Key Performance Indicators (KPI) have become a standard tool to rationalize a company’s performance. Especially in operations, airlines use the KPI tool to track their performance. This article goes beyond usual KPI usage and manifests the importance of KPI benchmarks. Read on to find out why your airline must use benchmarks for operational KPIs, how to set them up, and why real-time matters.
The Status Quo of Airline KPIs
Almost every airline I know is using operations KPIs. On-time performance, regularity, or delay reasons are just a few prominent examples of the KPIs airline track. Moreover, many airlines made considerable investments in getting more data-driven during the last years and setting up more complex KPIs. Even more importantly, many airlines set up real-time monitoring of operations KPIs besides the traditional KPI reporting.
However, many airlines I’ve talked to consider the KPI topic as a purely internal topic. That means they look at internal data only and monitor their internal KPIs only.
KPI Benchmark — A Quick Explanation
A KPI benchmark goes one step further. It includes competitors’ data into your KPI framework. Accordingly, you can monitor your essential operations KPIs in relation to other airlines. Therefore, a KPI benchmark always requires external data since —usually— an airline does not have the operational data from other airlines.
The Importance of Real-Time When it Comes to Operations KPI Benchmarks
When talking about operations KPIs, you need to distinguish two perspectives. On the side, there’s the reporting perspective. In this context, you look at KPIs over a specific, more extended period — for example, weeks or months. On the other side, there’s the aspect of real-time. In that context, you monitor your current performance. Especially since airline operations is a real-time business, the latter is essential.
Subsequently, a benchmark of airline operations KPIs must also cover both perspectives — real-time and extended periods.
Why Your Airline Must use KPI Benchmarks — 4 Reasons!
Including information and KPIs from your competitors brings unbeatable advantages to airlines. With the following, we put together four of the most important benefits.
KPI Benchmarks Help to Contextualize Your Performance
First of all, KPIs are just numbers, just facts. Without a proper context, they are useless. Therefore, you can, of course, put them into an internal context. That means you compare a KPI with an average, target values, or previous values.
However, incorporating your competitors’ KPI defines an entirely new level of context. Suddenly, you can compare your performance with other airlines and thereby identify if it is only you who’s performing good/bad or the entire industry.
Let’s take the following example: It’s Monday morning, and your airline’s on-time performance drops to 70%. However, the reason isn’t apparent. Is it an internal issue? Weather problems? An ATC strike? Airport closure?
In such a situation, a KPI benchmark helps to assess the situation. If you can see your competitors’ on-time performance is dropping too, you are likely facing some more significant external issues. Nevertheless, if your competitors’ KPIs remain stable internal problems might be the root cause.
You Gain External Insights
Business is about information. Having more accurate, broader, and more in-depth information than your competitors helps gain a competitive edge. And what is more useful than knowing how your competitors perform on an operational level?
Are your competitors more punctual? Are the delay reasons comparable? The delay minutes on a similar level? Etc.
KPI benchmarks are such a powerful tool to gain insights about your competitors. And always bear in mind: This is possible even in real-time.
Identify Areas for Improvement
It’s good to know how your competitors perform. Nonetheless, knowing something won’t improve anything. But, knowing something builds the base for improvements. Actually, I can’t imagine a better tool than KPI benchmarks.
By comparing your performance to your competitors’, you have the chance to identify your weak points, your areas for improvement. Why did your OTP drop today when everybody’s else maintained a high level. Why is your airline facing dozens of fuel-related delays at airports XYZ today, while no other airline is experiencing the same?
That list of examples is endless. Especially real-time KPIs, again, help to identify weak points exactly when they occur. So it’s up to you to monitor and assess them. And to implement necessary countermeasures.
KPI Benchmarks Motivate!
Finally, an aspect that is often underrated yet so important! Depeche Mode once sang “it’s a competitive world.” And they are so right. You want to be better than your competitors. And every employee of an airline wants to be better than competitors. The problem is lacking a (real-time) benchmark of operational KPIs is like a blindfolded sprint: No one knows how the others are performing.
KPI benchmarks create transparency and thereby help to motivate airline’s staff. For the first time, they can see how competitor A and competitor B perform. This is so motivational!