Operational management: the aim is "unremarkable service" October 2010

When a flight is on time, with OK cabin service, and your luggage arrives when you do, most passengers do not notice. This is how it is supposed to be. If, however, the flight is delayed, especially if this starts to be a pattern with an airline, then this is not OK.

As has been extensively researched since the 1980s one delayed or otherwise dissatisfied passenger tells at least nine other people – a passenger whose flight was reasonably on time and with adequate service will probably just answer a direct question with “yes, it was OK”. For most airline passengers unremarkable service is as good as it gets.

Unremarkable service, however, is the product of skilled operational managers who constantly integrate and adapt the outcomes of many different functions from within and outside an airline. They in turn are often regarded as unremarkable in terms of the role they perform and their visibility compared to the powerhouse functions of corporate strategy, international relations, finance, marketing and systems development. They usually only come to notice when the operation suffers serious disruption or when further cost savings need to be made, since they often control large numbers of direct or contracted staff susceptible to culling when additional savings are looked for.

Now, however, airlines are looking with a renewed focus on operational performance as a competitive differentiator. Not least because the web–enabled world creates fast and uncontrollable customer feedback, and is seen to be increasingly influencing buying behaviour. Also as global recession eases European airspace is also likely to be increasingly constrained by minimal new airport expansion and a delayed Single Sky air traffic management system while at the same time pan–European train operations are likely to become faster and more reliable.

So unremarkable service may have to get a whole lot better if it is to stay unremarkable and the talent management required to sustain competent multi–skilled operational managers may also need to be reviewed.

Unremarkable service requires the combination of many elements: serviceable aircraft, fuelled, cleaned, loaded and catered; briefed crew with logged flight plans; an available airport gate, ground transport, appropriate terminal facilities; processed joining and transit passengers, all ready within slot departure time and not just once but repeated many times during a day. This demands a careful allocation of resources between competing demands, involves dealing with variations and the unexpected, but it rarely involves facing totally new or previously unknown situations. So the managerial task may be stressful, with peaks and troughs, but for people who have worked in airlines it does not require remarkable skills, but competence and judgement.

Judgement within boundaries

Another complication faced by managers is that many ground operations functions are now outsourced. In larger airports the airline manager may well have to trade upon maintaining a good relationship so that additional staff or equipment is provided without recourse to the small print of a contract and also manage the internal hierarchy so that action to enable service recovery is not then criticised for coming in over budget or not following the rules. Ryanair has simplified this, no customers receive any extra service and if they do everyone gets the same. For other airlines distinctions between fare types, complicated by loyalty schemes, do not always lead to easy conversations at the customer service desk if one person is told they may receive more than another within earshot.

Does judgement matter or should the rule book not always be the arbiter? Many airport staff will remark that when dealing with passengers who are disabled, bereaved, frequent flyers, or who may have expectations generated by partner airlines, travel agents or corporate accounts, the rule book does not always fit, especially if the espoused mission and values are about treating customers with respect and selling the next ticket.

Setting targets within the integrated world of operations is fraught with danger as meeting one may well disadvantage the system. A major airline had to shampoo its carpets most weeks because purchasing had saved money by buying thinner waste bags which frequently split. Cabin crew constantly struggle to re–seat families on boarding when the terminal staff have assured the passengers this can be done – thus meeting check–in targets and dumping the problem on someone else. So an operations manager has to know the details of the work required, ensure compliance, especially of safety even if punctuality is threatened,and then have the energy to fight for resources, especially those that are required on occasion rather than all the time.

Is operations management important?

Is the management of airline operations of great significance in an economic climate where the financial survival of many airlines, issues of fleet selection, leasing, fuel cost, market access, yield management, product differentiation and the creation of viable alliances currently occupy most executive attention?

The answer is probably ‘yes’. It is not more important but to many airlines it is as important. Although the issues of managing a regular, reliable and punctual performance have not changed much since the advent of the big jets some fifty years ago and indeed have to an extent become much simpler because of automated and integrated systems, four largely external factors now have a growing significance.

These four factors are: the impact of a sustained period of cost—cutting, the growth of ancillary revenues, the importance of global networks, and the socially networked markets in which airlines compete for customers. The first may ease as with economic recovery but it may leave a longer term legacy that constrains the ability of airlines to remount more ambitious schedules. The latter two may well become very significant in increasingly competitive markets. Whatever the interaction, all four factors are combining to render today’s airlines more vulnerable to perceived poor operational performance than before (in turn impacting marketing propositions and the bottom line).

Relentless cost-cuttingOne result of the seemingly endless cost cutting of the last three years has been a reduction in operational management and staff. As a result, in a crisis there is no additional available resource to commit – this has been ruthlessly pruned. There are fewer people and often distorted age and length of service demographics. If training has also been reduced then the front–line competence may be thin, and with no reserves in terms of bodies or skill. At the same time a loss of collective experience as job levels are removed and experienced – and more costly staff out–placed — may result in a greater dependence upon the operating manual when the exercise of judgement and empathy with passengers may be more important.

Increase in ancillary revenuesThe pursuit of ancillary revenues is also starting to impact upon airline passengers and their perception of what is good operational performance. The days of acceptance of long delays at airports when an ‘all–inclusive’ price for a holiday had been paid, or when a company was funding business travel are fast disappearing. If passengers pay more for the carriage of their bag it had better arrive and quickly; if they pay more for a pre–ordered meal or on–board snack it had better be available and edible; if they pay more for preferential boarding and seat allocation it had better take place and produce a preferred seat etc.

The customer at the check–in desk or kiosk is very aware of how much they have paid for a service. Unbundling provides revenue streams but also exposes front–line staff to transactional expectations that were previously opaque. Corporate travellers also have a heightened awareness of the components that make up the value of the service they expect and may have to justify to their own bosses.

The importance of global networksOne attraction of offering global networks is the connections they offer through single or multiple hubs, with seamless service and compatible products. These expectations at airport level provide multiple challenges: from privileged lounge access, baggage allowances, carry–on baggage size, upgrading policies through to language skills and an ability to meet growing requests to respect diversity. As the sophistication of the alliance marketing increases so will the complexity of delivering the promise in physically congested and time–constrained facilities.

It is also likely that operations control of networks will be influenced by the yield profiles on loads on inbound aircraft with a consequent pressure to hold some departing connections – yet maintain operational integrity across the terminal.

This is not new. Major European airlines have protected certain high profile commercial connections for years. What is new is the multiplicity of partners and increasing knowledge of corporate customers. The scale and the visibility of the demands are likely to increase and quite often junior staff are on the front–line.

Significance of social networkingThe chaotic world of social networking continues to develop in unexpected ways. Think of the numbers that football stars, film stars and other celebrities have “following” them virtually and then think of them starting to twitter while delayed at airports; at airports waiting for their bags and hoping they will come and after flights describing their experience. Possibly, they will also soon be twittering on flights. If Stephen Fry can twitter in a slow lift, or a trade union official during negotiations then airline passengers, especially if aggravated, will certainly find the time. The only slightly slower world (before the advent of the iPad and iPhone) of PC- based chat rooms and blogs has long been a source of informed feedback on flights. A troll through recent comments on the larger European LCC sites is very informative as to what matters to some paying customers. More interestingly, what matters seems to align with the comments made by other customers on blogs about the major network airlines, i.e. arriving on time with one’s baggage and not being ‘ripped off’ on price – whether as booked, or through ancillary revenues — matters.

Recent research shows that in this networked world it is another online person who is believed rather than an airline or an official statement. Social networks are probably not a passing phase and the views expressed on Facebook about current airline operations do not always make for pleasant reading.

Demanding leadership

Historically, operational management has not been held in the highest esteem in airlines. Elements of it being regarded as a bit technical, and sometimes physically dirty still remain. A key determinant of reliable, regular and punctual services is the management of the operation. But operational management, if one discounts pilot management, has rarely been prized either in terms of relative salary or as a route to the executive suite. In today’s environment the professional skills of piloting, engineering, finance or the law, or wider commercial experience and skills in marketing or IT tend to be favoured more.

Operational managers tend to love their work, however, and their career choice. Most quote the satisfaction that comes from delivering a high quality product and on occasion rescuing the operation from the problems that extreme weather, technical, infrastructure failure and major geopolitical issues are always liable to cause. They also tend to enjoy leading people, as individuals and as organised in unions. These problems go with the territory and it is often what distinguishes the managers as people who regularly reflect on previous experience and adapt accordingly.

A role, not a profession

Crucially, operational managers need to be generalists. As Professor Richard Barker of Cambridge University’s Judge Business School argues in a recent Harvard Business Review article, management is not a profession pursued like accountancy, the law or medicine, piloting or engineering in the airline world. His argument is that much of our business education no longer equips managers for critical roles. An MBA is a useful qualification but it does not necessarily equip managers for a world in which peer relationships, team working, thoughtfulness, and flexible and adaptive attributes are more important than technical knowledge. This list of competence is from research compiled as to what organisations prize, not what business schools think they should deliver.

Back in the world of airline operations one characteristic of a manager stands out. The manager is responsible for bringing together many inputs and exercising judgement to affect the outcomes. At an operational level the manager, for some brief moments, is responsible for the combined value generated by all the inputs to the company. On her watch the value generated by marketing initiatives and brands are combined with the technical expertise from engineers, pilots, operations control, ground handling, passenger services, catering come together — or not. On her watch the value generated by the inputs from the company are enabled by the value of the inputs from alliance partner airlines, code–sharing partners, service partners, hotels, and transport services come together – or not. On her watch the value generated by the inputs from the company are enabled by the value of the inputs from parallel agencies responsible for airport infrastructure, terminal facilities, security, immigration, and air traffic control are enabled – or not.

The very definition of an operational manager is that she works across functions, influencing and adapting the outputs and approaches of numerous silos to a common purpose: delivering to each and every passenger an operation that is timely, reliable, and to the expected standard. From these trade–offs and recognition of the best course to steer through conflicting demands comes added value on the day, and longer term added value — if the learning from the inevitable problems is translated back into future decisions.

Learning, not blaming

At most airlines the blame allocation meetings about why a flight departure was late are a thing of the past. Trying to pin the blame on whether the aircraft was late out of the hangar, denied a gate when required, or was awaiting crew or cargo, which in turn impacted on whether cleaning, loading and dispatch could take place in time is probably one of the most fruitless pastimes invented by airline managers. Add to this local context concerning access to de–icing when required, stand allocation, security procedures, concourse congestion, or waiting on valuable transfer passengers and the complexities of the blame game are clear.

As Gordon Bethune mused when turning around Continental Airlines; “There are a lot of parallels between what we're doing and an expensive watch. It’s very complex, has a lot of parts and it only has value when it’s predictable and reliable.” A watchmaker exercises judgment to make the entire system balanced and reliable, and is not just assembler of parts.

So in today’s environment discussions on patterns and wave theories tend to yield more value than looking at targets and blame. Only recently has analysis of traffic congestion, especially on major motorways identified the phenomena of waves of build up and congestion. There comes a point at which the system becomes overloaded and resolution comes from de–stressing the system by enhancing small additional capabilities throughout the system, rather than at the point of impact. In airline operations the same skill is deployed in a myriad of tasks throughout a shift to de–stress the system. In the control centre through making minimal changes and accepting an occasional bad delay rather than ending up with too many crew and aircraft in the wrong places, and through careful stewardship of reserves of people and capacity rather than reacting in the moment.

Despite is name and 24 hour role this is not a theatre for histrionics. Both in the control centre and at airports many issues are resolved by listening to the staff at the sharp end and thinking system rather than activity. At airport level there are countless options to stop a wobbling system before it falls over: opening an extra check–in desk, deploying a dispatcher early, sending a loading team to a remote gate in advance of final allocation, requesting additional catering on standby, deploying additional hi–loaders, alerting immigration and security to potential additional peak throughput etc.

The key to good management in both arenas is that the important decisions are taken in advance and in the light of emerging and ambiguous patterns – hence experience and accessing the experience of specialist colleagues is important. This is second nature to the operational manager, it is what makes the job worthwhile, provided they understand the bigger system.

It is possible, however, that one product of the constant cost cutting of the last three years is now impacting upon the capability of airlines to manage the disparate function known as ‘operations’. There are fewer managers, and fewer staff, and amongst these there may be a reduced collective experience of how to avoid disruption, anticipate passenger reactions, and recover airline operations with a minimum of fuss, all in the quickest possible time.

Outside world judges

Brand values are built on emotion and as more people speak of their disappointment instantly and uncontrollably through social networks then the level of emotional reaction intensifies. But the challenge is not unique to LCCs. Maintaining premium pricing demands maintaining premium service, including punctuality.

Recently the bar has been raised on airline punctuality and reliability. Some people, especially travel agents looking after corporate accounts, do look at the government published punctuality reports. Ever since Bob Crandall effectively declared war on Frank Lorenzo’s Continental Airlines by lobbying the US Department of Transport to publish data, punctuality has been a market force.

Ryanair has consistently surprised other European airlines by beating them on regularity, reliability and punctuality and customers are aware of this. There may be other reasons why Ryanair is not an automatic first choice for many customers but punctuality is not usually one of them.

Underneath the hype that surrounds the Continental Airlines turnaround of the 1990s (which was not “new” — it built upon experiences from British Airways in the 1980s, Lufthansa in the early 1990s, and Southwest Airlines amongst others) three messages from that turnaround team to their managerial colleagues stand out.

First, what most people expect from an airline is getting them where they want to go, on time, safely and with their baggage. Second, the only way to deliver such a service is by ensuring all the staff want to provide it. Third, delivering good operations demands recognition of it as an interactive system, not a sum of the parts: exporting the problem down the line to someone else is not acceptable.

The role of the operations manager is to maintain these perspectives and to work continuously on both the inside world of the airline that delivers the outputs required and the outside world of passengers and customers. As UK high street banks have started to put executives back into branches to experience the whole system at point of impact; as supermarkets and retailers insist that executives manage outlets as a necessary experience; perhaps some airlines might benefit in a return to the wisdom of a few years back and ensure that some in the executive suite and those on the way there know what the term ‘operations’ actually entails.