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t's no news now that the commercial airline industry has been one of the hardest hit sectors. Due to the COVID-19 pandemic, demand has shrunk to unthinkable lows and the entire industry has been turned upside down.
The latest impact was felt last week when normally the industry would converge in London for the annual World Aviation Festival. Instead, like many other events, the show went on in a digital format.
And of course, the talk was a bit different this time and all about how airlines are navigating this unprecedented time. Here's the challenges and opportunities we heard from top airlines executives while covering the event.
Historical Data & Forecast Modeling Rendered Useless
To no surprise, one of the central themes was how past processes, systems and data are no longer a practical approach to today's environment. For instance, there's no point in comparing last year's booking curve when there are no correlations to current demand.
"We can't base our planning and sales numbers and routes on historical information anymore. It's a different world, so how do we get those new models in place so we are prepared for the future?," said Jennifer Sepull, Chief Digital Officer, Air New Zealand.
Sepull perfectly frames the challenge at hand for many airlines. Everything that was once known or practiced has to be tossed away in favor of building new approaches from the ground up.
That's precisely what the AI, data science and commercial teams at Air Canada tackled at the onslaught of the pandemic.
"We can't base our planning and sales numbers and routes on historical information anymore. It's a different world, so how do we get those new models in place so we are prepared for the future?"
"Because all the demand forecasting models went out the window, we've been able to work very closely with our commercial team to rebuild some of those models," said Catherine Luelo, SVP and CIO, Air Canada.
As airlines try to make sense of and analyze new and constantly changing demand levels, that also means reworking their schedules to align with these demand levels. These too need to be quickly built from scratch in this constant state of flux.
"With the arrival of COVID, we really had to rethink most of [our] processes and rebuild our schedules from scratch on really really fast timelines," said Robert Carey, Chief Commercial Officer, easyJet.
"We had to put in place, how do we take a schedule from essentially zero-build baseline all the way to on sale full schedule within a two-three week time period."
It was the same for fellow low-cost carrier Southwest Airlines.
"We started realizing we needed a different set of tools and we needed what they're calling clean-sheet optimization, which is where we're developing a new schedule from scratch every time we want to recreate a new base schedule," said Matt Muehleisen, Senior Director Network Planning, Southwest Airlines.
Greater Collaboration, Agility & Experimentation
However, even in challenging times there are still opportunities to be had and gains to be made. Or as Luelo puts it, "out of great crisis comes great innovation."
Despite how bleak the industry looks, there remains a great deal of optimism. "These are the times we innovate. These are the times we develop what we do," said Muehleisen.
As Carey articulated, the time pressure and rapidly changing environment has pushed airlines to take a much more efficient and agile approach to their way of working, something that's especially new for larger legacy carriers.
Themes that were heard across the board included, agile workflows, greater collaboration and a greater willingness to experiment and try new approaches.
"We've shifted to getting very focused around and reactive to demand that is in the market. We've adjusted our reporting so that the revenue management team and the network team are really joined at the hip." said Kevin Ger, VP Pricing and Revenue Management, Alaska Airlines.
Easyjet has incorporate a similar collaborative, fast-moving structure in order to respond to the market appropriately.
"With low loads and low customer levels it gives you some ability for your internal teams to learn a system without the demand of full travel load."
"We went to a cross-functional approach very early and brought together our revenue management, networking and sales teams into one consolidated team because we had to move at a much faster pace," said Carey.
"No project should take longer than 90 days to produce an output. Spending a larger chunk of time on a project that will change just doesn't make sense."
Not only have ever-changing demand levels pushed airlines to react accordingly, the overall lower demand levels have given airlines extra headspace to learn, improve and tinker with new ways of doing things. As Luelo states, this is a time for "process transformation."
"We are absolutely looking at other systems within our environment that we either need to fortify or we're good with running for a period of time. The [systems] investments are going to be very focused on things that are going to get people traveling and how we begin to get revenue back in the door," said Luelo.
"With low loads and low customer levels it gives you some ability for your internal teams to learn a system without the demand of full travel load."
Even as airlines firefight their way through the day-to-day, the big picture has not escaped them. It's not only about emerging from the pandemic as a survivor, but positioning your airline for the inevitable return of demand.
"Part of our five-year roadmap is to build a brand new future (systems) architecture," said Sepull. "We have a lot of great technology and data and analytics already. How can we build on that? It's a big undertaking we're focused on and will be focused on for the next five years."
