With a $3.2 billion fuel bill in 2018, Qantas is turning to technology and data to deliver business efficiencies in a bid to drive down its massive cost base.
Speaking at the Amazon Innovation Day in Sydney as part of the AWS Summit, the flying kangaroo’s CTO, Rob James, admitted that it is “easy to forget some of the grandest and oldest organisations were born of innovation”.
He noted that Qantas — now entering its 100th year, making it the oldest continuously operating airline in the world — now has a 30,000-strong workforce and flies close to 60 million people each year.
But the airline was originally established as Queensland and Northern Territory Aerial Services, which initially built its own aircraft.
According to Mr James, innovation has been part of Qantas ever since.
“[For example] it’s a little-known fact, but Qantas actually brought you Business Class travel,” he said. “You’re welcome.”
Mr James also cited the establishment of low-cost offshoot Jetstar in 2004 as another example, which he said had been unsuccessfully attempted by other full-service airlines around the world. Yet 15 years on, the subsidiary “contributes almost $1 billion to the underlying profit of the Qantas Group”.
Another example, he said, was last year’s rolling out of a 17-hour non-stop service between Perth and London — the first time that the Australian continent has been connected to Europe in such a way.
However, he confessed that “as a 99-year-old old company, sometimes I think some of our systems are that old as well”, meaning that Qantas is increasingly focused on “pushing the limits” to modernise and drive positive change.
Using data to slash costs
The airline executive said that a prime target for innovation comes down to reducing Qantas’s massive spend on fuel, which hit $3.2 billion last year.
“One of the most expensive parts of flying is fuel,” Mr James said.
“It’s also the most volatile cost in an airline — anywhere between 20 and 40 per cent of an operating cost for an airline.”
He added: “So you want to fly... as efficiently as possible.”
As such, Mr James explained that Qantas, in partnership with Sydney University and the Australian Centre for Field Robotics, developed the QuadraX flight planning algorithm.
The system uses massive amounts of data across different flight paths, in different weather conditions and altitudes, and using different aircraft and engine configurations, in order to simulate optimal efficiency.
These simulations help the airline tailor its routes and the aircraft chosen to service those routes to achieve maximum return on investment.
Using the new 787 Dreamliner aircraft as an example, Mr James said that “every time they land, we download half a terabyte of sensor data that we can analyse”.
“Every time we run one of these simulations, we’re doing a 10-year study in about nine hours... in the cloud,” he said.
“And that is dwarfed, in comparison, to what we expect in the future.”
Data delivers $40 million annual saving
“We were actually created by three entrepreneurs in 1920, in an industry that was only a few years old — that technology was really, really new,” Qantas’s high-profile CEO, Alan Joyce, said after taking to the stage.
“We have one flight taking off every 34 seconds,” Mr Joyce said.
“We’re one of few airlines to travel to every continent, and I say — because we do a charity flight to Antarctica twice a year — so I say we’re the only airline that flies really to every continent.
“So the company is massive in terms of its scale. One of the stats that gets me is the fact we produce 32 billion meals each year, so you can imagine the logistics of trying to get that right across the board.”
Elaborating on the QuadraX system, Mr Joyce said that the system is currently on track to achieve annual savings on fuel costs of $40 million, “by a 1 or 2 per cent improvement on these flight plans”.
“We did a Sydney to Santiago flight, in South America [to test it]: it saved one tonne of fuel on that flight by getting better flight plans,” he said.
“And we’re going to reduce our carbon emissions because of that system by around 50 million kilograms each year.”
Mr Joyce added: “The numbers... are massive, and that’s just one example of one technology being used that’s having a direct impact on our business.”
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
- Australian manufacturers can create their own stimulus
- Here’s what separates success from the rest
By Adam Zuchetti
- 5 workplace trends to watch in 2020
By Nicole Gorton