START-UP NATION/Airline operational software company:Former Cityjet boss Pat Byrne is flying high with his latest venture which designs software that provides real-time operational metrics to airline companies, writes BARRY O'HALLORAN
PAT BYRNE knows a thing or two about running airlines. He founded Cityjet, which is now one of the biggest operators out of London City Airport, and ran it for eight years. Air France now owns the company, but Byrne still chairs its board.
When he was running the company, Byrne discovered that one of the biggest logistical headaches in the business was managing aircraft crews, and finding out just how much it costs an airline at any given time was particularly difficult.
“I was a very frustrated executive, I suppose, because you just couldn’t get real-time information on operational costs,” he says. “The fixed costs are easy to track; you know what you’re paying for the lease on your plane, you know what your rent is, but it’s the variable costs are the ones that really get you.”
The really big one is crew, which can be anything from 15 per cent to 20 per cent of the cost of running an airline. Within that are salaries, but then there are special allowances for particular duties and out-of-hours working, positioning (ensuring that the right crew is in the right place at the right time), moving crew around from one place to another. “All of those costs are huge,” Byrne says.
It’s second to fuel, which is currently running at around 26 per cent of the cost, and operational delays, another key variable. The difficulties he had getting to grips with all this prompted Byrne to establish Rainmaker, which develops and sells software that allows airlines to manage crews and the associated costs.
Broadly speaking, the software uses information about planned and actual crew activities to provide management with intelligence and analysis that it needs to improve planning and decision making and to take remedial action where needed. This in turn helps to cut costs and save money.
Rainmaker has been going since 2005, with one of the first customers being Cityjet. The company gained momentum after a deal with Sabre, one of the biggest players in aviation IT support with has more than 40 per cent of the global market, which now acts as its reseller. “They would introduce their customers to us and endorse us to their customers,” Byrne says. “In 2008, we had two airlines, now we have 19 airlines, a massive surge, but it’s all been in the last three years.
The difference was that, through Sabre, Rainmaker went to the US. The first thing its partner pointed out to the Irish company was that in the US, airline crew pay is 100 per cent variable, in contrast to Europe where the general rule is 80 per cent fixed, 20 per cent variable. “It’s tied into extremely complicated work rules negotiated by very tough unions,” Byrne observes.
Calculating what US airlines have to pay their crew is almost an industry in itself, and no one had been able to automate the process. This included Sabre, which had spent several million dollars to no avail. Its representatives told Byrne and his colleagues that if they could come up with a way of dealing with the problem, then the company would open up the US market to them.
Rainmaker took a test set of data and rules and built a prototype in three months. Sabre was impressed with the results and recruited its first US customer, Mesa Airlines in Arizona. “And we’ve gone from there with crew pay in the US with large carriers like JetBlue, Virgin America, Atlantic Southeast, or as they’re known, ASA,” Byrne says.
Many of the airlines that are buying its products are feeder lines for big players such as United. However, some of them have 300 to 500 aircraft. To put that in context, Aer Lingus has 42.
“It’s been a really successful product and we want to develop the whole business intelligence area for airlines on the back of this, and that’s where we’re going right now,” he says.
Last year, Rainmaker generated revenues of €2.2 million. Byrne expects that to grow this year and is also predicting that the company will move into profit.
Recently, the company secured a €1.5 million investment from the Diageo Ulster Bank Venture Fund, which is managed by NCB Ventures, a division of the stockbroking firm. The fund operates under the Enterprise Ireland Seed and Venture Capital scheme.
That money will give it the scope to hire more people and continue with research and development. Rainmaker employs more than 20 staff, mainly engineers. Byrne says that it is “really hard” to get the right people as it is competing with big multinationals for such staff.
There is another problem: recruitment agencies. Byrne says they are “destroying” the business. The problem is that they have become too dominant and are charging exorbitant rates, while there is often a gap between what the company is looking for and the candidates that agencies put forward for interview.
