Case Study: Managing the Perfect Storm: The right software for airlines to handle disruptions

Transcript

Lori Ranson:So, um, this is a very timely topic to talk about, um, operational disruptions and how it can ripple through the industry. Um, and, uh, some of the causes of this is that airlines still rely on outdated IT systems. That are prone to failure and pretty much just prolong recovery times. So what are some of the main factors preventing airlines from effectively managing these disruptions within that sort of IT infrastructure? Sure.

Michael Clarke:Thanks for having me here. As you've mentioned, many airlines around the world still rely on very outdated IT solutions that don't have the necessary integration capabilities that provide them access to real-time data to make informed decisions. And airlines that do have the data, they don't take full advantage of the data, and they still make uninformed decisions that, you know, may resolve an issue today but cause downtime— downline impacts in the future, which they're not really aware of because of the lack of visibility to the impact.

Lori Ranson:Um, you and I were having an interesting conversation yesterday Because, you know, we think of staffing problems with mechanics or pilots or flight attendants, you know, new hires coming in.

Michael Clarke:Yeah.

Lori Ranson:But that can also affect operations control centers as well.

Michael Clarke:Most definitely, because within the operations control center, typically an average person has over 20 years experience, and it's usually fed through frontline employees who may have started at a gate as a gate agent or on the ramp or as a flight attendant. And as they've evolved in life and they no longer want to work in more strenuous situations, physically at least, they end up in the ops control center. And, you know, in the aftermath of the pandemic, there were a lot of early retirements across the board. And within the ops control center, there isn't really a feeder resource pool of people coming in because there's a high turnover in the front line. So there isn't really people that are being able to have that necessary experience to work in operations control center. Because most of the decisions in an airline's operation control center is based on experience and knowledge and with very little reliance on, you know, advanced IT solutions.

Lori Ranson:So what do you think airlines need to do do better to handle these disruptions?

Michael Clarke:Well, I think first and foremost, they need to take better advantage of data in terms of the data they have at their disposal. They have to embrace new solutions and new IT solutions that will enable them to be able to make much more complex decisions that incorporate the impact of their decisions, not just to solve a problem today, but to ensure that it doesn't cause a problem down the line. I mean, in the last month alone, one of the largest airlines in the world that has always, you know, positioned themselves as a very IT-savvy airline, we all saw what happened to them. And, you know, we can say the same of the top 5 airlines over the last 5 years. So this is not a problem that impacts an airline based on their size. It's just a matter of business processes, workflows, and having the right IT solutions in place to make better decisions.

Lori Ranson:Um, what are some of CAE's offerings in that regard?

Michael Clarke:So CAE, for some of the folks in the room may be aware of CAE as a company that we provide full flight simulators to help train your pilots, but we also provide IT solutions to help airlines make more effective decisions in airport management, crew tracking and management, flight planning, ops control, in-flight catering, how many meals to put on board an aircraft. In order to reduce our carbon footprint. And we also have very robust decision support solutions that were specifically designed for disruption management that seamlessly integrates into these systems across our platform to help make better decisions. So we offer a wide selection of products that help airlines make better decisions, and we work with airlines all around the world of all shapes and sizes, uh, low-cost carriers, ultra-low-cost carriers, Full flagship carriers, airlines of 1,000 aircraft, airlines of 10 aircraft, they all have the same need to be able to make better decisions.

Lori Ranson:But you can tailor the solution?

Michael Clarke:Solution is fully adaptable and tailorable to support different business models, different operations, and different fleet sizes. Because the key thing here is that an airline is reliant on limited resources in terms of their crew members, and their aircraft. And if you make bad decisions, you have poor utilization of your resources, which ultimately will cause you to have, you know, less desirable operational efficiencies.

Lori Ranson:It's interesting because airlines will tout their investments in IT.

Michael Clarke:Yeah.

Lori Ranson:But there seems to be a disconnect here when these things, when these big events happen.

Michael Clarke:I think, Airlines do invest in IT, but it's easier for an airline executive to get approval for an IT investment that will increase revenue.

Lori Ranson:Yeah.

Michael Clarke:Getting an investment to put into operational solutions is always challenging because, you know, it's typically a blue sky day and everybody thinks everything's perfect. It's only when it goes really south and it's like, why didn't we buy or why didn't we get? And then things settle down. And then, you know, it just repeats itself over and over again.

Lori Ranson:Do you think it's easier for younger airlines that don't have legacy systems to adopt kind of these new products that are available?

Michael Clarke:Most definitely. 'Cause one of the areas that we see working at airlines around the world is that some of the established carriers have very defined operational divisions, and each division has their own solution. And for a younger airline that embraces a more— a much more integrated perspective of decision-making, and just out of necessity, they have someone that's not a jack of all trades but a person that has multiple roles. So they want to have a solution that is integrated, that enables them to make aggregated decisions that are more even— that are better for the airline's operations. Definitely, a new startup airline or a younger airline will have that perspective, but one of the challenges that we have seen over the years is that once an airline grows up and they start bringing in seasoned veterans from other airlines, those seasoned veterans bring with them the same challenges that they didn't have at the onset.

Lori Ranson:Can you tell us some of the other ideas that CAE is pursuing just to better position airlines to manage?

Michael Clarke:Sure. So as I mentioned, we see tremendous opportunity to leverage data, and airlines typically rely on their ops control system to bring situational awareness of what decisions should I make today based on problem alerting. But they sit on a mountain of data that the only thing they worry about is how big is the database and when do I need to purge it. But, you know, there's seasonality, there's operational patterns that happen in an airline's operation that can be leveraged to help make better decisions, to help predict what the future operations may be, and also provide feedback to our very aggressive scheduling department that may decide that certain things that can be done that have never been able to be done, and you can have proof in the data to say, You cannot schedule this type of operation because we'll never be able to operate to, to realize that operation. So leveraging data is one of the things that we see as tremendous opportunity for the airline industry. And, you know, through the use of emerging technologies, um, through machine learning, through large language modeling, we see opportunities to actually help make or predict better decisions. But we also see it as an opportunity to understand how decisions are being made, going back to resource limitations, that some of the decisions can be recommended based on how the airline operates or wants to operate. Because when we visit airlines, we can tell who made the decision because the aftermath of that decision is very evident in how the airline operates after the decision has been made. So some of our customers are saying we want to have consistency and repeatability, that we don't want to know that Mary worked last night or Tim did that decision this morning based on what happened in the afternoon. And many airlines have that situation.

Lori Ranson:And it would seem that they would want to harness data, especially now with weather events and weather events happening much more frequently and causing disruptions.

Michael Clarke:Yes, most definitely. And the other area that we see, you know, it's kind of a little bit outside of our wheel well, but we still see tremendous opportunities there is that it's not just a matter of being able to say, here is the decision, but if you design your schedule in a different way, it reduces the likelihood of it falling apart that quickly as it does. And, you know, another dimension that we haven't really touched on, which actually was the primary issue a month ago, was communication. It's all about— it's all well and good that you have data, you make better decisions, But you need to be able to communicate it to the crew members. You need to be able to know where a crew member is, are they legal, and do they have the necessary information to tell instead of going to the airport at 9:00 AM, go to the airport at 11:00 AM, because that extra 2 hours of duty time is going to be really beneficial in the afternoon when you want them to operate a flight later in the day. And what has happened in many cases that airlines have literally lost track of their crew members.

Lori Ranson:Yeah.

Michael Clarke:And they don't have the necessary tools in place to bidirectionally communicate with them. And that's also a very important dimension in disruption management.

Lori Ranson:Yeah, that's, that's a very good point. Um, I, I think there have been 2 high-profile, uh, cases in that regard where, yeah, the, the flight crew was just completely lost. So, um, and I, I, I think that probably has upped demand for your products. Definitely.

Michael Clarke:Definitely. And, and the sad thing about it is I was in, uh, New York City on Valentine's Day a few years ago. For an airline based in New York, that Valentine's Day was not so nice, and that was their fundamental problem. And 15 years later, it's still the same problem. So, unfortunately.

Lori Ranson:Do you think it's a situation where this happens and then it dies down and—

Michael Clarke:Yeah, definitely a situation where it happens, it dies down, and there may be some commitment and changes. And, you know, what has happened for the 2 airlines based in Dallas is that they've made a commitment to make changes. 'Cause they, you know, they had their own black eyes a few years ago and they have made changes, but I wouldn't say that they've made enough because they're still deciding, do we really need to invest that money? Do we really need to change? And it's not just a matter of investing in the actual IT solution, but it's the business process change and the pièce de résistance that comes with trying to do things the new and better way.

Lori Ranson:Kind of moving along from that, just from your product perspective, how is Flight Solutions preparing for the future?

Michael Clarke:So beyond looking at leveraging the value of data, we also see tremendous opportunities for airlines to embrace autonomous and automated decision-making. And, and where we're looking at that is in the perspective of, you know, there are a lot of airlines that have ordered a lot of aircraft, and if you can't find enough people to manage the aircraft you have today, how are you going to manage a fleet That's 3 times the size of what you have today. And we're also very bullish on the eVTOL market. And some of our existing customers that use our solutions to manage traditional commercial aircraft have ordered 200 Archer aircraft or 200 Eve aircraft or whatever, or Lilium aircraft that we're like, okay, how are you going to manage those vehicles? In conjunction with your traditional aircraft? And is there an opportunity to have a multimodal platform that allows you to manage a vehicle regardless of what it is? Is it an A320, an A350, a Lilium aircraft, an Archer aircraft, or a Joby aircraft? We don't care. They all have movements we have to track. And if your reliance is on having the connectivity of the passengers from those vehicles onto your flights. It would be akin to just an extension of how an airline tracks their regional or alliance partners today. So with that in mind, the volume of flights and the volume of movements will increase. The number of vehicles that have to be tracked have to be increased. So there has to be an opportunity to be able to make some logical decisions. We've had an opportunity to work with some train, train operators and They're like, okay, Michael, if a train is running late— I won't say which air— which stations, okay, you know which train operator it is— but they're like, if the train is running late and there's only one track, the next segment has to be delayed. So why do I need someone to delay that flight? Just delay it automatically. And then working at some of our ultra-low-cost carriers, it's the same thing. If an inbound ASM message or movement message comes in, that is going to lead to a disrupt— lead to a knock-on delay, automatically delay that flight. So that's like basics, but we want to get to a point where based on us learning how decisions are being made, based on us presenting here are 5 solutions and everybody always picks option 3, we start only showing option 3 or reducing the amount of options to the point that we know that for certain types of disruptions we can automatically recover From the disruption, so reactively, or proactively make modifications to the schedule before the operation so that the likelihood of a disruption to happen reduces to almost nonexistent. Nothing's perfect, but it can significantly reduce the potential for disruption to happen. Today, folks just wait for the tidal wave to come and then to figure out what to do. We're like, we have enough data to tell you what will happen And make a recommendation without compromising your realized operational profitability. Because airlines will try to make decisions based on what is anticipated in terms of their productivity and profitability, but we can predict what it is. I mean, in the scheduling department, they're like, we want to run these flights. And at the end of the month, you know, you had 30% cancellation. Why not change the way you design that schedule so that you have a higher level of profitability?

Lori Ranson:Yeah.

Michael Clarke:of completion in their operations. These are the things that we're looking at.

Lori Ranson:Because, I mean, and scheduling departments sometimes want to push it to the limit, but actually—

Michael Clarke:It never happens. It never gets realized. But they're measured based on how much do I use an aircraft in terms of aircraft productivity. But if you're not in a position to realize that anticipated utilization, who is benefiting from that? You know, process.

Lori Ranson:How can airlines find out more and work more closely with—

Michael Clarke:Sure. So my colleague and I, Walter DeLuca and I, are here today. Walter's sitting over here. And then we're, you know, you can access our information from our website, CAE.com. It's a little bit of a journey to find the Flight Solutions Division because we're a small part of the operations, but an important part of the operations. But I'd recommend going to CAE.com or just reaching out to us. Our contact information should be in the delegation delegate listings.

Lori Ranson:And do you see a lot of interest from airlines just in general after the disruptions really wanting—

Michael Clarke:Oh yeah. I mean, airlines, and it goes in waves. So, you know, airlines will definitely get excited when they're, when they're called to task. about, you know, why aren't we prepared to manage your operations? But it's a relatively new area of capability in the sense of, you know, we work with over 100 airlines around the world, and of that number, only about 15 to 20% have disruption management capabilities, automated disruption management capabilities.

Lori Ranson:Okay.

Michael Clarke:But we see tremendous opportunity, and we're, you know, we're talking to a lot of airlines around the world. I've spent a lot of years working in this area, but, you know, I was motivated to work in this area based on, you know, my spring break experience and me realizing that there wasn't the technology available in the ops control center to help make better decisions. Because everybody's familiar with the fleet planning process and revenue management, Some, you know, I'd say to airlines, you spend so much energy and money to create the perfect plan and you have nothing to help execute it. So what is the situation? So there's definitely a growing interest. And, you know, when we receive a request for information or a proposal from an airline today, there is always a section on disruption management that wasn't there 20 years ago. But today it's like an integral part of the, of the request. So where there's definitely a renewed interest in disruption management, but as you said, it's usually amplified when, you know, when, when, when someone— you make front page of a newspaper or, you know, many newspapers, people start paying attention. But, you know, there's an opportunity for airlines to keep themselves out of the front page on this topic.

Lori Ranson:So what was your spring break experience?

Michael Clarke:So I was going to school in Boston. And I was trying to get to South Florida, I believe, and I was connecting on an airline based in Newark at the time. And it was just, I almost spent my entire spring break in Newark trying to get to Boston. So I'm like, you guys, how are you making these decisions? What's going on? They're like, oh, we're trying to figure it out, you know, literally manually, or, you know, but yeah. So that really motivated me, and that was like the nucleus of my dissertation. Here I am years later still talking about that topic.

Lori Ranson:Well, so it turned out actually to put you on a positive path.

Michael Clarke:Oh, most definitely. It's been a fun journey, and we're finally seeing the realities of it being actively used around the world. And it's not just with CAE. There are a lot of, you know, colleagues, competitive colleagues, I guess the best way to put it, that have solutions. And, you know, our main interest is being able to help airlines make better decisions. decisions and fully leverage your resources to maximize your productivity and profitability. You know, some airlines may not care about profitability, but you still need to care about productivity. So, you know, we help, you know, achieve those 2 goals.

Lori Ranson:Okay, great. Thank you so much. Thank you so much.

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