Traveller disruption: The $60bn problem that one company is solving
The recent grounding of Boeing’s 737 MAX aircraft by many aviation authorities, following the tragic crash of Ethiopian Airlines flight ET302, has highlighted the importance of data analytics in aviation.
Data from Cirium, a global data and analytics company, shows that a total of 28 airlines have so far grounded their Max 8s. These Max 8s had flown almost 4,700 cycles (and just under 12,700 flight hours) in the last 7 days alone.
While it is not the job of Cirium to understand the reasons behind the Ethiopian crash, the incident sheds light on how data can be harnessed to manage travel disruption.
“Cirium is an evolution from a number of different companies coming together with the goal to help different parts of the travel ecosystem. We develop analytics which help solve big customer problems,” said Christopher Flook- President CEO of Cirium, in an exclusive with AMEinfo.
What does Cirium do?
Cirium’s experts analyze millions of data sets each year to help airlines, airports, governments, metasearch, travel management companies and financial institutions predict future market demand and make informed decisions about their business strategies.
This includes forecasting supply and demand and managing challenges, including aircraft supply, fleet utilization, fuel prices and increasing the number of passengers.
. Cirium tracks over 36 million passenger itineraries each year so that travellers stay up-to-date with flight status and airlines minimize disruption.
. It analyses over $300 billion worth of airline tickets for market insights.
. It tracks over 35 million airline flights per month covering over 97% of scheduled flights worldwide and more than 90% of commercial aircraft in service so that engine OEMs can keep track of the per hour use of their engines.
. $5.3 trillion worth of aircraft assets is valued by Cirium each year, as part of strategy and pricing partnerships with the world’s top 50 lessors and tier-one investment banks.
“Keeping the world moving is our day-to-day mission”, says Flook.
What is the cost of disruption?
Cirium analyses the impact of disruption on the traveller, “a $60bn problem.”
“We are helping airports analyze how they perform and how different airlines are performing when they are flying into those airports, and how we can help them optimize their operations,” explains Flook.
Disruption ranges from cancellation to delays. Flook says approximately 16% of all flights are disrupted, from being delayed by 15 min to a few hours, to missing a connection and being altogether cancelled.
“The challenge for corporates is interesting. We did a case study last year with a major pharma company who spend $100 million a year on travel activity, and where 3% of that spent is wasted through disruption. That’s $3 million a year in direct productivity loss. That’s a big challenge for the industry to focus on to minimize the cost of disruption to corporations and airlines,” believes Flook.
Data comes from lots of different sources, some researched, and others mined thanks to Cirium teams stationed next to main runways to examine the world’s commercial aviation fleets.
“These guys are experts, spending time trying to find everything they can about the aircraft, using 250 different data points typically, and aided with a massive historical database of the world’s commercial aircraft,” said Flook.
What about individual travellers?
When it comes to individual travellers, Cirium is looking at how to connect the traveller, how to bring better data on where they are travelling, better data about their flight status, and pro-actively manage their experiences.
Some data comes through a contributory model where airlines provide information that Cirium can clean and aggregate and provide a service back to the airlines.
“One example of this is our schedules data: over 800 airlines give us their schedule, and we help them understand where their schedules won’t work and we then publish the ‘world schedule’ which is then used to create the billing system through the entire ecosystem of travel,” clarifies Flook.
“Another contributory model is flight status, where we take operational feeds from over 60 airlines, airports, and other flight management companies; direct feeds of their own flight operations status.”
Who can do all that?
Cirium employs 400+ people with more than 200 of them being technologists.
“We bring the data into a data lake and then we use data scientists to create models,” said Flook.
For example, a fleet is researched and connected to a schedule data which says where all of the aircraft are flying to and then that data is connected to flight status data that tracks actual aircraft locations.
“We work with companies like Rolls Royce, who are big customers for us, to actually tell them ‘This is where your engines are being utilized’.”
Cirium makes its money by essentially selling analytics.
“We live or die by the quality of our data, analysis. And we are completely independent, or neutral because we are involved in some significant industry mechanisms.”
The world has become digitized and customer-centered, but have airlines caught up to this trend? “There is a huge trend for the travel experience to be personalized for every passenger and seat in the aircraft,” says Flook.
One initiative from IATA called NDC (New Distribution Capability) allows airlines to offer a number of service elements when you buy a ticket using a new XML-based data transmission standard that enhances the capability of communications between airlines and travel agents to reach differentiation and competition in a non-commoditized way.
Anticipating maintenance models is another trend because it is costly to airlines when technical events are happening where aircraft could remain on the ground and taken out of service before the flight.
“The newest airlines give out huge amounts of data but with fleets combining new and old aircraft, data is patchy. So, we’re trying to make maintenance smarter. There is a big trend towards individual utilization data to create predicted models which anticipate when maintenance might be required, which makes it more efficient and improves the passenger experience,” says Flook.
In tandem, Cirium provides valuations or assessment of the current or future value of an asset.
“We increasingly see new types of money coming into the aviation sector through hedge funds, pension funds and the like, and we are helping those guys use data to assess the value of the asset that they are investing in and assess the underlying health of the market and the way the value of that asset might change,” explains Flook.
Lastly, smaller planes. The market for single-aisle aircraft is stronger and airlines need that agility to operate more aircraft on routes, according to Flook.
“This is the big bet based on high oil prices and different patterns of demand. Bigger aircraft didn’t work out.”
Cirium going Middle East
Cirium operates in the UK, US, Europe, India and Asia-Pacific and is now looking to establish an office in Dubai.
“All the big Middle Eastern airlines are customers of ours, in some degree or other, but obviously some are very big customers and others we would like to do more business with. We see a drive from ME airlines to use data and analytics to improve their service to customers,” says Flook.
In terms of industry health, Flook says the feeling is one of caution but that all the signs are good in terms of data coming from airlines. “Profitability is there, fallen a bit, buffeted by rising fuel prices. Demand growth keeps increasing annually 5-6% a year and in emerging markets, it’s even stronger than that.”
In terms of demand-side outlook, in the Middle East specifically, there is a predicted 5.5% traffic growth and a predicted 4% capacity growth, according to Cirium.