How could Agile reshape the post-Covid-19 Airline industry?
What if Agile Business Transformation was the key to a successful recovery for the airline industry? Agile project management methodologies are taking over traditional project management methodologies in various industries. But is the airline industry adapted to this type of project management and can it take advantage of Agile project management in the battle against the uncertainty of the Covid-19? This is what we try to discover through this article.
First, let’s start with a reminder on what is the difference between Traditional (Waterfall) and Agile Project Management.
On one hand, traditional project management (Waterfall Methodology) is a linear approach where processes occur in a predictable sequence. In this approach, the project follows a preplanned set of stages and assumes that the requirements remain fixed while the budget and project timeline can be changed. This approach is more suitable for projects where the possibility of changes in the scope is negligible. Therefore the waterfall approach is not meant for large projects facing uncertain context, given the rigidity of this project management method.
On the other hand, Agile project management is an iterative approach to project management that primarily focuses on customer feedback, flexibility, and effective collaboration between team members. Agile allows project teams to be more flexible and ensure that the final product is according to the customer’s standards. The agile framework divides the project into smaller time-boxed sprints that commonly last for 2 weeks. Each release is presented to the customers, after each sprint and their feedback is taken into account for the next sprint.
“Agile practices, including project management, grew out of a need to manage projects characterized by complexity and uncertainty with responsiveness and adaptability. When goals and solutions are unclear and there is high volatility, there is a particular need for alternative approaches to managing projects.” D. J. Fernandez
In fact, the Agile iterative character enables the detection of changes in the customers/context requirements quicker and therefore adapt, review the project scope, and be more efficient in our answer.
We already stated the uncertainty surrounding the airline industry in this time of crisis. And Agile project management seems to be a go-to project-management solution for this type of context.
In fact, the International Civil Aviation Organization (ICAO) said mid-January that in the most optimistic scenario, by June of 2021 passenger numbers will be expected to recover globally to 71 percent of their 2019 levels (or 53 percent for international and 84 percent for domestic flights). A more pessimistic scenario foresees only a 49 percent recovery (26 percent for international and 66 percent for domestic). This gap of more than 20 percent and the uncertainty of these forecasts make it hard for airline companies to project themselves and organize, plan their activity flow.
Let’s do a quick pass on the current practices in the industry, to understand better what are the constraints here.
Classic airline processes are still globally based on Waterfall project management methodologies. Network planning goes through a sequential process revolving around the two IATA seasons, (northern) Summer and (northern) Winter, and involving applications for take-off and landing slots at the world’s slot-controlled airports. An airline that doesn’t use its slot 80% of the time in any given season will lose it. Besides, the airline’s Fleet and Network teams plan the airline’s evolution years into the future, corresponding to aircraft delivery timescales which makes it hard to change direction without a lot of pain.
On the contrary, some companies of the airline industry (mostly Low-Cost Companies) are already working with agile methodologies. Their planning cycles are typically shorter. Also, by spreading themselves across multiple countries and bases, they can go wherever demand is greatest and aren’t limited by scarce slots at any single hub airport.
McKinsey & Co. defines Agile as:
“using data and analytics to continuously source promising opportunities or solutions to problems in real-time, deploying tests quickly, evaluating the results, and rapidly iterating. ”
For the airline companies, it would mean iterating continuously: identifying where demand is stronger or weaker than expected, tweaking prices in different markets to evaluate elasticity, adjusting schedules to try different options, and this every two weeks. We could there see, at first, a misfit between the classic airline practices and the implementation of Agile project management methodologies, especially regarding the timeframe.
Nevertheless, according to D. Çulha and A.Doğru,
“Business process development is usually more complex than standard software development. Therefore, 2 or 3-week agile iteration durations do not fit business processes. A bit longer periods seem to be more suitable.”.
Iterations for airline companies could be longer. In fact, Agile doesn’t mean ditching the fundamentals of airline strategy but adapting them. It’s more about disrupting some elements as the top-down planning approach and timescale in order to survive the Covid-19 pandemic, than trying to erase everything from the traditional project management. Still, it will be a major challenge that airlines will need to address as soon as possible.
So how can airline companies ease their way to more agility without taking a drastic turn overnight?
The answer we arrived at here is: Promoting Agile culture.
As stated by Jim Highsmith,
“A team can employ agile practices, but it won’t achieve the potential benefit of agile development without embracing agile values and principles.”.
In fact, a lot of people think they’re doing Agile, but they’re actually just using the framework without shifting the culture. However, the high performance of Agile can’t be achieved by just implementing the structures — it also requires a shift in culture and mindset. Using a framework without shifting culture is like saying, “I’m going to celebrate Christmas,” and putting up a Christmas tree but not inviting anyone to share the holiday with.
As an example, when Air France decided to implement SAFe (Scaled Agile Framework), they started by “Aligning the Stakeholders on a Definition of Awesome”. Concretely, they asked all business domains concerned by the transition, to align on a common definition of “awesome” with four themes:
- Agile Enterprise — In the Air France — KLM enterprise, the autonomous, stable, and cross-functional teams are the cornerstones of the organization for driving innovation and continuous improvement. The Transversal processes support and stimulate an Agile way of working and mindset at all levels. This allows the company to focus on continuously maximizing quality and delivering value to the customer.
- Value Creation — The Agile adoption aims to create more value — for customers and employees. Quality, as well as effectiveness, go up. The company succeeds by driving down the time-to-market and increasing the Net Promotor Score.
- Leadership — Air France — KLM develops servant leaders who empower Agile teams and value streams. They engender trust, work with a clear purpose, and provide direction to all levels of the Agile Enterprise. They are recognized for their Agile leadership, enabling others to succeed and drive the organization for continuous improvement. They focus on goals instead of tasks.
- Employee Engagement — The organization is recognized as one of the best places to work. As a result, it attracts talented people. It works closely with customers. People feel responsible and autonomous for their products and results. Employee satisfaction is high and demonstrated by EPS (active promotors).
This exercise aimed to ensure the adoption of common values supporting and at the same time testing the adoption of Agile Culture by the stakeholders.
To conclude, Agile project management could be very interesting to implement for some activities of the airline industry, in the process of recovery from the Covid-19 pandemic. For example, its iterative character could be useful in the monitoring and adaptation to the size of the demand, as we are still uncertain on how the passenger flow will evolve through the next months. Nevertheless, this industry is used to waterfall project management and the change resistance needs to be taken into account. This is where communication around Agile culture and its values, as well as advantages, plays the leading role. Before engaging in the Agile framework and practices, it is key to ensure an understanding of Agile methodology and its purpose.
About this article
This article has been written by a student on the Grenoble Ecole de Management’s Advanced Masters in Digital Strategy Management. As part of a content creation assignment, students are given the task of writing articles based on their digital interests and disseminate the articles online. Articles are marked but we make minimal changes to the content. Thanks for reading! James Barisic, Programme Director, MS DSM.