How aircraft operators stay relevant and ahead of the competition
Dassault Falcon 7X in Tokyo, Japan
Executive Summary
Operators are overwhelmed by the complexity and the challenges the aviation industry requires them to deal with. Although Business Aviation aircraft are „high tech“, businesses very often run without or on low tech software. The data itself is siloed and is mostly unverified, paper-based processes result in error prone, time-consuming and repetitive manual work. Maintaining available proprietary data systems is clearly unrealistic, given their scale and complexity. As a result, there are no learnings captured why money was lost or an unhappy customer left. Last but not least there is a high degree of financial blurriness, leaving an operator in the blind when making business decisions.
JetManager has created the technology to create contextual and actionable data into a single reality in real time, however, success is not simply achieved by installing the software and turning it on. In fact, our success requires an underlying Digital Transformation strategy.
Defining such strategy will bring you to the heart of your operation, asking questions how things are done and why. Based on that learnings, you enable business rules bringing your workflow to action, adding machine-learning-based automation to augment human intelligence.
As every organization is unique, no rulebook will solve this. It will not happen over night and it will require resilience. However, going digital can give birth to entirely new business models that shake up sectors, leaving companies that fail to adapt struggling to survive. Eventually you will have formed a game changing, efficient company, run on software augmenting human intelligence - the best of both worlds.
Introduction
Operators are overwhelmed by the complexity and the challenges the aviation industry requires them to deal with. Fragmented markets, national legislations, diverse aircraft fleets, challenging client structures, dynamic market forces, the ad-hoc characteristics of the business, last but not least the Covid-19 pandemic, all that poses huge challenges for an organization.
The customer experience of ad-hoc charter operators and aircraft management companies is tailor-made for every customer, thus it is often unstructured and challenging to manage. These challenges were originally overcome by people. More work and/or more complexity meant adding more staff. However, aviation businesses realize that there is a natural limit to such an approach and that growth becomes a theoretic management goal, which is almost impossible to achieve in practice.
Most stakeholders agree that the answer is digitalization. Distribution channels, backbone data systems, competitors and even business models will shift as technology attacks both internal and market inefficiencies and customer expectations evolve. As this was already apparent, the Corona pandemic eventually is the straw that breaks the camel’s back. Operators see deteriorating charter rates, adding additional pressure to become more efficient and to adapt through digital transformation, using greater level of interconnectedness to get closer to real-time visibility and responsiveness to quickly changing conditions.
The Status Quo
Business Aviation aircraft are „high tech“, but the operator organization is very often run without or on low tech software, such as spreadsheets. A software engineer who started his first job in business aviation expected this to be the by far most advanced industry he could think of. As it turned out, business aviation „is even behind trucking“, the industry he worked in before.
The data itself is siloed, so it is not connected with other data systems, and there are usually many. An analysis of the software stack of a larger operator revealed that they were more than 2 software systems in operation, largely unconnected, in flight operations alone. Making this worse, data is mostly unverified and transferred manually from a paper-based format to some siloed data system, which is error prone, time-consuming and repetitive.
Maintainability is yet another problem. An organization may be able to enter some of its most important data into some system, but maintaining it is even less realistic. In fact, operators reinvent the wheel every day as with current data systems, given their scale and complexity, data is either unavailable, incomplete, unverified or clearly having consistency conflicts.
As a result, there are no learnings captured why money was lost or an unhappy customer left - it is just not possible with the quality and data context available today.
As there is a lack of consistency and structure, yet the lack of an underlying general business process, there is no automation or algorithms which could possibly augment human intelligence.
Last but not least there is a high degree of financial blurriness. Probably most widespread in the Financial Department, processes in place are manual and paper-based, or the department relies on non-digital processes. That leads to a highly delayed reconciliation process which in turn inevitably leads to poor financial intelligence, as the answer to the question whether an operator made money on that last trip and if, how much, will most likely return a „we don’t know (yet)“.
Key Challenges
As an organization grows over time in a very unique and highly customer-tailored industry, problems arise daily which are „solved“ by unidimensional solutions. There is always time pressure and aircraft need to be moved „immediately“. A single aircraft operator will be able to cover this with a small team and some spreadsheets, but as the organization grows into a multi-fleet, multi-cultural, global, 24/7 operation, that design ceases to be viable. Paper-based processed and isolated software system lead to unconnected data. Aviation staff find themselves logging in into several software systems in the morning, trying to manually connect the dots and to find out what the operational status is.
One may be able to get the initial trip set up, but as multidimensional challenges flow in from principals, secretaries and family offices, the real problem is keeping track of the trip status and processing all the changes reliably and swiftly, while keeping your customer in the loop. As your fleet grows, these issues multiply exponentially.
Two other peculiarities make this even more challenging: rare access to verified data and no common data standards to exchange it. We are facing both a shortfall in common communication standards to connect available, often proprietary data systems, and scarcely available external data sources offering „verified data“ - while it turns out that this data is often truly wrong (pun intended)!
So what happens then? Operators have built their own, proprietary data systems, however, maintaining them and connecting them with each other is the even bigger nightmare.
In total, the lack of digital data, the unverified state of available data, its disconnection and thus its unknown state of accuracy poses interesting questions to the speed, quality and efficiency of an operation.
This is why JetManager was developed - to break down data silos, to digitize data streams and to connect them in real time, offering a single reality of your data, providing you with contextual and actionable insight.
However, such an approach requires foundational work. As the first step, you need to get to the heart of it all: carefully listed into your organization to understand how things are done and why - that will reveal your core workflow. With that knowledge you can ask the right questions, re-engineer your business process, weaving in concepts of reliability and flexibility. After a couple of iterations and rounds of testing, you’ll get more stable and obtain a deeper understanding how it should be done as opposed to how it is currently done. As you become more mature in understanding what you’ll actually need, you can start looking into automation, which will alleviate manual, repetitive workload so you can do what you can do best, be a creative thinker, focus on your customer and on what’s important.
However, it is not done by simply installing new software and by turning it on. In fact, the key to making this work is to reinvent your organization as part of a Digital Transformation strategy.
Digital Transformation
Digital transformation is the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements. It depends on the ability to extend proprietary data systems with multiple other data streams and software systems.
Most operators are responding to some degree to the challenges arising. Most of them find it hard to take one step back to look at the big picture, and to create and align the necessary Digital Transformation strategy with their overall corporate strategy. So some operators roll out a new „app“ as their „Digital Transformation“, while the whole backend is actually fed by the same people, in the same old-fashioned way: manually.
Other operators are scared and believe that such a process is too complex and requires too much time and too much resources, so being afraid of failing and with a lack of knowing where to start, they don’t even begin.
A growing number of executives however are facing up to the challenge, understanding that it has to be done to remain relevant and that corporate performance can be significantly improved at the same time. And they are keenly aware that digital can give birth to entirely new business models that shake up sectors, leaving companies that fail to adapt struggling to survive.
They are far enough advanced however to understand that the transformation will present challenges. Nevertheless, successful companies with the best economic performance approach digital strategy, compared with all others, in a way that they have taken advantage of digital to create broader ecosystems and to innovate new digital products and business models, and that they have created an adaptive design that allows the transformation strategy and resource allocation to adjust over time. In addition, they adopt agile execution practices and mind-sets by encouraging risk taking and collaboration across parts of the organization.
The business model relies heavily not just on their own proprietary data held in their system of record, but also data from third-party sources, connected devices and their vendors’ and customers’ systems.
Digital transformation depends on the ability to interact with other software systems, both internal and external. Being as close to real-time as possible, enterprise software vendors will need to facilitate this with open, agile products designed for sharing.
Uber for example depends on real-time geolocation information to set pricing and predict demand. In aviation, creating data lakes and combining several data sources and siloed systems, it will be possible to make business decisions based on forward-looking data in which you sell an outbound empty leg based on data intelligence suggesting that with a high degree of certainty, you will need that a plane at that location tomorrow. Reversely, your intelligence engine may suggest to leave a plane at a certain airport for promising predicted future business, rather than ferrying it home.
Overall you need to define your internal and external drivers - more a fundamental rethink of your corporate why - for which digital technology can only be the catalyst.
Guiding Principles
Digital transformation works when leaders go back to the fundamentals: focus on changing the mindset of the organizations members as well as the organizational culture and processes before they decide what digital tools to use and how to use them. To set a digital transformation on the right course a company must place it at the core of its agenda, and understand the magnitude of that undertaking. CEOs are heading in the right direction if they grasp the fundamental importance of heavyweight management commitment, are willing to make significant investments, and set clear, ambitious targets.
Secure senior management commitment
A CEO cannot simply sanction digital transformation. He or she must communicate a vision of what needs to be achieved, and why, in order to demonstrate that digital is an unquestionable priority, make other leaders accountable, and make it harder to back-track. An initiative „Digital first“ or „Digital by default“ would stress such initiative.
Define your strategy and define clear, ambitious targets
Leaders who aim to enhance organizational performance through the use of digital technologies often have a specific tool in mind. “Our organization needs a machine learning strategy,” perhaps. But digital transformation should be guided by the broader business strategy. Without targets, people who find it hard to accept that the old ways of doing things were massively inefficient might be content to sign up for a 10 percent improvement in cycle time, for example, when 100 percent is possible.
Leverage insiders
Organizations that seek transformations (digital and otherwise) frequently bring in an army of outside consultants who tend to apply one-size-fits-all solutions in the name of “best practices.” Instead rely on insiders — staff who have intimate knowledge about what works and what doesn’t in their daily operations.
Secure investment
Digital transformation is likely to require significant investment. Experience suggests that in IT alone, companies with outdated systems might need to double their current spending over a five-year period. That investment is likely to result in lower profits for a while - but without it there is a serious risk to profits in the longer term. Importantly, companies will need to allocate investment both to improve the current business and to build new businesses as the business evolves.
Start with lighthouse projects
To win early support, companies should start with projects that offer potential for significant rewards with manageable risk.
Organize to promote new, agile ways of working
Whatever structures a company chooses initially, it will reach the stage when only a fundamental organizational redesign will do. Silos drawn along functional lines have always been a drag on collaboration and performance in large organizations. In the digital age, when companies need to reinvent the way they work on the fly, an inability to connect all parts of the organization to share data, expertise, and talent can be crippling. As a matter of fact, start-ups are known for their agile decision making, rapid prototyping and flat structures. The process of digital transformation is inherently uncertain: changes need to be made provisionally and then adjusted; decisions need to be made quickly; and groups from all over the organization need to get involved. As a result, traditional hierarchies get in the way. It’s best to adopt a flat organizational structure that’s kept somewhat separate from the rest of the organization.
Make sure you’re action on data insights
While buzz words like artificial intelligence, machine learning, deep learning, or natural language processing sound fancy and exciting, they are not the main differentiator for future-proofing your organization. A much bigger competitive advantage is to harness valuable data, having the necessary skills to translate that data into meaningful insights, and above all being able to act on those insights. In our view, data without insights are trivial, and insights without action are pointless. We cannot overemphasize the importance of this point, because too many business leaders operate under the false assumption that if they hire smart data scientists or buy fancy AI tools, their problems will go away, or they will somehow become more high-tech.
Recognize employees’ fear of being replaced
When employees perceive that digital transformation could threaten their jobs, they may consciously or unconsciously resist the changes. If the digital transformation then turns out to be ineffective, management will eventually abandon the effort and their jobs will be saved (or so the thinking goes). It is critical for leaders to recognize those fears and to emphasize that the digital transformation process is an opportunity for employees to upgrade their expertise to suit the marketplace of the future.
No rule book will solve all of this. A transformation is not a science. The only way forward for a company is to learn as it goes and figure out how to apply lessons as scale is built. Along the way there will be important markers of success. IT strategy will become clearer as early prototypes afford insight into decisions relating to technology architecture, data architecture, and platforms. Customer satisfaction is likely to jump. Nevertheless, the term digital transformation puts the emphasis on technological change. But it becomes clear to anyone who understands digital technology’s potential that what is afoot is less of a digital transformation and more of a fundamental rethink of the corporate model, for which digital technology is the catalyst.
Conclusion
Operators more and more realize that they can’t continue „like this“. As digitalization approaches, organizations need to act to stay relevant. The Corona crisis emphasizes this even more: it needs swift adaptability through digital transformation, using greater level of interconnectedness to get closer to real-time visibility and responsiveness to quickly changing conditions.
However, a Digital Transformation effort is not easy, and many operators don’t even start because it is too big of a project. The only way forward for a company is to get started and then learn as it goes and figure out how to apply lessons as scale is built. The JetManager company and the JetManager operating system will fuel this process with asking the right questions and with designing a tailor-made, reliable and flexible business process your unique organization needs. IT strategy will become clearer as early prototypes afford insight into technology and data architecture. Customer satisfaction is likely to jump. Nevertheless, the industry is changing, and you shouldn’t see the digital transformation as the remedy for everything - rather treat it as a tool to fundamentally rethink your corporate model, for which digital technology is the catalyst.
Eventually you will have put your organization years ahead of the competition. You will have formed a game changing company. You will have improved your operational efficiency by large, leveraged customer delight, reduced friction and moved to real-time data. Your reporting will have shifted from hindsight to foresight, and you will be using ground-breaking technologies like machine learning and blockchain, paired with military-grade system security. Your organization will run on software augmenting human intelligence - the best of both worlds.