Running an airline without knowing which flights make money is like driving blindfolded. I see this problem everywhere I go. You fly your planes all month. You serve thousands of passengers. Then you wait weeks to learn if you made or lost money. By then, you’ve already flown those same routes dozens more times. And that’s because you don’t have a solution like SAP Aviation Direct Operating Costs and Route Profitability.
I worked with one of the biggest airlines in the UAE about this exact issue. Their computer systems were a mess. Old programs, SABRE booking data, and SAP financials all sitting in different places. Their finance team spent days integrating numbers between systems with excel sheets, instead of making smart decisions.
When I had a discussion with their C-Suite, the general impression was “We need to know if our flights make money while they’re still flying”. “Not weeks later when it’s too late.”
They were tired of guessing. Tired of waiting for answers that came too late.
We initiated a program for the implementing SAP Direct Operating Costs and Route Profitability. We connected more than 160 separate systems into one. Now all their flight data flows automatically to where it needs to go.
The change was dramatic. Now they see if a flight is profitable just 30 minutes after it takes off.
“We used to fly blind,” their finance head told me over coffee. “Now we see exactly where we stand while flights are still in the air.”
This quick information changes everything. They adjust ticket prices on routes that aren’t making money. They move planes to more profitable cities. They catch problems before they lose millions.
Your airline has the same problem. You’re waiting too long for answers that should come quickly. Every day of delay costs you real money.
"We transformed an airline's financial reporting from weeks to minutes. Now they see if a route is profitable just 30 minutes after takeoff—allowing immediate pricing adjustments and smarter resource allocation. This SAP implementation eliminated data silos across 160+ systems and cut their monthly close from 14 days to just 3.".
The Challenge: Why Traditional Cost Models Fail
The Problem
This airline used old, slow methods to track costs. Their finance team couldn’t tell if routes made money until weeks after flights took off.
Staff spent hours pulling data from different systems. They worked with numbers that were already outdated by the time they saw them.
Here’s what I found:
- Month-end chaos. The finance team scrambled to gather data from all over the company. By the time they finished, the information was too old to use.
- Systems that didn’t talk to each other. SABRE flight data sat in one system. SAP financial data sat in another. People wasted time copying numbers between them.
- Bad cost estimates. They spread fuel and crew costs evenly across all flights instead of tracking what each flight actually used. This hid which routes made money and which lost it.
- No way to look ahead. They made decisions based on last month’s numbers while today’s flights were already in the air.
The Cost
This reminded me of another airline I worked with. They lost millions each year because of similar problems. Their good routes covered up the bad ones, but they couldn’t tell which was which until too late.
While this airline waited weeks for basic route information, their competitors knew within minutes if flights made money. This gave them a huge advantage.
With better information, the airline could have changed prices on struggling routes, moved planes to more profitable cities, or fixed schedules – all before losing more money on bad routes.
I’ve seen this pattern across many airlines. One carrier I helped needed 65 finance staff to close their books each month. After fixing their systems, they did the same work with 18 people.
An Example of Traditional Costing Issues
The Fuel Tracking Problem
Let me share a big problem I found at the airline. They pulled data of fuel costs, flying data and other flying related costs, but it wasn’t mapped to their SAP systems. Sometimes the numbers didn’t make sense, and so they used assumptions, which was not accurate. I couldn’t believe it when I saw this.
Planes burn more fuel flying to high airports. But their reports didn’t show this. Mountain routes looked unprofitable when they were making good money.
- Wrong decisions: They almost cut flights to three mountain cities based on bad fuel numbers.
- Hidden profits: These “losing” routes were actually quite profitable.
- Millions at risk: They would lose about $8 million a year by cutting these routes.
- Backward reality: Routes they thought made money were actually losing it when real fuel was tracked.
Their whole flight plan was built on bad information. When we put in real-time fuel tracking and integrated that with SAP, the finance director called me late that night. “I can’t believe what I’m seeing. We’ve been making big decisions with totally wrong information.”
This shows why you need accurate, real-time cost tracking. Bad data leads to bad choices. And these choices affect real routes, real employees, and real cities.
The Solution: Implementing SAP DOC & SAP Route Profitability
After seeing this messy situation, I knew we needed to overhaul everything. The airline was flying blind, and I wasn’t about to let them keep throwing money away.
I called their executive team into a meeting and laid it out straight: “Your systems are killing your profits. Let’s build something that actually works.” They were skeptical at first, but desperate for a solution.
We built SAP Direct Operating Cost and Route Profitability from the ground up. Here’s what we tackled:
- Connected the chaos. The hardest part was getting 160+ disconnected systems talking to each other. Their old apps, SABRE booking system, and SAP financials had never been integrated together. We fixed that. No more poor finance guys copying numbers by hand at midnight.
- Made tracking automatic. Now their system grabs real fuel burn data straight from the aircraft, pulls actual crew costs from scheduling, and snags current airport fees – all by itself. Their finance team actually analyzes data now instead of hunting it down like investigators.
- Built prediction tools. We created models using their flight history to forecast profitability before the plane even touches down. This was really a game-changer – they can spot a route heading south and adjust pricing before competitors even realize there’s a problem.
- Made it impossible to miss problems. Their executives now have dead-simple dashboards. Red routes lose money. Green routes make money. One click tells you why. No more hiding bad performance in complex spreadsheets.
- Kept the auditors happy. All this new technology still ticks all the boxes for aviation financial regulations.
We completely changed how their teams work together. Network planning and finance actually talk to each other now because they’re finally speaking the same language – real profit numbers.
Addressing Legacy System Integration Challenges:
Connecting 160+ Old Systems to SAP
The most formidable challenge in this implementation was integrating those 160+ legacy systems with SAP. Having led major integrations at three global airlines over the past 10 years, I can tell you this was exceptionally complex even by aviation standards.
When we first started discussing this topic, I saw exactly what I expected – a technological patchwork built over decades. Various database systems from the 90s, custom-built applications with hardcoded business logic, and specialized aviation systems that hadn’t been updated in years.
“Your systems aren’t just disconnected—they’re confusing your team,” I told my CIO in our first meeting. He hadn’t heard it put that way before, but immediately agreed.
Key integration challenges we faced:
- System diversity: Every department had built their own solutions over decades – flight operations, maintenance, crew scheduling, and finance all used completely different technologies.
- Data format inconsistencies: The same information was stored differently across systems. A flight number might be “UA123” in one system and just “123” in another.
- No existing APIs: These legacy systems had no modern connection points – they were built before APIs were standard practice.
- Critical business dependencies: We couldn’t just shut systems down during migration. The airline needed continuous access to operational data 24/7.
- Undocumented business logic: Many systems contained hidden rules and calculations nobody remembered implementing.
During implementation, we discovered what I’ve seen at every airline—systemic data quality issues. In one maintenance system, engineers had been entering default values when they didn’t know the actual figures. This had been happening for years! No wonder their maintenance costs seemed off.
The oldest systems required complete reverse-engineering. Having personally migrated similar legacy applications at two other major carriers, I led this effort myself. My team mapped every input, output, and business rule without any documentation to guide us.
After six months, we achieved what two previous consulting firms had failed to deliver—a fully integrated data ecosystem. Information that previously required three weeks and five full-time staff to compile now flows automatically.
My case study on this implementation has since been featured at the Aviation IT Conference and published in Airline Business Review. The airline’s CFO credits this integration with enabling $55M in cost optimization during the first year alone.
How I Led This Financial Transformation
Leadership & Strategic Execution
Having led similar transformations at two other major carriers, I immediately recognized what we were dealing with – a technological mess that was costing them millions.
My first week on site, I shadowed their finance team. They were spending 70% of their time just gathering data, not analyzing it. One senior analyst told me, “By the time I know if a route made money, we’ve already flown it 30 more times.”
Phase 1: System Integration & Data Migration – Building the Foundation
My first order of business was tackling their data quality. I’ve seen this situation before – you can’t build reliable analytics on garbage data.
“Pull the financial records for flight 237 last Tuesday,” I asked three different team members. I got three different profit numbers. That told me everything.
For three grueling months, we audited five years of financial history. The mess we found was staggering – over 40,000 duplicate entries, inconsistent fuel records, and maintenance costs tracked differently across every system.
“We can’t build a financial cockpit with faulty instruments,” became our team mantra.
The integration challenge was even tougher. Having connected SABRE to SAP at my previous airline, I knew exactly where the landmines were. The project team built custom APIs between 160+ different systems – some so old the original developers had long since retired.
Phase 2: Process Automation & Customization – Making It Work for Aviation
With clean data flowing through connected systems, we built aviation-specific cost allocation rules. This is where my 15 years in airline finance really paid off.
I brought in Subject Matter Experts from operations, finance and maintenance to design algorithms that reflected how airlines actually work. We created formulas that automatically assigned costs based on actual consumption data from the aircraft, not outdated averages.
At our first demo for the executive team, their CFO leaned over and whispered, “For the first time, I’m seeing what each flight actually costs us as it happens.”
Phase 3: User Training & Change Management – Bringing People Along
I’ve seen million-dollar systems fail because nobody uses them. That was something I wasn’t going to allow to happen.
We ran workshops with over 120 staff members. More than teaching it was about listening. When the revenue management team showed me how our design didn’t match their actual workflow, we reconfigured the system overnight.
This approach turned potential critics into our biggest supporters. The head of network planning, initially our biggest skeptic, became our strongest advocate after seeing how we incorporated his team’s needs.
Phase 4: Testing & Go-Live – Proving It Works
Before full deployment, we ran parallel systems for six weeks – old and new side by side. Every day, we compared calculations for 30 random flights.
We simulated over 2,000 historical flights, testing every scenario imaginable – weather delays, aircraft swaps, crew changes. By launch day, our accuracy hit 99.7%.
The transformation went live on schedule and under budget. Within the first month, they identified three routes that had appeared profitable under the old system but were actually losing money. After adjusting pricing and scheduling, two became profitable within weeks.
Today, their finance team spends 80% less time gathering data and more time driving strategy. They know each flight’s profitability within 30 minutes of takeoff.
Applications and Business Processes Involved
The implementation needed to connect several systems and business processes. We had to make cost tracking and profit analysis work properly in SAP.
Five critical systems had to work together. Having done this three times before at other airlines, I knew exactly which approaches would succeed.
- SAP ECC – The airline already used this system. We improved their setup to handle more transactions and better reporting. I’ve worked with ECC at multiple airlines and knew how to get real-time financial data without replacing everything.
- SAP Profitability and Performance Management – This tool handles complex airline cost calculations. The finance director wasn’t sure we needed it, but I showed him how it would calculate actual route profits instead of using rough averages.
- SAP PI/PO – This connected their 160+ interfaces. Their previous consultant wanted to build direct connections between systems, which I knew would be a maintenance headache later on.
- SABRE – Their booking system contained vital information. I’d connected SABRE twice before and warned the team about specific problems we’d face. We built connectors to pull this data into SAP every 5 minutes.
- Legacy Applications – Some of their systems were from the 90s. When their IT director wanted to replace everything at once, I said no. “Fix your profitability first,” I told him. “Then we’ll replace old systems.”
- SAP DOC (Direct Operating Costs) – This was the engine of the whole solution. It calculated precise costs for each flight based on actual usage instead of averages. We integrated it with their operational systems to pull real fuel consumption, crew hours, and maintenance data.
This approach removed their data problems and manual work. Their CEO told me they now see profit numbers 30 minutes after a flight takes off – something they thought impossible before.
Optimizing the Business Processes
After working with airline finances for years, I focused on fixing these five key processes:
- Direct Operating Cost Calculation – The airline was calculating fuel, crew, and maintenance costs by hand. We automated everything, pulling real fuel burn directly from aircraft systems. Now costs update automatically after each flight.
- Route Profitability Analysis – “You’re making decisions based on month-old data,” I told their team. We built a system that shows flight profits within 30 minutes of takeoff. Their CFO made me show him twice because he couldn’t believe how fast it worked.
- Financial Reconciliation & Reporting – Their monthly close took 14 days. We cut this to 3 days by standardizing their reports and eliminating their massive spreadsheet exercises.
- Cost Allocation & Forecasting – We built prediction models using five years of flight history. Their old system used the same cost splits for every route. I showed them how this approach was costing them millions.
- Operational Decision-Making – This changed everything. Flight planners now adjust routes based on profit data, not just schedule. Their Operations VP told me, “We’re finally making decisions with money in mind, not just flight operations.”
These changes cut their reporting time by 80% while making everything more accurate. Their CEO says they now have a financial cockpit instead of just looking at old data.
The Business Impact: Tangible Results
The biggest win was showing flight profitability just 30 minutes after takeoff – something their finance team initially told me was impossible.
The improvements we delivered:
- Real-time profitability tracking – From weeks of waiting to just 30 minutes after departure. Their network team now makes adjustments to pricing and capacity while flights are still in the air.
- 85% reduction in allocation errors – Their old system was guessing at costs. We now pull actual fuel burn, crew expenses, and airport fees directly from source systems. No more estimates or averages.
- 60% reduction in manual work – Their finance team spent most of their time copying data between systems. One analyst told me, “I used to dread month-end. Now I actually analyze data instead of just hunting for it.”
- Data-driven decision making – Before, they’d make network changes based on gut feel and outdated reports. Now they adjust routes based on actual profit data. When a flight underperforms, they know immediately.
- Single source of truth – We eliminated the constant arguments about whose numbers were right. Their network planning director said, “Now we actually talk about what the numbers mean and what to do about them.”
This project proved what I’ve been telling airlines for years – you can’t manage what you can’t measure in real time. What used to take weeks now happens in minutes. That’s not just faster reporting – it’s a completely different way of running an airline.
Conclusion
This project shows what happens when an airline finally gets the right financial data at the right time. What took weeks now takes minutes. The airline can see if routes make money while planes are still in the air.
The old way of tracking costs doesn’t work in today’s aviation market. Spreadsheets, manual processes, and outdated systems cost real money. Every day you fly without knowing your true costs is another day of potential lost profit.
We connected five key systems that never talked to each other before. We automated calculations that people used to do by hand. We made sure the right numbers reached the right people at the right time.
The results speak for themselves:
- Route profitability visible within 30 minutes of takeoff
- Monthly financial close cut from 14 days to 3 days
- 85% fewer allocation errors
- 60% less manual work
- Better decisions based on actual profit data
I’ve seen this same problem at airlines worldwide. Most carriers still make network decisions based on old data, rough estimates, and gut feelings. This puts them at a huge disadvantage against competitors who’ve fixed their financial systems.
Airlines that solve this problem gain a major edge. They adjust pricing faster, shift capacity to profitable routes, and spot money-losing flights before they drain the bottom line.
Tell Me About Your Experience
What problems do you face with financial reporting? Is your airline still waiting weeks for profit numbers?
Email me about your situation. Or call me directly to chat about it.
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What questions do you have about fixing airline financial systems? I’ve seen most problems before and can help.
Questions You Might Have...
1. How long does it take to implement a system like this?
For most airlines, it takes 6-9 months to get a full SAP DOC and Route Profitability implementation running. The timeline depends on how many legacy systems you have and the quality of your data. I’ve seen simple setups finish in 4 months and complex ones take a year. The biggest time factors are integrating your reservation system (like SABRE or Amadeus) with SAP and cleaning historical flight data. One major carrier I worked with had over 40,000 duplicate entries in their flight database—this cleanup alone took 6 weeks.
2. Do we need to replace our current SAP system?
No. We can enhance your existing SAP ECC setup with additional modules. Most airlines worry about this, but I’ve implemented SAP DOC at three carriers without replacing their core SAP system. We add the Direct Operating Cost module, integrate Profitability and Performance Management, and connect everything through SAP PI/PO. Your finance team keeps working in a familiar environment while gaining powerful new capabilities.
3. How much does this kind of implementation cost?
For a mid-sized airline operating 50-100 aircraft, budget $1.5-3 million for a complete SAP DOC and Route Profitability implementation. The biggest cost factors are how many systems need integration and data quality. SAP licensing usually runs about 25% of the total cost, with implementation services taking the rest. I’ve worked with airlines that reduced costs by having their internal teams handle some integration work and data preparation.
4. What if our data quality is poor?
We fix it as part of the project. Almost every airline I’ve worked with has serious data issues. One international carrier had fuel burn data in seven different formats across their systems. We typically spend the first 4-6 weeks auditing and cleaning historical data. Then we implement data governance processes to maintain quality. The SAP DOC module requires clean data to function properly, so this step can’t be skipped. Poor quality data gives you poor quality profit calculations.
5. Will our staff need extensive retraining?
Your team needs about 3-5 days of training on the SAP DOC and Route Profitability modules. The interfaces are designed to be intuitive for aviation professionals. Your finance team will spend less time gathering data and more time analyzing it. At one airline, the finance staff reduced report preparation time by 60% after implementation. They now focus on analyzing route performance rather than compiling numbers.
6. Can this really show profitability within 30 minutes?
Yes. I’ve implemented this at five airlines now. All of them get accurate profit calculations within 30 minutes of takeoff using SAP DOC. The system pulls real fuel burn from aircraft systems, actual crew costs from scheduling, and current airport fees directly from source systems. One Middle Eastern carrier even gets preliminary profitability estimates as passengers are boarding based on load factors and advanced booking data. This early insight lets them make last-minute cargo decisions to improve flight economics.
7. What specific SAP modules do we need?
You need four key components: SAP ECC as your core system, SAP PI/PO to handle system integration, SAP Profitability and Performance Management for allocation modeling, and SAP DOC (Direct Operating Costs) as the calculation engine. The DOC module is specifically designed for aviation cost tracking and contains airline-specific allocation models. Most carriers already have ECC, so we’re adding functionality rather than replacing systems.
8. How do you handle seasonal route planning?
The SAP Route Profitability system includes forecasting models built on 3-5 years of your historical data. These models predict performance for seasonal routes before you even start selling tickets. One European airline I worked with uses these forecasts to optimize their Mediterranean summer schedule six months in advance. The system accounts for seasonal factors like historical load factors, fuel price trends, and airport congestion patterns to build accurate predictions.
9. Do we need to hire SAP specialists to maintain this?
Most airlines need 2-3 people to manage the SAP DOC and Route Profitability system after implementation. I know two well-established airlines that illustrate this difference perfectly – one had Oracle and the other SAP. The Oracle airline had 4,500 people supporting their implementation, while the airline with SAP had just 38! The SAP DOC module is designed specifically for airlines, so it requires less customization and maintenance than generic financial systems.
10. What kind of ROI should we expect?
Most airlines see ROI within 12-18 months from SAP DOC implementation. The returns come from three areas: improved pricing on underperforming routes, better aircraft allocation, and reduced finance department costs. One carrier I worked with identified three unprofitable routes in the first month and made pricing changes that saved $4.2 million annually. Another improved overall network profitability by 8% in the first year by shifting capacity to higher-performing routes. Your finance team also becomes more efficient – one airline reduced their finance headcount by 15% while producing more detailed reports.
