❗This episode contains valuable content you don't want to miss if you're operating a low-cost carrier.
With soaring fuel prices, APU reduction is low-hanging fruit that airlines to save on fuel costs and improve profitability. Save more than $150/hr by helping your team become more aware of APU usage.
Welcome to this episode of the JumpSeat with our guest Charles Duncan, Executive VP of WestJet and former President of Swoop.
In this episode, Charles shares the continuous improvement initiative he was tasked pre-COVID at WestJet Encore and explains how undisciplined APU usage can quickly burn through airline profits. Making key decisions based on data that is 6-months old just doesn't work. A data dashboard with real-time data can greatly improve the effectiveness of fuel initiatives by leveraging technology and automation for decision making awareness.
Don't want to miss out on the next episode? Follow us on your favorite podcast platform or subscribe to JumpSeat at flyht.com/podcasts! As this series of the JumpSeat podcast continues, we are always looking to share the most recent and impactful topics to share with our listeners.
❗This episode contains valuable content you don't want to miss if you're operating a low-cost carrier.
With soaring fuel prices, APU reduction is low-hanging fruit that airlines to save on fuel costs and improve profitability. Save more than $150/hr by helping your team become more aware of APU usage.
Welcome to this episode of the JumpSeat with our guest Charles Duncan, Executive VP of WestJet and former President of Swoop.
In this episode, Charles shares the continuous improvement initiative he was tasked pre-COVID at WestJet Encore and explains how undisciplined APU usage can quickly burn through airline profits. Making key decisions based on data that is 6-months old just doesn't work. A data dashboard with real-time data can greatly improve the effectiveness of fuel initiatives by leveraging technology and automation for decision making awareness.
Don't want to miss out on the next episode? Follow us on your favorite podcast platform or subscribe to JumpSeat at flyht.com/podcasts! As this series of the JumpSeat podcast continues, we are always looking to share the most recent and impactful topics to share with our listeners.
Welcome to another episode of the JumpSeat. My name's Chris glass, I am a product owner here at FLYHT, and I am sitting with WestJet EVP, Charles Duncan. Charles, Welcome to the pod!
Charles:Hey Chris, it is great to be here, thank you!
Chris:Excellent! So, a little history, Charles at one point was my boss back when I was working at WestJet.
Charles:Not that far back.
Chris:Not that far back, about three years ago now. So Charles, tell us about yourself. Tell us a little bit about your journey and what brought you to WestJet, brought you to Canada.
Charles:Yeah, well, I'll try to keep it brief, but 26 years in the industry and I'm definitely sort of one of those aviation geeks who's got Jet-A running through the veins. I started my career as a Revenue Management Analyst in Houston, Texas at Continental Airlines and spent, between Continental and United, about 21 years with them in a mix of commercial and operational roles. And I also spent 13 years in Asia with Continental before the merger with United. And then in 2017, so about five years ago now, I made the move from Chicago up to Calgary, Alberta to join WestJet.
Chris:Excellent. Now, back when you were with continental, you had some interesting travels, I believe you were on the island of Guam, if I remember correctly.
Charles:I was, I lived on Guam for three years, which is a great place and, in a lot of ways, I left my heart there. I've got a lot of great friends and[we] still stay close. In fact, I was speaking to a good friend from Guam earlier today.
Chris:Excellent. When was the last time you were back in Guam?
Charles:Well, it was pre-COVID, so I'm going to guess it was three— I have to look at my log book to be precise, but three years, maybe four years ago.
Chris:Excellent. So, in 2017 you joined WestJet and tell me a little bit about that experience. I believe that was back with Encore?
Charles:It was, yeah, my first job with WestJet was as President of Encore, which is WestJet's regional airline with 47 Q400. And when I came in, the company was, I want to say about four years old and we were still taking delivery of new Q400— the last of that order.
Chris:So a big growth.
Charles:Yeah, big growth. And it was really fun for me. Encore was serving I think, 38 cities across Canada. And I had only been to, as an American, only a handful of those Canadian cities. And I made it my mission that first year to visit all 38 bases and spent the night, got to meet the mayor and took out our elite level flyers and stuff. And it was actually just a great introduction to Canada.
Chris:Excellent. So what, I'm going to get you in a little bit of trouble here, but what was your favorite smaller city that you went to?
Charles:You know, there are many, it almost depends— and this is not to be politically correct— I mean, it's such a diverse country. And the airport codes are a challenge as well. And so, I found even just in visiting it helps me[get to know the city]. There are a lot of cool places. I mean, if you start in the east, Sydney, Nova Scotia and Cape Breton is amazing and beautiful, as is all of the Maritimes. I was actually quite struck by Sudbury as well, there's quite a mining history there and you see...
Chris:The home of Stompin' Tom Connors. I hope you heard some of his music while you were there.
Charles:I did not. I'll have to go back and do that! Yea, interesting. But you see these just massive— they look like chimneys, but they're actually mineshafts all over the place, just quite unique in that part of the country. Brandon, Manitoba was another favorite, enjoyed that. I think everybody[enjoyed] Yellowknife in the Northwest Territories, I think about Comox and Nanaimo on Vancouver island, I mean, it is such an amazing country and it was certainly a privilege for me in that role to be president of the airline that connected these smaller cities with hubs and the rest of the country.
Chris:And I remember that time too, where those smaller cities weren't big enough to get jet service or were on the cusp of that and seemed to be left out of that network that WestJet was offering everybody else. And I know a part of the early mission of WestJet was to free up travel for people who[air travel] was originally unaffordable for. And Encore did the same thing for those smaller communities.
Charles:That is absolutely right. And you actually remind me of another one of my favorite cities is Penticton in British Columbia and...
Chris:Long time wanted jet service and long time lobby.
Charles:They created a YouTube video and kind of like a flash mob and a dance and lobbied really hard for the service. And it continues to perform really well for WestJet to this day. And that's the sort of market, both for length of runway and the local population size. It'll never have a jet service, but the Q-400 and the regional aircraft is just perfect for that.
Chris:Now, when we were selecting destinations for Encore, I believe there was a speed dating time where we brought in all the different cities to come and pitch to us all in one spot, rather than flying across Canada. How was that experience?
Charles:Yeah, I was not directly involved in it, but certainly heard about it. And I think the Penticton pitch was part of that as well, and certainly a very clever way to announce the service and promote it. And ultimately, when you're launching a route or a new service as an airline, there's a lot of financial risk involved in that. And I don't think consumers or cities understand that fully. And so, as the airline, you want to service the city and the airport that have some skin in the game and are really motivated. And so by just making the effort to come to Calgary and pitch the airline on what their city had to had to offer and to basically get commitments around service, it's more of a"be honest", black and white— the emotional commitment that if you come, we will use your service and we won't forget this. I think it's really important and has helped to establish Encore now. Gosh, it must be nine years old, I think at this point, I think it goes back to 2013. So anyway, just really fantastic that just the level of support and the service over the years, we've been able to build in that reputation.
Chris:Awesome. What a great start with the company. And then we got to know each other on the continuous improvement team. So can you tell me a little bit about that role? Because I think it's going to tie into stuff that we want to talk about a little bit later on.
Charles:It absolutely will. So, in 2018, after just over a year with WestJet, I changed roles and became the Chief Strategy Officer. And through that, I had a bunch of different responsibilities. I looked after our corporate development team, which looks at things like mergers and acquisitions and partnerships and things like that, as well as our five-year plan and our strategy. I was also responsible for our project management office, so all of our big capital intensive projects implementation that team was really important in a lot of airlines, and certainly at WestJet. And then we created a team and it was built around the team you were on in continuous improvement, but we called it the Owner's Mindset. And we were given a really aggressive goal of improving the company's profitability through either costs or revenues, it didn't really matter, but to increase profits by$200 million annually, and we had a three year timeframe in which to get that done. We exceeded our targets together in 2018 and 2019, and then of course, 2020 hit and we had to disband the project.
Chris:There is bigger problems.
Charles:There were bigger problems. There definitely were, which have affected all of us, but that was a lot of fun. And we had a lot of fun together. I certainly did, tackling those projects and tracking them in our war rooms and so forth throughout 2018 and 2019.
Chris:One of those big initiatives that we had was APU reduction. I remember spending many hours on the ramp talking to ground handlers, talking to pilots and trying to figure out temperatures and all that kind of thing. And how successful was that at WestJet when we launched that program?
Charles:Well, I think it was hugely successful as part of the program and indeed, fuel for us is roughly about a one billion dollar— with a B— bill for WestJet overall. And when you think about APUs, I'm assuming most of the of listers on the pod will know what an APU is, but it's the Auxiliary Power Unit, the third engine on a twin-engine aircraft that's used to provide power to the aircraft when the main engines aren't running and also when the ground power is not available to plug into the local power grid, so to speak. At the time— and fuel is a lot more expensive now than it was then— we estimated, I believe, that the APU costs about$120 an hour to run through a combination of both the fuel and then the maintenance cost.
Chris:And right now, just on fuel alone, we're calculating at about$150 an hour.
Charles:That might even be low. I would think today we're paying$1.60 a liter jet fuel, I think it's roughly double what it was before, but regardless, it's a lot of money. And it's just money you're just flushing down the toilet because in most cases, the APU isn't required, it's really meant to be almost an emergency item when there aren't other options available. And so, not using the APU requires a lot of discipline for a whole lot of teams, whether that's the ramp team, the flight ops team, the tech ops teams, and even in flight with flight attendants. All of them, along with— I'm sure there are others I'm not thinking about— play a part in managing that cost down. And there's the old saying"what gets measured, is managed" and when you and I started this work, we didn't have scorecards, we did not know where the APU was being run or not, and who was responsible. And if we did know, we might actually have data that was like two months old and enter our live action...
Chris:And sometimes we'd have data that was six weeks old that we were trying to figure out if the initiative we were working on right now— we couldn't tell whether it was successful until six weeks down the road, which...
Charles:Which is impossible.
Chris:Very difficult to follow up with the pilot or the ground crew that's working that day.
Charles:"Do you remember you did six weeks ago?","No, I..."
Chris:Right, exactly.[Remembering] what you did six minutes ago in this industry is tough, right? So, with that program, what were some of the challenges you saw? So, you talked about the discipline that goes into it. What discipline did you have to drive and what did that look like?
Charles:Well, I think you have to look at it from every angle, each work group and what their need is. And certainly here in Calgary and across Canada, we have weather challenges as well, and so there are a lot of different groups to address. And we needed to educate as well that there are alternatives, it doesn't have to be run, here's the cost of this versus that. The first[step we] would start out, you and I working together would work with the airports and first ensure that we would have to audit all the facilities to make sure we actually had functioning ground power available. And that wasn't always the case. And whether it on the jet bridge itself or a portable unit, and was the portable unit working and functioning, and was it fueled up?
Chris:I remember the 80-pound tester that we had to take from airport to airport to airport. It had a big old case, and we had to drag it with us.
Charles:And we also had to measure, because a lot of this too would come down to airflow for the preconditioned air, because that would be another reason to run the APU is for whatever— first you'll have ground power, but then once you solve for that, is the PCA unit available or functioning enough. And then you get into all the good fun around the hoses, are there kinks, do they work? And we had devices to measure those things, air flow and air temperature and so forth. So, we would address those things and then once that's all addressed then, I'm oversimplifying now, but a lot of it comes down to standard work, I'll call it. And both for the ramp team that every single time an airplane comes in, it really doesn't matter if it's on a long term or a short term, whatever it might be, you connect power, you connect air and we power off the APU. And so it starts with discipline for the ramp and then we need to drive the same discipline for the flight ops team as well, to follow through. And one of the big lessons, and this sounds so stupid in hindsight, but I remember having to relearn this again, was we put out a memo, a directive, and it was just like,"Hey, effective next week, our new policy is connect power and turn off the APUs". And we, naively were told once the memo goes out, it will happen.
Chris:I remember that.
Charles:It will happen. The teams will follow through and will execute the new policy changed. And again, we shouldn't have been surprised, it didn't happen. But we had to actually go out on the ramp and watch this observe it, and then almost back into it. And that's when the audits of which gates worked and which had the equipment, which not, and so forth, had to happen.
Chris:You really had to peel back that layer to really figure out why it wasn't taking place, you know? A lot of people attribute it to just people not caring or people being lazy, and what it turned out is there was some really good reasons for this not happening. Like you hinted with the equipment with the temperature, there were some good reasons why these roadblocks existed. How did we go about getting rid of some of those roadblocks?
Charles:Well, in terms of— ultimately it was, I think first and foremost, spending a ton of time in the field, talking to people and identifying it and then getting the tools together, doing the measuring. I think of one there's, so many of these examples, one simple example was the tech ops team whose responsibility was to hand the airplane off in the beginning of each day, and they had a standard rule that if the air temperature, I think was anywhere below,-10 Celsius, which for Fahrenheit listeners would be about 14— which is every night. It could be-10 here in May as we're recording this in Calgary, but at-10 or lower, they would just leave the APU running all night because they didn't trust the airport infrastructure to keep the airplane warm. Which is pretty extraordinary when you think, because-10 is not that cold in Celsius terms. And so we had to go out and test that and prove it, and actually have people monitor the airplane and measure the temperature by the minute, by the hour because nobody wants to have a frozen airplane in the morning. And either for freezing the water lines or just to have an uncomfortable airplane, that then takes time to get comfortable and then delays departure because the flight crew and the pilots aren't going to take and don't want to have an uncomfortable environment for guests in the airplane. So, I use that as an example, but there were many of these, ultimately it just takes a lot of time in the field, partnering with those teams to see things through and test them and adjust policy, and then follow that through and implement. And yeah, it's a lot of work and a lot of time, but I think ultimately the proof was in the pudding and we got good results and we were very happy with the numbers we were seeing.
Chris:I think we would've been able to continue that too, if the pandemic didn't hit when it did and kind of killed momentum for a lot of things. I know most airlines kind of went into preservation mode at that point. Talk to me a little bit about your previous role to the one that you have now, and that'll bring us into the Alberta Innovates project that we're working on together as our two companies do business together. So, tell me a little bit about what was it like being the President of Swoop during a pandemic?
Charles:Yeah, my timing, I guess, was educational if nothing else, but could have been terrible. I was asked to lead Swoop, which is the WestJet group's Ultra Low-Cost Carrier. I forget the exact date, but in April of 2020, so less than a month into the pandemic. And then I stepped down literally two years later, so in April of 2022. It was certainly a challenging time for the entire team and I think for people who aren't in Canada, the experience for Canadian airlines was probably among the toughest in the world, just in terms of the travel restrictions and the vaccine mandates and the ever changing policies. It's been a challenge across the globe, but for us, our business declined by 90%, and I'm not aware of many other countries that saw this— and that's the entire industry. And when we were down by 90%, we saw the US industry down by 40 or 50%, as an example. And so, while there was pain everywhere, it was much, much more acute here in Canada for us. And a ULCC is a special kind of beast. You've got to[lower] costs, first and foremost, and of course it's a dense seating configuration on our 737- 800s— we had 189 seats, the maximum that you can fly. And we were really focused on high efficiency, maximum utilization on both our crew and our aircraft, and all in the name of keeping costs low to then be able to pass along lower fairs to consumers. And our costs were roughly 40% below that of more established network type airlines and therefore our fairs were that much lower as well. And, anyway, it was a lot of fun in spite of these tough times, but man, it was certainly a challenge. And it's really fun now to look at the Swoop team, we're adding airplanes to the swoop fleet, and these were all projects that we put in place while I was still there, but it's fun to see it all coming to fruition now, as we're climbing out of the pandemic.
Chris:Excellent. I've had the pleasure with the current project we're working on of traveling around and meeting some of your Swoopsters out there. And they're a fun, young, plucky bunch for sure. It reminds me very much of the really early days at WestJet the ability to adapt and adjust on the fly and kind of be a lot more flexible. So, it's neat to see that, and it's been great meeting the team there.
Charles:Yea, they are a great team. They really are.
Chris:One of the, one of the things that we're working on together is this Alberta Innovates grant that we've got, specifically to reduce APU burn on the ground for Swoop. So, tell me a little bit about why you were interested in entering in this partnership and where you think it can go.
Charles:Well, it's funny. I mean, we have done so many more things together than just APUs, but we'll talk more about APU in an example. But I think we're grateful as two Alberta-based companies that we've gotten a little bit of some seed capital from Alberta government to do something that is certainly in our financial interest, but just even more importantly, focused on the environment and not wasting fuel and having greenhouse gas emissions that really aren't necessary, which is generally what the APU would represent. And so, when you think about all these examples we talked about a few minutes ago around how do you reduce APU usage, in my mind, rather than having a manual team out, observing and listening and monitoring, there are technology solutions that can be deployed as well. And I think that's what we're at, at least in my mind, and you can fill me in[later], but we want to use these funds to develop prototypes, but from a smart technology point of view to automate and help drive better decision making and awareness so that we don't realize eight hours after the fact, "Oh my gosh, the APUs were running."
Chris:Or six weeks.
Charles:Fair enough, fair enough. But I'm thinking about coming in at 6:00 AM and the APU has been all night since 10:00 PM, those kind of examples.
Chris:Nobody being alerted or told.
Charles:Right. And there are some fairly simple ways that we can do this and get alerts and then get out and save that cost and the fuel and the emissions, and so forth.
Chris:So, we were out in Toronto, I took two members of our team out to Toronto. And one of the members, Vern, who I believe is still working in the office behind me here. He was working on the information that's coming off the plane that we're getting from the AFIRS boxes and trying to figure out exactly what the messaging is that we can use. And I remember him being so excited because he saw the problem in real-time, for the first time. I mean, these are computer programmers, they're not airline people, so they haven't been around airlines like you and I have. And when he saw the problem there, he was able to think of all these different innovative ways we could solve it. So, that was super exciting to see him get so excited about fixing a problem. And that's our intent with this grant money,[which] is to come up with a solution that can alert people in real-time. So, instead of sitting around a table going,"Why did we spend so much money?" It's stopping the spend before it occurs. And that's, that's our goal.
Charles:I love that. It's great, it's fantastic. And you said there's simple things, there's creating automated alerts, and so if we change the procedure that we don't run the APU at night, then we do need to know when the cabin gets to-20 or-30[degrees Celsius]. So, we can actually then fire up the APU and take corrective actions or find [if] the hose that's broken or has the kink in it and fix it before we have a problem delay flights the next day. So, it's really exciting.
Chris:Excellent. Can you also tell me a little bit about your new role? Because that's exciting as well because WestJet made some news recently with a merger and acquisition, which is new territory for the company.
Charles:It's huge for us and really exciting. We announced on March 2nd, so a few months ago now at this point, that we will be subject to government approvals and all the regulatory processes, which will take quite a bit of time. We're hoping by the end of this year that we'll have the approvals, but that will be acquiring Sunwing Travel. And in effect, they are a large tour operator with a small airline and we are a large airline with a relatively small tour operator. And they know tour operating much better than we do, and we think, as a larger airline, we can bring some operational efficiencies and run their airline perhaps better than they have. Especially when you think about their businesses is so cyclical across the seasons— they're really a winter-based airline. And of course we have a strong demand in the winter, but also strong demand in the summer, and so we can more efficiently.
Chris:Flatten out those bumps.
Charles:Yes! And so, we see really big synergy values from that and it's really exciting. And honestly, when we think about coming out of the pandemic, in particular, business travel will take a while to recover— and it may not ever fully recover because of zoom calls and other things. But we know, and we're seeing it now, leisure demand is just through the roof and people do want that, especially from Canada, warm sun destination to escape the brutal winter months. And so, this helps us beef up that side of the business, and we're just quite excited about it.
Chris:Right. And your role now is to...
Charles:Yeah. So my role is— thank you for reminding me of that part of your question, but ultimately, I've got a very small team as we're getting organized. We're working with the regulators, but also working with our counterparts at Sunwing to plan the integration as this will all map out. And it's fairly complicated and time consuming and lengthy. I've lived through one other merger in my career with Continental and United airlines and which, frankly, did not go as well as it could have. There were lots of lessons to learn from that across the board. And so, I'm trying to bring that experience with me to bear, so we don't repeat those same mistakes, some of them. Although this is quite different, not two"true" traditional airlines coming together, but again a tour operator with a small airline and vice versa, which I think will make it hopefully easier.
Chris:Yeah, it seems like such a great fit on paper, it just makes so much sense. And one other thing—we're getting a little bit long on time here— but just wanted to touch on cargo, because that was in your portfolio before and WestJet is venting heavily into cargo.
Charles:We are! Cargo is exciting for us, and this is something when we were working together, that was another area of business that I oversaw, and it was quite small. WestJet has had a cargo business for most of its 26 years, but entirely in the belly. And with narrow body aircraft, you can only move so much cargo. But as WestJet got into wide bodies first with 767s and now with 787s and flying Intercontinental routes and so on, we've been getting a lot bigger and better at moving cargo. And what's really interesting is we wanted to make sure we weren't chasing a fad or something like this because certainly through the pandemic, cargo volumes have grown a lot and eCommerce sales have grown with that as well. But we decided to take the plunge and, believe it or not, we were working on this before the pandemic. We announced it in June of 2020— Gosh, got to think[hard] now— 2021. Yes, we announced it in 2021, well into the pandemic, but we're getting four to start, 737-800 converted freighters. And we're really excited about that, sort of like the Sunwing example, because it's a common fleet type for us. We can use the same WestJet pilots and get the same operational efficiencies, the same tech, same maintenance program and so forth, same AFIRS boxes and Satcom wired into the rest of our fleet. And we can use it to compliment and supplement the cargo network we have using bellies and it's really exciting. We've got the first two here in Calgary, and we'll be getting the remaining two later this year and we're going through regulatory approvals and so forth for those airplanes right now, but it's going to be really exciting.
Chris:That is a really exciting time. As you come out of the pandemic, what are you most excited about for the WestJet group?
Charles:Whew, what am I most excited about? Honestly, it's everything, but it's about the growth, right? So the last two years, two and a half years, have just been full of so much negativity and we were working hard for sure, but it was just all negative stuff— cutting flights, demand, you're losing money, losing good people, all of this stuff. And so, even though we're financially not out of the woods yet, and high oil prices are making it a challenge as well, it's just so wonderful to see strong demand. And I never thought I would say this, but as I'm traveling around airports, I almost have to smile and be happy, be thankful, that I'm seeing queues and long lines, you know? And these are things that should annoy me, should annoy the travelers and we've got to get them fixed, and we're working with different providers. But it's just good to have these kinds of problems because they're good positive problems, they're growth oriented. And it, and it just tells me and confirms for me that there is a lot of pent up demand for air travel, and after this period we've lived through, it's just great to see.
Chris:Excellent. One last question for you and then I'm going to let you go back on your day— with all the places you've seen in the world, where should I go next? I've been asking all of our guests where I should travel to. I love to travel and I know you've seen the world, so...
Charles:And I'm not sure if you've been to any of these places[already], but I love to travel. It's one of the reasons I've been in the industry as long as I have, and why I hope to never leave. The first thing that comes to my mind is Bali. Have you been there?
Chris:No, I have not!
Charles:So, I proposed to my wife there and I've been[there] many times. It's magic. It's a wonderful place. The culture, the people, the food, just the whole of Indonesia, but in particular, Bali— it's the only Hindu island in the whole archipelago, and it's amazing. It's well worth visiting.
Chris:And I can assume WestJet will be announcing that as a destination soon? Are we breaking news on the podcast?
Charles:We're definitely not breaking news today! I'll talk to the network team, but I don't think Bali is on their list right now. But the most logical connecting point would be at Singapore or something like that, or Hong Kong. But it's a great place, it really is, highly recommend it.
Chris:So I'm putting Bali on my list. Thank you so much for spending some time with us. I know it's busy and with COVID, it's made the airline industry so much busier with less people, so I appreciate you taking time out of your day and thank you so much.
Charles:It's a pleasure. Thank you, Chris, I really enjoyed it.
Chris:Thank you to Charles Duncan for spending some time with us today on the JumpSeat, stay tuned for more exciting podcasts from us in the future. Thank you very much.
Outro:Thanks for listening to the JumpSeat. Catch the next episode on your favorite streaming platform and follow us on LinkedIn at FLYHT.