I love airline key performance indicators (KPI). Probably, I love KPIs in general. They give me the feeling of being in control (although I’m not a control freak). And of course, many of the discussions I have with colleagues from airlines revolve around KPIs.
Here’s A Little Backstory First
I’m currently running that super-amazing format Tea with Me. The idea is pretty simple: You can book a 30-minute slot in my calendar to have a virtual cup of tea and a relaxed chat. These discussions are not solely about KPIs but also about trends, technology, or airlines in general.
Last week I had a chat with a Vice President from Air Asia. I genuinely admire Air Asia. I think they are one of the rare airlines that deeply understood the challenges and potential the internet is holding. On top of that, with Tony Fernandez, Air Asia has a visionary but down-to-earth leader.
Of course, the discussion was also about Corona and its impact on the airline industry. Interestingly enough, our chat came to a point when the person I’ve talked to asked if (operational) KPIs still have the same relevance in such unprecedented times? He had the feeling that airlines don’t focus on KPIs at the moment since many of them are in a fire-fighting modus and not caring about facts and figures.
Actually, this standpoint isn’t uncommon at all. Nonetheless, I’m convinced that KPIs are the bedrock of a successful airline and especially operations. Moreover, I firmly believe that KPIs unleash their full potential when sailing through stormy seas.
Here’s why I think KPIs are now more critical than ever.
KEY PERFORMANCE INDICATORS ARE A SHOULD-HAVE IN GOOD TIMES AND A MUST-HAVE IN BAD TIMES
Always like to use a metaphor to explain it. Imagine a wealthy person — let’s call him Jeff— with a monthly income that is steadily growing. Jeff’s income is much higher than his monthly expenses. Jeff does not necessarily need financial KPIs (of course, you wouldn’t call it KPIs in private life). Jeff doesn’t need to track precisely where he spends money or how to save money. In fact, Jeff would be wise to do so, but it isn’t a must. We can consider it as a should-have.
Now, due to a crisis, Jeff’s situation has changed. He —unfortunately— lost his entire money, and his monthly income decreased massively. He now has to track precisely where he spends his money to manage his month financially. Monitoring and tracking “KPIs” suddenly became a must-have in order to lose control entirely.
I think the same accounts for airlines. In times of growing market and profitable business, KPIs are essential to improve further and enhance. However, personally consider it as a should-have.
But in times where everything went south —similar to Jeff’s situation— KPIs are a must to keep control and manage the situation.
KEY PERFORMANCE INDICATORS SERVE AS FIXED STARS IN UNPRECEDENTED TIMES
Corona hit the airline industry with an incredible and unthinkable impact. And “Unprecedented” is probably the most-frequent used word at the moment.
KPIs, in my opinion, are one of the essential tools an airline can rely on right now. The right KPIs help airlines to monitor, manage, and control the situation in the best possible way. Undoubtedly, an airline needs different KPIs than in pre-COVID time. On-time performance and seat-load factor are the KPIs any airline is interested in right now. But topics, such as restricted countries, parked aircraft, served routes (to name a few) help to assess the situation.
Indeed, every airline has to define its right set of key performance indicators, which assists at the moment. There’s no one-size-fits-all. But: The right set of KPIs captures the essence of a situation perfectly and helps to make the right decision. Especially during turbulent times with news every second, KPIs help to fade-out noise and concentrate on the relevant facts and figures.
IMPORTANCE GROWS ON THE WAY BACK TO NORMAL
The above-mentioned becomes even more relevant when you think about the long way back to normal.
Fortunately, there is more and more news about airlines that re-start their operations. Nevertheless, it’s evident that we are at the beginning of both a new normal and long-lasting process.
At the moment, no one knows how everything’s going to develop in the next months. Are we going to face a second wave? Which airlines are going to survive? What about new regulations?
The only thing that is clear from my POV is that we are facing a dynamic situation. And the word “unprecedented” will continue to fit the situation for the next months.
That’s why I think key performance indicators must play a vital role in every airline that wants to stay in control of the situation. For every airline that plans to act instead to react. And every airline that intends to make decisions based on facts instead of gut-feelings.
Similar to the current situation, the upcoming months will require different KPIs. That set of KPIs will be a mixture to previously, standard KPIs, recently added, and additional ones that help to assess each particular situation.
Accordingly, I’m super-convinced that airlines that can adapt KPIs perfectly and seamlessly to each situation will make better decisions and win the race in the long-run.