Punctuality, as all network planners know to their cost, can make or break the best laid hubbing strategy. Like an artist weaving a tapestry, it only takes one individual to pull a single loose thread for the whole work to unravel. Yet while punctuality has become no easier to achieve, especially for congested European networks, its importance for the network carrier has increased. Today, punctuality is no longer an optional extra, it is a hard necessity.
Everyone knows that poor on-time performance comes with a direct operational cost. Arguably more important, it holds hidden penalties in terms of lost opportunities and lost customer loyalty, as connections fail to work.
Research shows that on-time departures are second only to schedule convenience on the business traveller's list of criteria for choosing a network. Best connection times are also cited as the chief advantage of flying within an alliance network. Such findings have already persuaded Europe's Qualiflyer group - led by Swissair, Sabena, Austrian Airlines, TAP, THY and others - to aim for the fastest and smoothest connecting times as a key competitive weapon at its main hubs. To date, Austrian has been leading the way, making use of minimum connecting times of 25min at its Vienna base - but that can only work if punctuality is at the core of the airline's philosophy.
A consultancy project by Roland Berger &Partners aimed to help Austrian exploit this strategy by building and maintaining new levels of punctuality and schedule integrity throughout the operation. In the process, the work highlighted some revealing truths about the bottom line impact of delays and how they can be combated through a mix of process redesign and a deeper understanding of priorities.
Network design
Among the first lessons in network design is the understanding of its impact on levels of punctuality. In the drive to find the perfect schedule with the best connectivity and lowest operational costs, it is a factor all too easy to overlook. But it could be a costly oversight.
The more competitive connections that an airline attempts to build, the greater the risk that operations will not be able to master them in a timely manner. Naturally, a network must attempt to optimise wave structures and minimum connecting times. But should resources always be stretched to the limit? Just 10min of breathing space built into the system could make the difference between consistent on-time departure and firefighting.
The point is demonstrated by a comparison between Austrian's performance at Vienna and that of another neighbouring flag carrier in a nearby competing hub. The analysis is based on the number of "hits", defined as a competitive connection within a set time window after arrival (up to 105min short haul and 135min long haul), also entailing a realistic geographic detour and within 90min of the next best nonstop flight.
Both carriers achieve their greatest number of competitive "hits" at around the 50min mark after an arrival. In Austrian's case that is 25min higher than the minimum connecting time. But its competitor, with a minimum connecting time of some 40min, reaches its peak of hits with only 10min, leaving little slack in the system.
So Austrian is able to build a "punctuality buffer", yet still show a higher connectivity value - the vital efficiency ratio of any high-performance network carrier. The suggestion is that an airline can include punctuality when the system is designed without reducing network performance.
For Austrian, such scores are vital. European transfer passenger traffic has been showing impressive growth of more than 17% a year. That compares with growth of only 6.6% for direct traffic.
The cost of leaving late
There is also a popular misconception that delays only have an impact on direct costs such as customer handling and staff overtime. In reality, this may only account for a fraction of the real penalties. The bulk of these are invariably hidden away in lost revenue opportunities - invisible and poorly understood.
Digging a little deeper at Austrian, it was established that only 22% of the true costs of delays came from direct consequences. A more significant 24% came from customer "disloyalty costs" of two kinds. The first is from ad hoc disloyalty from customers who rebook on an alternative competing flight rather than wait for a delayed service. On the basis of a head count at Vienna, Austrian lost on average 173 business class passengers a day.
A second, less visible, loss comes from permanent disloyalty, where customers vow to avoid an airline on the basis of a bad delay experience. Equally, that gives a potential opportunity to pick up passengers from another, less punctual airline. Market research established that, if exploited, these disloyalty threats and opportunities could allow Austrian to capture 2% more passengers a year if it were more punctual.
But over half of the bottom-line cost was attributed to network quality - defined as the opportunity cost of not making best advantage of the minimum connecting time. That does not necessarily mean always aiming for the minimum. Rather, the rule is to target the fastest time only where it is commercially meaningful, but overall to gain advantage from having the highest product integrity. So, on routes where Austrian's present punctuality is poor, it consciously decides to lengthen the connection time to ensure punctual departure rather than simply aim for the best position on a computer reservation system.
Clear rules and commitment
Such theory alone, however, is not enough to improve punctuality. It needs to be followed through with detailed analysis of every flight across the schedule, weighting each according to the importance of punctuality. Here the trick lies in capturing the right balance between detail and practical application.
The Vienna project highlighted 12 variables reflecting both commercial factors (such as the number of transfer/business passengers on a flight or the degree of alternative services), and operational factors (such as the allocated turnaround time or position in the wave). On this basis, each flight can then be weighted according to a value-per-delay minute. For the sake of simplicity and fast decision-making, this information is summarised for the station control in the form of four priority categories. This list is then used to order the priorities for all those involved in the turnaround process. So every department or service provider is in a position to plan its resources according to the cost of delays for every flight.
Naturally, every airport and airline combination will have its own hurdles to overcome in improving turnaround times, but more often than not, the biggest delay driver is the lack of clearly defined tasks and responsibilities between departments. All it takes is one irregularity and chaos abounds. In short, the biggest punctuality levers are a robust, inter-linked planning process, owned by all the players and a cogent definition of actions to cope with day-to-day running as well as with the most frequent irregularities.
The willingness of an airline to become more punctual is put to the test through the establishment of operational decision rules. They may not themselves speed up the turnaround process, but they create the framework within which that goal can be achieved. Based on the priority ranking for each flight, they determine a carrier's response to some tough decisions - not least late connecting passengers or cargo. It takes a lot of courage and commitment for a carrier to cross that psychological barrier and close the door on late passengers for the very first time. However, judging from positive customer feedback, the Austrian initiative seems to confirm that passengers reward such strictness.
All punctuality improvement measures rely to a great degree on employee willingness to overturn the status quo and behave differently. This is no small task. Employees may have to do things for which they would previously have been admonished, for example leaving passengers behind. Thus the communication of top management commitment, motivation and support is essential. It is also vital to take everyone along with the project. The turnaround process is a vast web of inter-related activities and actors. If one player does not keep to the defined guidelines, then all lose out.
Mixed workshops, including airline, airport air traffic service providers and others, are a perfect vehicle for defining the necessary improvement measures. This not only builds commitment from an early stage, but also demonstrates to all parties how their activities impact others - a factor often underestimated. At Austrian, such a high degree of interaction was crucial to the project success and the new sense of co-operation appears to have been lasting.
One of the most critical aspects of a punctuality project is the ability to build and maintain the necessary pressure to keep departures punctual each day. During the course of the project at Austrian, this role was assumed by the project management. With the implementation phase, the role was handed to a newly appointed punctuality manager and his team.
The punctuality manager is not appointed to be popular, but to act as watchdog over all aspects of turnaround, uncovering the true causes of delays from the punctuality statistics. He needs, therefore, to have protection and encouragement by a corresponding top management mandate.
To effect the change in attitude, too much communication is better than too little. To this end, roadshows were initiated by Austrian and manned by representatives from the core team during the course of the project, accompanied by numerous posters and free gifts designed to underline the message about punctuality. Representatives from Austrian's operations covered the range of flight operations, maintenance, station control, network planning and revenue management. During the implementation stage, workshops have continued, to make employees aware of the new expectations.
Measuring success
The airline needs to be able to gauge the success of this change in attitude through clear performance measurement tools - accepted and understood by all the parties. It is not simply a case of analysing the delay codes. The project team at Austrian has broken down the headline IATA codes into new subdivisions in order to get at the real causes of delays. One example is delay Code 15: "Boarding discrepancies and paging, missing checked-in passenger". This can be subdivided into: boarding error, slow boarding due to special assistance and checked-in passenger late at gate.
These new subcodes are also accompanied by a new code assignment procedure involving better communication and clarification of problems between the ramp agent, the captain and station control. This procedure forms the backbone of a new controlling mechanism, including agreed targets and their regular achievement reporting in front of the management board.
In the end, punctuality improvement is not a distant goal, rather one that can be reached through hard toil and commitment on all levels. Austrian is already reaping the rewards and is now topping the tables in the Qualiflyer Group.
Punctuality improvement does not just reap rewards at the bottom line, it can also bring increased employee satisfaction and last, but certainly not least, a more content and loyal customer.
Ten lessons learned
1. The punctuality challenge is becoming greater.
2. Each network design has an inherent level of punctuality.
3. Tardiness not only increases costs but diminishes revenues.
4. The true cost of delays only becomes clear with analysis to identify bottlenecks and prioritise operations.
5. The biggest punctuality levers are to be found in streamlined communication and a tailor-made turnaround process.
6. A robust set of decision rules enables punctuality to be lived daily.
7. Top management commitment is imperative.
8. Improving processes requires interaction involvement from all concerned parties .
9. A punctuality manager/team with needs to have a clear management mandate.
10. Changing the mindset and effective control are prerequisites for anchoring improved punctuality in the organisation.
Source: Airline Business
