Perspectives: Production Variance

As I have read and listened to the discussion of airline profitability and air-traffic control (ATC) problems, punctuated by bankruptcies, delays, congestion, meltdowns, etc., I have concluded the problem, and therefore the solution, lies outside the current industry focus. Please allow me to explain.

For more than 30 years, in spite of their best efforts, the network airlines and the world’s ATC systems have continued to produce less-than-stellar results, both financially and operationally. Contrary to conventional wisdom, the fundamental problem pushing so many airlines toward the brink is not the hub schedule, weather, fuel costs, ATC, congestion, delays, lack of technology or even unit wage rates.

The underlying cause of 80 percent of the airline industry’s financial problems and the inability of the ATC system to meet demand is production variance created by the unmanaged complexity within the airline.

Production variance, driven by unmanaged complexity within the airline’s daily operation, especially at the hub airports, represents the fundamental flaw within the current airline/ATC production process that, over time, will decimate airline after airline. Yet production variance, the inability to consistently deliver a quality product, is not measured, quantified, or is it clearly understood.

To solve this problem, one must first forget it is an "airline" or "ATC" problem. Conversely, think production, think right part, right place, right time (smiling pax, bag/cargo, destination curb, on time), think lean. Think of this as a flow of materials problem. Think 1950s production process (current airline/ATC linear production process) versus Toyota production system (required airline/ATC production process).

For example, by adopting industrial engineering principles outside the mainstream thought process, Toyota embraced lean production. Based on W. Edwards Deming’s principal of "build the process that gives the right answer, first time, every time," Toyota leapfrogged Detroit’s outdated production processes from the 1970s right up to the early 1990s, when the Big Three belatedly woke up and smelled the coffee.

First, let me say that airlines’ financial problems cannot be laid at the feet of the government or deregulation, and cannot be solved by the government. Yes, of course, the build-up of aviation taxes, security measures and FAA’s less-than-sterling performance over the last 30 years add to the problem, but they are not the problem.

It is clear airlines need a new direction, or actually an old direction. I continue to go back to Deming, whose theory is that the only way to reduce costs is to improve quality. And one of the fastest ways to improve quality is to significantly reduce the large amount of production variance (i.e., defects) airlines and aviation authorities now incorrectly accepted as "normal" within their operations. (More than 40 percent of your product delivered late is definitely not normal).

As Jack Welch of GE is reported to have said, "Variation is evil." We agree.

Within two to three years, airlines will have the ability to improve on-time arrival, while decreasing block time 10 minutes per flight, with no change in the weather or ATC system. While it is not hard to accomplish this, actually believing it can be done and accepting the fact that the airlines already have all of the communication tools, data, internal control and capability to accomplish this task on their own is very hard.

As a path forward to solve the airline/ATC production problem, ATH Group has been working to bring the Lean Six Sigma philosophy to the airline industry through our patented "Attila" solution for over 15 years.

Based on our analysis, the airlines must, first and foremost, stabilize the movement of their aircraft. Further, airlines must understand and verbalize that FAA is not relevant in the current discussion of delays and congestion. First and foremost, FAA’s solution is 10 years away at best. What are airlines going to do for their customers tomorrow and the next day?

In summary, it is not the network peaked schedule, airport capacity, lack of runways, the ATC system, nor too little technology that drives up costs, decreases utilization and limits revenue through poor quality, but the network operation as currently operated, which represents a relatively simple, and solvable logistics problem.