Post on 07-Apr-2018
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Ramakrishna KrovvidiAGIFORS May 2005
Airline Benchmarking
Performance Improvement
By
Ramakrishna Krovvidi
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Ramakrishna KrovvidiAGIFORS May 2005
Presentation Structure
1. Benchmarking: A refresher
2. Case study
3. Challenges, paradigms, and benefits
4. Benchmarking scope in airlines
5. Role of international institutes
6. Beyond benchmarking
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Benchmarking
A Refresher
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Load carried per employee: RTK/Emp
300
400
500
600
700
Year 1 year 2 year 3 Last Year This year
Annual trend
RTK/Emp('000)
Why should we benchmark?
The purpose is to promote EXCELLENCE, generate new levels ofperformance, and new standards in the organisation
Competitor620
IndustryLEADER
650
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Who should we benchmark with?
Internal benchmarking
internal benchmarking is likely to meet with less resistance from managers
Benchmarking with competitors (international benchmarking)
those competitors who are performing better than us
Best in the Industry
with Industry leaders who achieved the best performance
Cross Industry
some measures could be compared with best performance of any industry
e. g. Finance, HR measures
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Benchmarking
Case Study
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Case Study of Airline XX
Airline XX is selected for demonstrating the concepts
Airline XX is IATA registered growing airline
Airline XX is making profits year after year
Sample data for 5 years
Airline A, Airline B, Airline C, Airline Y and Airline Zare close competitors with Airline XX
Analysis of Airline XX performance using
Internal benchmarking
International benchmarking
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Internal Benchmarking
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Airine XX: Capacity & Load carried per employee
610 640
730
460500
540
820
420
0
100
200300
400
500
600
700
800
900
Year 01 Year 02 Year 03 Year 04
millions
Capacity/Emp (ATKM) Load/Emp (RTKM)
Right MeasuresInternal Benchmarking?
The measures indicate a positive trend
But is it true the airlines manpower productivity is improving?
Let us analyse with a different metrics...
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Airine XX: % improvement over 4 years
120
105
3022
0
20
40
60
80
100120
140
ATK RTK
percentage
overal growth in 4 years growth per employee
The measures indicate altogether a different trend
Is the airline able to leverage economies of scale successfully?
Selecting appropriate measures and intelligentinterpretation/modelling is vital in building effective ManagementDecision Support Tool
Right MeasuresInternal Benchmarking?
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Benchmarking with Competitors
International Benchmarking
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Manpower productivity: Airline XX Trend
Year 5
Year 4
Year 3
Year 2
Year 1
Is airline productivity improving?
Let us compare the recent performance with close competitors and analyse
Manpower per Aircraft
248
240
250
245
245
300
350
400
450
500
550
600
500
550
600
650
700
750
800
850
900
950
10
00
Capacity per employee ('000 ATKM)
Loadcarriedperemployee('000
RTKM)
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Manpower per aircraft : Year 5
180
160
245
340
200 175
100
200
300
400
500
600
700
800
900
1000
20
0
30
0
40
0
50
0
60
0
70
0
80
0
90
0
100
0
110
0
120
0
130
0
140
0
Capacity per employee ('000 ATKM)
Loadcarriedperemployee('000RTKM)
International Benchmarking
Cluster 02
Cluster 01
Cluster 01 Cluster 02
% Narrow-body fleet @ 35-50% ZERO
% domestic capacity @ 3-8% ZERO
Capacity per employee ('000) = 700
Load carried per employee ('000) 400
Airline Business Model
Almost all
services
inculded
Excludes
certain
services
(e.g.
Catering)
Avg. distance flown per Pax (Km) 3000
Capacity per aircraft (million ATKs) >= 150
Avg. aircraft utilisation (hrs) = 11
AirlineXX
Is the Airline XX productivity better than competitors?
Is there an opportunity for the Airline XX to revisit its Business Model?
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Benchmarking
Challenges
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Benchmarking Challenges
Business Model variations
Differences in annual periods
Accounting methodologies and data reporting
Environment impact
Identifying right measures
Balancing lag and lead indicators
appropriate analytical tools and techniques
Management commitment & Leadership
Employee engagement and motivation
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Benchmarking
Myths & Paradigms
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Benchmarking
Benefits
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What are the benefits?
Effective wake-up-call
Identifying performance gaps
Awareness about performance
Learning from others experiences
Willingness to share information and solutions Innovate and generate new ways of doing things
Encourage individual and organisational learning
Adopting best practices
Many more.
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Benchmarking
Scope in Airlines
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Airline Scope
Financial Measures
Yield, Unit Cost, break even load factor, Value add and profitability
Operational measures
Load factor, seat factor, fuel consumption, crew productivity.
Qualitative and Customer Measures
On Time Performance, denied boarding, mis-handled bags, customer complaints,customer satisfaction.
People Measures
Average pay, Attrition, T&D investment, value add per employee
Process Measures
Recruitment lead time, annual accounts closing lead time,Service delivery GAP analysis models
Benchmarking has become a management tool that is being applied almost anywhere..
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Benchmarking
Role of International Institutes
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Role of International Institutions
There is role for everyone
Airline Management: Institutionalising the benchmarking process
and leadership
All of us: Promoting and changing mindset and paradigms
AGIFORS: working group
IATA, ICAO, FAA: standardise & regulate information needs
Research Institutes: R&D
Vendors: developing appropriate tools
Airline consortiums: Partnering in sharing information and
extending expertise
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Beyond Benchmarking..
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Beyond Benchmarking
Benchmarking is a process and not an end in itself
Management through Key Performance Indicators
Balanced Score Card
Continuous improvement as the way of life
Reengineering Six Sigma
Embrace new systems and technology
Invest in new capabilities and facilities
Above all..Engage Employees
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Questions?Contact:
ramakrishna@emirates.com