Korean Air Reduces Fuel Consumption, Saves US$2.56 Million Yearly in Catering and Paper Costs, Meets Sustainability Goals
 
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Korean Air Reduces Fuel Consumption, Saves US$2.56 Million Yearly in Catering and Paper Costs, Meets Sustainability Goals

Korean Air is South Korea’s national airline and its largest carrier. Its fleet of 148 planes flies to 13 cities domestically and 112 cities in 44 other countries. In 2011, the airline transported 23.7 million passengers and 1.7 million tons of cargo. In addition to passenger and cargo transportation, it provides aerospace services, accommodation, catering, in-flight sales, and limousine services. Travel + Leisure magazine ranked Korean Air as the world’s eighth-best airline in 2011, and it has also been ranked by the International Air Transport Association as the world’s top commercial airline cargo operator for six consecutive years.

Korean Air is deeply committed to green operations and constantly looks for ways to improve its product and service designs, so they are based on green business processes. In 2012, the airline won an Oracle Excellence Award: Eco-Enterprise Innovation.

 
 

 
 

Challenges

A word from Korean Air

  • “Oracle enterprise resource planning solutions best meet the aviation industry’s unique needs, particularly for aircraft maintenance programs. Korean Air has achieved a number of sustainability goals, including moving to a nearly paperless environment and cutting fuel consumption by 5%. We have also saved US$2.56 million in catering and paper costs per year.” – Sungyeon Park, Deputy General Manager, Korean Air

  • Meet environmental sustainability goals, such as reducing paper use, fuel consumption, aircraft noise, and carbon emissions from passenger and cargo transport
  • Address a lack of integration between account settlement, passenger and cargo bookings, and aircraft maintenance schedules, which resulted in inaccurate purchase requests
  • Improve in-flight meal production planning to minimize food and materials wastage
  • Optimize the use of resources and materials to improve the accuracy of aircraft maintenance planning
  • Create a nearly paperless environment by reducing the volume of paperwork that passes between departments and the need to print hard copies of tickets and manuals

Solutions

  • Cut catering costs by US$2.56 million per year and minimized food wastage, by creating route-specific menus based on accurate passenger numbers and regional demand
  • Established an aircraft fuel management system that helped reduce fuel consumption by 5%, based on revised laws and procedures about fuel allowances and ground-based auxiliary power units
  • Saved US$60,000 in paper costs and 165,000 sheets of paper per year by establishing a digital library and generating electronic airline tickets and other documents
  • Lowered the volume of paperwork sent between departments by implementing an electronic records and signature system to automate issuing and approving purchase orders for aircraft spare parts needed
  • Cut material costs and made better use of environmental resources by providing accurate, real-time information about maintenance planning operations and enhancing the visibility of financial and maintenance data
  • Improved energy efficiency and reduced noise by planning aircraft and engine maintenance and repair against flight schedules to ensure maintenance is completed accurately, regularly, and with minimal disruption

Why Oracle

Korean Air found that the majority of enterprise resource planning (ERP) solutions lacked the features required to support the aviation industry’s unique needs, such as developing flight schedules and aircraft repair and maintenance programs.

“Most ERP solutions only cover up to 70% of an airline’s maintenance requirements,” said Sungyeon Park, deputy general manager, Korean Air. “This makes replacing legacy systems with a new ERP system difficult and risky.”

To avoid the implementation issues that other airlines have faced, Korean Air realized it needed an ERP application that was highly flexible and expandable. After considering proposals that addressed common implementation issues, such as costs, timelines, and vendor codevelopment, Korean Air selected Oracle E-Business Suite Release 12.1 as the solution that best met its business and technical requirements, and predicted future aviation needs.

“It was also important to ensure the needs of the maintenance division were met, and Oracle proposed a codevelopment approach to support this important requirement,” said Park. “The company also offered a compelling strategy to complete the Oracle Complex Maintenance, Repair, and Overhaul implementation. In addition, we appreciated that Oracle was committed to maintaining a consistent, long-term partnership.”
 
Oracle also offered Korean Air the opportunity to link Oracle Advanced Supply Chain Planning with Oracle Complex Maintenance, Repair, and Overhaul, ensuring the company could keep track of inventory at all stages of the supply chain. Other Oracle solutions, such as Oracle Production Scheduling were implemented for process management. Lastly, Korean Air chose Oracle Business Intelligence Suite, Enterprise Edition to produce management reports, a key performance index, and a balanced scorecard. 

Implementation Process

In October 2007, Korean Air engaged Oracle Consulting to project manage and implement a global ERP system, based on Oracle E-Business Suite Release 12.1. Oracle Consulting worked on all aspects of the project, from the implementation planning study to the development and deployment. Staff from Oracle Consulting familiarized themselves with the needs and processes of the aviation industry, then established a detailed project plan and followed a systematic methodology to complete the four-year project, on time and within budget.

Korean Air also worked with Oracle Consulting over four months to define the goals for a new aircraft maintenance and repair system, based on Oracle Complex Maintenance, Repair, and Overhaul Release 12.1. The airline implemented a total of 27 Oracle modules to support the activities of the aerospace and aircraft maintenance divisions. Eight areas, including maintenance planning, were designed at Oracle’s head office and developed and implemented by the Oracle Solution Support Center.

The project also included four Oracle Complex Maintenance, Repair, and Overhaul experts with knowledge of the aerospace and transportation sector, and 10 Oracle Complex Maintenance, Repair, and Overhaul experts from Global Sourcing, a partner organization. These experts understood airline technicalities and language, and they had extensive mechanical and electrical engineering experience.

Korean Air and Oracle Consulting worked together to finish expanding the Oracle Complex Maintenance, Repair, and Overhaul system, which went live in January 2011.

The Oracle Solution Support Center also continues to support the Oracle ERP system and helped stabilize the Oracle Complex Maintenance, Repair, and Overhaul system by handling enhancement and support requests following the implementation.