Wednesday, November 19, 2014

The Role of Supply Chain Management in My Life As a Ramp Agent

After my high school graduation, I took some time off in order to work before I would then enter university. As I had always dreamed of becoming a pilot, I decided to at least apply to the airport next to my hometown for a temporary job in "OPS" (ground operations). It turned out that I was not eligible to work for AirPart GmbH, a subsidiary of Flughafen N├╝rnberg GmbH, directly. Instead, I was told to send my application to Faulhaber-Remke Services GmbH, a temporary employment agency. Apparently, there had been a shift from internal sourcing (AirPart GmbH) to outsourcing (Faulhaber). As a temporary worker back then, I was paid an hourly salary of 8.50 Euro, while the full-time employees (and there were only very few of them compared to number the temporary workers) received twice this amount of money. 

For my purposes, this was still perfectly fine. I was an unskilled worker and, first of all, had to be trained for my new job: ramp agent. 

Ramp Agent Certificate

Interestingly - and at this point it becomes clear why the airport utilized the temporary work model -, the incoming ramp agents had been employed particularly for the "winter hub" of AirBerlin, a German airline. This hub used to start in late October and then ran until late April.

I still remember my shifts as if they took place yesterday:

All "rampies" gathered in the OPS building at 5.30 a.m. and were each assigned an airplane. The most important information on the respective sheet we were handed out was the departure airport of "our" flight and its next destination. On this so-called "ramp sheet", we, the ramp agents, also had to check several boxes and to fill in various cells. [A ramp agent is the liaison between ground operations and the flight crew, and manages the overall handling procedure at the airplane. One of the cells on the ramp sheet, for example, asks for the fuel request the pilots would make. This information then had to be passed on to OPS by radio.] 

At 5.45 a.m., the first flights would arrive. The responsible ramp agent would hop on the "OPS" car driven by a key person (who would also provide each ramp agent with the necessary documents, for example the passenger list for the upcoming flight) and wait for the airplane to reach its final parking position. Usually, the last flight came in around 7 a.m. Depending on the weekday and on the passenger volume estimated by AirBerlin, up to approximately 20 airplanes arrived within this time frame. The same scenario repeated itself in the evening, beginning at around 6 p.m. and - if there were no delays - ending at 9 p.m.

The reader of this blog might wonder why so many planes of the same carrier gathered at such a small airport like Nuremberg. To answer this question, I would like to introduce an important supply chain management concept: the "hub-and-spoke" network. 

Let us look at the following map that shows AirBerlin's destinations from Nuremberg in 2009:

Some of these destinations are operated by Air Berlin, others by its "Oneworld" [= airline alliance] partners . Some of them are vacation destinations (like Palma), some are short trip destinations (like Barcelona). AirBerlin's fleet mainly consists of B737-800 for short and medium distances. This type of aircraft can transport up to 186 people at once. 

An this is now the idea behind the hub-and-spoke network: especially during winter, people who live in Germany want to escape the bad weather and book a flight to a more or less popular vacation destination. The total passenger volume for these flights, however, is lower than during summertime when most of the families are on summer break - which poses a problem to an airline like AirBerlin: these flights are not fully booked and therefore cost the airline a lot of money. The capacity (= supply in this case) exceeds demand, but as the product (= a seat on a flight) cannot be easily separated from up to 185 other products of the same kind (seats available on a B737-800), the airline must weigh its competitive advantages (low cost, route network, frequency of flights) against the increasing costs due to the lack of passengers. The solution for AirBerlin was the implementation of the winter hub. 

In the morning of every weekday, feeder flights would bring passengers from all over Germany with a vacation destination to Nuremberg. There, passengers exited the airplanes and went to the waiting hall of the airport. In the meantime, the incoming planes were cleaned, refueled and (un-)loaded. Then, all the passengers from all incoming flights with the same final destination boarded one of these planes with a destination of origin like, for example, Leipzig, that then flew to a vacation destination like, for example, Palma. This resulted in a higher percentage of seats sold per flight, as AirBerlin could redistribute its passengers from all over Germany instead of having to try to fill a flight only with passengers from Nuremberg. In the evening, then, the whole process was reversed.

This graphics nicely demonstrates the increased efficiency thanks to hub-and-spoke networks and alliances:

To sum up, I can only say that I enjoyed my time as a ramp agent a lot. I could write a whole book about all the fantastic, weird, unique and funny stories I experienced during this time, but this goes beyond the constraints of this blog. 

Unfortunately, AirBerlin has been struggling for a long time and Nuremberg became to expensive for the winter hub strategy (remember at this point that all the other ramp agents and I had already been outsourced and worked for half of the original salary). This is the reason why this blog was mainly written in past tense. It makes me feel a little nostalgic...

Last, but not least, I would like to point out that one of the most successful companies over the past decades (according to the book "Great by Choice"), Southwest Airlines, does not use the hub-and-spoke approach, but still prefers a point-to-point system. Why is that? What are the incentives for Southwest to stick to the "old" system? 
Also, I am wondering how the alliance systems works in terms of revenue of each airline within the network. What happens if AirBerlin offers a flight to Pittsburgh (what it does), but the flight from New York to Pittsburgh is actually codeshared flight with American Airlines (what it is), i.e. the passenger books via AirBerlin but finds him- or herself sitting on an American Airlines airplane from New York to Pittsburgh? Will AirBerlin keep all the money that was paid by the passenger for the ticket? Will it be shared equally between AirBerlin and American? Or will the money be split relative to the distance covered per flight and airline? If so, the airline that serves as the shuttle for the longer flight might be at a disadvantage as short haul flights are relatively more expensive for an airline than long haul flights (as the most fuel efficient flight phase is when the plane has reached its cruising altitude). And - related to this point - what is the minimum amount of destinations within the shuttle range and the minimum amount of vacation destinations that must be offered such that the hub-and-spoke system becomes less expensive than the traditional point-to-point approach? In the case of AirBerlin, this minimum might not have been reached.


About hub-and-spoke networks and Southwest Airlines: 

About flight phases and efficiency:

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