Isom: Numbers-obsessed US Airways paid $1 million in “above and beyond” bonuses last year

By | May 18th, 2010

US Airways is kind of obsessed with its numbers. It’s a good kind of obsession — it regularly touts its improvements in on-time arrivals, misplaced baggage, oversales and other metrics reported every month to the Transportation Department. Why is the airline so fixated on these figures? I asked Robert Isom, US Airways’ executive vice president and chief operating officer.

What’s so important about the numbers?

We focus on these numbers because they represent the reliability and convenience our customers expect from US Airways. These are also the metrics that the media most closely reports on and that all of the airlines are consistently measured against.

These are the measures most often cited as defining an airline as an under or over-performer, and you have to believe that these are the metrics that level the playing field — although, that being said, comparing yourself to an airline that flies, say solely in Hawaii, from an on-time arrival perspective when your operation is based in the Northeast, for example, doesn’t seem to be a great leveler but hopefully you get the point.

Our core beliefs as a company are that at the end of the day, most people want and are willing to pay for a safe, reliable, clean, hassle-free trip where you’re treated with respect along the way, and where your bags arrive when and where you do. So from that perspective, too, these measures work for setting and continually raising that bar for us.

How do you believe being focused on numbers will make you a better airline?

Everyone has a story about the time something went wrong or right with an airline, but when you’re transporting 80 million passengers each year, you really need data to help give some more specific meaning to those anecdotal stories. We look at numbers a lot because these help us identify our weak spots and raise the bar.

When did you start paying closer attention to these figures?

We have always focused on these since the beginning of time. But we really hit our stride in late 2007 when some of the emphasis put into place earlier in the year started showing up in our results.

That combined with continuing an employee incentive program that rewarded employees for hitting our monthly targets in on-time arrivals; baggage handling and customer complaints helped keep our focus as a company, too. Our on-time, every time program, which specifies what every department needs to do to get flights out on time, really started to show results.

Between 2007 and 2008 – we jumped from worst to first in on-time performance among the major network carriers according to the DOT and in 2009 were #2 by one tenth of one percent, making us the most reliable airline over that two-year period.

And once we got our operation running on-time our remarkable improvements in bag handling and customer complaints followed, delivering 64% and 58% improvements, respectively, between 2007 and 2009.

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Which of the numbers is the most important to US Airways, and why?

We focus on four key areas: on-time departures (or D:00 – flights that depart at or before their published departure time); on-time arrivals (or A14 – flights that arrive within 15 minutes of their scheduled arrival time); mishandled bags (or MBR – the number of reports of mishandled bags per 1,000 passengers); and customer complaints (the number of customer complaints filed with the DOT per 100,000 enplanements).

Probably the number one most important priority to us is departing on time, including an emphasis on things like First Bank (on-time departure performance for every hub flight scheduled to depart prior to 9 a.m. local time) and Fleet Launch (on-time departure performance for originating flights at all non-hubs that are scheduled to depart before 8:30 a.m. local time).

Because if you don’t start the operation on time each morning, and keep it running close to schedule, other performance metrics will suffer. This means that our maintenance team has to do its part, and overnight and every morning we have to be working hard behind the scenes to make sure the operation is indeed ready to start and start on time.

In other words, if an airline departs on time, it has a high probability of getting our passengers to their destination on time and with their bags. When planes run late, there is a higher chance of passengers missing connections or having their bags arrive at a different time – which ultimately leads to some customers filing complaints with the DOT.

So you can see how all of these measures are interrelated and especially influenced by getting our planes off the gate on time. And, of course, if we don’t depart on time the solution to arriving on time is to add time to our flight schedule which is costly, and delivering misconnected bags is also costly when our flights are not arriving on time. So, our focus on on-time performance has not only significantly improved our customers’ travel experience with us, but has also saved the airline a lot of money in the process.

Which of the numbers do you think is most important to your customer?

They’re all important, and it’s really hard to pick just one. I’d also say that depending on the customer, one could take priority over another. A wedding party that arrives on time but without their luggage would tell you baggage reliability is pretty important, while a business customer connecting in Philadelphia to an international city for a very important meeting would have a different view. That’s why we think all four of these metrics are inter-dependent and by focusing on departing on time, the other three metrics come along, too.

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The DOT report card is issued once a month, and there’s a delay of two months — the latest report, issued earlier this week, had March figures. My understanding is that your employees get a daily report. What’s in it, and what do your employees do with it?

The DOT needs to receive performance statistics from reporting carriers; correlate and audit the results, all of which takes time. The DOT report is valuable to us for assessing our competitive performance, but it does not meet our requirement for engaging our employees on a daily basis.

So we have a daily communication that goes out to all employees that monitors US Airways’ operational performance for both mainline and US Airways Express. This daily performance scorecard summarizes more than ten key performance indicators and their impact on our mainline, Express and hub operations. It also provides our employees with a snapshot of our daily and month-to-date performance, as well as how we are tracking against our monthly goals.

In addition to the four core metrics discussed above (D:00, A14, MBR and complaints), we also share stats on things like completion factor, cancellations, load factor, and our ability to launch our first bank of hub and non-hub flights each morning. As the saying goes, if you don’t measure it, you can’t move it, so making sure all of our employees are always aware of how we are doing is critical to achieving our goals.

What are your goals?

Our 2010 goals are designed to ensure that we continue to build on our efforts to deliver reliability, convenience, and a professional appearance to our customers. Our two guiding principles are: continue to be among the best of the network carriers in core operating performance; and become one of the best network carriers at recovering when things go wrong.

To achieve the first guiding principle, we set very specific goals for each one of our operating groups and airport stations for each of the metrics we’ve talked about. We have a station scorecard that provides an up to date view on how each area of our operation is performing, and this allows us to share best practices and identify opportunities for improvement.

As for service recovery, our customers most need us to be at our best when disruptions to their travel occur. We are very focused on investing in and improving the tools available to both our employees and our customers to provide swift and convenient recovery from delays and cancellations. These tools will help us to provide more timely and accurate information, and increased access to usable self service functionality. We have implemented some new systems already, and have many more projects in development.

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How do you reward your employees and managers for meeting those goals?

Under our Triple Play program, employees receive a $50 payout for each first place finish in either on-time arrivals, baggage performance or customer complaints among our Big Five network competitors (AA, CO, DL, UA and US) based on DOT results.

Employees have the potential to receive up to $150 each month if US is first in all three metrics. If we don’t land in first place but still achieve an on-time departure result of 72 percent for the month, employees receive a $50 ‘Pinch Hitter’ payout. We also reward employees who deliver exceptional results or demonstrate extraordinary examples of customer care through our quarterly Above & Beyond awards program which awarded more than $1 million to employees in 2009 and our Chairman’s Award program which awarded $250,000 to employees last year.

There are those who might suggest that numbers only tell part of the story, that a good airline can’t be measured strictly by metrics or even dollars and cents. Is that a fair criticism?

Sure. It can’t just be about the numbers, but I think I told you above why we use data to help us identify areas that need improvement as well as celebrate when we’ve done pretty well. From an emotional connection perspective, it’s hard to quantify how flying with us makes you as a person feel, and that comes back to our people.

When our employees take a little extra time to see you as a person, or pay attention to your unique needs that make you a unique customer, that’s when the connection is made. So we put programs, like Triple Play, in place whereby we measure and celebrate our success with numbers, so employees can also feel like they’re part of a winning team and we can recognize that what they are doing matters.

While there are many amenities that some customers may tell you they desire from an airline, at the end of the day most customers vote with their wallets. And what the customers who ultimately buy tickets on US Airways tell us then want (and there are 80 million of them each year) is a convenient schedule, competitive fares and an airline that gets them where they want to go on time, with their bags with minimal hassle.

The industry is littered with carriers who have tried to offer more than that (things like all business class seating) and their less than stellar financial performance and bankruptcies (such as EOS Airlines). We are confident we have the product our customers want that will also allow us to return to sustained profitability, which is in the best interest of our customers, the hundreds of communities we serve, our employees and shareholders.

(Photo: Caribb/Flickr Creative Commons)

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