One of the most asked questions we receive is built around the topic of savings that can be achieved by using airline real-time operations dashboards. In our latest blog post, we already discussed the financial effort of setting up and operating an airline operations real-time dashboard.
However, we did not cover the aspect of saving potential, which is related to a dashboard. Therefore, we thought it makes sense to put a spotlight on potential financial benefits, linked to real-time dashboards.
Thus, to enable airlines to compare both sides of the medal — cost, and savings — and to set up a proper business case. Similar, as mentioned when discussing the costs, the first answer when looking at financial savings is “it depends.”
Nonetheless, we will try to assess this aspect step-by-step.
What are the benefits and related savings of an airline operations real-time dashboards?
When looking at our clients, it can be said that a real-time dashboard helps to improve the most critical operational KPIs of an airline. We already talked a lot about that topic in previous blog posts:
- Why real-time KPIs will boost your operational performance
- How to improve your airline’s on-time performance in 30 days without spending several hundred thousands of dollars.
Let’s focus on on-time performance to create a straight-forward business case
On-Time Performance is the KPI, which has to be mentioned first and foremost when talking about improvements by a real-time operational dashboard.
Delay costs are one of the most painful cost drivers of an airline. Lufthansa, for example, spent €500 mil in 2018 on compensating passengers. And this figure does not include additional costs for maintenance, crew, fuel, etc. And since a business case that includes several KPIs would quickly get very complicated, we will focus on OTP only with the following calculation.
Although many factors —internal and external— influence OTP, we observed an improvement of this KPI by 1% – 4% over 12 months.
Airline Operations Dashboard Savings — Let’s do the math.
Of course, we have to work with several assumptions. And of course, the case might look slightly different depending on your fleet size, average delay minutes, and delay costs you are calculating.
In this case, we’re going to work with the following assumption of our airline; we like to call Freedom Airlines. Freedom Airlines operates 30 aircraft, with a total of 120 flights per day. The average delay minutes of Freedom Airlines sums up to 11 minutes, which is pretty much standard according to Eurocontrol.
Freedom Airlines calculates delay minutes with €79, according to University of Westminster for EUROCONTROL. Since Freedom Airlines does not take into account the first three delay minutes, they have an average delay of 8 minutes (11min – 3 min), summing up to 960 delay minutes — daily.
On an annual base, this sums up to roughly 350,000 delay minutes or approximately €27,7 mil.
Let us chose a conservative approach and assume a real-time dashboard (for example the A:Wall) helps to improve the OTP by 1.5%. That will lead to a reduction of more than 5,000 delay minutes annually.
Subsequently, savings of €415,000 can be achieved.
What about the costs?
According to our last post, the basic A:Wall package requires an annual investment of approximately €50,000. The basic package already contains everything that’s required for monitoring and improving the OTP.
Accordingly, the usage of a real-time dashboard (in our scenario) achieves savings of approximately €365,000 within the first 12 months.
Although this business case is based on several assumptions we do hope it provides a first overview of possible savings related to a real-time dashboard.
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