Keynote Presentation: The future of airline operations

Transcript

Jeff:So thanks everyone for being here. As mentioned, I run sales and account management for the software division of CAE. Most people know CAE as the simulators, as pilot training, but a few years ago The business started to dip their toe into the software market, airline operational software, and through both organic and inorganic means, we've gone through a number of changes and growth, and now we're about a year and a half into the stewardship of this business. And what I want to talk about today is what we're seeing in the market, and when we go out and we talk to our customers, what we hear from our customers about airline operations, how they're operating today, and where it's going. So we got together a few months ago to talk about these issues, and the very first one that came up was technology. We are a technology provider, and many of our customers today are still running software that's 25, 30 years old. They're still using Excel. They're still using business processes to compensate for inadequate software. However, what we have seen in the consumer market is many of the technology tools, componentry, such as artificial intelligence, machine learning, natural language processing, predictive analytics— these things are inherent and are embedded in in our consumer devices, and we've gotten comfortable with them. We've gotten comfortable with using them, and our expectations for how we interact with technology has changed. What we are seeing on the operational side at the airline is that this technology now has direct applicability to how airlines run their operations, And it has the potential to really impact that in a big way that we probably won't come back from. These technology components today are considered table stakes. If you're building software, if you're buying software to run operations at your airline, you should be thinking about how you're incorporating these technology components into your operations. And we expect that they will get faster, smarter, better, and probably within the next couple of years, something that we're not even aware of today is going to come along and render them obsolete. The second thing we talked about is the impacts of the pandemic. How has— how have airlines had to adjust based on the way that the pandemic impacted their operations and how they approached recovery? The first one was around the required contraction in flying and what happened as a result of that from a people perspective. We know that there was a lot of early retirements, there were furloughs, there was a lot of loss amongst pilots and flight attendants. One of the things that's not talked about as much is the fact that operational centers lost people too. And the people that they lost have been in their roles for 20 years, 30 years. They've been staring at Gantt charts for a really long time. And they have a lot of expertise, experience, and institutional knowledge that the airlines lost when they lost these people. The way that they are replacing these people now is to hire people right out of university. Who obviously do not have that same level of knowledge, experience, expertise, and they also have a different perspective on how to interact with technology. Their comfort level, their expectations for how to impact with technology is based on their consumer devices. It's not based on a Gantt chart, and so The way that airlines are thinking about the adoption of technology and how that technology interacts with the people is changing. The second thing that happened was coming out of the pandemic, we saw incredible disruption, volatility, change. To give an example, many of our customers are running crew planning software to build pairings and rosters. They do this, it probably takes them a day or a few days, one week, a month. Coming out of the pandemic, we had customers running their optimizers every 2 or 3 days because their schedules were changing so dynamically. And so this environment of change, disruption seems to be pervasive, seems to be consistent, seems like even though we are returning to some sense of normalcy, volumes are up, load factors are up, but we're still facing regular disruptions. And the ability to cope with those disruptions is proving more important than ever. The third thing that we saw was because airlines have been running technology for a very long time, running their operational centers the same way for a very long time, the pandemic provided an opportunity to hit the pause button. And to think, is it time to change? Many of them said, yes, it is time to change, but the budget wasn't there to make that change. It's happening now, with everybody, all at the same time. Typically in a year, we would see anywhere from 10, 15, 20 RFPs for technology. Last year we've responded to over 100. So the demand for change right now is overwhelming, but it also leads us to believe that the way that we are having conversations with our customers about collaborative planning, thinking about how they need to run their operations going forward in a flexible, an adaptive way, it feels like we're, we're on the right track. So what this has led us to believe is that we're in an inflection point. The way airlines have run operations for the last 30 years is not going to be the same way that they're going to run airline operations for the next 30 years. Change is required. Change has been forced on us. And so technology is going to keep changing. It is going to continue to offer newer and better ways to solve the really difficult challenge— challenges that airlines deal with every day. We believe that the dynamism The uncertainty is going to persist, and it's just going to become the new norm. And your airline is going to have to be flexible and adaptive in order to deal with an uncertain environment on a regular basis. And so, as we think about how you make your decision, if you are in fact at the point where you think right now, Is the right time to modernize the way that you run your operations. What is important? The first one is finding the right balance between people and machines. A lot of the talk about artificial intelligence, about automation, can be scary. To some, it means replacing people. If I can do this in an automated way, I don't need as many people. At CAE, that's not how we think about it. We think that there will remain a very important place for people in the future, and that automation technology should be used to augment people, to enable them to make better decisions, faster decisions. More accurate decisions, but ultimately there's still a role for people in the decision-making. Technology now has the ability to help break down silos. One of the big challenges that we constantly hear when we talk with our customers is being able to get the data they need, when they need it, how they need it, and to be able to join it together with data from other functional areas. to solve problems across departments. This is now possible. It's possible to do it in real time. And so I think the last thing that I wanted to share with you is we talk to a lot of airlines. We have a lot of customers around the world, and the messaging that we are getting has been very consistent that this is, this is the time to think about how to bring technology into the operational function in a way that really sets airlines up for the next 10 years, the next 20 years. But what's going to be most important along that journey is remaining continuously open to new learning, to flexibility to adapt. And if you do that, Then I think you will be setting your airline up for success. Thank you.

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