APRIL 2003A MAGAZINE FOR AIRLINE EXECUTIVES

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

M A K I N G E V E R Y D O L L A R C O U N T

A Conversation with . . .Brett Godfrey,

CEO, Virgin Blue

I N S I D E

New Approach to Cost

Reduction Provides

Benefits

Aeroflot Reshapes Itself

American Airlines

De-Peaks Its Hub and

Spoke Structure

www.sabreair l inesolut ions.com

During the past

several months, I’ve

had the opportunity to

visit with many airline

executives around the

world. It’s no surprise that

the theme of conversations with executives was

consistent — we have improved our cost structure

but we have much, much more to do.

Resource management, cost cuts and cash

management don’t easily sync up with investing.

Determining how to invest in challenging economic

times certainly is a tough question, but airlines

have shown that continuing to invest in their

operations now can save money — often quickly.

Retiring inefficient aircraft early may drive upfront

costs, but the return on investment is often

compelling. The cost of changing a business

process, such as de-peaking a hub, can be

justified by the ultimate savings. The purchase

of a decision-support system can be more than

offset by the savings the system generates.

Historically, airlines have invested in informa-

tion technology, providing the foundation to drive

business change and improvement. The overriding

concern today is ensuring that the money invested

now will generate a swift return on investment.

In this issue of Ascend we have chosen to explore

ideas and practices that target both a compelling

and a quick return.

A rapid ROI has never been more important.

Continued investment in key areas such as

simplifying operations, streamlining procedures

and upgrading information technology can truly

pay off and can produce short-term and long-term

benefits.

I hope you enjoy this issue, and I look forward

to visiting with you again in the third quarter.

A New Way of Looking at Cost Reduction

A Conversation With Regional Express

More Than Just a Web Site

Affordable Reservations for Low-Cost Airlines

Hawaiian Airlines Automates Fares Management

A Conversation With Virgin Blue

Integrated OCC Helps Propel WestJet

New Reservations Systems … Convert With Minimum Disruption

American Airlines De-Peaks Its Hub and Spoke Structure

Returning Network Carriers to Profitability

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40

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26

22

18

14

10

2

Robust Scheduling Helps With Irregular Operations

Web Services Holds Promise for Airlines

New Direct Connect Availability Lowers Distribution Costs

24

16

6

Asia/Pacific Airlines Benefit from Integrated SOC

ATA Gets the Most for Its Investments

AeroMexico Puts M&E Strategy into Practice

Locally Based ExpertsAssist EMEA Airlines

Aeroflot – Russian Airlines Reshapes Itself

48

44

38

20

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Automated Tool Manages CompensationPrograms

Cost Savings by Automating All In-Flight Services

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12in

du

str

y

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ion

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with Tom KleinGroup President, SabreAirline Solutions

contents

1april 2003

perspective

Sa

bre

Ho

ldin

gsreliable

Achieve optimal operations

Why do more than 200 airlines around the world choose Sabre Airline Solutionsas their technology partner? Because they rely on us to deliver hard-hitting, real-world answers to operational challenges and decision-support needs.

Times like these demand fresh thinking. Proven, ROI-based solutions. And a technology partner that can not only see the future, but can help you reach it.Times like these demand Sabre Airline Solutions. www.sabreairlinesolutions.com

APRIL 2003

Publisher

Sabre Airline Solutions1 E. Kirkwood Blvd.Southlake, Texas 76092www.sabreairlinesolutions.com

Editors

Stephani HawkinsScott Hunt

Designer

Yvette Hunt

Print Manager

Shari Stiborek

Contributors

LaDena Allen, Kay Alig, Peter Berdy,David Bornemann, Steve Clampett,Lori Courtney, Cameron Curtis,Alan Dicker, Mike Douglass, AdamFoster, Caro Goewert, GretchenGreene, Sharon Hall, KathrynHayden, Darren Henley, WalterJacobs, Billie Jones, Keith Knox, Robert Marley, Gianni Marostica,Matt McLellan, Kris Oliver, Heather Parham, Russ Perkins,Michelle Porter, Jim Quilty, Murali Ramdas, Dave Roberts, Mark Shearer, Daniel Toporek, Renzo Vaccari, Carla Warren andBruce Wong.

Reader Inquiries

If you have questions about this publication or suggested topics forfuture articles, please send an e-mailto wearelistening@sabre.com.

Sabre Airline Solutions, the Sabre AirlineSolutions logo and products noted in italics inthis publication are trademarks and/or servicemarks of an affiliate of Sabre Holdings Corp.All other trademarks, service marks and tradenames are the property of their respectiveowners. ©2003 Sabre Inc. All rights reserved.Printed in the USA.

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

costs can be negotiated downward, but

not without significant and often very

difficult negotiations. Customer services

can be reduced, but this often has a

negative revenue impact as demand

declines and customer dissatisfaction

increases. Nearly all of the large cost

drivers of the airline business resist the

holistic approach to reduction.

On the surface, staff reductions

seem the only resort to produce sizeable

cost reductions. This is the reason that

so many airlines have recently resorted

to layoffs in order to control costs. The

standard process is that the airline re-

engineers its processes in order to

remove inefficiencies and introduces

productivity improvements that lead

to the ability to reduce staff. A great

many airlines are performing this exact

exercise today. This process is not

simple, however, when considering the

human impact. Airlines typically perform

staff reduction as a last resort — and

rightly so. Staff reductions hurt morale,

have a tendency to reduce productivity

and often spawn labor actions.

Tactical Cost Reduction

It may appear that cost reductions

are virtually impossible at airlines, but

this is far from the case. To reduce and

control costs, airlines must take a tactical

approach to understanding what is

controllable and then take effective

action. The tactical cost reduction

process is a cycle:

The process begins with data

collection, where the carrier investigates

the characteristics of a particular

phenomena from a tactical point of view.

During the second step of the process,

the data is analyzed to identify trends

and impacts. This step is followed by

the development of remedial actions

specifically designed to deal with the

tactical characteristics of the issue. Finally,

in the last step, compliance with the

remedial actions is checked. This process

is a cycle, because data collection begins

again resulting in different analyses

followed by different remedial actions

and new compliance. This is a purely

tactical approach to cost control, and it

may not produce huge results in the

first implementation. But consistent

application of this cycle produces short-,

medium- and long-term successful cost

reduction. Before examining a specific

example, first consider the way costs

are split for most airlines.

Expenditure Tree

The expenditure

tree shows costs

split for a traditional

airline. Typically,

these airlines are

older and existed

during a regulated

period of the industry.

When considering total operating

costs, these airlines have a high

percentage of indirect costs — 30 per-

cent. Traditionally, these costs are con-

sidered overhead because they are not

allocated to the direct costs of the

airline. But these costs are not

purely overhead. Of the 70 percent

of the total operating costs that are

associated with direct costs, about

half of the direct costs are fixed

and the other half are variable.

The fixed costs include aircraft

payments, crew salaries, other

operating staff salaries and other

costs that are fixed for the operation.

Finally, about 80 percent of all variable

costs are related to per-flight expenditure,

and the remaining 20 percent of variable

costs are related to per-passenger costs.

Per-flight costs include the largest

percentage of fuel costs, crew overtime,

maintenance, navigation and landing fees,

among other costs. The per-passenger

costs include catering, fuel costs, some

passenger handling costs and a few other

related costs. This expenditure tree

demonstrates a fundamental principal

about the airline industry — most of the

costs of an airline have nothing to do

with passengers being carried. As shown

in the expenditure tree, only 7 percent

of a typical airline’s total operating costs

are related to passengers. This is a

strength and a weakness of the industry.

This is a strength because it means

that incremental revenues, driven by

successfully competing, essentially come

at no additional costs and therefore con-

tribute substantially to the profitability of

the airline. But it is a weakness because as

demand for passenger travel declines,

this reduction in revenue is not matched

by a corresponding reduction in costs

from flying fewer passengers. This is

the reason that so many carriers are

struggling today with profitability. This

is why a tactical expenditure control is

more effective than a holistic method.

An Example of Tactical Cost

Control

On-time performance has a big

influence on an airline’s profitability

(continued on next page)

industry

april 2003 3

IndirectCosts

FixedCosts

FlightCosts

PassengerCosts

80%, (28%)

20%, (7%)

50%, (35%)

50%, (35%)

30%

70%

100%DirectCosts

VariableCosts

TotalOperating

Costs

Compliance

RemedialActions

Analysis

Data Collection

Tactical Cost-reduction Cycle

industry

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Shane Batt | Ascend Contributor

The Tactical ApproachA New Way of Looking at Cost Reduction Can Pay Huge Dividends

With a global reduction in demand

for air travel and the continued over-

capacity of the marketplace, airlines seek

to reduce costs. Indeed, cost reduction has

always been an important goal, but recent

economic conditions have increased its

importance. In order to perform cost

reduction, most carriers look toward the

major cost drivers of their business:

Fuel,

Staff,

Maintenance and engineering,

Aircraft ownership or leases,

Customer service.

Together, these primary costs are

responsible for more than 85 percent of

all operating costs of an airline. They also

highlight the difficulty of reducing costs

for most carriers, because none of these

costs are easily reduced by themselves.

None of the primary costs are easily

reduced because ordinarily managers try

to contain the costs “holistically.” That

is, airline managers examine a major cost

driver and dedicate resources to solve

this particular issue. This normally

results in a task force being created to

address cost reductions in a strategic

manner. This holistic method generally

only produces limited positive results.

For example, fuel is one of an

airline’s highest costs — if not the highest.

Fuel costs, however, are difficult to

contain because they vary with world-

wide supply and demand for petroleum.

One way of reducing fuel costs is to

reduce flying, of course. This option,

however, also has a profound impact on

revenues. Fuel costs can be contained in

two primary ways: cost reductions due

to consumption and cost reductions

due to purchasing. Flight operations

departments attempt to cut fuel

consumption. Adjusting flap settings,

reducing power settings, performing

single-engine taxiing

and avoiding the use of

full reverse thrust upon

landing can all reduce

fuel consumption —

but not by much. If an

airline has never imple-

mented cost-control

activities for fuel, the

airline might gain some

real savings in this area

with a concerted holis-

tic effort. Most carriers,

however, exhausted

most of the “low-hanging fruit” from

fuel reductions long ago, and there is

little more to gain from holistic cost

exercises. In addition, the rise of fuel

prices due to global political or local

supply issues can result in higher costs

for fuel virtually overnight.

Similarly, fuel purchasing can be

“hedged” using strategies that essen-

tially pay a negotiated fixed fee to a

supplier for a period of time, regardless

of the price of fuel. This often reduces

the variability of fuel costs, but does not

necessarily reduce them. Some carriers,

such as Southwest Airlines, produced

tremendous results based upon fuel

hedging contracts in the wake of rising

fuel prices following Sept. 11, 2001.

Other carriers, however, have actually

increased costs with fuel hedging

activities. If fuel prices are predicted

to increase due to global political

conditions — such as war in the Middle

East or local strikes in Venezuela

during December and January —

the price of hedging increases and

produces a real risk if the airline enters

into these types of agreements. So,

fuel costs savings are hard to produce

and are even difficult to contain. If

an airline executive attempts to use

the holistic approach to fuel cost

reduction, the results will most likely

be disappointing.

Each of the other major costs

presents its own unique difficulty when

it comes to cost control. Airlines can

reduce maintenance and engineering

costs, for example, by introducing

new purchasing control practices.

This approach, however, can lead to

problems with on-time performance

during periods of unusual or irregular

operations. Aircraft ownership or lease

FUEL

STAFF

AIRCRAFT

M&E

SERVICE

OTHER

Typical cost breakdown of a US$1 billion airline

(values in $ millions)

130250

210

170

150

90

industrymarked for improvement through

the next type of analysis.

Prescriptive analysis — an approach

is developed for each normatively

negative item in order to improve to

the level of performance required.

The results of the analysis phase

were two fold. First, it was determined

that the total impact of OTP problems

on the carrier was approximately

US$88 million instead of the originally

estimated US$18 million. This extra

impact was identified in the fixed and

indirect portions of the expenditure tree.

Obviously, simply recognizing this larger

level of cost impact does not recover

the costs, but it certainly points to the

fact that work in the OTP area should

be exerted. Second, the prescriptive

analysis identified more than 80 specific

tactical actions that could be taken to

improve on-time performance.

After the analysis phase, the remedial

action phase was started. The combined

team used a multiple-step process in

order to take corrective actions:

Empowerment — the inter-disciplinary

team was organized to implement

the recommendations from the

prescriptive analysis and tasked

with reporting progress frequently.

Standards and procedures creation —

specific standards and procedures

were identified from the prescriptive

analysis and documented.

Training — the impacted staff were

trained in all procedures and practices.

Implementation — once the staff was

fully trained, the procedures were

implemented.

This particular carrier is currently in

the remedial action phase of implemen-

tation. Once this work is completed,

however, a process of compliance check-

ing will be put in place to ensure that

the remedial actions are fully assimilated.

The tactical cost reduction model

was successful for this particular carrier,

as well as for many other airlines.

This approach ensures that the tactical

drivers of the costs are addressed, and

this tends to reduce or eliminate the

strategic drivers of the costs.

The tactical cost reduction approach

works well for other tactical implemen-

tation issues besides OTP. This method

has been used successfully to address

airline cost areas including:

Maintenance and engineering

dispatch reliability — addressing

the impact of improving dispatch

reliability on total cost reduction,

Staff planning and deployment —

addressing the impact of improving

rostering and planning to reduce

total costs,

Crew planning and control —

addressing pairing creation, roster

creation, crew control and day-of-

operations management to reduce

total costs,

Service cost containment —

addressing the cost drivers for

handling passengers in order to

reduce costs while maintaining

or improving service levels.

All of these areas seem to be

secondary or related areas to the

overall issue of cost reduction,

but this is exactly the reason why

tactical cost reduction works so

well for many carriers. The basic

inter-related nature of the airline

operation means that these tactical

issues have a large impact on total

operating costs.

Because so many carriers have

experienced limited success with

holistic cost reduction on the major

cost drivers, maybe it is time to try

tactical cost reduction methods.

Shane Batt is a partner

in Sabre Airline Solutions Consulting

april 2003 5

News from Asia

Air China will add the Sabre ® AirFlite ™ SlotManager ™

system to its flight scheduling department, further

advancing the airline’s scheduling capabilities.

Following its merger with China Southwest Airlines

and CNAC Zhejiang, Air China, which also utilizes the

Sabre ® AirFlite™ Schedule Manager, has a total of 118

aircraft operating on more than 300 routes.

According to Li Zeng De, deputy director of

planning and scheduling for Air China, the advanced

flight scheduling systems will enable the airline to

generate the company wide fleet schedule quickly and

more efficiently.

“We are now a large player in the industry, and we

require superior solutions that enable the recent merger

to move forward as smoothly as possible,” said Li.

“Sabre Airline Solutions has been able to offer these

solutions to us while also providing support functions

that help schedule evaluation and optimization.”

This contract follows the implementation of a

range of software from Sabre Airline Solutions that

China Southern Airlines uses to meet its objectives in

the market, including Sabre ® AirOps ™ Movement

Control, Sabre ® AirOps™ Flight Planning, the Sabre ®

AirCrews ™ crew management system and Sabre ®

AirOps ™ Load Planning.

T H E H I G H L E V E LvıewNews Briefs from Around the Globe

industry

ascend4

and can be controlled tactically. Most

carriers understand the basic flight- and

passenger-related costs of OTP problems.

Delays or cancellations increase passen-

ger costs because passengers must be

provided meals, hotel accommodations,

incidental expenses and also must be

re-accommodated on other flights.

Most of these costs are relatively easy

to account for and are charged within

the passenger costs on the expenditure

tree. Similarly, when airlines are charged

penalties for late arrival at airports —

such as missing slots, crew working

overtime due to delays and consuming

extra fuel for auxiliary power unit/ground

power unit burns due to delays — these

costs are neatly accounted for in the

flight costs on the expenditure tree. To

control OTP costs, most airlines concen-

trate on the easily identified passenger-

and flight-cost characteristics of the OTP

problem. These costs are 15 percent to

20 percent of the total OTP impacted

costs for the typical airline. The largest

portion of the costs associated with OTP

are hidden from view and can only be

uncovered with a tactical approach.

Some of the costs associated with

OTP problems impact fixed costs and

some impact indirect costs. For example,

when delays occur, crewmembers may

not be able to complete their duty day

without being illegal due to the total

duty time spent for that day. This can

happen when a crewmember has four

hours left in his or her duty day with

a three-hour upcoming flight that is

delayed two hours. Since completion of

the delayed flight would result in the duty

day extending by at least five hours (two

hours of delay plus three hours of flight),

the crewmember is relieved and another

crewmember is called from stand-by or

reserve to handle the remaining flight,

resulting in a disruption of the crew

roster. This disruption might impact

the roster for several days if it occurs

in the first day of a multiple-day pairing.

Since most crew contracts stipulate that

crewmembers are paid the maximum of

the rostered duty period or the worked

duty period, the airline’s fixed costs of

crew salary increase because the crew-

member is not performing up to the

rostered level. If OTP is a long-term

problem for an airline, then the crew

contingent for the airline is often larger

than what would be necessary to oper-

ate if the carrier were performing accord-

ing to the schedule. In the same way that

OTP issues increase crew salary fixed

costs, OTP problems have a similar

impact on fixed maintenance costs,

aircraft costs and even indirect costs.

When delays occur and passengers

become more demanding, carriers often

endorse tickets over to other airlines to

carry delayed passengers. This provides

good customer service, but has a sub-

stantial impact on

indirect costs.

When the passen-

ger is endorsed

to another carrier,

the lost revenue

is accounted for

as increased indirect costs. The other

carrier lifts the coupon of the delayed

passenger and charges the ticketing

airline through the International Air

Transport Association clearinghouse.

These clearinghouse charges are gener-

ally applied to indirect costs if they are

not netted from revenues. The result

is that indirect costs increase due

to OTP issues.

The OTP problems cause increases

in variable costs (flight- and passenger-

related costs), fixed costs (crew salaries,

maintenance and aircraft unit costs) and

indirect costs. The largest bulk of the

costs are hidden in the fixed and indi-

rect costs. A recent Sabre Airline

Solutions client had this exact problem.

This particular carrier has approxi-

mately US$1 billion in total costs with

OTP costs estimated at US$18 million

per year. This is a fairly modest expense

and certainly within the parameters

for what is accepted as industry aver-

age, but it seemed as though the OTP

performance of the carrier was lower

than what the relatively modest

expense (1.8 percent) would indicate.

Sabre Consulting worked with the

carrier, employing the tactical cost

reduction process to examine the

issue in more detail.

First, a team constructed from the

client’s own staff and Sabre Consulting’s

specialists began a process of data

collection. The inter-disciplinary team

included resources from flight operations,

operations control, airport operations,

finance, maintenance and engineering,

marketing, and outstation management.

The team looked at the characteristics

of the carrier that might be impacted

by low on-time per-

formance. All stones

were turned over in

order to investigate

the characteristics

of the OTP issues at

the carrier. This data

collection was performed in only four

weeks, but time was spent to collect

historical performance information

(operational and financial) and also to

perform interviews in the different areas.

Following data collection, the

combined team performed a standard

process of analysis including three

specific steps:

Comparison analysis — the particular

data collected in the first phase is

compared to several benchmarks

including historical performance, com-

petitor performance, industry best

practices, budgets and expectations.

Normative analysis — the comparisons

and characteristics are mapped on a

graph where the horizontal axis meas-

ures financial impact and the vertical

axis measures operational impact.

The areas that are negative are

It may appear that cost reductions

are virtually impossible at airlines,

but this is far from the case.

“

”

Sabre HoldingsBack to the Future

Robust scheduling, on the other hand,

incorporates upstream and downstream

data to develop a more realistic final

result. It utilizes a metric that depends on

observable events, such as delays, can-

cellations and other downstream effects

in the airline network. The advantage of

this method is that robustness can be

measured in concrete terms, such as the

number of flight delays, misconnected

passengers and flight cancellations.

Such an approach is the basis of the

Sabre ® AirFlite ™ Reliability Manager.

During the next year, Sabre

Research will work with its research

partners and corresponding product

development groups to incorporate

robust scheduling principles in the Sabre

Airline Solutions product portfolio. In

addition, Sabre Research will develop a

comprehensive schedule evaluation tool

to better assist airlines during the sched-

ule planning process, ultimately helping

increase profitability.

Since 2000, Sabre Research has

been closely working with researchers

at the University of Illinois at Urbana-

Champaign, Massachusetts Institute

of Technology International Center

for Air Transportation and the Georgia

Institute of Technology on robust sched-

uling projects. At UIUC, researchers are

investigating the benefits of incorporating

move-up crew opportunities during the

crew schedule planning process. MIT

is examining ways to design flight and

operational schedules that are less

susceptible to disruptions and have

the ability to be easily downsized in the

event that an irregularity actually occurs.

At Georgia Tech, researchers have been

developing a simulation-based environ-

ment that will enable schedule evalua-

tion that incorporates schedule recovery

procedures. To date, these partners have

observed some encouraging results that

will be incorporated into the Sabre

Airline Solutions product portfolio

in due course.

Although the goal is in sight, there’s

still work to be done to perfect robust

scheduling. In general, projected schedule

profitability and schedule robustness are

conflicting objectives. A prime objective

of robust planning, then, is to find a fair

trade off between planned profitability

and robustness. A major challenge in

this area is to quantify the value of

robustness improvements, that is the

costs of schedule disruptions. Two other

factors that are important for the success

of robust planning

are operational

considerations and

schedule flexibility.

The ability to

determine the level

of schedule robust-

ness requires an

effective evaluation

tool or environ-

ment that is easy

to operate and

uses standard

airline-industry

data formats.

In addition, the

tool should allow

schedule evalua-

tion under regular

and irregular

airline operations

and incorporate

efficient recovery procedures during the

evaluation process. Sabre Research’s

work on schedule robustness has

identified two distinct approaches for

incorporating robustness: proactive

planning and reactive planning.

Proactive planning — enhances

the underlying schedule to incor-

porate more operational issues

(aircraft routing, crew pairing,

ground resources) into the

strategic planning process.

Reactive planning — incorporates

historical operational data to develop

new flight schedules that will be

less susceptible to disruptions

and time variations.

Ultimately, the benefits of robust

schedule planning will necessitate

that a prescribed level of profitability

is preserved during the planning

process. Within these bounds, robust

scheduling initiatives will enable airlines

to produce better schedules that are

less susceptible to irregular operations

while still delivering on the desired

profitability. The research challenge

that lies ahead is figuring out which new

planning concepts will add the most

robustness to airline schedules.

Michael D. Clarke and Dirk P. Guenther

are research and development leads

in Sabre Research.

april 2003 7

The goal of robust planning is

to maximize the airline’s actual

operational profit by anticipat-

ing schedule disruptions . . .

“

”

By accounting for unexpected events, robust scheduling

minimizes the effects on the traveler.

Sabre Holdings

ascend6

By Michael D. Clarke and Dirk P. Guenther | Ascend Contributors

Expecting the UnexpectedRobust Scheduling Helps Airlines Cope with Irregular Operations

When things go as planned, an

airline’s schedule theoretically delivers

the optimum results. Unfortunately,

things rarely — if ever — go according

to plan.

An airline’s ability to maintain

its flight schedule during irregular

operations such as adverse weather

conditions, mechanical disruptions or

an air traffic control failure could be

significantly improved if the overall

schedule planning process incorporated

a higher level of robustness.

Current airline schedules reflect

a precise, highly regimented sequence

of events that can be easily thwarted

when unexpected events occur. These

schedules contain little, if any, flexibility

to effectively adjust to changing circum-

stances. As a result, flight and crew

schedules are prone to disruptions

resulting in undesirable operational

consequences. In addition, it’s difficult

for an airline to maintain an on-time

flight schedule due to inherent opera-

tional factors in its network that are not

explicitly incorporated into the schedule

design and network planning process.

A more robust schedule design

builds in the needed flexibility to account

for the unexpected. The goal of robust

planning is to maximize the airline’s

actual operational profit by anticipating

schedule disruptions — the counterpoint

to traditional scheduling, which

attempts to develop a perfect schedule

that would deliver the highest return as

long as nothing goes wrong.

Although the desirability of robust

scheduling has long been acknowledged,

until now, implementing it has proven

illusive. The ability to simultaneously

consider multiple operational issues at

each stage of the planning process has

been considered unsolvable, limited by

the available computer resources and

modeling techniques. However, recent

advances in these fields have led

researchers to pursue concepts of robust

schedule planning and hybrid airline

schedule planning — such as combining

aircraft fleet assignment and crew

scheduling.

The Way We Were

Currently, schedules are created

with little or no feedback from the

operations department of an airline.

Such feedback, however, is crucial to

identify risk factors for schedule

disruptions and to better model

operational constraints. Similarly, it is

important to keep schedules flexible

so that changes later in the planning

process or during operations can be

incorporated more easily.

The schedule planning process has

been traditionally subdivided into

several discrete decision phases based

on the pre-existing functional divisions

within the airline such as schedule

generation, capacity planning, aircraft

maintenance routing and crew planning.

This sequential approach to schedule

planning has resulted in each airline

group narrowly focusing on its own

objectives rather than taking into

account the overall schedule. Additionally,

there is very little interaction between

the departments, which dilutes the

integrity of the final flight schedule.

Through robust scheduling, analysts build in the flexibility to account for unexpected

circumstances, such as adverse weather.

regionalToday many airlines still manually inte-

grate airline information from various

host-processing systems to optimize

schedule recovery.

The SOC system integrates a variety

of advanced Sabre Airline Solutions tech-

nologies, including the Sabre ® AirFlite ™

Schedule Manager, the Sabre ® AirFlite ™

SlotManager ™ system, Sabre ® AirOps ™

Movement Control, Sabre ® AirOps™

Flight Planning, Sabre ® AirOps™ Load

Planning, and the Sabre ® AirCrews ™

crew management system.

“Movement Control is a vital part of

our SOC at Air New Zealand,” Morgan

said. “We rely on it to track and assign

our check maintenance, and with effec-

tive use of Movement Control, we can

realize substantial savings of

approximately US$4 million.”

Sabre Airline Solutions continues

to advance its suite of SOC products.

During the next two years, the company

will invest more than US$5 million

to enhance its current SOC software

solution to provide seamless access to

the core functions

of flight planning,

dispatch, move-

ment control and

load planning.

These core func-

tions will be com-

bined into one

solution utilizing

a common data-

base and a graphi-

cal user interface

and navigation

with the same

look and feel.

Once completed, this system will offer

even more benefits, including:

A single point of access for all critical

information — no longer will SOC

personnel need to sign onto different

systems to get the critical data they

need to make real-time decisions.

A single-technology platform —

airlines will be relieved of the costs

associated with maintaining multiple

hardware platforms and software

systems.

Single data entry points — instead

of entering operational information

multiple times in multiple systems,

all data entered into the SOC system

will be immediately available to all

departments.

Real-time notification of events —

rather than relying on SOC personnel

to frequently check every system to

determine if an event has occurred,

the SOC system will utilize publish/

subscribe technology to automatically

alert any affected personnel when

a disruption occurs. This will reduce

the time needed to get the operation

back on track and avoid additional

problems.

Automated schedule recovery —

during crucial periods of irregular

operations, integration of infor-

mation from various host-processing

systems will be fully automated and

shared among systems, allowing

the airline to respond faster than

ever before.

For Virgin Blue, China Southern,

China Air, Cathay Pacific and Air New

Zealand, an integrated SOC represents

a key method of maximizing their

investments and improving the overall

efficiency of their organizations.

Hans Belle is vice president

of marketing, Asia/Pacific for

Sabre Travel Network and

Sabre Airline Solutions.

Apurva Mathur is director

of flight operations products

for Sabre Airline Solutions.

april 2003 9

Numbers don’t lie. The SOC sys-

tem is worth its weight in gold . . .“

”

+count it up1986 — Year the airline industry’s

first automated revenue management

system was developed and installed

by Sabre Airline Solutions

3,000+ — Number of members

on the development team that supports

Sabre Airline Solutions, leveraging

research, technology and architecture

direction to deliver cost-effective,

best-of-breed airline solutions

200 — Number of US Airways

systems that were shut down and

shifted to Sabre Airline Solutions

systems in 1998, representing the

largest system migration in the

airline industry’s history

An integrated SOC enables analysts to make informed flight-

related decisions.

regional

ascend8

By Hans Belle and Apurva Mathur | Ascend Contributors

Tying it TogetherAsia/Pacific Airlines Reap Benefits of an Integrated SOC

Integrating operational areas into a

system operations control center has

generated enormous benefits for many

airlines in the Asia/Pacific region. China

Air, China Southern and Virgin Blue are

among airlines in the region that have

developed an integrated SOC.

Integrating systems has allowed the

three airlines to manage their overall

flight operations — including flight

scheduling, flight planning, dispatch,

weight and balance, and crew manage-

ment — while increasing efficiency and

realizing considerable cost savings.

China Southern, for example, recently

attributed nearly US$8 million in

benefits to its new SOC.

“Numbers don’t lie,” said Hao Jian

Hua, chief pilot, China Southern Airlines.

“The SOC system is worth its weight in

gold and has played a significant role in

guaranteeing flight safety and operation

control for our airline and our valued

passengers.”

The SOC system has helped China

Southern make 1,623 flight adjustments

resulting in a profit of US$3.8 million.

The SOC’s computerized flight planning

has saved 2,368 tons of jet fuel, worth

more than US$800,000. And the SOC

has taken advantage of price differences

and planned for the loading of 28,860

tons of fuel in Hong Kong, worth more

than US$3.2 million.

Virgin Blue views an integrated SOC

as an important resource in keeping its

foothold in the marketplace.

“Virgin Blue’s aim of a fully inte-

grated SOC is to remain competitive on

the routes we already operate and, of

course, on any future routes,” said Nick

Brant, Virgin Blue’s head of information

technology. “We also required a system

that was able to maintain tight cost

control and operational integrity

simultaneously.”

Two of the other leading carriers in

the region — Cathay Pacific Airways and

Air New Zealand — have long benefited

from having an integrated SOC.

By integrating its products, Air New

Zealand has developed

“a new way of manag-

ing processes using

dynamic technology,”

said Eric Morgan, vice

president of network

logistics at Air New

Zealand.

“Our staff is more

proactive and solution-

based,” Morgan said.

The Asia/Pacific

airlines have found

that an SOC offers an

enhanced operational

control environment making available

information with a common situational

awareness with which to make informed

flight-related decisions. By integrating

the various operations departments, the

SOC provides minute-to-minute guidance

and control of airline operations as well as

ensures the legality of flight operations.

Not only should the departments be

integrated, but the tools they use should

be as well.

System integration enables analysts

to have a real grasp of what’s going on

in the airline’s operation by allowing

them to see what’s happening in other

areas such as movement control and

maintenance.

A lack of integration means airlines

must purchase, configure and maintain

several hardware platforms with various

system software. Data, in many cases,

must be entered multiple times and in

multiple formats when using different

databases.

Integration is particularly crucial

during periods of irregular or off-schedule

operations when the SOC must assess

the deviation of the airline’s operation

and return it to its published schedule as

quickly and cost effectively as possible.

Asia/Pacific

Our staff is more proactive and

solution-based . . .“

”

Bringing together the various flight operations areas into

an integrated SOC allows an airline to better manage its

overall flight operations.

Hans Van Pelt, chief information

officer of Regional Express, discussed

the benefits of the Web Sales Engine

for Regional Express.

QUESTION: As a regional airline,

how important is the Internet for both

marketing Regional Express to your

customers and enabling them to make

reservations?

ANSWER: Very important. It’s one

of three sales channels, and with the

online airline ticket market in Australia

being very mature, it is a channel we

cannot afford to be without.

Q: How has the easy integration func-

tion of the Web Sales Engine allowed

Regional Express to further harness the

power of Internet bookings and trip

planning?

A: Our implementation of the Web

Sales Engine was on time, and it is

easily managed using the back-end

maintenance tool. Essentially, we now

have an online booking service that we

need to spend little time maintaining,

meaning our efforts can be directed at

growing the channel and improving

visitor sales conversion.

Q: What influence did the existing

technology of Hazelton and Kendell

Airlines (the two Ansett regional

subsidiaries merged to create Regional

Express) have on your decision to

select the Web Sales Engine?

A: The existing services were

inconsequential. We were in a position

where we needed to choose a new

product designed to maximize revenue

from the online channel. Maintaining

previous solutions would not have

achieved the results we report today.

Q: What competitive advantage does

the Web Sales Engine give Regional

Express over other regional carriers in

the Australian market?

A: It’s a simple, effective and

customer-friendly booking engine that

is as good as anything in the Australian

market. Our competitors on routes are

either Qantas or Virgin Blue, meaning

that as a regional operator we still

need to be seen to have a comparative

solution and service to trunk operators.

Q: What role does such technology

play in helping you streamline and

simplify your operations?

A: The Web Sales Engine is part of

our sales channel mix and enables us

to operate the online channel without

the complexity that can be tied to

some online trading initiatives. To that

end, it allows us more time to focus

on marketing the channel, rather than

operating the channel.

industry

april 2003 11

. . . we now have an online book-

ing service that we need to spend

little time maintaining, meaning

our efforts can be directed at

growing the channel and improv-

ing visitor sales conversion.

“

”

News on New and Improved Productsand Services from Sabre Airline Solutions

hightech

product

Sabre ® Web Sales Engine,powered by GetThere

descr ipt ionA powerful online reservations system

for an airline’s Internet site.

benef i tsThe engine targets multiple

channels, sells distressed inventory

and directly reaches valued customers.

It also helps reduce inventory distribu-

tion costs and allows airlines to get to

market quickly with a new, powerful,

online distribution channel.

featuresIntegrates easily and seamlessly —

a flexible architecture enables the

tool to “plug in,” allowing an airline

to enhance its Web presence with

a customized look and feel that com-

plements its brand.

Provides convenient tools for end

users — travelers can log in or shop

as a guest; search by schedule or

price; choose preferences for seats

and special meals; and easily

complete the booking transaction by

purchasing seats. Passengers can use

GetThere’s low-fare search, which

returns alternate, less-expensive itin-

eraries and exclusive Web-only fares

promoted by the airline.

Uses innovative and proven

solutions — an airline can promote

fares only available online, create

new sites quickly and easily, and

review regular reporting statistics.

The flexible functionality also

includes options for accommodating

partner airlines, car rental companies

and hotels.

industry

ascend10

Webmasters — Making the Internet Work

A Conversation with … Hans Van Pelt, CIO Regional Express

Many airlines in today’s market are

using the Internet to achieve similar

goals: secure bookings, create customer

loyalty and reduce costs. The power and

reach of the Internet, combined with

proven technology, can provide carriers

worldwide with flexibility, responsiveness

and the ability to better market and

distribute their product.

Solutions, such as the Sabre ® Web

Sales Engine, powered by GetThere, can

harness the Internet’s power and reach,

helping airlines gain a competitive edge.

Such tools enable carriers to use their

own Web site to:

Offer an advanced Web-based

reservations system,

Market distressed inventory,

Offer extensive trip planning and

procurement capabilities,

Easily target specific customer segments,

Offer powerful customer self-service

features.

In addition, the Web tool can also

reduce inventory distribution costs and

enable carriers to immediately promote

specific fare types in a dynamic fashion

via the airline’s Web site.

For carriers seeking to address

distribution needs in multiple domestic

or international market segments, the

solution’s “super site” structure provides

the ability to rapidly duplicate and develop

subsites that are segment-

or market-specific.

This unique feature

significantly increases an

airline’s revenue opportu-

nity by providing the

ability to cost-effectively

drive bookings across

multiple segments

and markets, thereby

maximizing revenue

opportunities with

minimal investment.

Australia’s newest

regional carrier, Regional

Express, is just one of

many airlines reaping the

benefits of the Web Sales

Engine. Formed last

August by the merger of

two regional subsidiaries

of the collapsed Ansett

Australia, the carrier

adopted the Web Sales Engine to

complement its traditional customer

service techniques. The engine’s

flexible architecture is designed for

easy integration with public-facing

Web sites — the product simply plugged

in to the airline’s Web site — enabling

Regional Express to keep its customized

look and feel.

Regional Express, Australia’s newest regional airline, attracts customers utilizing a Web-based

booking engine.

product

april 2003 13

T H E H I G H L E V E LvıewNews Briefs from Around the Globe

News from Asia

Pakistan International Airlines selected the Quasar ™

passenger revenue accounting system. PIA, based in

Karachi, Pakistan, is the eighth airline to select the

Quasar system.

The Quasar system processes airline ticket

transactions for accurate and timely recognition of

earned revenue. The system enables PIA to reduce

costs, increase revenue and analyze detailed marketing

data to enhance its competitive position. The system

is available as an application service provider solution

under the Sabre ® eMergo ™ Web-enabled and dedicated

network solutions, or it can be installed on site.

“We have maintained a long-term IT partnership

with Sabre Airline Solutions and have been successfully

using a number of its solutions,” said Kaleem Malik,

chief financial officer at PIA. “The combination of Sabre

Airline Solutions’ reputation as a software supplier and

the Quasar system’s functionality were key factors in

our decision process. We believe the Quasar system will

be an important tool in helping us further improve our

business operations.”

PIA, in service since 1947, carries approximately six

million passengers per year, with an average of 160

daily departures, serving 74 airports with 46 aircraft.

News from Sabre Airline Solutions

EyeTicket Corp. and Sabre Airline Solutions have

formed a new marketing alliance to provide JetStream™

passenger processing to Sabre Airline Solutions

customers worldwide.

The terms of the alliance give access to EyeTicket’s

JetStream and EyePass™ products and services to Sabre

Airline Solutions’ airline, airport and immigration control

customers. EyeTicket, a Virginia-based developer of

high-volume public processing and access control using

iris recognition identification, has the reciprocal ability

to offer the Sabre ® Aerodynamic Traveler™ passenger

processing solutions and other Sabre Airline Solutions

products to its customers.

JetStream is an iris-recognition-based service that

positively identifies travelers, simplifies and expedites

transactions, and provides maximum security and risk

management at a competitive cost. After a quick one-

time enrollment, customers can check-in and board the

aircraft, check bags, or clear passport control simply by

looking into a video camera for a couple of seconds.

The transactions are easy, fast and secure.

The Aerodynamic Traveler solutions provide

passenger processing tools designed to increase agent

mobility, improve airport efficiency and maximize airline

customer satisfaction by providing the highest level of

service to passengers at the lowest possible cost.

“EyeTicket is very pleased to team with Sabre

Airline Solutions in bringing biometric passenger pro-

cessing to the transportation community,” said Stewart

Mann, EyeTicket chairman and CEO. “Sabre Airline

Solutions’ core competence and strong position in the

transportation industry will be pivotal in introducing and

successfully implementing biometrics on a broad scale.”

“We offer the most advanced solutions to address

the current environment, from streamlining passenger

processing at the airport to providing technology to

respond to security requirements,” said Steve Clampett,

president of airline products and services at Sabre Airline

Solutions. “While this environment continues to evolve,

this agreement ensures that we will have the solutions

ready to respond as requirements change.”

close-end departure fares.

Commissions on high-yield fares

create a wide field for distribution

strategy and compensation perform-

ance. The auditing function of the

Compensation Manager easily handles

the most complex payment structures.

Additionally, it enables airlines to remain

nimble so they can react to changes in

the marketplace or create and immedi-

ately implement new policies. The

flexibility delivered by the comprehensive

number of commission-targeting criteria

gives airlines the ability to apply

commission policies however they wish.

Several airlines around the world

currently utilize the tool to manage their

travel agency programs. For immediate

deployment of airline distribution

strategies, the Compensation Manager

is the optimal solution, and it stands

alone in the marketplace as the most

advanced tool for airlines to use to

help manage their distribution

objectives.

Erin Buth is a sales marketing manager

for Sabre Travel Network.

product

ascend12

By Erin Buth | Ascend Contributor

Distribution SimplifiedAutomated Tool Helps Manage Complex Compensation Programs

Airlines are focusing on controlling

distribution costs as part of an overall

strategy to operate as economically as

possible.

Since more than 70 percent of

bookings today are distributed through

travel agencies, airlines are focusing on

administering agency compensation

more efficiently and effectively to ensure

every aspect of distribution costs are

properly managed.

Although airlines have cut back, and

in some cases eliminated, commissions

paid to travel agents, many still maintain

performance-based agreements with

agencies and rely on them to apply the

correct compensation amount.

Airline commission policies are

complex, varying by geographic area,

point of sale and type of distribution.

Keeping track of these various

agreements and ensuring only the proper

commissions are paid can be difficult

and costly unless utilizing sophisticated

decision-support tools such as the

Sabre ® Compensation Manager.

The Compensation Manager, an

automated compensation administration

system and information database that

ensures the correct and appropriate

compensation amount is applied to air

tickets when the ticket is issued, enables

airlines to manage precise compensation

policies and ensure compliance on every

ticket. When errors in the compensation

rate are made, recovering the money

can be a cumbersome

process. The Compensation

Manager makes it impossible

to override the

compensation amount.

Studies have shown

that carriers can reduce their

commission expense on

average by 15 percent and

by as much as 46 percent

through the use of the

Compensation Manager.

The Compensation

Manager allows instan-

taneous introduction of

compensation changes via

a unique and secure Internet

connection and provides

many benefits to airlines

of all sizes, including:

Enabling airlines to adapt to the

changing travel market by quickly

making compensation adjustments

based on their individual needs,

Efficiently and effectively applying

variable and enforceable compensation,

Allowing for a quick and cost-effective

method of changing compensation

policies and procedures,

Significantly decreasing administrative

costs for participating carriers through

reduction of commission-related

debit memos.

The tool, which requires no new

hardware or software, also helps airlines

automate, centralize and better manage

all compensation policies, including

bonus and override agreements. The

Compensation Manager enables airlines

to offer special commission incentives to

travel agencies and produce customized

rule activity reports. Additionally, it

increases profitability by encouraging

travel agents to sell fares with a higher

yield. Essentially, the Compensation

Manager creates cost efficiencies that

improve the bottom line.

This system is particularly useful

for airlines that derive a significant

portion of their revenue from high-yield

transactions such as long-haul markets,

premium business travelers and

[the Compensation Manager ]

enables airlines to remain nimble

so they may react to changes in

the marketplace . . .

“

”

The Compensation Manager helps airlines automate,

centralize and better manage all compensation policies,

ensuring that the correct and appropriate amount is

applied to air tickets when the ticket is issued.

industryreservations, a process that is still

employed by several airlines in South

America, Africa and Asia.

Developing an effective Internet

strategy, however, is not only about

executing the various fulfillment

options. Being closer to the customer

provides an airline with a marketing

forum that can and should be harvested

for increased profits and better cus-

tomer service. Airlines can easily offer

hotel and rental car

packages dynamically

through the Internet, an

option traditionally left

for tour operators and

full-service travel agents.

Passengers view this as

an extra service, and

airlines benefit from

the incremental com-

missions earned from

selling the additional

content. Such dynamic

content packaging relies

on an airline’s ability to effectively target

audiences on the Internet based on their

historic preferences by extending its

customer relationship management

capabilities to this channel of distribution.

What makes matters a bit more

complicated is that the same passenger

may book some of his or her travel on

the Internet, some of it through a travel

agent and some of it directly with the

airline. And in doing so, the passenger

puts the burden on an airline to ensure

that key CRM initiatives, like customer

profiles, are accessible simultaneously

across each of these distribution chan-

nels. Specifically,

all customer touch

points need the same

information about the

traveler to ensure cus-

tomer recognition and

consistency of service.

In addition to

CRM-based initiatives,

airlines can also apply

point-of-sale and

alliance-based shop-

ping controls to

increase revenue

and provide more focused content. It

is imperative, however, for an airline to

have effective pricing and revenue man-

agement systems to be able to protect its

profitability. Since their inception,

Internet-based airline booking engines

have all too often been incorrectly charac-

terized as a channel for distributing

distressed inventory at cut-rate prices.

While low-fare sales do have a significant

place on the Internet, by intelligently

controlling its inventory, an airline should

be able to sell more than 50 percent of

its Internet seats above the lowest

private fare.

For airlines getting started, several

fulfillment options, such as the Sabre ®

Web Sales Engine, powered by GetThere

(see related article on page 10), make

Internet-based booking engines a reality

for even the smallest of airlines. For

experienced airlines, optimizing this

channel of distribution takes a well-

thought-out strategy that combines

fulfillment options with a blend of

electronic travel notification, CRM,

alliance and point-of-sale controls,

and effective revenue management.

Mona Boulaich is director of

sales and marketing systems,

and Vinay Dube is vice president

for Europe, the Middle East and Africa

at Sabre Airline Solutions.

april 2003 15

T H E H I G H L E V E LvıewNews Briefs from Around the GlobeNews from Sabre Airline Solutions

In November, the Kiehl Hendrickson Group, a

privately held firm specializing in airline planning and

scheduling products and airport consulting, was acquired.

The acquisition furthers Sabre Airline Solutions’ ability to

serve the small- and medium-size airline segment of the

airline software market and expands its customer base

and position in the aviation consulting market.

KHG and its product and services portfolio will be

integrated into Sabre Airline Solutions. “By combining the

best of both product lines, we will broaden our planning

and scheduling tools for the small- and medium-size air-

line segment,” said Tom Klein, group president of Sabre

Airline Solutions. “KHG’s leading position in airport con-

sulting also will broaden our consulting expertise.”

“We both have long histories in providing planning

and scheduling products to airlines,” said Steve

Hendrickson, KHG president. “The combination of

Sabre Airline Solutions’ established products and KHG’s

strong position in the small- and medium-size airline

sector creates a broad-based, end-to-end offering for

our customers.”

KHG was founded in 1992 by a team of former airline

executives. The firm has 22 employees located at its

headquarters in Minneapolis, Minnesota, and its office in

Washington, D.C. KHG had revenues of US$3.6 million in

2001. KHG clients include airlines, airports, government

agencies and other travel and transport businesses.

Web-enabled travel services can

notify passengers of schedule

and departure information

through electronic devises.

industry

ascend14

More Than Just a Web SiteBooking Engine: Only One Aspect of a Successful Internet-Based Distribution Strategy

In the last three years, the number of

Internet-based airline booking engines

has grown significantly. The motivation

is clear — to reduce distribution costs

for the airline and improve the travel

experience for the passenger.

Despite its rapid growth, this sales

channel is relatively immature and often

misunderstood. Getting it right takes

more than simply connecting a Web site

to your reservations system.

The key driver for a successful

Internet-based distribution strategy lies

in the ability to automate, and in some

cases optimize, key business and fulfill-

ment options. Ticketing, for example,

can be fulfilled in various ways. The

most cost-effective and passenger-

friendly option is to issue an electronic

ticket, although this option must be

supported by your reservations and

departure control systems.

The next best option is to automate

the issuance of a paper ticket from

printing to postage without human

intervention. And finally, an option of

last resort is to issue your tickets in the

traditional manner through an

airport or city ticket office.

This is an option of last resort

because CTO-issued tickets

may incur a commission that

the airline is trying to avoid in

the first place to reduce its

distribution costs.

The method of ticketing is

also dependent upon the usage

pattern of credit cards in a

particular country. Even today,

there are a number of Internet

users who do not feel comfort-

able submitting their credit

card information over the Web.

In such cases, ATO- and

CTO-issued tickets are the only

options. Other travelers can take

solace in the fact that several

fraud and credit card security

options exist today that make e-commerce

transactions safe and convenient. The

safest option is for the airline to store

and access a passenger’s credit card

information in an offline passenger

profile. Profiles are created and managed

by the passenger through direct contact

with an airline’s customer service repre-

sentative. Credit card information from

these profiles can then be applied

toward an Internet transaction without

this information ever having to be dis-

played across the Internet. In addition,

credit card companies, in conjunction

with reservations systems providers,

also offer fraud protection services for

credit card usage.

Internet-savvy travelers not only

want to purchase tickets over the Web,

but also want to use this technology

to be notified of schedule changes,

departure gate information, the weather

forecast at their destination and other

travel-related information. To provide

this service to passengers in a cost-

effective manner, airlines can employ

electronic travel notification services via

the Web, cell phones and other mobile

devices. While such services go a long

way in fulfilling the needs of these trav-

elers, an interesting byproduct is that

these services can also free agents from

the voluminous duty of reconfirming

By Mona Boulaich and Vinay Dube | Ascend Contributors

Being closer to the customer

provides an airline with a marketing

forum that can and should be

harvested for increased profits and

better customer service.

“

”

Effectively using a Web-site booking engine requires

a comprehensive strategy that automates key

business and fulfillment options.

News Briefs from Around the Globe

Sabre Holdingslounge. Subsequent messages could be

transmitted between the alliance partners

with the status of the incoming flight

arrival if the flight is delayed.

Increased customer service

represents another benefit of Web

services. In the case of misrouted bag-

gage, the passenger could be promptly

notified and arrangements could be

made at that time for the airline to

deliver her luggage.

As the vehicle for communicating

between alliance partners, Web services

could prove especially beneficial during

times of off-schedule operations.

Notifying partners of late arrivals can

minimize the impact on downline and

interline operations.

Sabre Labs, which uses applied

technology to create business opportu-

nities through innovation, is continuing

to explore ways to tailor Web services

to meet the day-to-day challenges of

airlines. Holder of nine patents with 20

pending, Sabre Labs’ team of 18 project

managers and engineers targets and

prototypes the application of emerging

technologies to enhance existing Sabre

Airline Solutions products or introduce

potential new products.

Gary Potter is a Sabre Labs

senior director for research and

development projects.

april 2003 17

News from Asia

Pakistan International Airlines has signed an agree-

ment to implement the Sabre ® Aerodynamic Traveler ™

passenger processing solutions to heighten customer

service and reduce operational and resource costs at

a number of its locations. Under this agreement, PIA

builds upon the Sabre Airline Solutions applications

already in use at the airline to streamline operations

and enhance revenues.

Sabre Airline Solutions will deliver the new tools

via the Sabre ® eMergo ™ Web-enabled and dedicated

network solutions, providing PIA access to system func-

tionality through its applications service provider model

via an Internet or direct connection. This ASP model

eliminates the airline’s need for costly and complicated

in-house data center infrastructure and support, and

marks the first expansion of Sabre Airline Solutions’

ASP delivery model into the airport environment.

The Aerodynamic Traveler solutions provide

passenger processing tools designed to increase agent

mobility, improve airport efficiency and maximize airline

customer satisfaction by providing the highest level

of service to passengers at the lowest possible cost.

PIA will implement the Aerodynamic Traveler Gate

Reader and Roving Agent Check-in modules under

the agreement.

The Gate Reader module reads documents and/or

cards to verify passenger information, including flight

information, date, flight origin, passenger name and

seat number. The Roving Agent Check-in module

supplements gate and check-in counter agents’ station-

ary workstations by providing wireless access to the

Sabre ® Passenger Reservation System currently in use

at PIA. The Roving Agent module’s handheld units

eliminate the need for a physical connection to a network

cable, enabling agents to provide mobile relief to long

lines of passengers and to proactively meet inconve-

nienced passengers during off-schedule operations.

“PIA has gained tremendous benefits from Sabre

Airline Solutions technologies,” said Khursheed Anwar,

chief operating officer at PIA. “With the addition of the

Gate Reader and Roving Agent Check-in modules, we

will be able to speed up the overall passenger boarding

process and provide greater efficiency for our agents

in terms of time required for flight close-out functions

and the ability to perform other duties. This type of

automation is critical for us in our key international

cities. Accessing these capabilities over the Web

helps us better perform in today’s highly competitive

airline industry.”

Specific benefits of this agreement include

improved seat utilization with better inventory control

and top quality check-in services for other airlines that

use PIA for check-in services in Pakistan. In addition,

travelers benefit from advance seat and meal selection

and incorporation of frequent flyer programs.

Connecting to the Sabre ACSI™ international airport

check-in system, already in use by PIA, the Gate Reader

module will automate the flight boarding and closeout

process at the airline’s London Heathrow, Manchester,

New York Kennedy and Toronto locations. After verifying

passenger information at the time of boarding, the

system performs real-time reconciliation of flight

lists and passenger data.

T H E H I G H L E V E Lvıew

Sabre Holdings

ascend16

By Gary Potter | Ascend Contributor

At Your ServiceResearch Into Web Services Holds Promise for Airlines

The Internet has dramatically

changed the way airlines do business

and has the potential to continue to do

so through new and evolving technolo-

gies. One such Internet technology

being explored by Sabre Labs is how

custom Web services can be deployed

to enhance various airline operations.

Sabre Labs has already identified

two potential functional areas that

could benefit significantly from Web

services — planning (shopping, reserva-

tions, fulfillment, etc.) and day of travel

(customer service, dining and cabin

services, flight operations, planning

and scheduling, and airport resource

management).

Web services — a location on the

Internet that provides a link to an

application that performs a desired

function — eliminate the need for local

application deployment, which lowers

the overall cost of ownership. Through

Web services, an airline can select —

and pay for — only the particular

functionality that is needed rather than

buying a complete bundled software

system. The airline accesses the Web

service from a unique URL, which lists

the functionality available and describes

the requirements needed to use the

service (what information must be sub-

mitted, what technical specifications are

required, etc.). In many cases,

sample code is even provided to

facilitate easy access to the service.

Once accessed, the service performs

the desired function. And because the

service is deployed on the Web, it can

be reached from anywhere with access to

the Internet.

Enabling airline planning or day-of-

travel applications through Web services

could increase operational efficiencies

while also helping an airline establish

a competitive advantage.

Take, for example, a passenger

arriving at the airport two

hours prior to departure.

She arrives and parks in

an extended-stay lot, and

with luggage in tow, boards

a bus for the terminal.

Depending on the airport,

she checks her bags for an

interline trip at curbside or

in the terminal. In either

case, she receives a board-

ing pass for the first flight

prior to going through the

security checkpoint and

heads to the gate area to

settle in and wait to board

the aircraft.

In a world enabled with

Web services, her travel

experience is made more

convenient and seamless.

The shuttle driver carries a hand-held

device that communicates with the air-

line’s passenger processing system. The

driver verifies the traveler’s identity, issues

a priority check-in coupon and sends a

message to the airline that she is on the

way to the terminal for check-in. It’s also

possible, with Web services, for the

shuttle driver to issue boarding passes

and even baggage tags.

Now at the terminal, she proceeds

to priority check-in, where she checks

her baggage and, if she hasn’t already

received it, is issued a boarding pass.

When the boarding pass is issued, the

airline’s Web service-enabled check-in

system notifies the downline alliance

carrier that the passenger has checked

in and is traveling with checked baggage.

The alliance partner returns a message

authorizing complimentary admission to

the departing carrier’s priority customer

Web services hold out the promise for making travel more

seamless for passengers, improving customer service.

Increased customer service represents

another benefit of Web services.“

”

industryIn the future, for example, low-cost

airlines could partner with full-service

network airlines in a symbiotic relation-

ship that capitalizes on each one’s

strengths. Through a codeshare agree-

ment, a low-cost carrier could provide

domestic lift and feed into a full-service

carrier’s international network.

Through customer relationship

management initiatives such as loyalty

programs designed to offer rewards

to repeat customers, they can attract

new customers and better maintain their

current customer base. CRM initiatives,

by maintaining extensive data on

individual travelers, also bolster customer

service, providing a 360-degree view of

a customer’s preferences thereby

enabling the airline to enhance the

entire travel experience.

These new opportunities would

require proven technologies that easily

integrate into the reservations system,

a scalable platform to withstand high

passenger volumes and access to

extensive airline industry expertise.

The niche reservations providers

that target low-cost carriers are unable

to support this growing hybrid segment

because they:

Do not offer the added functionality

a low-cost carrier needs to cost-

effectively take advantage of new

sources of revenue,

Lack a stable platform capable of

supporting increasing passenger

volumes, and in some cases are facing

significant technical challenges,

Do not provide consultancy services

and solutions backed by extensive

airline industry experience.

Sabre Airline Solutions, which

successfully manages the reservations

functions for low-cost pioneer Southwest

Airlines, has an affordable, targeted

reservations offering designed specifi-

cally for the low-cost market segment.

This solution was designed with the

needs of low-cost carriers in mind with

an emphasis on

ease-of-use,

direct distribu-

tion capabilities

and a simplified

operating model.

Sabre Airline

Solutions’ reser-

vations solution,

backed by more

than 40 years’

experience and

used by more

than 70 airlines

worldwide, also

makes available

the functionality

that hybrid carri-

ers may choose to utilize as their

needs change.

The Sabre® Passenger Reservation

System’s scalable, stable platform will

soon move to the next generation of

technology with a seamless back-end

migration in 2004 to the HP NonStop™

platform. The migration to this high-

performance platform, which will be

invisible to customers, will allow the

system to process increasingly large

volumes of annual passengers boarded

and more efficiently address customer

demands for carriers as they grow.

“We’ve already invested the time

and dollars to develop unmatched reser-

vations functionality for carriers of all

sizes so our customers are not faced

with development uncertainty, and we

will continue to invest in refining our

systems,” Marostica said. “Not only will

niche providers have to migrate to new

platforms, they also face the challenge

of developing the functionality sought

after by growing low-cost carriers that is

already available through Sabre Airline

Reservations.”

The capabilities of the reservations

solution are supplemented by extensive

customer support including a help desk

staffed with experts seven days a week,

24 hours a day. Customers also have

direct input in shaping future product

direction and determining development

of new functionality.

With the changes ongoing with

providers in the marketplace, low-cost

carriers have a unique opportunity to

evaluate the best option for a long-

term technology partner. Selecting a

provider that offers affordable reserva-

tions capabilities targeted for low-cost

carriers along with the flexibility to

adapt to an unknown future could set

the stage for long-term success.

Holly Cox is marketing communi-

cations manager, and Tim Finholt

is product marketing manager for

airline reservations and departure

control for Sabre Airline Solutions.

april 2003 19

Low-cost carriers need an easy-to-use, streamlined graphical

user interface for their reservations systems, which is one of

the features offered by a full-service reservations provider.

+count it up 246 — Combined years’ of airline industry experience possessed

by Sabre Airline Solutions’ consultants

industry

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By Holly Cox and Tim Finholt | Ascend Contributors

Open ReservationsFull-Service Providers Offer Affordabilityand Flexibility to Low-Cost Airlines

Low-cost carriers, relatively speaking,

are flying high.

Not only are they financially

outperforming the industry as a whole,

but they are also continuing to grow

and expand even in the current

environment.

Low-cost carriers experienced

95 percent growth in total passengers

boarded from 2000 to 2001, based on

historical growth rates and projections

by the International Air Transport

Association. And their low fares increas-

ingly appeal to the public, drawing not

only more leisure passengers but also

siphoning high-revenue business pas-

sengers away from the network carriers.

The success of this segment is

attracting new entrants — pure low-fare

airlines, offshoots of network carriers,

such as Song from Delta Air Lines, and

even new reservations providers are

emerging to serve this segment.

Today, many low-cost carriers rely

on a very simple reservations solution

— compared to full-service carriers —

offering:

An integrated check-in system,

Easy-to-use, streamlined graphical

user interfaces,

A robust Web booking tool,

Revenue accounting capabilities,

including basic reporting functions,

Revenue management functionality.

The reservations solutions providers

that serve this niche have gained market

share among carriers in the low-cost

segment because they offer speed to

market. But more and more, the limitations

of their solutions are found to impede

the growth objectives of many carriers

as they mature, and these carriers find

that they need to expand beyond the

traditional model to tap into new sources

of revenue.

A handful of airlines, such

as Southwest Airlines, Ryanair

and easyJet, have been able

to sustain growth without sig-

nificantly modifying their low-

cost business model. But, a

worldwide study conducted

by the Center for Asia Pacific

Aviation concluded that many

carriers in this segment will

struggle to maintain a pure

low-cost structure after five

years in operation.

“In all probability as low-cost

airlines grow older,” the study concluded,

“[i]t will become progressively harder

for them to apply a tourniquet to costs

and maintain harmonious relations with

their workforces. In effect, management

will have to become more innovative

and proactive in its oversight of

operations and, perhaps, be prepared

to compromise the low-cost airline

model if the situation demands it.”

Branching beyond the strict low-

cost model, some airlines have already

begun to incorporate non-traditional

programs, such as codeshare agree-

ments and alternative distribution, to

develop additional revenue.

This growing segment of “hybrid”

carriers needs a tailored, affordable

reservations offering that provides the

functionality needed by low-cost carriers

today while also allowing room to grow

in the future should the need arise.

Not only can a traditional reservations

provider offer this niche reservations

functionality, it can offer additional

capabilities.

“As the industry continues to evolve,

low-cost airlines will need to develop

new revenue streams,” said Gianni

Marostica, president of airline reserva-

tions and departure control for Sabre

Airline Solutions. “They may look

beyond the traditional low-cost model

for new opportunities such as code

share agreements, customer relationship

management capabilities — loyalty

programs, travel banks — and maybe

even interline electronic ticketing.”

Since 1987, Sabre Airline Solutions has success-

fully managed the reservations functions for

pioneering low-cost carrier Southwest Airlines.

Sabre Airline Solutions . . . has an

affordable, targeted reservations

offering designed specifically for

the low-cost market segment.

“

”

regionaleasy access to information and give

its passenger service professionals the

ability to quickly satisfy customer

requirements. The objective was to

build in easy-access features without

sacrificing productivity or usability.

To accomplish its goals, ATA

upgraded its existing 16-bit system to a

32-bit system based on the Sabre ® Qik™

business processing solution. This sys-

tem is designed to improve productivity

by 4 percent to 8 percent, improve flight

segment conversion rates by 1 percent

to 3 percent and reduce new-hire

recruiting expenses by up to 30 percent.

It also reduces host transaction volumes

up to 20 percent and telephone costs by

4 percent to 8 percent.

The upgrade resulted in the airline

replacing approximately 500 older PCs

throughout its Indianapolis and Chicago

reservations offices, along with upgrad-

ing old routers and circuits. The benefits

of the new system, however, more than

justified the replacement expense,

airline officials said.

The benefits are more than monetary;

with several changes such as the dual

screen display, pop-up windows and

menus, the upgraded system minimized

complex processes enabling agents to

work more efficiently.

“We were able to improve agent

productivity, reduce call times and

simplify training,” said Sylvia Phillips,

quality assurance and customer services

training at ATA. “Training our staff on

the new Qik solution is much easier.”

Upgrading its reservations function-

ality is just an example of countless ways

ATA has attempted to take advantage of

technology in order to remain a strong

industry competitor. Improving all facets

of its operations remains a priority as

the airline continues seeking ways to

get the fastest return on investment,

securing its financial stability long into

the future.

Steve Hodges is a Sabre Airline

Solutions account director.

april 2003 21

ATA improved its collections by

more than 15 percent, and it’s

improving steadily.

“

”

News on New and Improved Productsand Services from Sabre Airline Solutions

hightech

product

Release 10 of the Sabre ®

AirFlite ™ suite of planningand scheduling solutions

descr ipt ionAn integrated suite of Sabre Airline

Solutions’ core planning and scheduling

systems.

benef i tsRelease 10 of the AirFlite solutions com-

bines the functionality of the core plan-

ning and scheduling systems including

flight scheduling, profitability forecast-

ing and analysis, fleet assignment, and

slot management.

featuresUsability — the new release offers

intuitive user interfaces that model the

popular features of today’s mass-market

applications, including “drag-n-drop,”

versioning, undo/redo, and cut and

paste to other desktop applications.

Performance (Speed) — provides

real-time performance, while not

compromising the features of a

multi-user database environment.

Performance is especially critical

for schedule retrieval, editing and

incremental forecast evaluation.

Scalability — larger customers with

many analysts can run the system in

a networked, multi-user environment.

Smaller clients who do not want to

invest in expensive servers and

network software can run the system

as a stand-alone on a Windows PC.

Even clients who run extensive net-

works in the office may have analysts

who need to bring a laptop home

loaded with a stand-alone version.

Platform Independence — to support

our clients’ current hardware, the

system runs on both the UNIX and

Windows operating systems.

Transparency — the new system is a

“glass box” rather than a “black box.”

Maintainability — the new architecture

lends itself to efficient development

and problem resolution. For internal

projects, this leads to lower costs. For

external customizations and change

requests, this improves time to

market and competitive pricing.

Integration — the breadth of this suite

is one of its strengths. The integration

is centered on the schedule data.

The system uses a schedule-centric

approach in which all of the modules

access the same schedule data and

write updates to a central location.

All of the products run graphically

in the same application space.

regional

ascend20

By Steve Hodges | Ascend Contributor

Getting Its Money’s WorthATA Hones in on Key Ways to Get the Most for Its Investments

In an environment where every

dollar is crucial, ATA Airlines strives to

incorporate better business processes

into its operations in order to get the

most return on its investment. The air-

line, which continues to push the fron-

tiers of technology, recognizes the bene-

fits of technological advancements to

facilitate these initiatives and the need

to remain at the forefront of the industry

in order to compete effectively.

“The rate of change in our industry

has accelerated dramatically in the last

several years, causing us to rethink most

of our business processes,” said Glen

Baker, vice president of information

services at ATA. “This acceleration has

motivated us to be even more creative

in looking for ways to provide great

service to our customers while achieving

greater business efficiency.”

As part of its analysis of its opera-

tions, the Indianapolis-based carrier

recently identified two areas of its

reservations operation — change fee

collection and business processing

solutions — where change would make

a significant financial difference.

Considering the strict time restraints

ticketing and gate personnel are under

to service customers quickly and

efficiently, passengers owing additional

money for change fees may be over-

looked during check in, resulting in a

substantial loss of revenue. ATA realized

it could take advantage of an opportunity

to automate the process of identifying

change fee charges to ensure they are

administered correctly and consistently

when they apply and to enable them

to be waived when customer circum-

stances warrant.

“Process consistency and customer

service flexibility are guiding principles

for ATA’s mission to be an ‘Honestly

Different Airline,’” Baker added.

After implementing the Automated

Change Fee Collection option, a value-

added enhancement to the Sabre ®

Passenger Reservation System and the

Sabre ACS™ airport check-in system,

ATA improved its collections by more

than 15 percent, and it’s improving

steadily.

Through this option, a change

fee alert is automatically displayed for

passengers owing additional monies.

The alert, which is automatically popu-

lated with the change fee information

contained in the passenger name record,

is lifted once the fee has been collected.

For passengers already holding a

boarding pass, a gate reader will not

accept the boarding pass if additional

monies are due. Check-in cannot be

completed until the change fee has

been collected or waived for special

circumstances. In addition, passengers

standing by for alternative flights owing

fees cannot be placed on the standby

list until the fee has been received.

Fees that are waived or overridden are

reported for analysis by management.

“A policy is only as good as its

enforcement and tracking of exceptions,

and the Automated Change Fee

Collection option guarantees that we

don’t leave money on the table, alienate

our customers who have special

circumstances or put an added burden

on our customer service personnel,”

Baker said. “That’s honestly different!”

A second initiative for the airline

involved upgrading the graphical user

interface of its reservations system

to perform functions for processing

reservations, ticketing and automated

ticket agent check out.

ATA wanted a GUI that would provide

North America

Sabre Airline Reservations provides increased security features to airlines such as

ATA that use its reservations systems.

(Photo by Art Brett)

industryneed for complicated in-house data

center infrastructure and support.

Carriers of all sizes across the globe

have chosen the eMergo solutions,

seeking to improve revenues, lower costs

and quicken time to market — affordably

and without large capital outlay.

“Accessing the AirPrice system

via the eMergo solutions enabled us

to minimize our upfront investment,”

Taniguchi said. “Sabre Airline Solutions

presented us with a total cost of owner-

ship comparing a local installation to

access via the eMergo solutions. We

recognized we’d achieve a quicker

return on investment with all the bene-

fits of sophisticated functionality and

quicker time to market by going with

a hosted solution.”

That quicker time to market trans-

lated into fewer than four months from

contract signing to implementation,

allowing Hawaiian to immediately begin

using the application and impacting its

bottom line.

“The implementation went smoothly

and allowed us to quickly use the

application,” Ke said. “We like the

flexibility of using the Internet to access

the AirPrice system. Analyzing our

competitors fare changes manually took

us six to seven hours. With the system,

we complete the analysis in one to two

hours, and we make more fare changes

to more markets on a daily basis.”

To date, 40 global customers have

signed agreements to access Sabre

Airline Solutions applications using the

eMergo solutions. These applications

are hosted in a world-class data center

managed by EDS, a company recognized

worldwide as an expert in data center

operations. Like Hawaiian, carriers of

all sizes access the eMergo solutions,

helping them effectively manage their

information technology spend and

improve their bottom line.

David Endicott is the vice president

for the eMergo solutions.

april 2003 23

The Simple SolutionsThe following airline solutions are available via the Sabre ®

eMergo™ Web-enabled and dedicated network solutions:

Quasar ™ passenger revenue accounting system,

Sabre ® Aerodynamic Traveler ™ Gate Reader module,

Sabre ® Aerodynamic Traveler ™ Self-Service Kiosk module,

Sabre ® Aerodynamic Traveler ™ Roving Agent Check-in module,

Sabre ® Aerodynamic Traveler ™ Web Check-in module,

Sabre ® AirCrews ™ crew management system,

Sabre ® AirMax ™ automated revenue management system,

Sabre ® AirOps ™ Movement Control,

Sabre ® AirPrice ™ fares management system,

Sabre ® AirServ™ aircraft provisioning system,

Sabre ® CargoMax ™ revenue management system,

Sabre ® CargoRev ™ automated revenue accounting system,

Sabre ® LiteVision ™ personalized MIDT system,

Sabre ® StaffAdmin ™ employee tracking and assignment system,

Sabre ® StaffManager ™ automated staff allocation system,

Sabre ® StaffPlan ™ staff forecasting and planning system,

Sabre ® TransVision ™ traffic flow analyzer,

Sabre ® Travelcard Pro ™ billing and marketing information

access system,

Sabre ® Traverse ™ loyalty management system,

Sabre ® WiseVision ™ sales expansion system.

For more information about the eMergo solutions,

contact Jim Quilty, director of marketing for the eMergo

solutions, at 817 264 2906, or send an e-mail message to

jim.quilty@sabreairlinesolutions.com.

industry

ascend22

By David Endicott | Ascend Contributor

The Price Is RightHawaiian Airlines Selects Automated Tool for Fares Management

Hawaiian Airlines, the state’s largest

and longest-serving airline, has constantly

been faced with the challenge of address-

ing the daily competitive fare changes

that affect its routes. Until last year,

Honolulu-based Hawaiian used a manual

process to analyze fares on its 140 daily

jet flights to points throughout the islands,

the U.S. mainland, American Samoa

and Tahiti, which from a pure resource

standpoint, limited the amount of routes

that could be efficiently and effectively

analyzed for potential fare changes, and

therefore limited the amount of revenue

the carrier could maximize.

In today’s dynamic pricing environ-

ment, airlines file fare changes with Air

Tariff Publishing

Company sev-

eral times each

day, which

ATPCO then

publishes for

other airlines to

view. Airlines

have only a few

hours to identify,

analyze and

respond to price

changes by

competitors

before the next

filing deadline. Without timely

responses, Hawaiian was faced with

the potential of losing revenue or

market share.

“We knew an automated tool would

provide a more effective means to

analyze fares,” said Tessa Ke, senior

director of tariffs and schedule planning.

Subsequently, Hawaiian decided to

evaluate vendors that offer automated

technology for fares management.

After conducting a comparison

study, Hawaiian, founded in 1929 as

Inter-Island Airways and now the United

States’ 12th largest carrier, chose the

Sabre ® AirPrice ™ fares management

system for several reasons. Among the

deciding factors, the AirPrice system

was an established application already

in use at other major carriers. The Sabre

Airline Solutions pricing team demon-

strated to Hawaiian a potential increase

of up to 1 percent of annual revenues

given effective use of the AirPrice

system, helping to justify its investment

in technology.

In addition, Hawaiian wanted

to supplement the Sabre ® AirMax ™

automated revenue management

system that was already in place by

implementing the AirPrice system and

the Sabre ® AirFlite ™ Schedule Manager.

“We decided to implement the

AirPrice and AirFlite systems because

we wanted an integrated solution with

robust functionality and decision

support that enables us to proactively

make rapid, effective and profitable

decisions in an ever-changing and

competitive environment,” said Glenn

Taniguchi, vice president, schedule plan-

ning for Hawaiian Airlines. “Together,

this industry-leading suite of products

will enable us to build on the strong

foundation of the AirMax system by

tightly and effectively managing our

schedules, pricing and revenue manage-

ment from a network perspective.”

When it came to application access,

Hawaiian evaluated the benefits of

accessing the AirPrice system via the

Sabre ® eMergo™ Web-enabled and

dedicated network solutions against

those of a local system installation.

The eMergo solutions, an applications

service provider model, offers access to

20 industry-leading Sabre applications.

Providing a secure and safe environment

with superior reliability and data access

over an Internet or direct connection,

the eMergo solutions reduce an airline’s

upfront investment and eliminate the

Hawaiian Airlines could realize up to a 1 percent increase in

annual revenues by automating its fares management process.

Sabre Holdings

april 2003 25

News from Sabre Airline Solutions

Last year, 28 airlines joined the growing number of

carriers accessing software products through the Sabre ®

eMergo™ Web-enabled and dedicated network solutions, an

application service provider model that provides remote

access to leading technology. Already, 14 customers have

been implemented to date, making the eMergo solutions

the leading ASP offering for the airline industry.

The eMergo solutions offer airlines of all sizes access

to leading decision-support tools via an Internet or direct

connection, eliminating airlines’ need for complicated

in-house data center infrastructure and support. Airlines

choose the eMergo solutions for affordable access to

products designed to improve revenues, lower costs and

reduce time to market, without large capital outlay.

Sabre Airline Solutions currently offers 20 decision-

support and optimization software applications through

the eMergo solutions to support crucial areas of the

airline business.These applications include tools to

optimize airline pricing, revenue management, operations,

crew scheduling and others.

“We believe the eMergo solutions delivery method

will be a key tool allowing us to grow our business while

keeping our costs under control,” said Mary Ellen Thiets,

manager of passenger revenue accounting at Great Plains

Airlines, which accesses the Quasar system through the

eMergo solutions. “For

instance, we expect the

Quasar system’s automatic

loading of electronic ticket

lifts will reduce our data entry

expense by 90 percent.”

Hector Fuentes, pricing

director at AeroMexico, said,

“Accessing the AirPrice

system via the eMergo

solutions has allowed us to

minimize our upfront invest-

ment and achieve a quicker

return on investment and

ensures that we have a

reliable decision-support

tool that is available around

the clock to support our

competitive needs.”

The applications available through the eMergo

solutions have all been integrated and tested in the

environment. For a new airline signing on to the system,

this means that only the airline’s data and business rules

have to be loaded into the eMergo solutions, resulting

in much faster implementations compared to on-site

installations. Sabre Airline Solutions manages the system

administration and database requirements, which

includes 24-hour data center support. Last year, service

levels met or exceeded all customer expectations.

News Briefs from Around the Globe

Customer Products accessed

Aerolineas Argentinas Sabre ® AirMax ™ automated revenue management system

AeroMexico — Aerovias de Sabre ® AirPrice ™ fares management systemMexico S.A. de C.V.

Aeropostal Alas de Venezuela C.A. Sabre ® AirOps ™ Movement ControlSabre ® AirCrews ™ crew management systemSabre ® LiteVision™ personalized MIDT system

Air Jamaica Ltd. Sabre ® Aerodynamic Traveler™ Gate Reader moduleSabre ® Aerodynamic Traveler™ Roving Agent Check-in module

Air Malta p.l.c. Sabre ® Traverse™ loyalty management system

Gulf Air- Gulf Air Company G.S.C. Sabre ® TransVision™ traffic flow analyzer

Lloyd Aereo Boliviano SA (LAB) Quasar ™ passenger revenue accounting systemSabre ® LiteVision™ personalized MIDT system

The customer list for the eMergo solutions includes airlines spanning the globe. The list

below is an example of the types of carriers that signed last year.

T H E H I G H L E V E Lvıew

+count it up10 to 15 — Percent of total

airline revenue generated by cargo

29 billion — Estimate in dollars

of online travel sales worldwide in 2003

3.7 trillion— Estimate in dol-

lars of total travel sales worldwide in 2003

Sabre Holdings

ascend24

By Ascend Staff

Savings DirectNew Direct Connect Availability Option Helps Lower Distribution Costs

Airlines utilizing the Sabre ® Global

Distribution System now have a new

option available to help lower the costs

of distribution.

Under the new Direct Connect

Availability Three-Year Option, airlines

in the Participating Carrier Agreement —

which covers the distribution of airline

content through the Global Distribution

System — receive a booking fee reduc-

tion of approximately 10 percent, which

represents an average of 40 cents per

booking. In return, participating airlines

agree to provide access to all their pub-

lished fares, promotions and services,

and commit to a three-year term at the

highest level of participation in the GDS.

Eight carriers worldwide have

already partnered with Sabre Travel

Network for the DCA option enabling

Sabre Connected travel agents, offline

and online, to book all their content,

including Web fares, through the GDS.

“As the Internet has evolved from

a niche marketing tool to a mainline

distribution channel, travel agencies

and corporate travelers have become

frustrated with the discrepancies among

the various fares airlines offer online

versus more traditional distribution

methods,” said B. Ben Baldanza, senior

vice president marketing and planning for

US Airways, which participates in the DCA

option. “We are joining with Sabre Travel

Network to respond to these concerns

by eliminating the barriers and making

Web fares available via all its channels.

This move will allow us to better manage

distribution costs over the term of the

agreement.”

The three-year option is available

to all airlines with U.S. points of sale,

but the program will soon be expanded

internationally. Current agreements

typically cover only 30-day terms.

In the Global Distribution System,

DCA is the highest of six different

connectivity levels. The levels provide

airlines with a wide range of services

to market and sell their flight

and fare information to approx-

imately 60,000 travel agents

around the world.

Through the DCA option,

an airline agrees to provide

all published fares with the

exception of opaque fares

(those where the supplier’s

identity is not disclosed until

after the sale). This includes all

fares that the airline sells through any

third-party Web site and through its

own Web site and reservations offices.

Additionally, the airline agrees to provide

equal opportunities for Sabre Connected

agents to have access to promotions that

the airline may make available through

other channels, including competing

reservations systems and third-party

Web sites.

By participating in the DCA, airlines

are guaranteed the reduced booking fee

rate for three years, as well as the fee

for cancellations.

The DCA provides several benefits

for airlines, such as:

The ability to offer travel agents seam-

less, “real-time” access to their inven-

tory during the availability process,

The ability to interactively display their

complete inventory down to the last

seat available in real time, eliminating

the probability of any lost sales,

The ability to easily integrate their con-

tent with their revenue management

systems to maximize revenue potential,

Long-term reduction in distribution

costs,

Price certainty in booking fees

at the DCA level,

Elimination of fare confusion for

both corporate and leisure travelers,

Increased sales opportunities,

Seamless implementation (no

technology development work

required).

By participating in the DCA,

airlines are guaranteed the

reduced booking fee rate for

three years, as well as the fee

for cancellations.

“

”

By taking advantage of the DCA Option, airlines

can market their fares to travel agents around

the world and also lower their distribution costs.

industrysustainability not profitability, and that

meant a long-term approach to all

contracts and a true sense of fairness

to fare setting. For example, we did not

take advantage of Ansett’s demise by

increasing fares, we wanted those

passengers to appreciate our service

and value for money and return as

opposed to a one-time bonanza.

Q: What role does technology play in

maximizing your airline’s bottom line?

A: Technology infuses and drives our

innovation, and Virgin Blue has been

perceived as an innovative airline

primarily as a result of technology drives.

For example, the only department in the

company in 2002 in which the director

was allowed to set his own budget was

information technology. Timely revenue

collection is crucial, and I believe our

software here is state of the art. Crew

planning, scheduling and optimization

software recently acquired will also

result in material savings.

Q: What is the single most

important aspect of running a

low-cost/low-fare airline?

A: You can’t keep the “air fair”

without the lowest costs, and

that’s our motto — “cost control is

paramount to success.”

Q: What factors do you

weigh when implementing

new business processes?

A: Clearly, cost benefit and

likelihood of attainment.

Q: What are some of the areas

you can look at to achieve rapid

return on investments?

A: We continue to search for and

find markets where competition is

complacent and the

consumer is being ripped off or

underserved. When we find these

markets, and we do so regularly,

each asset employed (aircraft and

people) is profitably employed.

Q: How does Virgin Blue seek to

maximize its resources to get the

most value from its investment?

A: We maximize demarcation. For

example, our guest contact center

staff is trained to work at the airport

and our ground crew and check-in

teams are also trained as cabin crew.

People think we use rear stairs to save

money, when the reality is we use them

to save time, which in turn gets more

utilization out of our aircraft. We use

our size to leverage bigger and better

savings.

Q: When looking at investing in an

IT system, how quickly do you look to

get a return on investment?

A: We look for a system to pay for

itself within 12 to 18 months for

tangible cost savings or value benefits.

As part of its IT strategy to

maximize growth, Virgin Blue recently

selected Sabre Airline Solutions to help

integrate its flight operations. As part of

a five-year agreement, Virgin Blue will

deploy Sabre ® AirOps ™ Movement

Control, the Sabre ® AirCrews ™ crew

management system, the Sabre ®

AirFlite ™ Schedule Manager and

the Sabre ® AirFlite ™ SlotManager ™

system. In addition to this agreement,

the airline also utilizes Sabre ® AirOps ™

Flight Planning.

april 2003 27

industry

ascend26

Making Every Dollar CountA Conversation With … Brett Godfrey, CEO Virgin Blue

Since it began operations in 2000,

Virgin Blue has rapidly become one of

the strongest airline brands in the

Asia/Pacific region. With its emphasis on

a point-to-point route structure serving

16 markets in Australia, the carrier has

always maximized its resources as the

region’s pioneering low-cost carrier.

Virgin Blue is single-mindedly

focused on controlling costs and

ensuring that its money is well spent.

With its exclusive use of electronic tickets,

“a là cart” in-flight food menu available

for purchase, modern yet efficient office

facilities and single fleet type, the carrier

keeps costs at a minimum without jeop-

ardizing its quality and reputation. In

fact, Virgin Blue was voted the world’s

“Best Low Cost Carrier” in the Travel

Quality.com Aviation Awards for 2003,

besting other well-known low-fare carriers

such as U.S.-based Southwest, Irish carrier

Ryanair and U.K.-based airline easyJet.

From its first two Boeing 737-400s

the airline began flying in August 2000,

Virgin Blue has grown its fleet nearly 15

fold. With its current fleet of 29 Boeing

737s, Virgin Blue flew 2.3 million pas-

sengers in 2001. An offspring of Sir

Richard Branson’s Virgin Group, which

also includes Virgin Atlantic Airways,

the award-winning airline has been

recognized for its innovation, customer

relationship management and service

excellence.

The Virgin Blue name is a light-

hearted take on the Australian slang for

a red-headed person — known locally as

a Bluey — a perfect distinction for the

livery of its vibrant red fleet.

Virgin Blue CEO Brett Godfrey

discusses some of the ways the airline

has been able to compete effectively

while steadily improving its bottom line.

Question: How has Virgin Blue’s

strategy changed to combat the many

challenges facing the airline industry

today?

Answer: Virgin Blue was born into

current airline challenges and doesn’t

know any differently. Our primary

challenge has been self-imposed growth

and quite massive growth relatively

speaking. We started with two aircraft

in August 2000; by August 2002 we had

12 and by August 2003 we’ll be at 35.

The team at Virgin Blue has become

accustomed to heroic deeds being

considered the norm.

Q: Has the current situation

caused you to put a greater focus

on achieving maximum value (getting

the most possible benefit from

assets/resources)?

A: We have always been extremely

diligent, in fact, perhaps pedantic in our

attention to value. Our recent Boeing

announcement emphasized that focus

by taking near on 12 months of our time

to reach a conclusion that we felt our

shareholders, via the board, would ratify

immediately.

Q: Does being a low-fare carrier make

it more critical that you get a rapid

return on your money?

A: Contrary to popular misconception,

Virgin Blue is not focused on rapid

return on its money. The airline was

started from a mere A$10 million,

and banks’ research departments have

been quick to place multiples of more

than 100 times this investment as the

current valuation of our airline. Our

focus from the start was to build

Brett Godfrey leads Virgin Blue, the Australian low-cost carrier, which has undergone tremendous growth since it

began operations in 2000.

As part of its IT strategy to

maximize growth, Virgin Blue

recently selected Sabre Airline

Solutions to help integrate its

flight operations.

“

”+count it up600+ — Number of airlines with

schedules in the Sabre ® Passenger

Reservation System

12 million — Number

of fares stored in the Sabre ® Passenger

Reservation System — 12 times as

many fares as stored in 1978

400 — Number of airlines world-

wide that have been assisted by Sabre

Consulting

productkitchens that globally support the

carrier. Newly designed to run in a

“push” mode, the inventory control

system can even automate procure-

ment procedures for additional

inventory needs. Current users of the

AirServ system have reported a

5 percent to 7 percent decrease in

overall inventory levels in addition

to reduced manpower requirements

to manage such operations.

Automated financial controls — the

AirServ system’s pricing and invoice

processing modules ensure that a

carrier only pays for the services that

have been provided and only at the

prices agreed upon with its partners.

The pricing functionality provides a

single source of record and communi-

cation of prices across all products

(food, beverages, inventory items,

etc.) and services (delivery, cabin

services). When pricing is mapped

to services that are scheduled

through the system, invoices can be

automatically accepted or rejected

based on the system’s intricate and

thorough audit validation mechanisms.

These automated financial control

mechanisms can save a carrier nearly

5 percent in total catering spend by

minimizing caterer overpayment and

reducing headcount required to

perform these procedures.

Standardized menu planning — the

system’s menu planning applications

let a carrier or its caterer create and

manage all menu specifications, both

conceptual and production, from one

online database. Standardized across

all designated caterers, specifications

include digital images and detailed

preparation instructions. These speci-

fications are associated with a single

airline-approved price for any given

date range. Specifications can be

grouped in a way that best suits the

specific needs of the carrier. Enhanced

menu planning significantly reduces

related personnel costs as well as

improves and standardizes communi-

cation with caterers.

Automated scheduling — the AirServ

system’s scheduling module maps

the carrier’s routed schedule with

the carrier’s specific boarding

policies (distance, market

segment, city-pair and so on),

automatically building a planned

provisioning schedule for each

departure across the system. In

addition, the module automatically

recognizes opportunities for the

multiple provisioning of goods — the

ability to board goods for more than

one flight leg — and schedules these

opportunities per airline-specified

rules. Automating this arduous

process results in a reduction of

required personnel and potentially

significant cost savings due to

reduced caterer delivery charges that

can total tens of millions of dollars

per year.

And what of the recent trend of

carriers, specifically in North America,

piloting “buy-on-board” programs that

allow passengers to purchase meals

while in flight? The AirServ system

provides enhanced value to carriers that

are moving to this model by delivering

functionality that directly applies to the

management and execution of these

“meal purchasing” programs.

For airlines considering a meal

purchasing program, the AirServ sys-

tem offers the ability to create a hybrid

environment where the airline can choose

to provide meals for selected markets

and designate those markets targeted

for buy-on-board within the system.

These targeted buy-on-board flights

with their associated meal forecasts can

then be sent to the appropriate caterers

and vendors for fulfillment. The AirServ

system’s data warehouse functionality

offers increased value in this scenario

(continued on next page)

april 2003 29

With its intuitive graphical user interface, the AirServ system provides an

easy-to-use tool for dining and cabin staff.

product

ascend28

By Erin Bouck and Jamie Patel | Ascend Contributors

Meals, Magazines, Music and MoreRealize Cost Savings by Automating All In-flight Services

In today’s “tight-fisted” economic

environment, airlines are experiencing

shrinking revenues due to a variety of

reasons including declining ticket prices,

reductions in departure

schedules and lower load

factors. In light of these

revenue-diminishing factors, a carrier

must dig deeper and deeper into its

various business functions to find

ways to quickly streamline operations,

decrease costs and, ultimately, improve

its financial outlook.

One way an airline can gain

significant savings and enhanced effi-

ciency is by automating the onboard

products and services provisioning

process. In some cases, the costs

associated with in-flight services can

make up 2 percent to 3 percent of an

airline’s total expenses — equating to

hundreds of millions of dollars.

Automated tools, such as the

Sabre ® AirServ ™ aircraft provisioning

system, enable an airline to tightly

manage all aspects of its “above the

wingtip provisioning” — everything

from meal and beverage service to duty

free, entertainment, reading materials,

cleaning services, pillows and blankets.

The leading systems automate

processes associated with

menu planning and schedul-

ing, day of operations and

communication of changes,

inventory management of

airline-owned goods, pricing

and invoice processing, and

communication of real-time

information to partnering

caterers and vendors. Quite

simply, such a system

streamlines the entire in-flight

operation for any size carrier

across its entire network of

business partners.

Currently in use at

American Airlines, the AirServ

system is also being deployed

at Lufthansa and Aeroflot. In addition,

more than 20 airlines are currently

reviewing the system and the specific

benefits it delivers. The AirServ system

offers a modular design and pricing

structure that enables customizable

deployments based on the most

immediate needs of an airline.

With a proven history of enhancing

productivity and significant cost savings,

the AirServ system enables clients to

realize quantifiable improvements in a

wide variety of areas, including:

Reduced meal overage levels —

the AirServ system’s meal ordering

functionality uses a complex forecasting

algorithm and real-time data feeds

from the airline reservations and

departure control systems to provide

the most accurate meal forecasts

available today in the marketplace.

Forecasts are generated by class for

each departure utilizing historical

flight and day-of-the-week data,

booked passenger levels, special meal

counts, potential passenger upgrades

and non-revenue passenger counts as

well as timely schedule adjustment

information. The system can reduce

meal overage levels to 3 percent or

4 percent and, in turn, generate signif-

icant reductions in an airline’s overall

food expenses.

Reduced airline inventory costs —

the system’s inventory control mod-

ules optimize the amount of inventory

carried by the airline (trays, plates,

glasses and so on) by forecasting to

the airline schedule and the planned

boarding requirements for each

departure. In addition, it automates

the transfer of goods among catering

By automating the onboard provision process,

the AirServ system can help airlines save nearly

5 percent in their total catering expenses.

april 2003 31

T H E H I G H L E V E LvıewNews Briefs from Around the GlobeNews from Latin America

Avianca, SAM and Aces, the three Colombian airlines

that constitute Alianza Summa, contracted with Sabre

Airline Solutions to receive specific commercial and

competitive technical assistance to help the carriers

improve their operational efficiencies and increase

their revenues.

Sabre Airline Solutions assisted the airlines in pricing

and revenue management, flight scheduling, network

planning, fleet planning, financial planning and control,

sales, distribution, branding, loyalty, and competitive posi-

tioning. Combined, the carriers operate a 54-aircraft fleet,

which flies to 23 domestic and 19 international destinations.

“We want to have the first place in the airline industry

and gain insight into our core performance thus creating

positive memorable journey experiences and aeronautical

services,” said Juan Emilio Posada, president of Alianza

Summa. “We are going to make the changes needed

to operate seamlessly, efficiently and profitably. Our

agreement with Sabre Consulting is focused on helping

us create and sustain that competitive edge.”

Sabre Consulting consists of airline experts acting

worldwide to improve the business performance of the

company’s airline clients. This experience ensures that

every consultant understands the complexities of the

airline business and can offer true, hands-on, tactical

counsel rooted in results. Sabre Consulting currently

works with more than 110 customers around the world.

“It is Sabre Consulting’s proven track record that

attracted us to work with them,” Posada said. “It is the

company’s experience and industry knowledge that we

count on to help us reach our goals.”

News from Europe and Africa

Air France in partnership with Sabre Airline Solutions

recently signed a five-year contract with Royal Air Maroc

to provide a complete revenue management solution.

Under the terms of the agreement, Royal Air Maroc will

use the Sabre ® AirMax ™ automated revenue management

system as an application service provider solution hosted

by Air France through its facility in Valbonne, in the

south of France.

The AirMax system is a proactive revenue manage-

ment and decision-support system that maximizes

revenues by optimally allocating available seat inventory.

This capability gives airlines the ability to selectively open

and close the available inventory in the different fare

classes or buckets as the market dictates. Users of the

AirMax system can expect to generate from 3 percent to

8 percent of additional revenue, resulting in potential

profit increases of 50 percent to 100 percent. The AirMax

system’s capabilities have been recognized in premier

industry publications and by leading industry organiza-

tions and have been honored with the 2002 ATTIS award

for the “Best Revenue Management Solutions Provider.”

“We are committed to delivering quality ASP

solutions to our customers through the partnership

with Sabre Airline Solutions,” said Olivier Berthault,

director of information systems, marketing and sales

at Air France. “We consider this to be one of our most

successful partnerships from which customers are

deriving tremendous benefits.”

The Sabre Airline Solutions and Air France partner-

ship was launched in 1996 to provide Sabre Airline

Solutions‘ revenue management solutions to airlines

hosted by Air France in an ASP environment. Sabre

Airline Solutions‘ depth of industry experience and

award-winning revenue management software is

complemented by Air France’s hosting capabilities.

Since 1996, the partnership has successfully delivered

ASP-based revenue management solutions to Brit Air,

Regional, Compagnie Aerienne Europeenne, Middle

East Airlines and Air Mauritius.

The AirMax system can be run in different process-

ing modes based on the desired level of sophistication

in inventory control. It offers three levels of inventory

controls: leg segment, virtual nesting, and origin and

destination. In fact, Sabre Airline Solutions offers the

industry’s only commercially available origin and

destination revenue management system.

+count it up 46 billion — Dollars generated annually by the air cargo transport industry

regionalproduct

ascend30

in the area of customer relationship

management. With system-provided

passenger history data in hand, the

airline can better understand the spe-

cific tastes, trends and price sensitivity

of its passenger base.

Adding to the numerous system-

specific benefits, accessing the

AirServ system as a Sabre ® eMergo ™

Web-enabled and dedicated network

solution — an application service

provider offering — delivers a unique

combination of information technology

operations-related advantages. The

eMergo solution delivery method

allows an airline to access the latest

IT via the Internet or a direct commu-

nications connection. With the Sabre

Airline Solutions application hosted

in a secure data center managed by

IT professionals, an airline’s upfront

capital outlay is significantly reduced.

In addition, the need for an in-house

data center infrastructure is eliminated

along with ongoing system mainte-

nance and support concerns.

No matter the in-flight services

strategy an airline puts in place, the

AirServ system can help drive down

costs by standardizing practices asso-

ciated with its operations, automating

procedures around these operations

and giving the carrier ultimate control

over its entire onboard products and

services provisioning process.

Erin Bouck is the product manager

for the AirServ system. Jamie Patel is

director of dining and cabin services

at Sabre Airline Solutions.

With system-provided passenger

history data in hand, the airline

can better understand the specific

tastes, trends and price sensitivity

of its passenger base.

“

”

T H E H I G H L E V E LvıewNews Briefs from Around the GlobeNews from Asia

Bangkok Airways has signed a five-year, multi-million-

dollar contract with Sabre Airline Solutions for the

implementation of a suite of advanced passenger

reservations and departure control technology.

The broad reservations and departure control suite

that Bangkok Airways is implementing includes the

Sabre ® Passenger Reservation System, the Sabre ACSI ™

international airport check-in system, Sabre ® AirOps ™

Load Planning and a suite of tools from the Sabre ® Qik ®

business processing solution.

“After an exhaustive evaluation of more than 10

reservations system providers, we selected Sabre Airline

Solutions because its solution offered instant access to

market-leading reservations and departure control capabil-

ities and functionality that would enhance our yield and

optimize costs,” said Ping na Thalang, vice president of

information systems for Bangkok Airways. “Furthermore,

we believe Sabre Airline Solutions offers an excellent

product and overall value, and a range of technology

interfaces that enables us to continue building our own

applications around the host system.”

According to Ping na Thalang, the choice of Sabre

Airline Solutions for this contract was an essential step in

its domestic and international expansion program. The

carrier is recognized as being one of Asia’s most successful

independent airlines and Thailand’s second largest carrier.

Bangkok Airways became the 10th Asia/Pacific-based

airline to outsource its reservations and departure control

system to Sabre Airline Solutions in the last 12 months.

Bangkok Airways currently operates a fleet of

Boeing 717 and ATR72-200 aircraft for domestic services

within Thailand, as well as international services to

regional destinations.

The Passenger Reservation System will effectively

manage both reservations and operations without the

need for Bangkok Airways to develop, host and maintain

its own systems. Functionality provided includes

reservations, inventory and distribution management,

traditional and electronic ticketing, and fares and pricing.

The ACSI system automates the check-in and

gate management process and provides a faster,

more efficient passenger check-in and boarding process,

while Load Planning will be used by the airline for load

planning requirements.

These systems are supplemented by the Qik

solution, a suite of graphical user interface products that

make utilization of the reservations and check-in host

systems user friendly and substantially reduce training

timeframes. The Qik solution will allow Bangkok

Airways’ employees to quickly and efficiently service

passengers by presenting information in a consistent,

uncomplicated format with logical entry sequences and

graphical representations.

industrymedium and low-cost airlines to provide

the integrated tools — including Sabre ®

AirOps™ Flight Planning and the Sabre ®

FliteTrac operations control and flight

following system — that help bind the

OCC together.

“We use Sabre Airline Solutions

systems to increase our operations coor-

dination, improve our flight planning and

more effectively communicate with air-

ports and aircraft,” said Michele Derry,

director, operations control for WestJet.

“Our operations team uses Flight Planning

and the FliteTrac system extensively.

The combination of these two products

has been an excellent tool for our OCC.

“Flight Planning is a major compo-

nent of our dispatch system, enabling

optimization of flight planning by utilizing

cost index planning, fuel tankering and

analysis, and contingency planning,”

Derry said.

All cities served domestically by

the airline have access to the FliteTrac

system via Citrix, which enables

employees at varying locations to view

data in the FliteTrac system. ACARS

communicates directly with the FliteTrac

system to populate times, fuel, aircraft

parameters and any other pertinent

data. This data can also be entered

directly into the FliteTrac system.

In addition to these flight operations

products, WestJet takes advantage of

Sabre Airline Solutions expertise in

maintenance and crew management. By

providing minimum equipment lists and

configuration deviation lists information

on the flight release, the maintenance

control module of the FliteTrac system

can help determine the restrictions that

must be applied to particular aircraft for

dispatch. For enhanced crew manage-

ment, WestJet uses other components

of the Flight Control suite: the Sabre ®

CrewTrac ® crew scheduling system

tracks crew assignments while the

Sabre ® CrewQual ® crew qualifications

and training records system helps

satisfy the regulatory

requirements for main-

taining the training

records of various

airline personnel.

With its past successes, WestJet has

laid a strong foundation for continued

prosperity. Through its proactive use

of technology, the airline is poised to

continue its outstanding record.

Elayne Vick is a marketing advisor

at Sabre Airline Solutions.

april 2003 33

Introducing the Sabre Flight Control Suite

Low-cost as well as small-

and medium-size airlines have

unique needs that often times

require specific, tailored afford-

able tools that provide the right

functionality without unneeded

extras.

Like WestJet, many of these

carriers utilize a special suite of

tools — the Sabre ® Flight Control

suite for small, medium and low-

cost airlines. In the past few years,

Sabre Airline Solutions has tar-

geted airlines of all sizes, refining

function-rich systems to address

a smaller market demanding

leaner, more affordable PC-based

solutions. Many of the products

in the suite were added when

the company acquired David R.

Bornemann Associates, a small

privately held firm specializing

in aviation software products

since 1978.

Now integrated into the

Sabre Airlines Solutions

portfolio, these products are

used by more than 70 airlines

around the world, providing

quickly installed “off-the-shelf”

flight operations and crew

products.

The Flight Control suite

includes:

Sabre ® CrewPlan ® flight crew

planning system,

Sabre ® CrewTrac ® crew

scheduling system,

Sabre ® CrewQual ® crew

qualifications and training

records system,

Sabre ® FliteTrac operations

control and flight following

system,

Sabre ® AirOps ™ Flight Planning,

Sabre ® AirOps ™ Load Planning.

For more information on

this product suite, please call

480 948 1955 or send an

e-mail message to

david.bornemann@sabre.com.

industry

ascend32

By Elayne Vick | Ascend Contributor

A Model for SuccessAn Integrated Operations Control Center Helps Propel WestJet

WestJet has come a long way in a

short time. With its rapid expansion and

24 consecutive quarters of profitability,

even during an industry downturn, the

Canada-based low-fare carrier has

proven to be one of the industry’s top

performers during the last few years.

Since its founding in 1996, WestJet

has grown to become the second largest

carrier in Canada and the most successful

low-fare carrier in the country’s history.

In 2000, WestJet was the second most

profitable airline in North America, just

after Southwest Airlines.

Like Southwest, Calgary-based

WestJet uses a single fleet type of

Boeing 737 aircraft. Founded with the

idea of providing low-fare travel across

western Canada, WestJet initially served

five markets with its original three

Boeing 737-200s. Since then, WestJet

has continued to expand throughout the

country, now serving 26 markets including

an eastern hub in Hamilton, Ontario.

WestJet reached a milestone in

1999 when it completed its initial public

offering of 2.5 million common shares

of stock, providing the necessary capital

for the expansion of the company. In its

seven years, the airline has grown its

fleet by more than 1,000 percent to 37

aircraft and currently plans to add up to

77 additional next-generation Boeing

737 aircraft while it retires its fleet of 21

737-200 aircraft.

A key contributor to WestJet’s

performance has been its integrated

operations control center, which has

helped the airline maximize its operations

efficiency and user productivity.

By unifying its operations functions,

WestJet has achieved key goals including:

Maintaining on-time flight operations

in a safe and efficient environment,

Minimizing ground time through

more efficient flight planning and

improved aircraft movement control

and monitoring,

Controlling costs through reduced fuel

consumption,

Improving personnel productivity,

Enhancing aircraft productivity

through increased flight cycles.

With a staff of 60 — including dis-

patchers, crew schedulers, load planners

and operations coordinators —

WestJet’s OCC brings together vital

components needed to form the central

nervous system of the airline.

By bringing the various operations

areas together, WestJet maximizes its

ability to run smoothly, a goal of any

airline. Analysts in the OCC are able to

have a full view of the airline’s overall

operations rather than being limited to

their individual areas of responsibility,

enabling them to be more proactive in

problem solving.

Technology plays a major role in

unifying the OCC.

WestJet selected components of the

Sabre ® Flight Control suite for small,

A key contributor to WestJet’s

performance has been its integrated

operations control center . . .

“

”

WestJet, the most successful low-fare carrier in Canadian history, has maximized its efficiency

and user productivity by unifying its operations functions into an integrated OCC.

industrycheckpoints will keep an airline on track

throughout the process. An airline’s

unique needs should be reflected

throughout every stage of planning,

organization and execution including

training and subsequent support.

During this phase, both the airline and

the vendor should select a senior-level

sponsor who is heavily involved

throughout the migration process.

“Effective training and proven

airline personnel change-management

techniques are essential for solid

planning and project management,”

Hall said. “Professional trainers skilled

in airline migrations should work closely

with the airline to analyze key processes

and make recommendations to bridge

gaps between business practices today

and after the cutover.”

An equally important element

to effective planning is ensuring full

technical capability prior to the cutover

through business and data simulations.

An experienced supplier will also offer

extensive contingency planning and

established risk management proce-

dures as a part of its conversion practice

to identify technical risks and describe

fallback criteria and procedures in detail.

A Cut Above

It is essential that a vendor be expe-

rienced in orchestrating a “knife-edge”

conversion. In this approach, all systems

cut over virtually simultaneously to

minimize operations disruption and

customer service impact. Doing this

eliminates the need for repetitive systems

synchronization as well as bridging

software and other parallel support.

This method also enables an airline to

cut over quickly — within one to four

hours of system downtime, depending

in part on the airline’s current system.

In addition, data integrity will be main-

tained with no lost teletype traffic.

“A knife-edge conversion approach

requires that the vendor have a deep

understanding of how the cutover will

impact everyone involved, including

airline personnel and customers,”

Hall said. “Maintaining high levels of

customer service during the conversion

should be the top priority.”

This is accomplished by planning

and implementing a comprehensive

communications program to inform

customers ahead of time, setting

expectations and promoting the added

features and benefits available to them

once the new system is in place.

While a knife-edge conversion is

recognized as an industry best practice,

it is important that the vendor also be

skilled in phased migrations, maintaining

the flexibility to move to this strategy if

the airline prefers this approach.

In for the Long Haul

Finally, strong post cutover support

is also a vital component to a successful

conversion. Ongoing personnel training

and on-site support should be provided

until the new system is operating

smoothly. The vendor should be able to

modify its support program to match

the needs of the airline according to its

level of experience and expertise.

“The vendor’s commitment to

helping the airline stay competitive for

the long term should be evident in these

cutover-specific support initiatives,” Hall

said. “However, at a minimum, these

initiatives should rest on the foundation

of a strong customer-support model

offering worldwide offices and a help

desk staffed 24 hours a day, seven days

a week with an exceptional first-call

response rate.”

There are most certainly many addi-

tional elements with heavy influence on

the success of a system migration. For

instance, offering a single, easy-to-use

graphical user interface with intuitive

workflows for reservations and airport

agents will substantially increase the ease

of migration with less training needed

and quicker internal adoption. Another

element is the level of integration with

back-end systems — will billing and loyalty

systems, for instance, be fully integrated

with the new reservations system for

continuity during and after the migration?

There is much to consider when

selecting the right vendor to support

both an industry-leading system and

a successful cutover experience.

(continued on next page)

april 2003 35

Working together to prepare for a cutover to a new reservations system can

make the process relatively seamless.

industry

ascend34

By Holly Cox | Ascend Contributor

Low Risk, High RewardConversion to New Reservations SystemsCan be Accomplished With Minimum Disruption

Many airlines have realized

cost control benefits and gained a

competitive edge from outsourcing

their reservations and departure control

functionality. With more than 70 percent

of worldwide passengers booked through

a hosted reservations system, outsourc-

ing continues to prove attractive to air-

lines of all sizes. But many airlines look-

ing at outsourcing their reservations

system or switching providers fear an

unsuccessful system migration.

“Reservations and departure control

systems directly impact the customer

and are at the core of an airline’s opera-

tions, integrated with virtually all other

systems software,” said Gianni Marostica,

president of airline reservations and

departure control for Sabre Airline

Solutions. “It is understandable for

airlines to have some level of anxiety

associated with such a huge endeavor.

Although a very valid concern, the

right partner can provide a low-risk,

low-customer-impact conversion.”

Airlines are justifiably concerned

that an unsuccessful migration could

result in diminished revenue from

extended system downtimes, loss of

data during the transfer of information

and the negative impact on customer

service. By selecting a reservations and

departure control provider with extensive

airline industry expertise and conversion

experience, excellence in project organi-

zation and planning, a successful track

record in orchestrating “knife-edge”

cutovers, and proven

post cutover support,

an airline can avoid

these potentially

dangerous scenarios.

“In addition to

offering leading

product capabilities,

the vendor’s ability

to provide an effec-

tive and efficient

cutover experience

with as little operational disruption as

possible should also be an extremely

important consideration in the decision-

making process for a supplier,”

said Marostica.

Experience is Key

Nothing compares to the value of

deep airline industry expertise and

extensive experience when it comes to

system migrations. A vendor must first

be able to understand the unique needs

of the airline. The ability to effectively

scope the project comes from an exten-

sive knowledge of airline operations and

background in the aviation industry,

which is demonstrated through proven

migration methodologies successfully

used repeatedly with airlines of all sizes

and levels of complexity.

“It is true that every migration is,

in fact, unique,”said Sharon Hall,

vice-president of delivery for airline

reservations and departure control for

Sabre Airline Solutions. ”What sets a

vendor apart is its industry and conver-

sion experience that allows it to quickly

and effectively respond to issues if and

when they arise. It is also necessary to

consider the amount of dedicated per-

sonnel available — all of whom should

have extensive experience working

through virtually every possible scenario

throughout the conversion process.”

Having a Plan

Once the project has been

appropriately scoped, a second key

to a successful system migration is

excellence in project organization and

planning. Utilizing defined pre-migration

methodologies with a series of “go/no-go”

There is much to consider when

selecting the right vendor to support

both an industry-leading system and

a successful cutover experience.

“

”

Sabre Airline Solutions’ expertise in effective project

organization and planning have given it leadership in

large-scale system migrations.

regional

april 2003 37

News Briefs from Around the GlobeNews from the Americas

Unisys Corp., the information technology service

provider for the Transportation Security Administration

— a newly formed U.S. government agency — selected

Sabre Airline Solutions’ resource management systems

to assist in the scheduling of more than 44,000 security

screeners at airports across the nation.

“We are working under very tight timelines and need

proven solutions that work,” said Tim Bethea, a principal

with Unisys U.S. Federal Government Group. “Sabre

Airline Solutions has the experience and understanding

of the airline industry combined with the technology

that has proven results to improve airport operations.”

Sabre Airline Solutions’ resource management sys-

tems ensure that airports are staffed with the appropriate

number of screeners at every security checkpoint.

“Having the right number of screeners at each of

the locations is a key element to meeting the TSA’s goal

of making sure passengers don’t have to wait in security

lines for more than 10 minutes,” Bethea said. “The

ability to adjust these requirements in real-time as air-

port flow fluctuates is equally important. Sabre Airline

Solutions’ technology offers the TSA the ability to plan

for and quickly make changes to staffing requirements

at various airports, while ensuring passenger safety

and convenience.”

In the first phase of the TSA contract, Sabre Airline

Solutions implemented the Sabre ® StaffPlan ™ staff fore-

casting and planning system and the Sabre ® StaffAdmim ™

employee tracking and assignment system. The StaffPlan

system offers sophisticated staff forecasting and plan-

ning models designed to significantly reduce the time

and effort required for planning and budgeting airport

personnel. This technology enables analysts to quickly

respond to changes by utilizing the system’s “what-if”

analysis that evaluates the potential effect of any opera-

tional changes. Existing Sabre Airline Solutions clients

have reduced staffing requirements by up to 25 percent

through improved shift schedules with this technology

and have improved staff utilization by up to 7 percent

through increased cross-utilization.

The StaffAdmin system provides a flexible platform

for tracking employee outages, leaves of absence, atten-

dance and scheduling issues. It then presents data that

depicts scheduled coverage versus required coverage

necessary to maintain service levels. This technology

has provided up to a 5 percent improvement in staff

utilization through enhanced rostering and has increased

administrative staff productivity by up to 20 percent.

In the next phase, Sabre Airline Solutions will

implement the Sabre ® StaffManager ™ automated

staff allocation system, which dramatically enhances

airport-handling operations by facilitating real-time

staff planning and management, specifically those

events that may disrupt the scheduled daily assignments.

Customers using this system have reduced flight delay

costs by up to 5 percent and improved utilization of staff

and resources by up to 25 percent.

“With more than 35 airlines and airport ground

service providers using this technology for their airport

operations, we knew with the Sabre Airline Solutions

systems we could get this technology implemented

quickly for efficient management of federal screening

personnel at the airport,” Bethea said.

T H E H I G H L E V E Lvıew

+count it up41 — Percent of travelers who

research their vacation plans online —

although only 4 percent follow through

by booking online

2 trillion — Amount of world

trade transported in 2000 via air, repre-

senting 40 percent of the total

6.1 billion — Number of

passengers carried by Boeing 737

aircraft — the equivalent of the world’s

population

industry

ascend36

Having successfully managed more

than 30 cutovers since just 1998 — nine

in 2002 alone — Sabre Airline Solutions

has a proven track record of successful

implementations and conversions. Its

history includes successful implementa-

tions at Southwest Airlines, US Airways

(the largest systems conversion in the

history of the airline industry) and the

former TWA (the largest systems con-

version in a merger environment). Sabre

Airline Solutions also converted four

regional Australian airlines — Flight West,

Skywest, Hazelton and Kendell airlines

— in a rapid timeframe of 21 to 40 days

rather than the typical 120 days.

“Flight West chose Sabre Airline

Solutions’ reservations for several

reasons, including the company they

keep in other airlines — both in

Australia and overseas,” said Scott

McMillan, managing director of

Australia-based Flight West Airlines.

“Further, Sabre Airline Solutions under-

stood our requirements; our timeframe

for migration was short, they were able

to deliver the services required and

most importantly, could demonstrate

that delivery was possible.”

With more than 40 years of experi-

ence in the business, Sabre Airline

Solutions, which manages the reserva-

tions and departure control functions for

more than 70 airlines in 23 countries

worldwide, offers proven reservations,

departure and inventory control systems

technology with unparalleled conversions

knowledge, experience and methodolo-

gies. No other supplier has successfully

managed the migration and implemen-

tation of air transportation systems

with the scale and degree of complexity

that Sabre Airline Solutions has in

hundreds of projects for airlines of all

sizes. Continual improvement in software

programming and hardware upgrades

allows Sabre Airline Solutions to offer

the fastest possible passenger name

record conversion with the lowest

number of PNR rejects in the industry.

Holly Cox is marketing communications

manager for Sabre Airline Reservations

and Departure Control.

News Briefs from Around the GlobeNews from Sabre Airline Solutions

Sabre Airline Solutions was honored by The Airline

Group of the International Federation of Operational

Research Societies for its development of new resource

planning capabilities for airlines. AGIFORS awarded

Sabre Airline Solutions the prestigious “Best Technical

Prize” for its development of the Sabre ® StaffPlan ™

resource planning system, a new shift-scheduling model

that helps airlines manage personnel scheduling at

airports around the world. The offering is currently in

use by 20 airlines globally.

At its annual symposium, AGIFORS recognizes top

contributions in the development and application of

decision-support technology to the airline industry.

Any company or academic organization involved with

decision-support systems in the airline industry is

invited to attend and present its work. Sabre Airline

Solutions’ contribution was recognized from a field of

candidates that included American Airlines, Boeing,

Continental Airlines, Delta Air Lines, Lufthansa and

Massachusetts Institute of Technology.

“Our No. 1 commitment is to help our airline

customers better compete in today’s marketplace,” said

Barry Smith, chief scientist and senior vice president of

Sabre Research. “Not only does this award verify that

we are working at the leading edge of decision-support

technology, but also that the result of our work is

translating into valued industry-leading products for

the airline community worldwide.”

The mathematical optimization models powering the

StaffPlan system are based on cutting-edge techniques

of discrete mathematics. The StaffPlan system utilizes

seven interlocking optimization models working

together to solve complex shift-scheduling problems,

delivering market-leading results in a matter of minutes.

The system evaluates trillions of possible solutions

to find the best possible result, ensuring that airlines

optimize their resource allocation and deployment. To

do this, Sabre Airline Solutions accurately estimates

work requirements, examines historical data looking for

patterns in a variety of inputs including arrival times,

and matches airline schedules with the desired customer

service levels to provide robust and accurate work

requirement estimates and scheduling solutions.

T H E H I G H L E V E Lvıew

Having successfully managed more than

30 cutovers since just 1998 — nine in

2002 alone — Sabre Airline Solutions

has a proven track record of successful

implementations and conversions.

“

”

regionalmaintenance and supply chain

management strategy by generating and

receiving materials requests, processing

and creating the purchase orders.”

AeroMexico also uses technology to

achieve a short-term goal of developing

production control — the consolidation

of data in one view so that a single

person has access on one computer

screen to all maintenance aspects of an

aircraft. An analyst would have a quick

view of what maintenance needs to

be performed, where it needs to be

performed, and what resources and

materials need to be allocated to

complete it.

Through production control,

AeroMexico will be able to look at

any aircraft on the ground to determine

whether a window of opportunity exists

to perform maintenance.

“The philosophy in the M&E

area has also gradually become more

process oriented,” Luis Carlos Vargas

explained. “We look at the entire

process end to end and not at the

separate areas as individual modules.

We redefine the complete supply chain

process from start to end and then look

at the systems required.”

Long term, the airline is looking

at other ways to streamline its M&E

operations.

“On the materials management

front, the goal is to minimize inventory

ownership levels and investment and

support the maintenance production

plan with the needed service level,”

said Adolfo Payan, material planning

lead at AeroMexico.

And beyond production control in

heavy maintenance, line maintenance

and shop maintenance, “staffing

resources is our next objective,” said

Ulises Perez, process development

manager at AeroMexico.

“This is to ensure that the right

person is available at the right time and

the right place,” he said. “Also, we want

to focus on aircraft recovery to handle

changes in operations, react quickly and

yet comply with maintenance forecasts.”

The carrier is also deploying new

technologies such as a barcode system

for tracking and wireless capabilities

enabling maintenance personnel to

remotely access data.

“Part of the strategy for better and

more accurate information involves the

use of a barcode system for tracking,

which the Maxi-Merlin system supports,”

Luis Carlos Vargas said. “This allows

for more convenient data capture and

tracking. And with wireless capabilities,

we want to bring information records to

the aircraft.”

Although AeroMexico has success-

fully implemented much of its strategy,

Luis Carlos Vargas said the airline will

continue to evolve and explore new

ways to improve its M&E operations.

“One of our key objectives to

increasing the reliability and value

of information has been successfully

achieved, but maintaining a high-level

of information reliability is a never-

ending activity.”

Technology plays a key role in

ensuring long-term success for

AeroMexico, but when combining IT

with its staff of highly qualified experts,

the airline is well positioned to prosper

today and in the future.

“All of these initiatives rely on our

competent people,” said Jorge Wheatley,

AeroMexico’s chief information officer.

“The success of implementing IT and

getting the expected results requires an

effort in cultural change. At AeroMexico,

we have been working for the past five

years to achieve this change in order to

remain the most punctual airline in the

world with top-level service standards.

M&E is an essential piece in achieving

these goals; we consider M&E as a sub-

process of the production process.”

Giovanna Rosselli is the Sabre

Airline Solutions account director

for AeroMexico. Chris Evans is the

maintenance and engineering product

manager at Sabre Airline Solutions.

april 2003 39

With a fleet of 70 aircraft ranging from DC-9 to Boeing 767-300ER, AeroMexico,

the nation’s largest carrier, has a broad M&E operation that requires extensive

coordination. AeroMexico uses the Maxi-Merlin system as the core of its M&E

infrastructure.

regional

ascend38

By Giovanna Rosselli and Chris Evans | Ascend Contributors

Where the Rubber Meets the RunwayAeroMexico Puts M&E Strategy into Practice

In the cradle of one of the oldest

civilizations of the Americas, AeroMexico

is actively preparing for the future.

As AeroMexico continues to imple-

ment a comprehensive strategy for its

maintenance and engineering operations,

the airline has already begun to benefit

from its innovative approach.

Like many maintenance and

engineering groups, AeroMexico’s

M&E organization seeks to minimize

inventory and optimize the supply

chain, maximize productivity while

reducing maintenance costs, comply

with regulatory requirements, and

increase aircraft availability.

But in accordance with its strategy,

AeroMexico is aggressively pursuing an

integrated information technology solu-

tion that is capable of not only achieving

the airline’s goal, but also enabling it to

remain on a forward-thinking course.

As the largest airline in Mexico,

with a fleet of 70 aircraft ranging from

the DC-9 to the Boeing 767-300ER,

AeroMexico has a broad M&E operation

that requires extensive coordination.

A key component of the airline’s

M&E strategy is a centralized database

that provides necessary, real-time

information to the appropriate mainte-

nance and engineering personnel.

“Good maintenance planning and

control requires accurate information

and a robust materials planning process

ultimately leading to material reductions,

cost savings and a more efficient

maintenance and supply-chain process,”

said AeroMexico Systems Vice President

Luis Carlos Vargas. “Accurate and reliable

information is the foundation of a good

materials control process, providing an

ideal source for high-quality planning

and forecasting.

“One of our key objectives in M&E

systems is to establish and maintain a

reliable maintenance and engineering

control system that identifies and tracks

the data and activities associated with

each aircraft component, including,

but not limited to, maintenance hours,

work cards, etc. This systems infrastruc-

ture provides the mechanism to

capture reliable and comprehensive

M&E information.”

At the core of that infrastructure is

the centralized system that integrates

the functions of materials inventory,

logistics, engineering, technical records,

maintenance planning and production.

Since 1992, AeroMexico has utilized the

Sabre ® Maxi-Merlin ™ maintenance,

engineering and inventory system as

its base M&E solution.

“The Maxi-Merlin system is the

nucleus of all the maintenance and

supply chain systems from which all

of the other systems are fed,” Luis

Carlos Vargas said. “All of the detailed

information regarding hours, shops,

etc., is captured and registered.

“The information from the Maxi-

Merlin system is the base of all of the

forecasting models that help to manage

and plan all the activities for consumable

materials in the supply chain,” he said.

Using the Maxi-Merlin system, data

is available system wide as soon as it is

entered, providing structured reports

and decision-support tools that enable

the airline to make informed, business-

critical decisions without delay. Various

modules for different functional areas

spanning the entire M&E operations

“plug in” to the Maxi-Merlin system,

giving them access to the essential

operation-wide data.

One of the plug-ins selected by

AeroMexico to allocate its reusable

assets, such as cockpit voice recorders,

flight management computers, auxiliary

power units and engines, is the Sabre ®

Rotables Allocation Planning System, a

flexible, data-driven tool that helps an

airline maintain the minimum number

of aircraft parts needed to perform both

scheduled and unplanned maintenance.

As a decision-support module, the

Rotables Allocation Planning System

forecasts demand and determines station

allocations, minimizing inventory costs.

AeroMexico also uses other modules

tailored for specific M&E functions.

“We complemented the Maxi-Merlin

system’s modules of material planning

and inventory control with an external

purchasing module,” Luis Carlos

Vargas said. “This module supports our

Latin America

Good maintenance planning and

control requires accurate information

and a robust materials planning

process . . .

“

”

industryand the planes. Here passengers come

in and passengers go out, and airplanes

come in and go out, and they’re sepa-

rate. That’s how we create the efficiency

of always turning an airplane in a fixed

amount of time.”

Even though American has intro-

duced low-cost concepts into its model,

it has still maintained its directional

complexes.

“We’ve created hourly complexes

at O’Hare. The flights arriving during a

60-minute period connect to flights in

the following 60-minute period. It just

alternates like that hour after hour all

day long,” Casey said. “We have created

a directional structure within this de-

peaked schedule. And we’ve found a

way to maintain this structure and still

have the planes operate at fixed turn

times at both the hub and spoke. We

sequence these flights so we can always

operate directionally correct so the flight

that leaves with the westbound bank

heading to the west coast turns around

at minimum turn time on the west coast

and will always come back correctly in

an eastbound complex. And likewise in

the other direction.”

Drinking from the Grail

As American continued looking at

de-peaked schedules, the logic quickly

became apparent.

“What happens is that although we

traditionally scheduled peaks, we rarely

operated them,” Casey said. “Because

the airports are incapable of handling

the flights, the actual operation is flat-

tened. So we said, ‘If we operate that

way, maybe we should

schedule that way.’”

And by operating that

way, American has realized a

wealth of cost-savings and

reliability improvements.

“Looking at the data in

early 2001 was the impetus

for us to start looking at

these de-peaked schedules,”

Casey said. “It started as a

dependability issue.

Eventually, as we got into it,

developed it and designed it,

it became a cost initiative.”

By de-peaking the sched-

ule, American needs fewer

gates and fewer airplanes to

operate the schedule.

“At O’Hare we can operate the

same schedule and same number of

departures with four less gates and five

less airplanes,” Casey said. “Using less

gates and filling in the valleys when

there was no activity meant you could

operate the schedule with less people —

there’s not as many gates needing to be

manned and not as much down time

during the day. At hub and spoke com-

plexes, people work like mad during the

peak, and then they go over for coffee

and wait for the next one. With a

de-peaked schedule, it’s basically

continuous activity throughout the day.

As a result, we were able to operate the

same schedule with less gates, airplanes

and people.”

According to Casey, after de-peaking,

aircraft productivity, measured by miles

per aircraft per day, was only about

3 percent less than Southwest’s.

The impressive results at O’Hare led

American to de-peak its Dallas/Fort Worth

International Airport hub in November.

“At D/FW we saw basically the same

results — about a 5 percent improvement

in our staffing based on de-peaking,”

Casey said. “In addition, because we

could operate the schedule on four less

gates at D/FW, it allowed us to consolidate

our operations down to two terminals

from three. That added about another

US$4.5 million of benefits a year.

“De-peaking our D/FW hub has

enabled us to remove 11 airplanes from

the schedule while operating exactly the

same number of departures,” he said.

American also realized it could

apply the same concepts to its spoke

operations.

“We realized there was a secondary

opportunity to de-peak spokes because

the connecting complexes in the

de-peaked structure tend to be wider,”

Casey said. “Because the windows are

bigger, we could sequence the trips one

after the other and still be directionally

correct in the complex. And that worked

out better than we anticipated. We were

able to decrease our gate requirement

at spokes by 12 percent, a substantial

savings in real-estate expense and the

people associated to do the work.

Smoothing out the schedule also

achieved its original goal of improving

reliability by reducing congestion at

the hub and improving on-time

performance.

“With the operation running more

reliably, we ended up with fewer

(continued on next page)

april 2003 41

. . . American has realized a

wealth of cost-savings and

reliability improvements.

“

”

A graphical representation of American Airlines’ schedule

shows a reduction in the “peaks” of a traditional hub

structure.

industry

ascend40

By Stephani Hawkins and Scott Hunt | Ascend Editors

Leveling the PeaksAmerican Airlines De-Peaks its Hub and Spoke Structure

A few years ago, as airlines

throughout the United States struggled

with on-time performance and other

operational issues, American Airlines

gathered its top planning and scheduling

experts and began a quest to devise

“the perfect schedule” to increase the

airline’s reliability.

What they found might just be

the Holy Grail of flight scheduling —

a schedule that decreases ground

times, but improves dependability;

that increases the number of departures,

but decreases the number of gates; that

implements standard fixed ground times

like those

used by low-

cost carriers,

but maintains

directional

connecting

complexes

found in a traditional hub and spoke

structure; that increases unit revenues,

but decreases unit costs.

“When someone first had the

idea to do this, I said it’s impossible,”

said Don Casey, managing director of

capacity planning at American Airlines.

“But, in fact, it is possible.”

Finding the Grail

The magic formula involves

de-peaking the traditional hub and

spoke structure by flattening the arrival

and departure banks and reducing the

dead time between peaks.

Typically, network carriers try to

squeeze as many flights as possible

into peaks of arrivals and departures to

maximize connection opportunities while

minimizing passengers’ total travel time.

By spreading flights more evenly

throughout the day, American combined

the efficiencies of a low-cost carrier like

Southwest Airlines with the increased

number of destinations available through

a traditional hub and spoke model.

Before implementing this new

structure a year ago at its Chicago

O’Hare International Airport hub,

American, at some points, had more

than 10 aircraft movements scheduled

in a five-minute period during peak

times — alone, more than the airport’s

capacity.

The key to

de-peaking was

capping the number

of aircraft arrivals

and departures per

minute, Casey said.

“In every three-

minute interval

there’s a maximum of

two big jet move-

ments and a regional

aircraft movement,”

Casey said. “We

never exceed five

movements in any

five minutes. That’s

a hard constraint.

And that’s what cre-

ates the flattening

of the schedule.”

Along with more evenly distributing

flights, American applied another

concept used by low-cost carriers —

standard fixed ground times.

Rather than idling on the ground

for up to two and a half hours at the

spoke waiting to fit into the return

complex, the airplanes are immediately

returned to the air where they produce

revenue.

“The airplanes arrive in O’Hare,

they spend a fixed amount of time

there, and they go out to the spoke,”

Casey said. “They spend a fixed amount

of time at the spoke, and they come

back to the hub.

“The airplanes go out in 51 minutes.

It doesn’t matter when the passenger

arrives at the airport, the airplane

always goes out in 51 minutes,”

Casey said. “What we’ve done is

basically uncoupled the passengers

Before de-peaking its hub structure at Chicago O’Hare International

Airport, American Airlines exceeded the airport’s operational constraints

during peak periods. After de-peaking, the airline was able to operate its

schedule with four less gates and five fewer aircraft.

industryVaccari also suggested flight schedul-

ing tools that provide “what-if” analysis.

“You can make minor changes and

then run some incremental flights, or

you can make macro, global or holistic

changes and then analyze them to

compare a new structure with an old

structure,” he said.

Vaccari said he believes more carriers

will begin to look at de-peaking their

hubs based on American’s success.

“If you buy the argument that

you will not lose a lot of the revenue,

then you are getting potentially a ton of

cost savings,” he said. “I would even

argue that from the revenue side, you

are not losing much at all because

what you are trying to capture at a

hub with a very peaked schedule

is marginal passengers. A peaked

structure is designed to try to capture

the passenger traveling from small

station to small station.

“The revenue that you get from this

passenger, say a US$400 fare, is just not

worth it. To push a US$400 passenger

through one, two, three, four stops is just

not cost effective. The counterargument

is that you already have this capacity

anyway — you might as well fly the

planes to get the extra US$400. I think

the bigger, better idea is to match

capacity to demand — solve that

problem first rather than try to use this

extra capacity to chase after these

marginal passengers.”

Casey said the de-peaked schedule

has already exceeded American’s

expectations.

“The more we examined this concept,

the better it got,” Casey said.

april 2003 43

News Briefs from Around the GlobeNews from the Middle East

Gulf Air will use the Sabre ® Inform SM mobile

services to provide real-time trip information to its

passengers 24 hours a day, seven days a week.

The solution will enable passengers to check flight

information via cell phones, e-mail and personal

digital assistants.

The Inform services are a powerful customer service

tool that proactively provides flight information such as

schedule changes or delays, terminal and gate changes,

and cancellations as well as airport, airline, city and

country security updates.

“Travelers can register for a trip reminder service

that provides real-time flight status from 72 hours up

to one hour prior to departure time,” explained Tariq

Sultan, assistant vice president, information technology

for Gulf Air.

Services offered include:

Schedule inquiries — providing information on the

number of flights to destinations worldwide,

Flight inquiries — providing information on individual

flights, including arrivals and departures.

“Customers merely have to give their mobile numbers

to the booking agent, call center or travel agent in order

to obtain the service,” Sultan said. “This is an important

proactive service capability for our customers, and it

will make our operations more efficient by automating

manual processes and reducing service impact on our

valued customers.”

The Inform services represent the industry’s first low-

cost, end-to-end branded notification service for airlines.

Gulf Air, the national carrier of Bahrain, UAE,

Oman and Qatar, is the first airline in the Middle East

to introduce such technology.

T H E H I G H L E V E Lvıew

By de-peaking its hubs, American Airlines has reduced congestion at its gates.

At Dallas/Fort Worth International Airport, the airline was able to consolidate its

operations from three terminals to two and removed 11 airplanes from its schedule

while operating the same number of departures.

industry

ascend42

misconnects,” Casey said. “Our depend-

ability improved at O’Hare more than in

the rest of the system.”

Trusting the Grail

Although de-peaking leads to an

increase in passenger connect times,

American found it was still competitive.

Casey said American has not

received any negative feedback from

customers because of the increased

elapsed time.

“We were pretty concerned about

what de-peaking would do to connect

times,” Casey said. “The average

connect time increased 11 minutes at

O’Hare. The median time increased by

seven minutes. It doesn’t sound like a

lot, but it may have significant impact

potentially on our revenue. We’re

coming from a scheduling environment,

which looked at traditional schedules,

and the traditional hub and spoke

structures focused on elapsed time.

“We researched our exposure to

lengthening average connect times.

The conclusion we reached is that today,

a longer elapsed time is much less of

a factor than it was four or five years ago.

Other factors influence the decision on

which airline to choose — price, corporate

deals, frequent flyer programs, travel

agency incentives, etc. Those aren’t

elapsed-time driven. You have to have

competitive elapsed times; you don’t

necessarily have to have the fastest

elapsed times. So for 11 minutes, those

other criteria are going to drive the

customers’ decision.”

The additional 11 minutes actually

benefits customers.

“We’ve seen a

decrease in misplaced

bags and those kinds

of measures because

the operation is more

dependable,” Casey

said. “The additional

11 minutes also

allows extra time to

get the bags from one

flight to the next.”

In fact, American’s

local share at O’Hare

improved after it de-

peaked its schedule.

“Because in these

de-peaked structures

we actually have a

little more flexibility

in terms of where we

position the flights, we can tailor our

schedule a little bit better in a local

market,” Casey said. “So we’ve seen the

benefits at O’Hare and have held on to our

flow share as well; it’s up a little bit. We

haven’t seen any deterioration in our flow

performance and a little bit of improve-

ment in our local share performance.”

Sharing the Grail

Although this is a relatively new

concept for the airline industry, technol-

ogy is already available that can help

airlines de-peak their schedules, said

Renzo Vaccari, product manager for

planning and scheduling products at

Sabre Airline Solutions, who describes

himself as “a big fan of de-peaking.”

“The good news is that technology

provides you with the tools to evaluate

this and assess for yourself if this is the

right thing to do or not,” Vaccari said.

“This speaks to a sophisticated, automated

decision-support infrastructure suite.”

Vaccari said three key tools can

help an airline successfully revamp its

schedule structure:

A highly automated, highly graphical

schedule development environment,

such as the Sabre ® AirFlite ™

Schedule Manager — a tool with

multiple different graphical displays

that enables airlines to view and

manipulate schedules and update

them very quickly. Specifically, the

ideal tool provides a hub view that

allows airlines to look at all inbound

and outbound flights. It should include

reporting capabilities to measure how

many flights occur every 10 minutes,

30 minutes, hour, etc. It should also

enable airlines to look at elapsed time

and passenger connections.

A network profitability tool, such as

the Sabre ® AirFlite ™ Profit Manager —

a system that evaluates the impact

making these changes has on prof-

itability. Ideally the system would

forecast traffic at the origin and

destination level and then analyze a

passenger recapture process to show

how many passengers are expected

to fly each of these legs. Then the sys-

tem would give an overall profitability

for the schedule, for a particular

region, for a particular set of flights.

A fleet assignment tool, such as the

Sabre ® AirFlite ™ Fleet Manager —

a tool that completes the very compli-

cated process of fleeting a de-peaked

schedule. This optimization tool will

try to match capacity to demand.

This tool should provide a solution

that includes both the network

structure and the fleet.

Although the de-peaked structure “flattens” the schedule,

American Airlines found the average passenger connect

time increased by only 11 minutes. The airline also found the

additional time improved reliability by giving more time to

transfer baggage.

PASSENGER CONNECT TIMES INCREASE ONLY SLIGHTLY

T H E H I G H L E V E LvıewNews Briefs from Around the Globe

News from the Middle East

Gulf Air, the national carrier of Bahrain, UAE, Oman

and Qatar, has signed a three-year contract for access to

the Sabre ® TransVision ™ traffic flow analyzer. Gulf Air,

the first Middle East carrier to utilize the TransVision

analyzer, also uses two additional tools from the Sabre

Airline Solutions market data and analysis suite: the

Sabre ® ProVisionSM MIDT processing service and the

Sabre ® WiseVision ™ sales expansion system.

The TransVision analyzer is an affordable and easy-

to-use data mining system that provides airlines with

detailed analysis of origin and destination data. Details

such as passenger travel patterns, segment, feeder

and onward traffic flows, and yield and cabin-class

distribution can be found quickly. Utilizing the in-depth

travel analysis, airline planning and scheduling

departments can modify and adapt flight schedules

to fit traffic flow patterns. Because the system identifies

the most popular routes and transit points, airlines can

target the best possible departure and/or arrival times

and maximize passenger loads, while increasing revenue

and potentially their market share.

Through the TransVision analyzer, Gulf Air will have

access to a variety of ways to view potential market

opportunities by extracting valuable transit information

from booking transactions in computerized reservations

systems and global distribution systems. This insight

makes it possible for airlines to analyze transit-point

passenger flows, trunk-route feeding, onward traffic flows,

time-of-day and day-of-week passenger distribution,

route and airline preferences, codeshare impact on sales

figures, and cabin and yield distribution.

“We are looking forward to using the TransVision

analyzer as a logical progression from our already exten-

sive use of the WiseVision system,” said Alistair Rivers,

manager of network management systems at Gulf Air.

“The TransVision analyzer will give us more detailed

information on the markets where we and our competi-

tors operate. It will help us to make informed decisions

on the development of our routes and services.”

Under the terms of the agreement, Gulf Air will

use the TransVision analyzer via the Sabre ® eMergo™

Web-enabled and dedicated network solutions, an

application service provider offering.

News from Europe

Air Malta has successfully implemented the

Sabre ® Traverse ™ loyalty management system, which

significantly enhances the airline’s customer service

efforts and reduces operating costs for its FlyPass

loyalty program.

Air Malta utilizes the Traverse system via the

Sabre ® eMergo™ Web-enabled and dedicated network

solutions. The eMergo solutions, an applications service

provider model, eliminates an airline’s need for costly

and complicated in-house data center infrastructure and

support. The implementation with Air Malta marked the

first expansion of the eMergo solutions into loyalty

management.

“We have gained tremendous benefits from

Sabre Airline Solutions’ technologies,” said Brian

Bartolo, director of loyalty management at Air Malta.

“With the addition of the Traverse system, we will

be able to provide FlyPass members with greater

customer service than ever before. In addition, the

Traverse system provides greater efficiency for our

agents in terms of time required for processing

member information and the ability to perform other

duties. This type of automation is critical in our key

international cities. Accessing these capabilities via

the Web helps us better perform in today’s highly

competitive airline industry.”

The Traverse system benefits airlines by providing

the ability to:

Create comprehensive promotional offers for new

services and routes and introduce new partners,

Directly target campaigns to travelers, maximizing

the potential of promotions,

Track member activity and member response

to promotions,

Recognize and reward their most loyal passengers,

Manage members using a leading-edge customer

service tool based on proven technology and input

from a broad airline base.

The Traverse system is complemented by Sabre

Airline Solutions’ partnership with Points International,

which provides airlines with complementary tools that

allow members to exchange loyalty currencies between

airline programs and purchase loyalty points.

april 2003 45

regionalregional

ascend44

Europe, Middle East and Africa

By Marcus Pearson | Ascend Contributor

Next-Door KnowledgeLocally Based Experts Assist EMEA Airlines

As changes in the airline industry

continue at breakneck speed, it may

sometimes prove difficult to know all

the right answers — or, for that matter,

even all the right questions.

With such uncertainty facing the

industry, keeping pace may seem a bit

overwhelming. Fortunately, airlines

don’t have to go it alone. Resources are

available to help airlines stay on top of

the latest industry best practices as well

as the latest information technology that

enables them to compete effectively.

For airlines in Europe, the Middle

East and Africa, Sabre Airline Solutions

has created a locally based Center of

Excellence, a group of subject matter

experts who combine deep industry

knowledge with extensive IT experience.

Having worked in the EMEA airline

industry, these experts provide an

understanding of the region’s unique

environment and can help navigate

through the turbulence of changing

conditions. With their ability to identify

not only the problem but also the

solution, these experts can provide

insight and assistance to help airlines

determine the ideal course.

By combining industry and IT

knowledge, these subject matter

experts can also help airlines apply

their technology to new processes

and procedures. An airline considering

starting codeshare agreements, for

example, may not know how to

implement them in its flight operations

software. The Center of Excellence

can assist the airline to make sure its

decision-support tools properly support

the business.

The Center of Excellence recently

expanded, adding resources in additional

functional areas:

Julie Moffatt, a subject matter expert

in resource management, helped

develop and implement the Sabre ®

StaffPlan ™ staff forecasting and

planning system and the Sabre ®

StaffAdmin ™ employee tracking

and assignment system while working

for bmi. Julie was also fundamental

in the design, development, testing

and initial implementation of the

Roster Maker module of the

StaffPlan system.

Matthew Pearson, a subject matter

expert in crewing services, came

to the Center of Excellence from

My Travel. Before that, he helped

implement the Sabre ® AirCrews ™

crew management system at bmi.

Chris Vokes, a subject matter expert

in flight operations, joined the Center

of Excellence after serving as the

manager in charge of operations

and crew teams at bmi.

Lindsay Watson, a subject matter

expert in revenue management,

also came to the Center of Excellence

from bmi, where she worked as a

route analyst and supported the

implementation and training for

version 5.0 of the Sabre ® AirMax ™

automated revenue management

system.

The new members of the Center

of Excellence join the local experts in

flight scheduling — Maher Koubaa and

Bruno Joannet, who currently support

clients using the Sabre ® AirFlite ™ suite

of planning and scheduling solutions.

They have provided assistance to several

of the region’s airlines as well as led

the implementations of products from

the AirFlite solutions at Scandinavian

Airlines System, Aeroflot – Russian

International Airlines, Iberia, Air Malta,

Air France, Alitalia, Lufthansa, Air Algerie,

Brussels Airlines and Air Nostrum.

The EMEA-based experts in the

Center of Excellence offer the region’s

airlines unique expertise tailored

specifically for their needs.

Marcus Pearson is EMEA director

for the United Kingdom and

United Arab Emirates.

Having worked in the EMEA

airline industry, these experts

provide an understanding of the

region’s unique environment and

can help navigate through the

turbulence of changing conditions.

With their ability to identify not

only the problem but also the

solution, these experts can provide

insight and assistance to help

airlines determine the ideal course.

“

”

industrysolve the fleet assignment problem at

an O&D level and enhanced forecasting

techniques to improve accuracy at a

finer level of detail. The introduction of

such tools at airlines, such as American

Airlines and Air France, has proven to be

critical in times like this. Air France, one

of the first airlines to use Sabre Airline

Solutions’ bid pricing techniques on a

portion of its network, has been one of

the most successful traditional airlines

during the current crisis. More than half

of Air France traffic flowing at its Paris

Charles de Gaulle hub is connecting

traffic, and it is, therefore, instrumental to

control the flow and not displace high-

yield traffic. Lufthansa and British Airways

are two other examples of successful

introduction of O&D techniques. They

both use the O&D capabilities of the

Sabre ® AirFlite ™ Fleet Manager to

efficiently re-deploy their fleets to

better match capacity to O&D demand.

British Airways returned to prof-

itability in 2002 and added frequencies

to its North American routes. Lufthansa

posted 790 million in operating results

(an increase of 172.4 percent year over

year) for the first three quarters of 2002.

It increased its winter capacity by

13 percent, reinstating some international

routes, opening new ones and increasing

frequency in key European markets. Its

summer 2003 schedule will offer 8 percent

more seat kilometers on intercontinental

routes and 3 percent more SKOs on

continental routes than in the summer

2002 timetable.

Today, a handful of network airlines

have introduced O&D-based systems.

Even with such airlines, the effort has

focused on specific areas, such as

revenue management. Sabre Airline

Solutions estimates that the introduction

of a fully integrated O&D approach can

deliver up to five times the return of

only addressing O&D revenue manage-

ment. Ensuring consistency between

capacity decisions, inventory control

decisions and O&D fares drastically

reduces revenue leakage.

The alignment of the organization

and business process with the O&D

operational philosophy are critical

elements to consider along with the

introduction of the O&D decision-support

tools. In addition, the introduction of

new performance indicators is key to

driving the right behavior. A fourth

element of importance when introducing

O&D systems is the integration and

consistency across airline functions,

as well as the definition of the right

information flow and interfaces.

When implementing an O&D

revenue management system, for

example, airlines face several issues:

Assignment of workaround O&D flows

and not necessarily by traditional

sectors (e.g., domestic/international),

Emphasis on analytical skills and the

assignment of a new breed of revenue

management analysts focusing

mostly on O&D forecasting,

Closer integration with pricing

(fare actions) and network planning

(tactical fleet swaps) with common

goals and measurements,

Empowerment of analysts and

establishment of quantitative

measures to evaluate analyst and

team performance,

Move from top-down to two-way

goal setting.

The introduction of an O&D-based

system faces technical challenges:

data collection, scalability (size of O&D

data and complexity of optimization

problems) and interfaces (e.g., reserva-

tions system). But the main challenge

for a successful O&D implementation

remains the one of shifting operating

philosophies. The senior management

buy-in and the active participation of all

levels of the organization are key to

building the right foundation. External

consultants can play an important role

in ensuring the success of this venture.

The consulting team needs to include a

mix of subject matter experts who have

been exposed to best practices and

process consultants who can structure

the change and assist the airline in

managing it. The consulting team

engages in visioning sessions with

representatives from the airline’s

functional areas that are broadly

impacted by the O&D change. Together,

they determine the airline gaps versus

the industry best practices and take

into account the specificity of the

airline environment.

Network airlines have an opportunity

to emerge from the current environment

stronger than they did in the last two

crises in the early ’80s and early ’90s.

They will need to focus on better

leveraging their unique network

capabilities. The technology is available

to enable them to do so. Adopting the

right O&D operating processes will

further enhance their chances to

benefit from the marketing advantages

of their network structure and global

alliances.

Nejib Ben-Khedher is senior vice president,

Sabre Airline Solutions Consulting.

april 2003 47

The battle for profitability will

be waged on two fronts:

cost reduction and revenue

enhancement.

“

”

+count it up 357,000 — Parts in a Boeing 737

industry

ascend46

By Nejib Ben-Khedher | Ascend Contributor

Rising to the ChallengeBy Maximizing Their Networks, Traditional Carriers Can Return to Profitability

About 25 years ago, the deregulation

of the U.S. market saw the emergence of

numerous low-cost carriers competing

with cutthroat fares in key markets.

Traditional airlines witnessed record

losses aggravated by the recession in

the early ’80s. At that time, the hub-

and-spoke model, which just came to

maturity, was questioned. The major

airlines seemed to have no other

alternative but to shrink their fleet and

route structure, renegotiate their labor

contracts, and reinvent themselves as

low-cost. American

Airlines, however, took a

different path, utilizing the

strengths of the airline

network and introducing a

plethora of innovations in

the areas of marketing,

information technology,

fleet modernization,

finance and labor cooper-

ation. As a result,

American Airlines

enjoyed nearly two

decades of financial

and commercial strength,

operating one of the most

extensive domestic and international

networks from its Dallas/Fort Worth

and Chicago hubs.

Today, history is repeating itself.

The current downturn in airline business,

caused by the compounding effect of

multiple crises, has resulted in more

than US$15 billion in combined losses

for U.S. carriers during the past two

years. The temptation to move away

from the hub system to a point-to-point,

low-cost operation, again appears

tempting to major airlines.

The U.S. network airlines offer air

service to more than 100,000 origin and

destination markets. Less than 20 percent

of such services would be economically

viable if served point-to-point. The

situation is similar in Europe. Low-cost

carriers are confined to high-density

markets, where they can economically

offer high frequency. In addition, they

have avoided major hubs where loyalty

to the predominant airline plays an

important factor. There is, therefore,

a large, high-yield market left for

network airlines.

The battle for profitability will be

waged on two fronts: cost reduction

and revenue enhancement.

On the cost front, and specifically

within the scheduling area, airlines are

mainly focusing on simplifying their

operations. Hub isolation, reduced

fleet complexity at secondary stations

and de-peaking hubs are among the

initiatives intended to ensure a

smoother and reliable operation and

higher resource utilization. Also,

capacity has been trimmed to better

fit demand. It is, however, not enough

to reduce the unit costs to the levels of

their low-cost counterparts.

The battle is to be won

on the revenue front, by

better leveraging their

O&D networks and taking

advantage of an even

wider O&D base through

global alliances.

While the hub-and-

spoke structure has been

in place since the late ’70s,

only recently have network

airlines started changing

their approach to network

planning, scheduling,

pricing and revenue

management to align it with the O&D

structure. Recent advances in software

applications enabled the airlines to bet-

ter capture data, forecast and optimize

at an O&D level. In the late ’90s, Sabre

Airline Solutions introduced bid-pricing

techniques in revenue management

applications, designed algorithms to

SYSTEMS

Data

Integration

BUSINESS

Process, Workflow

Interfaces

PERFORMANCE

Measures & Reporting

KPI

PEOPLE

Organization

To capture full value from the introduction of O&D-based decision-

support systems, airlines have reviewed the underlying organization,

processes, performance measures and interfaces.

VALUE

regionalThis trans-

formation has

already reaped

substantial mon-

etary benefits for

Aeroflot. In 2002,

it quadrupled its

net profit to

US$75 million,

a significant

improvement

from the

US$60 million

loss in 1999.

As part of its

comprehensive

revamping of its

IT, Aeroflot,

which has

been using the

Sabre ® AirFlite ™

Schedule

Manager and the

Sabre ® AirFlite ™

SlotManager™

system since

1997, selected several additional tools

from Sabre Airline Solutions through an

innovative five-year “library card”

agreement, which enables the airline to

implement eight products from Sabre

Airline Solutions’ portfolio.

Egorov said selecting multiple

solutions from a single IT partner

provides contractual, commercial and

integration benefits.

“It was key to us to select a

provider whose offerings span all of the

functional areas of our airline so that we

would have the benefits of an integrated

operation,” said Egorov. “The products

installed to date have given us better

management information for decision

making, assistance in optimizing the

route schedules, and frequency and

publication efficiencies. This has

provided us the ability to focus on

profitable destinations, improving

overall network profitability.”

During the last two years, Aeroflot

has implemented the Sabre ® AirFlite ™

Profit Manager, the Sabre ® AirFlite ™

Fleet Manager and the Sabre ® AirPrice ™

fares management system.

“Since implementing the AirPrice

system, we have been able to strategi-

cally manage fares and more efficiently

distribute fare information in our highly

competitive marketplace,” said Evgueni

Bachurin, Aeroflot commercial director.

Aeroflot is also in the process of

implementing the Sabre ® AirMax ™

automated revenue management sys-

tem and the Sabre ® AirMax ™ Group

Management System. In addition, the

carrier has chosen

to implement the

Sabre ® AirPrice ™

Contract Composer

as well as the Sabre ®

AirServ™ aircraft pro-

visioning system.

“Implementing

the Contract Composer

further assists us with

facilitating the sales

the contract evaluation

and approval proce-

dure,” Bachurin said.

The AirServ

system will be deliv-

ered through the

Sabre ® eMergo ™

Web-enabled and

dedicated network

solutions, an application service

provider delivery method. Aeroflot

officials said they chose this platform

because it provides remote access to the

system, which eliminates the need for

additional hardware and software infra-

structure as well as internal IT resources.

It also decreases implementation time,

giving the airline the immediate benefits

of product implementation on an

accelerated time schedule.

The airline will soon select the

final products through the library card

agreement.

“These solutions will not only

enhance our customers’ experience, but

also improve our competitive position

through a long-term reduction in tech-

nology expenditures, an increase in

revenues and improved quality of service

to our passengers,” said Bachurin.

“For example, by moving to this next-

generation revenue management system,

we anticipate a 10 percent to 15 percent

increase in forecast accuracy, which

translates into a 2 percent to 3 percent

increase in system-wide revenues when

we transition from leg-based to origin

and destination control.”

(continued on next page)

april 2003 49

+count it up 50 — Gallons of paint to cover a typical Boeing 737 aircraft

As part of its new image, Aeroflot has upgraded its in-flight food

service to be more appealing to customers. The airline utilizes

the AirServ system to coordinate its dining and cabin services.

Nikolay V. Egorov,

Aeroflot CIO

Evgueni Bachurin,

Aeroflot commercial

director

regional

ascend48

By Barbara Childs | Ascend Contributor

A Brave New WorldAeroflot Reshapes Itself to Compete in the Modern Marketplace

The airline industry has undergone

numerous changes during the past few

years, but perhaps no single carrier has

undergone a more radical transformation

in the last decade than Aeroflot –

Russian International Airlines.

For most of its history, Aeroflot,

which traces its roots back to 1923,

enjoyed the benefits of its monopoly

status as the sole airline providing

service to the people of the vast Soviet

Union — a status that earned it the

distinction at one point as the world’s

largest airline.

With the 1991 collapse of the Soviet

Union and its command economy,

Aeroflot was thrust into the rough and

tumble open marketplace, forced to

compete domestically and internation-

ally like never before. But rather than

long for the past, the Moscow-based

airline eagerly began transforming itself.

“We realized after the fall of the

Soviet Union, followed by the meltdown

of the Russian financial market in 1998,

that we needed a significant repositioning

and overhaul of nearly every facet of

our operations,” said Nikolay V. Egorov,

chief information officer at Aeroflot. “At

the same time, cost reduction was high

on our priority list.”

Like Russia itself, Aeroflot has

been reinvigorated by the change to a

market-based economy, and the airline’s

energetic and boldly ambitious executives

have revamped the organization to

compete forcefully in the airline industry.

The airline has phased out remaining

vestiges of the communist past. Aeroflot

will soon re-brand the airline with a new

unified color scheme for aircraft seating

and adopt designer-style uniforms for

its cabin crew. Moreover, this year, the

airline plans to replace its old hammer

and sickle logo.

The changes behind the scenes are

even more significant. Aeroflot’s board

of directors recently approved the leasing

of 18 mid-range Airbus A-320s, the

largest fleet upgrade undertaken by a

Russian carrier. The new aircraft will

replace the older generation airplanes

in Aeroflot’s fleet of 111 aircraft —

including 27 foreign-built planes. The

airline remains Russia’s largest air

carrier, accounting for 68 percent of

international passenger flights to 103

destinations in 54 countries.

Since 1999, Aeroflot’s executive

team has made great strides to revolu-

tionize the airline, with particular

emphasis in the area of information

technology. In January 2001, Aeroflot

launched an ambitious IT agenda as a

critical element of its transformation

strategy in an effort to address tactical

and operational issues.

Europe, Middle East and Africa

These solutions will not only

enhance our customers’ experience,

but also improve our competitive

position . . .

“

”

Since its transformation, Aeroflot is truly taking off — in 2002, it quadrupled its net profit to

US$75 million.

regional

april 2003 51

T H E H I G H L E V E LvıewNews Briefs from Around the Globe

News from Europe and Africa

South African Airways and Lufthansa German

Airlines have selected the new Java-based Sabre ® Qik ™

Developer Tool as a key component of their next genera-

tion of customer service tools.

“We are excited about this opportunity to utilize the

new Java edition of the Qik Developer Tool,” said Petra

Bretthauer, director of customer care processes at

Lufthansa. “This product gives us the ability to have a

very flexible application that allows for easy integration

into our company’s long-term architectural objectives.

The Qik solution will help us adopt customer relationship

management processes quickly and will be an enabler

of our CRM strategy at important touch points — our call

centers. Through the new advances, this development

environment will allow us to provide a compelling

solution for our agents, allowing them to better serve

our customers.”

Andy Hayward, chief information officer of South

African Airways, said, “Taking responsibility for anything

that touches the customer is a responsibility we are

extremely serious about. The Qik solution has allowed

us to improve our productivity and reduce costs across

multiple business units. This upgrade will allow us to

evolve our front-end interface into a more powerful and

customer-focused tool. This will create a more pleasurable

experience for our customers and allow us to provide

services that our competitors only dream about. The

new Java edition of the Qik solution gives us the ability

to swiftly adjust to meet new and upcoming changes in

the marketplace without affecting the current operations.”

The travel industry’s leading reservations and airport

development solution, the Java-based Qik Developer

Tool enables companies to easily create user-friendly

interfaces, improving the ability of reservations and

airport personnel to service customers. The Java edition

of the Qik solution, which includes the Developer Tool,

offers solutions that enable developers to rapidly build

graphically rich applications incorporating multiple,

key data sources, all within an airline’s unique work

processes. The Qik solution helps facilitate CRM

strategies at the point of service by seamlessly placing

customer information at the fingertips of reservations

and airport agents.

The latest generation of the Qik Developer Tool

builds upon 15 years of innovation, migrating its

pacesetting capabilities to the Java platform. The Java

edition of the tool not only provides a higher degree of

sophistication to end-user applications, but also gives

users of the tool the benefits of Java, such as platform

and operating system independence. Being able to

streamline and efficiently control data sources and

technology offers users of the Qik solution the power

to reduce costs and improve customer service.

News from Asia

Japan Airlines will use Sabre Travel Network tools

to provide electronic ticketing functionality through a

global distribution system.

The functionality, which went live in Australia on

Feb. 24, will also be available through Sabre Connected

travel agencies in the United States, Canada, Bermuda

and Japan.

E-ticketing for self-booking travelers has already

been available within Japan for Japan Airlines

international reservations.

“The e-ticketing process developed by Sabre Travel

Network is fully interactive, allowing agents to issue,

refund, exchange, void and display online,” said Michael

Keating, chief executive officer, Sabre Pacific Pty Ltd.

Travel agents using the e-ticketing functionality will

experience reductions in the cost of sales and improve

operational efficiencies by reducing administrative

manpower and enhancing productivity.

The solution will help JAL improve its airport

check-in process, reduce the number of lost tickets

and improve revenue reporting.

“We chose Sabre Travel Network because of its

industry leadership position in the development and

commercialization of electronic ticketing solutions,” said

Akira Hisano, vice president reservations and ticketing

procedures for Japan Airlines. “We are confident that

the solution will provide us with an even more stream-

lined process and a reduction in our distribution costs.”

Japan Airlines joins 45 airlines currently using

the functionality. Sabre Travel Network offers electronic

ticketing for more carriers and more markets than any

other GDS.

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News Briefs from Around the GlobeNews From Sabre Holdings

Sabre Holdings recently reached a milestone in the

creation of its new travel technology platform with the

initial migration of its massive air pricing application to

the HP NonStop™ platform.

The technology achievement is part of the new Air

Travel Shopping Engine for the Sabre ® Passenger

Reservation System and the Sabre ® Global Distribution

System, a four-year program designed to migrate airfare

pricing, schedules and availability from a proprietary

mainframe system to the continuously available

NonStop server and database environment. The effort

will benefit customers of Sabre Airline Solutions and

Sabre Travel Network. The powerful airfare pricing appli-

cation continuously updates about 20 million fare and

rule records and 1.5 million schedules providing users

with the most current data in the industry. The program

can rapidly evaluate billions of potential fare combina-

tions for each requested origin and destination, as well

as nearby airports that may yield lower fares.

“In our first 60 days using our new NonStop

servers, we had no downtime,” said Craig Murphy, chief

technology officer for Sabre Holdings. “This technology

milestone reconfirms that we can achieve our goal to

migrate a huge application with the scope and volume

of air pricing from a mainframe environment to an

open-systems midrange platform. It’s the next step in

our ongoing plan to migrate applications to open sys-

tem platforms helping create the next generation of

travel technology platforms for our customers.”

Pauline Nist, vice president and general manager,

HP NonStop Enterprise Division, said, “The NonStop

platform provides Sabre Holdings with unmatched lev-

els of availability and scalability in a high-performance,

open system environment. We look forward to continu-

ing our work with Sabre Holdings in implementing a

variety of innovative solutions that will result in signifi-

cant customer benefits and competitive advantage for

Sabre Holdings and its partners.”

Using HP’s open system, Sabre Holdings is able to

leverage mainstream tools and development techniques

to rapidly develop new and unique shopping services.

The system enables the company to significantly speed

overall development time. For example, the develop-

ment for the air pricing application on the open system

was done entirely in C++ and Java and was developed

in an aggressive timeframe.

“We believe our open systems shopping platform

will provide the only nonstop capability in the industry

— in other words, virtually no downtime for our cus-

tomers, scheduled or unscheduled,” Murphy said. “It’s

the equivalent of changing a flat tire without stopping

the car, as both airfares and schedule data are con-

stantly updated while the system remains continuously

available.”

Sabre Holdings has a long history as the leader in

operations research for airlines and the travel industry in

general. Borrowing from techniques used in large-scale

optimization, the low-fare search algorithm can analyze

several billion fare combinations, across dozens of

connection points, in a few seconds. The search space

includes flight schedules from nonstop up to four-

segment connections, with a variety of parameters that

allow the user to control what is displayed. Unlike other

systems on the market, the system’s low-fare search

checks airline availability in real time, during the search,

and displays a list of itinerary options that are known

to be available for sale.

T H E H I G H L E V E Lvıew

Aeroflot, with its newfound energy

and drive to technologically advance its

operations, the ambition to reduce costs

and the spirit to makeover its corporate

image, has shown that it plans to emerge

from its transformation as a strong,

powerful and energetic competitor in

the global airline marketplace.

Barbara Childs is the Sabre Airline

Solutions account director for Aeroflot.

Aeroflot aircraft will soon sport a new, modern look to reflect the airline’s new

image as a key competitor in the airline industry.

T H E H I G H L E V E LvıewNews Briefs from Around the Globe

News from Asia

ABACUS Distribution Systems Indonesia signed a

multi-million-dollar agreement to provide Indonesian

Airlines with a suite of reservations and departure

control solutions.

Indonesian Airlines, which launched its first routes

in March 2002, recently implemented the Sabre ®

Passenger Reservation System and the Sabre ACSI ™

international airport check-in system across its network.

The systems are supplemented by a package of products

from the Sabre ® Qik ™ business processing solution,

tools designed to help develop rich graphical interface

capabilities that facilitate training and ease of use.

Indonesian Airlines also chose Sabre ® AirOps™ Load

Planning to ensure optimal flight operations.

The airline, which aims to operate a fleet of more

than 20 aircraft within two years, also signed a global

distribution system agreement with ABACUS — the

leading GDS in Asia — which will provide the airline

with distribution across the Asia region.

Rudy Setyopurnomo, president director of

Indonesian Airlines, said that the services provided

by Sabre Airline Solutions and ABACUS, which is 35

percent owned by Sabre Holdings, will help the airline

meet its aggressive expansion plans and succeed in the

competitive Indonesian aviation sector.

“Indonesian Airlines has moved into an exciting

time. Following the successful launch of our operations,

our goal is now to nurture growth in key markets and

continue our expansion profitably and be one of the

most competitive carriers in the region,” he said.

Indonesian Airlines will utilize the Passenger

Reservation System for all its reservations, distribution

and inventory functions. By virtue of being hosted in the

same environment as the ABACUS GDS, Indonesian

Airlines’ distribution position will also be considerably

enhanced.

The ACSI system provides a faster, more simplistic

passenger check-in capability. It is tightly integrated

with both the Passenger Reservation System and

Load Planning.

The Qik solution will enable Indonesian Airlines

employees to quickly and efficiently service passengers

by presenting passenger information in a consistent,

uncomplicated format with logical entry sequences and

graphical representations.

News From the Americas

Hawaiian Airlines has selected Sabre Airline

Solutions fares management and flight scheduling

systems to help better manage its fares distribution

and flight planning and scheduling operations.

Hawaiian is adding the new offerings to the Sabre ®

AirMax ™ revenue management system already in

use at the airline.

Specifically, the airline is implementing the Sabre ®

AirPrice ™ fares management system and the Sabre ®

AirFlite ™ Schedule Manager, core products in the

company’s award-winning integrated suite of revenue

planning software products. Sabre Airline Solutions

will deliver the AirPrice system to Hawaiian through

the Sabre ® eMergo ™ Web-enabled and dedicated

network solutions.

”We decided to implement the AirPrice system and

the Schedule Manager because we wanted an integrated

solution with robust functionality and decision support

that enables us to proactively make rapid, effective and

profitable decisions in an ever-changing and competitive

environment,” said Glenn Taniguchi, vice president,

schedule planning for Hawaiian Airlines. “Together, this

industry-leading suite of products will enable us to build

on the strong foundation of the AirMax system by man-

aging our schedules, pricing and revenue management

tightly and effectively from a network perspective.”

First installed in 1997, the AirMax system serves

as the airline’s central revenue management data

repository and provides decision support to set optimal

inventory controls for allocating seat inventory.

According to Taniguchi, the airline has realized benefits

in terms of revenue maximization, enhanced decision

support, improved productivity, forecasting accuracy

and responsiveness, and reduced spoilage and

oversell costs.

“Accessing the AirPrice system via the eMergo

solutions enabled us to minimize our upfront investment,”

continued Taniguchi. “We also achieve a quicker return

on investment with all the benefits of sophisticated

functionality and quicker time to market.”

regional

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These are unprecedented times in the air transport industry. But there’s one thing you can count on. Sabre Airline Solutions will be here, providing innovative technology solutions for your toughest challenges. Just as we have through five decades — in good times and in bad — for more than 200 airlines worldwide.

Times like these demand fresh thinking. Proven, ROI-based solutions. And a technology partner that can not only see the future, but can help you reach it. Times like these demand Sabre Airline Solutions. www.sabreairlinesolutions.com

proven

Achieve optimal operations

makingcontactTo suggest a topic for a possible

future article, change your address

or add someone’s name to the

mailing list, please send an e-mail

message to the Ascend staff at

wearelistening@sabre.com. 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 regional representatives:

Asia/Pacific

Mike Baldwin

Senior Vice President

Level 9, Phillips Building

15 Blue Street

North Sydney NSW 2060

Australia

Phone: 61 2 8923 5230

E-mail: mike.baldwin@sabre.com

Europe, Middle East and Africa

Vinay Dube

Vice President

23-59 Staines Road

Somerville House

Hounslow, Middlesex

TW3 3HE, United Kingdom

Phone: 44 20 8814 4540

E-mail: vinay.dube@sabre.com

The Americas

Walter Jacobs

Vice President

1 E. Kirkwood Blvd.

Southlake, Texas 76092

United States

Phone: 817 264 7657

E-mail: walter.jacobs@sabre.com