A M a g a zine for a ir line e xe c u t i ve s

2011 Issue N o. 2

Ta k i n g

y o u r

a i r l i n e

t o

n e w

h e i g h t s

A Conversation With Muhammad Ali Albakri,

Chief Information Officer, Saudi Arabian Airlines,
Pg. 24

Jewel

The

18 Comair Limited adopts a variety of

new technologies

40 The European Commission invests in

modernized air traffic management system

56 The most successful airline connects its entire

organization, end to end

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By Georg Schiefer and Tom Samuel, Ascend Contributors

Managing Flight Operational Costs

As airlines endeavor to curtail their operating costs, every flight must include an incessant decision-making process that could have a sizeable impact on operational costs.

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ver since the first oil crises in the 1970s, the airline industry has started to realize a serious fact over-exploitation of fossil fuels will lead to the extinction of many players in the airline business. While other industries can more easily switch to alternative energy sources, due to the state of technological advances, air transport will have no choice of alternative fuel resources for many more years to come. The only way to cope with this problem is adaptation to a rapidly changing environment. The main challenges airlines face today include: Fuel is one of the largest costs. Recently, fuel prices have spiked significantly, severely affecting all airlines flight operations and financial results. There is increasing schedule pressure put on by airlines network management to squeeze more flight legs and flight times out of the life cycle of aircraft. There are irregularity costs, which are constantly rising due to the basic fact that the number of irregularities is constantly

increasing but, also, because awareness of passengers and scrutiny from governing bodies has intensified with the result that increasing passenger compensation is levied on airlines. Airspace congestion is rapidly rising with an increasing number of airlines entering the market and the rapid growth of existing airlines operating more aircraft or seeking to operate more flights with existing aircraft. Impending airspace management regulations via new traffic flow concepts (such as SESAR in Europe and NextGen in the United States) will make modern technologies an absolute necessity. With more airlines in the market and lowcost carriers being set up everywhere, the competition for passengers is increasing, thus ticket prices are falling. Unfortunately, there are constraints that airlines must overcome that further intensify these external challenges. An airlines ability to react to external factors and adapt is hindered by factors such as: Old-fashioned air traffic control systems,

Pilots lacking education about flight cost management, Capacity-limited aircraft systems (mainly aircraft flight management system components), Legacy airline flight planning systems without any built-in cost optimizing capabilities. The answer to dealing with some of these complex constraints and achieving an economical flight operation is a modern approach to flight cost management with cost optimized flight planning. Sabre AirCentre Flight Plan Manager offers substantial cost-savings capabilities and the most advanced approach to dynamic flight optimization.

Statistical Contigency Fuel

110 100 90 80 70 60 50 40 30 20 10 0 92 94 96 98 100 102 104 106 108 110 112

+2 % M ea n vi De at io n
Actual To Planned Fuel Burn Here, 90 percent of all flights are covered by a reserve fuel of 4.8 percent. The figure of 2 percent mean deviation would indicate a systematic error, which would need further examination. It could be an airframe/engine deterioration not yet recognized by the performance monitoring system or a higher consumption specific to that route that should be covered by additional fuel reserves.

+4

.8%

CO

F9

Short-term flight cost management can be divided into several phases: Pre-flight It is important to consider all cost factors, including delay costs as well as precise vertical and horizontal flight profiles. Probabilistic planning models can also be used in multi-leg tankering analysis to reduce extra fuel uplift. In-flight Tactical control such as recalculation and re-optimization during the flight, flight watch and in-flight support for contingencies are the most important tasks. Post-flight management It is important to perform statistical analysis at the conclusion of a flight. Starting with the pre-flight phase, primary cost factors for flight cost management can be differentiated between linear and non-linear cost factors. Linear cost factors include: Fuel prices at origin(s) and destination(s), which should be constantly monitored and made available in the flight planning system, Time-dependent maintenance costs for all types of aircraft used, Aircraft and component leasing, Crew overtime costs, Cost of aircraft weight (wear and tear, and flex take off). Flight Plan Manager considers all these factors when calculating a dynamic cost index for each flight, with the ECON cost index being the most cost efficient and, thus, desired target. Non-linear cost factors, on the other hand, are: Over-flight charges (their calculation formulae are constantly monitored and maintained by the Flight Plan Manager support team and fully integrated in the dynamic route optimization), Delay costs. Both over-flight charges and delay costs require complex models for calculation and tactical updates.

Flight Cost Management

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All relevant operational cost factors are taken into account when determining an optimized four-dimensional flight path and identifying the least cost routing variant. Flight Plan Manager integrates the fourth dimension into the optimization by dynamically calculating a cost index for each flight leg and, thus, applying variable speed to the flight. Horizontal and vertical routing profiles are optimized simultaneously, considering upper wind and temperature forecasts and, equally important, including any air traffic management rules such as flexible route management, route availability document (RAD), conditional route availability message (Crams), conditional routes (CDRs), restricted areas and any other airspace restriction that may apply to or affect the route of a flight. Flight Plan Manager is designed to reduce the number of fixed company routes and let the system dynamically construct the costoptimized routing solution for each flight, considering all relevant airspace restrictions for delivering a route that will be most cost effective and also accepted by ATC.

Statistical Contigency Fuel

20000 18000 16000 14000

individual groups of connex pax

Cost (USD)

12000 10000 8000 6000 4000 2000 0 13:00

total delay cost curve

13:30

14:00

14:30

15:00

15:30

16:00

Arrival Time

An important pre-flight decision to make is how much fuel to tank to carry more fuel than needed is one of the biggest money wasters in the industry. Flight Plan Manager supports dispatchers and flight crews by providing tankering information and statistical reserve fuel indication. For basic and multiple-leg tankering calculation, Flight Plan Manager considers fuel prices at departure and destination airports and transports coefficients based on aircraft performance data. The calculation results are presented as single fuel eco values for each flight, enabling dispatchers and crews to make effective cost-based decisions.

Tankering

Delay Costs For a typical long-range passenger flight, the delay costs would be US$100 to US$300 per misconnected C-class passenger; US$20 to US$80 per misconnected Y-class passenger; US$5 average goodwill loss per delay hour and passenger, US$5,000 per aircraft delay hour.

Flight Plan Manager presents fuel eco values for up to six legs in the chain of the aircraft for maximizing the potential of cost savings. An automated tankering feature allows Flight Plan Manager to take control and tanker as much as possible in case of a positive tankering index to cover the burn of the aircrafts next flight leg. Its best to start with the Gaussian distribution when looking at the statistical component of flight cost management. The basis for the statistical analysis is provided by comparing flight planning figures with values actually achieved during the flight progress.

P=68% P=95%

Gaussian Distribution Using a Gaussian distribution, stored planning and actual flight data can be analyzed and predictions for the future can be made based on hard historical facts.

Various surveys have proven that the deviation between fuel consumption planning and actual fuel burn figures follows approximately a Gaussian distribution. Using this model, stored planning and actual flight data can be analyzed and predictions for the future can be made based on hard historical facts. Following the Gaussian distribution theory, its expected that 50 percent of flights will use less than the planned fuel. Therefore, if theres a situation in which 50 percent of the flights are using up to 2 percent fuel more than planned, the figure of 2 percent mean deviation would indicate a systematic error, which would require further examination. It could be an airframe/engine deterioration not yet recognized by the performance monitoring system, or a higher consumption specific to that route, which should be covered by additional fuel reserves. Depending on the probability goal set (usually 90 percent), the statistical contingency fuel can be determined, which covers the random error. The possible cost savings are significant. For example, in a real-life situation, statistical results were collected by a medium-sized airline during a two-year period. On average, pilots ordered extra fuel in the amount of 10 times the average proposed extra fuel (PEF) value, or 1,350 kilograms per flight. This increased operating costs per leg by an average of US$150, equivalent to approximately US$1.9 million of additional costs per year. On the other hand, if all flights had actually taken only the proposed extra fuel, analysis of the actual post-flight fuel to

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Statistical Contigency Fuel

Delay Costs Management There is no benefit in reducing the delay from 24 minutes to 17 minutes because the second group of passengers still wont make their connection. However, reducing the delay down to10 minutes will save US$350 in delay costs because they will then be able to make their connections on time.

identify all flights that would have landed with less than final reserve indicates that there might have been up to seven potential diversions. Diversions are the worst-case scenario, assuming that in each case, the actual burn-off had used the PEF and then used some of the diversion fuel. Diversions may also have been avoided by other replanning possibilities.

Delay costs are recognized by every airline, but unfortunately, they are rarely considered for flight planning purposes. Flight Plan Manager offers a fully integrated delay costs model and delay management tool. When dealing with delays, only arrival delays will be considered in this context. In case of a delay with a high number of connecting passengers on board, the dispatcher or operations control officer may be tempted to re-plan the flight with highspeed cruise to make up the lost time. The problem is more complex because actual delay costs are not linear but rise sharply in several discrete steps. For example, in case of an arrival delay, delay costs could rise sharply at 5 minutes of delay, 11 minutes of delay and 27 minutes of delay. These are the points where passengers miss their connections. In this example, there is no benefit in reducing the delay from 24 to 17 minutes, as this will not allow passengers to get to their connecting flights on time. However, a further reduction down to 10 minutes could save a certain amount in delay costs as one group of passengers will then be able to make their connections on time. It then must be determined whether this delay cost is acceptable or should be counteracted 82 ascend

Delay Costs Management

by the increased fuel burn to meet the target time. This decision has to be made within seconds; therefore, a flight planning tool that supports the decision-making process is essential. Flight Plan Manager includes delay-management capabilities that enable quick analysis of delay situations and costbased decisions. It will automatically adjust the cost index as needed to meet the desired target time window at the destination, considering the reduction of delay costs and the increase of fuel costs for higher speeds. During the in-flight phase, Flight Plan Manager has evolved from a flight planning to an advanced support tool for the entire duration of a flight. Weather and NOTAM are monitored for all relevant airports and flight information regions (FIRs), and warnings are created for the dispatcher in case of any situation requiring immediate reaction. Modern communication technologies such as ACARS, already available on a large number of aircraft, allow an easy information exchange with the flight deck and aircraft. Continuous automated position reports from the aircraft update Flight Plan Manager with the actual time, flight level and remaining fuel on board the aircraft. Dispatchers can use the dynamic reoptimizer to find better routing alternatives and profiles during the flight and send an update to the flight deck and directly to the aircrafts flight management system. The same applies to any re-routings or diversions. Flight Plan Manager gives the user full flexibility for in-flight re-planning and quick solution finding, allowing fast reactions to occurring problems or proactive support for

flight crews for highest safety and additional cost optimization and reduction. And finally, after the conclusion of the flight, it is important to perform statistical analysis in the post-flight phase. Further to the example of statistical contingency fuel, statistical taxi times and fuel are additional factors to fine tune the flight and fuel planning and further reduce costs. Flight Plan Manager allows precise application of these factors. For long-term flight cost management, the statistical route analysis for schedule planning constitutes the main challenge for airlines. With the requirement of continuously optimizing the network and aircraft utilization, this task has become increasingly important. Flight Plan Manager offers a unique approach in this area getting away from using average winds for schedule analysis and block-time prognosis to utilizing actual historical GRIB (upper air wind and temperature for all possible flight levels and waypoints) data information. The data is stored in the flight planning system and used for statistical analysis, giving precise and reliable information on flight times, fuel burns, costs and more for future flights. All airlines strive to minimize their operating costs, which is becoming increasingly important for their survival. Cost management should not apply to strategic decisions only. Every single flight must involve a continuous decision-making process that could have significant impact on airline operational costs. Unfortunately, many cost-relevant decisions are still based on inadequate simplifications and often the gut feeling of the decision maker, resulting in inadequate, inconsistent or sometimes simply wrong or expensive decisions. a

Sabre AirCentre Flight Plan Manager overview

Georg Schiefer is a solutions partner and Tom Samuel is the solutions director for flight planning solutions for Sabre Airline Solutions . They can be contacted at georg.schiefer.ctr@sabre. com and tom.samuel@sabre.com.

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Flight Plan Manager: Benchmark Results

Flight Plan Manager has a proven record in cost optimization and cost savings, providing significant savings to customers. In all recent benchmarks conducted with potential customers and against various in-house and commercially available flight planning systems, Flight Plan Manager has demonstrated superior results. The average return on investment is typically six to 12 months. Flight Plan Manager, the industry leader in flight planning technology, provides airlines with the widest and most advanced features and capabilities. Airlines worldwide rely on Flight Plan Manager, including: Air India, bmi, Iberia, SAS Group of Airlines (SAS, Blue 1 and Widere), Turkish Airlines, United Airlines, Virgin America, Virgin Atlantic. Features and services such as the dynamic four-dimensional route optimization, flight planning process automation and premium data services enable airlines to optimize their processes to realize more accurate flight plans and further cost savings. A summary of the benchmarking results clearly show the superior cost-savings capability of this solution. Seven benchmarks, based on airlines operating in North America, Europe and Asia comparing 127 short- and medium-range flights using Airbus A319, A320 and Boeing 737 aircraft, showed average savings of US$190 per flight leg.

Actual Airline Experiences

Airbus A320 and Boeing 737-800 operations, with 90-minute average flights (3,000 flight hours per year) saved 75,000 U.S. gallons of fuel per year (3 percent savings). This translates to US$190,000 of reduced fuel costs and 700 tons lower emissions of CO 2 per aircraft per year. A single Airbus A330-200 operating with 9,000 U.S. gallons of fuel on a 2,000-nautical-mile trip (3,500 flight hours per year) showed a 3 percent savings or 176,000 U.S. gallons of fuel per year. This translates to US$440,000 of reduced fuel cost and 1,700 tons of lower CO2 emissions per year. A single Boeing 747-400 using 25,000 U.S. gallons of fuel on a 4,000-nautical-mile trip showed a 3 percent savings or a savings of 360,000 U.S. gallons per year. This translates to US$900,000 of reduced fuel costs and 3,400 lower CO2 emissions per year. Flight Plan Manager is an integral part of Sabre AirCentre Enterprise Operations, which enables airlines to manage all parts of their operations flight, crew, maintenance and airport seamlessly and efficiently, from planning to execution. Information is available at the right time and made available where needed on the aircraft situational display in the operations control center, on the aircraft, and to a crewmember and passenger mobile devices. For instance, flight delay information available in the operations control system is seamlessly relayed to crew scheduling, dispatch, ramp operations, maintenance and airport gate operations. This gives airline staff the ability to quickly and efficiently respond to irregular operations while complying with company policies. In addition to reducing operational costs using Flight Plan Manager, other Sabre AirCentre components help create optimal crew schedules and airport staff rosters as well as provide valuable and sophisticated automated decision-support capabilities to help airlines recover from irregular operations. All these solutions working together to help airlines operate efficiently, manage costs and ultimately deliver their promise to their customers. a

Airline 1

Airline 2

Airline 3

An Integrated Solution

Burn Diff Min Avg Max Sum -1.600 +128 +2.061 +14.880

Time Diff -10 +2 +18 +249

Fuel Save $ -$-190 +$127 +$2.018 +$16.148

Time Save $ OVRFF Save $ TTL Save $ +$-115 +$27 +$268 +$3.382 -$-89 +$39 +$888 +$4.985 +$0 +$193 +$2.397 +$24.515

The savings potential is even greater for long-range operations. In 10 benchmarks with airlines operating in North and South America, Europe, and Asia comparing 85 long-range flights using Airbus A330s and A340s and Boeing 737s, 747s, 767s and 777s, Flight Plan Manager was able to produce average savings of US$1,043 per flight leg.

Burn Diff Min Avg Max Sum -2.372 +878 +6.920 +74.621

Time Diff -20 +4 +54 +353

Fuel Save $ -$-2.025 +$591 +$6.711 +$50.264

Time Save $ OVRFF Save $ TTL Save $ +$-654 +$270 +$8.548 +$22.943 -$-684 +$181 +$4.594 +$15.407 +$0 +$1.043 +$9.367 +$88.614

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