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1 Practical use of six-sigma for the IATA Fuel Program Tom Fodor Assistant Director E&M
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2 13-14 April 2010 Ops Conference 2 230 airlines Representing 93% of scheduled international air transport IATA is an association of:
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3 13-14 April 2010 Ops Conference 3 IATA’s Mission: To represent, lead and serve the airline industry Represent airlines’ interests to governments & international organizations Assist the airlines in developing solutions to the issues affecting efficient operations
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4 Fuel Price Evolution Forecast average fuel price for 2012 $129.2 / barrel Platts, September 28, 2012 $138.7 / b Nov. 5, 2012 LFI Conference 2012
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5 IATA’s Four-Pillar Strategy Invest in new technology Operate more efficiently Build & use efficient infrastructure Use effective economic measures Aviation & Climate Change Aviation is facing the challenge Nov. 5, 2012 LFI Conference 2012
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6 IATA Green Team Achievements 2005-2012 Americas: 17 Europe: 40 Africa/MENA: 27 ASIA/ASPAC: 27 111 visits 41.3 M tons of CO 2 US $9.8 B Nov. 5, 2012 LFI Conference 2012
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7 IATA Green Team Identified Savings Potential Average identified saving is 5% of the airline fuel budget Savings range from 2% to more than 14% (higher values for airlines that did not have a structured fuel efficiency program in place) Based on the actual fuel efficiency assessments, the major savings come from Flight Dispatch and Flight Operations Nov. 5, 2012 LFI Conference 2012
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IATA Methodology for Fuel Program Define Measure Analyze Improve Control Lean Six Sigma Methodology Combines the Lean and Six Sigma methodologies Lean: reduce waste and add value Six Sigma: reduce variation in product output, data driven, uses statistical tools IATA uses the DMAIC process for the fuel program DMAIC Process 8Nov. 5, 2012 LFI Conference 2012
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9 Define Baseline Phase 1 Phase 3Phase 2Phase 4 Implementation Execution Implementation Plan IATA Fuel Efficiency Program – Phase 1 Nov. 5, 2012 LFI Conference 2012 Fuel Program Setup Define Baseline Engage Executive Management Support Define Corporate Fuel Process Define Organization Establish Fuel Team Select Program Methodology
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10 Executive Sponsor, Fuel Manager, Fuel Team The Fuel Implementation Organization Nov. 5, 2012 LFI Conference 2012
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11 The Fuel Efficiency Implementation Team Nov. 5, 2012 LFI Conference 2012
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12 Responsibilities and Accountabilities Nov. 5, 2012 LFI Conference 2012
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13 Phase 1 Phase 3Phase 2Phase 4 Implementation Execution Implementation Plan IATA Fuel Efficiency Program – Phase 2 Fuel Program Setup Define Baseline Nov. 5, 2012 LFI Conference 2012 Perform Gap Analysis Review all five operational areas – Flight Operations, Flight Dispatch, M&E, Ground Operations, Cabin Identify initiatives Establish preliminary savings targets
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14 IATA Fuel Efficiency Gap Analysis Nov. 5, 2012 LFI Conference 2012 Areas covered: Flight Dispatch – 8 areas reviewed Flight Operations – 14 areas reviewed Engineering and Maintenance – 8 areas reviewed Ground Operations – 3 areas reviewed Cabin – 4 areas reviewed Objectives: Reduce weight Reduce drag Reduce engine specific fuel consumption
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15 Basic Data – Fuel Budget Nov. 5, 2012 LFI Conference 2012 Calculated for the previous 12 month period
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16 B747-400 Fuel Penalty for Extra Weight B744 weight factors 4Hours 3.9% 7Hours 4.1% 8Hours 4.1% 12Hours 4.7% Nov. 5, 2012 LFI Conference 2012
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17 Basic Data – Fuel Penalty 17 Nov. 5, 2012 LFI Conference 2012 Fuel burn (penalty) in kilograms to carry 1 kg additional weight on the entire fleet for 1 year
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18 Initial Assessment of Potential Savings Nov. 5, 2012 LFI Conference 2012 Example: Potable water quantity reduction Fuel savings calculated based on water consumption of 0.3 l / pax / hr using average flight length
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19 IATA Fuel Efficiency Program – Phase 3 Phase 1 Phase 3Phase 2Phase 4 Implementation Execution Fuel Program Setup Define Baseline Implementation Plan Nov. 5, 2012 LFI Conference 2012 Perform Benefit / Effort Analysis Prioritize Initiatives Risk Analysis / Mitigation Managing the Change Build a Business Case Define KPIs and OPMs Identify Data Requirements / Source Develop Implementation Plan
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20 Implementation Management “Formalize” in the Planning Process: Documented and detailed implementation plans Detailed timelines with well-defined milestones Accurate measurements and tracking results to plan Quantification of periodic and cumulative benefit to the airline Nov. 5, 2012 LFI Conference 2012
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21 Rating the Project Effort Benefit Nov. 5, 2012 LFI Conference 2012
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22 Setting Priorities Start Here Nov. 5, 2012 LFI Conference 2012
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23 Mitigate / Eliminate the Risk of Safety and Uncertainty Safety Risk Management Nov. 5, 2012 LFI Conference 2012
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24 LFI Conference 2012 Nov. 5, 2012 Project Work Plan Project timeline and the milestones depend on: Required resources, carry out survey Development of new servicing procedures based on the survey results
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Communication / Change Management Internal communication to include: Ground Operations management and personnel Flight Attendants and Pilots Supply Chain / Contract Management Internal stakeholders External communication: Ground Service Providers 25 LFI Conference 2012 Nov. 5, 2012
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26 Selecting KPIs KPIs Should be SMART Specific – Clearly defined performance requirement Measurable – Defined in a quantifiable way Achievable – Realistic, manageable Relevant – Directly related to the desired goal Time-constrained – Set to a defined time span Nov. 5, 2012 LFI Conference 2012
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27 KPIs are supported by trend graphs & performance measures to show progress against the specific targets in each initiative of the program Example of an Executive Level Dashboard Using Business Information (KPIs) Nov. 5, 2012 LFI Conference 2012
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28 LFI Conference 2012 Nov. 5, 2012 Key Performance Indicator (KPI) & Operational Performance Measures (OPMs) The company’s KPI and supporting OPMs for the project are: Part of the overall weight reduction initiative (KPI) Reduction of water servicing quantity in consideration of passenger load and flight length plus other considerations (OPM) % of flights serviced to policy level (OPM) Resultant fuel savings when comparing actual water weights carried to pre-initiative baseline levels (OPM)
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29 LFI Conference 2012 Nov. 5, 2012 Data Requirements Data elements for tracking actual results Aircraft water tank capacity Projected flight time and associated policy water volume Actual water volume after servicing Volume of water remaining on arrival Number of passengers and crew Flight time (block to block) Planned consumption rate Actual consumption rate Identify source of data Ensure data quality
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30 Implementation Plan Project / Objective Benefit / Effort, Priority Target Savings Issues / Tasks Duration / ROI Nov. 5, 2012 LFI Conference 2012
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31 IATA Fuel Efficiency Program – Phase 4 Phase 1 Phase 3Phase 2Phase 4 Fuel Program Setup Define Baseline Tracking Results Analyze Results Adjust Policies and Procedures Sustain & Control Implementation Plan Implementation Execution Nov. 5, 2012 LFI Conference 2012
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32 LFI Conference 2012 Nov. 5, 2012 Build Statistics Track actual savings against plan and identify under-performing areas Savings can be calculated from weight reduction and fuel penalty value
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33 LFI Conference 2012 Nov. 5, 2012 Monitor Performance
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34 LFI Conference 2012 Nov. 5, 2012 Monitor Performance Look for significant variance from plan Implement corrective action accordingly
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Continuous progress check Identify any implementation issues Improve procedures as necessary Institutionalize changes for sustained results Modify organization structure if required Adjust Policies and Procedures LFI Conference 2012 Nov. 5, 201235
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Institutionalize the Improvements LFI Conference 2012 Nov. 5, 2012 36 To sustain and control results:
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37 Fuel Book 5th Edition & Implementation Guidance Material Fuel Book 5 th edition highlights: Time dependent maintenance costs Aircraft performance monitoring (APM) Released: October 2011 Implementation Guidance Material: Setting priorities Risk assessment Building a strong business case Program management Metrics for tracking implementation Key Performance Indicators Released: June 2011 5th edition Fuel Efficiency Program Implementation Guidance Material Nov. 5, 2012 LFI Conference 2012
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38 IATA Fuel Efficiency Regional Workshop - Amman Oct 6-7, 200938 IATA Fuel Efficiency Regional Workshop - Geneva June 9-10, 2009 38 23 Jan 2009 Singapore Airlines Thank you!
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