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Viewpoint
Punctuality: How Airlines CanImprove On-Time Performance
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Executive Summary
Punctuality is one of the key performance indicators in the
airline industry and an important serv-ice differentiator
especially for valuable high-yield customers. In addition, improved
on-time per-formance can help achieve significant cost savings:
Airlines report delay costs from 0.6 to up toas much as 2.9% of
their operating revenues.
Consequently many carriers have started initiatives and set up
special teams or organiza-tional units to achieve these potential
cost savings and service improvements. Although theseinitiatives
can appear to be expensive at first glance, if they are well
conducted they can generatesignificant pay-offs. Research on the
performance of major airlines suggests that there is a posi-tive
correlation between on-time performance and operating profit. This
is a similar phenomenonto that found in manufacturing industrywhere
the cleanest factories tend to be those with thehighest
productivity.
Despite the increasing attention that airlines pay to
punctuality the industrys on-time per-formance is still far below
satisfactory levels. In 2000, approximately 25% of all flights in
theUSA and Europe were delayed by more than 15 minutes. A good
portion of this can be attributedto increasing congestion of air
space and poor operational performance of air traffic control
andairport facilities. Nevertheless, the individual improvement
potential within an airlines reach issignificant.
Exploiting this potential requires a key insight and mind-shift
by the airlines management:Punctuality is a key leadership
challenge throughout the organization and should rank high on
themanagement agendafrom strategy and planning all the way to
front-line operations. In rising tothis challenge airlines need to
take a strategic perspective and apply a comprehensive
frameworkthat addresses the three main levers for punctuality
improvement that are within their reach:
Network planning and control Aircraft availability Ground
operations and departure process
Tools such as simulations, statistical sampling, process
monitoring and key performance indi-cators build the foundation to
drill down to the root causes of delays. The key success factor is
to merge quantitative analytical rigor with the rich qualitative
information from front lineobservations, know-how and staff
experience.
Once agreement on the root causes of delay has been reached, the
path to solving the prob-lem is in most cases clear. Quantifying
both costs and the benefits of individual improvementmeasures
allows the trade-offs between punctuality, investment, turnover,
utilization, and otherperformance targets to be managed
effectively.
By working with leading airlines all over the world, BoozAllen
& Hamilton has developeda proven and comprehensive methodology
for improving on-time performance. This Viewpointoutlines our
approach to boost airline punctuality to new heights.
2001 BoozAllen & Hamilton
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Punctuality: How Airlines CanImprove On-Time Performance
A viewpoint by:
Alexander NiehuesSren BelinTom Hansson
Richard Hauser Mercedes MostajoJulia Richter
Airline punctuality is in the headlines. Hardly a week
passes without an article in a newspaper, magazine
or airline industry journal discussing the issue of
poor on-time performance and its impact on the industry and
on
society at large. In 2000, 25.5% of all intra-European flights
were
delayed more than 15 minutes, the second-worst ever result
after
1999, when the Kosovo conflict severely disrupted flying
over
parts of Europe. The picture was equally discouraging in the
U.S.
where 27.4% of the major airlines flights were delayed in
2000.
In other words: in at least 1 out of 4 airline travel
experiences,
customers will experience their plane leave or arrive late. This
is
a defect rate that would not be acceptable to anyone buying
or
selling any other kind of product or service in the 21st
Century.
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Although a high proportion of de-lays can be attributed to
increasedcongestion in air space, and thepoor performance of ATC
(airtraffic control) and airport serv-ices, it is ultimately the
airline,that the customer will blame. Thisis a criticism the
airline will find hard to afford, especially in viewof the
competition for valuablehigh-yield customers.
On top of the negative im-pact on customer satisfaction,delays
are expensive. Direct andindirect delay costs typicallyrange from
0.6% to 2.9% of rev-enue, depending on the size andtype of
operation and the methodof calculation.
This combination of signif-icant revenue and cost-side effectsis
why punctuality should rankhigh on top-managementsagenda.
Achieving punctuality is aleadership challenge throughoutthe
organizationfrom strategyand planning all the way to front-line
operations. However, thereare many levers that airlines canpull to
address this challenge.
A Brief Look Into History
It is not only today, in our fast-moving business world,
thatpunctuality matters. Historyhas seen many famous advocatesof
punctuality.
About 200 years ago, KingLouis the 18th of France used tosay,
Punctuality is the politenessof the kings. Very appropriatewords
indeed, as every airlinewants to be both polite to custom-ers and
be the king amongst itscompetitors.
G. E. Lessing, a German crit-ic and dramatist, took a
similarlyencouraging view of punctualitywhen he said, The best
proof ofgood education is punctuality.
However, there have alsobeen some famous skeptics, justas one
will find skeptics in airlinemanagement with regard to
theimportance of punctuality relativeto other business
objectives.
About 100 years ago, Frank-lin P. Jones, a U.S. businessmanand
the CEO of the AmericanManagement Association, allegedthat The
trouble with beingpunctual is that nobodys there toappreciate it.
And the famousOscar Wilde affirmed that Punc-tuality steals the
best of our time.
Indeed, some celebrities ofthe past seem very familiar
withcurrent airline departure proces-ses: The comedian Bob
Hopestated Punctuality is the art ofestimating correctly, how long
theothers are going to be late. (He
traveled extensively throughouthis life and, when asked howmany
places he had visited, heused to reply not as many placesas my
luggage.)
Finally, a quote from someonewho would have thoroughlyunderstood
the fine art of runninga punctual airline, Arthur Scho-penhauer, a
German philosopherwho lived over 150 years ago. Hesaid, You can
compare ordinarysociety with Russian horn music,where each horn has
only onenote to play, and only the punctualcoinciding of all
results is music.
2
Punctuality is the art ofestimating correctly, how long
the others are going to be late.Bob Hope, *1903, US Comedian
You can compare ordinarysociety with Russian horn music,
where each horn has only one note to play, and only
the punctual coinciding of allresults in music.
Arthur Schopenhauer, 1788-1860
German philosopher
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Exhibit 1. Punctuality and ProfitPunctuality Does Matter
Punctuality differs widelybetween airlines. It hasbecome a
competitive dif-ferentiator, both in positive andnegative waysand
customers do care strongly about it. Whenfollowing newspaper
headlines itis clear that airlines are active insharing good
punctuality perfor-mance with the world, and whenthey have problems
with theirpunctuality, it is unlikely that theworld will not
quickly hear aboutit in the press.
More importantly, however,punctual airlines appear to bemore
profitable. Our researchshows that major airlines withabove average
punctuality rateshave been more profitable thanthose with lower
than averagepunctuality performance. Thisfinding applies both to
major U.S.and European airlines (exhibit 1).
Despite the statistical limi-tation of such analyses the
datastrongly supports an old wis-dom of the industry: Sound
op-erations will support high punc-tuality rates; while the pursuit
ofhigh punctuality targets helps tocreate sound operations, which
inturn drive increased profitability.
This sets a clear goal foroperations: strive for outstandingand
consistent punctuality perfor-mance.
3
20 %
15 %
10 %
5 %
0 %
-5 %
-10 %
70.0 72.5 75.0 77.5 80.0 82.5
American Airlines
United Airlines Delta Air Lines
Southwest Airlines
Continental Northwest Airlines
American West Airlines
TWA
US Airways
10 %
0 %
2 %
4 %
6 %
8 %
70.0 72.5 75.0 77.5 80.0 82.5
Available data for:Air FranceAlitaliaBritish Airways
Airline Punctuality vs. Operating MarginU.S. 1999
Airline Punctuality vs. Operating MarginEurope 1998
15 min. Departure Punctuality 1999 %
Oper
ating
Pro
fit M
argi
n 19
99
15 min. Departure Punctuality 1998 %
Oper
ating
Pro
fit M
argi
n 19
98
KLMLufthansaswissairScandinavian Airlines
Sound Operations
Drive Profitability
High Punctuality
Source: AEA, DOT, ATI, press releases, BA&H Analysis
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Delay Costs and Punctuality Trade-offs
According to AEA (theAssociation of EuropeanAirlines) the
averagepunctuality for intra-Europeanflights was 74.5% in 2000.
Ourresearch shows that a top-10carrier performing at around
thislevel carries 100 to 400 millionin annual delay costs.
For each percentage pointimprovement in punctuality thereis a
potential profit improvementof 4-16 million, depending onthe size
of the airline (exhibit 2).
Acknowledging this cost rele-vance of punctuality, top
manage-ment must take a firm stance on at least two major
trade-offs:
Punctuality vs. turnoverand yield
Punctuality vs. cost andequipment utilization
Punctuality vs. turnover andyield. Short-term revenue
consid-erations such as display visibilityin the global
distribution systems(GDS) do in most cases workagainst punctuality.
Maintainingslots at peak times during the day,short connecting
times and tightblock times are valid sales-basedarguments. However,
they mayultimately result in poor opera-tional performance, and
may
therefore become counter-produc-tive to revenue maximization
inthe long run. Punctuality vs. cost andequipment utilization. One
ofthe most obvious and easy meas-ures to increase punctuality is
toremove bottlenecks and add ca-pacity (e.g. the number of
aircraft,longer block times, and moreground staff and
equipment).Without a solid quantitative busi-ness case, based on
analyzingpotential savings from avoideddelay costs, it is unlikely
that acontroller will support such ideas,especially as most of the
savingsare variable while the capacityincrease builds up fixed
costs.
4
Exhibit 2. Airline Delay Costs
Source: BoozAllen & Hamilton
Typical Delay Cost Breakdown Client Example
Holding
Yield reduction (re-booking)
Passenger care
Bound A/C capacity
Flight crew
In-flight acceleration
Station cost
Processing cost
Lost yield
Supplier capacity
and more
and more
Total Delay Cost
1 %pt 15-min. punctuality
4 16 million delay cost per year1
1 Depending on size of operationRange: 6 - 20 bn turnover
carrier
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Setting the Punctuality Target
Punctuality performance dif-fers widely across airlines.Europe
has seen a span ofperformance of up to 30%-pointsduring certain
months. It seemsdifficult to achieve and maintainpunctuality levels
of 85% andabove.
Punctuality targets are usual-ly defined in terms of
15-minutepunctuality, i.e. a flight is stillcounted as departing
on-time, ifthe plane goes off-blocks within15 minutes of the
scheduled timeof departure.
Using this approach the in-dustry allows itself to steal 25%of
the average travel time on adomestic flight in Europe. Theargument
that a 15-minute depart-ure delay still allows on-plan ar-rival is
not really valid. Althoughon-time arrivals are important
forconnections and the execution ofthe rotation plansin the
aware-ness of the travelers mind it isdeparture punctuality that
defineshis or her impression of an air-lines on-time
performance.
Consequently the 15-minutebar is not appropriateespeciallyfor
short haul operations. Ulti-mately, this means up-front ac-ceptance
of failure.
In a similar way to the totalquality movement or six
sigmaphilosophy applied by leadingfirms in the manufacturing
sec-tors, it is mandatory to strive for a zero-defect strategy in
the turn-around process. Allowing, forexample, a 95% on-time
perfor-mance (i.e. a failure rate of 5%) at
seven supporting sub-processesfor the departure (the total
numberof such support processes is actu-ally much higher) will in
combi-nation lead to only a 70% on-timedeparture rate. This means
thetargets for the sub-processes haveto be set much higherbut
howcan this be realized if the airlineindustrys quality
understandingof the end product allows 15 min-utes or 25%
slack?
Three Main Levers to Push Punctuality
An effective framework for approaching punc-tuality in a
structuredway should use three main levers(exhibit 3, page 6):
Network planning & control
Aircraft availability Ground operations
& departure process
Network Planning & Control
Sound network planning andcontrol is the foundationfor high
punctuality. Ourwork with clients, which hasincluded extensive
analysis andsimulations, enables us to quanti-fy the proportion of
delays whichare inherent in the schedule andthe rotation plans.
Statistical capabilities areextremely important in the
airlineplanning process. The capabilityto execute complex
simulations is
a critical tool for understandingschedule dynamics. A
capabilityto carry out what-if analyses iscrucial for simulating
schedulechanges and quantifying theirimpact on punctuality.
The fine-tuning of simula-tions is best achieved by usingreal
historical data. Therefore,it is critical that airlines
captureoperational data, in real time ifpossible, and use it to
feed thesystems used for schedule simu-lations and planning.
The first step to overcomingpoor planning and control, is
todevelop an integrated planningprocess, in which all the
planningentities work in the same contextand, if possible, use the
same sys-temsor at least the same time-tables and rotation plans.
Harmo-nization of the level of detail usedthroughout the planning
process is important; the plans for eachfunction must connect
seamlesslyto those of prior and consecutivefunctions. Achieving a
high levelof detail early in the process canbe cumbersome, but in
our experi-ence, it will result in a more stableoperational
platform.
A sound network structureand appropriate block, groundand slack
time deployment arekey to a good plan. Adding slacktime is
expensive. A possiblesolution is to identify the flightnumbers
where the punctualityimpact on the total schedule isthe highestthe
star flights,add some appropriate buffers forthem and in reverse
tighten timeframes for other, less criticalflights.
The operational procedures on the execution day (day zero)are
another critical success factor.
5
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Defining an operations controlcenter of gravity is of
utmostimportance. Some airlines still runseparate planning and
control cen-ters for the major operationalfunctions. These have to
be cen-tralized, or at least work closelytogether and be driven by
inte-grated processes, systems, and acommon command structure.
Hub operations in particularstruggle with on-time perfor-mance
at peak times when theirown network knots coincide withhighest
traffic loadings. Managingthis problem requires the airlinesexplore
new ways to share the air-space, either in concerted actionswith
other airlines, ATC provid-ers, airport operators and regula-tors
or by driving for new marketdriven methods of slot allocation.
Effective strategies for recover-ing from disaster days are
alsovery important to deliver sustain-able, high rates of
punctuality. To start tomorrows operationseffectively airlines must
considercanceling some flights if neces-saryyes, take a hit on the
holyschedule regularity. This will payoff in the increased
stability of theoverall system.
Aircraft Availability
Aircraft availability is thesecond main lever in thepunctuality
framework.If the punctuality target is reallytaken seriously it
needs to have an impact on fleet planing andstructure.
It is not only the sheer size of the fleet that is affected, it
isalso about the variation withinand across the aircraft types.
Vulnerability to version andequipment changes, or spare
partlogistics problems, has a directimpact on the ability to
quicklyrestore punctual operations after irregularities.
Punctualitymanagement needs to raise thisproblem early with the
networkand fleet planners.
6
Exhibit 3. Three Main Punctuality Levers
Source: BoozAllen & Hamilton
NetworkPlanning & Control
AircraftAvailability
Ground Operations &Departure Process
Integrated planning process
Network structure
Block and slack time deployment
Day-0 operations
Recovery strategies
Fleet structure and reserve
planning
Unscheduled maintenance
Spare part and workshop
management
Process engineering:
operational diagnostics
implementing improvements
Empowerment, motivation
and discipline
Supplier relationship
and performance
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If, as a result, the airline decides to increase the number of
reserveaircraft it is critical to deploy themcarefully and not in a
sweepingfashion. Monitoring their deploy-ment avoids the tendency
tosimply use them as a buffer formaintenance requirements.
Unscheduled maintenanceis a major driver of low
aircraftavailability rates. This is especiallytrue for intensive
hub and spokeoperations with tight rotationplans. The direct impact
on punc-tuality is not surprising (exhibit 4).
Ground Operations andDeparture Process
Significant improvements inon-time-performance at alow
pricewithout majorcapacity investments and undueimpacts on the
sales frontcan beachieved through focused processengineering in
ground operationsand in the departure process.
This entails thorough opera-tional diagnostics, followed by
acareful design of the multitude oftasks that build the departure
pro-cess as well as the implementationof the improvement
measures.
Sound ground operations arebased both on solid up-front plansand
process designs as well as
on highly motivated people. Theempowerment of front line
staff,combined with a high level ofdiscipline supported by
adequateincentive schemes do more forpunctual operations than
millionsof investment dollars spent at thewrong areas.
Ground operations are in-creasingly outsourced by airlines,with
the expectation of (at least)equal service levels but at lowerand
most importantlyvariablecosts. Our observations show,however, that
airline operationstypically do not have the proces-ses and systems
in place that arenecessary to monitor supplierperformance in an
adequate way.Traditional airline supplier meas-urement systems
focus on costsand product quality, whereas
7
Exhibit 4. Effect of Unscheduled Maintenance on Punctuality
Source: BoozAllen & Hamilton
60 %
70 %
0 %
2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0
10 %
20 %
30 %
40 %
50 %
Delay
ed d
epar
ture
s tot
al ne
twor
k(1
3 m
in)
Expected level
with planned
traffic reserve
Average level
at time
of analysis
Observations
18%
Client Example
Aircraft with unscheduled maintenance
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assessing timely performance on a minute-by-minute scale is
notwidely applied.
This is a major deficiencyin the case of the very
complexmulti-user and multi-participantground handling processes.
Here,the famous extended enterpriseapproach to managing the
entireprocess beyond organizationboundaries can be an
effectiveremedy.
Performance indicators relat-ed to critical milestones
through-out the whole departure processare essential and it is
particularlyimportant to integrate them withwell-designed
contractual agree-ments with the suppliers.
Tackling All Three Levers
Experience shows that thereis no single silver bulletthat will
fix punctualityproblems. Airlines need to use allthree of the main
levers describedabove simultaneously in order tobe successful.
The potential contribution of each area will obviously de-pend
on the airlines specific sit-uation, but it can be determinedusing
analyses that identify thereal delay root causes and theirrelative
importance.
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Case Example:Preventive Measures in Ground Operations for
Critical Flights
The example below illustrates the importance of identifying the
criticaldepartures that cause most of the delays. The BoozAllen
& Hamilton teamclustered the flights into different categories
depending on delay risks at the gate and delay risks at the ramp.
These specific delay risks wereidentified using quantitative data
and input from staff interviews. This in turn allowed to design
specific preventive actions for each of the flights, which were
readily adopted by station control, ground staff and
suppliers.Focusing preventive measures and specific flights
significantly raised theoverall departure punctuality.
High Medium Low
Low
Med
ium
High
53 % 62% 71%
72% 73%
78% 84%
Delay Risk at Ramp
Dela
y Ri
sk a
t Gat
e
Flight numbers and details
Weighted averagepunctuality in cluster
XY 1463 MIA 10:05XY 3361 ABJ 11:20XY 2262 LOS 11:45XY 2357 BOM
13:10XY 1707 EWR 13:20XY 4903 JED 13:20XY 3221 DEL 13:30
Preventive
Measures
Flight specific
delay risks
Source: BoozAllen & Hamilton
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Identifying the Real DelayRoot Causes
Delays are seldom theresult of one single fac-tor. In the most
cases dif-ferent failures in the multitude ofthe supporting
processes for flightdeparture occur together. Tradi-tional (IATA)
delay code basedmonitoring systems do not ad-equately account for
these com-plex inter-relationships. Also, theinherently restricted
myopicperspective of the people actuallyinvolved in the process
preventsan assessment of the root causesbased upon experience
alone.
The typical departure processis built up from a highly
intercon-nected web of simple, in some
cases almost trivial activities. It is the number of different
partiesand suppliers which are typicallyinvolved that creates the
complex-ityand exacerbates the prob-lems.
In such a system, things cango wrong, and they do go wrong.When
this happens it is easy toidentify the last and most
obviousdisturbance or event that occur-red in the process, and
report thatas the cause of delay. This is the major shortcoming of
delaycodes, which usually attribute toomuch weight to downstream
pro-cesses near the scheduled time ofdeparture.
There are three basic ap-proaches to identify the real
rootcauses of delays and to defineimprovement levers (exhibit
5):
Process monitoring and sampling
Simulation Conventional methods
Process Monitoring and Sampling
Process Monitoring andSampling establishes adatabase to evaluate
pro-cess performance in the overalldeparture process, supplier
pro-cesses, and the activities in prob-lem areas.
Process monitoring requiresthat key milestones in the depart-ure
process are defined and meas-ured. Some airlines conduct spotchecks
on such milestones, takingsamples from a number of flights
9
Exhibit 5. Three Approaches for Identifying the Real Delay Root
Causes
Source: BoozAllen & Hamilton
Process monitoring and sampling
Simulation
Conventional analytical methods Delay code frequency
Fishbone diagrams
Correlation analysis
Operations: overall departure
and all major sub processes
Analysis of specific problem areas
Supplier and quality management
Network and schedule design
Some special ground operation topics
with single simulation entities
e.g. gate/stand allocation
First-cut problem identification
Supporting cross-functional discussions
and problem solving
Supplementary to methods 1 and 2
Analysis Approach Where suited?
1
2
3
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on a regular basis; others go as far as using automated
electronictime-stamps that feed into onlinemonitoring systems.
Althoughsuch systems can require signifi-cant investment, the
increase inoperational transparency will payoff (exhibit 6).
Data from process monitor-ing allows the dissection of
thedeparture process, identifies theorigins of delays and the
impacton the overall airline delay rate.
The key success factors areanalytic rigor and the use of a
sys-tematic top-down approach thatcontinuously asks the questionSo
whats the real root causebehind that apparent root causethat we
need to remedy?
Simulation
The Monte Carlo simulationof the rotation plan is avery powerful
tool forevaluating and optimizing theschedule. Simulations are
alsouseful to plan certain groundactivities such as gate
allocation.
The expected outcomes ofMonte Carlo simulations are:
The effect on punctuality of variations in isolatedparameters
such as blockhours, slack distribution, etc.
The impact of externalfactors such as ATC delays
The identification of thecritical lines of flight in therotation
planthose linesthat are most sensitive topoor execution
Simulations will not tell how tosolve executional problems,
butthey will put an end to some ofthe companys myths such as we
cannot do anything to im-prove punctuality because all theproblems
are due to ATC.
One example of the use ofsimulations is in demonstratingthat
there can be a positive punc-tuality outcome from using vari-able
block times for a segmentdepending on the day of the weekand time
in the day, instead ofusing the same average block timeplus one
standard deviation on allflights of this route.
10
Exhibit 6. On-Time Departure Depends on the Punctuality of the
Milestones in Each Sub-Process
Source: BoozAllen & Hamilton
End ofCheck In
Stage 1 Stage 2 Stage 3 Stage 4 Stage 5
End of Deboarding
A/COn Blocks
End of Unloading
StartBoarding
Last ULDCargo at A/C
Last BulkFreight at A/C
End of Catering
End of Fuelling
RechargeCatering
Crew Arrivalat A/C
Start Crew Briefing
First Passengeron Board
Cabin DoorsClosed
Cargo DoorsClosed
AcceptWaiting list
End of Boarding
Gate Opening
CHECK IN
GATE
RAMP
SUPPLIERS
CABIN & COCKPIT
Monitoring the punctuality of each Milestone
On Blocks Off Blocks
- 90 - 60 - 45 - 30 - 5
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Conventional Root Cause Analysis
This category covers theconventional methods ofanalysis used in
most air-lines, for example, delay codefrequency, fishbone diagrams
andcorrelation analyses.
In the initial stages, thesemethods can help identify thebroad
picture and provide a firstcut understanding of the majorproblem
areas.
These methods also workwell to generate agreement
incross-functional discussions andworkshops, as they are easy
tounderstand and based on theimmediate experience of staff.
Many airline executives distrustthe delay codes reported by
thefront line. Nevertheless, they arehelpful to highlight major
prob-lem areas. A pragmatic interpre-tation is that systematic
failures indelay code allocation are at leastconsistent over time.
Therefore,they can provide data on delaypatterns that highlights
short- andlong-term trends in certain delayareas.
When using delay codes, it isimportant to understand that
theywill not provide information onthe upstream problems that
mayhave had more influence in creat-ing the delay than the reports
suggest. Still, delay codes oftenrepresent the best
quantitativeknowledge on delays that is avail-able in many
airlines.
To identify and understand theroot causes it is necessary
toleverage the knowledge of thestaff. The people working every-day
in the key processes do knowmany of the root causes but
thisinformation is often not reported.Listening to them one by one
maybe frustrating, but their individualstatements are like pieces
in a jig-saw puzzle that reveal the truepicture when put together.
Ex-hibit 7 shows an example of thetraditional fishbone diagram
thatcan be used to put staff statementsinto perspective and trace
delaysto their root causes.
One thing that is often for-gotten is to analyze the good
days.There is an untapped resource ofinformation, often neglected
bysolely focussing on a problem-
11
Exhibit 7. Leveraging Front-Line Observations in Root Causes
Analysis
Source: BoozAllen & Hamilton
ROOT CAUSESLate
Boarding End
Check-in of hand luggageat gate delays process
Passengers refuseto check in luggage
Long discussionswith passengers Etc.
High baggage theft rate at destination airport in developing
country
Late connectingpassengers
Late boardingannouncement
Boarding controlbreak-down
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oriented approach. Our experienceis that it is important to
study theperfect days on a regular basis tobetter understand the
causes ofdelays.
Reaching Agreement on Delay Causes
Once all the facts havebeen collected, it is ofutmost importance
toreach agreement amongst all thekey parties involved on the
rootcauses of the delays.
Regardless of the method ofanalysis used, the results
mustidentify problem areas, root caus-es and their order of
magnitude. It is important to spend time onthis effort until a
common under-standing of the problems is reach-ed, otherwise most
of the impactof the analyses on future perfor-mance will be lost.
This is be-cause, without this consensus,the search for solutions
will con-tinue in fruitless circles. Manage-ment and staff will dig
deeper intotheir trenches. If they stick too de-fensively to their
individual truthsand perspectives during the pro-cess, there will
be no real commit-ment and driving force to change.
Solving the Delay Problems
As soon as the root causesare visible and agreedon, the path to
remedy-ing them is usually clear and thedifferent improvement
options canbe evaluated. These options typi-cally fall into two
categoriesinternal measures and supplierrelated measures (exhibit
8).
12
Exhibit 8. Solving the Delay Problems
Source: BoozAllen & Hamilton
Resources, capacity and infrastructure
Process design and optimization
Empowerment, motivation and discipline
Monitoring/statistics
Policies and procedures
Punctuality incentives
Service level agreements
Not only what to deliver
but when to deliver
Operational planning
and interface design
Monitoring and feedback
Incentives and penalties
Internal measures Supplier related measures1 2
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Internal measures include:
Resources, capacity andinfrastructure. These refer tomeasures
such as using de-dicated resources for criticalprocesses, reserve
aircraft,or investments in systemimprovements.
Process design and optimiza-tion aiming at doing things
ininnovative new ways, whichhave not been thought of orattempted
before.
Empowerment, motivationand discipline. These factorsinclude
incentives, new poli-cies, clear roles and responsi-bilities for
the staff involved.
Supplier related measures include:
Service level agreements,which address not only whatto deliver
but also when todeliver it.
Operational planning andinterface design, integratingthe
activities and processesof each supplier within theentire network
of operations.
Continuous monitoring andfeedback as well as incen-tives and
penalties whichclose the feedback loop inthe supplier relationship
andwhich assign clear con-sequences to good or badperformance
levels.
The Importance of Supplier Management for On-Time
Performance
Supplier management is vitalfor on-time performance. Ifkey
suppliers do not finishtheir processes on time, the result-ing
overall punctuality will dropsignificantly. As an example, ex-hibit
9 shows the impact of un-punctual towing, catering, andfueling
processes on the overalldeparture punctuality for inter-continental
flights.
An important prerequisite for supplier management is toprovide
both partiesairline andsupplierwith clear data on the
13
Exhibit 9. Impact of Supplier Punctuality on Overall Departure
Punctuality
Source: BoozAllen & Hamilton
Towingpunctual
Towingunpunctual
Cateringpunctual
Cateringunpunctual
Fuelingpunctual
Fuelingunpunctual
FREQUENCY
IMPACT
Supplier Impact on Intercontinental Flight Departure Punctuality
Client Example
Towing Catering Fueling
60 %
70 %
80 %
90 %
81 % 82 % 81 %
58 %
65 %62 %
50 %
16% of flights 56% of flights 44% of flights
Over
all 1
5-m
in d
epar
ture
pun
ctuali
ty
23%19%
17%
-
actual performance versus agreedtargets.
The use of such informationshould also be reflected in
effec-tive service level agreements. Thisis a weak spot in many
airlinesthat have outsourced formerlyinternal functions. To
improveperformance the contracts withsuppliers may have to be
revisitedto ensure that they include cleardeadlines for supplier
processes.
Many airlines do not havethese basic contractual elementsin
order. To overcome this situa-tion, commercial purchasing
units,representatives from the opera-tions and product
managementneed to act as a team and agree on the performance
levels.
Punctuality and Leadership in the
Cross-FunctionalEnvironment
Airline operations are char-acterized by a multitudeof
cross-functional, net-work-type processes that, in con-trast to
fairly stable manufacturingoperations, face extremely
volatileoperational environments. Findingan appropriate
organization is amajor, and still unresolved, issuefor airline
managers. All the ap-proaches from customer centricorganizations or
virtual processorganizations down to the moreclassical matrix
solutions have notprovided answers to date. Punctu-ality is the
ultimate cross-func-
tional problem, and addressing itwill help an airline to tackle
theorganization and leadership chal-lenge.
Clearly defined punctualitytargetsintegrated in a measure-ment,
control and (ideally) rewardsystem commonly used for cost orrevenue
trackingcan be appliedthroughout the organization. Eventhe
marketing and sales depart-ment can, and should, be heldaccountable
for poor punctualityperformance created by over-selling schedules
with connectingtimes that do not work.
Putting punctuality high upon the agenda helps to unlock
theimprovement potential for opera-tional excellence hindered
byfunctional boundaries (exhibit 10).
14
Exhibit 10. PunctualityA Leadership Tool to Unlock the Potential
of the Extended Airline Enterprise
Source: BoozAllen & Hamilton
Punctuality
Sales Product Crew Station Operations Suppliers
Ram
p
Gate
Chec
k-in
Stati
on co
ntro
l
Fuel
ing
Cate
ring
Clea
ning
Tow
ing
Leadership
-
Punctuality is a Leadership Tool
By applying some basicprincipals punctuality can be leveraged as
amajor leadership tool for cross-functional performance:
Consistency Transparency Fair Reward Persistency
Ensure consistent work poli-cies and procedures across
allfunctions. There is nothing worsethan department A doing
onething and department B doinganother, whilst both parties
firmlybelieve they must stick to whatthey have been told to do.
Monitor the processes at keymilestones to increase the
trans-parency of the operations. Includethe statistics in the
airlines inter-nal communications. Everybodyshould be aware of the
actualsituation. What you measure iswhat you get.
Reward excellent performanceand focus on improving the
lowperforming areas. Using ideassuch as internal competitions
aregood, but airlines must be inno-vative and constantly find
newways of motivating their staff togo the extra mile. To pay
incash for improvements is a riskyavenue. Airlines such as
Conti-nental or Iberia have tried it. Suchinitiatives may lead the
companyinto a cost increasing vicious cir-cle involving persistent
demandsfor cash payments from staff.Airline employees are proud
oftheir jobs, even though they some-times claim the opposite. Use
thestaffs pride and help them to beachievers; helping them be
thebest in the world on punctualitymay be more effective and
sus-tainable than a cash bonus.
Lastly, never stop focusing onpunctuality. Improvements willnot
last unless punctuality is con-tinuously at the top of the
man-agement agendaotherwise itwill not be on the staffs agenda.
Conclusion: Punctuality deserves to rank high on the agenda
Punctuality is not only a qualityissueit reduces costs.
Punctuality differentiates air-lines from their competitors.
Punctuality is a powerful per-formance indicator that
drivestotal operational excellence.When an airline runs a
punctualoperation with high service qual-ity, most other indicators
are like-ly to be in the green. Not manyindustries have such
dominantindicators.
Punctuality is a tool for bridg-ing functional boundaries,
whichwill always be there regardless ofany organization model.
Managing the extended enter-prise effectively requires the useof
punctuality as a key indicatornext to quality and cost in
con-tractual agreements.
Finally, punctuality is a leader-ship challenge. It requires all
theskills we expect from advancedleaders: Motivate people,
createfollowers, decide on facts, createunderstanding, drive the
wedge!
15
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BoozAllen & Hamilton
BoozAllen & Hamilton isone of the leading man-agement and
technologyconsulting firms focused on busi-ness strategy and
transformation.We provide services to clients onsix continents
through two busi-ness sectors:
Worldwide CommercialBusiness
Worldwide TechnologyBusiness
Our Commercial Business clientsare primarily major
internationalcorporations whereas our Tech-nology Business serves
mainlygovernment clients both in theUnited States and abroad.
Our major areas of expertiseinclude:
Organization and StrategicLeadership
Strategy and CorporateFinance
Operations Management Information Technology Technology
Development
Our broad experience spans all ofthe worlds major business
andindustrial sectors.
Founded in 1914, BoozAllen& Hamilton is a private
corpora-tion with corporate headquartersin McLean, Virginia, USA.
In2000, our sales exceeded $2.0 bil-ion, and our staff grew to
morethan 10,700 members located inover 100 offices around the
world.
Airline and Aerospace
BoozAllen & HamiltonAirline and Aerospace isone of our
world-widecompetency centers with morethan 300 professionals.
BoozAllen & Hamilton hasdeveloped a breadth and depth
ofexperience in the airline industrywhich we believe is
unmatched.
We have completed close to1,000 successful engagementswithin the
airline, aerospace andtravel industry in the past decade,covering
all major market seg-ments and geographies.
Our clients include airlines,airports, state aeronautics
depart-ments, the Federal Aviation Ad-ministration, aircraft
manufactur-ers, third party service providers,aerospace companies,
and inter-national aviation authorities. Inparticular, we have
worked withmost of the major airlines in theworld (7 of the top 15
worldwideand 16 of the 25 largest).
Our services for the airlineindustry cover the entire
valuechain, supporting our clients intheir successful strategic
transfor-mation:
Strategy development Demand and market analysis Operational
restructuring
(of virtually all aspects ofairline operations)
On-time performanceimprovements
Alliance management andmergers
Route and fleet planning Marketing, sales and
distribution planning Organizational development Economic and
feasibility
studies Regulatory issues, and civil
and military air trafficcontrol
Airline and travel E-businesssolutions
History
In 1914, Edwin Booz had anidea. He believed that com-panies
would be more suc-cessful if they could call on some-one outside
their own organiza-tion for expert, impartial advice.He combined
analysis with for-ward-looking pragmatic solutions.In doing so, he
created a new pro-fessionmanagement consultingand the firm that
would bear hisname, BoozAllen & Hamilton.
Today, BoozAllen & Hamil-ton is one of the worlds largestand
most respected managementand technology consulting firms.We work
with the worlds leadingcorporations, institutions,
culturalorganizations and governments.We offer to our clients:
Innovative ideas Expertise on a global scale Pragmatic,
tailor-made
solutions And above all: results.
16
BoozAllen & Hamilton Airline and Aerospace
-
For more information, contact:
Europe
LondonDavid NewkirkSenior Vice Presidentphone:
[email protected]
MadridMercedes MostajoPrincipalphone: +34-91-522
[email protected]
MilanRiccardo LottiVice Presidentphone:
[email protected]
MunichRichard HauserVice Presidentphone:
[email protected]
StockholmSren BelinVice Presidentphone: +46-8-506 190
[email protected]
North America
Los AngelesTom HanssonVice Presidentphone:
[email protected]
Latin America
So PaoloLeticia CostaVice Presidentphone:
[email protected]
Asia Pacific
SydneyIan BuchananVice Presidentphone:
[email protected]
BoozAllen & Hamilton Airline and Aerospace
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