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Case Study: Can airlines pull IT all together?
Author: Vishok Mansingh, Asst. Vice President-Eng Logistics & Systems, Kingfisher Airlines LtdSubscribe
Can Airlines pull IT all together?
Vishok Mansingh, Asst. Vice President-Eng Logistics & Systems, Kingfisher Airlines Ltd wonders whether true ERP software is available for airline operations
Modern business is a complex process influenced by a number of parameters, usually working with real time information, over extensive geographical areas and with operations integrated into the larger world economy. In order to manage this challenging operational environment, software has become the essential nervous system for any business entity. Over time, software and IT infrastructures have developed with sophisticated tools to support individual functions of and processes in the business, working within the infrastructure and systems to manage resources, functions and processes as well as monitoring and recording the health of the organization. In sectors such as manufacturing, retail, banking and telecommunications, the extension of this, has been the development of enterprise resource planning (ERP) systems covering all parts of the business.
Is there ERP software for airlines?
What is interesting is that airlines operate some of the most sophisticated state-of-the-art technologies in their aircraft, air traffic navigation, ground support and systems capable of flying aircraft safely across the half world to within a few meters of accuracy and a few minutes of scheduled time; however, they are still seeking ways to bring that same level of technological sophistication to the management of their routine business functions.
History of the airline business
Commercial air transport is still a relatively young business sector. Commercial airlines really only started to appear in quantities after World War II. Yet, being a strategic industry, air travel is heavy regulated by a network of national and international rules, treaties and bilateral agreements. Also, many airlines, during their early days were, and a few still are, owned directly or indirectly by their national governments. For decades there was no open competitive market place to drive continual innovation and increasing efficiency in businesses. Then, deregulation in the USA and the opening of commercial aviation across the world created a competitive marketplace and pushed airlines to think about new business processes and technology.
However, airlines are very complex and dynamic businesses and full of contradictions. Here are some of the matters that they need to manage:
- Aircraft are expensive and sophisticated pieces of engineering, using state-of-the-art technology and yet they can become non-operational for the want of a bolt costing just a few dollars.
- Airlines are capital intensive businesses; but their main products, passenger seats or cargo space from point A to B over a period from 30 minutes to a few hours, have very short shelf lives.
- Operations depend on a number of controllable and non-controllable factors like, the weather, allocated time slots, ground infrastructure and the dynamic operational area.
- The industry is very heavily regulated by national and international bodies requiring extensive documentation to be maintained in real time.
- Human resources also have to be specially trained and hold current qualifications for each function to be able to meet regulations. For any operation at any time all the qualified people need to be available at the same time and in the same place. For instance, the operation of an aircraft requires the pilot, engineer, cabin crew, load master, DGR qualified person, etc. to all be available: the absence of just one single person can result in the postponement or cancellation of an operation.
- Airlines operate to very low profit margins.
Evolution of support software
Often, over time, different functions in a business have developed specialist solutions for themselves but making little or no attempt to integrate those solutions with related processes in other departments. When IT first started to make inroads into back office operations, it was largely a case of previously manual functions being computerized in isolation. Since the ‘experts’ in the field tended to be users, the focus was often only on their specific operational area instead of on the company as a whole. Further on, there was sometimes integration with similar functions and yet more individual and specialist software was tweaked to address the needs of those similar functions.
But there is software available which will address the needs for one or more functions.
Engineering and Maintenance
This function deals with the technical management of aircraft in areas such as technical services, maintenance planning, aircraft technical record (aircraft, engine, APU, log book) materials planning, repair and warranty management, production planning, inventory management, maintenance crew record, training and engineering crew roster.
Aircraft/Engine/APU performance monitoring
This deals with the monitoring of data from various sources such as the tech log, flight data recorder, etc. to analyze the current condition of the equipment and predict future trends for that condition.
This covers cockpit crew roster, crew training, crew scheduling, crew log book, flight planning, pre-flight briefing, nav. log, flight monitoring and disruption management. There are also some related functions such as:
Flight operation quality assurance
This is a regulatory requirement for the analysis of flight data to monitor the performance of the cockpit crew.
Fuel costs account for 20-40% of operating costs: fuel management aims to analyze consumption throughout a complete operation cycle to identify wastage and reduce consumption.
Cabin Crew Management
The cabin crew roster, crew log book, crew training and scheduling are all dealt with in this function.
This is a key function optimizing the commercial requirements of the service: frequency, size of aircraft used, configuration of aircraft, operating timetable.
Ticketing, revenue and yield management
Ticketing, accounting, revenue management and yield management are all dealt with here.
Weight and balance
This manages the optimization of an aircraft’s load to ensure it remains within safe limits and is able to deliver the most economical performance.
Finance and accounting
This is a standard module.
In day-to-day operating conditions, all of these functions are closely integrated and interdependent. For instance, the aircraft’s schedule will drive the cockpit, cabin and maintenance crew rosters which, in turn, integrate with crew scheduling. This schedule and the flight operation data drive maintenance planning, works scheduling and materials requirements which, again in turn, integrates with finance and cash flow planning. Aircraft flight planning and on-board payload figures drive the weight and balance schedule and determine the available payload.
Since there is no single software available to cover all of these functions, most airlines purchase different software packages for particular purposes; they then try to integrate the resulting variety of solutions. Unfortunately, each software package is stand-alone, and developed in a different language and platform using different standards. There will be multiple IT infrastructure standards, duplicated data bases and all of the associated errors. All of this makes a very complex job of integrating them into a seamless operation. Airlines do not have sufficient technical expertise to integrate multiple software packages and manage conflicts between different software vendors. Some airlines hire outside consultant to integrate these different software solutions which adds yet a further dimension to this already complex situation. And, since integration is so complex, it can result in a reduction in efficiency and utilization for individual software packages. It can also result in new business processes which are not the most efficient for the airline but are dictated by the need to operate these different software solutions.
So, in spite of the intention to deliver seamless operation across the complete business function, this integration still creates operational silos, which is not the desired end result from a good ERP system. Due to the complexity of this operation, users get frustrated and lose interest in software as it becomes more of burden than a tool that helps reduce the workload and increase efficiency, resulting in a detachment of users from the ERP system. This complex integration reinforces the requirement for a good single ERP software solution, covering all functions of the airline in real time to deliver the most economical output; that is the optimum transportation of a seat or cargo space from point A to point B. The only solution that can fully deliver this is a good ERP system.
This is a case study from Blue Dart Aviation Ltd., operating two different types of aircraft for its parent company, Blue Dart Express Limited, India’s leading air express and logistics business. There was a mandate to set up an ERP system for the airline with the following objectives:
- To manage and coordinate all the resources, information, and functions of the business from shared data stores;
- To integrate the software infrastructure that supports the entire company business process;
- To deliver a view of the company and all its parts as a connected whole rather than as separate silos of activity;
- Integrated electronic record keeping for key performance indicators (KPI) and other management information system (MIS) functions with high levels of automation;
- Tools to collate all relevant information at decision points, enabling informed decision making, with internal checks, control and logics to allow for lower levels of skill requirement without reducing quality and efficiency.
Since there was no ERP software covering all functions, a business process analysis was conducted for the airline to ascertain the exact requirements and the levels of interdependency with related functions. After analysis, these functions were broadly classified into two major areas: one which relates to ‘city side’ activities such as interactions with customers, commercial sales and cargo booking; the other which relates to ‘airside’ activities such as flight operation, ground handling, cargo operation, engineering and maintenance. There are also some common functions, like finance and HR, which impact on both sides.
Figure 2: Air side function are very closely integrated
Figure 3 covers the major costs and the majority of functions for the operation of the business. It was decided to address all of these functions using a single software package and resulting in a seamless integration across the enterprise. The software should also be capable of integrating with existing finance software. A second phase will bring all other functions also under the single software solution
After mapping all business processes on the airside, a single process flow covering all airside functions has been developed. Available software functions/capabilities were mapped against this single process to determine the extent of coverage. After reviewing all available software, the company has decided to select ARMS (airline resource management system). This software covers:
- Flight operation;
- Engineering and Maintenance;
- Weight and balance;
- Ground Equipment Management;
- Flight Planning;
- Finance integration;
The software was implemented over a period and the benefits of a single software solution for the business were:
- It offers an enterprise level bird’s eye view;
- It can be implemented and operated using a single hardware and software type, and one license;
- It is economical as there are no multiple and separate functions such crew roster, training, tech log etc.;
- There is a common database across the enterprise allowing minimum data entry, accurate validation and shared information;
- It delivers an optimization of resource as it covers all functions, resulting in increased efficiency;
- Using a single source for MIS results in improved accuracy in data and the elimination of reconciliation of data from different functions;
- Very accurate MIS and KPI monitoring can be achieved;
- There were no integration and associated problems;
- It streamlined the business processes where that is most efficient for the business operation but not where they are suitable for integration;
- It achieved very fast implementation and user acceptance;
- It promoted broad awareness of related functions and an analysis of the company-wide cause and effects of individual activities.
This experience validated the view that, as with the nervous system in the human body, an airline also needs a single, seamless ERP software solution. Software vendors need to develop single ERP software packages from the drawing board instead of bundling different software packages together and then selling that as ‘an integrated ERP software package’. This is the long term solution for airlines.