Innovating with Airborne Analytics

We have a three- [or] four-year strategy to take us to the next level in three areas. One is operational efficiency or improved performance. Two is customer intimacy. And three is innovation.

In terms of operational efficiency, we’re using analytics on engine performance data for our fleet. That increases reliability and also helps reduce fuel burn if we can fine-tune the aircraft engines. Fuel accounts for approximately 40% of our costs, so percentage gains on our fuel bill and our engine performance are worth a lot to the bottom line.

We also use analytics to optimize crew and shift deployment. We have 15,000 staff who have to be matched to plane types, to the destinations, to special breaks that they have to have, etc.

In terms of customer intimacy, we use analytics to look at frequent flyer preferences and assess flying preferences. We look at click-stream data on our site to see what customers are viewing, to get a feel for what stage in the cycle they’re at. We also have analytics to look at customer complaint data to see if there’s a trend developing about meals, or seats, or service or something else. These are all bundled up to improve the customer experience to keep us as number one airline in the world.

It’s business-driven, directed by an innovation council. I’m the chair, and the head of HR is my co-chair. We have probably about 10 or 15 representatives as general managers from each of the business units. Once we have the IT and the business people working collaboratively to do a proof of concept, the innovation will go through a formal funding process and have a proper business case and proper justification.

Right now, the guys are developing a tag for baggage. We know how many bags get lost or misdirected. We can look at data that says it will cost us, on average, X dollars on a lost-bag retrieval, customer follow-up, etc. — and then ask, “What can we do on the end-to-end process? What causes this? By looking at the data and analytics, can we redesign this whole process?”

Today when people change their flights or flights are delayed, they have no idea if their bag made it with them or not. These new LED baggage tags can change dynamically as the circumstances change. When the bag gets on the carousel, it has the potential to appear on your iPhone, and you could track not only where it is, but then just put your hotel into your iPhone, and somebody could pick it up and deliver it to your hotel while you go to a meeting. It will just change dynamically with low-energy Bluetooth.

A lot of digitization and information coming through used to be paper-based, and now it’s going end-to-end. The next level of maturity for organizations will be to digitize and architect so cleverly that you can modularize and plug-and-play for maximum flexibility. That’s the real key. We spend a lot of time architecting the future based on projected growth and projected efficiencies. We know, every time we talk business case, where we expect the benefit to be, and how it’s to be realized and where it will be realized. It’s very thoughtful and disciplined.