Successful SAP® Implementation Provides Unique Flight-By-Flight Cost Effective Analysis For Air Transat
Air Transat, a leading charter airline in Canada recognised the need to equip itself with an integrated enterprise system to better position itself for growth while increasing operational efficiency.
It was concluded that specific modules of SAP could be configured to meet business requirements. Capgemini provided systems integration expertise and technology consulting to deploy the solution.
The result of the SAP implementation was a significant reduction in the number of systems Air Transat needs to run its airline operations, an integration of all airline operations and a unique ability to analyse flight profitability. As well, the solution provides Air Transat with aggregated information to continuously react to market demand.
Client Profile
Air Transat is the leading Canadian charter airline, serving 90 destinations in 25 countries from some 10 Canadian cities.
Headquartered in Montreal, Air Transat has annual revenues in excess of CDN$1billion and provides service to approximately 3.3 million passengers a year, an average of 400 flights per week.
Business Issues
The Canadian air transportation industry has been plagued by over capacity, increased fuel and aircraft maintenance costs, diminishing profit margins, fierce competition and an overall threat of economic failure.
Against this background, a shift in the travel needs of Air Transat’s customers towards new destinations and leisure activities created intense competition and reduced margins. Technology was seen as a driver to achieve optimal ways of doing business and reassess services.
Air Transat management realised that current systems and processes were manually intensive and did not allow for timely and accurate access to information. Legacy systems comprised some 19 different, and disparate, components. The airline needed an integrated enterprise system that facilitated competitive, and unique, flight-by-flight analysis across all operations. This would position Air Transat for growth while increasing operational efficiency.
Timely and focused access to information, with built-in flexibility to adapt to dynamic change, would facilitate quick decisions and increased revenue. Also, access to real time financial data would enable flight profitability analysis. Due to its rich functionality in sales and revenue planning, SAP was selected for this project.
Capgemini was chosen to lead the project because of in-depth expertise with SAP implementations, deep experience with airline operations and a long-standing relationship with Air Transat. The project, christened SAP Galaxy, included deployment of specific SAP modules, technology consulting, ‘Go-Live’, followed by effective post-implementation support.
Solution
Air Transat awarded the project to Capgemini on a fixed price contract. OTACE (On Time and Above Client Expectations) represents Capgemini’s commitment to delivery excellence, and in keeping to this in spirit as well as in letter, performance premiums were built into the contract.
The project team comprised a 2:1 ratio of Air Transat employees to Capgemini staff. Through a unique design and customisation, Capgemini provided an end-to-end solution that allowed Air Transat to move from a manually intensive system process to completely integrated systems across all airline operations. The scope of the SAP Galaxy project included the complete implementation of SAP modules Finance (FI), Controlling (CO), Sales & Distribution (SD), Materials Management (MM) and Project System (PS) and integration with Air Transat’s enterprise systems.
FI and CO
- analysis of expenses and revenue, linking chart of accounts
- manage data gathering from international routes and suppliers, including complexities with different currencies and exchange rates.
SD and MM
- monitor and change ticket pricing, allowing flexibility for the latter.
PS
- route and flight profitability
- identify and remove variable cost for every flight on a continuous basis to determine revenue.
Key legacy systems for Air Transat included a flight scheduling and logistics system (AIMS) and a sales system (SMSR) containing all passenger and sales information. Interfaces from AIMS to PS allowed Air Transat to obtain timely flight information within minutes. The success of this was of critical importance to Air Transat and included a risk element. The SAP Galaxy project represented the first time that PS was being used in this way in the airline industry.
Capgemini’s methodology, DELIVER, was adapted for SAP and used to accelerate deployment of the project. By leveraging knowledge, techniques and experience from past projects, and taking account of SAP’s methodology (Value SAP®), the result facilitated a fast and efficient implementation.
Taking advantage of the methodologies and scenario testing contributed to the project being completed on time, within budget, and with a profitability margin that met initial expectations. The entire project spanned a period of 15 months.
Elements in addition to the SAP implementation included training, technical support and a help desk to support ‘Go Live’. Procedures for support provision ensured smooth transition of the project to the production environment.
Capgemini was awarded cash premiums twice along with citations of excellence by Air Transat management in recognition of exceptional results and an innovative approach.
Benefits
The successful implementation of SAP has reduced the number of operational systems at Air Transat by nearly 50%. The fully integrated system allows Air Transat access to time sensitive data in real time, with the application able to manage a large volume of information at a time, some 300-500 megabytes. The ability to perform a detailed reconciliation of all earnings and expenses relative to a given flight is a powerful management tool. It allows Air Transat to adjust flight schedules on a continuous basis. The cost effectiveness of each route now becomes transparent, allowing management to make intelligent decisions to respond to sudden, and sometimes drastic, change.
The ability to track, through an integrated system, all costs and revenues related to airline operations, is estimated to yield savings of CDN$3 million a year for Air Transat.
Written in co-operation with Air Transat A.T. Inc.,