ARTICLE: How to run a profitable airline
The motto on the above Alaska Air plane says “We’re all pulling together” and it reflects the leadership approach to this small, but profitable airline. The Smart Planet article, which relies on research done by the New York Times article, supports that thesis, but also points to the carrier’s willingness to innovate and its management obsession with data.
The airline operates in some of the most challenging terrain and meteorological conditions. Senior management bought into the new technology and invested in the equipment needed to provide more precise navigation. That increased scheduled reliability and brought with that a steadier stream of earnings in the notoriously irregular weather of Alaska. With the risk taking strategy, the airline attained an 87% on time performance.
Data is a common tool to guide all forms of management, but Alaska took the discipline to another level. Its attention to relevant detail is demonstrated by the following Times quote:
“The airline has established 50,000 points of data to improve its on-time performance, from the time bags are loaded and passengers board to when the pilot pushes back from the gate. It also figured out that if it could shave just a minute of taxi time from each flight, it could save 500 minutes, or over eight hours, a day — the equivalent of flying an extra plane daily, said Ben Minicucci, the chief operating officer. If such small efforts allowed the carrier to free up a plane, it could generate $25 million to $30 million in revenue a year.”
That’s impressive introspection which leads to enhanced fleet utilization and thus improved margins.
Not surprisingly, the same astute executives apply the dual initiatives of innovation and data discipline in Alaska’s safety regime. There the state-of-the-art technique is called Safety Management Systems and the carrier is already doing it. As expressed in its Annual Report:
“Implement an integrated Safety Management System (SMS) for Alaska Airlines and Horizon Air and reduce Risk Level 3+ events, which represent elevated risk to the operation, such as significant aircraft/asset damage, injuries to employees and customers or a significant reduction in safety.
Air Group is moving to SMS to build upon the many systems already in place to provide better and more efficient oversight that is integrated across all aspects of the organization and to ensure safety risks are managed to acceptable levels. Alaska is at the second of four levels of implementation; Horizon is at the first level. Page 52.
Full implementation of SMS framework to establish interim target of reducing risk and be completed by year-end 2015 and reduce Risk Level 3+ events to 5.5 events per 0,000 departures (on our way toward Zero events).”
That statement embodies the spirit of SMS and assures that the safety benefits will be realized in the near future. More importantly, the discipline of this data-based analysis drives the company to an ever-escalating level of safe operations. The time and effort required to establish an effective SMS program involves everyone from senior executives to line personnel. It is difficult to navigate the implementation with only internal resources; a carrier seeking to emulate Alaska’s success might consider involving knowledgeable, outside consultants with experience implementing this initiative with other carriers, especially the automation of the relevant data.Share this article: