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Ramping up for the new normal
When technology becomes key
Page I of 13
Abstract
The spread of the coronavirus has hit airlines hard. Demand for travel has tanked, worldwide aircraft
are grounded and slot regulations have been suspended for summer 2020.
The situation is dynamic and forecasting is difficult. It is important for airlines to prepare for the
ramp up. To get started, airlines need sound and efficient action in the following areas:
Network Planning and Scheduling
Crew Management
Partnership & Codeshare Management
A successful restart requires the targeted use of tools and skillful handling of scenarios. Find out
what’s in for your airline.
∟
We are all looking forward to taking off again!
∟
Table of Content
1 Introduction ........................................................................................................................................... 1
2 You have to start with assumptions ................................................................................................... 2
2.1 How can scenarios help airlines to survive? ............................................................................. 2
2.2 How might passenger behavior change? .................................................................................. 4
2.3 Who is going to be the winner?.................................................................................................. 5
3 Recovery needs to be planned and this is what planners will do ................................................... 6
3.1 Network Planning and Scheduling – but on which data? ....................................................... 6
3.2 Increasing importance of airline partnerships .......................................................................... 9
3.3 Planning your crew ....................................................................................................................... 9
3.3.1 Manpower Planning and Training ................................................................................... 10
3.3.2 Pairing, Assignment and Roster Maintenance .............................................................. 10
3.3.3 Healthcare Management ................................................................................................. 10
4 Combining Data Know-How and Business Expertise ................................................................... 11
5 Lufthansa Systems Airline Consulting, NetLine and zeroG - a strong team ............................. 12
5.1 The NetLine suite – 5 excellent products .............................................................................. 12
5.1.1 NetLine/Plan...................................................................................................................... 13
5.1.2 NetLine/Sched .................................................................................................................. 13
5.1.3 NetLine/Crew .................................................................................................................... 13
5.1.4 SchedConnect ................................................................................................................... 13
5.1.5 NetLine/Ops ++ ................................................................................................................ 14
5.2 Joint decisions are better decisions ....................................................................................... 14
5.3 Working together with our experts to make your best decision ......................................... 16
6 Contacts .............................................................................................................................................. 17
Page 1 of 17
1 Introduction
Crew planners, network analysts and schedulers are “hands-on” people. It is not in our nature to sit
still. We prefer planning and coming up with scenarios. Now that we are confined to our homes, we
are indeed sitting still, haunted by that feeling that there is something more to be done and
something else to be said.
This article is our way to contribute to the growing volume of knowledge shared between the people
in the airline industry. The best contribution that we at Lufthansa Systems can make is in the field
that we know the best: Information Technology.
There is a guiding vision for our NetLine technology:
∟
“Together we connect to make the best decision ahead of time”
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We want to address those of you who will use this technology. And we hope it will help you churn
out an insane volume of schedule scenarios or crew rosters that you will be asked to do once the
planes start flying again. Technology will be a friend, an advisor and a tool that you can use to re-
build everything that has fallen down over the past few months.
Page 2 of 17
2 You have to start with assumptions
Every problem needs to be placed in the right context before it can be understood. After we
understand it, we can try to resolve it. A context can be framed by asking the right questions. Below
are some of the questions that a planner may ask when trying to define a credible scenario for
recovery.
2.1 How can scenarios help airlines to survive?
No one can really answer the question of when the crisis will be over. The end of the COVID-19
pandemic will not necessarily mean that the crisis is over. There are economic and regulatory
impacts that will shape the airline industry for years to come. This does not mean that the industry
has to wait to see what will happen, before it reacts. Planners can already create scenarios for
possible outcomes. It may not be impossible or even advisable to have a scenario for absolutely
everything. It is possible to model a smaller number of scenarios that are considered probable and
start from there.
Page 3 of 17
Let us take one recovery outcome that is currently believed probable, a “U-shaped curve” in travel
demand:
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Sources: IATA COVID-19 Impact assessment combined with Lufthansa Systems’ NetLine internal estimates
GDP = Gross Domestic Product
ASK = Available Seat Kilometers
In this scenario, the world will suffer a GDP growth reduction of several percentage points this year,
becoming almost flat, but not quite negative. Recovery is then expected to start in September
2020. Over the long term, air traffic follows GDP growth, but the emphasis here is on the “long
term”. This is only an aggregated view but the picture will Iook very different from region to region
and from route to route. This also means that one (of several) probable macro-economic scenarios
can result in many different market and network scenarios for each airline.
0%
20%
40%
60%
80%
100%
120%
0 months 10 months 20 months 30 months
ASK GDP
Level, indexed to January ´20
Months, March ´20 = 0
Page 4 of 17
2.2 How might passenger behavior change?
The following matrix outlines some possible passenger behavior changes, split by market segment
and focusing on the short term. It is likely that in the long term, passenger behavior will return to
the way it was before the crisis. For the initial recovery, it is important to understand what may look
different from “normal”:
Travel
type
Situation in June
2020
Situation in September
2020
Situation in March
2021
Bu
sin
ess
If it cannot be avoided, there
will be some continental travel
mostly limited to national or
EU-borders
International business trips
are hardly possible due to the
existing entry restrictions.
Many companies are in the
discovery phase. Business
trips have no priority.
Some continental travel if
necessary. International travel
is kept to a minimum.
Travel policies have been
reconsidered.
Continental and
intercontinental travel still
kept to a minimum (demand
reduced 70% compared to
2019)
Le
isu
re
Summer holidays are spent in
the home country. Passengers
are afraid of a new outbreak
and being stranded abroad.
Spending leisure time at home
is acceptable. Hotel
capacities in holiday regions
have been reduced. Travelling
has become more expensive.
Most likely autumn holidays
will be spent within the
region.
The demand for international
tourism is growing again.
Insurance companies have put
together corresponding
corona packages.
Continental tourism has
reached 80% of pre-crisis
levels.
Fa
mil
y &
Fri
en
ds
As far as the border
conditions allow, friends and
family are visited. However,
the crisis has led to many
people returning to their
homes.
As far as the border
conditions allow, friends and
family are visited.
Visits are possible again.
Page 5 of 17
2.3 Who is going to be the winner?
The discussion which airline business model is best positioned, was an emotional topic even before
the COVID-19 pandemic. Every business model has its fans and promoters but the picture has
always been mixed. Some LCCs have proven to be more profitable than large network airlines. They
have been winning in some markets (and market segments). However, large network carriers have
been equally successful. In fact, some have become bigger and more dominant, largely due to the
round of consolidations following the 2008 financial crisis. There are also global mega-carriers,
regional and niche carriers and various hybrids. Even state-owned legacy airlines are still around
and will most likely be around after this crisis is over.
One thing is certain – after this crisis is over, we will have fewer airlines in the market. Many will not
survive. Nevertheless, it is not certain that we will emerge from the crisis with one winning business
model. Winners will be determined by the market they serve and their own ability to adapt. Two
types of airlines are guaranteed to survive: smart ones and the ones that are lucky to have solid
financial backing.
Smart airlines know how to leverage every resource at their disposal, including technology.
Especially the technology that allows airlines to adapt quickly and react to changes in the market.
In other words – optimizers, especially in scheduling and network planning areas.
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3 Recovery needs to be planned and this is what planners will do
Once the big, relevant questions have been asked, someone will have to make all the assumptions
and actually build the scenarios that will form the backbone of the recovery plan. To make it clear,
a recovery plan is more than just a set of scenarios. Scenarios merely paint a possible outcome of
the actions that an airline can take. A full recovery plan also needs to describe these actions. Here
we will look at the how planners can build the scenarios and design the recovery plan.
3.1 Network Planning and Scheduling – but on which data?
Scenarios require market assumptions, which are reflected in different market models. The latter
are built and calibrated using things we know to hold true. Most commonly, we use historical data
sets, where the past helps us to predict the future. We also know that past behavior is an indication
of future behavior. However, all of this only holds true if the future is expected to be similar to the
past. But what if it isn’t? What if the future will be so radically different that no data set from the
past can guide us in the right direction? This is where technology can help.
Technology has allowed us to move away from always having to repeat ourselves. These days we
are experimenting with “Schedule Designer” type of applications. This approach allows for clean
sheet scheduling using a powerful set of optimizers that can generate a schedule “from scratch”,
with only a minimum set of constraints and other data. Some examples of data include:
Commercial constraints (Minimum Connecting Time, time preferences, defined time
windows)
Slot and curfew constraints (maintain grandfather rights, differentiation between Schengen
and non-Schengen flights)
Operations constraints (Minimum and standard ground times per AC type and station,
weather constraints)
Crew constraints (duty times, waiting times, check-in times, minimum rest time)
Maintenance constraints (# of stands per airport, Minimum ground time for maintenance,
minimum night maintenance stand time, AOCs at certain stations)
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It is important to remember that historical demand data sets will always have an important role to
play. This will certainly be the case once things return to the “normal” state. However, during the
crisis, we may need to derive the short-term demand from different data sources. Some examples
of available data include search engine inquiries, economic forecasts and COVID-19 recovery rates.
We can create supply-driven models, where the dynamic capacity variations in the market, coupled
with pricing settings and known intakes, indicate what the demand may be. During the crisis, we
may also need to move away from “base week” schedules and custom build our own scheduling
windows. Planning may be done in a “real world” environment and based on real-time data.
However, we can still use our historical data sets and our tried methods and to do well in the
unknown, post COVID-19, world. We will just have to work harder to achieve the same outcome.
What that means is that we will have to build many different versions of the future, based on the
one known version of the past. The true future simply remains unknown but we can still have a
scenario for it. Here too, technology can help. Top of the market network planning tools can evaluate
a network scenario in under a minute, so in theory, at least, doing ten scenarios per day (including
preparing a scenario) is very easy. If a future is just going to be a percentage of the past, then we
have only 100 possible scenarios for the future. This is no more than 10 days’ work for a single
network planner equipped with the right tool.
It is similar to the more complex exercises that may come the planner’s way. Fleet planning is never
an easy one to do. It requires a degree of expertise and simultaneous handling of multiple variables:
fleet size, cabin configuration, operating cost, range, performance, etc. In the end, what we need
to know is the right fleet size and fleet mix for our network. Moreover, in a post-crisis world, this is
where the biggest savings for an airline lurk. No fleet will be the same, as everyone will be seeking
to retire less efficient aircraft, trim their current aircraft orders and better utilize their existing fleet.
Here too, technology brings relief for a planner, if the planner has a fleet assigner, arguably the most
useful optimizer ever made (and this opinion is biased because it comes from someone who spent
10 years using it on a daily basis).
Page 8 of 17
Let us not forget the slot management, because it will still be there in the future. Things will be
different for a while. With fewer airlines, fewer flights and less congested airport infrastructure,
there will be more runway, apron and gate space and more terminal capacity. All of these things
needed to align in the past for a lucky airline to obtain the high value slots. However, slot
management has always been more about keeping the slot and not falling foul of the 80/20 rules.
We have now broken all the rules during this latest crisis, but eventually, they will be back. Even
with fewer airlines and more space at the airports, premium slots will remain premium and airlines
will have to compete for them and monitor them carefully, just like before. Technology is again here
to help and current slot management and monitoring tools can serve this purpose well into the
future.
Page 9 of 17
3.2 Increasing importance of airline partnerships
If we assume that airlines will reduce their fleets and networks (and some airlines will go out of
business), this will inevitably affect the customer network proposition. Airlines will have significantly
fewer destinations to offer their customers. Rethinking a network goes hand in hand with rethinking
partnership models. This is precisely why airline cooperation and various levels of alliances will
become attractive.
Efficient codeshare management can be an excellent way to increase the load factor. Codeshare
management means two things: optimizing the existing codeshares and finding new opportunities
that can be turned into codeshares. Technology helps with both. Codeshare management tools
automate the assignment of existing codeshares in real-time. As soon as the codeshare partner
cancels or retimes the codesharing flight, the system will automatically react and reassign the code
on another flight operated by the partner that allows for a similar connection with minimal
degradation. Similarly, a network planning tool will allow a quick evaluation of potential new
codeshares, before a potential partner is approached with the request.
More complex forms of airline cooperations are found in airline alliances and joint ventures. They
provide a commercial and regulatory framework for cooperation between the airlines and carry a
greater benefit potential, if executed correctly. Traditional alliances (e.g. Star Alliance, oneworld)
have provided airlines with a broad cooperation platform, mostly on a marketing level, as they held
no overarching role that infringed on an airline’s ability to operate independently. Joint ventures
have bounded airlines in a more significant way but required complex negotiations and regulatory
approvals.
It remains to be seen if the post-crisis airline industry will seek to embrace the various cooperation
models, and how many will be successful. However, planners with the help of technology, will still
be the ones required to model and evaluate it.
3.3 Planning your crew
The huge change in the network and the schedule usually results in an enormous operational “rat
tail”. Nothing in the operational world will remain the same as before. Planning for the new reality
will need to be done differently. This particularly affects crew management.
Page 10 of 17
3.3.1 Manpower Planning and Training
With some authorities suspending the flight crew license renewals, there will be a huge backlog of
outstanding training. Some aircraft types will be phased out. This will result in an enormous amount
of retraining. Seniority rules and agreements with the respective unions can play an important role
in this. A manpower planning solution that also proposes part-time models would be suitable.
Additionally, real-time information allows for optimal decisions ensuring that the right crew
members with the right qualifications are always in the right place at the right time.
3.3.2 Pairing, Assignment and Roster Maintenance
Crew pairing and assignment will take place almost simultaneously due to the constantly changing
flight schedules. This can have an impact on existing contracts, for example, when it comes to plan
violations. Since the situation can change constantly, sufficient reserve and standby capacities
must be planned as well. The possibility to elaborate schedule changes in real-time during the
pairing construction and the assignment phase will enable the crew planner to achieve the best
results during the roster construction phase. Having integrated optimizers will help a lot as the time-
consuming activities to import/export data from the crew management system to the optimizer
tools and vice versa can be completely avoided. However, in the COVID-19 world we won´t be able
to create stable rosters anymore as we did in the past. Therefore, it will become crucial during the
tracking phase to support crew trackers with tools that will allow them to face IROPS as fast as
possible providing a clear prioritized view of the pending problems and allowing them to
automatically generate possible solutions to apply in what-if scenarios keeping all costs and KPIs
under control.
3.3.3 Healthcare Management
Country restrictions must be constantly communicated to the crew members. In addition, the airline
must ensure that the relevant crew documents are verifiably maintained. For example: If crew
member A goes to destination X then the system generates a message/warning for the crew
member or the crew planner. Communication can then take place via an app with the crew planner.
Consequently, the duty roster of the affected employee is adjusted accordingly.
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4 Combining Data Know-How and Business Expertise
In addition to the data and the tools, deep business expertise will also be required to get things
going again. Only expertise can produce the right interpretation of the newly acquired information.
This will result in some complex analyses, evaluations and scenarios. Some examples include:
Market impact analysis
Demand forecast evaluation
Development of recovery schedules
Competitor impact analysis
Network optimization
Hub structure optimization
Fleet plan evaluation
Strategic network scenarios
Partner analysis
Crew Planning and Management
Lufthansa Systems is aware of the need to maintain this business expertise and can provide support
to airlines in planning and execution of any business scenario, regardless of complexity.
Page 12 of 17
5 Lufthansa Systems Airline Consulting, NetLine and zeroG - a strong
team
Lufthansa Systems can help airlines look at the big picture from every angle. The team combines
various divisions focusing on specific services to the industry. The NetLine division develops top of
the line airline planning and management tools - from network planning, schedule planning,
codeshare and crew management to the day of operation. Data science is the focus of our zeroG
division and Lufthansa Systems Airline Consulting provides business expertise.
5.1 The NetLine suite – 5 excellent products
NetLine improves productivity and shortens time-to-decision, time-to-execution, and time-to-
market, providing significant benefits in terms of increased revenue and reduced operating costs.
It is important to dismantle silos that have built up over time. NetLine gives you a full overview. We
want you to be prepared for the new, which is why we are already thinking about tomorrow today.
This is how together we connect to make the best decision ahead of time.
Page 13 of 17
5.1.1 NetLine/Plan
An advanced machine learning based network planning tool that uses calibrated data models and
offers expert users unprecedented ability to model any network scenario, regardless of complexity.
NetLine/Plan gives airlines the ability to plan, optimize and strategize your fleet and network for
the maximum profitability.
5.1.2 NetLine/Sched
Already one of the most sophisticated scheduling tools on the market, NetLine/Sched also comes
with a variety of powerful optimizers, including the Tactical Fleet Assigner, Swapper and TPEM,
which will help you by automating and speeding up the schedule development process. It will
improve your schedule profitability by optimizing your schedule while maintaining schedule
integrity.
5.1.3 NetLine/Crew
NetLine/Crew has everything that a crew planner needs: pairing, rostering and tracking, including
optimizers and solvers. It also has the capacity to handle crew logistics by offering an interface to
hotel management and transport solutions from various providers. Hotel rooms are reserved
automatically based on crew pairings. Changes in NetLine/Crew are processed independently by
the respective travel management solution. Reservation confirmations are automatically sent back
to NetLine/Crew.
5.1.4 SchedConnect
As the industry anticipates an increase in codeshare and alliance partnerships, a codeshare
management tool will become indispensable. Lufthansa Systems’ SchedConnect is a market leader
in this segment and offers more than just codeshare management by integrating schedule
distribution and publication functionalities.
Page 14 of 17
5.1.5 NetLine/Ops ++
NetLine/Ops ++ is a market-leading movement control tool, currently used by some of the world’s
biggest airlines. It can provide an operational control platform for collaboration and coordination
between different airlines operating as a single group entity, which may be a significant advantage
in the post-crisis world when more integration in the industry is expected. NetLine/Ops ++ has a
powerful tail optimizer and disruption solver to help the Ops Controller in any situation.
5.2 Joint decisions are better decisions
We know that focusing on only one aspect can blind us. Connecting data and teams give your airline
a critical competitive edge. Our suite consists of "connected" software components. Thereby, we
promote both the exchange of information between the departments and interpersonal
communication.
By working together, we can discover solutions that can be implemented more quickly and that go
beyond local optima. We want your employees to be able to concentrate on the essentials with the
support of automation. Our cross-product connections create additional transparency:
Interface between NetLine/Sched and NetLine/Crew for fast and interactive planning
A planned flight schedule is only as good and cost-efficient as the crew pairings based on it.
NetLine/Crew Pairing uses the schedules from NetLine/Sched to generate legal and
consistent crew pairings.
Data is shared in the opposite direction as well: NetLine/Sched Rotation Optimizer takes this
detailed crew pairing information into account to optimize the flight schedule.
Page 15 of 17
Interface between NetLine/Sched and NetLine/Ops ++, for seamless planning from long
term to the day of ops
Airport slot statistics (coming from NetLine/Sched) are displayed in NetLine/Ops ++. Thus,
the ops controller is aware of remaining CNL (Cancellations) or ETD (Estimated Time of
Departure) for each slot. Furthermore, the integrated Slot Monitor in NetLine/Ops ++ monitors
the grandfather rights to ensure no rules are violated.
Newly created flights in NetLine/Sched can directly be validated in NetLine/Ops ++ against
maintenance rules. If necessary, the check times can be adjusted and updated in
NetLine/Sched. By displaying those bought maintenance slots in NetLine/Sched, the
scheduler can already consider these while creating the flight schedule
Interface between NetLine/Crew and NetLine/Ops ++ for coordinated disruption
management
Operational schedule changes are consistently reflected in the crew duty rosters. Canceled
flights are deleted from the roster and the crew member receives an automatic notification.
The interface gives ops controllers full transparency regarding duty times and their limits,
which helps them make better, faster and more cost-efficient decisions. An additional scenario
environment offers a basis for testing various feasibility scenarios: Ops controllers can take
duty times into account when modifying flight schedules and Crew controllers can review
roster changes with immediate legality checks (duty time) and logistical changes (hotels,
deadhead booking, etc.)
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5.3 Working together with our experts to make your best decision
It is important to us that we understand your concerns. That is why we develop our solutions in
partnership with you. Communicating and exchanging ideas is essential. A dedicated contact
person at our headquarters in Germany means someone is always on hand to take your call.
Lufthansa Systems is not only a top IT vendor. We are also a top knowledge vendor and we have a
team to match: our Airline Consulting division team are top experts including former airline CEOs,
leading aviation research academics, senior managers from airline commercial planning
departments, operational experts, top-gun project managers and many others. They are real
insiders and bring along extensive knowledge from a wide range of aviation and IT projects, from
various world-leading airlines.
There is more. zeroG is a subsidiary of Lufthansa Systems that focuses on unlocking the power of
data by creating solutions to improve the world of aviation. This enables us to set up new innovative
data models from which your airline can benefit.
That is what makes us special, and offers the best conditions for a well-founded partnership.
Page 17 of 17
6 Contacts
Dirk Bracklow: Head of Product Line Management NetLine
Jan-Peter Never: Senior Product Delivery Manager NetLine/Plan
Judith Semar: Product Owner Optimization
Michael Becker: Senior Product Manager SchedConnect
Emanuele Esposito: Senior Product Consultant NetLine/Crew
Andres Radig: Senior Product Manager NetLine/Ops ++
Sergej Bukovac: Director Consultant
Manuel van Esch: Lead Business Consultant
Julia Opitz: Product Marketing Manager NetLine
Lufthansa Systems GmbH & Co. KG Am Messeplatz 1 65479 Raunheim
