Driven by increasing costs of operation and tougher competition the international airline industry has been forced to major cost cutting measures over the past decade. But not all of this translates to layoffs and salary cuts. Much money can be saved just by smarter usage of the existing resources like crew and fleet.
And it is in this niche the Göteborg headquartered company Carmen Systems has made itself a big name in the world’s transportation industry.
Late 2002 it entered Asia and set up a regional office in Singapore, lead by 38 year old Kristina Larsdotter-Lane.
“When I arrived to Singapore in the fall 2002 we had already signed up Singapore Airlines and negotiated a deal with Philippine Airlines and it looked really good. Then sars broke out, the Iraq war began and bird flu arrived on top of it all. This forced our target market to concentrate on survival for some time,” explains Kristina who shares her life in Singapore with British husband Graham and their five year old daughter Hannah.
“But the market has recovered now and my company is involved in several interesting project discussions in the region,” she adds.
Before Carmen Systems did Kristina, who has an MSc in Computer Science and Engineering from Göteborg´s famous technology university Chalmers, ran her own IT business. Kristina sold the company when she joined Carmen Systems in year 2000.
Specifically Carmen Systems develops markets and implements resource optimization software and services solutions for clients in the transportation industry, primarily the airline and railway industries.
1988 Carmen was formed as a project team at Volvo Data and became a private company 1994. SAS and Lufthansa were the first clients and Swedish railways,
Swedish Railways, SJ, signed the first contract with Carmen Systems in 1995
Later carriers in the Americas joined the list of Carmen Systems users.
Except those already mentioned does today’s client names include, among others, Air France, British Airways, Delta Air Lines, Finnair, KLM, Lufthansa, Mexicana, Northwest Airlines, SAS, Virgin Atlantic Airways, Deutsche Bahn, Rail Gourmet, and Green Cargo.
During the financial year 2004, Carmen Systems recorded an approximately SEK 221 million revenue, showing consistent increasing profitability. Today it employs 220 people from 26 countries. Except its headquarters in Göteborg, Sweden, there are offices in Austin (Texas), Copenhagen, Montreal, Singapore and Stockholm.
“We are today the world’s largest company within crew management systems. And we also have modules for fleet and passenger management. My job here is to firmly establish Carmen Systems in the Asia Pacific and build a strong regional office with sales, marketing and service staff. Today we are just three people in the regional office.”
What kind of customers are you looking for in Asia?
“Our major markets are Hong Kong, Australia, Thailand and Malaysia. It normally takes a year or two to negotiate a contract. But we could conclude the Singapore Airlines deal in just five months so it is not always like that.”
She adds that Japan of course has big potential and is on Carmen Systems map as well but that Japanese carriers have developed their own proprietary software solutions and done it very well. This makes Japan a harder nut to crack than most other markets.
A rule of thumb is that an airline should operate 30 aircraft or more to be able to make substantial gains on an investment in a Carmen Systems crew management module.
“And we price our products on the number of crew. The more crew you have the bigger savings can you make on an investment in our systems. Normally the client leases a system for five years. That is a complete package with service, maintenance and upgrades.”
During the preparatory phases, before a roll out of the system, there are usually some work to be done with customization and adaptations to rules and regulations in the business environment the client is active in. It could for example be trade union agreements, national laws and other regulatory issues. All that is entered in the system and continuously as new rules appear or change.
“So it is not like car leasing where you return an old car at the end. With us has the customer got a fresh system all the time.”
Another nice feature is the ‘what-if” possibility. As Carmen Systems have added modules to cover many aspects of an airline operation, the possibilities to simulate scenarios have grown more and more sophisticated, to include for example salary negotiations which has actually been tried and proven to work in real life.
The airline operational know how within Carmen Systems is by now so strong that clients have outsourced some tasks directly to Carmen Systems instead of doing it in house as before.
Finally, how does the appearance of low cost carriers affect your business?
“It is more difficult to make savings for such airlines. But large budget carriers can definitively save on better resource management. The new Asian low cost carriers are still too small for this but later they may become prospects.”
