Success Story: Asset Turnaround in a Distressed Industry (CS242a)

Taking out cost in a crisis situation

This story is for executives who:

• Are underutilizing their aviation fleet.

• Are not certain their reporting dashboards are providing accurate and relevant information.

• Want to reduce their aviation division’s carbon footprint.

The Challenge

This company is one of Canada’s largest integrated energy companies and operates one of the country’s largest aviation departments. Management was aware they were excessively using third-party charter services and utilization of their own fleet was suffering. After a thorough Maine Pointe analysis, it was evident that significant change was necessary to drive down costs across several areas of their aviation division, including fuel use, crewing, maintenance, and scheduling.

The challenge was clear - take costs out while still servicing 250,000 passengers a year, meeting the needs of business units across five locations, and maintaining a safe operation. Following our successful engagement with the company’s ground transportation division, the SVP of field logistics once more turned to Maine Pointe for the answers.

Optimizing scheduling and reducing reliance on charters

It quickly became apparent that, the company had a functioning corporate flight department, but needed to develop the capabilities of a small airline. Virtually every KPI indicator was incorrect or inaccurate, and unfavorable against industry benchmarks. There were no systems in place for yield optimization, crew scheduling, maintenance, fuel conservation or timetable planning. Maine Pointe deployed a multi-faceted solution which:

• Focused on reducing the number of charters and optimized owned assets
• Tirelessly worked with business units to develop an agreeable flight schedule which optimized load factor and asset utilization
• Created a state of the art operations control center (OCC) for continuous monitoring and management of all aviation-related processes
• Developed an operational dashboard with key metrics and a meaningful,
  accurate scorecard
• Developed a system for crewing the aircraft more efficiently with better coverage

To ensure we understood the needs of all aviation users across the company, Maine Pointe conducted a passenger survey which opened up two additional destinations, as well as an ‘Aviation Users Group’ for key stakeholders to meet monthly, ensuring on going optimization of the service.

The Results

The tools developed by Maine Pointe and our client as part of an Aviation Costs Reduction Project, delivered a multi-faceted solution which provided continuous management and monitoring of all aviation-related processes. This enabled our client to reduce reliance on third-party charters and optimize usage of their own fleet.

• Annualized savings of 20%, exceeding Maine
  Pointe’s high-end target
• Improved use of own fleet by as much a 96%
• Reduced overall fuel use by 28% and improved fuel
  efficiency by 8%
• Carbon emissions reduction equivalent to 2,173 passenger vehicles taken off the road
• Improved load factors from 39% to 55% (despite year over year volume being down)
• Delivered a 7:1 ROI

Lessons learned for other executives

• You can have full control over lodge occupancy and allocation.
• Accurate cost-of-ownership modeling is a powerful tool in negotiations with third-party providers.