Fuel Expense Isn’t The Crisis-
June 4th, 2008by Michael J. Boyd…. Forbes
Here’s some heresy. The airline industry’s real problems are not fuel-based. Just parking airplanes, reducing capacity and dropping suddenly-unprofitable routes only make a dysfunctional airline system a little smaller. That’s because most carriers have ignored controlling the No. 1 cost metric in the scheduled airline business: minutes.
Yes, minutes. That’s the No. 1 resource and the No. 1 cost driver in every airline operation. They are the baseline airline metric. Cut minutes. Cut costs. It’s that simple. Everything is driven by how airlines use minutes. Maintenance costs. Labor costs. Fuel utilization. Customer service. Revenue. How an airline structures itself to use minutes can be the determinant if it makes money or just produces red ink. High fuel costs have only made this more obvious.
But minute-management is totally ignored in many aspects of the business. Any frequent traveler can see it, if he looks. Some airlines will protest, “We look at all aspects of our operations on an ongoing basis.” Sure they do. About as effectively as Ray Charles directing traffic.
Too often, airlines operate on the basis of just moving airplanes, which is not the business they’re in. They are in the business of moving human passengers from Point A to Point B, often with an intermediate connecting point in between. Airplanes really don’t care when or how they get someplace. Passengers do. And that means a need for total worship of the value of minutes.
Example: How often does a flight arrive late at a hub with a cabin-load of passengers on very short connections, and there’s no additional preparation on the ground to get them and their bags connected?
Example: A flight arrives at the connecting hub 20 minutes late. Yet when it pulls in, it’s another five extra minutes wasted because when the last 747 jumbo jet left, the numskull manager on duty didn’t have the brains to tell the agent to re-position the jet bridge for the smaller 737 that’s next. Minutes wasted. Passengers mis-connected. Money squandered for no reason other than mismanagement. But a lot of airline chiefs are oblivious to it.
There’s the late-arriving “regional jet” with a connecting time to Concourse B suitable only for Olympic sprinters. Yet the ground crew responsible for retrieving “carry-on” from the rear bin moves at the speed of sumo wrestlers. See, a regional jet does not really “arrive” until the last passenger has his “carry-on” roller bag tossed onto the end of the jet way or into the puddle at the bottom of the air stairs. But minutes are not a part of this thought process.
Example: How often does a flight arrive at a gate and sit for three to four minutes until somebody decides to saunter out to direct it in? That three minutes of the 737 sitting out there might be an additional $250 in wasted fuel, crew time and maintenance.
Example: How much effort is applied to getting a late-arriving aircraft off the gate a quickly as possible, to get it closer to being back on schedule? A lot of airline operations are rote and routine. “We get 30 minutes by the book to turn it, so that’s what we’ll do.” That’s fine. But don’t go blaming OPEC for your high costs.
Example: air traffic control (ATC). The incompetently managed air traffic control system inflicts billions in excess costs annually. It starts with the need to factor in more minutes (read: expense) into flight schedules to accommodate the inefficiency of this obsolete system. Even with this, 20% of flights are still arriving “late,” i.e., more than 15 minutes off-schedule.
If it’s just 16 minutes, this costs a bundle of money. Figure in engine reserves, fuel, crew and other maintenance items, and it’s another $400 to $500 in extra costs. Plus the cascading expenses of customer misconnections. Multiply that out for, say, American or United. Big money.
Yet how much outrage has been expressed by the airline industry about ATC? Answer, none. Cocktails and mindless repartee with the FAA administrator at industry social functions seem to take priority to the minutes wasted and the losses the system inflicts on a carrier’s shareholders, employees and customers.
Bottom line: Fuel isn’t the solution. It’s managing minutes. Airlines use fuel to move airplanes, and moving airplanes is what makes money. Slowing flights down to save fuel isn’t a universal answer either. That only keeps them in the sky longer, increasing other time-delineated costs, such as maintenance and crew time.
The point is that airlines cannot survive on saving fuel. Just on saving minutes.
Michael J. Boyd is president of the Boyd Group, an aviation consulting, research and forecasting firm based in Evergreen, Colo.