Rich Lesser on BCG's AI operations partnership with KLM

03 October 2019 Consultancy.uk

Global strategy consultancy Boston Consulting Group (BCG) and Dutch airline KLM have been collaborating closely in recent years – a relationship which culminated in a new Artificial Intelligence partnership between the two in 2018. One year on, BCG CEO Rich Lesser has explained how the alliance has led to the launch of a suite of products based in AI that dramatically improved the airline’s operations.

Founded in 1919, KLM Royal Dutch Airlines is the oldest airline in the world still operating under its original name. 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. The firm is determined not to rest on its laurels as it approaches its 100th anniversary, though, and has been implementing a roster of innovative changes throughout its operations during 2019.

One way the company is looking to the future is through the implementation of AI programmes to improve its operational workings. In the summer of 2018, this saw KLM forge a new partnership with BCG to produce what the firms described as a pioneering AI partnership that could “revolutionise global airline operations.” While BCG had worked alongside KLM multiple times throughout the years, the move represented the first time in the Dutch airline’s history that it has collaborated with a leading management consultancy to launch an entirely new service.

Rich Lesser, CEO at BCG

The jointly-developed AI system was intended to digitise KLM’s entire commercial aviation process and leverage advanced machine learning technology to streamline operations “in an unprecedented manner.” One year after the announcement, BCG’s CEO has elaborated on the work the two companies have put in to realise that vision in the months since.

Unique collaboration

Taking to his LinkedIn to talk about the partnership, Rich Lesser said, “Over the course of 18 months, BCG and KLM developed AI-based tools – through which, for example, machine learning and advanced optimisation process dozens of variables and propose how to repair schedules with the minimal delays and disruptions and the least ripple effect for passengers, crews, fleet, and ground resources."

This was far from a simple process, however. Lesser elaborated that the average day in the life of an airline is tremendously complex, with operations requiring the integration of granular information about tens of thousands of passengers, a fleet of more than 100 aircraft, schedules for thousands of crew members, and the tasks of essential ground staff. Any change to that concoction ultimately has to contend with technical complexities and major change management operations if they are to keep things running smoothly.

Fortunately, Lesser stated, BCG was founded with “a mission to discover the opportunities and solutions hidden within complex systems,” including those which cross functions and industries, and which cross the globe. While the array of challenges facing KLM and all airlines had traditionally been addressed in isolation, BCG realised it would need to work with KLM to tackle them holistically.

Discussing that process, Lesser expanded, “The magic of this project came out of the close collaboration among KLM’s operations and decision support teams; BCG’s consulting team, which had deep airline expertise; and BCG GAMMA, made up of data scientists, data engineers, and software developers. We rolled up our sleeves together to break down siloes and conquer two types of complexity of equal importance.”

Two complexities

First, BCG and KLM collaborated to develop tools to address technical complexities. These AI-driven processes can support employees by sifting through vast quantities of data and giving them the right information at the right time – minimising the impact on tens of thousands of passengers in a single day. However, as is the case with any tool, it is only as effective as the training given to the person wielding it. For this, BCG and KLM partnered to oversee significant change management, working to gain the trust of employees so that they could “comfortably adopt the tools and become part of the solution.”

Lesser concluded, “This often means putting AI-enabled decision-making authority in the hands of frontline staff, in the operations control centre. Armed with analysis from the decision support tools, employees can focus on making integrated decisions that boost performance. [By doing this] BCG’s partnership with KLM tackled both of complexities at the same time, and early impact has been significant – with 15% to 25% fewer passenger disruptions and a large reduction in delays. Working with KLM, we are now bringing this solution to other global airlines.”

Earlier in 2019, this continued partnership saw Brazilian airline Gol become the first Latin American client of KLM and BCG’s joint venture. With a fleet size of around 130, Gol is Brazil’s largest international airline, ahead of local rival Azul, and one of South America’s largest players. The airline carries more than 33 million passengers annually and operates 750 flights daily to 73 destinations in Brazil and in South America, the Caribbean and the United States, making a strategy to digitise its internal operations key to optimising its operational performance.


×