Calculating Costs in the Clouds

How Flight-Planning Software Helps Airlines Balance Fuel, Distance, Wind, 'Overfly' Fees

New aviation software is redrawing the routes planes fly to get from point A to point B -- and saving airlines millions of dollars.

In the past, when a Frankfurt-bound United Airlines plane took off from San Francisco, the pilots followed a standard route: over Montana and then northeast over Canada and Iceland. But thanks to new route-mapping software UALCorp.'s United is now installing at its operations center, the airplane, if winds and weather allow, stays in U.S. airspace until Cleveland or Detroit. That cuts its Canadian "overfly" bill -- most countries charge fees for using their airspace -- and trims fuel usage, yielding an average savings of $1,433 per plane, one-way.

Fuel costs more now than ever, eclipsing labor as the No. 1 expense for many airlines. Desperate to cut expenses, airlines around the world are turning to sophisticated software to help their pilots and dispatchers find the best balance of fuel usage, flight speed and flight path.

"Airlines are looking for efficiencies across their business," says Anthony Concil, a spokesman for the International Air Transport Association, a trade organization for airlines world-wide. After cutting staff, reducing fleets and taking other steps to cope with a massive industry downturn that began in 2001, "we're at the stage where there isn't much low-hanging fruit," he says.

Part of the new equation is minimizing -- where possible -- the costliest overfly charges levied by some nations to pay for their air-traffic controllers. IATA estimates that the world's carriers spend more than $20 billion a year on such navigation user fees.

The formulas countries use to compute their overflight fees vary widely. Cameroon, in Africa, bases its charges on the maximum takeoff weight, with an international flight passing over the country paying from €102 to €204 ($134 to $267). Canada assesses 3.6 Canadian cents (3 U.S. cents) times the distance flown times the weight of the aircraft, plus C$97 per flight for air-traffic-control coverage over the North Atlantic. United Kingdom overfly rates are three times as high as Ireland's rates, and German rates are at least twice as high as Canada's, according to international aviation specialists.

The U.S. funds its air-traffic-control system differently. Instead of flyover fees, passengers pay multiple taxes to the airlines, which pass the money on to a trust fund. On domestic flights fliers pay 7.5% of the cost of the ticket, plus $3.40 for each flight segment. Passengers on international flights pay $15.10 in fees for coming into and leaving the U.S.

Minimizing overflight fees must be balanced against additional fuel costs if an alternative route is less direct. The software systems track a slew of additional data: weather; airport locations and runways; weight and performance of each airplane in the carrier's fleet; temporarily blocked airspace and the locations of fixed air routes, which change daily due to winds.

The computers churn through multiple scenarios, including minimum time, minimum fuel and minimum cost, and determine which is the best solution for the maximum payload, given up-to-the-minute wind and weather information.

British Airways in 2003 finished installing such software on its route network, replacing a homemade system that one pilot describes as "a blunt instrument." As a result, it has drastically changed the routing of its Sao Paulo-London flight. Instead of flying in a straight line and crossing over Portugal, Spain and France before entering U.K. airspace, the airline now takes a northerly track over the Atlantic and enters the U.K. over Cornwall. Capt. Tim de la Fosse, BA's general manager of flight technical, says the new path saves £3,000 ($5,767) per one-way flight in European overfly fees, uses one fewer ton of fuel and is 18 minutes shorter in duration.

BA's software comes from Deutsche Lufthansa AG's information technology subsidiary. Originally developed by the German airline for its own internal purposes, the so-called Lido system now is used by 30 airlines, including Air Canada, Singapore Airlines and Emirates. Capt. de la Fosse figures BA now saves more than £12 million a year by flying more efficient routes.

Other vendors include EDS, Sabre Holdings Corp., Boeing Co.'s Jeppesen unit and SITA, a world-wide aviation and telecommunications provider. Northwest Airlines Corp. and Southwest Airlines Co. use a Jeppesen product. Continental Airlines Inc. and AMR Corp.'s American Airlines both are evaluating the offerings in the marketplace, possibly a prelude to replacing systems they already use. Delta Air Lines Inc., leery about the potential problems of integrating an off-the-shelf system with its other operational computers, invested heavily in updating its own internal route-planning system.

Air Canada bought the Lufthansa system in 1996 and currently is upgrading it, says Capt. Richard Sowden of the airline's flight technical department. "In the operating world of an airline, the flight-planning system is absolutely critical to cost control," he says. Air Canada used to have a rudimentary inhouse system, which lacked the logic and logarithms to analyze all the choices, he says.

United recently purchased a rival system offered by Lockheed Martin Corp. in partnership with an Austrian software company called flugwerkzeuge aviation software GmbH, or f:wz. The Vienna company got its start as the internal system for Austrian Airlines but now counts among its customers Malaysian Airlines, Gulf Air and Middle East Airlines.

While United hasn't fully implemented the software, it already is using the system to revisit the routings of its 46 daily transatlantic flights. So far, the f:wz software has guided 2,400 flights and saved the airline $2.3 million. United will start phasing in its Asia flights this month and by June most of its international flights will be optimized with the new software.

In addition to its San Francisco-Frankfurt route, United also changed its routing on the Kuwait City- Washington Dulles flight. Before redoing the route, the plane flew over Iraq, took a left in Turkey, then crossed Continental Europe and the U.K. But by flying north all the way through Eastern Europe and Scandinavia and then turning west, United can save $4,500 on average in fuel expenses and overfly charges in Western Europe.

United expects that once the system is fully installed by the end of 2008 and can handle its 1,600 daily mainline flights, it will be able to save more than $20 million a year. That may not sound like much to some, but any reduction in the airline's $4.8 billion annual fuel bill and $146 million in navigation charges is welcome. United won't say how much the new system costs, but "it's a quick and positive return on the investment," says Alexandria Marren, vice president of operational services. "It's definitely a game-changing product" and will help the airline save a lot of fuel when implemented on the busy domestic network.

Before these new systems arrived, dispatchers, airline workers who design aircraft routings and track the flights, constructed the paths manually, taking the plane from one navigation way point to the next. They pored over manuals from the aircraft manufacturers that laid out a particular model's fuel burn, added the payload information on a particular flight and mixed in the wind data to calculate how much fuel should go on board.

Now with more sophisticated meteorological information, better on-board navigational tools and the enormous computing power of the latest route-planning software, United dispatchers are so enthusiastic they are swamping their company's sign-up list for training on the new system. "It's a great tool," says Scott Andrews, one of United's 175 dispatchers.