Airlines can increase customer satisfaction and operational efficiency with big data
You most likely think of crystal balls and mind readers when you hear the term "clairvoyant." But the word also describes the future of airline IT operations. According to McKinsey & Company, clairvoyant airlines can improve travel margins by 5 to 10 percent, and it doesn't take magic to get there. The secret is insights from big data and analytics that offer a prescriptive solution to business disruption.
It's always a hard call whether to hold a flight or leave passengers behind, but airlines no longer have to guess at the right decision. They can now use real-time data to make the best choice for any given situation.
McKinsey & Company cites the example of an airline deciding whether to hold a plane for 15 minutes. In reality, it will take 32 minutes for the passengers and their bags to make it onto the plane because of the specific gate locations and airport traffic conditions. If the plane waits, the airplane will miss its takeoff slot and eight other passengers will be in danger of missing their connections at the destination airport.
Without analytics, there's no way to take all these factors into account when making a decision. The airline just has to make its best guess and deal with the consequences. Add analytics to the equation and the airline can run an algorithm that considers the arriving gate information, walk and bag transport time between gates, the cost of re-booking passengers and the frequent flier status of the affected passengers. Now the airline can foresee that the 15-minute hold will likely turn into a 30- or 40-minute delay and make a decision accordingly — how's that for clairvoyance?
Taking over proactive control
There's no better way to annoy passengers than to invite them aboard, prepare them for takeoff and then announce they'll be sitting on the tarmac while you fix a mechanical problem. Imagine how annoyed fliers would be if they knew the mechanical issue causing the delay could have been proactively fixed if the airline had better insights.
Aviation Week notes that air carrier issues, including mechanical problems, were the second-most-common reason for flight delays and cancellations in 2014. If an airline uses analytics to examine travel data about its past delays, it might realize that having specific airplane parts on hand can reduce delays. McKinsey & Company notes that over 80 percent of all warning lights are caused by the same three parts.
When the warning light flashes, airlines can also use data analytics to proactively alter the flight schedule using a combination of predictive analytics and historical data. This is where real-time data is especially helpful. Up-to-the-minute information can aid a more accurate prediction of fix time based on what is actually happening on the ground and in the air at that precise moment.
Working toward a better future
Analytics can also be applied to numerous other day-to-day airline operations — everything from maximizing fuel usage to creating better crew schedules. Cathay Pacific, a leading Hong Kong airline, uses data analytics to significantly reduce fuel costs, according to MIT Sloan Management Review. Joe Locandro, director of information technology for Cathay Pacific, said that performance data has been key to fine-turning aircraft engines to maximize fuel efficiency.
"Fuel accounts for approximately 40 percent of our costs, so percentage gains on our fuel bill and our engine performance are worth a lot to the bottom line," says Locandro.
Cathay Pacific also applies data analytics to its crew and shift deployment decisions. Analytics software uses information about employee skills, planes they are trained on, destinations and special breaks to optimize the schedule. Locandro explains that this new process has boosted productivity and reduced downtime among the company's more than 15,000 employees.
Airlines have many moving parts, literally and figuratively, and data analytics can be efficiently integrated into airline IT operations to make all the gears turn more smoothly. This can result in reduced scheduling issues, lost bags, delays and overall costs, but most importantly, data can help airlines keep passengers happy so they see a bright future when they gaze into their crystal ball.