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Generational Shifts Socio-Economic– Geo Political – Technology – People/ Resources
March 2013
J.J. DeGiovanni
Socio-Economic
Mobility of the world
Merger
Supply
Geo Political
Open Skies
Fuel
Technology
Information
Aircraft
People/ Resources
Skills
Mindset shift
2
Generational Shifts
Incremental and Transformational Change
What We Do
3
Ground Processing Concerns & Actions
B777 506K lbs. – Fully Loaded
54 Vehicle Movements
207K lbs. of Fuel
348 Passengers
120K lbs. of Cargo
60 Minute Turn
Issues
Injury
Damage (Declared/Discovered)
Mechanical
Foreign Object Damage (FOD)
Actions
Line Operations Safety Assessment (LOSA)
Supplier
FOD Programs
FAA Aviation Safety Action Program (ASAP)
Training
4
Airline Industry Strategy Analysis
Entrants
• Open Skies
• Foreign
Suppliers
• Lower cost
• Expanding services
• Express Providers
• Fuel/New Aircraft
Substitutes
• High Speed rail
• Private Jets share
• Ground transport
Customers
• Emerging Markets
• Low touch
• Economy Driven
• Convenience
Industry
• Consolidation/Alliances
• Labor/Skill/Shifting
• Mega Carrier
• Automation
5
Airline Dynamics
Positive Positive
?
Positive
Low impact
Airline Environment
6
Past Present Future Labor Intensive
• Process
• Paper
Automated
• Minimal touch
Technology improvements
• Enabling/Integration
Rules Based Pay as you go
Global Competition
Wireless communications
Protected Market Open Skies
Force multipliers
• Knowledge/Decisions
Divisional Autonomy Consolidation Common Cultures
Restructured Business Principle Based
Mergers
Organizational Alignment
Safety Mindset
Structure
Consolidation
Best Practice
Drop & Adopt
Aligning Values
7
United 1933
The New
“United”
November 30,
2010 Continental 1934
Distraction Management Focus
Go Forward Plan - 2013
Alignment (85K+ People)
Focus-Purpose
Performance Based-Profit Sharing/Incentive
Accountability
Teamwork
8
Quality/Safety Impacts all 4 Objectives
People Generational Differences
Traditional Boomer Gen - X Gen - Y
Birth dates 1900-1946 1946-1964 1965-1985 1981-1997
Description G.I generation Me generation Latchkey
generation
Digital
generation
Major events Experienced
WWII
Atomic age
Modern
Gov Trust?
End of cold war
Gulf war
Internet
Personality
Traits
Command &
control
Self sacrifice
Optimistic
Success
Company for
life
Independent
Skeptical
Hopeful
Determined
Opportunistic
Likes Respects
Authority
Family
Responsibility
Can-do
Society
Freedom
Work-life-
balance
Public
activism
Latest tech
E-Engaged
Dislikes Waste
Tech-cautious
Laziness Red tape
Hype
Anything slow
Negativity
Safety Self based/why Make Sense Reason based Understand
9
Traditionalist
Strengths
• Get it done
• Objective
• Knowledge
Gen X
Strengths
• Fresh perspective
• IT Savvy
• Inquisitive
Gen Y
Strengths
• Accomplishments/Speed
• Society/time
• E engaged
• Virtual
Boomers
Strengths
• Hierarchy
• Society
• Focus
Balancing Inputs
10
United Keys to Success
• Optimizing strengths
• Growing common vision
• Alignment
• Cross education/ mentoring
• Innovation
Balance / Mentoring / Learning
Mentoring/values
Safety Training (People)
Connecting Across Generations
Interactive
Hands-on/ Touch
Visual
Purpose
Safety Focus
Behavioral Based
Enabling People
Knowledge/ Tools
Transparency
11
Connecting with People
Safety & Technology
Improve Transparency
Data
Results
Efficiency
Leverage Knowledge
Experience
Better Decisions
12
Passengers/
Industry Employed
1990 1995 2000 2005
390 million
pass
433 million
pass
526 million
pass
514 million
pass
462 k
417 k
520 k
375 k
2010
369 k
516 million
pass
Source BTS Data
Productivity - Everything!
Socio Economic
Drivers
New Aircraft
Touch Labor
Use of supply chain
Efficiency
How you think?
Supply Chain
1990 Airlines did everything
2012 : 95% Fuel/ 100% Cleaning/ Heavy Maintenance 50%
Shift in Safety
Increased oversight of supply
Supply integration
Competitors now Business Partners 13
42 Bankruptcy
Economics of Fuel
Facts:
26% of all Expense
Every $1 change in the cost of a barrel of oil
impacts UA $100 million annually
9 Million Gallons used per day at United
Jet Fuel cost 35% more than Crude Oil
14
1980 1990 2000 Today Op Cost
2012
.79 per gal .80 per gal .86 per gal 2.96 per gal 26.3%
• Fare increases and fuel
surcharges as market allows
• Hedging (temporary coverage)
• Additional winglets installations
• B757 Carbon Brakes
• B777 Performance improvements
• ECO-wash
• Aircraft weight reduction
• Aircraft burn bias R&D
• B787
• Fuel Planning
• APU Usage reductions
• Upgrade APU tracking tech
• Gate/ground power systems
• Consolidated data analysis
• Shared best practices
• mainline
• Regionals
• IATA Fuel Gap Analysis
• Flight planning systems
• Dispatch efficiency
• Consolidated tanker operations
• Efficiency training
Geo Political
Open Skies
Drives increased competition
Need for operating efficiency
Safety
Reduce injuries
Damage Cost
Regulations
OSHA
Increased oversight
Fines/ Inspections
Flight cabin oversight
Safety Management System (SMS)
Integration of Airline
Behavioral Based
Personal Ownership
FAA 2014 regulation 15
Future Markets-Major Shifts
16
Framework Plan
Recognition Safety Knowledge Communication Safety Leadership Team
MoveSmart/ BackSafe TEM - ADD UP Cost of Poor Safety SCA*
Integrated SMS VPP–Safety Excellence Safety Act. Program LOSA
Thinking Mindsets Reliability Advocate Roles
Team Based Safety
Cu
ltu
re
To
ols
S
ys
tem
s
Pe
op
le
•Safe Environment
•Going the Extra Distance
•Proactive in Safety
$
Time
•Injury
•Damage
•WC Costs
•Lost Revenue
AFA IBT
IAM UAL
Maintenance
Airport Operations
On Board
Flight Ops
•People
•Behaviors
•Location
•Intervention
* SCA – Safety Compliance Assessment
Summary
18
Mergers
Distractions
Management
Threat & Error Management
Competitive Cost
Fuel
Service Providers
Communication
Real time data
People
Adaptable/Skills
Alignment
Principle/Values
Technology Socio
Economic Geo Political
Competitive Product
New Markets
Enablers Stability/Not
Knowledge/Experience
Capability Global Opportunities
Backup
Common and Special Cause
Safety Management System
Alignment
Framework
19
Common vs. Special Cause
20
Wingtip Fracture- Fall Special
Cause =
Significant
Vehicle Accident
• Towing
• Slips/Fall
• Strains
• Walked into
Common Cause
Time
QT
Y
Special = Investigation & High Visibility
Common = What We Typically Accept
Actions
• Threat & Error Management
• MoveSmart
• Near Miss Program
• Communications / Advocates
Changing Performance is a Common Cause Issue
Operational Efficiency Improvements
SMS
Policy – What’s to be achieved
Risk – Define/Control
QA – Monitor and Feedback
Promotion – Creating a Positive Culture
LOSA
Self Correction
Behavioral Based
Peer to Peer
SECA
Structure/ Framework
Training
Recognition
21
Aligning 84k people
Adaptability
Ability to bring and be changed
Manageability
Framework to think
Team work
Growing focus for team focus/recognition
Balance
Work life/family balance
Loyalty
Appreciative work place
22
The “Plan”
Safety Incentive
SAT
On-Time Bonus
Generational Shifts - Variables
23
People
Geo Political
Socio-Economic
Technology
Mergers