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Data May Be Fueling the Airline Industry’s Renaissance

Francois AjenstatIn this special guest feature, Francois Ajenstat, VP of Product Development at Tableau Software, observes that across industries, data has been touted as the “oil of the 21st century” and airlines are no exception. As vice president of product management, Francois is responsible for product strategy and product planning. He combines customer and partner feedback to set the strategic vision and leads the execution of new features and products. Prior to joining Tableau, Francois worked at Microsoft for 10 years in a number of different groups including SQL Server, Office, and Trustworthy Computing. Prior to joining Microsoft, Francois worked for Cognos Corporation (acquired by IBM) leading strategic alliances with key industry partners such as IBM, HP, and Microsoft.

While the price of oil is dropping, the value of data is rising.

It’s nearly impossible to talk about the airline industry without talking about oil — fuel prices, fuel efficiency and fuel saving are just a few phrases that get tossed around endlessly. This is especially the case considering the recent dramatic drop in the cost of crude oil. During the first quarter of last year, the average price of Gulf Coast jet fuel was $1.63 per gallon. Now, jet fuel prices are averaging around $1.00 per gallon.

But while lower fuel prices are indeed a boon to airlines, there are other factors that also deserve credit for the industry’s recent renaissance. In fact, data has in many ways become the new oil for airline companies in recent years because of its outsized impact on business. While the price of oil is dropping, the value of data is rising.

Airlines have been quite proactive in improving profitability via consolidation, improved efficiencies, new revenue streams and other strategies. United Airlines Chair Glenn Tilton, for example, acknowledged recently that the industry is actually undergoing structural changes, which sometimes involve “challenging the business model itself.” While challenging a business model can mean a lot of things, just about all aspects of the transformation have one thing in common: They rely heavily on data — a four-letter word that’s often called the “oil of the 21st century.”

Aer Lingus, AeroMexico, Copa, Delta, and Lufthansa are just a handful of leading airlines integrating data and analytics heavily into their businesses, often with highly visual and interactive tools. Some are beefing up the bottom line by expanding their top line, while others are focused instead on slicing costs — say, by improving manufacturing efficiencies.

Delta, for instance, is one of the world’s largest global airlines, and it recently began analyzing large amounts of data as part of its global sales initiatives. Indeed, a similar story can be told for China Eastern. And while leveraging data to improve sales isn’t easy, as airlines have a lot of data, new integration and analytics tools make it easier than ever and are delivering tangible revenue increases to airlines.

Irish airline Aer Lingus also relies on analytics for production planning, which involves everything from rostering pilots to planning flight operations to assisting with maintenance engineering. Data helps the company deliver the lowest cost per seat for passengers in order to remain competitive. In fact, digging into data a few years ago revealed a new aspect of engine costs the company wasn’t previously aware of — and that was just one way data had a “very significant difference in terms of … dollars,” according to the airline.

These are just a few quick examples — and they’re just the tip of the iceberg. Data and analytics can impact all departments of a business, and the airline industry is no exception. Copa Airlines, for example, has made data analytics and visualization a part of every aspect of its business. As the company’s Application, Integration and Information Services Director put it: Data is used for “almost all of it: human resources, finance, planning, income, everything related to operational analysis. It started in small areas and later is started growing, growing, growing until it’s almost viral. Everyone wanted it.”

As more airlines reap the rewards that come from combining, mining and applying their mountains of data, the demand for better analytics (and in turn better cost savings, efficiencies, profitability and so on) will only grow. Data is the oil of the 21st century and it’s the fuel of choice for many airlines looking to fly their business to the next level.

 

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