Diminishing Returns, Data Sharing and Resilience

June 28, 2020

In the olden days, the airline industry was fat with potential for savings. The onset of technology and processes that allowed inexpensive monitoring of everything from pilot rest time to fuel to managing maintenance downtime and pretty much everything else meant that there were a thousand ways to look like a hero. Motivated people made good finds so were promoted quickly and there was a steady stream of equally bright replacements sniffing out and pitching their own projects. All said, life was pretty sweet.

Of course, Camelot can’t persist forever. Inevitably, things started to tighten up as all the cheap wins were realised. While the new bosses were still well regarded for their achievements, the replacements were slightly cynical, thinking the wins had been too easy to deserve the merit they engendered. “One half-decent idea and they’re dining out on it for life…”

Still, reasonable gains continued to be found. Smaller, yes, but far from insignificant. The tightening was good for the industry in a way, in that it necessitated finding some very intelligent and diverse people. Airlines started looking for mathematicians and data analysts to squeeze the most out of a tonne of fuel and although they had to double down, they were still able to mine benefits.

There was a growing reliance on third-party software over original work though, and the benefits kept shrinking anyway. Sometimes the benefits cost more than they earned; nonetheless they were applauded. Fair enough, as it was taking creative intellectualism to keep finding gains, but everyone ignored the elephant in the room. The industry grew disconnected from conventional benchmarking and everyone knew it, but what else were they supposed to do in this Daliesque world?

Hang on, I spoke too soon – that’s not the elephant in the room. As relatable as it is to consider projects in this light, the reality is that entire airlines follow exactly the same model. They’re running on razor-thin margins and there’s no way out. Projects reflect the organisation as a whole – that’s why the Daliesque nature goes unheeded. To be honest, the only way out airlines can see is if the industry changes favourably for them. Deep down, they know they’ve got very little ability to direct their fate.

This spiral is evocative of mining for gold. The first miners dug and worked the mine to its exhaustion. Gold was abundant though – they were taking out nuggets, so had little concern about the dust that was left behind in the tailings. Successive attempts have involved finding increasingly sophisticated ways of processing the tailings. Sometimes a group may come across tailings in a corner of the pit that has been overlooked and it gets a win, but otherwise the yield is in line with the ever-diminishing predictions. The cost of recovery versus the value of the yield runs against the tightest of margins. If the COVID equivalent hits in the form of a market crash, the price of gold completely tanks, and everything that everyone is doing is rendered worthless. In the absence of much else to do, they start discussing how to retrospectively inject resilience into the industry so that when they resume their activities, they’re somewhat insulated from fluctuations capable of bankrupting them overnight. What!? Why? Razor thin margins meant that the model was running out of time anyway – why would anyone want to prolong that? To what end? For how long?

Luckily, there’s an easy answer to this. Just stop. Stop celebrating worthless projects and start redesigning the industry. Stop focusing new hires on small gains in nearby realms. Stop treating them as person in a team in an area in a department in an organisation in an industry. Encourage collaboration at all levels, including external to the organisation. Start looking at the shape of the industry 20 years out instead of the airline's balance sheet 5 days out. If 2020 has taught us one thing, it’s that everything can be flipped on its head in an instant. The industry as we know it is finished. Don’t let the eventual reappearance of planes in the sky fool you – it’s over. COVID changed it immutably and permanently. Airlines planning to get back to “pre-COVID” may well be the ones that don’t survive at all.

It’s not that the work people were doing wasn’t admirable or worthwhile. It’s not their fault that nobody wanted to talk about the fact that the model was unsustainable. The whole industry watched this happen like a bunny in the headlights. It’s not even the industry’s fault… at least, not entirely. Without the focal point of a massive upheaval, redirecting the industry got harder with every passing day. It had grown into a corner.

It’s not all doom and gloom though. Forced to walk away from the tailings pit, our only option now is to find a new mine. We’ll wander around in circles for a while, but eventually the nuggets will start showing up again. This time though we’re going to be looking much further toward the future, always exploring for the next mine. Instead of being our pay cheque, the tailings will be our savings plan or insurance policy.

So, where’s the mine? Well for starters, it won’t be found unless we all look for it together and at the same pace. “All” means everyone. Airlines, airports, industry bodies, passengers, ATC, Customs and Immigration, technology companies, weather companies, governments, fuel companies, taxi companies, provisioners, hoteliers, retailers and everyone else touched by the industry. Oh, and there’s another thing. When we find the mine, everybody has to share.

We’re going to succeed by collaborating, not by hoarding. Concepts like Trajectory Based Operations (TBO) are going to pull all players much closer together. An airline may lose the relative advantage it has over a competitor, but it will be well ahead in real terms. Providing other airlines with commercially advantageous data will be palatable because it’s reaping the benefit of other airlines doing the same. Hoarding data makes about as much sense as every airline setting up its own ATC.

Hoarding data is also the antithesis of resilience. A trip in the future will involve a passenger being picked up by a UAV from home (taxi company). Once the door closes, they’ll be regarded as being in a restricted area, they’ll have their identity confirmed and be asked the reasons for their trip (government, Customs). They’ll provide blood and/or saliva samples for immediate testing (Department of Health). Their bags will be sized, weighed, scanned and sniffed and their ETA to the airport forwarded (airline, Customs). If everything checks out, they’ll be deposited next to the plane and will depart exactly on time some minutes later.

So how does this engender resilience compared to the current industry, where airports are the hub of all travel? Health testing would have to be done when the passenger was in a restricted area, so after check-in with the airline. Would Customs carry it out, extending its bottleneck even further? Unlikely – it only cares who you are, not how you are. Would the Department of Health set up another queue for passengers to endure? Whether it was a kiosk or human testers, identity would have to be verified independently and prior to Customs so it didn’t have to process people who weren’t going to be traveling anyway. Also, the union would insist that staff not be exposed when testing is to occur immediately afterward. It’s all too big and too hard – it won’t happen that way.

Besides, what would happen if the test for the COVID of the day was positive? After all that, would the passenger be sent home? The bags would need to be pulled by staff with adequate PPE, the passenger moved to a quarantine area within the airport, the airline advised, weight and fuel calculations rerun, transport organised for the passenger, the taxi company advised that their cab may be contaminated, prompting them to advise current and recent passengers that they’ve been exposed, etc. The amount of data sharing is comparable to the future trip, but the cost and quality of the airport solution is vastly inferior as it’s focused on recovering from a situation rather than preventing it. Not only that, but interactions with other passengers and airport staff all carry a risk of transmission, so the potential for infection fans out at an impressive rate.

So, what happens to our future passenger who tests positive in the UAV? We don’t know – that hasn’t been designed yet. What we do know is that a massive amount of pointless activity has been averted and not one person’s health has been put at risk. That’s inherent resilience that’s been built into the system from the start. Many of the measures currently being discussed aren’t about resilience at all – they’re about mitigation. That’s not to say that they won’t be effective, but if another COVID-like event occurs, they’re unlikely to prevent a shutdown similar to what we’re currently facing.

The healthy future trip passenger has a completely different experience. Knowing that all passengers were subjected to the same rigours that they were, they know the plane is going to be one of the safest environments they can be in. Instead of posing health risks, information about air travel can be used to help governments manage pandemics, providing a snapshot of a person’s health at a fixed point in time. Instead of being immediately shut down, the airline industry would be seen as playing a vital and ongoing role, perhaps even being regarded as an essential service.

Now that’s resilience.