Aircraft

Maintenance; One Master index, fits all.

www.boeingmaintenance.com www.Fokkermaintenance.com www.Embraermaintenance.com Many things are written about big data and big data analytics. Many consultancy companies have made this topic to a trending topic, but for what reason? Is it a hype creating a new market for consultants or can we learn anything form it? Lets simplify this hot topic and lets see what we have already inside our companies. What can we do without having these highly expensive professionals on board? By some small steps, the performance of your airline can significantly improve already. The only question is: what is to be measured and what is your favorite measured key performance indicator? To be honest, there is nothing new on the horizon when looking at some activities already taking place within your airline. In fact, being a CEO of an airline, you already have two special kinds of highly skilled and trained employees at your availability. They think and act the same in their own straight and digital way. Correct, it is the technicians and financial staff who are thinking in a digital world and who are very strong doing analytics and mathematics. So, why not use them to the best of their so called big data knowledge? Being a CEO, it is indeed a big challenge to generate the best performance out of both of them and to have them fully cooperating with each other. Although they have similarities in thinking and organizing, to maximize their cooperation isnt a simple task. Whenever you have these two kinds of alpha people working together, it will certainly lead to a strong operational performance at a very low costs level, without a doubt. So, what is the problem? For your airline, you need a high labor productivity ratio to maximize fleet performance and minimize ground time due to maintenance. This target is a responsibility of your Technical Director and his technicians. The technicians will tell you they need a certain number of engineers, mechanics and Cat As to operate the fleet and safeguard quality. But, the financial people will start a debate on this topic. They do not really know how to do it, but they will repeat the total personnel costs of your maintenance department have to decrease in order to reach profit or at least break even levels. Especially in times when revenues are lower than expected, reduction of staff is one of the fastest way to regain profitability.

 Conclusion: Technicians are operational driven to prevent unnecessary ground time and have a limited interest in finance. On the other side, the financials are mainly costs driven and want to reduce costs at all times, without having any operational experience how to do it. Fleet performance versus Maintenance costs Most importantly, they have to understand each other and they have to start communicating in the same logic and language to understand the main problem. To really start the communication about higher fleet performance against lower maintenance costs, you need to start combining data and KPIs. Release the old system where we manage and measure a certain department or process. We have to stop thinking in separate silos or departments. Show your managers and directors the business relation they already have by generating one single KPI or Index based on many combined data. Thats all. Picture 1: example of a classic KPI dash board

With single and stand alone KPIs, the reader of this report must have the ability and must have the time to find correlations all by himself. Furthermore, there are no conclusions mentioned nor what needs to be done. By combining data, the relation between several business processes becomes clear immediately. Combining data and KPIs was also one of the conclusions of a Dutch digital analytics day, held at 24 June 2013, where KLM was elaborating on this topic. KLM concluded to revitalize and start combining their KPIs by searching for the question behind the first question. E.g. what do we want to achieve with this KPI? Which change do we expect by monitoring this KPI? Does this stimulate our staff to reduce costs? Together with the Amsterdam Business School, Nayak Aircraft Services was involved in a study to create one single Master Index consisting of a combination of many data. In fact, the Master index is measuring fleet performance against maintenance costs.

Being an Airline or a MRO like Nayak, it is expected to cover the complete operation at low costs and prices. Measuring more than eight KPIs per department or processes is not only more work to collect, manage and maintain, it is also not giving more transparency. In fact, the Master index is providing information to further fleet performance when being an Airline or support customer satisfaction when being a MRO like Nayak. With half a year of investigation, the students of the Amsterdam Business School in close cooperation with the Finance Director of Nayak, invented the Index including the following ingredients:

The ingredients mentioned here above were put in a formula to generate the unique Nayak Index, combing operational & financial data: The Master index: (1-UGT)*(target DD / DD) * (1+ X* AGE) MX Costs / (FH*FC)

UGT DD Target DD AGE MX costs FH FC

Unplanned Ground Time Deferred Defects Maximum acceptable DD Average age of the fleet Maintenance costs Flight Hours Flight Cycles

The formula was tested and analyzed on different projects and Aircraft types over more than a year to see if the index is sustainable in each and any circumstances. The students even used Linkedin polls on the internet to obtain more information and data. To their great surprise, many Airlines seem to have a great deal of cooperation available at a certain level.

Picture 2: Screenshot Linkedin Poll on decision making

Whenever decisions related to Maintenance costs are taken in cooperation with General Management, at least try to measure these decisions in a combined KPI to support further understanding between department leaders. Generate a full 360 degree understanding of the relation between all departments by bringing raw data together in one combined and single KPI. This is one of the first real challenges behind organizing Big Data. The Master index is just an example of how to use the already available data by combining data to a single KPI in stead of hiring a Big data specialist. As many financial people say and understand; What gets measured, gets done. So, why not start measuring performance against costs? Isnt that your wish as well? Or do you have another favorite KPI, Index or Big data solution..???? Pim van Berkel MSc, October 2013

------------------- Pim van Berkel (1972 Haarlem, The Netherlands) has been working as a Finance Director within the Aviation Industry for more than 10 years. With a cash is king mentality, Pim thrives on performance management. He is keen to implement new ideas which are beneficial to the complete organization. One of his achievements is a fully combined and integrated business plan to monitor and manage the maintenance costs and reserves within a Dutch Airline. Next to his work as a finance professional, Pim is a speaker at seminars and workshops as well. For questions about this article, your favorite KPI, ideas or any other suggestion or question is most welcome at: pim.vanberkel@nayak.nl.