PROBLEM

In the not so distant past, flight schedules had to be planned months in advance. These schedules then had to be coordinated and literally sent to the printers. Some time later they were finally distributed to travel agencies, ticket counters, and even placed inside the aircraft.

Today, flight schedules are still planned months in advance. Marketing and planning departments must make their best guess based on historical data and statistics to create a schedule. The aircraft type is then assigned and seats are released for sale using yield maximizing software (now with fewer fare buckets). When the flight finally leaves, maybe they have the right equipment (plane) for the load, or maybe something else would have been more efficient for that market.

SOLUTION

The continuing schedule initiative uses computer software to continually evaluate which equipment to place on which route to maximize load factors and fares (yield). (Please keep in mind that Alaska is heading toward a common fleet of 737 aircraft – approximately 120, 150, and 176 seats. The one aircraft concept is very important as a cost savings measure that makes Dynamic Efficiency more effective. All 737s are ideal, but the concept will work with the MD-80 although not as efficiently because of its 3 & 2 seating.)

Under the Continuing Schedule Initiative, approximately 90% of Alaska’s schedule would be released for sale much as it is now, using the same time line and methods, only all aircraft seating offered for sale would look like a 737-700 in the computer, the smallest in the fleet. Ten percent of the capacity would be withheld. The schedule will then be constantly evaluated by a computer that is programmed with Alaska’s system’s parameters (gate availability, aircraft route capabilities, employee availability, etc.). The computer will look at how loads and fares are developing and will opportunistically upgrade to the next size aircraft, placing more seats on the highest yielding routes.

At the same time, it will release some of the withheld (10%) capacity for sale on the highest yielding markets within the constraints of Alaska’s system (gates, slots, etc.). This evaluation process takes place on a daily basis and the remaining capacity is added even later in the process (say 20 to 25 days out) to better match Alaska’s capacity to their heaviest demand. As a hypothetical example: Who could foretell, when the schedule was created a year ago, that the Dallas Mavericks would win in the playoffs and that there would be a spike in demand in the Dallas area? By remaining flexible and using computer technology to spot increased demand late in the time frame, capacity is better matched to real world demand.

Assigned seating is important to Alaska’s customers. To keep assigned seats when an aircraft type is made larger, I’ve developed a patent pending procedure that allows passengers to remain with their previously assigned seats. They will not notice that an aircraft variant change had been made.

Assigning flight crews to flights added late in the process requires a change of procedures. This could be accomplished by increasing the number of crews on reserve. The ideal solution would be a computer scheduling/bidding system that can adjust with this system. This would necessitate getting union contract language to accommodate it, and, because of the benefits, should be a very high priority. I believe that in a cooperative team building environment, Alaska’s union employees would jump at the chance to be a part of an innovative winning team. However, this could be implemented regardless of union cooperation simply by increasing the ratio of crews who are on reserve.

BENEFITS

Increased load factors and higher yields: It is reasonable that overall yields could be increased in the neighborhood of 2 to 5%. How much would that be? For 2005, operating revenues at Alaska were approximately $2.4 billion. That puts the benefit in the range of $48 to $120 million per year.

RISKS/RETURN ON INVESTMENT

New computer software will take a while to develop and will be expensive to integrate into existing sales and computer networks. The trend is for customers to buy tickets closer to their departure date, making this flexible system more attractive as pockets of excess supply will not be as common, removing the incentive to wait for lower prices. Experimentation via trial and error to maximize the benefits will take some time. This process should be transparent to the customer except that new flights will be added late in the scheduling process. Constrained routes and routes with little frequency would not work as well as high frequency routes between large unconstrained cities. Developing the software and integrating it with existing systems will require a sizable investment. However, payback of this investment would be very fast by anyone’s standards, in the range of three to six months.

Current Row Numbering 737

Learn More: Minute Maker Initiative™ »

NOTE: U.S. and International Patents Pending. These business models, their software and its interaction with various hardware components, as well as their inter-relationships with other patent pending business models are protected by U.S. and International Law, and are the property of Wingman Consulting, Inc.

“We must use time as a tool, not as a crutch.”
John F. Kennedy (1917 - 1963)

PROBLEM

Most managers and employees do not recognize the value of an aircraft minute and are not motivated to save them. Airline costs are presented in non-intuitive CASM (Cost per Available Seat Mile) form that means little to the people who can make a difference.

The cost of an aircraft minute is easy to understand. For example, in the year 2005, it cost Southwest Airlines (SWA) $61.42 for each minute they operated one of their aircraft. It cost Alaska Airlines $93.28 per minute ($5,596 per hour), or 51% more, to operate theirs (in 2003, Alaska’s cost per minute was “only” 41% higher). These costs include the entire cost to produce that flying – both fixed and variable. When they do more flying with the same number of aircraft, all those fixed costs are spread over a larger base resulting in lower overall costs. With this knowledge, managers and employees can make valid decisions.

Current contract language pays pilots and others by the minute. This works as a disincentive as pilots are paid more on flights experiencing delays. Other contract language also fails to motivate employees to save aircraft minutes.

SOLUTION

Make unproductive aircraft minutes productive. Use technology and streamlined procedures to shorten flight, ground, and turn times. Alaska’s flight schedule will then be adjusted to accommodate more flying throughout the day, generating more revenue with the same number of aircraft. This is the same concept used by TANGO (see Chapter 4). A few of the many ideas to accomplish this are:

1. Use technology across all work groups directly responsible for making an aircraft move. (Accountants have a tough time justifying this one. That is because they don’t know the value of a minute and don’t know how the use of technology can save minutes.) Here’s how it works:
   
   Departures: The ramp lead has a handheld wireless device. When cargo doors are closed, he or she keys in the amount of cargo in each loading station. This information is wirelessly fed into a central computer. The gate agent closes the aircraft cabin door. That person enters the number of passengers in first class and in coach into their handheld wireless device that is assigned to each gate. This passenger count is transmitted to the same central computer. The central computer then calculates weight and balance information and sends it wirelessly to the electronic flight bags that each pilot possesses. The pilot’s electronic flight bag (which also contains all their publications) verifies the weight and balance information and performs its own independent calculations for takeoff and landing. Meanwhile, the central computer has also sent the same data via ACARS (Aircraft Communications And Reporting System) directly to the plane’s computer which independently also calculates its own takeoff and landing data. Before the aircraft pushes, all numbers and pilot briefings are complete so that both pilots can concentrate on engine start and taxi in an expedited but safer fashion.
   
   Arrivals: When the aircraft touches down, ACARS sends the central computer an “on the ground” arrival time. The central computer then pages the wireless device assigned to the arrival gate for that flight. The agent, with the device on their hip, feels it vibrate and hears it chime. They then immediately head down the jetway to meet the arriving flight. The ramp lead’s handheld wireless device also notifies them of the aircraft’s arrival. They gather their crew and head to the gate. Prior to the aircraft arriving, the ramp lead marshals the gate agent who is driving the jetway to position the gate’s wheels on a pre-set spot on the ground. The agent also adjusts the gate’s height for the type of aircraft inbound. They both know the aircraft type because their wireless devices told them the type. The aircraft pulls into its spot and the agent immediately moves the gate two feet forward, lowers the canopy and opens the door. Each and every time, the same way at all stations.
   
   Think about it… When the UPS or FedEx delivery person knocks on your door to deliver your package, what are you signing? You’re signing an electronic tablet that informs the central computer that the package has been delivered. Anyone can check on the status of their package anytime, instantly, online. You log onto their web site and can see that the package you ordered was placed on the truck at 5:28 this morning for delivery to your door. They’ve been using this technology for years now. Where is it in the airline industry? It’s missing in action, that’s where.
   
   Can the expense of this technology be justified? You bet it can. Try this… If you save one minute on each of 500 flights per day, that’s 500 minutes of flying that can be producing revenue doing something else. That many minutes divided by 60 equals 8 hours, 33 minutes of flying per day. That is almost the value of one entire aircraft, or $47,000 of revenue per day, $17 million per year (when you save minutes throughout the fleet of aircraft, they are made productive by reshuffling the entire fleet’s schedule to use them). That will buy a lot of handheld wireless devices and one minute per flight isn’t even the tip of the iceberg. If you work for an airline that you think is incorporating some of this technology now, listen closely to how they use it. I’ll bet it’s not being used as I just described. The focus must be saving aircraft minutes.
   
   
2. Change the way that pilots are paid. The goal is not to take away pay, but to remove the incentive to arrive late. When you are paid by the minute you don’t care if you’re late. This could be accomplished in a number of ways; one would be simply to remove the first, say, 15 minutes of time over scheduled block times; another might be to adopt SWA’s trip pay formula that pays pilots in “trips” instead of hours. It doesn’t matter; it’s not about the pay because the pay is a drop in the bucket; what matters is to remove disincentives. For those who think this may create an ‘unsafe’ environment, I simply challenge you to compare Southwest’s safety record with any other.
   
   
3. Fly appropriate speeds for the situation. Today Alaska’s speed guidance is very general and is the same under most circumstances. This initiative would give flight crews the knowledge to make informed decisions. What is the cost of a minute? What is the cost of 100 lbs. of fuel (pilots measure fuel in pounds, not gallons). What are the circumstances when it would pay to fly fast, or to fly slowly? If the gate is not available in Orange County, should we slow down to take longer in flight or fly normally, get there and park on the ramp with one engine shut down? These are all decisions that pilots can only make their own guess to. Some make adjustments, but others don’t worry about such things. Why should they? As the pilot saying goes, “We get paid by the minute and baby needs a new pair of shoes!” Again, for safety, no procedural changes should be made below 10,000 feet, and a stabilized approach must be established no later than 1000 feet above the ground.
   
   
4. Every work group should use team building to teach and discuss procedures to enhance time savings. For pilots, this would be sharing ideas for smoothness, fuel savings, automation usage, and many other techniques, such as promoting efficiency on the fight deck.
   
   
5. For maintenance personnel, evaluate the cost/benefit of “tomorrow’s maintenance done today.” Don’t take wear to its limits; change life limited parts early to prevent schedule interruptions and enhance safety. Re-evaluate service check locations (more locations) and break service increments into smaller pieces, if possible, to put fewer constraints on the Soft/Hard Schedule concept (explained next chapter). Accomplish more maintenance at night; perform routine daily checks not only at hubs, but also at outlying stations. These maintenance initiatives may cost a little more, but aircraft utilization is the driver, not maintenance, as overall cost savings of more utilization will far outweigh the modest increase in maintenance costs.

Provide realistic time saving goals to educate, motivate, inform, and empower:

• Set realistic time saving goals: A team can only win when it knows what game it’s playing. Saving aircraft time is the game that can bring Alaska’s managers and employees together to function as a team.
  
  
• Educate: Alaska has a great service culture, build on it. Business efficiency could easily be added to that culture. Sharing knowledge, discussing it during training, taking feedback from lower levels on ways to be more efficient, flight crews sharing their knowledge with each other, are examples of enhancing education. Many more ideas can be found by consulting with those who work daily in each field. Simply knowing the cost of an aircraft minute will lead to solid decision making.
  
  
• Motivate: Ask any pilot how they get paid… “By the minute,” is how they will answer. This works against saving minutes. But to a Customer Service or Ramp Agent, how hard would they work if she or he is given a monetary incentive based on saving time? This could easily be tracked when their respective door (aircraft entry or baggage) is closed.
  
  Rampers, Customer Service Agents (CSAs), baggage handlers, flight attendants should all have incentive programs focused on saving aircraft time and improving customer service. The payoff is huge when those minutes are captured and utilized. Some possible incentive ideas: Motivate CSA’s with $1 for each minute prior to scheduled departure that the front door is closed (with all passengers aboard). Inbound idea: Ever ask a CSA why they often aren’t quick to meet an aircraft upon arrival? They’ll let you know that deplaning passengers ask questions and take more of their limited time – why rush when there is little incentive (their turn time doesn’t start until the door is opened). Sometimes they simply don’t know the plane is there. Again, a handheld wireless device could notify them automatically.
  
  
• Inform: Armed with accurate information, employees will make good decisions. Flight paperwork, for example, should contain the following information for the flight crews: Where the flight came from and inbound load, outbound load, planned ground time at the next station for the aircraft, next destination of the aircraft, average block time for that flight (this week, month, year), average taxi times out and in for each runway in use, what time the arrival gate is expected to be available, latest information on cost of fuel/100 lbs., cost of aircraft minute, and many other variables that are simply unknown to most employees. Why should a pilot know these things? So they may make informed decisions… “Should I speed up to save time, or should I slow down to save fuel if the aircraft remains overnight?” Each work group should be armed with the information they need to make little decisions that could save aircraft time or fuel and thus money.
  
  
• Empower: Once they have the knowledge, they must be included in the decision making process. Does flying fast make sense when the gate won’t be available? Since the gate won’t be available, does it cost less to fly slowly, or to get to the destination and sit on the ground with only one engine running? Victory for Alaska’s team rests with their employees’ performance. Alaska has hired the best. Now those employees must be trusted to make sound decisions and conversely, be held accountable for their performance. Small things are very important; the big picture remains utilizing aircraft to the maximum extent possible. Employees must be taught to work together in a collaborative manner.

BENEFITS

As sound procedures are implemented, wasted time is slowly drawn out of the system. Aircraft ground times and flight times will begin to shorten. As this occurs, you pull those minutes out of the schedule and use them elsewhere. How many wasted minutes are out there? Many. First, there is the great amount of pad added to block times. Secondly, there is the tremendous amount of pad added to ground times to get the on time numbers up… One hour of excess ground time built in as a ‘circuit breaker,’ when removed, saves 6 minutes over 10 different flights. I think it is conservative to estimate that overall, 8 to 10 minutes per flight could be pulled from the system for each and every one of 500 flights per day. Again, that time is usable when you reschedule every plane for the entire day. That’s 4,000 minutes per day, or more than 66 hours of aircraft time per day. That’s the equivalent of 6.1 aircraft per day; or $137 million worth of additional revenue flying, all with the same 110 aircraft. Does that number surprise you? Again, I think it is conservative, and we’re not done saving minutes yet. This is the second most valuable idea so far – I’ve been saving the best for last.

RISKS/RETURN ON INVESTMENT

The risks of this initiative are low. Alaska Airlines can definitely save aircraft time and generate more flying with that time. Expenses must, however, be kept under control. Money cannot be wasted for fuel when it’s not appropriate to do so. Incentives must directly lead to reduced aircraft time and/or more customer satisfaction. Safety must be and will be enhanced by these procedures and incentives. On time performance numbers will improve and be more consistent. Return on investment will be less than 6 months.

Learn More: Soft/Hard Schedule Initiative™ »

NOTE: U.S. and International Patents Pending. These business models, their software and its interaction with various hardware components, as well as their inter-relationships with other patent pending business models are protected by U.S. and International Law, and are the property of Wingman Consulting, Inc.

PROBLEM

Many block times (when aircraft pushes back to door opening upon arrival) and turn times (door opening on arrival to time aircraft pushes back) are padded to assure an acceptable on time percentage. Once set, these times cannot be adjusted to match the real operating environment for that day. The actual block times will vary from forecast due to winds, load factors, weather conditions, approach and runway in use, and a myriad of other variables. An aircraft that is not in motion – whether from being early to arrive, or by spending more time than necessary on the ground – is just as inefficient as being late.

If only we knew which flights wouldn’t use their pad and on which day! Then we could adjust our schedule in advance to add time to the flights that needed more, and we could vacuum up the rest of the time to create more revenue flying. Remember this; how can someone who built a schedule a year ago possibly know what today is really going to be like? It is much easier to predict what tomorrow will be like if only we could make adjustments to the schedule for tomorrow!

SOLUTION

This initiative is the one that under certain circumstances may be noticeable to customers as well as employees. The benefits will be worth it, however, as it will move Alaska, or any air carrier, into a new level of efficiency… Here’s how:

The published schedule is “soft.” Departure times may be adjusted up to 10 minutes earlier, or 60 minutes late; arrival times may be adjusted any number of minutes earlier, or 15 minutes late. At 9:00 a.m. each day, the ‘soft’ schedule will be made ‘hard’ for the next day. When the schedule is made “hard,” the entire day’s flight sequence for all 110 aircraft is “re-shuffled” to maximize aircraft utilization.

This “re-shuffling of the deck” is done by computer software that uses input from a combination of people and other computer systems. It evaluates the following to come up with more realistic block and turn times:

1. Forecast winds aloft.
2. Forecast departure, enroute, and arrival weather.
3. Load factors for deplaning/enplaning.
4. Number of disabled passengers. Number requiring aisle chair assistance.
5. Any known or forecast traffic problems for time of day (flow control, ramp congestion).
6. Expected departure and arrival runways and taxi routes.
7. Ground servicing needs.
8. Maintenance and other constraints.

Now armed with current data, the computer runs a solution to maximize aircraft utilization within the constraints of our system and plus or minus the maximum allowable adjustment.

For example, let’s look at an aircraft going SEA-ANC-SEA. This leg is notorious due to the fact that what was a headwind one day may be a tailwind the next. This makes it very difficult to establish reliable block times. Let’s say that we look at the forecast winds for tomorrow’s flight. It will have a strong tailwind to Anchorage and thus strong headwinds to Seattle. All employees at Alaska are told to shoot for a ten minute early departure. Let’s say they actually achieve it. So today, flight 89 will be early, very early. In fact, they will arrive 55 minutes early. If this is a winter flight, it will be scheduled for 53 minutes on the ground (longer than the usual 35 minutes because of winter ops, deicing, etc.). This means that the aircraft will spend the next 1+48 (53 minutes plus 55 minutes) on the ground. Let’s make it even worse. Let’s say that the airplane is only half full arriving and half full leaving, and it’s a bright sunny winter day, not a cloud in the sky. Under these conditions, a 28 minute turn may be more realistic, but it is scheduled to sit for almost two hours. Oh, and when it does finally leave, it will be facing a very stiff wind on the nose all the way to Seattle, thus making it late when it gets there.

So, let’s apply a little adjustability and see how it works…

The computer looks at the entire day’s flying and sees the effect of the wind because it has run a flight plan time based on the now pretty accurate winds aloft forecast for tomorrow. It determines that it is best to delay the takeoff from Seattle by 30 minutes (plus don’t push 10 minutes early). This delay creates a “hole” 30 minutes big that can be used for another aircraft’s flight. It will mean that the aircraft will still arrive early, only not as early as before by 40 minutes (now 1+08 on the ground). The computer predicts that the turn can be accomplished in 30 minutes due to the good weather and light load factors. It knows it has to make up time for the next leg, due to the headwinds, and schedules the ANC – SEA flight to push 10 minutes early. This actually means that the aircraft will still spend 58 minutes on the ground (This is an example where wider flex limits would produce even better results. I limited it to 30 minutes here for illustration, but could have delayed its SEA departure more). The return flight to Seattle may still arrive a little late, but it should be within 15 minutes of the original “soft” schedule (again, more adjustability would be better).

In this example, the benefit is twofold. It created a 30 minute gap that is usable aircraft time where there was no gap before. To make this gap productive, the original schedule has more flying time than it otherwise would… the day prior, the entire schedule of all aircraft is adjusted to maximize aircraft utilization. So, creating this 30 minute gap allowed the scheduling software to use an airframe that it otherwise couldn’t have during this time. The second benefit is that it also produces a higher on time arrival percentage. This example highlighted the fact that more adjustability would allow you to have even better results. The reason I only allowed it to push 10 minutes early is because the airlines have already told all passengers that they can expect it, and they are already accustomed to it. Thus, there is no need to inform the passengers that you are using a soft/hard schedule technique.

If you go beyond 10 minutes early, then you will be forced to inform everyone on the flight of the new departure and arrival times. Doing so would be worth it and it can be made into a positive, not a negative. Imagine, when you purchase your ticket, by whatever means, if you leave a cell phone number with text messaging, or an e-mail address, or a phone number of any kind, when the soft schedule becomes hard (at 9:00 a.m. the day prior), a computer notifies you of the following:

Dear Mrs. Smith: This message is to remind you of your upcoming flight on Alaska Airlines. Your flight, 89, is now scheduled to depart tomorrow, the 21st of February, from Seattle at 7:20 a.m. instead of the originally scheduled 6:40 a.m. Based on forecast tailwinds and good weather in Anchorage, we expect that your flight will arrive in Anchorage at 11:02 a.m. local Anchorage time (12 minutes early). Please schedule accordingly. This flight adds 987 miles to your frequent flyer program. Your assigned seat is the aisle seat you requested: 11C. You may expect a light breakfast sandwich served with your choice of drink. Thank you for choosing Alaska Airlines!

This is similar to a dentist or doctor’s office that calls the day prior to remind you of your upcoming appointment.

So, this program uses now known conditions and adjustability to “vacuum” minutes from the padded schedule. Not all found minutes will be usable. We know that there is “slop” – our computer program will tell us the day prior where it is so that we can minimize it.

The next step is that you have to schedule more flying for each day than you do now. This ties together with the first idea, the Continuing Schedule Initiative. As the computer watches loads develop; it will know, for example, whether February 21st is a heavy or slow passenger load day. The computer will learn how much overcapacity it can safely add without having to cancel too many flights. This is much the same way we over-book seats. With seats, we know there will be no-shows, we just do not know where or when. With aircraft, we know there will be minutes we can use, we just don’t know where until we run this new re-shuffling program. So, we take it slow and don’t plan on adding too much additional flying until we get a solid statistical model developed. Then we learn more, like during peak travel times fewer minutes will be available for use, so we learn to schedule fewer extra flights during peak times and more flights during slack times.

Employees will know the schedule is “soft” until it is made “hard.” “Hard” schedule notification and updates would best be disseminated via wireless handheld devices that everyone involved in the movement of the aircraft would possess. These devices would help pull minutes from our schedule and pay for themselves many times over with increased productivity.

To further enhance aircraft utilization, as proficiency is gained at shortening turn times and block times we begin to adjust from what we’ve learned. For example, if the flight to Anchorage is consistently turned in under 35 minutes during the month of February, then you teach your “soft” schedule builder to adjust so the “hard” schedule builder doesn’t have to adjust as much. Also, starting the fleet off 15 minutes earlier in the morning and flying them until 15 minutes later in the day dramatically improves aircraft utilization with this initiative.

BENEFITS/RETURN ON INVESTMENT

The first benefit will be a dramatic increase in the on time arrival percentage. This will happen because departure times will be adjusted based on actual wind and other data to ensure that the adjusted arrival time is met. In most cases this will be at or before the original “soft” arrival time.

The second benefit is increased aircraft utilization. Research from actual Alaska flight data suggests that it is conservatively possible to vacuum 8 minutes per flight, and an additional 4 minutes from the average turn time using these techniques. The average aircraft performs 4.6 legs and a little over 3 ground turns in an average day.

• 500 flights per day times 8 min. per flight equals 4,000 minutes per day.
• 110 aircraft times 3 turns per day equals 330 aircraft turns per day.
• 330 turns times 4 minutes each equals 1,320 minutes per day.
• 4,000 minutes plus 1,320 equals 5,320 minutes per day.

The question then becomes, “how many of those minutes can Alaska actually utilize?” Using 50% of these captured minutes is a fair place to start our calculations as some of the minutes will be used to help otherwise late aircraft get back on schedule and some will just not be usable when the re-shuffle occurs. Thus, 5,300 minutes becomes 2,650 minutes per day.

The third benefit comes from starting the flying day earlier and ending later. The capture rate for these minutes would be higher as they allow flexibility on both ends of the schedule. Using a 66% rate capture here, we would increase each aircraft’s utilization by 20 minutes per day. This equals 2,160 minutes of additional flying per day.

When the 2,650 minutes are added to the 2,160 we have created 4,810 usable revenue producing minutes each day.

What’s that worth? At $94.16 per minute, it’s worth $453,000 per day, or $165 million per year. That’s $660 million by the year 2010. Once again, the return on investment will be very short, in the 6 month range (more on this later).

RISKS

It will take customers and employees some time to adjust to this concept. Ten minutes of early adjustability limits this risk as you need not notify passengers – unless you adjust more – and more adjustability would not be a huge inconvenience. Passengers will get used to it and won’t migrate to other carriers because the product will otherwise be unchanged and will have superior on time performance and lower costs that can translate to lower fares. To mitigate this risk, tests can be run with small adjustments until employees are comfortable working with it.

The estimates of “slop” as presented are believed to be on the low side. The unknown variable is the percentage of minutes that will be usable as revenue producing time. Running the software over time will completely answer this question. There is little doubt that enough can be saved to more than cover expenses, the question of up-side potential (how much money can be saved) remains somewhat open.

DYNAMIC EFFICIENCY SUMMARY

The Dynamic Efficiency Program better matches capacity to demand and saves aircraft minutes to increase utilization. An operation that is designed to save time will be efficient, and will be safer. The value of an aircraft minute ($94.16 revenue; $93.28 cost) is a more meaningful measurement than RASM and CASM when working to increase aircraft utilization.

The benefits outweigh the costs by a considerable margin, producing a return on investment period that is very short. Usually if you try to estimate the cost to develop something new you can start by adding all your known expenses and then doubling them and adding 15% to that. In this case, I have taken conceivable costs, doubled them, doubled them again and added 15%. After estimating all costs using this manner, it is very difficult to come up with an investment number that approaches $100 million for a company the size of Alaska (this investment is small compared to the return). This includes all of the software development, all hardware development, all the hardware costs, all the training costs, etc. Typical ROI (returns on investments) times are much longer than this. Imagine how long the payback period is to purchase an aircraft that is 10% more efficient (it would take years). Alaska recently purchased and installed half million dollar winglets on their aircraft to save 3 to 5% in fuel costs. The payback or ROI for winglets is more like three to five years.

The likely combined benefits of these three initiatives are:

The Continuing Schedule Initiative:	$84 million
The Minute Maker Initiative:	$137 million
The Soft/Hard Schedule Initiative:	$165 million
TOTAL	$386 million per year, or $1.5 billion by 2010.

ACTION

The time to act is now. Using the previous figures, each month of delay equals $32 million or about 16% of total operational revenue for Alaska Airlines. Let’s be very conservative and say it would “only” save Alaska 10% or $240 million per year. Would it be worth it? How much would these procedures save at other airlines? For most legacy carriers, the answer is probably much more depending on their fleet mix and current operational techniques (they need to make dramatic shifts in both of these areas). For a company like Southwest, these ideas would save them less because they are already more efficient, but they would still benefit tremendously by adding Dynamic Efficiency to their operations.

Some small pieces of these initiatives may be in use today by various departments. The full benefit, however, will not be recognized without a clear plan and good coordination as each initiative influences the other.

NOTE: U.S. and International Patents Pending. These business models, their software and its interaction with various hardware components, as well as their inter-relationships with other patent pending business models are protected by U.S. and International Law, and are the property of Wingman Consulting, Inc.