KLM partners with BCG to bring artificial intelligence to the skies

05 June 2018 Authored by Consultancy.eu

After years of close cooperation, the Boston Consulting Group and KLM Royal Dutch Airlines have agreed to what they describe as a pioneering artificial intelligence partnership that could “revolutionise global airline operations”. It is the first time in the Dutch airline’s history that it has collaborated with a leading management consultancy to launch an entirely new service.

The jointly-developed artificial intelligence (AI) system will digitise KLM’s entire commercial aviation process and leverage advanced machine learning technology to streamline operations “in an unprecedented manner”. With these and other state-of-the-art analytic and organisational tools, the suite of integrated solutions will be able to minimise daily disruptions caused by human error and unforeseen events.

Combining AI, machine learning, and advanced analytics with a joint force of KLM Operational staff and data scientists, engineers and developers from BCG Gamma (the data science consulting arm of BCG), the technology can help optimise airline processes, from front-office to back-office. This includes seating, baggage, ground services, inter-airline networks and developing long-term strategic solutions to some of the most pressing problems facing global aviation.

“At the moment artificial intelligence is mainly used for commercial purposes, but not so much on the operational side. This has to be changed by applying smart tools”, says KLM CEO Pieter Elbers. Rene de Groot, Chief Operating Officer of KLM added, “I am excited about this partnership with Boston Consulting Group (BCG). We share the vision that operations as a cost center and a purely executional role is a thing of the past.”KLM partners with BCG to bring artificial intelligence to the skiesThe end result, says De Groot, is that the technology will allow KLM to be more effective and efficient in the decisions about their services and long-term strategies – against a backdrop of growing competition – as well as process increasing complexity and a marriage with Air France that is planned to head towards further integration. One area AI can add major value is Maintenance Repair & Overhaul Planning, as smart technology can align the complex equation of bringing together the numerous people, machines and materials involved in MRO operations, while also shedding light on maintenance that could proactively be executed ahead of schedule.

Flyers, meanwhile, can expect less delays as the AI-powered systems improvise immediate and workable solutions for minor problems – such as a baggage delay – which often have a domino effect and create major headaches for thousands of passengers.

There is no name for the joint KLM and BCG project. Nor is it a specific tool. Rather it is a suite of self-learning, AI-driven technologies that will continually adapt and work under the oversight of an extremely complex computer program. “The tools actually support the people," said De Groot, by quickly finding the best solution for any conceivable disruption or crisis. “They are self-learning and a solution deployed in Amsterdam can be remembered and adapted for instant use in New York should a similar problem arise.” 

For KLM, the partnership also strengthens the firm’s digital-focused strategy developed over the past several years. De Groot: “It marks a key move to becoming the most customer-centric, innovative, and efficient network carrier. In the fast-paced aviation industry, the successful companies will be those who build the right strategic partnerships to accelerate innovation, growth, and customer value.”

Ready for take-off

The new technology has already been successfully trialled at KLM. Now both firms say they are ready to launch their joint services to airlines worldwide and help usher in a new era of AI-driven aviation processes. “There is a lot of interest”, says Nicolas Boutin, Head of BCG’s Airline practice, who has declined to reveal how the proceeds of sharing their proprietary AI solutions would be divided between the Dutch airline and US-origin management consultancy.Quote Nicolas Boutin“Today’s announcement brings together two visionary industry leaders, with complementary cultures and track records for innovation. We have worked with KLM for many years. Our partnership will drive growth for both companies, stimulate a unique value for customers worldwide, and be an incredible innovation boost for the industry,” he added.

In deciding to develop the set of solutions, both BCG and KLM had concluded – after years of working closely together on other projects – that the challenges facing the modern aviation industry could not be solved by human expertise alone. Instead, AI was needed to properly assess the inextricably complex cost, operational performance, customer satisfaction and employee engagement metrics that must be harmonised to generate an optimal process. 

The two firms have a long-standing strategic relationship which transcends technology and is rooted in more traditional management consulting. BCG was the Dutch airlines’ consulting partner of choice when it decided to implement cost saving measures worth €2 billion in 2015. The American consulting giant advised KLM to adopt a successful High Performance Organisation (HPO) model, leading to what Elbers described as a complete “redesign” of the company. Prior to that, in 2010, KLM and Schiphol – where the airline is headquartered – called in BCG together with McKinsey to study KLM’s international competitiveness, among other areas. 

With its fleet of more than 160 aircraft, the KLM Group – which includes low-cost carrier Transavia – carried more than 41 million passengers in 2017 and is performing well on all metrics. It is part of Air France-KLM, which is in turmoil following the resignation of CEO Jean-Marc Janaillac, forced out by costly strike action by French staff. Within the Group, KLM is outperforming Air France on nearly all financial metrics, and as a result, Dutchman Elbers is considered a frontrunner to replace Janaillac in a move that would be a drastic departure from Air France’s tight French heritage at the top. Whether he takes on the top job or not, Elbers is certain to propel KLM’s partnership with BCG into the skies.

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