What If Planning – The Way Forward for Airlines

posted on 11th June 2020 by Eddie Saunders
What If Planning - The Way Forward for Airlines

By Wolfgang Vermöhlen, Product Manager GS Planning Staff, INFORM GmbH

Wolfgang Vermöhlen is Product Manager for GroundStar (GS) Planning Staff at INFORM GmbH. He can look back at more than 25 years of experience in the aviation industry and 18 years of taking care of the development of the company’s resource planning software.

While difficult to think in these terms now, there may be a silver lining to the COVID-19 global pandemic. Despite many airlines having strong balance sheets and high customer satisfaction levels prior to the onslaught of COVID-19, they are now facing an unprecedented cessation of air traffic, at 95% or higher of passenger volumes. It is far worse than such seminal events as the 9/11 terrorist attacks and the 2008 financial crisis. Some airlines have declared bankruptcy and many others require government funds to remain solvent. As of April 2020, Cirum reported an estimated 60% of the global aircraft fleet had been grounded and airline capacity was down 70-80%. The economic losses continue to mount. For example, Oxford Economics projected U.S. air travel spending for 2020 will experience a $400 billion decrease, representing an economic output loss of approximately $900 billion. There is, however, an object lesson for airlines from this insidious and transformative event which may present a way forward towards a more sustainable, profitable and steadfast industry. It is that planning for the unexpected is no longer an operational task, but rather a survival mandate.

Changes Ahead

Already we are seeing a transformed aviation industry. The massive aircraft groundings and economic losses notwithstanding, major airlines have temporarily ceased operations, flight routes have been revised, industry consolidation has occurred, and new workforce management practices are being implemented. Leading industry observers such as McKinsey & Company are not predicting a return to normal operations and demand levels of just 60-70% of 2019 levels until 2022-2023, and that is being optimistic. There are also a host of new safety protocols being implemented by those airlines flying. These include: requiring masks for crews and passengers, social distancing on aircraft, the use of electrostatic sprayers to sanitize aircraft before every flight, and touchless check-in kiosks. Preventing the virus’ spread has become a major undertaking with airlines working 24/7 to sanitize all areas of their aircrafts, from cockpits and cabins to tray tables, arm rests, seatbelts, buttons, vents and handles. Under consideration are new policies for conducting government-administered contact tracing and temperature checks to detect and prevent the spread of COVID-19.

On the economic side, airlines are feverishly negotiating terms with vendors and airports to gain relief on their payment terms. They are also retiring aircraft early and working with aircraft manufacturers to delay acceptance of new aircraft deliveries. On the workforce side, in addition to layoffs, the airlines are seeking voluntary unpaid leaves and implementing salary reductions, working in conjunction with the labor unions. There is real evidence that when it comes to making the necessary changes, the airlines personify the expression, “When the going gets rough, the tough get going.” It is clear that the airlines have not been licking their wounds for long, but rather are proactive in adopting new measures, and deploying new strategies and technologies that help them stay ahead regain their operational equilibrium. Chief among these strategies is a new focus on planning for and responding to unforeseen events. Central to these strategies are advanced planning technologies.

Shifting Factors and Considerations

It does not take a global pandemic to introduce the unexpected, but the pandemic has clearly introduced a host of many shifting and unknown factors that need to be considered in advance and addressed promptly. Right now, we know the pandemic has caused there to be fewer airlines and flights, government interventions, travel restrictions, and boarding-related security and safety measures. We also can project that certain flights are likely to rebound faster than others (e.g., business travel and short-haul flights are expected to bounce back sooner than leisure travel and long-haul flights). Less known, but likely to have a major impact on air travel, are the ripple effects of the pandemic-fueled recession/depression’s economic conditions. The International Air Transport Association (IATA) forecasted that the industry will experience a revenue loss of $252 billion, which represents 44% of 2019 revenues.  All of these unknowns also will have to be considered in conjunction with different criteria such as expected seat load factors (i.e., very low, low, medium and normal), staffing requirements for aircraft and on the ground tasks, Service Level Agreement’s key performance indicators, and task rules (i.e., minimum handling service level, crisis modified service level, standard service level and premium service level). The logistical effort and planning tasks are unquestionably the most arduous the industry has ever faced. Man alone won’t be enough. Technology has a vital role here and must be harnessed in the recovery and beyond.

            What If Planning Solutions

In the post COVID-19 period, there will be new flight plans and demand recovery scenarios. Mergers and acquisitions, joint ventures and new partnership among airlines too will influence a restructuring of routes and fleets. Also being weighed are the different recovery scenarios now being considered. These include:

  • A rapid bounce back – the least likely
  • Slow 6-9 month recovery – unlikely
  • Structured change recovery requiring a minimum of 12 months to stabilize – possible
  • A 12-18 month recovery which sees a stabilization coinciding with the virus subsiding, but then possibly re-emerging – possible
  • Gradual recovering extending into 2022 – fairly probable
  • A longer recovery extending into 2023 – also very possible

During the 12-18 month recovery period, the industry will have to contend with a furtherance of government lockdown and shelter in place orders prompting minimum air travel. At one point, when the health agencies such as the World Health Organization and Center for Disease Control deem it safe again, air travel will begin to bounce back and levels will begin their ascent to pre-pandemic levels. Consumer confidence in air travel will start increasing even with new safety protocols and a smaller selection of flights in place. Planning technologies to support air transportation during this new, transformative period can be leveraged to help airlines become better prepared and more resilient. For instance, when flight schedules are available, planning solutions will help airlines develop “what if” scenarios and then apply the technology-driven data to generate optimal staffing levels. If flight schedules are not available, the planning technology can help the airlines gain relevant market intelligence from schedules drawn from pre-pandemic flight schedules and then make assumptions related to different flights such as domestic vs. international, business vs. leisure, short-haul vs. long-haul, and when each will category of flight will recover.

These planning solutions also assist in optimizing workforce management which will also be plagued by unknown factors. What is known is that large scale layoffs and furloughs and uncertainties regarding flight plans will introduce new staffing challenges. A lack of continuity planning to support a step-by-step return of employees to their pre-pandemic roles will hinder the industry’s recovery. Applying sophisticated planning and workforce management software, airlines can determine appropriate staffing levels. They can better manage work volumes, staffing capacities and work process guidelines. These solutions also offer features such as an employee portal that allows workers to easily log in to view their work schedules and any schedule changes. Previously, paper schedules were distributed to employees and changes had to be communicated verbally. The additional use of mobility solutions further supports online workflows for quick roster assignments, workload adjustments and social distancing requirements. The digital tracking capabilities of advanced workforce management solutions even include a “coronavirus” function that can be applied to contain infection. The feature allows for COVID-19 positive cases or those deemed suspicious to be entered into the system wherein infected or potentially infected employees can be marked for quarantine and blocked from work.

Leveraging planning solutions, planners can make assumptions as to the most likely scenario for the immediate period ahead, and then implement measures that support that scenario. As part of the planning process, consideration will also be given to other involved entities – the airports, ground handlers and authorities – and their turnaround processes. Based on changing scenarios or factors, the airline will be able to re-evaluate and update its plan to accommodate evolving recovery stages and economic conditions.

Triumphant over the What Ifs

Time management expert and author Alan Lakein said, “Planning is bringing the future into the present so that you can do something about it now.” Undeniably, the pandemic has introduced unprecedented, dire circumstances. It also has presented an opportunity for airlines to become more resilient and better prepared to cope with the unexpected. Planning is the key and advanced technologies are the route to the most meaningful planning and future sustainable operations.