Document

A MAgAzine for Airline executives 2009 issue no. 2

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Planning departments follow industry best practices to compete

Global carriers take various steps to remain in the black

Air Malta makes big changes across entire organizations

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A Conversation With … Dave Barger, President and Chief Executive Officer, JetBlue Airways, 4.

t a 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

Happy Jetting

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2009 issue no. 2

editor in chiefStephani Hawkins

Managing editorB. Scott Hunt

Associate editorCarla Jensen

Art Direction/DesignCharles Urich

contributors Wendy Albright, Michael Askew, Shane Batt, Alessandro Ciancimino, Steve Clampett, Scott Dennett, Michelle Fischer, Greg Gilchrist, Glen Harvell, Jason Heideman, Christine Kretschmar, Gordon Locke, Lindsay Millward, Benjamin Mussler, Mark Neill, Sandra Opdahl, Garth Overmyer, Lalita Ponnekanti, Gareth Tedford, Susan Via, Alan Walker, Fionna Wee, John Winstead, George Wrigley, Jung Yu.

PublisherGeorge Lynch 3150 Sabre Drive Southlake, Texas 76092 www.sabreairlinesolutions.com

Awards

2009 Awards for Publication Excellence, International Association of Business Communicators Bronze Quill, Hermes Creative Award, ECO Awards 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

2007 Awards for Publication Excellence, International Association of Business Communicators Bronze Quill

2006 Awards for Publication Excellence, International Association of Business Communicators Bronze Quill, Silver Quill and Gold Quill


2004 Awards for Publication Excellence, International Association of Business Communicators Bronze Quill and Silver Quill

makingcontact

Asia/PacificDavid Chambers Vice President 3 Church Street, #15-02 Samsung Hub Singapore 049483 SG Phone: +65 6511 3210 E-mail: [email protected]

europeAlessandro Ciancimino Vice President Via Appia Nuova 990 00178 Rome, Italy Phone: +39 348 3708240 E-mail: [email protected].

india/south AsiaVish Viswanathan Vice President 187, Royapettah High Road, Flat A-7 Mylapore Chennai, India Phone: +1 682 605 4544 Cell: United States +1 817 312 2830 Cell: International +91 98404 96765 E-mail: [email protected]

latin AmericaKamal Qatato Vice President 3150 Sabre Drive Southlake, Texas 76092 Phone: +1 682 605 5399 [email protected]

Middle east and AfricaMaher Koubaa Regional Head 77 Rue de la Boetie Paris, France 75008 Phone: +33 1 44 20 7657 E-mail: [email protected]

north AmericaKristen Fritschel Vice President 3150 Sabre Drive Southlake, Texas 76092 Phone: +1 682 605 5335 E-mail: [email protected]

WorldwideShane Batt Executive Solutions Partner Phone: +44 7717 495 129 E-mail: [email protected]

Sabre Airline Solutions, the Sabre Airline Solutions logo and products noted in italics in this publication are trademarks and/or service marks of an affiliate of Sabre Holdings Corp. All other trademarks, service marks and trade names are the property of their respective owners. ©2009 Sabre Inc. All rights reserved. Printed in the USA.

Address correctionsPlease send address corrections via e-mail to [email protected].

reader inquiriesIf you have questions about this publication or suggested topics for future articles, please send an e-mail to [email protected].

To suggest a topic for a possible future article, change your address or add someone to the mailing list, please send an e-mail message to the Ascend staff at [email protected].

For more information about products and services featured in this issue of Ascend, please visit our Web site at www.sabreairlinesolutions.com or contact one of the following Sabre Airline Solutions regional representatives:

Introducing Sabre AirCentre, the industry’s leading operations solution that helps deliver your promise.

Every ticket you sell is a contract. And managing the pieces that go into meeting those commitments is no easy task.

That’s why you need Sabre ® AirCentre TM Enterprise Operations, so you can deliver your promise across your entire airline – fl ight, crew, ground and maintenance – all at the lowest operating cost. Plus, its fl exible technology platform adapts to your ever-changing business needs. That’s our promise to you!

See the many ways Sabre AirCentre delivers. Visit sabreaircentre.com today.

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®Committed to minimizing the environmental impact of our global operations and to promoting sustainable business practices in travel and tourism.www.sabre-holdings.com

Cert no. SW-COC-002360

he old saying, “An apple a day keeps the doctor away” dates back to 1866 when

London’s Notes and Queries magazine, today published by Oxford University Press, printed the quote, “Eat an apple on going to bed, and you’ll keep the doctor from earn-ing his bread.” Nearly 40 years later, at the turn of the century, there were numerous versions of the rhyme in circulation, and in 1913, “An apple a day keeps the doctor away,” came to life and has been used ever since.

This and similar phrases — such as the 1980s advertisement, “Milk. It does a body good.” — are intended to steer people toward good health. And while I agree that milk and apples are good sources of nutrition, drinking the daily recommended allotment of milk and eating an apple a day won’t stave off all health issues, which is why many people partake in regular preven-tative health checkups rather than trying to diagnose their own physical condition and, when symptoms are present, try to self treat.

While I may know my body better than anyone else, I simply don’t have the necessary technology or expertise to detect serious problems. I can do all the right things to keep myself healthy, but only through the partnerships I’ve created with medical professionals, the advanced tech-nology they use and a solid support system do I have a much better chance of remain-ing healthy well into the future.

When it comes to our physical health, by the time certain symptoms become visible, the ability to cure those problems and regain full strength and health can be

an uphill battle. If a complete examina-tion were performed on a regular basis, chances of avoiding unforeseen problems and increasing long-term health are much greater.

In many ways, running an airline is similar to taking care of your body. It may sound farfetched, but if you take a close look, the basic principles and priorities are similar. For example, you can run your busi-ness with minimal internal and external rela-tionships and take your chances of maybe or maybe not achieving long-term wellness and success. Or you can solicit input from employees and customers as well as part-ner with companies that specialize in vital aspects of the industry and significantly increase your chances of long-term sustain-ability. Similarly, you can choose to diag-nose your own company’s ailments, or you can work with experts specifically trained to examine, analyze, diagnose and treat for a better overall outcome.

Air Malta is a prime example of a carrier that recognized the need for change through proper diagnosis and treatment based on input from its employees, custom-ers, technology providers and other external entities. The carrier placed every area across its organization under the microscope to analyze, determine problem areas and imple-ment strategies to turn the entire enterprise around and regain its footing. Among the many initiatives Air Malta incorporated, its Web booking engine has been among the most successful. The carrier experienced a 30 percent increase in Internet sales and aims to double that within the next two years. As a result, the European Union has

given the airline a “clean bill of health” in a recent audit of all ticket and airline Web sites selling flights within Europe.

On our cover, JetBlue Airways President and Chief Executive Officer Dave Barger puts great emphasis on the airline’s guests, or “jetters,” who receive nothing but the best treatment both in the air and on the ground. At its home airport terminal at New York’s JFK International Airport, it offers speedy check-in, numerous security lanes, ample gate seating, complimentary Wi-Fi, and several dining and shopping options. In flight, the carrier sells seats with up to 38 inches of pitch and superior entertainment options. And when JetBlue felt it needed a health boost through better merchandising and partnership capabili-ties, it choose a new customer sales and service solution to power its customer res-ervations. That only scratches the surface when it comes to JetBlue and the level of service its 22 million annual custom-ers have come to expect. The airline has received more than 120 awards and has received the No. 1 customer-service rank-ing among low-cost carriers by J.D. Power and Associates for the past five years. It’s clear that a good part of what keeps this airline healthy is its happy jetters.

Whether in business or on a personal level, taking the necessary steps to remain healthy just makes sense, and it’s refresh-ing to see how many airlines are giving their all to win their battles, overcome their challenges and come out on top.

I hope you enjoy this issue, and I look forward to working together toward a healthy, prosperous future!

Tom

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with Tom KleinGroup President, Sabre Airline Solutions/Sabre Travel Network

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11 SmallAirline,BigFuture

Air Malta placed every aspect of its organization under the microscope

14HappyJetting

Dave Barger explains what makes JetBlue Airways an industry leader

20ShrinkingToProfitability

While some airlines shrink and others grow, they all have taken steps to cut costs and generate revenue

StayTunedToThat26Channel

ZUJI helps Asia/Pacific carriers extend their online booking capabilitie

30MakingAComeback

Indicators point to a slow but definite economic recovery for BRIC and MENA countries

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35FlyingGreenShoots

Airlines and aircraft manufacturers strive to control greenhouse gas emissions and reduce their carbon footprint E-Commerce:TheMore42

TheMerrierAdvanced revenue management technology helps airlines maximize group sales opportunities and reduce spoilage

46PracticeMakesPerfect

Many airlines ensure their planning departments abide by industry-best-practice principles to stay competitive Merchandising:Right50

Price,RightValueOffering the right ancillary choices travelers truly value benefits airlines and their customers

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54CanISeeYourID,Please?

Companies have a unique identity that shapes how they are perceived

58SocialButterflies

Airlines have access to a rich social networking opportunity, ensuring easy access to real-time, valuable resources

61ServiceWithASmile

Carriers can smoothly adapt to and operate with a broad spectrum of technology through a unique implementation and support approach

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“Bundles”OfJoyNew capabilities within SabreSonic® Customer Sales & Service help carriers plan, execute and succeed well into the future

72PromiseDelivered

Advanced operations technology helps carriers “deliver the promise” to their valued customer

Real-TimeSolutions78ForReal-TimeOperations

An informative, robust, real-time and predictive solution enhances an airline’s overall operations as well as its travelers’ experience

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2009AirlineTrends:TopIssuesAndTheirImpact

6%

3%

Global economy Network growth Aircraft acceptance Privatization

AreasOfInterest

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Results of the 2009 Airline Trends Survey conducted by Sabre Airline Solutions® during the third quarter identified 15 main areas of interest for today’s carriers.

The survey, completed by 192 airline professionals from 90 carriers of all sizes, geographic locations and business models, not only identified key industry topics but also determined their impact (both positive and negative) and identified underlying issues impacting each area. Results also identified specific initiatives airlines are taking in the areas of environmental sustainability and merchandising.

57%

52%

The 2009 Airline Trends Survey showed airlines’ top areas of interest during the next 18 months include fuel price instability, revenue and yield, competi-tion, alliances and consolidation, and customer loyalty and retention.{

Fuel price instability

Revenue/yield

Competition, alliances and consolidation

Customer loyality and retention

Labor management

Network planning and scheduling

Government regulations

Operations

IT investment

Multi-channel distribution

Environmental sustainability

Merchandising/ancillary revenue

Mobile application management

Airport and passenger security

In-flight safety

Other

When broken down by region, carrier type and job level, the 2009 Airline Trends Survey showed fuel price instability and revenue/yield to be the top two conerns across the board.

{AreasOfInterestByCarrierType,RegionAndJobLevel


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Fuel price instability

Revenue/yield


Customer loyalty and retention

Labor management

Network planning and scheduling


Operations

IT investment

Multi-channel distribution

Environmental sustainability

Merchandising/ancillary revenue

Mobile application management

Airport and passenger security

In-flight safety

Negative impact No impact Positive impact

ImpactofIndustryIssuesByRegionBase:allrespondents(n=192)Americas=91,EMEA=48,APAC=49Lettersindicatesignificantdifferenceat95%confidence.

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(Base:allrespondentsn=192)

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Revenue management

Fuel purchasemanagement

Staff/crew optimization

Operational cost management

Flight planning optimization

Competitive fare analysis

Fare dilution management

Revenue management

Fuel optimization

Cabin class downgrading

Corporate business share

Fraud management

Other

Alternative forms of payment

Other

Not sure

Primarytacticsairlineswillusetoincreaserevenue Primarytacticsairlineswillusetoreducecosts

Base:Airlinesfocusedonincreasingrevenueorincreasingrevenueanddecreasingcostsequally(N=151)

FuelPriceInstability57 percent view it as a primary challenge75 percent indicated it has a negativeimpact on costs, revenue and operations Base:ThoseindicatingFuelPriceInstabilityasachallenge(n=109)

RevenueAndYield52 percent view it as a primary challenge55 percent indicated it has a positiveimpact on costs, revenue and operations Base:ThoseindicatingRevenueandYieldasachallenge(n=102)

Base:Airlinesfocusedonreducingcostsorincreasingrevenueanddecreasingcostsequally(N=152)

Base:allrespondents(n=192)

Distribution mix

Fuel hedging management

Ancillary revenue

Airport opeations management

Revenue integrity

Flight plan management

Cargo management

Load plan management

Revenue accounting

Other

Other

Not sure

16% 67% 17%

44%

34% 21%

20%

18%

18%

10%

4%

1%

0%

6%

4%

12%

29%

11%

3%

3%

5%

3%

1%

2%

10%

8%

21%

All of the above network optimization

Fluctuation of fuel prices

Increase Revenue Only Reduced Costs OnlyIncrease Revenue and Reduce Costs Equally

37%

27%

13%

13%

All of the above network controls match capacity with demand

Global economy

While some airlines focus more intently on increasing revenue and others put a primary focus on reduc-ing costs, 67 percent of airlines plan to increase revenue and reduce costs equally during the next 18 months.

Airlines in Asia/Pacific find merchan-dising and multi-channel distribution to have the most positive impact from a cost, revenue or operational stand-point. Carriers in the Americas indi-cate customer loyalty and retention as well as competition, alliances and consolidation have the largest positive impact while airlines in Europe, the Middle East and Africa view network planning and scheduling as having the most positive impact.

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AirlineProfitManagementGiventhechallengesairlinescurrentlyface,thefocusformanagingairlineprofitsduringthenext18monthsisto:

DeepDive

{

{ The survey revealed that 34 percent of those indicating fuel price instability as a top area of interest cite fuel-purchase mamagement as the biggest contrib-uting factor. It also showed that 21 per-cent said operational cost management is the biggest driver of revenue and yield. {

Customer loyalty and retention were viewed by airlines as the leading area to have a positive impact from a cost, revenue or operational standpoint. Fuel price instability is still viewed as the No. 1 negative impact to airlines.

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Over capacitySynchronization and optimization

Codeshares

Rationalization of network

New entrants

Airline bankruptcies

Schedule synchronization

Marketing agreements

System compatibility

Partner capacity management

Revenue sharing agreement

Other

Not sure

Customer experience

Customer relationshipCampaign management

Loyalty program management

Customer data management

On-line community/social media presence

Other

Not sure

Competition,AlliancesAndConsolidation38 percent view it as a primary challenge 52 percent indicated it has a positive impact on costs, revenue and operations Base:ThoseindicatingCompetition,AlliancesandConsolidationasachallenge(n=75)

CustomerLoyaltyAndRenention27 percent view it as a primary challenge86 percent indicated it has a positiveimpact on costs, revenue and operations Base:ThoseindicatingCustomerLoyaltyandRetentionasachallenge(n=54)

29% 49%

15%

11%

9%

4%

4%

8%

15%

10%

10%

8%

5%

4%

4%

4%

3%

5%LCC competitors revenue dilution regulations

Competitive airfare

DeepDive

12% Of those who view competition, alli-ances and consolidation as a main focal point, 29 percent said over capac-ity is the primary issue. When looking at customer loyalty and retention, 49 percent said customer experience is the biggest contributor to establishing long-term customers.

{

Time to market

Available technology

Developing the strategy internally

Competitive reaction

Third-party distribution

Negative consumer response/impact to brand

Change in business process


Industry standards

Other

TopChallengesForMerchandisingStrategyImplementationSmall base:Thoseindicatingmerchandisingasanareaofinterest(n=14),thereforedataisreportedinabsolutevaluesandnotpercentages.

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4

2

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DeepDive

There are a wide variety of challenges that impede the implementation of an airline’s merchandising/ancillary revenue strategy, including time to market, available technology, devel-opment of an internal strategy and competitive reaction.{

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Lynne Clark | Ascend Staff

Small Airline,Big Future

Air Malta recognized the need for change … big change. To ensure long-term success, the carrier placed every aspect of its organization under the microscope — from flight operations to human resources and everywhere in between — and began implementing change that would secure its future.

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By Shawn Mechelke | Ascend Contributor

Air Malta wants the world to know it’s almost always summertime in the Maltese Islands, and the airline is more

prepared than ever to fly travelers to its main destination — a tiny Mediterranean archipel-ago that boasts of superbly sunny weather, expansive beaches and 7,000 years of intriguing history.

Consisting of the three islands of Malta, Gozo and Comino, the island chain lies virtually in the middle of the Mediterranean, with Malta 93 kilometers south of Sicily and 288 kilome-ters north of Africa. Best of all, Malta is more or less a two-and-a-half-hour flight from most major European urban centers including London, Rome, Paris, Geneva, Madrid and Athens.

Founded in 1973, Air Malta discovered at the age of 30 that it needed a facelift. The car-rier, Malta’s national airline based in Luqa, faced increased competition, needed a revamped infrastructure, and encountered rising fuel prices and an overdependence on seasonal package holiday traffic. On the positive side, however, it had taken advantage of the post Sept. 11 slump in aircraft orders and had leased a brand new fleet of Airbus A319 and A320 aircraft, finally moving away from a hybrid fleet of aircraft.

After meeting with employees’ unions and signing a rescue pact agreement, Air Malta began a recovery process that continues today. Every aspect of its business has been under the microscope including flight operations, commercial operations, technology and human resources.

“In 2003, Air Malta was losing money from its core operation — the transportation of passengers and cargo to and from Malta,” said Joe Cappello, Air Malta chief executive officer. “The situation was not sustainable, and we embarked on an ambitious project to return the airline to profitability within three years.”

The carrier’s diligent restructuring began with a meeting with employees’ unions.

“We agreed to a moratorium on wages for the term of the agreement as well as greatly enhanced flexibility and, in turn, we agreed to not make anyone redundant,” said Cappello. “Management also committed to substantial cost savings in areas other than human resourc-es. Together, management and the unions hon-ored the agreement, and Air Malta managed to save €30 million in costs.

“We began focusing on our core opera-tion and divested ourselves from other invest-ments and subsidiary companies like hotels, which were no longer necessary as the Island’s tourism infrastructure had become sophisticated enough not to need the airline’s investment in this sector,” Cappello said. “We also outsourced our cabin cleaning, IT and in-flight entertainment operations. In addition, we launched a new portal and booking engine and invested heavily in international marketing.

“All these initiatives have contributed toward making Air Malta a stronger organization

capable of facing today’s challenges,” he said. “We’re not out of the woods yet as we still need to reduce our costs and increase revenue and return the airline to sustainable profitability.”

PreparedForShortTripsOne of the areas in which the company

agreed to restructure was flight operations. The result is a refocused route network strat-egy that maximizes the Islands’ proximity and caters to short holiday vacationers.

“Previously, Air Malta flew to as many points as possible once or twice per week in response to charter and tour operator oppor-tunities,” said Brock Friesen, chief commercial officer for Air Malta. “This worked well for long-stay vacationers until the late 1990s when it became apparent that the summer vacation market was no longer growing. Moreover, it became apparent that the airline could not sustain itself mainly on summer peak travels and new sources of year-round traffic were needed.”

By 2006, Air Malta’s executives took note of the boom in the number of Europeans taking short holidays. They realized that the airline had a unique niche within two-and-a-half hours of its base hub at Malta International Airport.

“With increased spending power and decreased air fares, people started taking more than one short holiday each year, in addition to their summer vacations,” Friesen said. “This booming segment travels year round, gener-ally avoiding summer peaks. Capturing this segment requires frequent flights at convenient times. Hence, our network has fewer points, but more daily and double daily services to rich markets.

“The focus on two-and-a-half-hour seg-ments or less is driven by cost,” Friesen said. “Short-holiday travelers are only willing to pay so much for their airfare and are indifferent whether the flight is one or three hours. At prevailing fare levels and current oil prices, few routes are sustainable if they are over a two-and-one-half-hour flight to Malta.”

Aspartofitsaggressiverestructuringinitiative,AirMaltaexecutivesandunionmembersworkedtogethertosave€30millionincosts.Indoingso,unionsagreedtoamoratoriumonwagesand,inturn,managementvowedtosignificantcostsavingsinareasotherthanhumanresources.

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Photo courtesy of Air Malta

The reasoning has led to a growth strategy focused on nearby large urban populations with more flights to existing points served such as Zurich and Munich and opening new destinations such as Paris.

“We are also interested in growing our network from Catania, Italy, where we already serve London, Geneva and Munich in addition to Malta,” Friesen said.

PreparedTechnologicallyThe drive to reduce costs while enhancing

passenger experience has led Air Malta to make significant strides in technology systems. The carrier has worked with Sabre Airline Solutions® on a number of upgrades including state-of-the-art network planning, flight scheduling and revenue management systems as well as new Web check-in and e-ticketing solutions to enhance customer service.

Other technological advancements include a more robust, user-friendly Internet presence. Since 2007, bookings through airmalta.com have grown tenfold, from 3 percent to almost 30 per-cent. The carrier hopes to increase Internet sales to 60 percent in two years.

“This year, the Internet channel is boom-ing,” said Cappello. “Average fares on the Internet now equal those of the system overall, indicating that the channel attracts more than just bargain seekers. Interestingly, we are selling more and more connecting flights on our partners via the Internet, and we are increasing the display of alternative routes.

“Research shows that customers love transparency and self service, and we have worked hard to lead in both,” he said. “In fact, the European Union has been complementary of our Internet booking engine and has given us a clean ‘bill of health’ in a recent audit of all ticket and airline Web sites selling flights within Europe.”

That’s not to say Air Malta is ignoring the more traditional travel agent channel. Cappello said the carrier is aggressively pursuing European travel agents and expects the channel, together with the Internet, to more than fully offset declin-ing tour operator traffic, previously the airline’s primary distribution channel.

“Tour operators have been hurt badly by low-cost carriers and the Internet,” Cappello said. “However, they remain especially important not only in emerging markets, but also in established markets. We are investing heavily in automation to make it easier for them to book on Air Malta at attractive prices while curbing the waste that goes with manual processes that have undermined our revenue management.”

ExpandingTogetherCurrently, Air Malta has codeshare

agreements with 10 airlines, thus extending its point-to-point reach to that of a global carrier. Partners include bmi, Brussels Airlines, Lufthansa, Lufthansa Italia, Swiss International Air Lines and Turkish Airlines.

“Our partners connect Malta to virtually every country in the world, offering seamless ser-vice through check-in, airport lounge facilities and

baggage transfer,” said Friesen. “More than 60 percent of our operated services are now code-shared, and more are expected. The connectivity we have gives travelers multiple flight options each day from virtually everywhere in Malta. For example, we sell more tickets from Stockholm via Munich, Zurich and Frankfurt than we ever did operating two nonstop flights per week from Malta. Travelers want to fly on the days and at the times they want to fly … not just on the days that we fly.”

PreparedForTheFutureAir Malta has made numerous strategic

changes — such as simplifying its fleet, working in harmony with employees, codesharing with several global carriers, outsourcing certain areas of its operation, investing in advanced information technology — to weather tough times and secure the carrier’s future and that of its employees.

Air Malta’s effective leadership combined with its top-notch employees and continuing methodical adjustments across its organization has positioned the carrier to remain Malta’s main carrier, presenting the most extensive options for air transportation to and from the Islands. a

Lynne Clark can be contacted at [email protected].

By Shawn Mechelke | Ascend Contributor

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Sixyearsago,whenitbeganlosingmoneyfromitscorebusinessoftransportingpassengersandcargo,AirMaltaexecutivesimplementedastrategicrecoveryplanwiththegoalofreturningtheairlinetoprofitabilitywithinthreeyears.

Photo courtesy of Air Malta

Photos courtesy of JetBlue

A Conversation With … Dave Barger, Chief Executive Officer, JetBlue Airways.

HappyJetting

For New York’s hometown airline, JetBlue Airways, it’s not just about safely jetting its guests from point

A to point B, it’s about providing superior service in every aspect of each customer’s air travel experience. It’s a common goal among airlines around the world, but one of many things that makes JetBlue stand out is its “Customer Bill Of Rights,” which outlines exactly what inconvenienced customers can expect during times of service disruptions that are within the carrier’s control. And that’s just the tip of the iceberg for JetBlue, which prides itself on having created a new airline category based on value, service and style.

JetBlue keeps customer satisfaction and comfort at the forefront. It offers “Lots of Legroom” and super-spacious “Even More Legroom” seats. It was the first in the region to introduce in-flight e-mail and messaging services. It offers 36 channels of DIRECTV, 100 channels of Sirius XM Radio and unlimited brand name snacks; it doesn’t charge for first checked bags; and the list goes on.

“During 2008, we continued to improve the travel experience for our customers onboard our aircraft,” JetBlue President and Chief Executive Officer Dave

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Barger told shareholders earlier this year. “For example, we modified our fleet with a product we call Even More Legroom. Even More Legroom seats provide our custom-ers with 38 inches of pitch in selected rows for a modest fee. We believe our cabin experience, which includes the most legroom in coach (based on average fleet-wide seat pitch for U.S. airlines) and DIRECTV and Sirius XM Radio installed by our LiveTV subsidiary, to be ‘best in class’ across the industry.”

As a result of its detail to customer satisfaction, the airline has won more than 120 awards in categories such as Best Large U.S. Economy Class, Best In-Flight Entertainment, Most Eco-Friendly Airline, Best In-Seat Comfort and Best North American Low-Cost Carrier.

“For the fifth year in a row, JetBlue achieved the No. 1 customer-service rank-ing among low-cost carriers by J.D. Power and Associates,” Barger said. “This award, and many others, is a testament to the dedication of our crewmembers who do a tremendous job delivering The JetBlue Experience to our 22 million customers annually.”

During the course of nearly 10 years, the airline has built a stable, fun environ-ment for its crewmembers — the airline’s term for employees — and a pleasant atmosphere for its customers. It con-tinually engages in community activities to support non-profit organizations in the

cities it serves. And it views its strategy for continually improving the environment as its social responsibility.

In addition to providing top ser-vice to its customers and a warm work environment for its more than 12,000 crewmembers, JetBlue has a knack for clever themes, such as its “Happy Jetting” tagline, and witty advertising that holds viewers’ attention through comedic dia-log, such as that of its “Welcome Bigwigs: The CEO’s Guide To Jetting” video.

Whether in the air or on the ground, JetBlue strives to deliver on its promise to provide world-class service, convenience and comfort to its millions of customers. It operates out of New York John F. Kennedy International Airport’s Terminal 5, which it refers to as “home sweet home,” and offers “jetters” quick, simple check-in, up to 20 security lanes, 26 gates with ample seating, complimentary Wi-Fi, 22 dining options, 25 retail locations and a children’s play area.

“In 2008, we marked the beginning of a new chapter in JetBlue’s history with the opening of our new Terminal 5 facility at JFK Airport,” Barger said. “This proj-ect, a partnership with the Port Authority of New York & New Jersey, involved six years of planning and construction and includes 26 gates, new roadways, a parking structure and a connector to the

AirTrain. We believe we have a tremen-dous advantage being based in New York, the largest travel market in the world, and Terminal 5 gives us the opportunity to provide superior customer service on the ground that matches our award-winning experience in the air.”

In May 2007, Barger was named JetBlue chief executive officer, assum-ing the additional title of president this year. He has served on the airline’s board of directors since 2001, and from 1998 to 2007, he served as the airline’s chief operating officer. He’s been in the airline industry for more than two decades, serv-ing in several management positions for Continental Airlines prior to the founding of JetBlue in 1998. In a recent interview with Ascend, Barger shared his thoughts about what makes JetBlue Airways an industry leader.

Question: JetBlue Airwaysintroduced a new airline categorybasedonvalue,serviceandstyle.Whatconstitutesthisasanewcategory,andhow is it different from what competi-torsaredoing?

Answer: In the past, when people looked at the airline industry, they saw two main kinds of airlines — traditional or legacy airlines and low-cost airlines. In recent years, there’s been a

JetBlueAirwayshastailoreditsaircrafttoincludeits“EvenMoreLegroom”product,offering38inchesofpitchincertainrows.Thecarrier’sconstantdetailtoits“jetters”hasearnedittheNo.1customer-servicerankingamonglow-costcarriersfiveyearsinarow.

DaveBarger,whojoinedJetBlueAirways’boardofdirectorsin2001andsixyearslatertookthereignsaschiefexecutiveofficer,recognizesthatexceptionalcustomerservice,intheairandontheground,isthekeytothecarrier’songoingsuccess.

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blending, so to speak, of the character-istics that used to be associated with each of those types as our industry has faced many challenges. Whether it’s 9/11, SARS, high oil prices or economic recession, airlines have had to adapt. Travelers have begun to shop for air travel with more of a focus on price. We recognized this early on and decided to distinguish ourselves as the preeminent value carrier in the Americas. JetBlue will offer competitive fares, which any airline can do, but we can offer much more value that other carriers can’t, whether it be free onboard entertainment, unlimited complimentary snacks, great legroom and a free first-checked bag, all coupled with friendly service. And by offering custom-ers the option to purchase up, for four more inches of legroom in our Even More Legroom rows or first-run movies, for example, they can add value that’s impor-tant to them. We offer a great experience to our customers today without nickel and diming them for it.

Q: JetBlue’s complimentary in-flighte-mailandinstantmessagingser-vices were a first among U.S. airlines.How important are these types of ser-vicetocustomers?Whatfeedbackhaveyoureceivedfromcustomersabouttheadditionalservice?

A: As we’ve looked at connectivity at altitude, we’ve recognized the desire for customers to stay connected with friends and loved ones on the ground, especially on longer transcontinental flights. We’ve been testing these capabilities on one of our aircraft — named BetaBlue — for almost two years now, and the response has been very positive. The ability for a customer to e-mail or stay connected via instant mes-saging to those on the ground is a great option, especially when it’s offered free of charge, and the feedback we’ve received from customers on BetaBlue flights has been overwhelmingly positive. We’re plan-ning to roll the product out to additional aircraft starting this year, with the goal to add it as a complimentary amenity to the JetBlue in-flight experience.

Q: JetBlueAirwaysisthefirstandonly U.S. carrier to declare a CustomerBill Of Rights. What was the purposefor creating a Customer Bill Of Rights,andhowdoes itcontributetoJetBlue’ssuccess?

A: We created the JetBlue Customer Bill of Rights in early 2007 after experiencing some operational challenges due to winter weather. We wanted to pro-vide customers with a tangible document outlining exactly what they can expect

from us if their travel plans become disrupted. This goes back to our desire to bring humanity back to air travel, one of our goals since launching service in 2000. We’re a customer-service company that just happens to be an airline. The Customer Bill of Rights allows customers to hold us accountable as we welcome them onboard.

Q: Initseighthyearofservice,JetBlueAirways said good-bye to flying andhellotojettingwithits“HappyJetting”tagline. How has the airline leveraged

this new tagline throughout its busi-nesses, and how has it made a differ-encefromacustomerperspective?

A: Flying is what the other guys do. Jetting is what we do here at JetBlue. Flying has a history of negative connotations, so we decided to distance ourselves from it. This was more than a marketing campaign; not only did we change the terminology used across the entire airline — the term “flying” isn’t used anywhere — jetting introduced a new way of thinking. It identifies the value proposition that we offer our

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JetBluenotonlytakesgoodcareofitscustomers,itoffersasecure,enjoyableatmosphereforits12,000crewmembers,whoworktogetherasateamtoensurethebestpossibletravelexperienceforalljetters.

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customers and sets us apart from other airlines. It helps explain why JetBlue is unique in a fun way.

Q: Last year, JetBlue became theofficialairlineoftheBostonRedSoxprofes-sional baseball team. How did this agree-mentcomeabout,andwhyisitimportanttotheairline?

A: Over the years, our growth in cities outside of New York has been considerable. Boston has become a very important market for us. We now offer the most non-stop des-tinations from Boston of any airline. It’s our second home. As we’ve grown, we’ve looked for ways to develop strategic sponsorships with key organizations. We’ve been fortunate to develop a great relationship with the Boston Red Sox as the team’s official airline. We’re also excited to have recently announced a new partnership with the New York Jets, which is our first major sports franchise partnership in New York, our hometown.

Q: How did JetBlue Airwaysbecome “The Official Airline Of

Springfield” in celebration of TheSimpsonsMovie?

A: We like to look for fun and excit-ing partnership opportunities. The release of The Simpsons Movie was the perfect way to celebrate our extensive service to the greater Los Angeles area. We even hosted a contest with a grand prize that included two tickets to the movie’s premiere in Hollywood. And if you’ve ever wanted to see Homer, Marge, Bart, Lisa and Maggie Simpson traveling in style, we have the photos that show it!

Q: In 2005, JetBlue Airwaysreceived the highly coveted DiamondCertificateofExcellenceAwardfromtheU.S. Federal Aviation Administration.Whatwerethemainreasonsforwinningsuchaprestigiousaward?Whatempha-sis does the airline place on winningsuchawardsandwhy?

A: We were honored to receive the FAA’s Diamond Certificate of Excellence Award for our maintenance technician train-ing program. An award like this highlights

the excellence of our training programs and the dedication of our crewmembers. We’ve also received a variety of recogni-tions throughout the years for offering cus-tomers exceptional customer service — like five consecutive recognitions by J.D. Power and Associates for excellence in customer satisfaction. Any recognition we receive is directly related to the dedication of every JetBlue crewmember who strives to meet the needs of every JetBlue customer.

Q: When other airlines beganchargingpassengersforthefirst-checkedbag, why did JetBlue choose not to fol-lowsuit?

A: We are focused on creating a new airline category best described as a value airline. There are certain things we believe should be included as part of a ticket. Right now for JetBlue, that includes an assigned seat with industry-leading legroom, free sat-ellite TV and radio, unlimited complimentary snacks, and a free first-checked bag. When these items are combined with JetBlue’s award-winning friendly service, we have

CastmembersofTheSimpsonsMovie(fromleft:Homer,Marge,Bart,LisaandMaggie)travelinstylewithJetBlueAirways,“TheOfficialAirlineOfSpringfield.”

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what we call the JetBlue Experience. It’s what’s sustained our airline for almost 10 years and is positioning us for future success.

Q: As part of its continuing com-mitment to give back to the communi-ties it serves, JetBlue partnered withKaBOOM!, a non-profit organizationthatenvisionsbuildingplayareaswithinwalking distance of every child in theUnited States. How many play areashave been built by JetBlue employees,what impactdoesthis initiativehaveonthese employees, and why is it highlyimportanttotheairline?

A: We have been fortunate to part-ner with KaBOOM! for several playground builds in JetBlue cities. In September, we completed our seventh build, which happened to be right down the street from our corporate support center. Our crewmembers have tremendous passion for our industry, but they also are pas-sionate about the communities in which they live. That’s why it’s important we partner with organizations like KaBOOM! and the American Cancer Society to allow our crewmembers the opportunity to give back to their communities and to be a good corporate neighbor.

Q: JetBlue’s CEO OutreachProgram included a humorous com-mercial,“WelcomeBigwigs:TheCEO’sGuideToJetting,”targetingCEOswhowere accustomed to flying on privatejets.Whatwereyoustrivingtoachievethrough thisprogramandaccompany-ing commercial? And how successfulhas this initiative been in attractingnewbusiness?

A: Our Welcome Bigwigs campaign was a tongue-in-cheek advertisement and viral video series welcoming CEOs and other executives to travel with JetBlue after being banned from using their pri-vate jets. The goal was to humorously use current events to portray the ameni-ties every customer experiences when traveling with JetBlue. The campaign was perfectly timed with current events and received interest by the general public and the news media. The buzz generated by the campaign was a huge success. It showcased that JetBlue likes to do things differently and that we have a fun edge about our brand. Another example would be our US$599 All You Can Jet pass, which received an extraordinary amount of social media attention and news coverage.

Q: What are some top reasonscustomers choose JetBlue rather than

competing airlines? What steps doesJetBluetaketoretaincustomers?

A: At JetBlue, we strive to add value to every customer’s experience, and that’s why customers choose to jet with us again and again. The free satellite TV and radio, extra legroom, unlimited complimentary snacks, and free first checked bag add value to the price our customers pay for a ticket. But those are the tangible things. The most important element that keeps our custom-ers coming back is the caring and friendly attitude exhibited by our crewmembers. That’s the secret that makes JetBlue suc-cessful and helps us stand out from other airlines.

Q: How involved are JetBlueAirways’ crewmembers in Jetting toGreen, your environmental sustainabilityprogram? In what ways is JetBlue goingaboveandbeyondtomakeadifferenceintheenvironment?

A: Every JetBlue crewmember plays a role in the success of our airline, and that includes environmental initiatives as well. Jetting to Green is a platform that allows us to share our environmentally friendly practices and to promote education and volunteerism. We have corporate elements to the program — like our partnership with Carbonfund.org that allows customers to offset carbon emis-sions generated by their flights — and we have events that allow our crewmembers to do one thing that’s green. All across our net-work, crewmembers volunteer to plant trees or clean up beaches and parks. And then they

bring this environmental awareness back to the workplace, and it manifests itself in things like single-engine taxiing where our pilots only use one engine to taxi aircraft when on the ground. This saves fuel and helps the environ-ment at the same time.

Q: What roledoes technologyplayin the success of JetBlue? How has tech-nology changed and evolved since theairlinebeganservicesadecadeago?

A: Technology has played a large role in our success. We launched service nearly 10 years ago as a completely e-ticket airline. We’ve never had paper tickets. Our reserva-tions crewmembers work from their homes. We were the first domestic airline to have TVs at every seat — in economy class, no less. Fast forward several years, and we introduced complimentary in-flight e-mail and instant messaging services on our aircraft BetaBlue, a first among U.S. domestic air-lines. We look for ways to use technology to enhance the customer experience and also to operate efficiently. Smart use of technology can drive business success.

Q: Where do you see JetBlueAirways infiveyears?Whatpositionstheairlineforlong-termsuccess?

A: JetBlue is poised to be the preemi-nent value airline in the Americas. Approaching our 10th anniversary, our strong business model, expanding network, young fleet, ame-nity-rich service and friendly crewmembers are the tools we will use to reinvent the air-line business all over again. a

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JetBlueAirwaysstrivestoachieveserviceexcellenceintheairaswellasontheground.BasedoutofNewYorkJFK’sTerminal5,theairlineofferssimplecheck-inoptions,amplesecuritylanes,sufficientseatingatgates,freeWi-Fi,severaldiningandshoppingvenues,andachildren’splayarea.

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Shrinking To ProfitabilityMany carriers continue to implement measures to remain solvent or regain solvency while others continue to grow their operations. Regardless of which airlines shrink and those that grow, all airlines have taken steps — albeit some more drastic than others — to cut costs and generate revenue during the most trying time in the industry.

By Lauren Lovelady | Ascend Staff

Airline growth has traditionally been viewed as a key indicator of airline prof-itability. The addition of new routes and

expansion of existing ones as well as delivery of new aircraft appeared vital to sustaining this growth and increasing market share and revenues.

Until last year, there were few, if any, examples of airlines successfully shrinking their operations — reducing capacity, delay-ing or canceling aircraft deliveries, scaling back or eliminating service, and slashing jobs — to achieve profitability. After all, these measures are somewhat risky and could potentially result in the loss of market share, revenues and customer loyalty.

Then in early 2008, airlines began to experience the effects of the oncom-ing global economic downturn, after barely recovering from the aftermath of Sept. 11, seven years earlier. Oil prices spiked. At one point in the year, fuel comprised 40 percent of an airline’s costs. And airline traffic growth rates slowed as companies and individual consumers alike tightened budgets. North America was the first region affected; Asia/Pacific, Europe and Africa soon followed. Still the Latin America and Middle East regions seemed to be holding their own. But by the first quarter, even traffic in Latin America was impacted, and other regions were posting declines near or exceeding 10 percent. Only the Middle East was experiencing a growth in passenger traffic due, in part, to increasing trade activities and development of the tour-ism industry within the region.

According to the International Air Transport Association, North American air-lines alone lost US$5.1 billion last year (due in part to soaring fuel prices), and worldwide industry losses this year are forecasted to be around US$11 billion. North American airlines are expected to lose around US$2.6 billion, European carriers about US$3.8 billion and airlines in Asia/Pacific and Africa close to US$3.6 billion and US$500 million, respec-tively. Additionally, Latin American airlines are forcast to lose US$900 million, and Middle East carriers are expected to lose US$500 million. The global recession is impacting not only passenger traffic but freight volumes as well. IATA’s 230 carrier members are fore-casting freight volumes to fall by 17 percent.

“There is no modern precedent for today’s economic meltdown,” said Giovanni Bisignani, IATA’s director general and chief executive officer, during his recent address to 500 of the airline industry’s top leaders at the 65th IATA Annual General Meeting and World Air Transport Summit. “The ground has shifted. Our industry has been shaken. Our future depends on a drastic reshaping by partners, governments and industry.”

So what does the future hold for the worldwide airline industry?

CuttingCapacityIn response to the early warning signs

in the third quarter of 2008, many carriers began reducing capacity. Suddenly, airlines’ survival depended on their ability to shrink, rather than grow, to match the number of seats they offered with the number of pas-sengers now willing to pay for the seats. Capacity cuts came in two forms. Airlines assigned smaller planes with fewer seats on routes once served by larger aircraft, or they eliminated service entirely in some markets, at times parking underutilized aircraft.

U.S. carriers were the first to imple-ment reductions. Airlines in other regions soon followed, and most initial reductions worldwide were fully in place by the first quarter. North American carriers made the largest initial reductions, cutting capacity by 9 percent. Operational statistics posted from the first quarter indicate that while capacity was reduced by 9 percent, passenger traffic declined 11.1 percent, resulting in a 2.1-point gap. This gap was significantly less than the 3.8-point gap reported for Europe and the comparatively large 6.5-point gap for Asia/Pacific.

In all cases, the fact that traffic declines outpaced capacity reductions suggests addi-tional cuts are needed and, in most cases, are already underway. For example, as the usually busy summer travel season was ending in the northern hemisphere, U.S. car-riers announced further service reductions. American Airlines now plans to cut capacity

by 7.5 percent this year, compared with the 6.5 percent previously forecasted. Delta Air Lines said it will trim capacity by 10 percent, up from the 6 percent to 8 percent it origi-nally planned. And Southwest Airlines, which had never planned a capacity cut, plans to reduce flying by 6 percent this year.

Other regions around the world are being impacted as well. Japan Airlines, the largest Asian carrier in terms of revenues, is cutting capacity on international routes by 10 percent. Asia/Pacific carriers account for nearly a third of global passenger traffic. And many African carriers, including South African Airways, Air Zimbabwe and Ethiopian Airlines, have reduced or suspended inter-national flights and moved aircraft to more profitable regional services in response to a 12.9 percent drop in passenger traffic.

The Middle East, however, appears to be the only region still not experiencing the downward spiral in passenger traffic. In fact, demand for air travel grew 9.5 percent from June 2008 to May 2009. But because the region continues to add capacity — 14.5 percent over the same period — ahead of demand, Middle East carriers are expected to lose a combined US$900 million this year.

But are capacity cuts alone enough to return an airline to profitability? Probably not, say most industry analysts, but they may help stop the bleeding because roughly 50 percent of a carrier’s costs are related to capacity production, including fuel. And parked aircraft require some level of ongoing maintenance,

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1Q08 2Q08 3Q08 4Q08 1Q094.6% 2.6%-2.2% -8.5%-12.0%13.8% 10.7% 10.7% 2.0%-0.1%4.0% 2.8% 0.8% -2.7%-9.7%2.2% -1.0%-3.2% -7.5%-11.1%

ThefirsttrafficdeclinesoccurredinNorthAmerica.Byearly2009,NorthAmericancarriershadrespondedwitha9percentcapacitydecrease,LatinAmericatrafficwasshrinking,andotherregionswerepostingdeclinesnearorbeyond10percent.

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15%Asia/PacificLatinAmericaEuropeNorthAmerica

Asia/Pacific

LatinAmerica

Europe

NorthAmerica

TrafficGrowthByWorldRegion

SourcesATA,AEAALTA,AAPA

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and preparing them to return to service is expensive.

“Most airlines owe money on their aircraft, either for loans or leases,” explained Jim Corridore, an airline analyst at Standard & Poor’s. “So as long as they can generate enough money from the plane to cover at least some of the payments, they’re often better off flying the plane — even at a loss — rather than parking it.”

TheDemiseOfBusinessClassIn the past, many airlines have relied on

business travelers, who generally purchased higher-priced, last-minute fares, as a steady source of revenue. But with the recession impacting virtually all business sectors world-wide and subsequently individuals, many trav-elers are now forced to choose price over customer loyalty, convenience and preferred amenities — if they even utilize air travel.

Among European flagship carriers, for example, British Airways is leading the way in the elimination of costly amenities that had previously distinguished the airline from low-cost carriers. Cutting meals in economy class on short-haul flights will save the air-line approximately £22 million (US$36 million) annually. At the same time, British Airways’ trans-Atlantic, business-class-only subsidiary, OpenSkies, recently dropped service between Amsterdam and New York and shelved plans to add four more jets serving other European cities by the end of the year. In the United States, some airlines have begun charging

extra for drinks on long-haul flights and others have increased the fees for checked baggage.

Bottom line, some airlines now view ancillary services that don’t generate additional revenue as unnecessary, and passengers and businesses are now refusing to pay the price for a seat in first or business class, particularly on short-haul flights. According to the latest figures released by IATA, the number of pre-mium ticket holders dropped 23.6 percent in May — the 12th straight month of declines.

“On short-haul flights, business class is on the way out and might even disappear within the next few years,” said Panmure Gordon Analyst Gert Zonneveld.

TheRiseOfLow-CostCarriersAs price-sensitive travelers search for

the cheapest fares, the demise of business class on full-service carriers has brought about the rise of low-cost carriers with their minimal operating costs and relatively few amenities. From early on, it became evident that budget airlines around the world were weathering the recession better than their full-service counterparts.

A detailed view of the comparatively data-rich U.S. marketplace during the first quarter reveals low-cost carriers Southwest Airlines, AirTran Airways and JetBlue Airways had some of the smallest traffic declines, rang-ing from 4 percent to 8 percent. In addition, these declines more closely matched capacity reductions. While some full-service carriers

had comparatively large gaps between traffic declines and capacity cuts, possibly signal-ing the need for further capacity reductions, traffic declines for most low-cost carriers approximately equaled capacity cuts.

In other regions, low-cost carriers appear to be faring even better. In the face of mounting losses by European flagship carri-ers, both London-based easyJet and Ryanair, Europe’s largest budget airline, are expected to post pretax profits this year. Asia’s fledgling low-cost carriers are also benefiting from bargain-hunting travelers, lower fuel prices and the opening of the region’s routes to com-petition during the last decade. Singapore-based Tiger Airways, for example, is flying 50 percent more passengers this year than the same time last year.

“These times are very good for low-cost carriers,” said Bruce Buchanan, CEO of Melbourne-based Jetstar Airways at a confer-ence earlier this year. “We’re seeing quite strong demand. Six months ago it was a much tougher environment.”

The only threat to the continued rise of low-cost carriers in Asia/Pacific, agree industry analysts, is if governments return to protec-tionist policies in an attempt to save jobs at full-service flagship carriers, many of which are state owned.

Similar to businesses such as Walmart and McDonald’s in the retail and restau-rant sectors respectively, it appears low-cost airlines have become the beneficiaries of increasingly cost-conscious consumers seek-ing more value for their money.

CancelingOrders,DelayingDeliveries

Recent airline capacity reductions and budget cuts have undoubtedly impacted air-craft orders and deliveries. Boeing and Airbus have been grappling with falling orders as the global economic crisis forces airlines to delay or cancel plans to acquire new aircraft. And tightening credit rules have made it more difficult for potential customers to secure financing to update their fleets.

While most airline/aircraft negotiations are ongoing and confidential, carriers world-wide have hinted at or announced plans to cancel or delay orders. British Airways, for example, has delayed delivery of 12 new superjumbo Airbus A380s and is reviewing the status of 24 Boeing 787 jets it ordered in 2007. In China, government authorities have urged state-run carriers to cancel or delay aircraft deliveries. Ireland-based Aer Lingus has postponed the delivery of five new air-craft until at least 2013 and beyond and has terminated existing leases on two more to significantly reduce its capital expenditure for the next three years and strengthen its balance sheet. Qantas said its strategy to save US$1 bil-lion in the short term so it could take advantage

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NorthAmericancapacityreductionsof9percentapproximatelyequaledtrafficdeclinesof11.1percent.The2.1-pointgapwaslowerthanthe3.8-pointgapforEuropeorthefairlylarge6.5-pointgapforAsia/Pacific.

CapacityAndTrafficChangeByWorldRegion1Q09versus1Q08

LatinAmerica NorthAmerica Europe Asia/Pacific

4%

2%

0%

-2%

-4%

-6%

-8%

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-12%

-14%

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-0.1%

-9.0%

-11.1%

-5.9%

-9.7%

-5.5%

-12.0%

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of long-term potential growth is now possible because it has delayed aircraft deliveries. And the list seemingly goes on and on.

“While the commercial aviation indus-try is facing a significant downturn, it is cyclic and has a long history of declines and upturns,” said Randy Tinseth, vice president of marketing for Boeing’s commercial air-plane division.

Despite current difficulties, Boeing projects the commercial airplane market will stabilize and economic growth will return over time. It expects a market for 29,000 passenger and cargo planes valued at US$3.2 trillion during the next two decades and maintains a record backlog of more than 3,500 orders.

Still, creeping fuel prices, aging fleets and environmental concerns are pressuring some carriers to retire older, less-efficient air-craft sooner rather than later, which may be financially beneficial to them in the long run. Houston, Texas-based Continental Airlines recently took delivery of two new, fuel-effi-cient Boeing 737-900 ER jets with winglets and removed from service four Boeing 737-500s. The U.S. carrier also plans to acquire seven additional Boeing 737s by yearend and remove 29 more 737-300 and 737-500 aircraft by next January.

ReductionInWorkforceMounting financial losses, capacity

cuts, declining passenger travel and failed business ventures have ultimately equated to massive airline job losses — thousands upon thousands of them — in every area ranging from airport and flight services to maintenance and administration. The airlines’ decision to shrink their operations has had a domino effect on aircraft manufacturing jobs as well, which now face an uncertain future as current orders for aircraft dwindle.

In the United States alone, airlines cut nearly 28,000 jobs last year, with the majority coming from full-service carriers. However, many low-cost and regional carriers also laid off employees as they, too, struggled with high fuel prices and the worsening global economic crisis. By the end of 2008, the country’s airlines employed about 391,900, down 6.6 percent from the year before.

Headcount reductions at most airlines worldwide have continued this year. In fact, one of the largest international carriers in the world, American Airlines, is now operating with staff levels similar to those it had in the 1980s. Employees fortunate enough to still hold jobs within the industry face pay cuts or months or years of salary freezes. In addition, a few airlines are asking employees to work for free. British Airways urged thousands of staff members to work unpaid for up to four weeks this summer, following the lead of Chief Executive Officer Willie Walsh.

At many airlines, staff and pay cuts have been met with resistance from unions and government mediators called in to avoid crippling strikes. In some regions with recent-ly liberalized or still-restricted markets, the fear is that government officials will take measures to protect local employment and secure the short-term stability of their flag-ship airlines, impeding the long-term prog-ress of deregulation worldwide.

“We cannot reshape without flexibil-ity,” said Bisignani. “This is not the time for salary increases. To protect jobs, we must modernize work practices, and we must all do more with less.”

Consolidations,MergersAndAlliances

It is the critical issue before the global airline industry at this moment: how many airlines can the current world market sup-port? Most in the industry already know the answer: not as many as there are now. By the end of 2008, a reported 31 airlines had ceased operations during the year.

Who will survive the global recession? The answer is complex and highly dependent on each region’s market structure and level of regulation. In competitive, deregulated markets, only the healthiest carriers should survive. In the current market situation, that appears to be mainly low-cost carriers. However, as some industry analysts point out, are some airlines considered “too big to fail”? What then?

In other more regulated markets, gov-ernments have injected funds into state-owned airlines to keep them alive while allowing smaller players to compete on their own. In his state of the industry address, Bisignani noted that liberalizing key routes would generate US$490 billion in economic activity and 24 million jobs.

“We don’t want bailouts,” he said. “All we ask for is access to global capital. If we cannot pay the bills, saving the flag on the tail will not save jobs.”

Most industry analysts view the current market situation as a unique opportunity for airlines to rethink and reshape the airline busi-ness — to join forces where advantageous to strengthen themselves and the industry as a whole. To do so, carriers must:

Revisit their costs structures, Slash expenditures in the short term, Launch programs designed to return to

long-term profitability. For some carriers, capacity and head-

count reductions and delaying or canceling aircraft orders will not be enough to remain in service. In such cases, struggling airlines face a handful of choices. First, they can seek financial assistance from external sources, such as governments or private investors, knowing bailouts will not be without stipula-tions. Second, they can fold and cease opera-tions. Or they can consolidate and pursue mergers, acquisitions or alliances to improve market position; provide access to new mar-kets; eliminate redundancies; and create

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Erringonthesideoflargercapacitydecreasesappearsbeneficialsofar.Whilelow-costcarriersseemtoberidingoutthestormbetterthannetworkcarriers,it’slikelythatbothmodelswillneedtomakefurtherreductions.It’sevidentthatairlineswiththecouragetomakelargercapacityreductionsseemtohavebeenrewarded.

TrafficChangeVersusCapacityChange—Top11U.S.Carriers—1Q09Versus1Q08

2%

0%

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-6%

-8%

-10%

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CapacityChange

TrafficChange

Capacity dropped more than traffic

Traffic dropped more than capacity

Southwest

AirTran

USAirwaysJetBlue

AlaskaDelta/Northwest

ContinentalFrontier American

United

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operational economies of scale and cost synergies.

Approximately 50 of the world’s larg-est airlines are members of one of the three main global alliances — oneworld, SkyTeam or Star Alliance — and, together, they carry more than 60 percent of the world’s air travelers.

DecliningITInvestmentsFor the first time in several years, airlines

are drastically reducing their IT investments in an attempt to cope with unprecedented financial losses. In the 2009 Airline IT Trends Survey, co-sponsored by SITA and Airline Business, IT spending as a percentage of revenue is fore-casted to be just 1.7 percent this year, the lowest level since 2002. The survey is an independent poll of senior IT personnel working within the top 200 passenger carriers. This year, 116 air-lines responded, including 27 percent classified as airlines carrying more than 20 million passen-gers and 11 percent low-cost carriers.

Undoubtedly, airlines are in survival mode: 72 percent of survey respondents intend to renegotiate IT supplier contracts and 70 percent will invest in solutions that lower overall enter-prise costs. Most airlines have already begun rationalizing IT suppliers, consolidating IT infra-structures, reducing headcount and outsourcing, where possible.

“We are living in the most challenging times any of us have seen in the air transport industry,” said Paul Coby, SITA chairman and

British Airways chief information officer. “We should not be surprised that when survival is the issue for many airlines, that all but the most essential of IT invest-ments has been put on the back burner.

“But it is important to recognize that IT is also part of the solution to our chal-lenges. Used well and effectively, IT will cut costs and protect revenues,” he said. “The survey tells us that IT has already accomplished a great deal in reducing dis-tribution costs and expanding self-service functionality.”

For the first time, all survey respon-dents said they sell tickets online, indi-cating Web sales are among airlines’ most important distribution channel. Web check-in is now at 60 percent and is expected to reach 92 percent in the next three years. During the next three years, carriers will prioritize IT investments in a number of areas, including IP telephony, service-oriented architecture, software as a service, Web 2.0, cloud computing, data security and biometrics.

“Again, no one should be surprised by this,” continued Coby. “It tells me that airlines absolutely understand the impor-tance of technology for the future, and what we are seeing here is an immediate and necessary response to the global recession.

“Now every airline in the world also knows that IT is going to be key to

future success when we come out of the recession with smart use of technol-ogy addressing not just the 1.7 percent of airline costs but addressing 100 percent of the airline cost base and 100 percent of airline revenues.”

According to the survey, airlines plan to add more functionality to their Web sites by the end of 2010, including:

Change/cancel/rebook facilities, Alternative payment options, New products to improve revenue, Booking portal for corporate custom-

ers, Frequent flyer redemption functional-

ity, Booking portal for travel agencies, Online shopping tools.

The use of efficient self-service technologies is becoming increasingly widespread with 74 percent of all airlines planning to increase the number of kiosks for either check-in or new functionality. Both Web and kiosk check-in will reach almost 100 percent by 2012.

AnIndustryAtTheCrossroadsAs a whole, the airline industry has

never been profitable over the entire busi-ness cycle. Instead, short periods of profit-ability, accompanied by rapid expansion, are typically followed by periods of heavy losses that on an accumulated basis place the industry below the breakeven point.

During the past decade, for instance, the industry only experienced three years of positive net profits while overall losses exceeded US$25 billion.

Perhaps the idea of shrinking to prof-itability should not be the primary objec-tive for the majority of airlines today. Rather, the focus should be on trimming the excess from an industry that has grown too fast in some areas and strength-ening areas that have not grown enough. To survive and thrive, the industry needs financially and operationally sustainable airlines. Most carriers will have to respond to the economic downturn with continued cost-cutting initiatives and revenue-gener-ating programs, and those that emerge with healthy balance sheets will have the opportunity to reshape their market seg-ments and firmly establish their positions in this ever-evolving industry. a

Lauren Lovelady can be contacted at [email protected].

Carrierswiththemostcapacityreductionsrealizedimprovedprofitability,asmeasuredbychangeinoperatingmargin.Thosemakingfewerreductionsoftenfacedprofitabilitydeclines,andcarrierswithmedium-sizedreductionspostedmoremixedresults,withtheworstcasebeinganearlyflatchangeinprofitability.

ChangeInProfitabilityVersusChangeInCapacity

Profitability Decreased

Profitability Improved

20

15

10

5

-5

-10SourcesU.S.SEC10-Qfilings

Southwest

AirTran

USAirways

JetBlue

Alaska

ContinentalFrontierUnited

American

Profitability Change -operatingmargin,points

0%-2%-4%-6%-8%-10%-12%-14%

Capacity Change Delta/Nortwest

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it all starts here

Introducing Sabre AirVision, the clearest way to build your brand and profi ts.

They say planning is everything. But fi nding the right plan to build your airline’s brand and increase your profi t isn’t always clear.

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Stay Tuned To That Channel

ZUJI helps Asia/Pacific carriers extend their online booking capabilities well beyond direct flights, enabling them to add a hotel and/or package travel booking capability to their direct sites.

By Kim Stockham | Ascend Contributor

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By Kim Stockham | Ascend Contributor

While the Asia/Pacific region is still grap-pling with the global financial crunch, some travel companies are working

more closely with airlines than ever before to help innovate and stimulate sales with: Cost-effective online distribution and mar-

keting options that have a wider consumer reach than ever before,

New revenue streams for airlines where hotel booking channels come to airline Web sites.

Asia/Pacific is a volatile region for travel even in the best of times, with health and political uncertainties regularly changing the travel landscape. Short-lead flight bookings of only days or weeks are also “the norm” for this region.

Asian-based travelers have always kept a close eye on their purse strings when it comes to travel, but they’re cutting the total cost of a trip like never before in this current economic climate. They’re tak-ing fewer and shorter trips to predominantly short-haul destinations as well as trimming travel spending by choosing economy over business class. And, at times, they are fly-ing with a low-cost carrier alternative to a traditional network airline.

While airline capacity is currently fair-ly stable in the region, load factors are an issue and yields are often poor. The hyped regional growth of air travel in Asia has cur-rently stalled, and the once-full Asian travel “rice bowl” is now a much smaller meal.

It’s not just airlines hurting. Hotels are hurting, too, because as well as looking for cheaper ways to fly, people are also cutting back their spending when they get where they’re going. Gone are the days of a midnight snack from the hotel mini bar and large food and beverage spending at the hotel. This is dramatically reducing revenue per available room, or revPAR, for hotels.

Many airlines have, and remain, focused on revenue-raising and cost-cut-ting initiatives to get through these tough times for travel, and some are strategically thinking outside the box to adapt to the new reality of travel. Some of these actions are extreme and reflect the chaos of the industry today. Others are less headline-grabbing, but in themselves are innovative solutions in challenging times designed to drive flight sales and supplement core revenue streams.

A climbing trend for airlines in the region is the addition of new products that lead to additional revenue streams. Airlines are extending their product portfo-lios beyond direct-flight sales by introduc-ing third-party relationships, technology and certain products on their sites. In a way, it’s an all-care-no-responsibility approach where the third party retains and serves the customer

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and the airline takes a cut of the sales generated from its site.

Innovative online marketing placements and techniques are also tapping into the cre-ativity of the industry and reaching audiences actively buying travel via the Internet.

ZUJI, a TravelocitySM-owned online travel company and brand that has online travel sites spanning the Asia/Pacific region, has evolved

to become a driving force for innovation and positive change.

This evolution of the online channel can ensure a cost-effective distribution option for flights, when considering that online travel agents, or OTA, distribution decreases the airline’s internal servicing costs at the same time as extending consumer reach. Beyond this role, ZUJI extends the bounds of a traditional

airline/agent relationship to become something even more mutually rewarding. ZUJI’s online prowess in Asia/Pacific, and Travelocity lineage, ensures that various online services for airlines are now offered, with even the online distribu-tion channel now being able to serve airlines in more creative ways.

“In the early days of online travel in Asia/Pacific, no one really knew the potential or how the growth of online bookings would pan out,” said Roshan Mendis, president of ZUJI and regional vice president of Travelocity for Asia/Pacific. “ZUJI played an important role in introducing some Asia/Pacific-based airlines with the opportunity of online distribution in the region as well as globally. Over time, we’ve grown and changed, alongside airlines, which have introduced more and more complex direct-booking functionality to their Web sites. Online distribution and marketing offers airlines great flexibility and fast reaction time to tweak the message or the offer, based on consumer book-ing response.”

As more low-cost carriers launched in Asia, with their predominantly online, direct booking models, the tide really turned toward online travel, and it gained the groundswell of support that continues today, just six years after ZUJI’s launch in Asia/Pacific.

Most Asia/Pacific airlines now embrace the multi-distribution model, including direct bookings as well as offline and or OTAs. A fairly recent trend has been the move of LCCs to the OTA mix as they look to extend their reach, maximize their marketing dollars and gain a foothold in new markets.

National carriers now sit alongside Jetstar Airways, Jetstar Asia, IndiGo and SpiceJet in the mix of online travel agent offerings on ZUJI, as the benefits of regional and global marketing and distribution are recognized by all airlines.

The next step in the evolution is for airlines to work closely with OTAs, such as ZUJI, to extend their product base. Known as “private” or “white label” hotel booking sites or engines, they’re the next trend of airline online development. ZUJI can connect its hotel port-folio to airline sites as a business-to-business relationship.

ZUJI can provide advice, technology, logistics and global hotel product to airlines, enabling them to add a hotel and/or package travel booking capability to airline-direct sites. Airlines do not have to significantly invest in technology development or build direct hotel relationships in house because ZUJI provides this as an outsourced service as part of the rela-tionship, and ZUJI also manages the customer service elements of a hotel booking.

Depending on the level of complexity the airline seeks, adding hotel bookings as a service to direct airline customers can be as simple as adding a plug-and-play link to an airline-branded white label site, where the airline then gains revenue from every hotel booking made on

ThemajorityofAsia/Pacificonlinetravelersshoparoundusingnumerousonlinesites,aswellassocialnetworkingsites,priortobookingatrip.Asaresultofthistrend,ZUJIlaunchedRateFinder,designedtohelpcarriersgaintravelerinterests.

PartneringwithZUJIenablesairlinestoincludeahoteland/orpackagetravelbookingcapabilitytotheirdirectWebsiteswithoutasubstantialtechnologyinvestmentortheneedtoestablishdirecthotelrelationships.

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that site. More complex solutions offer custom-ized packaging between the airline’s flights and hotels for each destination.

“Adding hotel bookings to an airline port-folio opens a new ancillary revenue stream for airlines,” Mendis said. “The booking technology can be as customized or as out of the box as suits an airline needs and can offer everything from stand-alone hotel bookings to integrated, dynamic package bookings. These allow travel-ers to choose from the airline’s flight options and add a hotel to create a package holiday online. In this case, only the airline partner flights are shown.

“All hotel-only or package bookings can be made online as a link from the airline’s direct Web site, and the hotel or packaging site can be customized to have the airline’s preferred look and feel as well as site copy. ZUJI manages the technology and back-end and client service, all of which is opaque to the consumer. Generally, ZUJI pays the airline commission on sales or visitor targets, therefore creating a new revenue stream for the airline. It’s an approach that turns the traditional supplier-distributor relationship sideways for the benefit of all: travelers, air-lines, ZUJI and the thousands of global hotels,” Mendis said.

ZUJI’s partner network team works with Virgin Blue (for the delivery of www.BlueHoldays.com packages travel: matching Virgin Blue and its sister airlines with hotels), and Jet Airways (for the delivery of an online hotels solution). There is opportunity for all airlines with an online presence to follow suit.

Beyond working with airlines to extend their product range, ZUJI is also working to drive more airline bookings from its core platforms. The recent introduction of ZUJI’s “TripSaver” technology now offers an opaque way for airlines to market and promote their product to travelers as part of a package. Consumers do not see component pricing for the fare component, but instead design a short break comprising flights and hotel accommodations online and see a total package price. This dynamic-packaging feature was introduced as part of ZUJI’s ongo-ing investment in serving suppliers and travelers great online travel experiences.

Further, ZUJI’s brand new calendar shop-ping feature for flights also gives airlines a new way to highlight their weekday, alternate day and off-peak travel flight options (where fares may be cheaper and more appealing to travelers with flexible travel plans) across a seven-day view on most ZUJI sites.

Savvy marketing is also playing a role in helping capture the limited consumer travel spending.

The distribution side of ZUJI’s business is also changing to meet a new environment for travel and changing travelers. ZUJI offers inte-grated online campaigns on ZUJI sites, which offer a much more compelling proposition for consumers than static ads. This enables airlines

to raise awareness of their brand, destinations and fares as well as stimulate new demand.

ZUJI is also embracing new marketing channels and actively promotes deals and pro-motional placements beyond its members to social media sites, including deal “tweets” and Facebook fare updates to a growing band of followers. The result is a multi-faceted approach to promotions that airlines on ZUJI can utilize to their best advantage.

“Most Asia/Pacific online travelers now visit many online sites before booking a trip,” Mendis said. “They visit social networking sites to find opinions about travel, OTA sites, such as ZUJI, as well as supplier sites. In recognizing this shopping-around consumer behavior occurs, we’ve just introduced another new and innova-tive way for airlines to capture traveler interests to specific third-party travel sites when they leave our site. We call it ‘RateFinder.’”

ZUJI actually encourages visitors to look at other OTAs and even an airline’s direct site while researching a trip. That offers another new and opportunistic way for airlines to capture highly qualified consumer traffic coming from one of ZUJI’s sites. While initially it sounds a little counter-intuitive, it’s actually a clever way to capitalize on a behavior that already exists, to the benefit of savvy advertisers, offering a win-win for ZUJI (realizing people shop around anyway) and airlines (that have the opportunity to capture the traffic coming from a ZUJI site).

Another facet to the ZUJI Partner Network is the additional distribution for airlines that comes with extending the business-to-business distribution of flights to hoteliers.

One recent example of this is Taj Holidays, which is working with ZUJI-owned Travelocity India on a new booking site called Fly-N-Stay. Further, non-core travel sites, such as BigPond.

com, Australia’s largest telecommunications company and network, and Yahoo!, also work with ZUJI to deliver travel channels that extend the audience reach and booking potential for all ZUJI suppliers.

While airlines originally worked with OTAs such as ZUJI to establish relationships that mimicked the historic relationships they’d had with offline travel agents for distribution, today, the interconnectivity is multi-tiered and mutually beneficial. Behind the scenes, ZUJI manages highly complex technology to ensure innovative and lucrative travel connections for the industry as a whole.

“ZUJI can offer suppliers much more than a one-way conversation,” said Mendis. “The opportunities for innovation are many and varied. From new hotel booking channels on an airline Web site to extended airline distribution on our partner sites and even creative market-ing opportunities, the opportunity exists for real and tangible value to the bottom line and better customer relationships ahead.”

Beyond ZUJI opening the door for hotel bookings from airline sites, advanced Web tech-nology from Sabre Airline Solutions® is helping more and more airlines have their own direct reservations functionality (enabling them to reap some of the benefits of in-house bookings alongside agency distribution). Online-direct and OTA distribution now work hand in hand for air-lines. a

Kim Stockham is director of corporate affairs for ZUJI Asia/Pacific. She can be

contacted at [email protected].

Travelocity-ownedZUJIpartnerswithAsia/Pacific-basedairlines,broadeningonlinebookingcapabilitieswellbeyonddirectflights.Theonlinetravelcompanygivestheregion’scarrierstheabilitytoaddhoteland/orpackagetravelbookingcapabilitytotheirWebsites.

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Aeroflot’s

A thorough examination of Aeroflot Russian Airlines through an extensive turnaround exercise has helped the carrier reinvent itself and once again become a top player in the world’s air space.

By Barbara Childs and Luc Lachoix | Ascend Contributors

Revolution

Making AComeback

Five key indicators point to a slow but definite economic recovery for the emerging markets of BRIC and MENA.

By Sam Shukla | Ascend Contributor

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B RIC and MENA countries (Brazil, Russia, India, China and Middle East and North Africa) have noticeably

felt the effects of the global economic slowdown, which accelerated sharply late last year. Each of the BRIC and MENA nations is recovering from the global downturn at its own pace. Each country must overcome a combination of econom-ic factors such as fluctuating oil prices, the swine flu outbreak earlier this year, the recent banking industry collapse, tour-ism decline, business travel decreases and yield dilution.

There are several indicators to gauge the recovery of the BRIC and MENA emerging markets. One of the most valu-able indicators is gross domestic product (the total market value of all goods and services produced within a country in a given year — equal to total consumer, investment and government spending plus the value of exports, minus the value of imports). Other important indictors include planned available seat kilometers, cur-rent and forecasted passenger volumes, commercial aircraft deliveries, and unem-ployment statistics. These five indicators combined can paint a picture of each BRIC and MENA nation and the general speed at which recovery is underway (barring any additional unforeseen world events).

GrossDomesticProductGDP has traditionally been one of

the strongest signs of economic condi-tions. By the first half of 2009, the gross domestic product versus 2008 of the BRIC countries had fallen from a robust range of 5.4 percent to 9.7 percent to 2.5 percent to 8.3 percent. The most drastic declines in GDP occurred in Russia (6 percent to 3 percent) and Brazil (5.4 percent to 2.5 percent). The MENA region GDP declined noticeably as well from a robust 5.3 percent in 2008 to 2.6 percent this year. Experts believe, however, that next year should bring healthy advances in countries such as Russia, India and China.

UnemploymentStatisticsUpdateFollowing global trends, unemploy-

ment rates in the BRIC and MENA coun-tries rose noticeably from calendar year 2008 into early 2009. The latest unem-ployment statistics, however, are showing a slowing down of unemployment fil-ings. In some BRIC and MENA countries, the unemployment figures are declining, signaling job growth and a turnaround from the economic crisis. For example, in Brazil the overall unemployment rate stood at 7.9 percent in May 2008 and grew steadily to 8.9 percent in April. In May, however, unemployment fell to 8.8

percent, resulting in 181,000 additional jobs being created. The same trend is occurring in Russia, where unemployment recently peaked at 10.2 percent in April but has since started a downward trend to 9.9 percent in May. This downward trend in Russia will continue if oil prices remain at reasonable levels.

In India, unemployment was grow-ing at a rate of .3 points per month since March 2008, to a recent peak of 9.5 percent. That unemployment growth rate

has slowed down considerably to just .1 points per month, driven by a resurgence of domestic demand for goods and ser-vices. China is currently an anomaly among the BRIC and MENA nations. In terms of percentages, its unemployment rate has remained relatively consistent from 2008 to 2009 (4 percent to 4.2 per-cent). Economic experts in that region do not foresee large increases in unem-ployment in the months leading to a full economic recovery.

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AvailableSeatKilometers

80,000,000,000

70,000,000,000

60,000,000,000

50,000,000,000

40,000,000,000

30,000,000,000

20,000,000,000

10,000,000,000

0

BrazilRussiaIndia ChinaMiddleEastNorthAfrica

4Q20084Q2009

AS

Ks

International

Instabilityofoilpricesandlackofhigh-yieldbusinesspassengerdemandhascarriersinBRICandMENAtakingacarefulapproachtodomesticandinternationalASKsduringthefourthquarterversusthesameperiodlastyear.Butdespitecurrentmarketchallenges,therearestillsomeconservativeplansforASKincreasesinthesemarkets.

80,000,000,000

70,000,000,000

60,000,000,000

50,000,000,000

40,000,000,000

30,000,000,000

20,000,000,000

10,000,000,000

0


4Q20084Q2009

Domestic

AS

Ks

The collective MENA nations tradi-tionally have some of the highest unem-ployment rates in the world. Recent statistics indicate an increase in unem-ployment from 9.4 percent in 2007 to 11 percent for the first half of 2009. Economists in the region believe that

this unemployment rate will decline to 2007 levels and lower only when tour-ism increases significantly and younger generations of the labor force are able once again to emigrate to Europe, North America and Asia for work.

AvailableSeatKilometersAirlines operating to and within the

BRIC and MENA countries are continuing their cautious approach about domestic and international ASKs planned for the fourth quarter 2009 versus the same period last year. This is partly due to the continuous instability of oil prices and lack of high-yield business passen-ger demand. There are, however, some planned ASK increases for the BRIC and MENA countries despite the market challenges.

Most carriers in Brazi l , includ-ing GOL, TAM, TRIP and Azul, wil l increase ASKs, leading to an 11.3 per-cent gain versus the fourth quarter 2008. Internationally, a wide variety of carriers operating to Brazil from North America, Europe and Asia will drive a 3.3 percent increase in capacity during the fourth quarter versus the same period last year. In the Middle East, international capacity will grow by 12.4 percent during this year’s last quarter; predominantly driven by British Airways, Air India, Emirates, Etihad Airways, Gulf Air, Jet Airways, Qatar and Lufthansa. Domestic capacity in the Middle East will remain flat this year versus last year. The North Africa region is planning to realize an increase of 3.6 percent in international ASKs in the fourth quarter, driven by EgyptAir, Royal Air Maroc and Afriqiyah Airways.

PassengerVolumesBaring any additional, unforeseen

world events, the passenger volume forecast for BRIC and MENA countries looks encouraging. Russia, India and China are collectively forecasted by the International Air Transport Association to achieve more than 8.2 percent increase in passenger traffic for 2010 versus 2009. This translates into an incremental 10.4 million passengers. In Brazil, pas-senger traffic is expected to grow by 4.9 percent next year. The MENA region will realize a growth of 6.5 percent in passenger traffic, adding more than 11 million incremental passengers. The top five countries leading the MENA region in absolute passenger growth for 2010 versus 2009 are UAE (3.6 million), Egypt (1.3 mil l ion), Saudi Arabia (900,000), Qatar (670,000) and Morocco (640,000).

CommercialAircraftDeliveriesCarriers in the BRIC and MENA coun-

tries are continuing to invest billions in new aircraft technology despite the slow recovery. Airbus and Boeing delivered new aircraft to a variety of traditional network and low-cost airlines in the BRIC and MENA countries during the first half of the year.

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PassengervolumesforBRICandMENAnationsshowsgreatgrowthpotential,withRussia,IndiaandChinaexpectedtoachieveamorethan8.2percentincreaseinpassengertrafficnextyearversusthisyear,accordingtoIATA.

Year2010Versus2009PassengerVolumeGrowth

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

AfterasignificantdropingrossdomesticproductthisyearforBRICandMENAcountries,2010holdspromiseforsubstantialGDPincreases,withChinaleadingtheway.

Year2005To2010GrossDomesticProduct

12.0%

11.0%

10.0%

9.0%

8.0%

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

BrazilRussia India ChinaMENA

Year2005Year2006Year2007 Year2008Year2009Year2010

Per

cen

tin

crea

ses


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A total of 118 Airbus and Boeing jetlin-ers were delivered without further delay, deferment or cancellation. In China, a total of 62 new jetliners were inducted by venerable carriers such as China Southern, China Eastern, Cathay Pacific Airways, Hainan Airlines and Shenzhen Airlines. A

variety of Middle Eastern carriers such as Emirates, Qatar, MEA, flydubai, Bahrain Air, Jazeera Airways and Air Arabia collectively accepted delivery of 25 new aircraft.

Meanwhile in India, Indian Airlines, IndiGo, SpiceJet and Air India accepted

delivery of a total of 13 new aircraft to operate new and incremental services. A handful of new aircraft were delivered by Airbus and Boeing to Brazil, Russia and North Africa.

This year’s fourth quarter can be characterized by financial institutions, economists, investment bankers and air-line executives as the beginning of a long recovery from a deep, worldwide eco-nomic recession. While all five of the major emerging markets indicators are not pointing toward a full recovery just yet, there is reason for some strong optimism. For example, GDP for all BRIC and MENA nations is expected to grow noticeably next year. Passenger volumes for 2010 are forecasted to increase for BRIC and MENA carriers between 5 percent and 8.5 per-cent. To date, no further aircraft delivery cancellations have been announced by Airbus and Boeing for the rest of the year. And finally, portions of the BRIC and MENA collection of nations such as Brazil, Middle East and North Africa will see an increase in available seat kilometers dur-ing the fourth quarter over last year. a

Sam Shukla is a solution partner for Sabre Airline Solutions®. He can be


Duringthefirsthalfoftheyear,118AirbusandBoeingaircraftweredeliveredtocarriersinBRICandMENAcountries.Chinatooktheleadwith62newjetlinerdeliveriesfollowedbyMiddleEasterncarrierswith25deliveries.

NewAirbusAndBoeingDeliveries—JanuaryToJune2009

70

60

50

40

30

20

10

0


Nearly 150 million The number of seats Ryanair, easy-

Jet and Air Berlin accounted for in

2008, or 17.7 percent of total capacity

within Europe, according to the 2009

edition of RDC Aviation’s Low Cost

Monitor. Seven of the top 10 intra-

Europe carriers are network airlines,

but their combined capacity fell 4

percent last year.

2026 The year in which the “Aviation: The

Real World Wide Web” study by Oxford

Economics predicted the world would

carry 6 billion air passengers annually,

up from just under 2.5 billion in 2007,

according to Travel Daily Asia News.

55+ billion The amount of net losses in U.S.

dollars, according to the Air Transport

Association of America, U.S. passenger

and cargo carriers cumulatively lost

from 2001 through 2008. During the

period, U.S. passenger airlines shed

more than 150,000 jobs.

+count it up

FlyingGreenShootsAirlines and aircraft manufacturers take myriad steps to control greenhouse gas emissions and reduce their carbon footprint.

By Peter Berdy | Ascend Contributor

Carbon dioxide has crept into the airline vocabulary faster than the fizz coming out of a favorite carbonated drink. If

passengers are not yet aware of CO2, they soon will be. British Airways Chief Executive Officer Willie Walsh said airline passengers should pay a global tax on carbon and accept an increase in the cost of flying for the sake of the environment. British Airways is the first airline to propose such a tax and indicated the money raised should be used to combat tropi-cal deforestation and help developing compa-nies adapt to climate change. The proposed tax is no small change: US$5 billion a year.

Walsh said airlines should be forced to buy permits from 2013 to cover their car-bon emissions in a global emissions trading scheme.

“For the industry to play its part, the people who benefit from that industry — the passengers — are going to have to pay,” Walsh said. “Airlines can’t escape the respon-sibility of addressing the impact that aviation has on the environment. We accept that our industry has got to improve.

“It could be four or five times the US$5 billion if the price of carbon goes up,” he said. “The critical thing is to cap overall CO

2 and then provide financial incentives to industries that have other fuel sources and technologies to reduce their CO2 output.”

British Airways’ stance suggests that airlines should offset their emissions by help-ing pay for investments in non-aviation indus-tries that use lower carbon technology. In other words, the carbon credits these indus-tries create would be purchased by airlines to offset carbon pollution generated by flying.

Since we are in the “pre-CO2 tax”

era for air travel, it is worth examining what airlines and manufacturers are doing on their own to reduce greenhouse gas, including the steps and investments they are taking for more efficient use of fuel and to be friendlier to the environment. There is a wide range of activities, and by no means is this roundup complete.

FocusOnFuelConsumption“Fuel consumption has always been

one of the main criteria for airliners,” said Christian Dumas, deputy head of Airbus in charge of environmental issues. “Depending on the price of crude, fuel can be up to 40 percent of an airline’s operating cost. Efforts to reduce fuel consumption make sense to control costs as well as reduce emissions.”

As part of many efforts to reduce fuel consumption, manufacturers Airbus and Boeing are building planes that weigh less by using composite materials such as hi-tech plastics and carbon fiber. The new Airbus A350 and the Boeing 787 are built with a composite material content as high as 50 percent.

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Photo courtesy of Airbus Photo courtesy of Airbus

Photo courtesy of Boeing

Reducing airplane weight, no matter how small, can help significantly reduce fuel consumption.

“The airlines are really making effort to take weight off the aircraft,” said Paul Steele, head of the Air Transport Action Group, an association for environmental standards.

In addition, there is a concerted drive toward total efficiency that includes better management of air space. Airlines are trying to manage routes to cut flight time and save fuel, and new technology and solutions should soon be deployed by the U.S. Federal Aviation Administration and EUROCONTROL to manage airspace. Boeing has carried out tests in San Francisco, California, for making approach and landing in a straight line rather than in steps as is the current practice.

“This would allow a savings of 40 percent of fuel during landing,” said Billy Glover, head of environmental strategy at Boeing.

There have been attempts to reduce the length of time the engines are operating includ-ing tests by Airbus that would mean engines are only switched on when the plane is actually on the runway.

New-generation airplanes, including the Airbus A350, Boeing 787 and Bombardier C-series, will reduce fuel consumption by up to 20 percent compared to those they will replace. According to Raphael Sheffield from Airbus, this new generation of aircraft pushes current understanding of technology about as far as it can go in terms of squeezing more efficiency in fuel consumption.

In addition to developing new, more-efficient aircraft models, manufacturers have developed modifications for use with current airplanes, such as winglets, to reduce fuel burn by improving the way engines consume fuel. Manufacturers, in partnership with engine com-panies and others, are helping their customers test new biofuels and are also working with suppliers and with each other on sustainable initiatives.

ReducingGreenhouseGasEmissionsAirbus and Boeing publish environmental

and corporate responsibility reports where they set forth their track record and commitments related to sustainability and corporate responsi-bility as well as describe what they are doing to reduce their environmental footprint and bring new technologies to the industry. Many airlines are doing the same.

AirbusAirbus is engaged in air-traffic manage-

ment, developing efficient new airplanes, test-ing alternative fuels, making improvements to in-service aircraft and developing new pro-cesses to decrease fuel consumption and CO2 emissions.

Airbus’ track record includes fly-by-wire technology, development of composite struc-

tures, and the use of advanced materials and aerodynamics, all of which have reduced air-craft weight and fuel burn and increased fuel efficiency.

Airbus aircraft painting processes are becoming more environmentally friendly with new techniques and operational changes that improve eco-efficiency. Changes in painting results in a dramatic reduction in paint volume. Airbus also is studying ways to capture and dispose of the paints’ damaging volatile organ-ic compounds, or VOCs, before they present a risk to the environment. The majority of Airbus customers now choose low-VOC paint.

The use of solvents to clean equipment has been reduced by 90 percent, and the quantity of harmful chromate dust generated by the polishing of primer paint will be greatly reduced by new practices as part of the Airbus chromate-free program.

Alternative fuel research is a core tenet of Airbus’ initiatives to reduce the environmen-tal impact of air transport. This offers potential benefits such as lower fuel burn and increased engine reliability and durability as well as improved payload-range performance. Airbus has partnered with Honeywell Aerospace, UOP, the Institute for Aviation and the Environment, and JetBlue Airways to develop renewable energy technology. Biofuels of interest to Airbus include synthetic fuel from biomass (BTL), fast-growing algae and jatropha. The company also sees potential in alternative forms of existing aviation fuel. In addition, Airbus, Shell and Rolls-Royce conducted an Airbus A380 flight test in 2008 that utilized gas-to-liquid kerosene, which is cleaner than the oil-derived jet fuel.

Airbus is a partner to Single European Sky ATM Research, or SESAR, a program to help modernize Europe’s air-traffic manage-ment, preventing congestion and reducing aviation’s overall environmental impact.

Manufacturers are looking at a total life-cycle approach to airplanes. Airbus is lead-ing a project called Process for Advanced Management of End-of-Life Aircraft, or PAMELA, for dismantling and recycling retired aircraft. Airbus estimates more than 5,200 aircraft will be retired during the next 20 years. Not only is it being applied to the end-of-life treatment of Airbus aircraft but also taking dismantling and recycling into account in the design of new products.

BoeingBoeing’s stated priority is to reduce

emissions of CO2 from operations and their products. The plane maker is focused on three “pathways”: Improving the fuel efficiency of new air-craft models. Boeing’s newest aircraft, such as the 787 Dreamliner and 747-8, are about 20 percent more fuel efficient than their predecessors. Boeing has also made improvements to existing airplanes (blended winglets and retrofit performance packages) and developed solutions to increase fuel effi-ciency and reduce noise during the complete life of the airplane.

Improving the efficiency of air traffic sys-tems. Boeing, together with airports, air-traffic management systems and airline operations teams, has been working on new methods of air traffic management that are delivering substantial emissions savings, including predictable continuous descent, which improves fuel consumption com-pared with the current step-down descent. Boeing’s program, called Tailored Descent, has been in use by four airlines at San Francisco International Airport since 2007.

Improving the life-cycle CO2 emissions of fuels. Boeing; engine manufacturers; and Virgin Atlantic, Air New Zealand, Continental and Japan Airlines have conducted innova-

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VirginAtlantic,AirNewZealand,JapanAirlines(left)andContinentalalongwithBoeingandenginemanufacturersGEAviation,Rolls-RoyceandPratt&Whitneyhaveperformedground-breakingdemonstrationtestflightsonsustainable,plant-basedfuels,whichhaveprovedtheeconomicandenvironmentalviabilityofbiofuels.

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Photo courtesy of Boeing

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tive demonstration test flights on sustain-able, plant-based fuels. These flights proved the economic and environmental viability of biofuels such as jatropha, algae and came-lina. In 2008, Boeing, Virgin Atlantic and GE Aviation proved the technical feasibility of using biofuels during the first biofuel flight, followed by a sustainable biofuels test flight with Air New Zealand and Rolls-Royce. In 2009, Boeing conducted another series of evolutionary test flights with Continental Airlines and GE Aviation as well as Japan Airlines and Pratt & Whitney. These flights demonstrated that sustainable biofuels have the potential to be applied to existing air-planes to reduce CO

2 emissions.In 2008, Boeing and industry stakehold-

ers signed the “Aviation Industry Commitment to Action on Climate Change,” the commer-cial aviation industry’s commitment to pursue carbon-neutral growth and eventually eliminate carbon emissions from products in the long term.

ContinentalAirlinesContinental Airlines has created a cor-

porate initiative called Eco-Skies to minimize its carbon footprint and maintain awareness among its employees, suppliers and customers. The airline states that it is 35 percent more fuel efficient per revenue passenger mile versus a decade ago. It has replaced most of the aircraft in its fleet with more energy-efficient planes and operates only twin jet aircraft.

Continental has saved fuel and reduced emissions by nearly 5 percent by installing wing-lets on most of its Boeing 737s and 757s. The airline focuses on minimizing fuel burn with a new flight planning system. It also has reduced emissions from ground equipment at its hub in

Houston, Texas, by more than 75 percent since 2000. Continental has 13 full-time staff environ-mentalists working with engine manufacturers, designing green terminals, and tracking carbon emissions and chemical recycling daily. Even all the trash from company headquarters is later sorted for recyclables. FORTUNE magazine named Continental one of the top 10 global companies across all industries in the commu-nity/environment category in 2007.

NatureAirCosta Rica-based Nature Air is the first

airline to offset 100 percent of its carbon emissions from flight operations. The airline just embarked on its fifth consecutive year of compensating for its flight emissions, which

go toward preservation and reforestation of tropical forests in Costa Rica. Nature Air flies 74 daily turboprop flights to 17 destinations in Costa Rica. According to the airline, its fleet of DeHavilland Twin Otter Vistaliners and Beechcraft King Air E90s provide “the least intrusive and most enjoyable way to travel through environmentally sensitive areas.”

Nature Air is the first airline to run its entire ground operations equipment and fleet of diesel vehicles on biodiesel. The biodiesel formula utilizes recycled vegetable and cook-ing oils. River pollution is a growing problem in Costa Rica and is mostly due to sewage runoff from homes, hotels and businesses that don’t have proper sewage treatment facilities. To help prevent local restaurants and Nature Air employees from flushing cooking oils down sink drains, the carrier pays program participants to collect all recycled or unused cooking oils.

The World Tourism & Trade Council, Rainforest Alliance, Conde Nast Traveler and Virgin Holidays have recognized Nature Air for its sustainability efforts.

CopaAirlinesPanama-based Copa Airlines applies

good environmental practices with its fleet of Boeing 737-700 and 737-800 aircraft outfitted with winglets that reduce noise and green-house gas emissions by up to 5 percent.

The carrier also incorporates smart oper-ating practices to reduce fuel consumption, including: RNAV satellite navigation (enabling Copa to choose the most direct route to various destinations),

Optimizing altitude and speed at different stages of operation,

Optimizing takeoffs and landings, Single-engine taxi,

CopaAirlinesreducesnoiseandgreenhousegasemissionsbyupto5percentbyemployingsoundecologicalpracticesoperatingafleetofaircraftequippedwithwinglets.Thecarrieralsousesseveralmethodstominimizefuelburn.

Photo courtesy of Embraer

NatureAir,thefirstairlinetooffset100percentofitscarbonemissionsfromflightoperations,supportspreservationandreforestationofCostaRica’stropicalforestsasaresultofitsreducesemissions.Thecarrierisalsothefirsttorunitsentiregroundoperationsequipmentandfleetofdieselvehiclesonbiodiesel.


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Using ground power units instead of auxiliary power units at airports with GPU,

Regular engine cleaning and polishing wing surfaces,

Reducing weight onboard.Copa has voluntarily submitted a formal

environmental audit plan to the Panamanian regulatory agency. The annual environmental audits ensure the airline follows through on its commitments. The audits are conducted by an external consulting agency certified by Panama’s national environmental authority, ANAM.

The carrier collaborates with ANAM in programs that minimize the environmental impact of its operations and improve envi-ronmental performance. Its environmental management programs focus on sustainability and support innovation, clean production and a green corporate culture to reduce or offset greenhouse gasses and minimize the environ-mental impact of the company.

In addition to enhancing general knowl-edge of environmental problems, especially those related to the impact of aviation on the environment, Copa launched an environmen-tal awareness campaign. It is designed to demonstrate good environmental practices such as reducing and offsetting emissions, using resources wisely, and properly manag-ing residual waste, with an objective to inspire support and participation in the company’s environmental programs and successfully inte-grate environmental responsibility across all sectors.

For example, Copa has a company-wide recycling program. It includes paper, cardboard, cans, glass and oil. It indicates it has reduced the volume of paper it uses by e-ticketing and distributing operating manuals electronically. Copa uses biodegradable products to clean aircraft and offices. The airline has converted ground equipment to run on liquefied natural gas, reducing emissions by 21 percent.

JapanAirlinesThe JAL Group has been conducting a

variety of measures that are helping reduce its environmental footprint. It is targeting a 20 percent cut in CO2 emissions per available ton kilometer of its fleet by next year, compared to 1990 levels. It has already achieved nearly a 16 percent reduction since 1990.

JAL’s environment-friendly activities cover a wide range, including: Recycling aluminum cans, newspapers and magazines;

Converting old crew uniforms into noise-reduction and heat-shield materials used in automobiles;

Fitting specially developed air-sampling equipment on its aircraft to help understand the causes and effects of global warming;

Recycling plastic sheeting used to protect air freight to make wheel chocks and gar-den supplies;

Recycling precious metals, including titanium and nickel from aircraft-engine maintenance plants, to make watch parts;

Retreading jumbo-jet tires so they can be used again.

JAL operations are focused on initiatives aimed at achieving reductions in CO2 emissions to lower fuel consumption. Efforts include using new low-emission airplanes, applying direct descent approaches, reducing emissions on the tarmac and reducing weight of its planes, such as unpainted cargo aircraft.

In addition to using newer airplanes that reduce noise, JAL uses a slightly sharper ascent to reduce noise at ground level and delays deploying landing gear and flaps as long as possible.

JAL has reduced pollutants from materi-als used for washing, painting and maintaining aircraft. In 1990, the carrier established an automatic aircraft-washing facility at Tokyo’s Narita International Airport, resulting in reduced use of detergent and water for washing aircraft. Old paint must be removed before the new paint is applied to airplanes, requiring the use of a large amount of paint remover. JAL collects all the paint-remover waste on plastic sheets and chemically processes it to be safely discarded.

JAL also participated in a demonstration flight using second-generation biofuel on a Boeing 747-300 airplane.

AirNewZealandGeneral Manager of Operations and Chief

Pilot Dave Morgan said Air New Zealand aims to become the world’s most environmentally sus-tainable airline and was proud to have played a role in a biofuel test.

The airline conducted a two-hour test flight using a Boeing 747-400 with a 50/50 blend of jatropha-based fuel and standard jet fuel last December. By extrapolating results from this test, Air New Zealand said that using this fuel in a 12-hour flight using a Boeing 747 could reduce fuel burn by 1.2 percent and CO

2 emissions by 60 percent to 75 percent on average.

“We remain committed to our ambition of having 10 percent of our fuel needs by 2013 met by alternative fuels but appreciate that there are many more steps to be taken by experts in other areas to deliver biofuel as a commercial aviation fuel source,” Morgan said.

LufthansaLufthansa plans to have 10 percent of its

fuel derived from alternative sources within 12 years. Like many other airlines testing biofuels, Lufthansa aims to power its aircraft with energy derived from a sustainable source of plants or algae in combination with conventional airplane fuel.

The carrier recently equipped an Airbus A340 with a 1.5-ton mobile laboratory to track gases and compounds. It forecasts that it will have cut CO

2 emissions by 25 percent by 2020

compared to 2006, and it will have cut nitrogen oxide levels by 80 percent from its 2000 mark.

VirginAtlanticVirgin Atlantic completed the world’s

first flight using a biofuel-powered commercial aircraft. It flew its Boeing 747-400 aircraft using 20 percent biofuel (a mixture of coconut and babassu oil) and 80 percent conventional jet fuel.

Clearly dedicated to finding cleaner and more sustainable fuels, Virgin Chairman Richard Branson has committed to use all profits from travel firms such as Virgin Atlantic and Virgin Trains over a 10-year period to fund research and development of alternative, renewable fuels, amounting to a US$3 billion pledge to combat global warming.

Virgin has taken a series of initiatives to make its businesses as sustainable as pos-sible, including washing planes and engines to improve performance, efforts to reduce noise levels, engaging in recycling programs, reducing electricity consumption, reducing paper use, offering offsetting programs, and serving fair trade tea and coffee onboard. The move to fair trade products is in line with Virgin Atlantic’s business sustainability strategy including provid-ing more ethical, environmental and sustainable products.

WhatRemainsThere’s a lot more airlines can do to

reduce fuel consumption and greenhouse gases. Many airlines are still operating at less-than-optimal efficiency in terms of resources they deploy and how they operate, and many have not taken steps from top down to make the environment a priority. There are old and new ways to gain benefits in lower fuel costs, such as replacing inefficient planes, simplify-ing business processes and taking steps to recycle.

Airlines need to follow fuel-smart proce-dures and make this a daily priority. Basic steps include weight reduction and reducing the num-ber of items onboard, reducing exterior paint, washing engines to improve performance, fly-ing more efficiently such as using continuous descent, limiting use of APUs and reverse thrusters, turning off an engine while taxiing, actively recycling and minimizing waste, and reducing reliance on conventional fuels, among others. a

Peter Berdy is a consultant for Sabre Airline Solutions®. He can be contacted

at [email protected].

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Biofuels are extremely attractive to the airline industry because they are “drop-in” fuels requiring no modification to existing air-craft and can be used as direct substitutes to fossil fuels. The issue is large-scale availability and cost of these biofuels.

Biofuels are produced from renewable resources such as different plants with cer-tain attributes such as sugar or oil content. A major environmental benefit is that as plants grow, they absorb carbon dioxide from the atmosphere. After processing the plant biomass into fuel, they release CO

2 back into the atmosphere when the fuel is burned, completing their lifecycle.

First-generation biofuels are derived from crops rich in sugars or starch, such as sugar cane and corn. They can be processed and fermented to make ethanol, which has been used for transport, heating, powering stationary engines and cooking. These first-generation biofuels do not have the energy performance needed for use in jet aircraft. Ethanol has only about half the energy per volume of jet fuel. Biodiesel has about 80 per-cent the energy of kerosene but can solidify at low temperatures of a high-altitude flight. In addition, the quantity of biodiesel that could be produced from oilseed crops is limited.

The solution may come from a combina-tion of hydroprocessing, a technology already used by petroleum refineries and microscop-ic algae. The National Renewable Energy Laboratory, or NREL, has extensive experi-ence cultivating and manipulating microalgae to produce lipids or oils. By using various technologies used by refineries to remove impurities or reduce molecular weight, the algal oils could be made into a kerosene-like fuel very similar to petroleum-derived com-mercial jet fuel.

The recipe sounds like a daydream for using underutilized resources: grow algae in salty water unfit for other use, expose them to the sun in areas unsuitable for growing crops, feed them power plant or other exhaust gases that threaten the world’s climate, and deny them certain vital nutrients. In addition, there is considerable refining capacity strategically located around the world that could be used for hydroprocessing microalgal oil to jet fuel, with both offshore and onshore locations highly suitable for microalgae growth nearby.

Many microalgae naturally store energy as oil when the lack of nutrients makes them unable to use the energy for normal

growth. They also use the lipids to regulate their buoyancy. By manipulating nutrients and other growth conditions and by selecting and genetically engineering strains to increase this oil production, NREL researchers were able to attain quite high lipid production levels.

As it happens, many microalgae grow best in saline water, and like any plants, they require sunlight and carbon dioxide. Unlike terrestrial plants, they do not require precipi-tation or good soil. Warm climate desert and seashore areas that are unsuitable for tradi-tional agriculture are suitable for microlagae growth.

The ability of microalgal cultures to utilize high volumes of carbon dioxide is so great that development of the technology was also motivated by the idea that greenhouse gas emissions could be reduced by passing flue gas from power plants, ethanol plants, oil and gas drilling operations, or other industrial sources through the algal cultures.

Second-generation biofuels are termed “sustainable” since they come from new sources that do not compete for resources

with food supplies or land resources and can be used in aviation. Bio-derived oil from plants such as algae, jatropha, halophytes and cam-elina can be converted by chemical processes to make high-quality jet fuel.

Plant-based fuels offer significant envi-ronmental benefits when considering the full lifecycle from plant growth to the time they are processed and then burned as fuel. Plant-based fuel sources absorb carbon diox-ide while they are growing. In looking at the complete lifecycle of plant-based fuels, scientists count the reduction of CO

2 that takes place during plant growth, processing the biomass into fuel and then burning it in an airplane engine. The net effect of counting the complete lifecycle is that biofuels can reduce CO2 emitted by aircraft by 50 percent to 80 percent plus reduce dependence on fossil fuels.

The diversity of viable sources of bio-fuels increases the potential for making them available to more regions of the world and accelerating market viability. Sustainable bio-fuels could be an attractive alternative as their

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Biofuels: The Natural Alternative

AccordingtoExxonMobil,whichplansforaUS$600millioninvestmenttoproduceliquidtransportationfuelfromalgae,algaecouldproducemorethan2,000gallonsoffuelperacreofproductionperyear,comparedto650gallonsforpalmtreesand450gallonsforsugarcane,whilecornonlyyields250gallonsandsoy50gallons.

Near-AndLong-TermViableBiofuels

2,000

1,500

1,000

500

0SoybeanSalicomiaCamelinaJatrophaEuphorbiaAlgae

Oil

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ld(

ga

llo

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ea

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Advanced generation1st generation

(Halophyte) (Halophyte)

(Source: Boeing 2009 Environment Report)

By Peter Berdy | Ascend Contributor

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production is not limited to locations where fossil fuels are located, enabling a more diverse geographic supply.

Biofuels offer advantages over standard oil-derived jet fuel in terms of supply, price and eco-efficiency. Biofuel sources should be able to grow in many places around the world, especially where the aviation industry may have demand. Biofuels have the poten-tial to deliver large quantities of greener fuel for aviation at more stable prices.

Sustainable biofuels flight test pro-grams will be useful for the effort to certify these fuels through the ASTM International standards board (formerly the American Society for Materials and Testing). Current jet fuel specifications state jet fuel must be derived from petroleum-based sources. Efforts are underway to accelerate develop-ment, certification and commercial use of sustainable fuels.

The Sustainable Aviation Fuel Users Group, formed in 2008, includes airlines, industry leaders, environmental organizations and fuel technology leaders. There are more than 16 aviation and engineering firms in this coalition, including Airbus, Boeing, Honeywell UOP, Air France/KLM, Virgin Atlantic, British

Airways, Cathay Pacific Airways, TUIfly and Virgin Blue. Their purpose is to accelerate development and commercialization of sus-tainable new aviation fuels.

Its members pledged to work with the Roundtable for Sustainable Biofuels, a global body of non-governmental organizations, green groups and biofuel developers that is working on new standards designed to help ensure that crops used to make biofuels are produced in an environmentally sustainable manner and do not contribute to increased carbon emissions through related deforesta-tion and changing land use.

This activity will help enable the com-mercial use of renewable fuel sources that can reduce greenhouse gas emissions while lessening commercial aviation’s exposure to oil-price volatility and dependence on fossil fuels. And it makes aviation the first global transportation sector to voluntarily promote acceptance of sustainability practices into its fuel supply chain.

The Sustainable Aviation Fuel Users Group said it was currently working on research into using algae and jatropha cur-cas-based biofuels, believed to have a sig-nificantly lower environmental and carbon

impact than fuels made from corn or other food crops. It added that it was also about to launch a new project to assess the viability of halophytes, a class of plants that thrive in saltwater habitats, which it is hoped can be produced in large quantities without requiring agricultural land.

Looking at long-term potential, 25 per-cent of all jet fuel could be alternative fuel by 2025. Biofuels could be 30 percent of that amount by 2030.

At the Eco-Aviation conference, Commercial Aviation Alternative Fuels Initiative Executive Director Richard Altman said much of the hype about biofuels is well-founded but warned that serious challenges lie ahead.

“The expectations may be too high for certain feedstocks, but in terms of moving to biofuel to power commercial flights, there’s not too much hype,” Altman said.

Algae, for example, has been called the “Holy Grail” of alternative fuel offerings by Boeing and others, but he cautioned that while it “looks good on paper ... we really don’t know much about it. We don’t know what the manufacturing process [for turning it into fuel] is.” a

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250+ million The number of registered Facebook

users, according to the Centre for

Asia Pacific Aviation. More and more

airlines are embracing Facebook, the

most used social network by world-

wide monthly active users.

120+ The percentage by which U.S.

airlines have improved their fuel

efficiency during the past three

decades, according to the Air

Transport Association of America.

11 billion The amount in U.S. dollars the industry’s

operating revenues rose by last year,

while operating costs surged US$24

billion, resulting in an industry-wide

operating loss, according to the Air

Transport Association of America.

10 fold The increase in market share no-frills

airlines have realized, from 3 percent in

1996 to 30 percent in 2007, according to

the Civil Aviation Authority.

28,000 The number of flights U.S. airlines

operate on a daily basis, according

to the Air Transport Association of

America. The carriers serve 80

countries using more than 6,000 aircraft

to carry an average of 2 million pas-

sengers and 50,000 tons of cargo.

34 The percentage of all intra-European

capacity represented by low-cost carriers

last year, according to the 2009 edition

of RDC Aviation’s Low Cost Monitor.

Growth across all sectors slowed sharply

toward the end of 2008, with aggregate

annual capacity growing just 2.2 percent,

the smallest increase this decade.

+count it up

E-Commerce:The More The Merrier

Airlines can benefit from advanced revenue management technology designed to maximize group sales opportunities and minimize spoilage.

By Santosh Sah | Ascend Contributor

G roup traffic, generally comprising nine or more passengers traveling together, represents a vital seg-

ment of the total traffic in an airline’s net-work. However, group business is gener-ally perceived as a high-cost business, and many carriers don’t possess a well-defined business strategy to maximize group rev-enues without diluting individual passenger revenues.

While revenue management has evolved significantly during the last two decades for managing individual passen-gers, it’s another story for group traffic, which has lagged behind and is often identified as low yielding and too com-plex, causing it to be often neglected by airlines. But, when properly broken down and analyzed — peeling away the layers and identifying group products, the orga-nizational structure, technology and trends — it doesn’t have to remain low yielding and complex.

GroupProductsGroups are broadly categorized as

either “ad hoc” or “series” groups. The ad hoc group signifies a one-time travel request for one-way, roundtrip or multi-destination travel itinerary whereas the series groups are of a repetitive nature, and the group travel spans a set of departure dates. In the case of series groups, each departure date may be associated with its unique travel itinerary, group size and fare. Series group bookings are seasonal and often called allotments, such as summer, winter or special-event allotments, which are typically received and processed early in the flight horizon.

GroupOrganizationThe organizational framework for

group management at airlines is either centralized or decentralized. The central-ized framework enables consistent group pricing and administration of group con-tract compliance but is inherent with long turnaround times. The decentralized frame-work enables a quick turnaround time but is fraught with problems of inconsistent group pricing and contract enforcement.

The ideal organizational framework to effectively manage group demand is a combination of decentralized selling of groups with a centralized desk for process-ing inventory and pricing exceptions.

GroupDecisionSupportMany airlines lack a group decision-

support system to compute recommended group fares. In such situations, the group decision is purely based on inventory avail-ability, which leads to confirmation of too many low-yielding groups across the

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network. Similar to individual passengers, group demand can be segmented into three broad categories:

High yielding, Medium yielding, Low yielding.

An advanced group pricing decision-sup-port system creates a good mix of the three types of group demand to maximize overall revenue.

Group customers, especially the low-yielding segment, are generally considered to be more price sensitive than schedule sensitive and may be willing to accept an off-peak flight for a less-expensive price. Customer choice models can be used to correctly assess the price versus schedule tradeoffs. These are a special class of statistical regression models that are used to predict the likelihood of customers purchasing a given option when faced with several differ-ent alternatives (including “do not purchase” or “purchase flights on a competing carrier”).

In group decision support, choice models can be used to predict the selling probability of a specific flight and fare alternative based on the relative schedule and price attractiveness. So in addition to price, flights with more desirable departure times, shorter elapsed times and fewer connections are more likely to be chosen by group customers — mathematically, it is said that “probability of selection (flight) = f (flight attractiveness, group fare offered).”

While group sales agents easily recognize the schedule and fare tradeoffs, most automated group decision-support systems use a much simpler approach and simply recommend flights

with the greatest availability of discount seats (as well as maximum profit margin). Although widely used, this “greedy” approach ignores flight schedule attractiveness, and undesirable flights make it difficult to complete the group sale. Since lost group sales are also lost profits, a correctly designed self-service group capability should not be limited to flight profit margins only. It should also consider the flight’s likelihood of selection by prospective group customers.

A branch of decision theory known as expected value analysis is applicable to this prob-lem. The expected group profitability by flight can be found using the following function:

“expected profit (flight) = probability of selection (flight) * profit (flight).”

The group price quote should consider future individual passenger demand, real-time flight availability and agency/customer histori-cal performance. Collectively, these factors are used to determine the group displacement cost (essentially the breakeven price of expected future individual customers). However, based on the expected value analysis, the group price decision should also consider flight schedule attractiveness and potential competing offerings in the market place.

Using the estimated group displacement cost in conjunction with customer choice mod-els, the optimal group price can be determined. The group displacement cost is the basis for accepting or rejecting requests for the various categories of groups. It is computed based on the marginal value of an incremental seat in an idealized nesting structure that considers the marginal tradeoffs across all units as a function

of the forecast demand and current bookings by booking class. In the case of origin-and-destination inventory management, the mini-mum acceptable value (displacement cost per passenger) for the group considers the network effects to ensure a network-optimal solution. The rejection region represents combinations of group fares and group sizes that are not profit-able to accept.

Group pricing should account for the pub-lished fare along with any applicable negotiated fares. Generally, the process of identifying the actual group selling fare based on the computed displacement cost is a manual process at most airlines, resulting in a significant increase in the group desk organization to cater to increasing group segment demand across the network. The unsustainable labor increase in group handling costs with the rise in group volume may force airlines to reassess their business policy of carry-ing groups across the network (in the absence of automated support tools).

Overbooking is another important consid-eration. Group materialization rates impact the spoilage of inventory on high group markets. It has been observed that the agency/customer books groups early, and typically 70 percent of group bookings are cancelled before departure. In many cases, the agency/customer hands back a large quantity of seats to the airline very close to departure, leading to either spoilage or dilution of the inventory.

Naturally, it’s critical to ensure that inven-tory spoilage is minimized — a small percentage drop in spoilage has a large revenue impact — by effective tracking of the group materialization from the time of booking until departure. Passenger name record-based regression models provide one of the most robust and accurate means to forecast group materialization rates. Ideally, the pre-departure group PNR activities are used to influence the materialization forecast.

FutureTrendsInformation technology adoption in group

management has trailed behind passenger reve-nue management, but this is about to change due to advances in technology. Airlines have found it difficult to develop a compelling business case for technology solutions supporting group sales.

During the early years of the Internet, there was skepticism from consumers and sup-pliers alike regarding the viability of booking travel online. Today, online travel in the United States is approximately 60 percent of the total U.S. travel market.

The aggressive growth in online shopping and booking of travel proves that the Internet is the preferred shopping and booking method. Online travel has grown by leaps and bounds to become an essential marketing and distribution channel. One of the key travel segments for e-commerce is undoubtedly group travel. Yet, this segment has been behind the curve in the online migration.

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Ad HocGroup

School

Incentive

Convention

Corporate

Cruise

Allotment

SeriesGroup

Adhocgrouptravelcomprisesasingledeparturedateforone-way,roundtripormulti-destinationtravelwhileseriesgrouptravelincludesmultipledeparturedatesforone-way,roundtripormulti-destinationtravelspreadoverarangeoftraveldates.

AdHocAndSeriesGroupProducts

The younger generation of group travelers is more technologically savvy and is comfortable with the self-service aspect of shopping and booking travel, but they need around-the-clock flexibility for shopping and booking.

Of course, there are four major challenges associated with group business that may require resolution for a migration to an online self-service platform, including: Complex and unique business processes, Manual and labor-intensive decision-making processes,

Lack of fully integrated technology platform supporting end-to-end group sales processes,

Adoption of new technologies requiring skill improvement of existing resources.

Airlines need to simplify and streamline group business processes to make them more efficient. It is necessary to evaluate the entire process supporting group sales and implement automated systems for end-to-end efficiencies. By doing so, airlines can significantly reduce group processing costs and become more effi-cient in the group sales process.

Group revenue management software has already made strides in automating the group decision-making process. The self-service group sales solution can leverage advancements that have already occurred in the group revenue management area.

The recent advancement in the integration of airline systems using an industry-standard Web services framework will help reduce the

complexity of creating an integrated platform that can offer full capability of online group sales. With the recent surge in Internet usage across the globe, the fear of learning newer technology is slowly eroding, and there is higher acceptance of Web technology that has evolved and requires minimal training for end users.

The group market is maturing and airlines need to work aggressively to automate group shopping, booking and fulfillment to avoid the risk of ceding the “first-mover” advantage in the online group e-commerce business. The transi-tion of group business to a self-service online group sales framework will give airlines greater insight into group shopping characteristics. Group shopping data can be leveraged to design and offer group products that meet customers’ needs. The various aspects of group selling can be influenced by the critical insight gained from group shopping data. In addition, group shopping and booking data can be used for targeted e-mail campaigns that can help boost demand on low load factor flights. Currently, airlines only target the individual passenger segment for promoting the distressed inventory and, in the near future, the group passenger segment will also be tar-geted for the sale of distressed inventory.

Traditionally, an airline’s call center is per-ceived as a cost center, but with the advent of online group sales, it can be transformed to a revenue center. Call center access will be avail-able to the basic-level customers with payment of service fees whereas premium group custom-ers can be offered this service free of charge. In addition, the self-service online sales platform enables airlines to bundle non-air content such as hotel, tour bus and activities with primary-air content to sell attractive travel packages to group travelers. The call center will also have the ability to cross sell non-air components to small and medium-size groups that typically only buy air travel from airlines. This will help generate significant incremental revenue for carriers.

One of the biggest challenges for the suc-cess of group online sales will be the adoption by travel agencies, corporate meeting attendees or leisure group travelers. Airlines can give incen-tives to those using their online group sales platform with best group rates guarantee. Once the benefits are established, there will be steady migration of customers to the new self-service group sales model. Airlines that prepare for such a shift will be ready to increase market share of their group business. a

Santosh Sah is a product marketing principal of Sabre®AirVision™ Revenue for Sabre Airline Solutions®. He can be contacted at [email protected].

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Thedecisiontoeitheracceptorrejectgrouprequestsisbasedonthedisplacementcostforthegroup.Itiscalculatedbasedonthemarginalvalueofanincrementalseatinanoptimumnestingstructure.Therejectionregioncontainsacombinationofgroupfaresandgroupsizesthatarenotprofitabletoaccept.

$700$600$500$400$300$200$100 $0

0 10 20 30 40 50 60 70

AcceptanceRegion

RejectionRegion

TheGroupIndifferenceCurve

Groupsize

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Theultimateorganizationalstructureforeffectivemanagementofgrouptrafficcombinesdecentralizedgroupsaleswithacentralizedgroupdeskforprocessinginventoryandpricingexceptions.

Group evaluation (automated decision

support)

Grouprequest

Customer Airline’s sales team

Automated group processing

Groupbusiness

rules

Pricing & revenuemanagementorganization

Inventoryexception

InventoryoverrideInventory/pricing

overrides

Centralizedgroup desk

Negotiatedcontract

Track contract ccompliance

Yes

No

TypicalGroupWorkflow

Practice MakesPerfect

By Pete Newell | Ascend Contributor

Independent of organizational structure, many airlines ensure their planning departments abide by industry-best-practice principles and cover all required activities. In doing so, they stay competitive in a dynamic environment, remain compliant with minimum industry standards and, in the long run, help maximize profitability.

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Why do virtually all airlines manage day-of-departure schedule changes in operations and not in scheduling?

Why do a vast majority of airlines set varying fare levels on the same flight as opposed to selling all seats at a standard rate? Why do almost all carriers produce annual plans? Because, quite simply, these activities improve efficiency, increase revenue and help long-term planning. While there are numerous ways to achieve these goals, many airlines follow the same standard commonly known as industry best practices when performing these activities.

External influences significantly impact the airline business. For example, passengers who have purchased tickets on other airlines in the past have developed certain expectations when it comes to purchasing tickets on a new airline, even if that new airline claims to be different. In addition, airports have rules that carriers must abide by before being granted rights to fly into that airport. When consider-ing these passenger and airport demands, an airline still will most likely position itself as unique and unrestricted by the conventions of its competitors.

Competitive differentiation is important; however, an airline also must adapt a majority of its behaviors to industry best practices to succeed. Failure to ensure an airline’s practices meet industry standards will likely negatively impact its bottom line and, in some cases, threaten its survival.

What do carriers do when they want to achieve industry best practices? Consultative studies are often beneficial in these cases because an outside perspective is useful in getting a carrier back on a competitive track. External consultants conduct business process reviews that pinpoint areas where a carrier is not achieving industry best practices and recommend steps needed to bring them up to standard.

These reviews utilize the IDEF0 method-ology, originally designed by the U.S. Air Force to model decision, actions and activities of an organization or system. It involves high-level functions and sub-functions with multiple sub-levels such as sub-functions of sub-functions. These levels are numbered such that Level 0 is the highest level. At all levels, a function transforms inputs into outputs subject to con-trols with the use of mechanisms.

Sabre Airline Solutions® consultants have customized the IDEF0 approach to apply to various airline functional groups. Key to its popularity and success, this methodology focuses on function rather than organization. Basically, airlines may vary the structure of their departments as long as all industry-best-practice activities are conducted. Often, departments are structured to match func-tional groupings, but not always, and it is not

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a requirement to take advantage of the IDEF0 approach.

Industry best practices impact every aspect of an airline, both operationally and commercially.

For instance, on the commercial side (a level 0 functional group), airline planning is a key area or level-1 functional grouping. Typically, airline planning activities are conducted within an airline’s marketing or commercial divisions, though some variation can exist. For some car-riers, airline planning activities are grouped into one large network management or planning and scheduling department. While the exact name of the department is not important, it is imperative that an airline ensure it conducts most airline planning activities as defined by the IDEF0 industry-best-practice model.

Four functional groupings (level-2 activi-ties) fall under the airline planning umbrella, including:1. Strategic planning,2. Network planning,3. Schedule planning,4. Support activities.

An airline’s organizational structure may or may not map directly to these level-2 sub-groupings. For example, carriers often assign support activity tasks to various depart-ments. In other cases, half of the activities may be handled by network planning, and the other half by schedule planning. Regardless of where the support tasks take place, it’s critical that a cooperative environment exists to help coordinate all functions.

If viewing airline planning as a relay team, strategic planning (long term) hands off the baton to network planning (medium term) which, in turn, hands it off to schedule planning (short term). Support activities are just that, activities enabling the other functions to be completed successfully. The four level-2 functional groupings work together to help ensure industry best practices exist through-out the airline planning process.

StrategicPlanningStrategic planning’s objective is to better

prepare the airline for the long term, typi-cally 18 months or more into the future, and it evaluates mergers and acquisitions. While many airlines have a department dedicated to strategic planning, others allocate it as a separate task for network planning. In either case, it is essential that the airline com-pletes strategic planning activities, otherwise, it may miss growth opportunities uncovered by the process and fail to adapt to a changing environment.

NetworkPlanningNetwork planning, responsible for deter-

mining routes and frequencies, is directly impacted by strategic planning outputs. Typically viewed as a function for the medium

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IDEF0Methodology

UsingIDEF0methodology,afunctionconvertsinputsintooutputsdependentoncontrolswiththeuseofmechanisms.Sabre Airline SolutionsconsultingteamhastailoredtheIDEF0approachtoapplytovariousfunctionalgroupswithinairlines.Akeyfactorinthismethodologyisthefocusonfunctionratherthanorganization.

Information,guidelinesorpoliciesthatcontrolorconstrainthetrans-formationoftheinputtotheoutput

Function

Controls/Constraints

Mechanisms

Resourcessuchaspeople,systemsortoolsthattransformtheinputtotheoutput

Input Output

Airlineplanningisoneofseveralhigh-levelfunctionswithinthecommercialorganizationofanairlinethatcanbebrokendownintolower-levelfunctions(orsub-functions),includingstrategicplanning,networkplanning,scheduleplanningandsupportactivities.

AirlinePlanning

Strategicplanningisthefunctiondedicatedtolookingatandpreparingforthelongterm.Itinvolvesusinginformationsuchasindustrydata,determininguppermanagement’sobjectivesandgoals,andapplyingplanningsystems.Theoutputfromthisfunctionisusedbyotherdepartmentstohelpcarryoutthesecorporategoals.

Information:• Industry data• Market intelligence• Economic forecasts• Traffic growth forecasts

Strategicplanning

StrategicPlanning

Output:• Strategic plan• Long-term schedule• Fleet plan• Ad hoc studies

Systems:• Fleet assignment model• Profitability forecasting system• Profitability reporting system• Traffic, fare and revenue databases

People:• Strategy, network, scheduling• Senior management• Finance• Sales and marketing

Input:• Information

Commercial

Revenuemanagement

Airlineplanning

Sales Alliances E-Commerce

Strategicplanning

Networkplanning

Scheduleplanning

Supportactivities

Level0

Level1

Level2

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term (18 months to six months in the future), network planning uses the strategic plan and fleet plan supplied by strategic planning as its base. Network planning is a key function in driving an airline’s business since its outputs include required elements for schedule plan-ning, sales and other areas, such as the draft schedule and scenario forecasts.

SchedulePlanningWhile network planning starts the pro-

cess of schedule generation, it is the schedule planning activities that finalizes the timings for each flight. These activities begin six to nine months prior to day of operation and last until the week before or, in some cases, the day before. The inputs utilized for schedule plan-ning activities are outputs that were produced during both strategic planning and network planning activities.

SupportActivitiesSome activities cross over the different

defined time spans within airline planning. These tasks, called support activities, help support completion of the various strategic planning, network planning and schedule plan-ning functions. For example, the calibration of data models used by the three planning func-tions is a support activity.

Often, responsibility for support activi-ties is shared by various departments within airline planning rather than assigned to a dedi-cated department. There is some variation by airline in terms of which department performs which activities. Typically, if the activities are not assigned to dedicated departments, they fall under network planning or schedule planning.

The IDEF0 approach to industry best practices continually expands and is applied to more and more areas within airlines. Beyond airline planning, it has been applied to areas such as revenue management, pricing, ground handling, cargo revenue management, operations control, dispatch and crew plan-ning. Its popularity among airlines is buoyed by the fact that it works regardless of system types used. As airlines continue to face the challenges brought on by a constantly chang-ing external environment, it will become more imperative that they remain in line with indus-try best practices across all operations and commercial areas. a

Pete Newell is a senior management consultant and project manager for Sabre Airline Solutions. He can be


Networkplanningtakesinformationfromlong-termstrategicplanningandusesittocreateandforecastaplannedscheduleforthemediumterm.Itutilizesdatasuchashistoricprofitabilityandappliesitinvarioussystems.Itskeyoutputsareplannedscheduleandprofitabilityforecasts.

Information:• Historical traffic and profitability• Demand trends• Competitive schedules• Cost information

Networkplanning

NetworkPlanning

Output:• Initial draft schedules• Forecast traffic, revenue and profitability• Scenario evaluations• Budget schedules• Statistical summaries

Systems:• Schedule editor• Fleet assignment model• Profitability forecasting system• Information databases• Slot management system

People:• Network, strategy, scheduling• Pricing and inventory• Sales and marketing• Operations• Regulatory affairs

Input:• Strategic plan• Fleet plan

Scheduleplanningtakesadraftschedulefromnetworkplanning,enhancesitandfinalizesitforshort-termuse.Thisfunctioninvolvescommunicationwithothergroupsintheairlineasittakestheplannedscheduleandshiftsitclosertodayofoperation.

Information:• Operational criteria• Infrastructure (slots, gates, facilities)• Profitability (historical and forecast)• Bookings

Scheduleplanning

SchedulePlanning

Output:• Schedule• Statistical summary• Reports

Systems:• Schedule editor• Fleet assignment model• Slot management system• Information databases

People:• Scheduling• Network• Operations• Pricing and inventory

Therearevariousactivitiesthatarenecessaryforthesmoothfunctioningofstrategicplanning,networkplanningandscheduleplanning.Mostoftheseactivitiesarerelatedtomultipleairlineplanningareasandgroupedintosupportactivities.Theseactivitiesincludecalibration,datamaintenanceandotherrelatedfunctions.

Information:• Data Specifications• Model input specifications• User feedback• Schedule load timeline

Supportactivities

SupportActivities

Output:• Updated data tables• Functioning models• Calibrated tools• Slot management• Synchronized codeshares flights

Systems:• Profitability forecasting system• Codeshare management systems• Data mining system• Calibration tools

People:• Strategy, network, scheduling• IT support• Vendors• Reservations

Input:• Strategic plan• Fleet plan• Network planning Working draft schedule (final iteration)

Input:• Raw input data for models and calibration• Codeshare partner schedules • Communications with slot coordinators

Merchandising: Right Price, Right Value

By Mike Llewellyn | Ascend Contributor

Ancillary sales provide huge revenue opportunities — yielding “buy-an-airplane” kind of revenues. Offering the right ancillary choices travelers truly value benefits airlines and their customers.

Unbundling value-added goods and ser-vices from air fare is nothing new in the airline industry. Unbundling, which

involves separation of products, attributes or services from the total ticket price, can be thought of as a true à la carte offering — giv-ing customers the opportunity to purchase low fares and add only the goods and ser-vices they want.

There are a few key products that are likely to bring the most value to customers, including:

Premium or pre-reserved seats, Bags, Insurance, Lounge access, Onboard services such as Internet access.

Lowering costs and finding new rev-enue sources is certainly a key to the suc-cess of any carrier competing in the current value-focused economy. Travelers seek low fares that attract them to purchase while offering additional items they desire and can buy separately. A quick search of direct airline Web sites around the world reveals

just how far the ancillary offering trend has developed and matured. Ryanair’s Web site, determined to deliver that rock-bottom fare, is a prime example of how to successfully attract the cost-conscious traveler. That aggressive fare structure comes with a plethora of additional add-on fees and many optional services.

While some may question this strat-egy, when looking at ancillary product offer-ings at their core, the idea of separating air transport and additional services clearly has merit. It provides an opportunity to offer only the goods and services travelers wish to purchase.

Why should a person traveling on a day trip, with no bag, pay for the additional fuel consumed by another traveler carrying a 40-pound bag? It is a question that many travelers will find themselves asking in times where travel budgets are stretched paper thin.

What is the right strategy or approach to unbundling the air fare from these ancil-lary goods and services? There are three

key tenants of developing and delivering a successful ancillary product offering:

Maximize revenue opportunities, Offer customers the choices they most value,

Reach customers everywhere.

MaximizeRevenueOpportunitiesWith the right ancillary strategy, air-

lines can remain fare competitive while cre-ating those critical opportunities to generate incremental revenue. The industry numbers are clear, with several carriers in double-digit percentages of total income, all related exclusively to ancillary revenues. Some may think these numbers are reflective of only low-cost carriers, but that is simply not the case. Ancillary sales make up significant revenues to all carrier types — cost-focused or full-service.

OfferValuableChoicesConsumers have long showed that

they are more than willing to pay for goods and services that they truly value. Offering

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Removingcertainproductsandservices,suchasin-flightfoodservice,fromthepriceofanairlineticketnotonlyenablescarrierstoofferlowerairfares,itboostscustomersatisfactionandgeneratesadditionalrevenue.

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a low price with aggressive fare pricing certainly attracts consumers’ attention. Airlines can provide a unique value propo-sition to every one of their customers, enabling them to choose and pay for only those products they value most. Arming customers with these ancillary opportuni-ties allows them to see the unique value in the services offered and, in turn, enables carriers to increase revenue, all while providing travelers with the products and

services they want and consciously choose to pay extra to receive.

For example, JetBlue Airways offers “Even More Legroom” for passengers who desire the additional seat pitch. The carrier’s marketing message is simple — the baseline product is good; however, the Even More Legroom product offers more. For a rather petite person, the additional legroom may not be worth the extra cost, but for someone 6’5”, it’s likely well worth a few extra dollars.

If there are cost concerns, reconfiguring an aircraft cabin to accommodate a premium seat offering may not be a necessity. Options might include exit-row seating at a premium cost, or offering rows near the front for an additional fee. Other viable ancillary options may include offering window and aisle seats at a premium or the option to pre-reserve any seat on the aircraft.

ReachCustomersEverywhereCritical to the success of any merchan-

dising strategy is channel consistency. Airlines must expose/offer and seamlessly distribute products and services across both direct and indirect channels, online and offline. This will enable them to maintain a consistent custom-er experience and maximize the incremental revenue opportunity. Missing a key traveler touch point will simply frustrate customers and decrease revenue opportunities.

In the case of premium seats, it’s criti-cal to target corporate travelers who are most likely to select the premium offering. Missing those corporate travelers, many who book in indirect channels, is a significant missed opportunity. Travelers want the same prod-ucts regardless of the touch point they use — including indirect agency channels.

Recently, United Airlines began selling its Economy Plus seats, which give custom-ers up to five inches of extra legroom near the front of the economy cabin, in the Sabre® global distribution system, and early results show that agencies are pleased to offer the product to travelers.

“I’m glad to see that Sabre [Travel Network®] and United have worked out a pro-cess to include the agency for the Economy Plus Seat purchase program,” said Brenda Ortman, director of corporate operations for El Sol Travel. “This allows us to be competi-tive in a difficult market.”

AncillaryPitfallsThere are a number of pitfalls related

to the sale of ancillary goods and services. There is no question that selecting ancillary options that a customer does not value will be reflected by a lack of sales. Recent exam-ples of this include the much-ridiculed pay- for-lavatory use or charging for pillows, blan-kets and soft drinks. Travelers are extremely savvy, and it’s critical to ensure that they are happy with both the price points and service offerings. If customers feel like an airline is gouging and taking advantage, it could turn them off and lead them directly to the near-est competitor.

A perfect example is the story of a passenger who, while booking a low-fare ticket on an airline’s direct Web site, was presented with an enticing message about a premium seat offer. Once the customer realized the premium seat would cost nearly

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UnitedAirlines’EconomyPlusproductgivescustomersfiveextrainchesoflegroomforanadditionalfee.

Photo courtesy of United Airlines

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25 percent of his total airfare, he politely declined the offer.

On the day of departure, he used the self-service check-in kiosk at the airport. Again, he was given the opportunity to purchase a premium seat offer at the same price that was offered during the initial book-ing. For all the same reasons, he declined and proceeded to the departure gate. While waiting to board the aircraft, the gate agent made a professional announcement with a crisp message that the aircraft offered a premium seat. The announcement continued with a vivid description of what the customer would receive, but interestingly, the price now reflected an increase from the offer received at both the Web and kiosk. It was assumed that the product was clearly selling well since the price had now increased.

It was upon boarding that the customer noted not one single passenger was seated in the premium seats. The non-premium “regular” seats were completely full … not a single seat remained. Perhaps if the price had been right as opposed to outrageous, the premium section would have filled up, and the airline would have gained additional revenue.

Considering that the premium seats took up nearly the first half of the coach cabin, the aircraft clearly was not properly balanced. The flight crew was tasked with explaining why, when asked, that passengers could not reseat themselves in the premium

section. After several inquiries about the pre-mium section, the flight crew finally made an announcement that the premium seats were available only for an additional fee. Now, the premium seat product had created a day-of-operation impact to the flight crew.

The plane was backed away from the gate, but then stopped short, and the flight attendants moved the last three rows of the cabin to the front three rows of premium seat product. At which point some of the other passengers who initially wanted to move to the premium seats became upset that others were moved to those seats for free. Clearly, for many on that flight, the customer opportunity was lost forever.

Offering ancillary services must be done properly. Certainly price, message, take rates and competitive position all matter when selling ancillary goods and services. A full awareness of these issues, a well-thought-out plan and perhaps a bit of caution must be exercised to avoid pitfalls.

AncillarySolutionsSome of the most popular ancillary

offerings may be technologically challenging to implement. Seats represent a great exam-ple of the complexities of ancillary product offerings. They require inventory control and must be offered in all channels to assure that consistent traveler experience.

It is clear that Saturday mid-day travel from a leisure location will not attract many

customers at the “normal” price. This per-haps is a good time to offer low-cost options to attract the leisure traveler, which would support the sale of those premium seats. Another option would be to sell those premi-um seats onboard. Many passengers would have gladly purchased when realizing the standard seating section was full. Likewise, in a heavy corporate market, those seats may well demand a price premium, especially on a long-haul flight.

Sabre Holdings® delivers a suite of products and capabilities that enable airlines to differentiate, market and sell ancillary offerings. The complete end-to-end solution allows shopping for ancillary services while enabling airlines to efficiently increase reve-nues — all while delivering exactly what the traveler wants. a

Mike Llewellyn is a SabreSonic® Customer Sales & Service marketing

manager leading merchandising products for Sabre Airline

Solutions®. He can be contacted at [email protected].

JetBlueAirwaysoffers“LotsOfLegroom”seatsand“EvenMoreLegroom”seats,givingcustomerstheoptiontoenjoythestandardseatsor,foranadditional,reasonablefee,choosetheEvenMoreLegroomseatswithfourextrainchesofseatpitch.

Photo courtesy of JetBlue Airways

CUTTING UP

Can I See your ID, Please?

Companies, like individuals, have a unique identity that shapes how

they are perceived. And Sabre Airline Solutions® — with its emphasis

on helping airlines better market, sell, serve and operate — focuses

on providing high-performance solutions for the airline industry.

By B. Scott Hunt | Ascend Editor

One of our most important assets is our identity. Our identity impacts not only how we see ourselves but how others

see us. In defining ourselves, our identity helps us discover what is important to us, what drives and motivates us, what concerns us.

The same concept applies to busi-nesses, which also have a corporate identity that drives how they act and how they are perceived. In the air transportation industry, for example, carriers have created a variety of different identities for themselves, whether nurturing a reputation for lush customer care or value-based travel or a hybrid of the two. That self-definition leads them to make certain choices and take specific actions that are con-sistent with their corporate image. And those choices and decisions, in turn, impact how the airline is perceived by customers, which influ-ences the decisions they make about which airline to fly.

In most cases, these personal and busi-ness identities are created over time. While there is always a first impression, that initial reaction can be reinforced, or refuted, through future interaction — which is why many com-panies place such an emphasis on maintaining a consistent experience to ensure the correct image is constantly enhanced.

Although its roots in the air transporta-tion business go back more than 40 years,

Sabre Airline Solutions is less than 10 years old as a distinct identity. In that time, the company has worked to define itself as a passionate advocate for the airline industry, invested in the success of its customers and eager to work closely with them to create a prosperous future.

From the start, Sabre Airline Solutions has sought to help airlines throughout their enterprise. Specifically, the company strives to help airlines excel in four key areas of their business: Creating a compelling product that appeals to their targeted customers,

Reaching those customers where they shop for air travel,

Caring for their customers at every touch point,

Operating efficiently to provide the product the customer expects.

Airlines that excel in these four areas — marketing their product, selling their product, serving their customers and operating efficiently — have a tremendous advantage over their competitors. Through better marketing and selling, an airline can increase its revenue. By operating effi-ciently, it can reduce costs. And by serving its customers, an airline can improve the customer experience to build loyalty and repeat business.

As the world’s leading provider of high-performance solutions for the airline industry, Sabre Airline Solutions offers airlines unique expertise and leading technology. But that is only one aspect of the company’s iden-tity. Unlike other technology providers, Sabre Airline Solutions offers its customers a unique advantage with unmatched flexibility, acces-sibility, choice and experience.

When an airline selects Sabre Airline Solutions as a business partner, it benefits from the flexibility of innovative technology based on service-oriented architecture and solutions that are adaptable and scalable. It gains access to global support, locally based centers of expertise and the largest airline community. Airlines working with Sabre Airline Solutions can choose the solutions they need from the industry’s largest portfolio, including value-added services and the desired level of support. Airlines can also choose whether to install their solutions locally or access them remotely through a secure connection and leave the maintenance of the IT infrastructure to Sabre Airline Solutions. And airlines can also benefit from the company’s deep exper-tise in the air transportation industry as well as the shared experience of the full airline community.

The unmatched flexibility, accessibil-ity, choice and experience represented by

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Offeringexceptionalservice,fromthetimeaticketispurchasedthroughoutanairlinecustomer’sentirejourney,buildsloyaltyandincreaseschancesofrepeatbusiness.

Photo by Jupiter Images

Can I See your ID, Please?

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The Sabre Airline Solutions AdvantageSM is a key element of the company’s identity. It infuses everything it does and drives its future direction.

The advantage manifests itself particu-larly in three main solution areas, including both software and related services and con-sulting expertise, available from Sabre Airline Solutions: Airline Marketing & Planning, Airline Customer Sales & Service, Airline Enterprise Operations.

AirlineMarketing&PlanningThe Airline Marketing & Planning area

helps airlines achieve their profit potential, build their brand and establish the founda-tion for exceptional airline performance. These solutions — including revenue management for customers and cargo, fares management, market data and analysis, planning and sched-uling, dining and cabin services, and passenger revenue accounting — help airlines better market their product.

The marketing and planning area is truly where it all begins for an airline, enabling it to execute its vision. Whether it aspires to be a full-service network carrier or a low-fare lei-sure-focused airline, a carrier can use the mar-keting and planning solutions to establish the foundation to build that identity. Determining the times to serve chosen destinations, the

price and the services offered establishes an airline’s brand and creates the promise that airlines offer to their customers.

As an integrated suite, these solutions help airlines optimize fares, capacity and demand to increase revenue. The marketing tools help airlines create the ideal schedule to attract the desired customer. Using the marketing and planning solutions and services enables airlines to determine the best com-petitive fare structure and provide revenue management capabilities to generate the most income from each seat. The solutions also help minimize costs by improving produc-tivity and reducing waste. The planning phase is also key from an operational perspective. If the plan is too rigid, it will be stressed when the inevitable disruptions occur on the day of operations. Using these solutions to build in the desired level of operational flexibility pro-vides the airline the necessary “wiggle room” to adapt to irregular operations.

AirlineCustomerSales&ServiceThe Airline Customer Sales & Service

area enables airlines to uniquely value every customer using a modern and future-proof technology platform. With these reservations, departure control, ticketing, shopping, distri-bution, inventory, customer notification and customer insight solutions, airlines can bet-ter sell their product and serve customers.

Building on the customer promise created in the marketing area, customer sales and ser-vice is where the airline makes a commitment to customers to deliver them from one point to another with a certain level of service.

And revenue and customer-centric CSS solutions enable airlines to personalize that customer promise. Using CSS solutions enables airlines to take the vast amount of customer information they collect and operationalize it. By valuing each customer uniquely, airline-defined experiences can be tailored to each individual traveler. High-value customers can receive perks unavailable to less-valuable customers, such as having their bag fees waived or receiving lounge access. Operationalizing what airlines know about their customers enables them, if they choose, to offer certain additional ancillary services that are more likely to be perceived as valu-able. It also gives airlines an opportunity to enhance customer service. If an airline mis-placed a customer’s baggage on a previous flight, the CSS environment can provide that information at every touch point, giving the airline the opportunity to atone for the mishap with, say, drink coupons or a similar gesture.

AirlineEnterpriseOperationsAirline Enterprise Operations help airlines

deliver the promise made to customers at the lowest operating cost. The operations solution — providing crew management, flight opera-tions, resource management and maintenance control — enables airlines to optimize the span of operations to seamlessly and efficiently con-trol the enterprise, manage change and provide the desired customer experience, resulting in a more efficient operation.

The core of an airline’s operation is its system operations control center. The complex-ity of an airline requires tightly integrated coor-dination among multiple departments. Bringing these departments together into an SOC is the first step. But integrating the operations systems provides the next level of efficiency. By coordinating systems, changes in one area are quickly reflected in others. When an aircraft is late coming out of maintenance causing a flight delay, impacted areas such as crew and dispatch can see the change in real time and work together to find the optimal solution that takes passengers, aircraft and crew into account. Managing change, from as minor as a crewmember calling in sick to as major as a hub closure due to weather, can be handled more efficiently and cost-effectively with an integrated system.

The scope of operations, however, actu-ally extends beyond just the SOC to include the airport operations and maintenance facilities. By integrating all of these areas into a true enterprise operation solution, airlines have the ability to consider the full impacts of decisions and make the best choices.

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ThroughapartnershipwithSabre Airline Solutions,airlineshaveaccesstotheindustry’slargestportfolioofinnovativetechnologythatcanbeinstalledonsiteorsecurelymaintainedremotely.Inaddition,theycanbenefitfromthecompany’sdeepexpertiseandongoingsupport.

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The solution sets also work together to provide additional capabilities. For example, piec-es of the operations and CSS solution areas can work together to reaccommodate passengers, crew and aircraft when there is a disruption. Or components of the CSS and marketing and planning areas can work together to perform

real-time revenue management based on current conditions rather than relying on historical data.

BeyondSolutionsThe Sabre Airline Solutions Advantage is

also evident in elements that support all three of the solution areas, which utilize an advanced

technology platform, a vast customer communi-ty, software-as-a-service capabilities, and world-class delivery and customer care.

Sabre Airline Solutions has taken several other actions in keeping with its mission of help-ing airlines succeed. The company builds its systems on a new technology platform that incorporates service-oriented architecture and an enterprise service bus to give airlines the ability to more quickly and easily adapt to changing business or technology needs. The technology company has developed the largest airline com-munity in the industry — with more than 200 airlines. These airlines actively participate in the future development of Sabre Airline Solutions products and services and have online and offline forums to exchange ideas and best practices.

Earlier this year, the company introduced its delivery and customer care program to ensure airlines realize: Tangible business value, Full solution adoption, A consistent experience.

The delivery process is designed to be transparent, responsive and predictable with a clearly defined implementation lifecycle. And customer support is available 24 hours a day, seven days a week from fully staffed help desks or online through an interactive customer portal.

Sabre Airline Solutions offers its systems through the industry’s largest software as a ser-vice platform, which currently hosts more than 400 applications that are accessed by more than 115 unique customers worldwide. Choosing to access an application through the SaaS environ-ment provides benefits including: Hardware and third-party software procure-ment,

Patches and upgrade management, Application management, Access to proven application functionality, 24/7 help desk support, 24/7/365 hosting, Data backups and offsite storage, Hardened facility, Security monitoring.

The company’s focus, from the solutions it provides to the manner in which it provides them, all contributes to the Sabre Airline Solutions identity. The company seeks to partner with innovative and forward-thinking airlines around the world to provide the capabilities needed to succeed and to give each airline the ability to create — and realize — its unique identity in the air transportation industry. a

B. Scott Hunt is the brand marketing manager for Sabre Airline

Solutions. He can be contacted at [email protected].

Placinguniquevaluesoneveryindividualcustomerenablesairlinestoenhanceeachtravel-er’sexperiencebyofferingproductsandservicestailoredtotheirspecificneedsanddesiresateverytouchpoint.

Identity,forbothindividualsandbusinesses,representsoneofthemostsignificantassetsthat,dependingonfirstaswellasfutureimpressions,determineshowtheyareperceived.

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Anita Allen | Ascend Contributor

SocialButterfliesSabre Airline Solutions® offers members of its airline community a rich social networking opportunity to ensure easy access to real-time, valuable resources.

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You can’t read a paper, surf the Internet, listen to the news or walk a city street without hearing or seeing the effects of

social networking. From citizen journalists captur-ing world news on their iPhones to Twitter races and Facebook families to resumes posted on LinkedIn, social networking is changing the way we research, analyze, report, communicate and unwind on an individual and collective basis.

The travel industry has even more to gain from this phenomenon, as indicated by a 2007 Forrester Research study on traveler shoppers. The study identified technographic segmentation as a market research tool that identifies and profiles the characteristics and behaviors of consumers through a market segmentation process.

The study also showed that business travel-ers are 50 percent more likely to be “creators” of blogs and video uploads or indulge in other social creation activities compared to the average general online population. Defined in categories, they’re also more likely to be: Critics (people who react to others’ content), Joiners (people in social networks), Collectors (people who use really simple syn-dication, or RSS, feeds or voting sites such as Digg).

As business professionals across the globe adopt social networking into their per-sonal lives, it is a logical step for social net-working to expand into the realm of business networking. Similar to social networking, busi-ness networking allows individuals to connect

and engage with like-minded people. As with any new communication medium, businesses decide when and if they should embrace the trend.

When Sabre Airline Solutions asked members of its global user community if they wanted to include these emerging tech-nologies into their communications channels, the answer was an overwhelming “yes.” Community members recognized a need to engage colleagues in a new way, beyond the existing methods of e-mail, in-person confer-ences, council meetings, phone calls and online meetings. The community wanted to take col-laboration to a new level one that is not limited by the confines of a time zone, geographic location or budget. The solution: business networking through a unique online tool called the Sabre® Community Portal hub.

Working together for the common good makes sense, and providing members of the user community with the types of communications they need to build their strengths and better perform their jobs is a top goal for Sabre Airline Solutions.

“The airline business is no stranger to work-ing together for the good of the industry,” said Greg Gilchrist, senior vice president of global sales and client management for Sabre Airline Solutions. “Airlines have historically worked together to cre-ate and expedite solutions that benefit the industry, such as interline ticketing and codeshare agree-ments. Through our robust community model, we continue to help airlines have these conversations

and create mutually beneficial solutions and ser-vices. That’s the heart of our business.”

With features similar to Facebook and LinkedIn, the Hub enables community members to take this desire to work together to the next level. The tool enables users to share and collaborate in a virtual online community 24 hours a day, seven days a week, regardless of geographic location. Through the Hub, members can: Ask questions and provide answers, Share perspectives and knowledge, Provide input and guidance on the future direc-tion of Sabre Airline Solutions software, ser-vices, training and other support.

Perhaps most important is the ability for users to interact with members of their own organi-zation, other customers and Sabre Airline Solutions staff worldwide.

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“All members of the airline community are encouraged to participate in one or more com-munity activities,” said Susan Via, manager of com-munity marketing for Sabre Airline Solutions air segment customers. “The goal is to continue to engage customers in conversations that provide mutual value so they don’t have to wait for a survey or annual meeting to tell us what is on their minds. The value of using multiple channels of engagement

is that feedback and action items can be addressed immediately or noted for consideration.”

In the popular book Groundswell, the “groundswell” phenomenon is defined as a social trend in which people use technologies to get the things they need from each other instead of from traditional institutions such as corporations. Recent successes of community initiatives indicate that the phenomenon can also help businesses that listen

to and take action from these important customer touch points.

“At every level, Sabre [Airline Solutions] peo-ple listen and really care about solving our problems and making the best possible product line,” said Gary Plexman, director of schedules and product support for First Air. “We get to share our concerns and ideas with the full Sabre [Airline Solutions] community on a frequent basis through customer councils, conference calls, workshops and confer-ences, and now on a real-time basis through the Sabre Community Portal and the Hub. This allows the community to bring a number of different view-points to bear on an issue very quickly, leading to rapid development and change to existing products and to the development of new products.”

While it’s unclear what long-term value social media, business networking tools and community marketing will provide the airline industry, one truth is sure to stand: humans, by their very nature, are social and collaborative beings. Given the right tools, the commonalities of the majority can be magnified and tapped at a global level to develop next-genera-tion software and services that benefit the entire industry. a

Anita Allen is a member of the Sabre Airline Solutions community marketing

team, which is primarily focused on customer engagement. She can be


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TheSabre Airline Solutionscommunityenablesairlinesfromaroundtheworldtohelpshapethetechnologytheyuse.Fromthebeginningofacustomerengagementtoimplementationandthroughouttheongoingrelationship,airlinesareencouragedtocollaboratewithotherairlinesaswellasSabre Airline Solutionsasitssystemsimproveandevolve.

CollaborationopportunitieswithintheSabre Airline Solutionscommunityoffermultiplegatheringpointsthatareaimedatspecificemployeesfromenduserstotopexecutivestohelpthemenguageandconnectonapersonalandprofessionallevel.

ServiceWithASmile

Sabre Airline Solutions® helps carriers smoothly adapt to and operate with a broad spectrum of technology through its Implementation & Support Lifecycle approach.

Russ Renfro | Ascend Contributor

The most modern technology is only as good as the implementation and service that sup-ports it. It’s not merely a matter of a technology provider offering an end-to-end range of state-of-the-art solutions but also the additional support needed from the beginning of solution implemen-tation through training and ongoing support. And Sabre Airline Solutions is committed to ensuring the highest level of support from implementation through operation.

In doing so, Sabre Airline Solutions employs the Implementation & Support Lifecycle, a compo-nent of Service360° SM Delivery & Customer Care, to help carriers and their employees get swiftly up to speed, then to extend and fully maintain their professional dexterity in operating with advanced technological capabilities.

The goal is to provide airlines around the world with solutions that deliver significant imme-diate value and improve their business operations while also constructing a platform that fully sup-ports and enhances each carrier’s future growth and business opportunities.

The Implementation & Support Lifecycle provides a proven, integrated set of delivery standards that: Promote the partnership between Sabre Airline Solutions and its partner airlines,

Drive business value, Accelerate time-to-market factors, Focus on process improvement, Create efficiencies, Help minimize the need for customizations.

The implementation approach focuses on maximizing a carrier’s total return on investment,

and value-optimization methods constitute a cen-tral theme that runs throughout the lifecycle.

During the implementation process, the technology provider’s project team assesses an airline’s current business practices, recommends new business practices, identifies value mea-sures and key performance indicators, or KPIs, and provides hands-on training and transition assistance to move from current practices to the carrier’s future-state solution.

The lifecycle is tailored to minimize imple-mentation risk and maximize the value carriers realize from technology provided by Sabre Airline Solutions. It is based on more than 40 years of direct practice in implementations across a wide variety of airlines, business models and technology.

The Implementation & Support Lifecycle specifically addresses all activities related to achieving live production of a carrier’s solution as well as successful ongoing operations. Practical examples include: Business-process improvement; Development of modifications (features/functions, interfaces to third-party systems, reports);

Technical installation; Application configuration; Training of users, super users, system administrators and technical staff;

Testing/validation; Data migration; Assistance during cutover; Transition to customer care; Post-cutover activities;

Ongoing customer care.These functions are organized into four life-

cycle phases — Project Initiation, Interactive Pilot, Solution Adoption and Project Transition — plus the Customer Care phase.

ProjectInitiationDuring Project Initiation, both the airline and

Sabre Airline Solutions assign project managers whose first task is to establish a common under-standing in relation to the fundamental criteria for a successful project, the implementation process (a primary function of the Implementation & Support Lifecycle) and the overall project scope and goals.

Together, project managers define mile-stones and project organization as well as how the project is to be managed in practical terms (com-munication, documentation, decision process, task control, change control, risk assessments and steering/status reporting).

Upon approval of the project manager’s initial planning by the project sponsors (and/or steering team), project members assemble for an introduction and initiation of the overall plan and project objectives.

InteractivePilotThe primary objective of Interactive Pilot

is to bring the carrier’s new solution to a point at which it is ready to be personalized through param-eter setup, configuration and solution design.

Here, the carrier’s current status must be thoroughly evaluated in terms of alignment with the standard solution as well as current busi-

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The Implementation & Support Lifecyclerepresentsaformalizeddeliveryapproach,emphasizingvalue,adoptionandconsistencythathelpsensureairlinesderivemaximumbusinessbenefitfromtheirtechnologypurchases.

Projectinitiation

Interactivepilot

Solutionadoption

Projecttransition

CustomerCare

CustomerCare

Implementation&SupportLifecycle

Projectandprogrammanagement Valuemeasurement Qualityassurance

ness practices/processes, organizational skills, data/information sources, business-critical issues, KPIs and geographic locations. This vital informa-tion must be used in planning and scheduling Interactive Pilot scenario workshops and prepar-ing the technical environment for key-user training and business-scenario execution.

Among the most important functions dur-ing the early stages of Interactive Pilot is to train key users on the standard solution, thus preparing them for full participation in workshops as well as providing at least an initial understanding of how best to apply the new solution in their operations.

Based on essential industry-best practices, the primary focus of Interactive Pilot workshops relates directly to standard business-process sce-narios. As workshops progress through each scenario, Sabre Airline Solutions experts work jointly with the carrier to identify business-process changes, feature/function enhancements (with a goal to eliminate or at least minimize any need for customizations), organizational recommendations and required points of integration.

Sabre Airline Solutions also offers a “Mini Interactive Pilot” during the sales process. This enables carriers to more fully understand the capabilities and value of the proposed solution and aids in the definition and refinement of the full implementation project scope.

SolutionAdoptionDuring Solution Adoption, Sabre Airline

Solutions works closely with key users as part of the agile development approach, utilizing a customer collaboration workshop to define and implement any required modifications to existing carrier business practices or functionality.

The results of each change (process, enhancements, interfaces, etc.) are vital to the collaboration workshop for direct validation with the carrier.

Once Solution Adoption is complete, all enhancements/customizations and integration have been built and validated, and the associ-ated business-process changes, organizational changes and technical installation have been fully planned.

Using this approach, the collaboration workshop is, in actuality, a hands-on validation and value optimization of the end-state solution. But the carrier doesn’t have to wait until the end of the project to appreciate the solution because its personnel are key partners in its evolution.

ProjectTransitionThe implementation portion of the lifecycle

concludes with Project Transition when the full-scale migration is conducted and the solution is placed into production in accordance with the rollout strategy.

This phase includes full end-user training, final carrier validation of the end-to-end solution, data migration, cutover to production and recom-mendations for value optimization.

As indicated by the name “Project Transition,” the focus is on smoothly transitioning from project implementation to a customer-care relationship.

Once the solution is successfully validated as production-ready and users are sufficiently trained, cutover to live production will quickly take place.

Depending on conditions specific to each project, several alternative strategies can be applied at the time of cutover. One consideration is whether the cutover should be performed in steps (by module, by business function, by work group, by location) or as one comprehensive cutover.

Cutover strategy is decided on a case-by-case basis, considering carrier-specific criteria such as the size, complexity and geographical distribution of the carrier’s business operations as well as the nature of the solution and specific integration needs.

To ensure smooth operations from the day of cutover, Sabre Airline Solutions assigns team members to provide onsite and/or remote support to users and system administrators for a mutually agreed-upon duration.

Other critical Project Transition activities include training the carrier’s staff on Sabre Airline Solutions support processes, introduction to its support staff, project-success recognition, KPI updates and joint post-project review.

TrainingServicesTraining is a standard service that educates

a carrier’s staff on the use and capabilities of the solution being deployed. It includes onsite or remote training relating to the application features and functions as well as the application’s best-

practice use in the individual carrier’s business-process environment.

Training is typically provided to a set of key users and is usually conducted at a Sabre Airline Solutions site prior to cutover. However, it can be performed at the carrier’s site, if preferred. Sabre Airline Solutions also offers advanced and refresher training — available either before or after the carrier’s solution is in production.

Sabre Airline Solutions develops and deliv-ers high-quality product training, including a train-ing team that is responsible for establishing, com-municating and achieving well-defined, carefully quantified training standards.

During this process, the implementation project’s training procedures can be customized to address the airline’s needs. Training approaches include:

Instructor-led training — Training occurs in a classroom setting at the carrier’s site or at Sabre Airline Solutions location(s). For most solutions, this is the preferred training method.

Web-mediated training — Internet-based train-ing, where a Sabre Airline Solutions instructor conducts a Web session, is best used for maintenance-release training and refresher training.

Train-the-trainer — Only the carrier’s training staff or business-area experts are trained in the use of the solution (similar to what is some-times referred to as super-user training). Then the newly trained personnel lead operation train-ing for their peers and provide ongoing monitor-ing and leadership in the use of the solution.

Sabre® Airline University — The university is available via the Sabre® Community Portal, which places a knowledge bank within easy reach of the airline community and enables users to tailor their training delivery in a way that suits their applications. Each solution has its own program designed to ensure customer success through:

− Instructor-lead classes,− Virtual classroom,− Online learning,− User conference sessions.The standard training program consists of a

training-delivery methodology and supporting train-ing materials, including a training guide, which is an integral part of the training program. During user and super-user training programs, the instructor references examples and exercises in the training guide and discusses how the system functionally relates to trainees’ daily job functions.

Sections of the guide include objective and task-based modules, business-process flow and system overview, screen captures and generic data, procedures, scenarios, and exercises and business concepts relating to system functionality.

CustomerCareNext, the project’s focus shifts to ensure a

successful transition to ongoing support. At this time, the primary interaction between the carrier

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Thebestbusinesssolutionscontainnotonlysuperiortechnologybutalsopreciseandskilledimplementationandsupport.TheImplementation & Support Lifecycledeliveryapproachensuresasuccessfulend-to-endimplementationexperienceaswellaslong-term,ongoingcustomercare.

and Sabre Airline Solutions is transferred from the project team to the Customer Care team. Customer Care includes a service center staffed around the clock, every day of the year, by select personnel with significant experience in both information technology and the airline industry.

GlobalServiceCentersAs part of its world-class level of support

across its entire solutions portfolio, Sabre Airline Solutions provides global maintenance support to its airline customers. Customer Care (the main-tenance period) includes service center frontline, advanced support and operations teams located at global service centers in Montevideo, Uruguay, and Bangalore, India.

The global approach involves both solu-tions/functional and customer-service training. Infrastructure installations are highly advanced and are completely integrated between support offices, providing 24/7 support coverage around the world.

The Sabre Airline Solutions commitment to service remains strong, with the full integration of its support operations into a true “follow-the-sun” model, involving two stable groups of resources applying their knowledge and experience within the same business hours of global airlines all day, every day. This stability within the 24/7 operation results in a solid, constant knowledge base, aligned overall direction and quick turnaround times for airlines.

In Bangalore and Montevideo, the advanced-support teams are staffed with dedi-cated subject-matter experts, providing assistance for complex service requests. Each subject matter expert is dedicated to a select group of solutions and provides consultative-level analysis, expert troubleshooting and resolution coordination.

Tools used by the Customer Care team — including the Sabre® Community Portal, Siebel, eService, eKnowledge and the Sabre® Customer Experience Manager — are overseen and man-aged by dedicated, experienced developers and analysts as well as project and solutions managers.

Reports ranging from high-level overviews to detailed activity relating to each individual service request can be developed to meet spe-cific airline needs. Also available are customization of reports and consultation on reporting best practices.

ManagingTheRelationshipA successful delivery is just the first step of

a long-lasting relationship between Sabre Airline Solutions and its airline customers. And delivery success is critical, providing a solid foundation. But the majority of the relationship occurs after initial delivery of the solution, during which time the airline realizes the true value of the delivered solution.

A key strength of Sabre Airline Solutions is the ability to service an extensive global customer base while continuing to invest in new technology

as well as performing other customer deliveries. It’s not a boutique, but rather a key technology partner in global aviation. As such, it has the finan-cial strength to provide a full spectrum of tiered support services critical to a carrier’s business-solutions lifecycle.

TieredSupportServicesSabre Airline Solutions customer-relation-

ship support is based on open communications and skilled-resource availability. Tiered Support Services provide a predictable and optimal service experience best suited to each airline’s unique business needs. The tiers help align the Sabre Airline Solutions service values with its cus-tomer’s operations and include:

Standard Tier — Support teams consisting of frontline, advanced support and technical resources; global 24/7 operations and region-ally based delivery and support resources; solution- and customer-specific sales and account management; industry-leading sub-ject-matter and operations-research exper-tise; Web-based self-service and automated-support systems; and a staff that is focused on each individual customer’s realization of value from Sabre Airline Solutions technol-ogy.

Silver Tier — Everything from the standard tier is included as well as service credits added to standard service commitments; higher prioritization of service requests; system-uptime service-level agreements; and biannual customer checkpoints.

Gold Tier — Combines the standard tier and silver tier as well as the highest service-level commitments; a dedicated gold service line; included licenses for new solutions versions; and additional services such as “health checks” and user-conference passes.

LifecyclePractices:ValueManagement

The Sabre Airline Solutions mission is to provide valuable solutions that drive an airline’s business. It is committed to backing up its return-on-investment promises by offering a comprehensive “value-measurement” activ-ity. As part of the overall delivery services, Customer Value Measurement is intended to help an airline quantify the true value the solu-tion provides to its business.

Customer Value Measurement can be performed on each airline engagement and proj-ect. Using this service, Sabre Airline Solutions and the airline agree on the measurement criteria at project kickoff and establish a mea-surement benchmark that carries through to the system’s production period and each subse-quent year during the Customer Care phase.

From a practical standpoint, it is evident that value metrics will naturally vary among solutions and can cover incremental revenue benefits, cost savings, government compliance and staff productivity.

Primary activities in the value-measure-ment process include defining the measure-ment approach and criteria (metrics), establish-ing a baseline during the delivery engagement, implementing the new solution and measuring the key metrics at predetermined intervals post implementation.

Once the value-measurement-process definition is complete, Sabre Airline Solutions can assist the carrier in benchmarking current-state metrics during implementation and measuring actual return on investment post cutover.

ProjectAndProgramManagementProject control is provided by the Sabre

Airline Solutions project-management function. Multiple concurrent deliveries are additionally supported by a program-management func-tion. These functions provide the oversight mechanisms of the engagement and take place throughout each of the other implementation phases.

At all junctures, the goal is to provide comprehensive project-planning and -manage-ment services — from project initiation through production cutover and transition to Customer Care. The purpose is to seamlessly incorporate the responsibilities of both the airline and Sabre Airline Solutions into a comprehensive plan that achieves project goals and meets delivery targets. Sabre Airline Solutions approaches proj-ect- /program-management functions through: Adherence to project methodology — To ensure consistency of control processes and reporting, standard methodology discipline is enforced across all projects.

Management of project plans — Project plans include a variety of topics, such as the project schedule as well as change-and-issues-management and risk-mitigation

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A successful deliv-ery is just the first step of a long-lasting rela-tionship between Sabre Airline Solutions and its airline customers. And delivery success is critical, providing a solid foundation.

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plans. After the planning phase is complete, project plans are actively managed, with fur-ther changes handled through a formal change-request procedure.

Project-schedule updates — So progress can be computed and reported at timely intervals, project-schedule updates are solicited and received via “actual time spent” or “percent-age completed.”

Project-progress reporting and communica-tion at all levels — Standard progress reports are provided to all levels of the engagement model, at the chosen level of detail, in a timely and scheduled manner. Steering sessions are held on a regular basis.

Change and issue management — Project discipline is enforced through change- and issue-management tracking. To help ensure timely delivery, changes are made only through properly authorized change requests. Issues are managed, tracked and escalated as needed through completion.

Program management — Program manage-ment provides multi-project coordination through established project-to-project depen-dencies that are tracked and communicated to ensure full awareness and visibility. Programs are managed via integrated schedules for each subproject. While project managers are responsible for the plans, schedules, changes, issues, risks and budgets for their specific proj-ects, program managers are responsible for all these functions at the overall program level.

QualityAssuranceSabre Airline Solutions quality assurance

applies principles and practices to help ensure the delivered solutions satisfy customer needs and expectations. These standards are applied throughout the project lifecycle.

Quality assurance is characterized by early and frequent feedback — engaging airline cus-tomers and testers early in the process. Practices such as code inspections and test automation are applied to uncover issues before they actu-ally materialize to prevent errors and omissions rather than find them during late-phase test-ing. Experience has proven that this approach enhances quality, reduces costs and accelerates solution delivery.

Built into Sabre Airline Solutions stan-dard development, implementation and support methodology, quality-assurance activities include a requirements definition in the form of user stories, requirements traceability and acceptance criteria; iterative development methods including multiple, short development iterations with a high degree of customer-representative involve-ment; software-configuration and -release man-agement; and comprehensive validation activities and deliverables.

Additional quality-assurance factors involve: Close customer collaboration, periodi-cally bringing the airline and solutions teams together to gain communication and feedback efficiencies;

Business-scenario-driven validation cycles (including execution of validation scripts before delivery to verify that all requirements have been met and the system and interfaces are ready for delivery);

Pre-delivery checkpoints performed by the implementation team, serving as internal quality-assurance gates and involving all parties engaged in a specific customer delivery;

Post-project reviews that enable Sabre Airline Solutions to learn from each subsequent deliv-ery and enhance the process.

The end result is software that is thor-oughly and properly inspected and verified for early defect resolution.

Through its Implementation & Support Lifecycle, Sabre Airline Solutions brings airlines a level of implementation and ongoing service that is unique in the airline industry. a

Russ Renfro is director of lifecycle services for Sabre Airline Solutions. He can be contacted at [email protected].

45,500+ The number of channel views the

Qantas YouTube channel has received

since its February 2006 launch,

according to the Centre for Asia

Pacific Aviation. The carrier realized

3,526 views of the relaunched “I Still

Call Australia Home” advertisement

within the first three days as well

as more than 87,000 views for its

“Painting Of The First Qantas A380”

video.

4.6+ million The number of times the “Bare

Essentials Of Safety From Air New

Zealand” safety video has been viewed

on YouTube, according to the Centre for

Asia Pacific Aviation. The video features

body-painted cabin crew and pilots

delivering the in-flight safety briefing

to customers travelling on Boeing 737

domestic jet service.

8.5 million The number of people the air trans-

port industry will directly employ by

2026 as a result of the 145 percent

increase in annual travel between now

and then, according to Travel Daily

Asia News. The airline industry is also

expected to contribute US$1 trillion to

world gross domestic product during

the same time period.

+count it up

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Bundles Of JoySabre Airline Solutions® unveils several new capabilities of SabreSonic® Customer Sales & Service, designed to help carriers plan, execute and succeed well into the future.


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In September 2008, Sabre Airline Solutions launched SabreSonic Customer Sales & Service, innovative reservations and depar-

ture control software that provides advanced revenue generation and customer knowledge capabilities that transcend those of traditional passenger reservations systems. SabreSonic CSS gives airlines the ability to know every customer better than their competitors and use this insight to optimize revenues and effectively deliver the right service at the right price to the right customer, every time.

SabreSonic CSS supports any airline business model, from low-cost carriers and full-service airlines to hybrid carriers that offer a range of services. It is robust and flexible enough to support an airline’s implementation and operation of new strategies and busi-ness models that may evolve in response to changes in the marketplace.

In addition to the base solution, there are three major bundles that directly address revenue optimization while focusing on customers: Inventory & Revenue Management, Merchandising, Customer Centricity.

It is the industry’s only customer sales and service solution designed to deliver what airlines need to aggressively compete — now and in the future.

Backed by a multi-million-dollar invest-ment and three-year solutions roadmap, Sabre Airline Solutions is committed to delivering new SabreSonic CSS capabilities to the mar-ketplace on a regular basis. Since last year’s launch, several key capabilities have been introduced that airlines can benefit from today: the Executive Dashboard module, the custom-er value calculator, a pay-for-seats model, and advanced inventory and revenue management capabilities. In addition, significant progress has been made on a sophisticated rules engine as well as service enablement under a service-oriented architecture.

ExecutiveDashboardAirlines, by nature, have complex work

environments supported by diverse systems that continually generate large amounts of data. To obtain a holistic view of the data requires carriers pull it together in a single, easily accessible location. But even when that is possible, determining which information should receive the greatest attention at any given moment is a daunting task at best. As a result, many airlines have probably spent a great deal of time and resources attempting to interpret the information in a timely manner to generate essential performance metrics.

To assist with this challenge, Sabre Airline Solutions is deploying industry-leading analytical and business intelligence capabili-ties to the SabreSonic CSS user community and the marketplace. The newest addition,


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the Executive Dashboard, is a timely and automated solution aggregating critical perfor-mance metrics and offering a succinct “at-a-glance” view of the overall health of the airline. Delivery via the Sabre® Community Portal enables global accessibility and single sign-on. The Executive Dashboard is an integrative communications tool linking high-level execu-tives with the management teams directly sup-porting them as they monitor their business from a single information source. Executives can easily view the areas of their business that require immediate attention without waiting for staff members to pull together data and generate reports.

Imagine, for example, you are the chief executive officer of Worldwide Air. Shortly after arriving at the office, you log into your computer and access the Executive Dashboard to get a quick picture of yesterday’s perfor-mance and an update on today’s operations. Your attention is drawn to the operations area of the Executive Dashboard. The majority of flights today are on time, but there are six key flights with high volumes of business travel-ers experiencing major delays. Since current weather conditions don’t appear to be a factor in the delays and there are many customers to move, you phone the vice president of flight operations to inquire about the reason for the delays, how long they are expected to be, and the number of destinations and passengers impacted. The vice president has also been monitoring flight operations on his computer using the Executive Dashboard. When the

flight delays were first posted, he contact-ed the director of systems operations who advised him that strong winds on the East Coast were resulting in air traffic control/gate hold delays on the six flights. The vice president was also advised that the winds were expected to calm down within the hour and the flights should depart shortly thereafter. With this information, the vice president is able to quickly respond to your inquiry while assuring you that important business travelers have been advised of the situation and appropriately accommo-dated. As the operational data on the Executive Dashboard is updated frequently throughout the day, you are able to follow your airline’s operation as it gets back on track.

The Executive Dashboard interfaces with other Sabre Airline Solutions tech-nology to provide a concise view of an airline’s performance. Capabilities included currently are in the areas of:

Ticketing — Includes seats sold and flown. Drill-down capabilities enable airlines to view the performance of their sales channels.

Operations — Flight movement and tracking systems deliver updated flight departure, arrival and delay data fre-quently throughout the day.

Reservations — Frequent flyer informa-tion and, in the future, customer value segmentation data generated by the customer value calculator.

Inventory — Forward-looking bookings as well as year-over-year and month-to-date comparisons.

Revenues — Preliminary (unaudited) data as well as audited revenues from the rev-enue accounting system.

For airlines utilizing solutions from other providers in some areas of their operations, a standard, structured process for feeding data into the Executive Dashboard is available.

“When Sabre Airline Solutions approached us to be a launch partner for its new Executive Dashboard product, we were very interested as we had been looking to pro-vide our executives with an at-a-glance over-view of the airline’s operational and financial performance,” said Midwest Chief Information Officer Alex Yarmulnik. “We partnered with Sabre Airline Solutions throughout the design and deployment of the Executive Dashboard and leveraged its knowledge of airline busi-ness processes and core technology to realize a materially shortened delivery timeframe. In addition to utilizing the existing components of the SabreSonic CSS platform, we were able to integrate our internal data stores into the Executive Dashboard, thus providing execu-tives with a consistent view of the airline’s key performance indicators.”

CustomerValueCalculatorTraditionally, airlines have used loyalty or

frequent flyer tier programs to segment their customers, with qualifications for these pro-grams based on the number of flights and/or distances flown in combination with the types of tickets purchased. While these programs continue to be valuable, not all airlines utilize them, and because of enrollment require-ments, not all of an airline’s customers are program members. So how can airlines learn about their customers and their preferences? And after obtaining that information, how can they determine which types of customers best support their strategy?

Part of the Customer Centricity bundle, the customer value calculator is a robust, con-figurable tool that enables an airline to assign a value score to every customer with a profile. A profile is created when a customer logs into an airline’s Web site, makes a reservation with an agent or enrolls in a frequent flyer program. A customer’s trip information (itineraries booked, fares paid, special requests and preferences) is incorporated into the profile, which is then used to calculate a customer profile score.

The calculator is configurable via a graphical user interface, enabling an airline to determine its own unique definition of cus-tomer value based on its business strategies. And it is flexible. As the industry shifts and markets evolve, airlines can quickly change valuation rules to effectively compete.

Currently, the customer value calculator uses the basic variables of recency, frequency

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TheExecutiveDashboardprovidesairlineexecutiveswithaconciseviewofkeyperformancemetrics,aggregatingdatafrommultiplefunctionalareasandinterpretingthedatainameaningfulmanner—providingatimely“at-a-glance”viewoftheoverallhealthoftheairline.

Photo by Sabre Airline Solutions

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and monetary value. Recency represents the number of segments flown by a customer in a time period specified by an airline — usually about 12 months — and is used to capture recent travel activity. Frequency also measures the number of segments flown, but gener-ally over a longer period of time; for instance, 36 months. Monetary value calculates the amount of money spent by a customer in a user-specified time period. The airline has complete control over the time ranges defin-ing these variables, the tiers and associated values within each variable and the relative importance of each variable in calculating a customer value score.

For example, recency may comprise 20 percent of an airline’s customers’ value scores; frequency, 30 percent; and monetary value, 50 percent. Once the variables and associated parameters are set, the airline can then calculate a value score for each customer that is stored in his profile. The distribution of customer value scores can be viewed in a bar chart or tabular format, and the tool’s what-if

capabilities enable the airline to graphically display the impact of changing the variable parameters on the entire customer base or a random sample or subset.

These value scores can then be used to generate and evaluate merchandising strate-gies and optimize revenues across all cus-tomer touch points in conjunction with the Sabre® Rules Manager. Based on the value scores, the airline may decide to differentiate service to certain subsets of customers. For example, it can set a rule that states, “if a customer value score is greater than 85, then waive bag fees.” The carrier also has the ability to manually override rules. For instance, it may determine a specified customer’s value score should never fall below 60, even if calculated otherwise. And as an individual’s flight needs and habits fluctuate over time, the calculator’s “audit trail” capability will make it possible for the airline to track changes and explore the reasons for them.

InventoryAndRevenueManagement

With their cost-cutting options dwindling, airlines are narrowing their focus on additional ways to generate revenue. The advanced rev-enue management solutions within SabreSonic CSS will enable airlines to offer optimal fares to capture the most passengers and the most revenue in the toughest economic conditions. Recent enhancements to the Inventory & Revenue Management bundle include improved O&D inventory control capabilities with flexible default fares that enable airlines utilizing O&D revenue management to calculate availability for policy classes without fares, such as frequent flyer redemption and staff travel, while ensur-ing adequate availability to maximize overall revenues. An upgraded simulation tool enables airlines to view an agent availability display and verify the impact of business rules and market values on availability. This helps pre-vent the implementation of erroneous rules that negatively impact revenues and reduces the time the revenue management depart-ment now spends troubleshooting availabil-ity issues. For codeshare partners hosted

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Offeringavarietyofancillaryproductsandservicesthatcustomersvaluemostwilllikelyboostloyaltyaswellasincreaseanairline’sincrementalrevenues5percentto8percentonaverage.


in SabreSonic CSS, expanded capabilities, including true availability, permit availability requests for the marketing airline’s flights to be cascaded to the operating airline, sig-nificantly reducing overbooking and spoilage on codeshare flights. And new Web services from SabreSonic CSS provide airlines with a more reliable method for sending updated inventory controls from their third-party rev-enue management systems to SabreSonic CSS. These services replace FTP servers and other less reliable solutions now in place at most airlines.

Is an airl ine leaking revenue? Planned inventory alerts will automati-cally notify Sabre® AirVisionTM Revenue of bookings and cancellations, ensuring an airline has the most up-to-date inven-tory data around the clock to re-optimize flights based on those changes. With these advanced inventory controls, an airline won’t miss revenue opportunities that might occur in between the nightly batch processes of the revenue manage-ment solution.

While knowing its customers is crucial to an airline’s success, knowing its competition can also be profitable. A new competitive revenue management solution will enable an airline to monitor the competition and create intelligent business rules to respond to changes in its competitors’ availability of low fares. For example, if the competition offers a US$2,000 fare for a direct flight between

London and Hong Kong with a desirable departure time, the revenue management solution will compare this low fare with the airline’s US$2,250 fare for a one-stop flight and recommend increasing the availability of its lower-valued fares. By expanding revenue management prin-ciples to include an overall market view, SabreSonic CSS alerts revenue manage-ment analysts to possible revenue spoil-age and dilution.

Other planned enhancements include a redesigned consolidated graphi-cal user interface for inventory and rev-enue management that will improve effi-ciency and provide additional data to assist with decision making and increased flexibility in the generation of availability status message generation.

PayForSeatsWhile advanced revenue manage-

ment solutions have the ability to create up to a 5 percent improvement in reve-nue for a carrier, effective merchandising techniques may result in an even greater incremental revenue increase — 5 per-cent to 8 percent. The Merchandising bundle offers sophisticated products and capabilities that help airlines differenti-ate, brand, market and merchandise their fares with ancillary products and services through both direct and indirect points of sale controlled and connected by SabreSonic CSS.

Included in this bundle is a power-ful ancillary seats model that enables an airline to increase revenues by offering customers the opportunity to purchase in advance premium, or very desirable, seats via all booking channels (SabreSonic® Check-in, SabreSonic® Web, SabreSonic® Res and the Sabre® global distribution system). With the pay-for-seats model, an airline can:

Dynamically display premium seat fees and pricing options at the point of sale,

Seamlessly integrate customers’ seat selections into the point-of-sale work-flow,

Process seat fees using SSR messag-ing,

Confirm seat purchases, Dynamically adjust seat prices based on flight segment length,

Add taxes to seat fees (in countries that apply taxes to premium seat charges, such as Canada),

Offer multi-currency support. By providing a wider range of choices,

customers can determine the products and services that best meet their needs, thereby increasing customer satisfaction and loyalty. And an airline can optimize revenues by up selling to higher-yielding fares and cross selling ancillary products and services.

Sabre Airlines Solutions partnered with Wisconsin-based Midwest Airlines

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AsthelaunchcustomerfortheExecutiveDashboard,MidwestAirlinesparticipatedinthedesignanddevelopmentofthesolutionandleveragedSabre Airline Solutionsexperts’knowledgeofairlinebusinessprocessesandcoretechnology.

Photo by shutterstock.com

last year to launch the pay-for-seats model with solid results.

“Our work with Sabre Airl ine Solutions was in direct answer to our customers’ desire for more choice,” said James Reichart, director of advertising and brand for Midwest Airlines. “Working with Sabre [Airline Solutions] to launch Midwest Class — a choice of seating in the same coach cabin aboard our Boeing 717s — is the first step in allow-ing customers to choose amenities that customize their flight experience. Sabre Airline Solutions has been a real asset to Midwest Airlines and has played a pivotal role in helping us meet our operational needs.”

SabreSonic CSS will continue to develop and enhance the pay-for-seats model to include the option to charge for any pre-reserved seat, not just premium seats, and support for taxes on seat fees will be expanded to include other countries, in addition to Canada. To assist with seating issues encountered during irregular operations and subsequent pas-senger reaccommodations, the model will automate the tracking of passengers, alerting airlines when passengers who are entitled to preferred seats do not receive them and issue credit vouchers as compensation.

RulesEngineThe backbone of SabreSonic CSS

is a sophisticated rules engine, which serves as the key driver for the Inventory & Revenue Management, Merchandising, and Customer Centricity bundles. The rules engine utilizes a business rules management system with a common interface for inputting, viewing and modi-fying the rules that govern airlines’ busi-ness strategies. Many of the rules that were once imbedded in applications and required extensive code modifications to update can now be readily adjusted by airlines using natural-language rules, providing greater control over inventory, revenue management and merchandising efforts.

The rules engine combines revenue management and merchandising in a revolutionary new approach. An airline may realize, for example, that many of its customers prefer exit row seats because of the additional legroom. Using the pay-for-seats model, it can decide to charge an additional US$30 fee for exit row seats because customers are will-ing to pay for the extra legroom. That’s merchandising. Now incorporate revenue management. One of the carrier’s aircraft types has two exit rows with a total of 12 seats. Initially, the exit row seats are

an extra US$30, but when only four are still available for booking, they become an extra US$40 each. When only two exit row seats remain, it’s an extra US$50. However, one of the seats is a center seat so instead of US$50, it is only an additional US$35.

Imagine the time and manpower needed to process this type of data using traditional systems. With SabreSonic CSS, the airline can input these rules into the engine’s business-rules manage-ment system and easily adjust them as necessary.

ServiceEnablementSabreSonic CSS is supported by

robust and scalable service-oriented architecture, an open standard that sup-ports the seamless exchange of data across the suite and enables the com-

plete infrastructure to work as a single, high-performing unit. Airlines can choose the tools and technology that best meet their needs from suppliers such as IBM, Microsoft or other open-source alterna-tives, giving them control over their work-flows and presentation of information.

As new functionality and compo-nents are introduced and integrated with existing solutions, SabreSonic CSS will continue to expand its services in sup-port of the base solution as well as the Inventory & Revenue Management,

Merchandising and Customer Centricity bundles. The Sabre® AirVisionTM Revenue Manager, for example, communicates with SabreSonic® Inventory via Web ser-vices. These services are available to air-lines desiring to integrate their traditional or legacy revenue management systems with SabreSonic Inventory.

In the near future, sophisticated services will be provided for backend systems for the automated exchange and refund of tickets as well as ser-vices that support and/or interface with the customer value calculator, Sabre® Reaccommodation Manager, ticketing (excess baggage and other fees) and new shopping functions. In addition, other ser-vices will enable airlines to use the com-ponents and functionality of SabreSonic Check-in in flexible new ways.

When SabreSonic CSS was launched last year, it carried with it enormous expectations of delivering capabilities that would make a real difference for airline performance worldwide. From the start, the team tasked with making the SabreSonic CSS vision a reality has fol-lowed the philosophy that capabilities should be brought to market as soon as they are certified ready for use rather than waiting for artificial milestones.

Accordingly, today airlines in every segment are able to take advantage of advanced functionality that helps them better manage their business: the Executive Dashboard, the customer value calculator, advanced inventory and reve-nue management, and pay-for-seats capa-bilities, all supported by a sophisticated rules engine and service enablement of key business logic. With these advances and investments in SabreSonic CSS, Sabre Airline Solutions continues its more than 40-year commitment to providing industry-leading capabilities that enable airlines to plan, execute and succeed at its business strategies well into the future. a

Lauren Lovelady can be contacted at [email protected].

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A new competitive revenue manage-ment solution will enable an airline to monitor the com-petition and create intelligent business rules to respond to changes in its com-petitors’ availability of low fares.

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A trip that occurs on a beautiful, clear, sunny day with no disruptions, no hassles — just smooth sailing

through the airport and an on-time flight to their destinations where their luggage is waiting at the baggage carousel.

These represent some expectations of airline customers when they plan their next trip and select a carrier. They base their selection on various factors such as ticket price, the schedule or maybe even the type of aircraft. Another major consid-eration likely relates directly to the posi-tive experience and superior service they received on a previous flight.

And while not every day is beauti-ful, sunny and hassle free, the successful carrier must still deliver its promise. The customer, having booked a flight and pur-chased a ticket, now has a contract with the carrier for air transportation to the desired destination. The carrier is obligated to fulfill this contract — its promise — and, how that promise is delivered is key to the carrier’s success.

Regardless of the circumstances, delivering the promise is a fundamental requirement 365 days a year. And during irregular operations, it is much more impor-tant to deliver in a manner that exceeds customers’ expectations, which will likely bring them back time and time again.

To help carriers honor their vow each and every day, Sabre Airline Solutions® developed and launched Sabre® AirCentre™ Enterprise Operations.

TheSolutionComprising end-to-end, integrated,

next-generation technology, the Sabre AirCentre solution enables carriers to seamlessly and professionally manage their operations to include successful manage-ment during disruptions — at the lowest operating cost.

The integrated solution helps airlines make better and faster decisions about their operations, and it is founded on three primary operational principles:1. To help carriers (from planning through

execution) efficiently maintain control of their operations, which stretch from their centralized systems operations control center to the operations at their airports;

2. To help carriers optimally manage change, from operational disruptions to new business models or technology being introduced;

3. To help carriers provide the desired cus-tomer-service experience based on their unique operating models. With the Sabre AirCentre solution, carriers can now opti-mize the full scope of their operations

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Advanced operations technology helps carriers “deliver the promise” to their valued customers who, by booking flights and purchasing tickets, have a contracted “promise.”

By Dave Roberts | Ascend Contributor

while selecting the degree of customer service that best fits their corporate phi-losophy.

These operational principles make it possible for carriers to provide the cus-tomer experience they want to achieve while delivering their promise and keeping operational costs down.

AViewAcrossTheEnterpriseCarriers benefit from day-of-opera-

tions solutions that are integrated across all operational areas to provide real-time data when it is needed. To accomplish this, Sabre AirCentre Enterprise Operations focuses on its four major components that span carrier operations — with capabilities across flight operations, crew manage-ment, airport operations and maintenance control.

FlightOperationsSabre® AirCentre™ Flight presents the

integrated core elements of flight opera-tions, including movement control, flight planning, dispatch, load planning, weight and balance, and ACARS communication. Working together, these elements provide productivity enhancements for airline users that enable them to be more efficient. Flexibility, speed and user-friendly inter-faces are key measures for movement controllers as well as flight and load plan-ners in the operations offices. The solution reduces the level of dispatcher data entry and supports a paperless flight operations office.

Sabre AirCentre Flight enables air-lines to manage their flight operations from flight planning and tracking to load planning, movement control and irregular operations. The process begins with a reli-able flight schedule, which is key to the service an airline offers, and maintaining its integrity is primary.

The core of the Flight component is the movement control system, which is integrated with the flight scheduling system and the maintenance control sys-tem. Sophisticated aircraft tail-assignment algorithms optimize aircraft assignments to ensure schedule continuity from plan-ning to operations. During the day of operations, a what-if-scenario environ-ment for automated and optimized solu-tions assists when disruptions occur. The movement control system provides opera-tions controllers with a better view of impending operational issues that can lead to delays, along with tools to resolve the problem quickly and efficiently. The system also provides proactive alerts, a graphical user interface and swap sugges-tions, enabling effective management of

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Single data entry across airline operations

Simplified and automated business processes

the operational schedule with little or no controllable delays.

Within the Sabre AirCentre flight planning engine routes, altitudes and flight speeds are selected considering legal requirements, weather and air traffic con-straints. Connecting flights and fuel con-sumption are also evaluated when deter-mining the flight plan. The flight planning tool calculates the optimum flight plan based on variable cost parameters and indices when considering all these factors.

Using this optimum flight plan, flight planners check maintenance status of the aircraft; weight limitations for each segment of the flight, route and altitude restrictions; required fuel for operation to destination; and contingency fuel to alternate airports based on current and forecasted weather.

As part of the important weight-and-balance process, load planners develop the optimum load plan for aircraft loading and unloading as well as for the best center of gravity for reduced fuel burn en route.

Airlines today monitor their on-time performance and fuel utilization very close-ly. New technology is available to improve both of these key areas. This technology enables airlines to analyze the designated flight plan and alert the flight planner of impending air traffic control delays before flight departure. With this technology, air-lines can file alternative flight plans and avoid unnecessary ground holds or burning additional fuel in a holding pattern while en route.

CrewManagementSabre® AirCentre™ Crew helps car-

riers efficiently manage crewmembers. Beginning months before the day of opera-tions, the Crew component considers major crew scheduling areas such as creating a crew plan, determining required qualifica-tions and deciding where crewmembers will be based. Successful crew scheduling ensures that legal and qualified crewmem-bers are assigned to each flight.

The use of effective staff planning systems enables the creation of more-exact hiring and training policies that will drive availability of critical resources when need-ed on the day of operations. Manpower planning, vacation/leave allocation, crew training and crew communications are han-dled with ease through automated tools.

Using industry-best-practice tools and the most advanced algorithms, crew schedulers effectively build optimized crew rosters that consider crew preferences, an optimal schedule and the lowest operat-ing cost. And using automated decision-support tools to schedule crewmembers, crew planners determine and simulate the potential impact of operational variations

such as changes to schedules, equipment types, crew-base locations and other sup-porting resources.

If the crew operation is disrupted due to unplanned crew absences or operational disruptions, crew schedulers can use opti-

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mized recovery solutions to immediately identify alternate resources for impacted flights. The recovery optimizers also return crewmembers to their original schedule as soon as possible following the disruption.

Throughout the process, access to a flexible, powerful, easy-to-use, natural-language rules engine enables a carrier to react quickly and efficiently. Whether it’s a change in the carrier’s business model, a new labor agreement or changing govern-ment regulations, crew schedulers can model the new requirements, deploy the new rule set and determine the impact on the crew schedule in a timely manner.

AirportOperationsSabre® AirCentre™ Airport helps

carriers manage their staff and ground resources, including personnel-staffing levels, ground equipment and end-to-end management of gates. The Airport com-ponent encompasses the entire scope of operations from resource planning through day-of-operations management. Working together, the SOC and the many airports around a carrier’s system successfully manage the day of operations.

Effective gating processes help ensure a smooth flow of arriving and departing flights, reducing fuel burn and mitigating gate “wait” time. Using robust technology, in tandem with their personal experience and reasoned judgment, gate planners develop an optimal gate schedule and proactively respond to flight changes as they occur.

Staff planners schedule ground staff and equipment based on actual work demand created from the flight schedule, ensuring an optimized plan without com-promising the customer experience.

Automatically accounting for work standards, employee agreements and the incoming work demand, staff administra-tors expeditiously and accurately build ros-ters based on user-defined rostering rules. Employees are able to manage all their exception requests, such as vacation and overtime, through employee self service. These approved employee exceptions are automatically validated and accounted for as staff administrators assign or award shifts.

On the day of operations, staff man-agers monitor all aspects of airport opera-tions, specifically those events that might trigger service delays and/or additional operational costs.

Using a powerful decision-support and tracking tool, managers and supervi-sors can evaluate workloads and assign-ments and are automatically alerted to flight changes. And when flight disruptions occur, the system’s automated response

reallocates task assignments and resourc-es and notifies airport staff via wireless communications.

MaintenanceControlSabre® AirCentre™ Maintenance

addresses the need for carriers and main-tenance, repair and overhaul organizations to manage maintenance programs, statu-tory compliance requirements, production schedules, materials assets and usage, as well as aircraft and technical staff produc-tivity from planning through execution, all while sustaining cost effectiveness and maximum safety and reliability.

The mechanical condition of aircraft must be constantly monitored. The mainte-nance, repair and overhaul division accom-plishes aircraft service checks and main-tains the airworthiness of the airline fleet.

Maintenance controllers work closely with movement controllers and flight plan-ners to monitor flight status and potential problems that may occur when technical problems exist. In addition, they serve as liaisons between operations controllers and the ground maintenance teams at the airports.

An efficient maintenance program contributes significant benefits:

Performing the right corrective action the first time resulting in fewer creeping delays for maintenance,

Making the unpredictable predictable resulting in fewer unscheduled mechani-cal disruptions and more proactive rather than reactive withdrawals from service,

Programming activities in the right place at the right time and with the right resources reducing duplication of effort and “over-maintenance,”

Coordinating deployment of aircraft to optimize the utilization of the aircraft.

IrregularOperationsWith advancements in information

technology and integration of automated solutions, the ability to manage and con-trol a carrier’s daily operations has sig-nificantly improved — even during irregular operations. These advancements enable increased exchange of information among operational groups, providing the basis for collaborative decision making.

To deliver their promise efficiently, carriers must overcome irregular opera-

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tions in a manner that considers both their customers and their business goals. Sabre AirCentre Enterprise Operations pro-vides sophisticated recovery solutions that enable preplanning of or reaction to disrup-tive situations rapidly and effectively.

Disruptions inevitably occur. To keep each individual flight on schedule, flight and crew controllers react promptly to find a new aircraft. With automated alerts providing advance warn-ing of potential disruptions, controllers have time to take corrective action.

Whatever the magnitude of a disruption, carriers want to return to normal operations as soon as possible to minimize any inconve-nience to passengers and lessen the impact on operational costs. While many irregularities are unavoidable, efficient and timely responses consistent with corporate policies and brand are crucial in maintaining passenger goodwill.

Accomplishing all these things is the intent of Sabre AirCentre Enterprise Operations, which is based on performance scales that detail the innovative techniques and new tech-nology that provide carriers the ability to more competently manage change while controlling costs.

There are two performance scales. The first scale contains 14 steps leading to improved overall cost control. At the top of the scale are powerful new tools for applying variable-cost-index flight planning and collaborative air-traffic management techniques, plus optimization-based recovery capabilities that minimize dis-ruption cost.

The second performance scale addresses the concepts of managing change that occurs every day during operations and evolves over time according to corporate direction. The top of this scale includes utilization of dynamic en route flight planning, automation of event-driven decision support as well as the full scope of integrated operational recovery.

To recover from disruptions with minimal impact on customers and the operation requires timely and accurate decision making. Sabre AirCentre Enterprise Operations uses recovery tools to aid in solving customer, flight and crew disruptions with speeds that produce recovery plans in seconds and minutes rather than hours, with each of the recovery plans fully deployable based on flight, aircraft and crew legality.

Recovery from disruptions of any and every size is an essential key to carrier suc-cess. The same integrated operations solutions that are used for operational planning are also used during daily operations as well as during recovery operations, representing a significant advantage to airlines — user familiarity.

Carrier staff members are fully proficient with the Sabre AirCentre tools and comfortable using them. New tools are not used during recovery operations, so operations and crew controllers or dispatchers are able to concen-trate on generating solutions to the problems

rather than having to learn how to use a differ-ent tool.

As a result, the Sabre AirCentre solu-tion is used to its full potential, and business processes are fully adopted, providing greater cost savings.

TheTechnologyNew techniques for today’s airport and

flight operations are prime examples that infor-mation technology continues to change the way information is gathered, compiled and shared

with airlines’ operations staff.Sabre AirCentre Enterprise Operations

is based on flexible, adaptable technology in an open, modular service-oriented architecture infrastructure, enabling carriers to maintain a modern, futuristic operations environment. The solution’s platform is designed to evolve with a carrier’s ever-changing business needs as the dynamic marketplace changes.

In particular, carriers today are con-cerned about one primary aspect of operations: minimizing costs. Sabre AirCentre Enterprise Operations is designed to help carriers deliver their promise at the lowest operating cost — period.

Airline customers seek value. The solu-tion provides investment value not only in the tools but also in the integration within the solution, promoting collaboration throughout all areas of a carrier’s operations, resulting in bet-ter, faster and more consistent decisions across the enterprise.

The solution is based on the four pillars of The Sabre Airline Solutions AdvantageSM: flexibility, accessibility, choice and experience. Together, The Sabre Airline Solutions Advantage and Sabre AirCentre Enterprise Operations are key differentiators in building a superior opera-tions solution for airlines.

The solution also utilizes the Sabre® ASxSM Airline Services Exchange for “just-in-time” information exchange through the service-ori-ented architecture and extensive use of flexible rules engines.

SOA flexibility enables the solution to assist carriers of all sizes and complex-ity worldwide. And as airlines grow through acquisitions or route expansion, the Sabre AirCentre rules engines enable carriers to quickly and efficiently implement company work rules or government regulations without additional information technology investment.

The SOC’s capability to communicate and coordinate among its departments has significantly improved with advancements in information technology. Sabre AirCentre Enterprise Operations enables improved exchange of information within the SOC as well as among the SOC and external operational groups such as airport control centers, air-traffic control, line-maintenance and hangar facilities, pilots, and engineering departments.

And data exchange is more efficient, response times quicker and employee pro-ductivity increased. With more dependable data accuracy, problems can be analyzed rapidly and more proficiently, enabling better decision making with a proactive (versus reac-tive) posture.

PromiseDeliveredThe contract has been drawn up, and a

promise must be delivered.Airline guests have high expectations

regarding this contract. The carrier is in busi-ness to meet and, as often as possible, exceed these expectations. Combining car-rier expertise and experience with Sabre AirCentre Enterprise Operations innovation and technological advances is the solution many carriers have chosen, enabling them to deliver the promise and rise above the competition.

Cloudy or sunny, rain or shine, Sabre AirCentre Enterprise Operations is today’s pathway for carriers to achieve success and the roadmap for furthering successful opera-tions well into the future. Above all, custom-ers definitely take notice — and, they’ll remember superior service when they book their next flight. a

Dave Roberts is senior principal of strategic planning, airline and

flight operations for Sabre Airline Solutions. He can be contacted

at [email protected].

Regardless of the circumstances, delivering the promise is a fundamental requirement 365 days a year.

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Real-Time Solutions For Real-Time Operations

Sabre® AirCentre™Flight Exploreroffersaninformative,robust,real-timeandpredictivesolutiontoenhanceanairline’soveralloperationsaswellasitstravelers’experience.

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As if the daily operational challenges within the aviation industry are not enough, commercial aviation is con-

stantly being challenged by external factors such as the current worldwide economic downturn, volatile oil prices, dated and con-strained infrastructure, shrinking air space capacity, and increasing political pressure to control the environmental impact of the industry. The value of operating at maximum efficiency, therefore, has never been more crucial.

And if these factors aren’t bruising enough, there’s the much-needed overhaul of U.S. and European air transportation systems — NextGen and Single European Sky ATM Research, or SESAR — creating future unknowns in terms of capacity and operational performance … not to mention the costs and technology requirements to implement.

Additionally, Atlantic Interoperability Initiative to Reduce Emissions, or AIRE (part of NextGen and SESAR efforts), Asia and South Pacific Initiative to Reduce Emissions, or ASPIRE, and the European Union’s Emissions Trading Scheme all endeavor to reduce aviation’s environmental footprint on a global scale.

Naturally, better fleet planning, route and network planning, flight planning, oper-ational control and decision support, fuel management, and air traffic management can significantly contribute to the reduction of carbon dioxide emissions, lessening the environmental impact of airline operations. But beyond these important environmental issues, in the face of all industry pressures, airlines need the right processes, tools and technology to help operate at optimal efficiency.

Flight Explorer provides the aviation industry with an operations management decision-support solution that can confident-ly address, expertly manage and remedy all current and future operational needs.

Introduced as the “Flight Explorer Aircraft Situational Display” tool in 1997, the solution was one of the first flight track-ing systems on the market. It immediately gained recognition as the industry’s premier real-time flight tracking and management system. It provided a unique solution to the aviation industry, enabling flight plan-ning and dispatch operators to visualize an aircraft’s current state, in real time, using a single, integrated solution. With continued investment, innovation and enhancement, today, Flight Explorer leads the market with an installed base of more than 5,000 systems.

Flight Explorer now goes far beyond simply flight tracking. It provides opera-tionally critical situational awareness of an airline’s operating fleet while in flight,

incorporating multiple data feeds, dynamic weather overlays, situational alerts, predic-tive weather and air traffic tools designed to drive an airline’s business performance success. Whether running a major, low-cost, hybrid, regional or commuter airline; a global air express or air cargo company; a major or regional airport; an air charter ser-vice; a fixed-based operation; or an airline-related service; Flight Explorer helps make informed decisions on how best to manage fleets, crew and overall flight operations.

When Flight Explorer was acquired by Sabre Airline Solutions® last year, the combined team set out with a goal to open the aerospace and aviation door to the future. The shared focus on enhancing the collaborative decision-making capabilities of air traffic operations led to this vision. And Sabre Airline Solutions continues to support the advancement and evolution of Flight Explorer by heeding customer requests and ensuring expanding development to compete globally.

At the core of Flight Explorer is: A broad and expanding source of global data that provides real-time flight tracking information around the world via the U.S. Federal Aviation Administration’s ASDI feed for instrument flight rules traffic, U.K. Class I data feed, international radar feeds, Honeywell GDC datalink and ARINC Direct for ACARS position messaging.

Extensive, customized range of weather solutions from industry-leading provid-

ers, eliminating the need to choose only one. Display and animate North American next-generation weather radar, worldwide infrared astronomy satellite coverage, international graphical meteorological terminal aviation routine weather reports, and add other dynamic weather reports including airman’s meteorological informa-tion, significant meteorological information, convective SIGMETS, collaborative con-vective forecast, pilot weather report, and real-time lightning and onsite turbulence.

Comprehensive and advanced event sys-tem that generates alerts via voice, e-mail, onscreen event list, PC audio or log file for aircraft events such as arrivals, depar-tures, change in estimated time of arrival, flight plan received or altitude, proximity to destination, METAR, runway visual range, diversions, and FAA delays.

One of the most powerful assets of Flight Explorer is the Dynamic Data Integration System designed to integrate and display any in-house data including all current and future weather, flight planning (all company flights and routes), and other on-site dynamic data within the solution. This provides airlines com-plete flexibility whereby integrated dynamic data can be vendor or client specific. It also includes a Web-based dashboard interface to ensure 99.99 percent system reliability and performance.

The Route Analyzer feature within Flight Explorer, designed to quickly optimize rerouting, reveals the routes available in

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Real-Time Solutions For Real-Time Operations

By Kristen Elmi | Ascend Contributor

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RouteAnalyzerquicklyidentifiesavailableroutesbasedonactualandpredictedweatherusinganextensive,customizedrangeofweathersolutionsfromavarietyofindustry-lead-ingproviders.Thisfunctionalityenablesoperationsprofessionalstoquicklymakenecessaryrouteadjustmentsintheeventofweather-relatedirregularoperations.


relation to actual and predicted weather and published and anticipated air traffic restric-tions. It also enables dispatchers to make necessary route adjustments prior to filing a flight plan, utilize detailed airport summa-ries containing weather to anticipate delays and reduce delays for a better customer experience.

In addition, the new Traffic Flow Management reroute advisory feature and update alert provides a list of TFM advisories and enables flight planners and dispatchers to view and analyze reroute options textu-ally and graphically. Advisories are sorted according to action level, giving priority to those at the top of the list. An alert can be

generated when a reroute advisory is cre-ated, updated or deleted by the U.S. FAA. Also, a holding analyzer pattern tool displays a list of flights that are within a specified region to determine how they are stacked in a potential holding pattern and informa-tion fields are updated every 10 seconds. Providing options in this unified, informa-tive, detailed and real-time manner helps airlines make proactive decisions across their operations.

Last year, every dollar increase per barrel (42 gallons) of fuel drove an additional US$46 million in fuel expenses for U.S. pas-senger and cargo airlines, and every penny increase per gallon drove US$195 million in annual expenses. Historically, fuel expenses have ranged from 10 percent to 15 percent of U.S. passenger airline operating costs, but averaged more than 35 percent in the third quarter of 2008. Flight Explorer pro-vides a unique functionality that indicates and visually displays the estimated flight range based on current fuel on board and specific burn rate for each aircraft type. It can also account for the static reserve fuel amount. This feature is useful when making decisions about diversions, emer-gencies and ETOPs and is vital to help-ing airlines plan and monitor effectively to achieve optimal fuel economy and on-time performance.

Sabre Airline Solutions, through its expertise and partnerships, helps airlines manage and control their flight operations and deliver their promise to their customers with increasing efficiency on a daily basis.

The technology company recognizes an airline’s need for the knowledge and tools required to operate at top efficiency, just as an airline’s leaders recognize that their teams’ smart decisions stem from pos-sessing and applying experience and train-ing with advanced solutions. Flight Explorer provides the aviation community an opera-tions management decision-support solu-tion, enabling operators and dispatchers to confidently address and skillfully manage both present and future issues.

By combining real-time aircraft posi-tion data with a choice of weather provid-ers, an airline’s operations center can plan, predict and react to disruptions of any sort, reducing impact to travelers and the bottom line. a

Kristen Elmi is a Flight Explorer marketing associate for Sabre Airline

Solutions. She can be contacted at [email protected].

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Usingrobust,real-timeoperationssolutionsenablesairlinestorunsmoothly,regardlessofunanticipateddisruptions,helpingensurethebestpossiblecustomerexperienceandcontributingtothebottomline.

Flight Exploreroffersexclusivecapabilitiesthatdenoteanddisplaytheprojectedflightrangebasedoncurrentfuelonboardandpreciseburnrateforeachaircrafttypeaswellasaccountforthestaticreservefuelamount.Thisvaluablefeaturehelpsmakedecisionsaboutdiversions,emergenciesandETOPsandisessentialtoachieveoptimalfuelsavingsandon-timeperformance.

Going With The “Flow”



O perations professionals increas-ingly value aircraft situational dis-play tools for the maintenance of

operational control. While an ASD primar-ily focuses on graphical weather and the present position of aircraft, Airspace Flow Manager provides a unique solution, enabling carriers to proactively manage current and potential air traffic system disruptions.

The missing tool has been a single source of information to show what is happening in the U.S. National Airspace

System and, more importantly, what is going to be the impact on their opera-tion. With this information, carriers can proactively manage their flights to reduce delays. A great many opportunities made possible by collaborative decision making go unused because of the multitude of Web sites and tools that have to be con-sulted to get all necessary information, which is most needed when there isn’t time to look for and analyze it.

With Airspace Flow Manager, how-ever, dispatchers, operations controllers

and air traffic control coordinators are more operationally aware and can pro-vide more definitive answers. Capabilities include:

Monitoring flight lists associated with ground delay programs and ground stops;

Identifying specific flights that are impacted by GDP, GS and other traffic flow management programs;

Compression modeling to calculate delay reduction as a result of routing out of a constraint area;

A capacity demand analyzer to graphi-cally model the impact of a GDP;

A My Airports feature that provides real-time status of ATC delays, diver-sions and cancellations for a specified list of operationally critical airports.

Airspace Flow Manager facilitates a reduced workload and increased manage-ment oversight for an airline’s operation. The planning horizon increases, and air-lines can make better cost-saving deci-sions during constrained operations. The key is reducing the impact of the volatile national airspace system and traffic man-agement programs. Each minute of delay costs an airline US$74.10, so literally every minute counts to improve the bot-tom line, and a higher percentage of on-time flights yields satisfied customers.

A key feature of Airspace Flow Manager is the Route Analyzer tool, allowing for the graphical display of mul-tiple routes between a city pair. This becomes increasingly important when there are air traffic control constraints.

In addition, Airspace Flow Manager uses the graphical components of Sabre® AirCentre™ Flight Explorer to present the information. Airspace Flow Manager takes Flight Explorer to the next level by bringing planned and scheduled flights

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Going With The “Flow”

WiththeabilitytoquicklyshowtheimpactonanytrafficmanagementinitiativesforfutureflightsusingtheRouteAnalyzertool,anairlinecannowproactivelymanageitsoperations.

By Dana Knight | Ascend Contributor

Sabre® AirCentre™ Airspace Flow Manager combines the data of seven tools in use by airlines, as well as other air transport-related companies, today for air traffic control information. The data is filtered so only the information that will impact operations is presented.

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mation available for active flights is now available for those that are on the sched-ule as well as the ones for which a flight plan has been filed.

With one tool that replaces many, tasks are completed more efficiently, decisions are made more effectively and airlines operate with greater precision than ever before. a

Dana Knight is operations solution director for Sabre Airline

Solutions®. He can be contacted at [email protected].

RouteAnalyzerquicklyidentifiesavailableroutesbasedonactualandpredictedweatherusinganextensive,customizedrangeofweathersolutionsfromavarietyofindustry-lead-ingproviders.Thisfunctionalityenablesoperationsprofessionalstoquicklymakenecessaryrouteadjustmentsintheeventofweather-relatedirregularoperations.

2050 The year in which the International

Air Transport Association has set

a target to reduce airline industry

emissions by 50 percent compared to

2005 emissions. This is one of three

challenging targets relating to avia-

tion climate change IATA identified

in September that will require air-

lines, airports, air navigation service

providers and manufacturers to join

forces to achieve.

77,000 The number of new jobs in the United

States that would be created if NextGen

were put on the “fast track,” according to

IATA’s Giovanni Bisignani, who recently

called on the U.S. Obama Administration

to renew its role as a leader in the global

aviation industry and take immediate

action to boost the U.S. economy.

30 The percentage by which the global

aviation accident rate has declined

from January to August this year

compared to the same period last

year, according to Giovanni Bisignani.

While the decreased accident rate

is encouraging, IATA recently called

for greater cooperation between the

United States and the International

Civil Aviation Organization to break

down silos and share safety informa-

tion and data.

+count it up


2009 issue no. 2

editor in chiefStephani Hawkins

Managing editorB. Scott Hunt

Associate editorCarla Jensen

Art Direction/DesignCharles Urich

contributors Wendy Albright, Michael Askew, Shane Batt, Alessandro Ciancimino, Steve Clampett, Scott Dennett, Michelle Fischer, Greg Gilchrist, Glen Harvell, Jason Heideman, Christine Kretschmar, Gordon Locke, Lindsay Millward, Benjamin Mussler, Mark Neill, Sandra Opdahl, Garth Overmyer, Lalita Ponnekanti, Gareth Tedford, Susan Via, Alan Walker, Fionna Wee, John Winstead, George Wrigley, Jung Yu.

PublisherGeorge Lynch 3150 Sabre Drive Southlake, Texas 76092 www.sabreairlinesolutions.com

Awards

2009 Awards for Publication Excellence, International Association of Business Communicators Bronze Quill, Hermes Creative Award, ECO Awards 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

2007 Awards for Publication Excellence, International Association of Business Communicators Bronze Quill



2004 Awards for Publication Excellence, International Association of Business Communicators Bronze Quill and Silver Quill

makingcontact

Asia/PacificDavid Chambers Vice President 3 Church Street, #15-02 Samsung Hub Singapore 049483 SG Phone: +65 6511 3210 E-mail: [email protected]

europeAlessandro Ciancimino Vice President Via Appia Nuova 990 00178 Rome, Italy Phone: +39 348 3708240 E-mail: [email protected].

india/south AsiaVish Viswanathan Vice President 187, Royapettah High Road, Flat A-7 Mylapore Chennai, India Phone: +1 682 605 4544 Cell: United States +1 817 312 2830 Cell: International +91 98404 96765 E-mail: [email protected]

latin AmericaKamal Qatato Vice President 3150 Sabre Drive Southlake, Texas 76092 Phone: +1 682 605 5399 [email protected]

Middle east and AfricaMaher Koubaa Regional Head 77 Rue de la Boetie Paris, France 75008 Phone: +33 1 44 20 7657 E-mail: [email protected]

north AmericaKristen Fritschel Vice President 3150 Sabre Drive Southlake, Texas 76092 Phone: +1 682 605 5335 E-mail: [email protected]

WorldwideShane Batt Executive Solutions Partner Phone: +44 7717 495 129 E-mail: [email protected]

Sabre Airline Solutions, the Sabre Airline Solutions logo and products noted in italics in this publication are trademarks and/or service marks of an affiliate of Sabre Holdings Corp. All other trademarks, service marks and trade names are the property of their respective owners. ©2009 Sabre Inc. All rights reserved. Printed in the USA.

Address correctionsPlease send address corrections via e-mail to [email protected].

reader inquiriesIf you have questions about this publication or suggested topics for future articles, please send an e-mail to [email protected].

To suggest a topic for a possible future article, change your address or add someone to the mailing list, please send an e-mail message to the Ascend staff at [email protected].

For more information about products and services featured in this issue of Ascend, please visit our Web site at www.sabreairlinesolutions.com or contact one of the following Sabre Airline Solutions regional representatives:

Introducing Sabre AirCentre, the industry’s leading operations solution that helps deliver your promise.

Every ticket you sell is a contract. And managing the pieces that go into meeting those commitments is no easy task.

That’s why you need Sabre ® AirCentre TM Enterprise Operations, so you can deliver your promise across your entire airline – fl ight, crew, ground and maintenance – all at the lowest operating cost. Plus, its fl exible technology platform adapts to your ever-changing business needs. That’s our promise to you!

See the many ways Sabre AirCentre delivers. Visit sabreaircentre.com today.

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®Committed to minimizing the environmental impact of our global operations and to promoting sustainable business practices in travel and tourism.www.sabre-holdings.com

Cert no. SW-COC-002360

A MAgAzine for Airline executives 2009 issue no. 2

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Planning departments follow industry best practices to compete

Global carriers take various steps to remain in the black

Air Malta makes big changes across entire organizations

11 20 46

A Conversation With … Dave Barger, President and Chief Executive Officer, JetBlue Airways, Page 14.


Happy Jetting

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