A debriefing report

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A debriefing report

• Integration of Canadian Airlines
• Jacques Cherrier

November
No
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The presentation

• Overview of the integration task
• Key deliverables from an IT perspective
• Zoom in on Marketing and YM the lessons learned
• Project management, IT
• Users (revenue controllers)
• Methodology (Optimization, forecasting.)

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Special thanks

• Jeffrey Kastner, Manager IT solutions
• Pierre Chouinard and Elaine Drury (with the
  project team)

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The task at hand
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1999 2 major airlines
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Air Canada , 2001

• The new Air Canada is now the 11th largest
  carrier in the world
• Expanding our fleet, currently 376 aircraft
• Flying more than 2000 non-stop flights per day
• Over 30 million passengers to 150 destinations

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The Key deliverables in 2000

• Integrated the Air Canada and Canadian schedule
• Merged the airport operations, including changing
  terminals at Toronto's Lester B. Pearson
  International Airport
• Combined the Reservations and Flight Operations
  systems.
• Hired and trained over 1,700 new employees
• Upgraded airport facilities for better customer
  service

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The Business Challenge

• Two Major airlines of similar size and complexity
• Different work groups representation
• Canadian Airline financial difficulties

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IT as a key partner
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The IT Context

• Complex technology infrastructure
• Smorgasbord of technologies
• Systems are highly intertwined and must all work
  together reliably
• More than 300 applications supporting functions
  such as passenger reservations, seat inventory
  management, flight scheduling, load planning and
  forecasting for each aircraft, the frequent flyer
  programs, flight departure control, invoicing,
  payroll, and so on.

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Reservation system

• Reservation system is at the core of the airline
  business
• Many of the problems encountered during the early
  days of integration can be attributed to having
  two separate reservation systems
• Air Canada had its own Reservation System (RES
  III) and Canadian was based on Sabre technology
• Decided to consolidate to Air Canada's systems
• Mainly due to implementation and training
  considerations
• One million Canadian Airlines reservations were
  successfully transferred to the Air Canada
  computer reservations system

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RES effort

• Monumental task of over 100,000 PD of work
  executed in 9 months
• Twice the size of Y2K preparation in one quarter
  of the time
• More complex than Y2K
• effect on system capacities
• business process changes
• training issues
• new functionalities to introduce
• massive moves of personnel and equipment
• data merging
• dependant on great unknowns in business direction

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Airport systems

• Developed special front-end software that enabled
  use of the Air Canada computer terminals to
  access records on Canadian system
• Trained 470 Canadian employees on Air Canada's
  system
• Self-service Express Check-in Kiosks
• Originally put into production in 1999
• Helped to mitigate many of the line-ups at
  airports

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Project Management Office

• Managed and controlled about 125 IT projects
• Also managed many of the business-related
  projects
• Project management disciplines throughout
• Tight change control
• Drew heavily on Y2K project experience

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Next steps

• Single operating carrier code planned for June
  2001
• Improving the airline profitability
• YM and related tactical systems
• Scheduling deployment to leverage the global
  network
• Improved pricing decision making
• At Air Canada, IT has established its credibility
  as a strategic business enabler

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Focus on Marketing
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Marketing IT Interview with P. Chouinard,
Project Manager Marketing IT
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The mandate

• Target set of applications was Air Canada, with
  existing functionality, even though some of the
  CP systems provided additional functions
• No attempt was made to "optimize" the target
  portfolio of applications by substituting
  "better" CP applications, or introducing
  additional functionality to AC applications

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Do

• Get the business fully on board.
• AC Marketing set up its own Integration group,
  with formal plans and activities. This was
  critical at cut-over, migration would not have
  happened without this.
• Set up a separate group to handle all changes to
  the hardware, network, etc.
• Make sure you have the right people. Make the
  necessary adjustments as soon as problems are
  identified.
• Communication, communication, communication

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Dont

• Don't make everything cut-over critical advance
  or delay implementations as much as you can.
• Don't attempt to make historical data perfectly
  compatible with the target applications you may
  waste a lot of energy here.
• If it is not compatible, define alternate
  solutions or drop it.

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User Perspective Interview with E. Drury,
Project Leader Marketing
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The goal

• Data integrity had to be maintained
• Quality of AC data should not be compromised by
  the introduction of CP
• Implementation was a Fixed date
• All was accomplished except some historical data
  back load that carried over the RESIII migration
  date

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Lessons learned

• Manage scope creep define Business
  Requirements as much as possible
• Identify all impacted areas
• If not, there will be friction with IT and
  Project Management to deliver what is required
  due to resource constraint
• Reliance on external consultants made life
  difficult
• Turnover
• Sharing plan, progress reports...

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Lessons learned (contd)

• Effort was underestimated to manage CP on top of
  ACs current route structure
• new controllers without experience and little
  market knowledge
• methodological challenge (forecast, setting
  allocations)

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YM methodology OR experiences
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Different philosophy and related systems

• From a Virtual Nesting (Financial Bucket) system
  to a Fare class Leg Based system with Bid Price
  OD control
• Similar type of MI system but with different
  perspectives
• Allocation by bucket versus booking classes...
• No change to the AC optimization logic

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Forecasting (leg based demand)

• Historical CP data with actual bookings but no
  forecast was ìmported
• Forecast at cutover
• Sponsorship was effective on parallel routes
  where both AC and CP had flown
• For some non-parallel routes sponsorship was
  applied (e.g. US short haul OD1 OD2)
• For most non-parallel, manual allocation setting
  (e.g. International destinations)
• Revert to normal production process after X
  weeks
• Different per type of markets

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Revenue input

• Revenue input for YM derived from AC data
• The average yield on CP lower than ACs level
• Applied the ODF and Leg based fare from AC to the
  parallel routes
• For the non-parallel routes, values where derived
  from an average Yield per mile from logical
  market cluster

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Lessons learned

• Need for calibration (cutover and on-going)
• User requires system/OR experts
• Make sure you are present and pro-active
• Fine tune parameters and YM component as market
  particularities emerged
• e.g. OD fares used in the BP calculations at
  cutover versus reality
• HKG-YVR X with HKG- YYZ is only 100 more for
  a 3,000 mile add-on journey

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Lessons learned (contd)

• There will be an impact on the stability of the
  forecast
• Flight consolidation, stimulated demand
• Difficult to provide valid revenue outlook
• No real solution but monitoring and calibration
• Do not expect that historical fare input to be
  readily usable
• The mix may not be what the host airline is
  desiring
• Data may not be packaged as required (different
  rules for OD trip building)
• It is more important to turn up with a reasonable
  scenario and adjust as actual input come in
• Market realities will be integrated as the
  business progresses