they are ever released to of our requests enter through our Web services our production environment. Any products that environment, and traffic in this environment has before a line of code is do not demonstrate compliance with MOS more than doubled within a year and includes specifications will not be released. These best nearly 300 available services. Our largest open- ever written. practices were built over time through many systems environment, by number of servers, years of experience with open-systems and is our air shopping environment, consisting of SOA architecture. hundreds of midrange servers, managing more

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How does this relate to some of the latest IaaS will evolve into a mature capability in the will also exist out of the box in an open-systems “buzz words” in the technology industry? One future, it is difficult at this stage to consider an environment. of today’s most popular phrases is “cloud com- infrastructure service environment for highly We have made a very thoughtful and puting.” There are several definitions of this scalable, complex solutions that process data deliberate transition over many years from a term, including the traditional application service updated thousands of times a second requiring mainframe environment to an open-systems, provider, or ASP, and SaaS models where huge amounts of interconnectivity with other service-oriented architecture environment. We customers make use of product functional- external services. are aware of the value the mainframe provides ity hosted in a vendor’s environment. Cloud One benefit of all this hype is that invest- but also recognize the advantages and flexibility computing has also been used to reference the ment in cloud computing has already resulted we get with open systems that enable us to use of Web services from another provider’s in innovations by leading technology providers more quickly deliver products as services that products or services. I believe Larry Ellison, that will assist in dramatically improving the cre- better match your expectations. With our scale chief executive officer of Oracle, probably has ation and manageability of SOA environments. and your operational demands, we have learned the best definition of cloud. In his words, it is It will drive increased operational maturity many lessons along the way and have continu- simply: “… databases and operating systems and additional cost advantages through better ously reapplied those lessons to our standards and memory and microprocessors and the automation, monitoring and resiliency that are and new releases of our solutions. Internet.” available “out of the box” in an open-systems Our research team is partnering with major When looking at these more traditional defi- world. We expect that the ability to interoper- technology providers to apply cloud concepts to nitions of cloud, it would be fair to say we have ate across potentially heterogeneous cloud our environment in a way that we truly believe been in the cloud business for quite some environments will become much easier and will take our SOA capability to the next level. As time, primarily focused in solutions supported more manageable. And, with better automation, we continue this journey, we welcome your as SaaS or through Web services. However, we will have the ability to seamlessly bring active participation, as there are many things there are new, more leading-edge definitions capacity online to support new load demands that we can learn from each other along the of cloud that go further, advocating the use of within a matter of seconds, or even shut down way. a a complete virtual instance of an environment hundreds of servers to conserve power during where customers load their own applications off-peak hours, which we call “organic server on a virtual service without any knowledge of management.” The expectation is that in the the underlying infrastructure (Infrastructure as not-too-distant future, the operational resiliency Barry Vandevier can be contacted a Service or IaaS). While there is no doubt that we have taken for granted in a mainframe world at [email protected].

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40 billion 1978 31.9 million The number in freight ton kilometers The year in which the United States The number of jobs worldwide sup- managed by Sabre® AirVision™ removed government control over ported by the air transport industry, Cargo every year, two-and-a-half commercial aviation. Since then, fare about the population of Dallas, Texas, times the amount FedEx ships prices have fallen by half, while and Tokyo, Japan, combined. worldwide annually. passengers traveling have almost tripled.

44+ million 1,762 29 The amount in tons of freight aviation The number of airlines operating 20,806 The percentage of global aviation carries annually, about 35 percent of jets and 6,153 turbo props in 2008. impacted by the Iceland volcano. world trade by value. According to IATA, the volcano affected 1.2 million passengers a day.

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No Blind Spots For a decade-and-a-half, airline executives from around the world have provided valuable feedback each year in a variety of areas that help evolve the products and services provided by their information technology partner, Sabre Airline Solutions®.

By Steve Clampett | Ascend Contributor Photos: Jupiter

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little more than 15 years ago, Sabre Airline Solutions sent its first customer satisfaction survey to the 300 or so executives of the airline community. At the time, no one knew quite what the response Awould be or the changes that would evolve as a result of the customer feedback received. The customer satisfaction survey is a formal, consistent instrument for understanding trends, judging product perceptions, finding or rein- forcing areas needing improvement, validating areas doing well and determining where to concentrate efforts. Bottom line: it’s a way of ensuring there are no blind spots. Comprising 16 questions, the survey asks customers their opinions about six key areas: 1. What is your perception of our solutions? 2. What is your perception of Sabre Airline Solutions versus its competition? 3. What do you think of our customer care? 4. What do you think of our account management teams? 5. What do you think of the different pieces of our service offerings? 6. And, of course, the big one: Would you do business with Sabre Airline Solutions again? Generally, much of the survey feedback received has already been gathered from Airline executives who took the Sabre Airline Solutions survey indicated that help desk staff other sources, including account management needed more technical expertise. As a result, first-line support personnel now receive additional teams, user groups and airline executive visits. training and the first-call resolution rate has improved considerably. However, the customer satisfaction survey is conducted by an independent international mar- competitors may attempt to duplicate Sabre throughout the Americas, Europe, the Middle keting research firm that collects and analyzes Airline Solutions software lines and product East, Africa and Asia. The goal is to be as close the feedback in an objective, unbiased manner. code, the breadth and depth of the sales and as possible to our clients worldwide. The survey results are then provided to Sabre account management teams’ subject matter The survey has also been helpful in pointing Airline Solutions for dissemination to the appro- expertise is impossible to duplicate. Our roots out weaknesses and areas needing improve- priate departments, which, in turn, respond run deep in the airline industry, and this is our ment within Sabre Airline Solutions. In fact, with the necessary actions. biggest differentiator in the marketplace. the company has undertaken some significant Sabre Airline Solutions is also a truly global changes during the past five years. While not And The Survey Says … company. Five years ago, the company was all of them have been a direct result of survey The employees of Sabre Airline Solutions locally based in Texas. Today, its global footprint findings, many are, at least in part, a response to continue to be its greatest asset. This was indi- is far reaching and includes offices in Krakow, the feedback received. cated in the first customer satisfaction survey, Poland; Bangalore, India; Manila, Philippines; While Sabre Airline Solutions has made and little has changed over the years. Although Montevideo, Uruguay; as well as others notable progress in the consistency of its solutions, product delivery and customer care, survey results indicate more work is still needed. Because most customers purchase a “basket” of solutions from the company, they expect, as well they should, the entire package to look and perform in a similar manner. We’re pushing hard to establish a unified product development methodology, a single delivery methodology and an account management policy that is consistent across all product lines. The objective is to provide each airline with high-level and high-value service every time. In addition, Sabre Airline Solutions created the role of customer delivery executive within its Customer Service and Delivery organization to adequately meet the needs of its larger airline customers. These CDEs are specifically focused Airlines around the world have access to Sabre Airline Solutions experts who are located in a on and responsible for the delivery of all products variety of offices throughout the Americas, Europe, the Middle East, Africa and Asia, including to each of these larger, strategic customers, and Krakow, Bangalore, Manila and Montevideo. they have been well received by the airlines.

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Survey feedback also reveals products from needed more technical expertise to sufficiently product portfolio has been repositioned into Sabre Airline Solutions have a high degree of answer product queries and troubleshoot three key suites — Sabre® AirVision™ Marketing brand recognition within the airline industry. If an issues. In response, the first-line support people & Planning, SabreSonic® Customer Sales & airline needs a solution, Sabre Airline Solutions have received a great deal of additional training, Service and Sabre® AirCentre™ Enterpise is a player in virtually every category, with one and the percentage of first-call resolutions has Operations. As well, marketing messages were or two other competitors on the list as well. increased significantly. simplified and clarified, transitioning from an We constantly strive to be true to our brand Product documentation has also been identi- emphasis on the technical aspects of products and understand our customers’ expectations. fied as an issue in the survey. Respondents and services to focusing on the Sabre Airline When a solution is developed and delivered, have asked Sabre Airline Solutions to provide Solutions Advantage SM — flexibility, accessibil- first and foremost, it must work properly in the additional user, technical, business simulation ity, choice and experience — our customers customer’s business environment. An airline and training documentation. While it would be receive. purchasing a product from a “boutique” com- virtually impossible to maintain large books of To help carriers survive and even thrive in petitor may be more forgiving if the solution printed product information, much of this is today’s airline industry, Sabre Airline Solutions fails to deliver as promised than if the product now available on the Sabre® Community Portal. relies heavily on the input of its customers. was purchased from Sabre Airline Solutions. The portal’s online knowledge center includes They shape future solution direction by To help meet customer expectations, user manuals, product plans and release notes expressing their needs and actively participat- Customer Service and Delivery is now partner- as well as the latest software downloads. ing in the product planning, delivery and ing with clients through an interactive pilot Quick reference instruction guides and product support processes. a program. It’s a way to engage customers earlier demonstrations are also available. in the process by allowing them to use solu- At the other end of the spectrum, Sabre tions on a trial basis to refine their requirements Airline Solutions spent a great deal of time last and better understand product features and year fine-tuning its product portfolio and corre- benefits. The pilot program has been particularly sponding marketing messages. Feedback from successful with Sabre Airline Solutions crew a number of channels, including the satisfaction products and will be applied consistently across survey, indicated customers appreciated the Steve Clampett is president of Airline all product suites. wide range of products and services offered, Products and Solutions for Sabre Also in the area of customer support, survey but had difficulty completely understanding the Airline Solutions. He can be contacted respondents noted that the help desk staff company’s solutions portfolio. In response, the at [email protected].

+count it up

1.9+ billion 6.5 736 million The amount in U.S. dollars the The percentage of total revenues, of the The amount in U.S. dollars collected airline industry collected in ancillary 32 carriers that reported to BTS, in baggage fees during October fees during the fourth quarter of generated by ancillary fees. In 2009, through December last year, 2009, according to the Bureau of the carriers collected US$7.8 billion according to BTS. US$564 million was Transportation Statistics. This repre- in ancillary fee revenue, compared to collected for reservations change sents an 18.3 percent increase from US$5.5 billion the previous year. fees and US$611 million from other the same quarter the previous year. ancillary fees, such as pet transportation fees and frequent flyer award program mileage sales.

79 1,400 32 million The amount in U.S. dollars per barrel The number of aircraft expected to be The amount of jobs the aviation of oil IATA forecasts this year, an delivered this year, which, according to industry supports, according to IATA, increase of US$17 over last year. This IATA, puts the industry at risk for over equating to US$3.5 trillion in economic means fuel will rise from 24 percent of capacity. activity. operating costs to 26 percent.

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With its continuing rapid development and deployment, the electronic flight bag doesn’t simply represent the future. Electronic flight bags, in fact, are already on many commercial carriers’ flights today.

By Dave Roberts | Ascend Contributor Photos: Jupiter ASCEND I SOLUTIONS

rom the very early days of aviation, utilized as part of the EFB solution. Again, pilots have relied on information the carrier must carefully weigh the value printed on paper — and with the of the solutions versus the cost. increased complexity of air travel and the ability to fly longer dis- Problem Solved tances, the large amount of paper From the outset, Sabre Airline Solutions® Fnecessitated a separate bag for the pilot to recognized the super complexity of the carry to and from the aircraft. electronic flight bag as well as the chal- The “flight bag,” as it became known, lenges carriers faced in deciding how to is a physical satchel or briefcase in which evaluate EFB vendors and making the right the pilot carries numerous documents that vendor choices for their specific airline may be needed during the course of a flight operations. — documents including flight manuals, As a result, Sabre Airline Solutions operation manuals and approach plates. launched new technology called Sabre® Today, evolving technology in aviation AirCentre™ eFlight Manager, a compre- has transformed the physical flight bag into hensive approach designed to work with an electronic information storage unit that a carrier’s personnel using the technol- has come to be commonly referred to as ogy company’s expertise in consultative the electronic flight bag. processes, industry affiliations and project And EFB has continued to grow — from management to provide a complete EFB simple solutions such as global-positioning- solution. system capability and real-time weather The vision included creation of a digi- display, to electronic approach plates and tal transformation effort merging several airfield diagrams. commercial and operational projects into EFB scope and capabilities are expand- a comprehensive business process. This ing daily. Government regulatory guidelines effort reaches from the flight deck to represent a clear indication of EFB accep- ground-based systems, producing auto- tance by the airline community and those mated and lean processes across the entire who oversee flight operations. airline system. Aircraft manufacturers are closely Automation in EFB development enables involved, building new aircraft equipped each carrier to measure, manage and devel- with hardware and connectivity capabili- op a culture of constant improvement. ties. Software and hardware suppliers are The foundation upon which eFlight continually announcing new designs and Manager was built encompasses three development of new components for vari- core aspects: ous EFB classes. 1. In-depth analysis of a carrier’s flight- The technology evolution has become operations processes and procedures, an EFB revolution, with more and more 2. Critical evaluation of how these pro- carriers expressing eager interest in the cesses and procedures can be leveraged capability and potential of new technology in an EFB solution, onboard their aircraft. 3. Determining which of these may be New aircraft include EFB capability that judged likely to be more effectively and is built into the avionics units onboard. efficiently changed using the EFB tech- Older aircraft are outfitted with ruggedized nology. laptops that may either be mounted in the Sabre Airline Solutions experts apply cockpit or removed from the aircraft after their collective knowledge to begin the each flight. EFB project by developing a plan to intro- Three main components comprise a suc- duce EFB into a carrier’s flight operations cessful EFB solution: hardware, software — including making recommendations to and communications, each with unique senior management in setting an EFB providers. Carriers are faced with a com- vision for the future. plex task of determining the best solutions Sabre Airline Solutions professionals also for their airline operations as well as mak- review EFB applications and brainstorm on ing difficult choices regarding hardware required functionality for the carrier. Select and software vendors. functions of the EFB are based on what These choices include the type of hard- can be best described as “common sense” ware and whether it should be removable, that should be inherent in the initial phase fixed or embedded in the onboard avionics of implementation. system. A carrier must carefully evaluate As part of this initial phase, a review the costs versus the hardware capabili- is undertaken to determine the relative ties and the procedures used in its flight advantages of either continuing with an operations. older, yet effective, procedure or changing Software is equally difficult to select to become more efficient. since there are many different functions Sabre Airline Solutions also works that have been automated and can be diligently to build an understanding of the

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The value depends on the applications selected in a carrier’s EFB solution and varies by customer, region and type of operation. A representative industry sample (with results calculated from process workshops) showed a 75 percent reduction in process time, a 36 percent reduction in flight- operations working time, a 28 percent improvement in ratio to total labor time and a 48 percent reduction in process costs. Areas that can be readily identified for potential cost savings include a printing cost reduction, a significant paper-saving cost reduction, a weight reduction (a further positive result of which will be fuel savings), a communications cost reduction and a cost reduction related directly to the fact that there will be no more manual processing of trip-file information. Also, savings opportunities materialize due to better payload distribution resulting from greater accuracy in takeoff-point calculations, reduced handling fees, optimized flight-planning results (compare actual versus planned costs to calculate specific savings), general process-cost optimization and cost reduction through selection of best-value vendors. EFB results to date have shown that it is, in general, following the industry pat- tern previously observed in the evolution of ticketing (starting with paper-based tickets and various automation and paperless An Electronic Flight Bag includes all documentation and forms carried by pilots, such as phases to even greater savings through aeronautical charts, manuals for fault reporting and operations, minimum equipment lists, wireless check-in and handheld boarding and logbooks. Its weight-and-balance calculator enables pilots to instantly determine the ideal control through use of mobile phones). speeds and engine setting for an aircraft, in any weather, on any runway, with any payload. Over many years of development effort, continually improving wireless capabili- data-management aspects as well as data expansion of the carrier’s intranet services ties resulted in greater convenience and readiness and education of carrier person- and document-management systems. improvement in ticketing, check-in and nel about the difference between current The solution has been designed with boarding processes for passengers. paper processes and future electronic capabilities for identifying a carrier’s opti- And although EFB at various stages processes. mum hardware and software solutions and a has been available in the industry for workshop approach to aid in determining the many years, it now exhibits the consistent Advantages Accrue Quickly best processes through which the carrier can potential for return on investment that is Once eFlight Manager has been imple- deploy and utilize EFB. required to justify retrofitting aircraft cur- mented, it enables a carrier to optimally Additionally, eFlight Manager includes rently in operation for EFB processes. manage items including digital content — the “solution-proposal” process — encom- Making the correct choice about hard- from publishing through delivery — and passing the vision, solutions components, ware, software, communications and the carrier can track content throughout its implementation phases, project timeline, implementation is a major decision for lifecycle. system architecture for respective phases, today’s carrier — and the selection process In addition, the carrier has full capability to data services, data management, communi- and efficient deployment of EFB are vital to configure content — by tail and device — and cation infrastructure, software and cockpit success that can be provided to an indi- for content archiving to satisfy both historical hardware. The solution also includes an EFB vidual carrier by eFlight Manager. a and regulatory purposes. readiness check, a high-level business- Overall, the solution consists of people, process review and identification of further processes and tools — data-management cost-saving opportunities (based on the indi- tools for the administration of EFB content vidual carrier’s applications). and EFB applications that actually drive value and safety improvements. Cost-Savings Opportunities Dave Roberts is senior principal The Sabre Airline Solutions approach also Moving from a paper-based to a paperless in airline and flight operations encompasses a change-management pro- process, the industry-average cost reduction strategic planning for Sabre Airline cess enabling crews to more easily replace is substantial: approximately US$150,000 Solutions. He can be contacted the carrier’s legacy paper culture as well as to US$200,000 per year per aircraft. at [email protected].

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GateManager AirTran Airways leverages the new, powerful Sabre ® AirCentre™ Gate Manager, a real-time flight monitoring and gate management decision-support solution that efficiently gates a flight schedule and helps pro-actively respond to irregular operations.

By Lauren Lovelady | Ascend Staff ASCEND I SOLUTIONS

hile many airlines are still tasks, the carrier is teaming with Sabre Airline The new version of Gate Manager was installed trying to recover from the Solutions® to incorporate the latest technology there and is in full production, replacing the economic downtown of into its operations. airline’s manual processes in place until just a the past couple of years, Most recently, AirTran Airways served as the few months ago. other carriers, particularly launch customer for the new Sabre® AirCentre™ “It was a rewarding experience to provide low-cost ones such as Gate Manager, a real-time flight monitoring and input into the new version of Gate Manager AirTranW Airways, posted fourth-quarter and even “event-triggered” decision-support solution that and act as the launch customer,” said Michael yearly profits for 2009. In fact, AirTran Airways helps ensure each aircraft is assigned a suit- Bernardo, Atlanta Command Center manager for experienced a record full-year profit due in large able airport gate to park at a designated time. AirTran Airways. “The new and improved func- part to its growing operations at Milwaukee, Using data from an airline’s flight operations tionality captured in this version will enhance Wisconsin’s Mitchell International Airport. system, Gate Manager evaluates the informa- any carrier’s ability to make time-sensitive deci- It’s not surprising then that the airline made tion, analyzes changing conditions, alerts users sions with broader knowledge of all the moving a major commitment to the Milwaukee area to potential problems — sometimes hours in parts in a fast-paced hub operation.” at the end of last year by announcing the advance — and automatically disseminates The new Gate Manager — rebuilt from establishment of a secondary hub at the airport, updated gate information, making it available to the ground up — provides AirTran Airways bringing with it additional jobs and pilot and all dependent systems, including flight opera- with advanced features that continue to evolve flight attendant bases. AirTran Airways began tions, airport FIDS and boarding pass printers. based on user feedback. A component of flights to Milwaukee just seven years ago By proactively addressing potential issues, air- Sabre® AirCentre™ Enterprise Operations, Gate from its primary hub in Atlanta, Georgia, and is lines can minimize operational disruptions and Manager is based on flexible, robust technology now the second-largest carrier operating there. passenger and baggage displacement as well in an open, service-oriented architecture frame- Currently, it operates 52 departures a day from as reduce tarmac waiting times and taxi fuel work that leverages the Sabre® ASxSM Airline its new hub to 22 destinations. burn for their aircraft. Services Exchange. Utilizing the ASx advanced “For each of the last three years, we have AirTran Airways implemented the new ver- platform, airlines can easily integrate Sabre doubled the size of our presence in Milwaukee sion of Gate Manager for a handful of key users Airline Solutions technology with other company in terms of our flights, our employees and at its Atlanta hub, which has approximately systems or in-house or third-party applications the numbers of markets served,” said AirTran 280 daily departures. The airline was already and incorporate new components and replace Airways Vice President Kevin Healy. utilizing a previous version of the solution at outdated ones without major disruptions to But growth does not come without growing the hub. With the ongoing feedback provided infrastructures or operations. Reliable, scalable pains. Like most other carriers, AirTran Airways by AirTran Airways, Sabre Airline Solutions and secure, the ASx exchange is designed to has focused on cutting costs, generating ancil- continues to fine-tune the gate management evolve as airlines’ needs and operations change lary service revenues, increasing capacity on technology for the airline’s Atlanta hub. In the in response to the dynamic marketplace as well profitable routes and trimming unprofitable meantime, the carrier also recognized the need as lower their IT development costs. ones, more efficiently utilizing resources, and for an automated, real-time gate management Gate Manager integrates with other com- improving processes. To assist with these solution at its expanding Milwaukee operation. ponents within Sabre® AirCentre™ Airport,

Gate Manager includes advanced graphical alert capabilities that immediately display the violation of a specific parameter. The alert offers alternatives so the impact to passengers and the overall operation is minimal.

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including Sabre® AirCentre™ Staff Manager occurs — for instance an aircraft blocks in at Fully customizable, Gate Manager can sup- real-time resource management solution a gate — the information is sent via message port most airlines’ business models as well as as well as other Sabre AirCentre Enterprise queuing, which signals the solution to automati- airport authorities responsible for the manage- Operations components such as the Sabre® cally update. This enables a seamless flow of ment of gates. Following user-defined rules, AirCentre™ Movement Control flight informa- information with all users receiving the same the solution displays a graphical alert as soon tion system. Therefore, a gate change made in data at the same time in a matter of seconds. as a specified parameter is violated and sug- Gate Manager is automatically reflected in Staff “Gate Manager allows us to communicate gests alternatives for minimizing passenger and Manager without manual input or intervention. to users and view information once limited to operational disruptions. Based on customer feedback from users phone or radio transmissions,” Bernardo said. “I encourage all airlines using the old version of the previous version, Gate Manager is now “Out, off, on and in aircraft gate events can of Gate Manager or evaluating a real-time gate more flexible, reliable and user friendly. Flight be seen within seconds. Comments once only management system to take the time and information and gate assignments and changes seen by the user can now be viewed by all review this new version,” said Bernardo. “It’s a that were once saved on each user’s individual participants.” must-see application.” computer are now stored in a central database Gate Manager now features four standard Ultimately, users are responsible for making users connect to via a graphical user interface. user access levels, with additional levels final gate changes, but the Gate Manager solu- This common repository enables users to view possible: tion’s window into the future enables them to the same data at the same time. In addition, a Administrator level — Users can make make an informed decision before the situation variety of reports can be pulled from the data- changes to their airline’s gate configuration, becomes critical. After all, one miscalculation or base based on user-defined specifications to including adding and deleting gates, specify- haphazard gate change can strain an airline both help identify trends as well as ongoing issues. ing which gates can accommodate various operationally and financially. a The gate management solution’s expanded aircraft types, and determining which airlines scrollable view of the flight schedule enables can park at which gates. This level also over- users to review operations up to four days in sees the work and access levels of other the past, the current day and up to three days users. in the future. By clicking on a tab, users can Supervisor level — Users perform the same easily move among the days and assess past functions as the administrator level; however, problems, manage current operations in real they cannot add or remove users or modify time and plan the days ahead. user access levels. In the previous version of Gate Manager, Normal level — Operational changes can be information was updated once every minute, made, but system configurations, such as and each user’s computer “refreshed” on a dif- adding or deleting gates, are not possible. ferent schedule. These inconsistencies made it Read-only level — Ground handlers, caterers difficult for even users seated next to each other and third-party contractors — those need- For additional information about to accurately assess information and coordinate ing a snapshot of the airline’s operation to Gate Manager, please contact Brent changes. Rather than being “refresh-based,” effectively and efficiently support it — can O’Brien, a product manager for Sabre the new Gate Manager employs an XML push- access Gate Manager via this level, at which Airline Solutions. He can be contacted notification method. Essentially, when a change no changes are possible. at brent.o’[email protected].

+count it up

10.3 1.7 billion 522 billion The percentage that passenger The amount in U.S. dollars airlines lost The amount in U.S. dollars IATA demand rose in March 2010 in just six days following the Iceland expects industry revenues to reach compared to March 2009, according volcano, with the greatest impact on this year. That’s a US$43 billion to IATA. During the same period, European carriers, according to IATA. increase from last year, but still US$42 cargo demand grew 28.1 percent. billion below the 2008 peak. Both are improvements from the 9 percent and 26.3 percent growth for passenger and freight demand recorded in February.

ascend 79 MAINTAINING CONTROL All airlines face maintenance, repair and overhaul challenges that leave room for improvement. Industry consultants from Sabre Airline Solutions ® can effectively diagnose MRO issues and prescribe solutions, whether process and procedure related or dealing with information technology software, to significantly and quickly yield optimal results.

By Allan Bachan | Ascend Contributor Photos: Jupiter ASCEND I SOLUTIONS

ircraft maintenance is highly regulat- for any airline to embark on a selection process for capital investments and/or are supported by many ed, and statutory compliance must MRO software, with at least 20 pure-play provid- add-ons or external systems. ERP systems are be met by all operators worldwide. ers, another 25 or so specific point solutions, and extremely execution biased and perform better Maintenance, repair and overhaul five enterprise resource planning types from which in independent MRO shops rather than for airline A costs of aircraft can range from to choose. And more are emerging. maintenance operations. US$300 to US$1,800 per flight hour. There is also a At last count, there were no less than 120 pro- Software vendors have touted their products minimum of US$1.2 million in annual supply chain viders of MRO systems. But which flavor is best as replacements to “legacy” and “homegrown” and capital materials inventory investments to — a pure-play, ERP or point system? The answer systems. Observing the implementations of these support any twin-engine aircraft in the commercial lies in the specific business model of the airline and newer systems during the past six years, how- fleet. Maintaining aircraft and their engines and what it seeks to achieve. Each system has value in ever, shows that traditional systems have not been components is also an extremely labor-intensive one way or another, but there is yet to be a single entirely retired and, in some cases, are either still process and requires numerous unique skills and system that is a complete solution. Therefore, fully running in parallel or only certain functionality competence across all disciplines. an airline needs to specifically define its business has been turned off. Consider airframes that must undergo tempera- objectives and have a rigorous selection process to Some of the newer systems have even been ture changes of 100 degrees Fahrenheit in mere finalize its shortlist of contenders. Bear in mind that abandoned during the project initiation stages — lit- minutes. Couple that with complex, failsafe and more than one shortlist can result — one for each erally when a good peek under the hood has taken myriad systems such as avionics, electrical, plumb- domain area. For example, technical documenta- place. And still others were abandoned or scaled ing, hydraulics, pneumatics, temperature control, tion management vendors may or may not be the back after going live and operating for more than a communication and pressurization systems all in same as materials and logistics vendors. year or so. Still, others have just never gone live and a single vessel — virtually an aerodynamic tube Some may argue that a sound, corporate ERP are stuck in a lengthy implementation cycle. Some — and it becomes clear how aircraft maintenance system must be in place before an MRO system airlines have also gone through multiple product can be a significant challenge. Information technol- can function effectively. Others may contend that implementations in just a few years. ogy systems are, therefore, essential tools for the with an effective ERP system, an aviation MRO- Sabre Airline Solutions® cited the case of two management and control by an airline to meet such specific system is not needed. There are merits known low-fare/low-cost carriers in the United a challenge. and demerits of both, and either can be very effec- States that are now into the third MRO system tive. It all lies in the implementation services once implementation in six short years and have at least Three Main Components the functionality exists in the product. And one five known ancillary systems supporting mission- The aircraft repair business can be categorized thing is certain … there is no true aviation MRO- critical MRO business functions. into many different facets, or modules, as MRO ERP system available. There is no question that modernization is software vendors traditionally like to call them. ERP systems that are used for MRO are heav- necessary. Software vendors that have changed What it all boils down to can be categorized into ily customized installations that had/have large their underlying technology with equivalent three main components — compliance, productivity and materials management — with cost management being a common denominator. A Maintenance Health Check: From Planning Through Execution layman’s perspective can also be management of issues that are regulatory (compliance), people Report and Plan and planes (productivity) and assets (materials • Aircraft routing Feedback • Maitenance programs and planning management). • Performance management • Manpower planning There is slight overlap in these three broad cat- • Maintenance costing • Materials planning egories where, for example, in disciplines such as * Reliability management • Work orders and packaging human factors, licenses and certifications, people and compliance come together. Regardless, an MRO system can be “boxed” into these areas, having costs as a mandatory dimension with infinite possibilities for subcategories. Record and Schedule In a nutshell, the key compliance output of Audit • Production standards any MRO division at an airline is safe, airworthy, • Production planning • Work orders closure • Progress monitoring mission-reliable aircraft. Add the business aspect, • Compliance management • Pre-kitting which requires optimal resource utilization, lowest • Technical records • Resource assignments overall costs and minimal aircraft downtimes. The optimal IT system should be fully capable of achieving all these requirements, and it should provide Execute • Task execution proven decision support for the airline as it strives • Maintenance control to accomplish these objectives. • Engineering support • Deferrals and MELS tracking • Parts tracking MRO Technology Historically, MRO IT systems were designed based on the need for management and control of compliance issues. With the fast-growing The maintenance planning through execution cycle takes an analytical look at the “day in the life sophistication of aircraft and general advances in of” the maintenance and engineering functions at the airline. Starting with the “Plan” activity, air travel, the business aspects of maintenance are Sabre Airline Solutions examines how the airline conducts aircraft routing and maintenance programs more in focus without compromise for safety and management as well as other planning activities. Performance measures such as maintenance compliance. yield are taken. A pre-prepared questionnaire is used by the Sabre Airline Solutuions consultant. Cluttered. There is no better way to describe This continues through scheduling, execution and reporting. An overall picture of the processes the current marketplace. It is a daunting experience is then presented.

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the vendor to map its system into this cycle and Health Check Status (Fulfillment To Industry Best Practices) also to execute demos to it can be quite effective as a standard. Other business scenarios that should be demonstrated include: Materials demand to procurement/replenish- Extremely well ment, Aircraft induction, Very well The rotable cycle, Maintenance planning document and maintenance review board revisions into the approved Pretty well maintenance program, An airworthiness directive or service bulletin

Not too well from receipt to execution, Compliance reporting. This is not an all-inclusive list, but with the right Not well at all audience, the appropriate questions can be asked that will lead into the philosophy and concepts of 1 Planning 1.8 the vendor’s systems to make a good judgment Scheduling 2.0 call and educated decisions. Maintenance Execution 2.4 The process of evaluation outlined is one of Recording & Auditing 2.5 cross-functional business scenarios rather than Reporting and Feedback 2.0 Business Procedures 2.3 a departmental-level or transactional checklist. Use of Technology 2.0 Analogously, and far too frequently, it’s been determined that just having eggs, butter, flour and sugar does not always yield a well-done cake. A common mistake is that airlines tend to overlook the simple, The health check status view presents a graphical summary report that represents the findings important functions as they assume that vendors of the study. It points to areas of potential improvement at high level and will be included in the have naturally incorporated these into the system prescriptive recommendations provided to the airline. The prescriptions will detail what correc- design. For example, what is the use of managing tive actions can be taken to achieve better performance levels. multiple parameters on an aircraft or component when the only visibility afforded on key screens improvements to the business are seeing main- Fourth, review the customer list and see who the is just those control parameters and not conven- tenance renewals and upgrading their clients, in vendor is using as a thought leader for the product. tional aircraft hours and cycles? True, it’s an industry some cases, with complete sub-product add-ons. Finally, ask the vendor to identify the adoption levels standard but sadly, it’s not an observed software These experiences all speak to the relative maturity at that thought leader and what actual business standard. So beware that nothing is too trivial. of the products and vendors as compared to legacy cases can be made as value propositions for the Another unused selection criterion is a trial systems that have had time to grow. software used in that company. This should ideally period. In this modern era of cloud computing, While there are many vendors in the space with be an airline that is recognized or perceived as an Software as a Service and application service varying technology platforms and product offerings, industry frontrunner. providers as delivery methodologies, being able to they all seem to be doing some level of business. test drive the system remotely should be allowed. But there is no clear market leader. There are Business Requirements And Evaluation An MRO system lifespan is more than 15 years, new systems sales, and there are legacy systems Only after the vendor knowledge and experi- and investments are substantial, so a trial in some upgrades as well as point solutions and add-on ence has been determined should the business form of at least a subset of the system should be improvements across all selections. So airlines are requirements list come into consideration. Those mandatory. still selecting, implementing and improving MRO requirements have to be spread across technology, systems to meet current and emerging challenges. modular and business functionality, product plan and Vendor Services direction, customer support, price, and delivery. Implementing a new MRO system is a costly Vendor Experience Typically, airlines submit a request for information and lengthy endeavor. The software must first It’s a myth that most MRO systems fulfill the followed by a request for proposal to shortlist spe- be mapped to the airline’s business processes, basic and primary functions and that an airline should cific vendors. Then a final evaluation would include and the client must see how the system will act really look at differentiators within and among these product demonstrations and onsite (user) reference for its defined roles and responsibilities. This is systems. An airline should start by looking at the visits. What is not frequently done but should be the “solution definition” phase and is typically number of customer years (the cumulative number requested is a proof of concept. conducted in an interactive pilot environment. The of years per customer) a particular product or module MRO systems have a large user base, and system would typically be used by 15 percent to of a product has been used. Next, it should examine defining business scenarios that cover the more 20 percent of the total airline staff or as much as 25 the number of aircraft years the system or part of the vital cross sections of the MRO division can be percent to 30 percent for an airline with significant system has been used to manage that aircraft and/ difficult as there will be organizational biases. What MRO capability. or maintenance management processes for the air- works best is taking a single integrated process Solution adoption and training must be struc- craft. This would be the cumulative number of years that involves the most user departments that are tured, recurrent and exact. Data conversion and that each aircraft has been in the system. Third, look executed most frequently. Make it real. Use real migration activities must ensure that the necessary at the airline and industry MRO experience that is on aircraft, real parts, real roles, real screens, and real historical information is available in the new system the vendor team — domain experience. data and reports. Sabre Airline Solutions MRO since the value of an aircraft is in its records. This MRO management systems are not born in IT experts find that an integrated cycle from planning must be available after the older system is replaced. shops. They are born from the industry and bred through execution works quite well as the first There will be business process changes introduced with experienced personnel and proven philosophy. demonstration. It is, after all, a daily process. Asking by the new system, and change management is

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a necessary program, especially where most, if limitations intimately and, therefore, they can work Technical Records Hub not all, of these processes must be documented, directly with and for airlines on how to circumvent Sabre® AirCentre™ Technical Records Hub audited and statutorily approved by regulatory and these known product and implementation issues. solves a significant challenge and supports going- state agencies. Sabre Airline Solutions has integrated its staff green initiatives at any airline. It is designed to: As mentioned before, there is no one complete management, flight following and maintenance Automatically capture and collaborate informa- enterprise system. Integration as well as customiza- control systems to more than 15 different MRO tion and data from maintenance documents, tion of the system becomes necessary. These are systems at various airlines throughout the world, records in any format and maintenance forms uniquely defined for each airline based on the other and its MRO professionals understand full well that are filled out at maintenance stations with- systems in place. Typical integrations include bi- the business need for such interfaces. They can out manual data entry into other systems; directional interfaces to human resources, finance, also serve as an advisor to the airline throughout Communicate and securely transmit those docu- payroll, flight scheduling and flight operations; time the selection process and directly pinpoint areas ments into pre-defined indexes and repositories and attendance; courier tracking systems; vendor of difficulty in some applications. This will enable while prompting down-line and follow-up actions supply and tracking systems; health monitoring an airline to cover those appropriately in the project by advising staff and consumers of the informa- (AHM); engine condition monitoring (ECM); and scope. tion; technical documentation systems. Project and Store those records in Web-searchable files for program management is also necessary to ensure Implementation Management retrieval and use; success. Whether the project is one of MRO systems Share those files internally and externally through The introduction of an MRO system is therefore implementation or improving some business secure Web access for auditors, vendors, aircraft not just a hardware and software project because aspect of maintenance operations, Sabre owners, etc. these additional activities are frequently up to eight Airline Solutions can manage the complete The solution also provides the ability to extract times the cost of software and hardware. And this project. This effectively covers non-product all aircraft records and store them on a DVD in a does not include staff costs for those who will be areas that are of prime interest to an airline structured format at the time of ownership change. dedicated 100 percent to the project during the but are not currently addressed by some When 50 percent of the commercial value of an implementation cycle. MRO software vendors, including: aircraft or engine lies in its records, the value of If the project turns out to be one of a develop- Project and program management, this solution can easily be seen. Additional value mental nature, then that becomes a whole other Solution definition, is realized when the processing and ongoing use topic. Complex software creation, evolution and Interactive pilot management, of those records on a real-time basis are fully management processes have to be taken into Data conversion and migration, automated. consideration. The airline’s core business is not IT, Change management, and it is not advisable to have large development Solution adoption. Mobility effort in an MRO IT project. Technical staff costs can be high, and productiv- Health Checks ity is the key to profitability in an MRO environment. Benchmarking And Selection Decomposition of MRO functions at an It is also essential to cost control in an airline’s MRO Sabre Airline Solutions can help airlines select a airline and a detailed study of key perfor- organization. Keeping mechanics and technicians system or subsystem to fit their business needs. mance indicators for each will yield a prepared close to the job at hand, yet empowering them While no longer offered by Sabre Airline Solutions health check report, resulting in high-level with informational tools to perform effectively, due to a change in business strategy, the Maxi- prescriptions for improvements that should goes a long way toward these productivity goals. Merlin M&E system has been the “gold standard” be addressed in key business areas. Various solutions can be deployed that include but for many years. are not limited to: There is merit in benchmarking any new sys- Get-Well Programs Having technical manuals available on a hand- tem on the market against this business standard. Based on the status and recommendations held device as readable and searchable content, Sabre Airline Solutions is armed with hundreds made from the health checks, the airline Retrieving work assignments and reporting work of cross-functional business processes, matured may embark on specific get-well programs status, and augmented for technology changes as an for a particular area, whereby Sabre Airline Using interactive and onscreen bi-directional assessment benchmark standard for emerging Solutions will employ the full-time use of its interfaces on kiosks and/or portable devices to and current software in the market today. Airlines industry consultants. This may or may not back-end MRO systems. choosing to select systems can benefit tremen- include the installation of point solutions, dously from this compounded experience. This integration packages, process improvements, The Right Partner is backed by industry expertise in the form of and/or training and guidance. Specific goals, No matter what an airline’s current MRO situa- personnel having more than a combined 200 such as improvement of maintenance yield tion, there is always room for improvement. A new years of airline MRO management experience by 10 percent, will be defined in such an MRO system is not always the answer. It may, in and systems implementations. The IT company’s engagement. fact, be the source of other issues and challenges experts possess a valuable resource library of for years to come. Regardless of an airline’s MRO more than 100 MRO RFIs and RFPs from multiple Integration Packages requirements, Sabre Airline Solutions consultants airlines collated for different industry segments The Sabre Airline Solutions flight following, will find areas of quick returns that will deliver tre- with Sabre Airline Solutions personalized scoring movement control, maintenance control and mendous incremental value. a and weighting methodologies. maintenance planning solutions have been Sabre Airline Solutions has airlines using its integrated with more than 15 MRO systems operations solutions, integrated with several MRO at more than 20 different airlines. This integra- systems, and it has also partnered with some of tion interface is now a standard middleware today’s top MRO applications vendors. Its experts interface package that can be installed and have witnessed outsourced attempts at migrations configured in a matter of days. The key from Maxi-Merlin and other legacy transformations business benefit is one of much improved Allan Bachan is a solutions director to these “newer” solutions. They know these maintenance yield and decreased disruptions for Sabre Airline Solutions. He can be vendors and their applications’ capabilities and for unscheduled maintenance. contacted at [email protected].

84 ascend CALLING ALL CHANNELS Airlines have recently developed distribution strategies that have led the way to a set of revenue-generation trends in the greater market — and Sabre Travel Nework ® can help airlines take advantage of those strategies.

By Nadja Killisly | Ascend Contributor ASCEND I SOLUTIONS

uring the past several years, tion markets in any number of industries on where distribution trends are headed in air carriers have established around the world. both the near and distant future. trends that have effectively And those trends can be readily quanti- enhanced value and, because fied and analyzed, not just as an academic Merchandising D of their demonstrable levels of exercise, but in an orderly process to gain Because of changing economic conditions success, have positively affected distribu- valuable insight and further innovative ideas and increased competition, carriers have basically been forced to reconsider their fundamental revenue-generation models. The new merchandising approach not only helps airlines increase their sales, but Opportunities Through Business Intelligence also enables them — from a customer- service perspective — to differentiate their offerings and increase the value to their customers by giving them the option to Determine effective Analyze demand choose among attributes. partnerships and curves to determine In fact, the whole idea of “fare families” creates a more logical relationship between build others age capacity controls man me nt services and price — and the choice as to ue n e N exactly which services to buy and what Optimize route, v e Gain insight into market e t price is reasonable in relation to those w network structure R information and analysis o services is left up to the customer. and fleet mix r through technology k Global distribution systems and reserva-

l tion-platform providers are now incorporating

Understand n Identify competitive

n those advanced capabilities and those cus- g

i changes in n position and track

i tomer choices into their solutions. This t g

demand and traffic e promotional effectiveness

r further enables carriers to sell ancillary ser-

d a vices (special excursions, discount tickets n l e a

Control swaps of crew- s Improve bookings across to entertainment and local attractions, etc.) compatible fleet to optimize all agencies and track sales through distribution channels. network profitability representative performance And the relative complexity of merchandising has resulted in increased complexity of the required shopping platform as well as the underlying algorithm supporting the global distribution system.

Several opportunities can be determined through business intelligence, giving an airline the Multi-Channel Strategy ability to identify new revenues and maximize its operations. These developments have also fostered the rise of the multi-channel strategy involv- ing, for example, further development of an airline’s own website (in conjunction Traveler Trip Types with global distribution system offerings) or, say, a low-cost carrier, as it evolves Direct Indirect into more of a hybrid model, looking to enter indirect distribution channels. Cost-conscious As time goes by and multifaceted mar- leisure keting approaches are employed, it is High-end more important than ever that carriers look leisure closely at a distribution channel strategy. Weekend Thinking and acting clearly and objectively, getaway an airline must determine the appropriate

Group/tour/ target and overall objectives for the differ- package ent channels, thereby maximizing each.

Unmanaged business travel New-Media Technology Mobile technology is emerging as a Managed corporate major new battleground on which traditional suppliers and distributors are being Complex challenged by innovation from new market intinerary entries. How to be part of the new social media phenomenon — and how to prop- The concept of trip type helps an airline segment booking types both by their number of erly incorporate mobile services into the occurrences and their value to an airline’s bottom line. Consumers travel at different times for dif- workflow — is a focus to which the distri- ferent reasons — for the week, a business trip; for the weekend, a quick getaway. Travelers typically bution specialist must pay close attention. match their trip type to the distribution channel that best matches their specific travel needs. Developing mobile services requires the

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airline to deliver the same exceptional experience on a hand-held device as the Revenue Optimization Scale one on its website to gain consistent, positive brand recognition. Customer–centric revenue management Dynamic availability/dynamic pricing Point–of–origin revenue management Business Intelligence Origin–destination revenue management Today, more than ever, airlines need Branded fares business intelligence to make time-sensi- Ancillary revenue opportunities tive decisions based on market changes. Married segments/journey data The use of business intelligence is gaining Automated inventory controls Last–seat availability importance in the marketing and revenue Advanced group management management areas. And because it is key Manage distressed inventory to understanding the consumer’s behavior, Interlining and/or codesharing there will be an increasing demand for Sell from zero additional data related to the travel or Electronic ticketing Interactive messaging shopping phase — specific shopping data Revenue integrity tools or, in the future, merchandising data that 26 inventory classes can be skillfully applied in conjunction Numeric point–of–sale control with more traditional market data such Revenue management for private and public fares as revenue data or the critically valuable Marketing/advertising services Dynamic connect points competitive insights from MIDT. Multi–carrier itineraries Leg–segment revenue management controls Global Distribution System Value Something that hasn’t changed during the past several years is the sharpness To increase revenue and improve yield, more sophisticated revenue management of debate regarding the relative value strategies and capabilities must be implemented. With increased GDS participation of the global distribution system. And in comes increased revenue management capabilities and support. this regard, it’s important to keep several salient points in mind. First, a global distribution system involves extremely robust technology — technology that, under any circumstances, would not be easy to replace. Consumer Choice Yield Curve In fact, during fiscal year 2008 in the United States, global distribution systems processed more than 375 million air transactions, representing nearly two-thirds of all U.S. airline-passenger revenues (in Europe, the number of GDS air transactions processed during the same period

High cost was more than 275 million). F fares high margin Indirect distribution fees should therefore be looked upon by carriers as not just a cost, but also as a highly valuable means of increasing revenue. The question, in other words, should not be whether to use GDS merchandising, but rather, how much channel share the carrier is planning Business travelers Y fares for and how GDS involvement can help high yield increase revenue. Any evaluation of distribution channels that considers GDS only as a cost is fundamentally flawed. Relative channel

Low cost Direct Q fares profitability is a much more appropriate low margin online customers approach in more accurately evaluating GDS activity. Other And there are further examples to illustrate how a global distribution system increases a carrier’s revenue. For instance, Complex trips Simple trips travelers typically match their trip type to the distribution channel that best matches their specific travel needs. For a carrier to Depending on the complexity of the trips and whether these are leisure or capture the maximum number of travelers corporate customers, travelers will choose the channel appropriately, which will and increase its market share among the have significant impact on an airline’s yield. total potential customer base, it must

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be able to offer its products via multiple on the relative level of sophistication in are part of higher participation levels. distribution methods — sometimes to the their control of the distribution offering they In general, the set of functionalities an same traveler, who would choose from apply. airline seeks and the type of connectivity among multiple channels based on the Many carriers are looking at sophisti- (teletype versus interactive) it selects will purpose of the trip. cated controls in their inventory and revenue impact revenue-generating opportunities. An independent study showed that in management systems alone to manage avail- As part of the business model, strategy only 33 percent of the travel instances ability. These carriers, however, often ignore and objectives, the carrier should dictate analyzed, the traveler would have a strong the fact that not aligning connectivity level which functionality — and participation preference to book a trip on the specific (in indirect channels) to their direct busi- level — is the best fit. channel chosen. ness needs effectively serves to limit sales The Sabre Travel Network solutions When it comes to an analysis of corpo- potential. portfolio consists of data sets (BIDT, rate market segments, global distribution The Sabre Travel Network distribution MIDT, TCN, Fare Tier Report, transactional portfolio contains a set of products and data), data processing (simple PMRT services, enabling carriers to increase processing, enhanced MIDT processing), Hig hlight reach, improve revenue and gain addi- and myriad decision-support tools and tional insight. Sabre Travel Network is consulting services. The need for data best positioned not only to help increase and business intelligence is critical for As time goes by carrier reach via its network of online decision-making processes in the areas and offline agencies, but it also provides of sales, network planning, pricing and access to leading corporations worldwide, revenue management. and multifaceted of which Sabre Travel Network possesses With its extensive portfolio, Sabre a 51 percent share of global travel man- Travel Network becomes a true partner for marketing approaches agement companies. an airline’s distribution strategy in helping To improve revenue for airlines, the identify additional revenue and marketing are employed, it is Sabre® global distribution system offers, opportunities. a through the Sabre ® AirCommerce™ more important Distribution & Merchandising solution, a set of diverse capabilities ranging from interline and electronic ticketing and than ever that sophisticated revenue management practices to merchandizing and marketing. carriers look closely These all help improve the airline’s yield. A carrier might consider leveraging Sabre at a distribution Travel Network marketing and promotional ads — Sabre® Sign-In Advertising and channel strategy. Sabre® PromoSpots — which are graphical or textual promotions that are displayed on agents’ desktops and designed to influ- Nadja Killisly is a senior principal of ence their shopping and booking behavior. air segment strategy and marketing systems traditionally have the greatest The results can be substantial and may be for Sabre Travel Network. She can be penetration with travel management used in a number of situations. For exam- contacted at [email protected]. companies or travel agency organizations ple, an airline can announce its availability because a GDS offers a set of products as a booking carrier in the Sabre GDS, it and services that support business-pro- can increase bookings in underperforming cess requirements. O&D markets or it can launch new direct And one of the marketing advantages service to a number of destination of a GDS in comparison to an airline’s own markets. website is the greatly increased reach and Some of the functionalities promotion of the airline’s brand through the of a GDS are based on GDS in markets where brand penetration and interactive connectiv- recognition are not high. ity, which If specifically comparing GDS fees to the costs of other media offerings, the individual transactional cost of the GDS may for some airlines prove higher than that of other Internet methodology (taking all costs into consideration). But the GDS reach goes far beyond what other Internet marketing efforts can yield, due to such obvious factors as language and awareness limitations.

The Solutions In conjunction with their revenue management practices and strategies, carriers can positively influence their revenues based

88 ascend revenue within reach making contact T aking your airline to new heights

Associate Editor Carla Jensen

Design Manager Yvette Hunt

trademarks and/or service marks of an Latin America Awards affiliate of Sabre Holdings Corp. All Kamal Qatato Vice President other trademarks, service marks and Phone: +1 682 605 5399 trade names are the property of their E-mail: [email protected] respective owners. ©2010 Sabre Inc. All rights reserved. Printed in the USA. 2010 Hermes Creative Award Middle East and Africa Address Corrections & Reader Inquiries 2009 Awards for Publication Excellence, Maher Koubaa If you have questions about this publication, International Association of Business Vice President suggested topics for future articles or would like Communicators Bronze Quill, Hermes Phone: +973 38350001 to change your address, please send an e-mail to E-mail: [email protected] Creative Award, ECO Awards [email protected]. For Excellence In Environmental Communications The Sabre Travel Network logo is a trademark and/or service mark of an affiliate of Sabre Holdings Corp. ©2010 Sabre Inc. All rights reserved. AS-10-11515 0210 *2010 Business & Travel Meetings Show Innovation Award. Travel Meetings Show Innovation Network logo is a trademark and/or service mark of an affiliate Sabre Holdings Corp. ©2010 Inc. All rights reserved. AS-10-11515 0210 *2010 Business & The Sabre Travel 2008 Awards for Publication Excellence, International Association of Business Communicators Bronze Quill and Silver Quill, Hermes Creative Award, The Communicator Award Introducing Award-Winning Merchandising Capabilities Awards for Publication Excellence, 2007 International Association of Business Maximize the value of every seat. Sabre® AirCommerceTM Distribution & Merchandising Communicators Bronze Quill provides you award-winning* capabilities. Differentiate your airline and grow revenue 2006 Awards for Publication Excellence, by merchandising branded fares, seats, bags and other ancillary services to corporations International Association of Business and travelers worldwide. Discover how Sabre AirCommerce can take a front seat in Communicators Bronze Quill, Silver Quill and Gold Quill your airline’s success. Visit www.sabretravelnetwork.com/sabreaircommerce today. 2005 Awards for Publication Excellence, International Association of Business

Communicators Bronze Quill, Silver Cert no. SW-COC-002360 Quill and Gold Quill

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