OM in Action 2014 Today’s Speaker: Mr. David Brown Manager, Operations Services Cathay Pacific Airways Topic & Issues: Cathay Pacific: Operations Management in Action Airlines are constantly striving to maximize profits in a highly competitive environment. However, effective management of the business is extremely complex because decisions often have to be made in an environment that is acutely affected by temporal, spatial, and conditional factors that greatly affect realtime, economic decision making. This talk takes a look at the various behind-the-scene aspects of managing the business where operations management techniques can be employed effectively. This presentation is brought to you by the BBA-OM program. http://ihome.ust.hk/~bbaom/ Mr. David Brown Career • About 20 years in airline flight operations management and control • Currently Manager of Operations Services at Cathay Pacific, responsible for flight planning and navigation, flight dispatch, and operations engineering Academic Background • MTech Knowledge Engineering, National University of Singapore • MBA (Finance), San Francisco State University • BSc Marketing, Golden Gate University, San Francisco Operations Management in Action Overview The Airline Business Fleet Planning Resource Scheduling Yield & Inventory Management Ground Operations Flight Operations Key Financial Performance Indicators ATK - Available Tonnes Kilometers RTK - Revenue Tonnes Kilometers a measure of capacity a measure of production Income Revenues RTK Expenses ATK RTK ATK ATK Profit Yield Load Factor Cost Production compared to capacity Transportation Network Hub & Spoke Operation Range of Modern commercial Jets A320 (3,700 km) A330-300 (11,300 km) B777- 300ER (14,490 km) Service Supply Chain Purchasing the most cost-effective aircraft for the network Fleet Planning Match capacity with demand to optimize yield Flight Scheduling Optimize resource utilization Sales & Reservation Minimize turn time by effective coordination of multiple tasks Passenger Acceptance Minimize queuing and processing time Pre-Flight Preparation Efficient collection of data for analysis & performance measurement Flight Operation Post-Flight Processing Minimize operating cost without compromising safety and security standards Fleet Planning Long Term Planning • Buying The Right Aircraft for the Network Structure Medium-Short Term Planning • Optimize Utilization of Aircraft to Flights • Optimize Assignment of Capacity to Demand Payload vs. Range Payload Zero Fuel Weight (ZFW) Take-Off Weight (TOW) Max Fuel Tank Capacity (MTC) Range Resource Scheduling Aircraft 1 HKG + 00:01 387 02:10 504 Aircraft 2 Aircraft 3 - 00:03 Aircraft 4 + 00:30 07:00 110 11:05 +00:16 11:30 HKG HKG HKG 451 111 HKG TPE 408 09:00 838 D Check Maintenance Aircraft 6 -00:07 05:00 261 CDG Aircraft 8 Aircraft 9 HKG 07:15 00:20 06:20 255 450 TPE LHR 04:45 HKG Aircraft 11 251 02:20 410 05:40 + 00:13 05:05 HKG MAN 07:45 701 07:45 LHR 10:35 BKK 12:30 BKK 11:50 702 14:35 4A1 & A NRT HKG SEL CDG 261 07:00 450 +00:03 06:00 250 MAN 261 01:00 #2 ENG HI N2 VIBS. MADD 239. + Aircraft 7 Aircraft 12 TPE 11:00 104 Aircraft 5 Aircraft 10 451 HKG +00:05 02:40 MEL 06:55 HKG 06:00 104 NRT 05:55 08:45 HKG SEL 08:45 505 466 411 13:45 TPE 12:35 HKG 467 HKG Film Shoot for BBC 0900 - 1700 HKG HKG Yield & Inventory Management Pricing Model Sales d- 90 Demand Driven Dispatch Schedule d-7 Schedule d0 Revenue Match demand to inventory inventory = demand demand > inventory demand < inventory demand = inventory Cost Ground Operations Arrival Departure Turn Time Passenger Deplaning Toilet Servicing Cargo/Bag Offload Routine Maintenance Catering Offload Cabin Cleaning Crew Boarding Catering Uplift Security Check Passenger Boarding Cargo/Bag Uplift Door Close Fuelling Pre-Flight Preparation Departure Clearance Cost of On-Time Performance Cost OTP Delay Delay OTP OTP 80.9 % 51.2 % 82 % 52.6 % 77.4 % 2010 2011 47.8 % Year 2012 Within 15 minutes of STD Year 2010 2011 2012 On - the - Dot Customer Processing Time Potential Efficiency = ƒ(degree of customer contact) Single channel, Single phase Multi channel, Single phase Channel – number of servers Phase – number of steps in the service Multi channel, multi phase Phases of a Flight Cruise Climb Take-Off Descent & Approach Landing Flight Planning HKG Flight Information Region & Airways 24ºN N W E BEKOL DOTMI S TAIPEI FIR TAMOT MAGOG ELATO 22ºN ENVAR KILOG SIERRA KAPLI SIKOU GUANGZHOU FIR NOMAN 20ºN IDOSI MANILA FIR DUMOL EPDOS DAGON SABNO ENBOK DULOP IKELA EPKAL 18ºN SANYA AOR DOSUT 110º E 112º E 114º E 116º E 118º E Routes To & From S.E Asia 24ºN N W E S TAIPEI FIR 22ºN GUANGZHOU FIR 20ºN MANILA FIR IDOSI DUMOL EPDOS DAGON ENBOK DULOP IKELA EPKAL 18ºN SANYA AOR DOSUT 110º E 112º E 114º E 116º E 118º E Wind Plot Chart LAX HKG Basic Element of A Flight Plan Flight Levels Weather Conditions for Take-Off Airways Wind Speed & Direction Fuel Log SID & STAR Visibility Fuel Consumption Routing En-route Winds Destination Weather for Landing Available Alternate Total Fuel Required for Flight Allowable Payload Temperature Head Winds Availability Passengers Air Pressure Tail Winds Visibility Baggage Wind Speed & Direction Cargo Wind Speed & Direction Average Fuel Statistics by Aircraft Type Aircraft Type Average Burn Off / Hour Boeing 777 - 300 7000 kgs Boeing 747- 400 10,000 kgs Airbus 330-300 5500 kgs Airbus 340-300 6500 kgs Measuring Fuel Mileage FUEL MILEAGE = DISTANCE TRAVELLED FUEL USED FUEL MILEAGE = AIRSPEED FUEL FLOW Developing a Cost Index Crew, Maintenance, Delay, Etc. Fuel Price, Burn Off Fuel Related Cost Time Related Cost Relationship Between Fuel & Time Cost Fuel Cost Time Cost CI N.B. Time cost varies from airline to airline CI Calculating Cost Index How Do We Calculate the Cost Index ? TIME COST COST INDEX = FUEL COST Unit of Measure : KG/MIN or 100 LB/HR Managing Goals Business Goals Constraints & Choices Operational Goals Thank You
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