Competing With Data & Analytics
Flying passengers around the world is a complex business — one that is becoming increasingly data-driven. Hong Kong-based Cathay Pacific knows this as well as anyone, as it uses analytics to support decision making on all fronts, from determining planes’ fuel efficiency to improving customer experience to managing crews’ flight and rest schedules. Even something as mundane as luggage handling is getting an analytics makeover.
Yet Cathay Pacific doesn’t take an all-data-all-the-time approach. The company’s chief information officer, Joe Locandro, is clear that data works in tandem with experience and business acumen when used for decision making. “Analytics will give you statistical spreads,” he notes, “but you still need to have this thing called experience and insight.”
In a conversation with David Kiron, executive editor for MIT Sloan Management Review’s Big Idea Initiative, Locandro describes how his company uses data — and what caveats he puts on its role.
What is your role and mandate at Cathay Pacific?
As the CIO, I’m in charge of all the technology globally, including our subsidiaries. It’s a fairly comprehensive portfolio of systems infrastructure and business units, everything ranging from baggage to catering to airline planning, etc. We’re currently going through a large IT investment cycle.
We have a three- [or] four-year strategy to take us to the next level in three areas. One is operational efficiency or improved performance. Two is customer intimacy. And three is innovation.
In terms of operational efficiency, we’re using analytics on engine performance data for our fleet. That increases reliability and also helps reduce fuel burn if we can fine-tune the aircraft engines. Fuel accounts for approximately 40% of our costs, so percentage gains on our fuel bill and our engine performance are worth a lot to the bottom line.
We also use analytics to optimize crew and shift deployment. We have 15,000 staff who have to be matched to plane types, to the destinations, to special breaks that they have to have, etc.
In terms of customer intimacy, we use analytics to look at frequent flyer preferences and assess flying preferences.