Practical use of six-sigma
for the IATA Fuel Program
Tom Fodor
Assistant Director E&M
1
IATA is an
association of:

230 airlines

Representing 93% of scheduled
international air transport
Ops Conference
22
13-14 April 2010
IATA’s Mission:
To represent, lead and serve the airline industry
 Represent airlines’ interests to
governments & international organizations

 Assist
the airlines in
developing solutions
to the issues
affecting efficient
operations
Ops Conference
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13-14 April 2010
Fuel Price Evolution
$138.7 / b
Forecast average
fuel price for
2012
$129.2 /
barrel
Platts, September 28, 2012
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Nov. 5, 2012
Aviation & Climate Change
Aviation is facing the challenge
 IATA’s Four-Pillar Strategy




Invest in new technology
Operate more efficiently
Build & use efficient infrastructure
Use effective economic measures
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Nov. 5, 2012
IATA Green Team Achievements 2005-2012
 111 visits
 41.3 M tons
of CO2
 US $9.8 B
Americas: 17
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Europe: 40
Africa/MENA: 27
6
ASIA/ASPAC: 27
Nov. 5, 2012
IATA Green Team Identified Savings Potential

Average identified saving is 5% of the
airline fuel budget

Savings range from 2% to more than
14% (higher values for airlines that did
not have a structured fuel efficiency
program in place)

SAVINGS SUMMARY
10.0%
13.9%
Flight Operations
Flight Dispatch
Maintenance & Engineering
Based on the actual fuel efficiency
assessments, the major savings come
from Flight Dispatch and Flight
Operations
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33.4%
42.7%
7
Ground Operations &
Commercial
Nov. 5, 2012
IATA Methodology for Fuel Program
Lean Six Sigma Methodology
 Combines the Lean and Six Sigma
methodologies
 Lean: reduce waste and add value
 Six Sigma: reduce variation in
product output, data driven, uses
statistical tools
IATA uses the DMAIC process for the
fuel program
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Control
Define
Improve
Measure
Analyze
DMAIC Process
Nov. 5, 2012
IATA Fuel Efficiency Program – Phase 1





Phase 1
Phase 2
Phase 3
Phase 4
Fuel
Program
Setup
Define
Define
Baseline
Baseline
Implementation
Plan
Implementation
Execution
Engage Executive Management Support
Define Corporate Fuel Process
Define Organization
Establish Fuel Team
Select Program Methodology
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Nov. 5, 2012
The Fuel Implementation Organization
Executive Sponsor, Fuel Manager, Fuel Team
The Fuel Efficiency Organization
CEO / COO
Executive Sponsor
Executive Steering
Committee
Fuel Efficiency Manager
Fuel Team
Airline
Departments
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Airline
Departments
Airline
Departments
10
Airline
Departments
Nov. 5, 2012
The Fuel Efficiency Implementation Team
FUEL
EFFICIENCY
SUPPORT
TEAM
Flight
Safety
FUEL EFFICIENCY
CORE TEAM
Network
Planning
Commercial
Training
Operations
Control
Cabin
Service
Cargo
Fuel
Purchasing
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Human
Resource
Ground
Operations
Maintenance
&
Engineering
IATA Webinar
Finance
Flight
Operations
Dispatch
FUEL
EFFICIENCY
SUPPORT
TEAM
Crew
Scheduling
Information
Technology
1
11
2010
Nov. 5, 2012
Responsibilities and Accountabilities
Fuel Policy Task Descriptions
Identify new policy requirements
Develop Policies, ensure corporate
compliance
Complete policy design
Document policies
Approve Policies
Communicate Policies
Ensure Policies are compatible with
standards and best practices
Escalate non-std or missing policies
Control new policies
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Nov. 5, 2012
IATA Fuel Efficiency Program – Phase 2
Phase 1
Phase 2
Phase 3
Phase 4
Fuel
Program
Setup
Define
Baseline
Implementation
Plan
Implementation
Execution
 Perform Gap Analysis
 Review all five operational areas – Flight Operations,
Flight Dispatch, M&E, Ground Operations, Cabin
 Identify initiatives
 Establish preliminary savings targets
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Nov. 5, 2012
IATA Fuel Efficiency Gap Analysis
Areas covered:
 Flight Dispatch – 8 areas reviewed
 Flight Operations – 14 areas reviewed
 Engineering and Maintenance – 8 areas reviewed
 Ground Operations – 3 areas reviewed
 Cabin – 4 areas reviewed
Objectives:
 Reduce weight
 Reduce drag
 Reduce engine specific fuel consumption
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Nov. 5, 2012
Basic Data – Fuel Budget
Calculated for the previous 12 month period
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Nov. 5, 2012
B747-400 Fuel Penalty for Extra Weight
B744 weight factors
4 Hours 3.9%
7 Hours 4.1%
8 Hours 4.1%
12 Hours 4.7%
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Nov. 5, 2012
Basic Data – Fuel Penalty
Fuel penalty to carry extra
weight
Number
of Aircraft
Annual
Flt Hours
Weight
Factor
Fuel penalty
1 kg - A/C
A330-300
A320-200
B747-400
B777-200
B737-700
CRJ-200
ATR 72
12.0
28.0
06.0
12.0
28.0
22.0
22.0
57,120
74,060
28,398
58,224
76,440
44,000
44,000
3.5%
3.1%
4.3%
3.8%
3.6%
2.0%
1.9%
167
82
204
184
98
40
38
Total
130
382,242
Fuel penalty Fuel penalty
1 kg - Fleet 100 kg - Fleet
1,999
2,296
1,221
2,213
2,752
880
836
199,920
229,586
122,111
221,251
275,184
88,000
83,600
12,197
1,219,653
Fuel burn (penalty) in kilograms to carry 1 kg additional weight
on the entire fleet for 1 year
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Nov. 5, 2012
Initial Assessment of Potential Savings
Example: Potable water quantity reduction
Potable Water
Fuel Penalty
Water Uplift
Weight Reduction
1 kg - Fleet
kg
A330-300
A320-200
B747-400
B777-200
B737-700
CRJ-200
ATR 72
1,999 kg
2,296 kg
1,221 kg
2,213 kg
2,752 kg
880 kg
836 kg
1,350 kg
120 kg
1,606 kg
1,238 kg
108 kg
50 kg
50 kg
Total
Fuel burn to
carry
water uplift
kg/yr
Optimum
water
reduction
kg
2,698,920 kg
275,503 kg
1,961,109 kg
2,739,090 kg
297,199 kg
44,000 kg
41,800 kg
702 kg
49 kg
559 kg
495 kg
36 kg
33 kg
34 kg
8,057,621 kg
CO2
Reduction
Metric
Tons
Target
Fuel Burn
Improvement
Saving Kgs
75%
50%
75%
75%
50%
50%
50%
1,052,063 kg
56,196 kg
511,625 kg
821,486 kg
50,196 kg
14,707 kg
14,379 kg
3,314 t
177 t
1,612 t
2,588 t
158 t
46 t
45 t
2,520,651 kg
7,940 t
Fuel savings calculated based on water consumption of 0.3 l / pax / hr
using average flight length
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Nov. 5, 2012
IATA Fuel Efficiency Program – Phase 3
Phase 1
Phase 2
Phase 3
Phase 4
Fuel
Program
Setup
Define
Baseline
Implementation
Plan
Implementation
Execution
 Perform Benefit / Effort
Analysis
 Prioritize Initiatives
 Risk Analysis / Mitigation
 Managing the Change
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 Build a Business Case
 Define KPIs and OPMs
 Identify Data
Requirements / Source
 Develop Implementation
Plan
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Implementation Management
“Formalize” in the Planning Process:
 Documented and detailed implementation plans
 Detailed timelines with well-defined milestones
 Accurate measurements and tracking results to plan
 Quantification of periodic and cumulative benefit to the
airline
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Nov. 5, 2012
Projects Input into Benefit-Effort Worksheet
1
3
0
1.4
Status
Benefit
16
7
4
it
5
1
8
10
1.6
1
1
3
2.0
17
13
10
Effort
6
1
-
Weight
0.85
0.10
0.05
0
<$50K
<$50K
0
1$50-500K
$50-500K
1-
-
3
$500 - 1M
$500 - 1M
2
6
$1 - 10M
$1 - 10M
3
9
>$10M
>$10M
4-5
-
For each measure, determine relative effort level required to meet initiative requirements (1,3,6,9)
Measure
14
5
Duration (wks)
1.0
3
Direct Savings
Indirect Savings
Other * -
4
11
BENEFIT
4.3
1
FUEL
EFFICIENCY
PROJECT
PRIORITIZATION GUIDE
0.25
0.25
0.25
0.25
1.00
Measure-
3
9
9
1
1.00
1.0
For each measure,
determine relative impact the- fuel initiative has on respective measures (1,3,6,9)
-
12
7
9
1
1
0.25
1
1.00
-
6
8
6
1
0.25
1
RECOMMENDED
PRIORITY
3 Project 10
1
TOTAL EFFORT
Benefit3.9
0.25
1
Project Risk
(None,Low,Medium,
High,VeryHigh)
3
0.25
1
Capital Requirements
($MM)
1
1
1.00
5.8
RECOMMENDED
Project
PRIORITY
3
6
2
0.05
1
TOTAL EFFORT
1
2 Project 9
TOTAL
Project Risk
(None,Low,Medium,
High,VeryHigh)
1 Project 1
0.10
6
EFFORT
Capital Requirements
($MM)
0.20
Importance Weighting:
0.85
6
financial,
cost-wise readiness,
success,
Project Durationprogram
(wks)
replication)
0.30
Importance Weighting:
ID1 Project 9 Reduction of Potable Water
Personnel Requirements
Other (other
(average FTE)
Type 2 Financial
0.50
PROJECT TITLE
ID
TOTAL BENEFIT
Status
Type 1 Financial
BENEFIT
Indirect Savings
Fuel Saving
Type 1 Financial
Other (other financial,
cost-wise readiness,
Direct Savings
Command/Warfighte
r support, program
success, replication)
Type 2 Financial
Rating the Project
EFFORT
Personnel Requirements
(average FTE)
BENEFIT
15
ovember 10
2
Effort
People
Time Duration
Capital Required
Risk
Effort
CYINTECH INFORMATION SOLUTIONS
Weight
0.25
0.25
0.25
0.25
0
1
< 1 FTE 1 - 1.5 FTE
< 1.5 Mo. 1.5 - 3 Mo.
$0
$0 - 50K
None
Low
3
6
1.5 - 2 FTE 2 - 2.5 FTE
3 - 4.5 Mo. 4.5 - 6 Mo.
$50 - 100K $100 - 150K
Medium
High
9
> 2.5 FTE
> 6 Mo.
> 150K
Very High
5
*
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Financial with no direct link
Promotes cost-wise operation
Improves direct support for fuel efficiency
Increases probability on initiative success
21
Nov. 5, 2012
B/E Matrix Helps to Screen Potential Projects
Setting Priorities
BENEFIT / EFFORT
MATRIX
Benefit
High
16
7
1
8
Highly Desirable Opportunities
Projects in upper left are the most
desirable projects
12
Potentially Desirable
Opportunities
Projects in the upper right are
potentially desirable, but usually
require more analysis
3
Med
4
17
13
9
“Potential Quick Hits”
Possibility for Kaizen event or
small GB project
10
6
Low
Confidential - For Discussion Only
Start Here
Least Desirable Opportunities
Projects in the lower right are the
least desirable
14
11
5
15
2
Effort
17
Low
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March
11
Med
High
Individual Fuel Efficiency
Initiatives
22
CYINTECH INFORMATION
SOLUTIONS
Nov. 5, 32012
Safety Risk Management
Identify Risks
Analyze Risks
Identify Likelihood of Risk Occurrence
Analyze Consequence of Risk
Estimate Level of Risk
Evaluate Risks
Risk Reduction / Mitigation
CYINTECH INFORMATION SOLUTIONS
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Action / Monitor / Review
Consultation / Communication
Mitigate / Eliminate the Risk of Safety and Uncertainty
23
Confidential
Nov. 5, 2012
Project Work Plan

Project timeline and the milestones depend on:
 Required resources, carry out survey
 Development of new servicing procedures based on the survey
results
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Nov. 5, 2012
Communication / Change Management
 Internal communication to include:
 Ground Operations management and personnel
 Flight Attendants and Pilots
 Supply Chain / Contract Management
 Internal stakeholders
 External communication:
 Ground Service Providers
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Nov. 5, 2012
Selecting KPIs
KPIs Should be SMART
 Specific – Clearly defined performance
requirement
 Measurable – Defined in a quantifiable way
 Achievable – Realistic, manageable
 Relevant – Directly related to the desired goal
 Time-constrained – Set to a defined time span
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Nov. 5, 2012
Using Business Information (KPIs)
Example of an Executive Level Dashboard
KPIs are supported by trend graphs & performance measures to show
progress against the specific targets in each initiative of the program
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Nov. 5, 2012
Key Performance Indicator (KPI) &
Operational Performance Measures (OPMs)

The company’s KPI and supporting OPMs for the project are:
 Part of the overall weight reduction initiative (KPI)
 Reduction of water servicing quantity in consideration of
passenger load and flight length plus other considerations
(OPM)
 % of flights serviced to policy level (OPM)
 Resultant fuel savings when comparing actual water weights
carried to pre-initiative baseline levels (OPM)
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Nov. 5, 2012
Data Requirements
 Data elements for tracking actual results








Aircraft water tank capacity
Projected flight time and associated policy water volume
Actual water volume after servicing
Volume of water remaining on arrival
Number of passengers and crew
Flight time (block to block)
Planned consumption rate
Actual consumption rate
 Identify source of data
 Ensure data quality
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Nov. 5, 2012
Implementation Plan
ABC AIRLINES
FUEL EFFICIENCY IMPLEMENTATION PLAN
Project / Objective
Benefit / Effort, Priority
Target Savings
FE Project:
# 9 GO - TO1 Potable Water Carriage
Objective:
Reduce the amount of unnecessary water carriage
Initiative Owner:
Service Provider:
Data Source:
VP Ground Operations
ASAP Ground Servicing, Inc.
Ground Service Records / Flight History / Cabin Staff Reporting
B/E Ratio:
Priority:
Target Savings:
Target %
5.8 B / 1.0 E
1A
7,940 tons of CO2
50% domestic fleets, 75% international fleets
Proposal:
Tailor the amount of potable water on each flight leg
Issues:
Ground Service Contracts
Accurate Forecasting
Accurate Measurements
Issues / Tasks
Implementation Tasks: 1. Establish team
2. Develop survey
3. Conduct survey
Duration / ROI
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Duration:
3 months
Expected ROI:
Timeframe:
500%
April to June 2011
Nov. 5, 2012
IATA Fuel Efficiency Program – Phase 4
Phase 1
Phase 2
Phase 3
Fuel
Program
Setup
Define
Baseline
Implementation
Plan




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Phase 4
Implementation
Execution
Tracking Results
Analyze Results
Adjust Policies and Procedures
Sustain & Control
Nov. 5, 2012
Build Statistics


Track actual savings against plan and identify under-performing areas
Savings can be calculated from weight reduction and fuel penalty value
Actual Average Potable Water per Flight
A330-300
A320-200
B747-400
B777-200
B737-700
CRJ-200
ATR 72
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
1,350 kg 1,350 kg 1,100 kg 1,000 kg 1,000 kg
950 kg
900 kg
950 kg
900 kg
850 kg
800 kg
800 kg
120 kg
120 kg
120 kg
120 kg
110 kg
110 kg
105 kg
95 kg
90 kg
85 kg
85 kg
85 kg
1,606 kg 1,606 kg 1,550 kg 1,500 kg 1,350 kg 1,400 kg 1,450 kg 1,350 kg 1,250 kg 1,300 kg 1,250 kg 1,250 kg
1,238 kg 1,238 kg 1,125 kg 1,050 kg 1,050 kg 1,000 kg 1,075 kg 1,025 kg
950 kg
900 kg
900 kg
900 kg
108 kg
108 kg
101 kg
95 kg
92 kg
77 kg
62 kg
55 kg
52 kg
57 kg
45 kg
54 kg
50 kg
50 kg
49 kg
45 kg
39 kg
37 kg
34 kg
30 kg
27 kg
26 kg
27 kg
31 kg
50 kg
50 kg
50 kg
48 kg
44 kg
39 kg
36 kg
31 kg
29 kg
25 kg
28 kg
20 kg
Actual Savings per Fleet
A330-300
A320-200
B747-400
B777-200
B737-700
CRJ-200
ATR 72
Monthly
Cumulative
Jan
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
t
t
t
t
t
t
t
t
t
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Feb
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
t
t
t
t
t
t
t
t
t
Mar
43.1
0.0
6.1
21.4
1.6
0.1
0.0
72.2
72.2
t
t
t
t
t
t
t
t
t
Apr
58.8
0.0
11.0
35.0
3.2
0.4
0.1
108.4
180.6
t
t
t
t
t
t
t
t
t
May
58.8
2.4
25.8
36.4
4.1
0.8
0.4
128.7
309.3
t
t
t
t
t
t
t
t
t
Jun
75.6
2.5
21.5
46.7
7.7
1.0
0.8
155.8
465.1
32
t
t
t
t
t
t
t
t
t
Jul
81.3
3.9
16.9
33.8
10.9
1.3
1.0
149.1
614.2
t
t
t
t
t
t
t
t
t
Aug
75.6
6.6
26.5
41.8
12.8
1.6
1.4
166.3
780.5
t
t
t
t
t
t
t
t
t
Sep
90.7
7.6
35.8
55.2
12.4
1.8
1.4
204.9
985.4
Oct
t
98.7
t
9.0
t
30.2
t
60.4
t
10.2
t
1.8
t
1.8
t
212.1
t 1,197.5
Nov
t
106.3
t
8.5
t
32.2
t
58.0
t
13.1
t
1.7
t
1.4
t
221.3
t 1,418.7
Dec
t
104.0
t
8.5
t
28.0
t
53.9
t
11.2
t
1.2
t
2.0
t
208.8
t 1,627.5
t
t
t
t
t
t
t
t
t
Nov. 5, 2012
Monitor Performance
Potable Water Actual Versus Target and Plan A330-300
Actual
Target
Plan
120.0
110.9
104.0
99.3
104.0
106.1
100.0
93.9
Tons / month
80.0
88.4
90.6
88.4
75.6
84.0
88.4
99.5
75.6
95.0
81.3
99.5
108.6
106.3
104.0
103.9
98.7
106.3
101.7
104.0
99.5
Oct
Nov
Dec
90.7
75.6
60.0
43.1
40.0
58.8
58.8
Apr
May
43.1
20.0
0.0
8.4
0.0
Jan
Feb
0.0
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Jun
33
Jul
Aug
Sep
Nov. 5, 2012
Monitor Performance

Look for significant variance from plan

Implement corrective action accordingly
Potable Water Actual, Target and Plan A330-300 Total
(Tons / Year)
Target
Actual
Plan
792.8 t
0.0 t
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200.0 t
400.0 t
600.0 t
800.0 t
34
947.9 t
1,000.0 t
1,154.8 t
1,200.0 t
1,400.0 t
Nov. 5, 2012
Adjust Policies and Procedures





Continuous progress check
Identify any implementation issues
Improve procedures as necessary
Institutionalize changes for sustained results
Modify organization structure if required
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Nov. 5, 2012
Institutionalize
Institutionalize the Improvements
Improvements
Establish control plan, metrics, and monitoring, transfer control to
To sustain and control results:process owners
Track and Control
Results
• Establish / Maintain process
ownership
• Manage to new metrics
• Ensure projects are linked to
strategic or financial targets
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Capture and Extend
Project Knowledge
• Perform a Project Review
• Validate project completion
• Archive and share materials
36
Audit the Results
• Ensure the improved process
remains intact
• Use data / statistics to
validate
Nov. 5, 2012
Fuel Book 5th Edition &
Implementation Guidance Material
Fuel Book 5th edition highlights:
 Time dependent maintenance costs
 Aircraft performance monitoring (APM)

Released: October 2011
Implementation Guidance Material:






Setting priorities
Risk assessment
Building a strong business case
Program management
Metrics for tracking implementation
Key Performance Indicators

Fuel Efficiency Program
Implementation Guidance
Material
5th edition
Released: June 2011
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Nov. 5, 2012
Thank you!
Thomas FODOR
Assistant Director,
Engineering & Maintenance
Operations Department
www.iata.org
International Air Transport Association
IATA Head Office
800 Place Victoria
P.O. Box 113
Montreal, QC H4Z 1M1
Canada
Tel.: +1 +1 (514) 874 0202 Ext. 3952
Fax: +1 +1 (514) 874 2661
Mobile: +1 (514) 927 3249
E-Mail: fodort@iata.org
IATA Fuel Efficiency Regional
Workshop
Amman
Geneva
Singapore -Airlines
38
38
Oct 6-7,
June
9-10,
2009
2009
23 Jan 2009