Demand will be lower. Schedule changes will be more drastic. Many flights will be unprofitable. And, the way airlines manage schedules will change. The tools airlines use will need to change too.
How will scheduling and tools change?
BOOKINGS – NOT PROFIT FORECASTING
Flight forecasting systems will be mostly useless for some time. There will be few new routes and any other forecasts will face extreme uncertainty which has always been the weakness of forecasting systems. Instead, capacity decisions will move much closer to the date of departure. And, the demand data will be a combination of recent flown data and future bookings—which have always been the best predictors of demand.
An example of this close-in schedule management comes from our experience with past disruptions for the industry. Right before 9/11, I upgraded Delta’s reporting in what we called the Monster Report (named because it was big and scary). The goal was to modernize that platform as well as to include new data such as bookings to help with our decision-making. After 9/11, I had to deliver this report daily to the CMO by 6:30am because it was a critical tool for managing the airline during that period of uncertainty. The current situation magnifies this need to most airlines of the world and will likely last for quite a bit longer time.
A flexible business intelligence (BI) tool will be critical. Analyzing the schedules and reporting out the changes to the rest of the airline must be quick and accurate. Downloading large reports and manipulating them in Excel will waste precious time and increase the likelihood of errors. Our airline customers are already saving multiple man-days each month by upgrading from legacy tools to Zulu’s powerful BI engine.
The ability to run several scenarios and automate the analysis is highly valuable. With the high degree of uncertainty in the industry over the next few years, analyzing and having clear reports on several scenarios will help the airline make better decisions and understand how best to react. Using a profit optimization model to reassign aircraft or right-size the network can speed the schedule change process. The ability to assure operational feasibility with intelligent rotation optimization for updating the schedule in an easy-to-use system will be the key for generating the scenarios.
FLEXIBILITY AND ADAPTABILITY
Fourth, airline scheduling processes will change. The old business processes will be much less effective. How they change is up to each airline’s unique situation. However, the new business processes will require software that is flexible and vendors who can adapt more quickly to the changing requirements. New capabilities need to be ready in weeks not months. The environment will be changing too quickly for the legacy software business models to keep up.
When processes change and new schedule designs happen, issues arise for users. These issues need quick responses from the vendor to resolve them. A vendor like Zulu with experts in scheduling works closely with our airline customers on best practices and streamlined workflows. Gone are the days when you just get training on the software and are on your own for how to use it.
NEW TECHNOLOGY TO REPLACE OLD INEFFICIENCIES
Workarounds outside the system and manual processes may have been tolerable 6 months ago. Schedule changes were small and less frequent, teams had more people and many manual workarounds had become part of the status quo. The world has really changed now. More is demanded of schedulers, but the teams are smaller. Previous workarounds do not adapt to the changes very easily or cannot keep up with the speed of changes. To help their airlines adapt and thrive, airline planners will need to modernize their technology and bring in the capabilities they need. Three months into the pandemic, Zulu is seeing an increase in demand from airlines who recognize they need these modern tools.
PROCUREMENT RISK MANAGEMENT
More and more airline procurement groups are seeing the risks of having all or most of their systems from a single vendor given the financial struggle many of the legacy vendors are experiencing. Should their single vendors go out of business, it could create quite a bit of chaos for the airline, undoing any perceived benefits of a bundled contract arrangement. There is much more openness now to work with a “best of breed” strategy that selects the best capabilities, usually from smaller, more nimble vendors with sustainable financials.
Going into the pandemic, the legacy software vendors had very high debt levels and over-reliance on ticket volume-based revenue. Those revenues are now a small fraction of what they were. The legacy software companies are not receiving the same scale of government support as did the airlines, so they are having to choose short-term survival instead of making investments in their product or in customer support. While most vendors will emerge in some form from this crisis, chances are that the old market leaders will emerge smaller and weaker.
THERE IS HOPE FOR THE FUTURE
I joined Delta Air Lines just before 9/11 and experienced one of the biggest shocks to the industry at the time. I worked in international network planning during the Iraq war and SARS-1 outbreak, and into Delta’s bankruptcy in 2005. Fortunately, Delta’s response to each of these disruptions was to reimagine their planning and scheduling processes, including challenging long-held assumptions and investing in new technology. This combination of rethinking together with new technology proved critical to survive each crisis and will be crucial for airlines today. Airlines who do this will survive and thrive as the industry recovers.