Carmen and the Massachusetts Institute of Technology (MIT) have recently begun a joint research project to identify the real-time (or near real-time) measures that best indicate the overall operational and financial performance of an airline.

Each Key Performance Indicator (KPI) will be determined through a structured series of simulation studies where the relationship between existing and yet to be proposed indicators will be determined and the resulting correlation values ranked to determine the KPI’s.

KPI’s have been used in the manufacturing industry for many years as a means for managers and analysts to quickly determine whether there is a growing problem and what to do to resolve the issue. While the use of KPI’s in the airline industry is not new, many of the KPI’s that are used by airline managers are either personal heuristics or the measurements on which airlines are rated. The intention is that this project will provide definitive answers to the age old question “What should I look for to be able to tell that there is trouble brewing?”

Carmen is working with MIT Professors, Cynthia Barnhart and John-Paul Clarke who are leading authorities in airline operations research. Professor Barnhart and her research team have recently completed a study showing how flight-leg on-time performance (an industry standard for operational performance) can be a poor indicator of passenger delay and disruptions.

Professor Clarke and his research team are the developers of the MIT Extensible Air Network Simulation (MEANS), a simulation environment where the operations of airlines and air traffic control may be simulated at the level of detail of the individual aircraft and passenger.

In the simulation studies, the Carmen Integrated Operations Control System (IOCS) will be coupled with MEANS providing a test-bed to evaluate the relationship between indicators and performance to quantify the effects of different scheduling and recovery strategies. The list of indicators to be evaluated include those proposed by Professor Barnhart based on the results of her study.

According to Professor Cynthia Barnhart, “In analyzing the effects on passenger delays of the U.S. Department of Transportation’s 15- minute on-time-performance metric, we found that the metric was not only a poor measure of passenger delays, but it also resulted in airline operating strategies that led to increases in overall passenger delay. Our study shows that it is imperative to carefully, through rigorous analysis, define the metrics to be applied.”

Carmen believes that the results of this research will provide airlines with valuable new ways of thinking about their operations.