CAPA Airline Leaders’ Summit – an AWS Look at How Digital Transformation is Helping Airlines
At the beginning of April, I headed to Manchester, United Kingdom, to attend the CAPA Airline Leaders’ Summit – Airlines in Transition. This was the first in-person event I had participated in for 2 years, and it did not disappoint.
The conversation was about strategic topics and key megatrends, including decarbonization, point-to-point travel, business travel, low-cost aviation, new entrants, and digital transformation.
The overall mood was positive, with the expectation the industry will reach 2019 prepandemic traffic levels by late 2023 to mid-2024. Nevertheless, there is no lack of challenges ahead with increased costs due to jet fuel prices (now at over $160 per US liquid barrel), war at the doors of Europe causing traveler uncertainty, and sustainability concerns that are rapidly becoming an existential threat to the industry.
The summit ended with a tribute to Peter Harbison, CAPA president emeritus, a true industry legend, and a friend, who is now retiring after 53 years in the business.
Among the various topics, digital transformation and what it all means to travelers was front and center. I had the opportunity to sit down and have a deep conversation with the CAPA analysts on the status of industry transformation, the role of the cloud, and how Amazon Web Services (AWS) is helping airlines optimize operations and improve customer engagement.
This is a summary of the first half of the conversation, which looks at how airline investments in modern technology are improving how they manage operations.
Q: How did airlines react to the COVID-19 pandemic, and how are they preparing for recovery?
A: The Covid-19 pandemic is 2 years in. After the initial shock, travel and hospitality companies, specifically airlines, looked at freezing their operations and reducing their costs.
They quickly realized that though grounding planes was easy, cutting other costs was not. Customer service and the technology that they were using was not designed to scale up and down based on demand.
As such, we have seen a desire to transform the way that airlines are operating across IT, airline operations, and customer engagement. They want to be more agile, scalable, and flexible to handle waves of operational needs and spikes in customer support.
For example, in August 2020 Finnair decided to move out of its data center and went all in on AWS. Working with Nordcloud, an AWS partner, Finnair migrated a mix of 450 servers and 20 applications that needed rearchitecting and replatforming to deliver on the business case in just 7 months. After the first phase of the migration, it reduced IT infrastructure costs by 45 percent.
In the fall of 2021, Finnair took the next step in its migration, which included exiting two data center applications hosted on approximately 400 servers, which were vital to Finnair’s daily operations. The estate was a mixture of Windows, SAP, VMware, legacy Windows 2008, Windows 2003, and even Windows 2000, Oracle, and IBM AIX software. Some of the technology, such as ticketing booths, had not been touched for 20 years and required updating before the migration was even possible.
Even traditional and institutional technology providers invested in new technology. Travelport, for example, not only committed to move out of its data centers and decommission its mainframes but also signed a strategic, long-term agreement to use the advanced cloud technology of AWS to accelerate the digital transformation of retailing in the travel industry. The agreement, which unites expertise in travel technology, cloud technology, and hyperpersonalized retailing, is focused on “powering a simple, smarter, and better future for travel retailing.” [Announcement]
Q: What is the status of digital transformation in the industry from the technology and cloud adoption perspective?
A: Airline industry leaders, like United, Delta, Air Canada, Ryanair, Qantas, and TUI, took this opportunity to modernize their operations, move away from legacy systems, and, where possible, reinvent processes, initiating innovation.
There are many cases where airlines started looking at hardcore problems beyond digital assets—for example, websites and mobile apps—and focused on their core business needs, like improving revenue management, flight planning, and ground and flight operations.
For example, United Airlines, an all-in AWS customer, partnered with us to install over 20,000 Internet of Things (IoT) devices and cameras to monitor equipment locations at Newark Liberty International Airport (EWR). This included tow trucks, catering, cleaning, fueling, and planes as well as on-the-ground equipment, such as wheelchairs, personnel, and passengers. United saved more than US$120 million in ground equipment purchases and over 1.3 million hours of personnel search time.
Q: Demand is rising, but so are fuel and food prices. How do airlines partner with AWS to reduce spending?
A: Several airlines have partnered with AWS to use machine learning (ML), IoT, and other cloud services to significantly reduce costs and waste to improve their sustainability posture.
Qantas cut fuel costs significantly using cloud flight analytics, called Constellation, to plot optimal flight plans that avoid headwinds in favor of time-saving tailwinds to go from origin to destination. Constellation is helping Qantas not only to plan routes and save fuel but also improve its sustainability posture. “That’s going to save us $40 million in costs each year by a 1–2 percent improvement on these flight plans,” says Rob James, chief technology officer at Qantas, in a recent article. “We’re going to reduce our carbon emissions because of that system by around 50 million kilograms each year.”
In another example, Ryanair is forecasting to save substantial fuel costs by dynamically planning where aircraft should be flying and allocating the right plane to the right route by using a cloud-based flight simulator. The idea behind it is quite simple: given that the most fuel consumption and engine stress occur during takeoff when climbing to a cruising altitude, Ryanair is placing the most efficient plane-engine combination on the routes that have most takeoffs. This is also helping in its maintenance planning.
Ryanair’s Panini Predictor uses ML to predict how much fresh food is needed on each flight, reducing food waste and improving selection, so that each passenger can choose a preferred sandwich onboard. This is not a simple feat considering that the company has nearly 500 aircraft and runs about 2,000 flights a day, with a single plane traversing multiple routes across multiple countries. Each plane has limited space and can be restocked only once every 24 hours. This solution helped the company to boost its revenue and cut waste by more than half. That is true innovation.
Q: How is AWS helping travel companies and airlines improve operational efficiency?
A: Travel companies, and airlines specifically, are resuming operations, but they want to do it right. They have labor shortages, so they are investing in automation and self-service tools. They also want to improve their sustainability posture and reinvent their decades-old processes with modern technology.
To do all this, data is the glue to make it all happen. They are moving toward a data-driven culture: making data accessible across their organizations to drive timely insights and make decisions faster.
For example, Ryanair digitized aircraft maintenance history, or logbooks, usually collected and stored away in a warehouse. This helps them to do real-time reports on aircraft health and feeds the information into the company’s predictive maintenance system to identify anomalies. Digitization has cut down data collection from 2 weeks to near instant, removed the approximately 8 hours a day of maintenance data categorization, and made maintenance reports available in near real time. As a byproduct, Ryanair does not need to store the paper anymore, saving trips to an off-premises 415-square-meter warehouse that is now decommissioned.
At AWS, we are not only helping these reinventions and bringing to light these innovations, but we are also promoting reference architecture like the Airline Data Platform, the Airline Schedule Engine, Aircraft Predictive Maintenance, and the Aircraft Turn Tracking that show best-in-class architectures. We are also partnering with industry leaders, like Datalex, Elenium Automation, Flyht, IBS Software, OpenJaw, and other ISVs to make their solutions run smoothly and natively on AWS, to be scalable to their customers’ needs, and to be more cost effective.
We are going a step further: where there are gaps in the market, we are developing industry-specific solutions, promoting standards, and helping applications’ interoperability. You can find more about the solution areas and the specific use cases we are investing in on our website and our solution library.
Stay tuned for part two to learn how airlines are transforming the customer experience with the cloud.