The development of an integrated action plan to reduce non-performance cost for a low-cost airline

What they asked

Our client was a low-cost airline. Their Achilles heel was the cost of non-performance due to flight delays. They therefore wanted to better understand the root causes of these delays, and define a set of preventive and corrective measures to reduce the cost of non-performance.

What we did

The challenge of reducing non-performance cost is to find the right balance between external expenditures and internal costs. External expenditures are caused by delays (such as claims and compensations for hotels, etc.). Internal costs are caused by efforts to prevent these delays (such as spare aircraft capacity, mobile repair teams, etc.). These costs are split over multiple departments, which complicates decision-making.

We created an integrated, non-performance cost model, combining existing and new data from different departments to quantify and understand the relevance and impact of all root causes for delays. This model enabled us to visualise and quantify company-wide trade-offs between departments, and then formulate recommendations to reduce non-performance costs.

What we accomplished

Our bottom-up analysis and fact-based approach ensured that coordination between departments was now based on facts. The airline could now clearly define and manage trade-offs from a company-wide perspective. They also had new insights to help them continuously monitor and steer performance, in an atmosphere in which every department understood its contribution.

We also delivered a roadmap to improve non-performance costs. This roadmap contained six initiatives, including integral performance measurement, right-sizing slacks in schedule, reducing technical delays at outer stations, and more.