Last year, I left my corporate life in New York City behind in a vow to give myself one year to design my dream job. Shortly thereafter, I took off on a 9-month-long social experiment, in which I would circumnavigate the globe by couch-surfing exclusively through my social network. Seventeen countries, four continents, and over a hundred encounters later, I have learned that I am not alone in my quest to earn a living while traveling the world: there are so many people out there right now who are making it work.
To make an impact at the enterprise level, the data science group can’t work in isolation, said Ian Swanson, Oracle vice president of machine learning and artificial intelligence product development, during a presentation at the recent Oracle OpenWorld conference. “In order to do data science right, it has to be a team sport,” said Swanson, former CEO of DataScience.com, which Oracle acquired earlier this year.
One of the data science group’s most valuable teammates is the IT organization, for multiple reasons, he said. The DS group relies on IT to manage and secure the data it uses; support the needed analytics tools; and deliver ready access to scalable bandwidth, compute, and storage capacity to build and train production-oriented analytic models.
Another important ally is the application development team. Developers must incorporate the models DS builds into their “ecosystem” as regular features among the many they use to build production applications, Swanson said.
That points to a significant attribute of production-oriented models: reusability. An ecommerce recommendation engine, for instance, might be reused for forecasting an item’s revenue stream, he said. A key performance indicator for one technology company Swanson worked with on a DS project was “how often that model was used by other parts of the business,” he said.
Line-of-business managers are a valuable constituency as well, because they’re tasked with performing the actions—and getting the results—from applications that use analytic models. An underestimated advantage line-of-business managers bring to the analytics model-building process, Swanson said, is their domain expertise—their experiences working with customers.
As for the top brass, they don’t need “to be involved in every step of the model, but they need to understand how it will be used, the opportunities it offers, the things it can achieve,” Swanson said. “If you’re not involving the top, if they’re not part of the team, data science is not affecting the heart of the business.”
Awash in Tools
Because data science is the new darling of the technology marketplace, the number and variety of analytics tools are staggering. Swanson said he worked with a company whose DS team had accumulated 682 different tools. “How is IT managing 682 different tools?” he wondered.
Still, building predictive analytics models is complicated, requiring a “full stack” of tools, libraries, and languages—preferably open source, which encourages standards and self-service, Swanson said. As DS matures, its practitioners will have to comply with enterprise programming standards, in particular version control. “If you’re writing production code, you should be using some sort of system that encourages working together to follow best engineering practices, such as checking in code and making sure its reproducible,” he said.
But enterprise data science goes beyond programming. “It requires a platform that removes barriers to production, improves collaboration, manages the tool sprawl, provides self-service access to data, and helps with model planning and retention,” Swanson said.
Calling data scientists “the architects and engineers of digital transformation,” Swanson noted that there are DS use cases “in every industry and function,” providing the means to generate “new business channels and new business models.” But achieving those goals requires the will—and a strategy—for extending the work data scientists can do as widely across the enterprise as resources will allow.
“It’s about creating a process that delivers reliable outputs to drive business outcomes,” Swanson said. “You need to put it into action—that’s real DS.”
With only one month left in 2018 it now appears almost certain that the average inflation-adjusted domestic round-trip air fare in America this year will be the lowest it has been in at least nine years.
Based on data and analysis from the U.S. Department of Transportation and Airlines for America, the major carriers’ trade association, the average domestic round-trip fare paid during the first of 2018 was $338, excluding ancillary fees, and $360 including those fees.
That’s 15.1% lower than the $398 that travelers paid, on average, in 2014 excluding ancillary fees, and 14.9% lower than the $423 they paid, on average in that same year when fees for ancillary services are included. The year 2014 turned out to be the costliest, on average, for domestic air travel year out of the last nine years.
The cheapest year for domestic air travel, on average, out of the previous eight years was 2017, when the average domestic round-trip fare, excluding ancillary fees was $347, and $370 with those fees. Those figures were both about 3% higher than the average domestic round-trip fare in the first half of this year.
All dollar figures in the data and analysis are inflation adjusted and stated in 2018 constant dollars.
The final calculation of the average domestic round-trip fare price for all of 2018 won’t be available until sometime next spring. But it is very unlikely – in fact, it’s almost statistically impossible – for the full-year 2018 average fare price to rise above the 2017 full-year average price. That’s the case for several reasons.
First, to push that much higher from the first half 2018 average fare price, second half 2018 fares prices would have to have been significantly, even painfully higher throughout the second half of this year. But that has not been the case.
Only this week has Southwest been able to push through a modest fare hike that other carriers followed. Southwest is a long-established discount carrier that now struggles with higher costs than traditionally was the case. Still, it tends to set the floor price for fares charged by the nation’s largest, more conventional airlines. Southwest raised its prices $2 to $5 each way on about 90,000 listed fares. American, Delta, United, Alaska, JetBlue and Hawaiian airlines all followed suit.
That increase was welcomed by analysts and investors who had been complaining for months that airlines’ fares were too low this year because the industry had added more capacity than consumer demand could fill without airlines resorting to increased price discounting. But even that new, modest price increase isn’t big enough, nor will it be in effect long enough for it to significantly alter 2018’s downward pricing trend line.
Airline profits in 2018 also are expected to be down from 2017 and from the peak year of 2015, when the group as a whole earned an unprecedented $23.7 billion net profit and an operating profit of $26.8 billion. Last year U.S. airlines reported combined operating profits of $20.3 billion and combined net profits of $14 billion.
Through the first nine months of this year, U.S. airlines saw fuel prices move up 50% from the previous year, only to fall precipitously again over the last six weeks.
The fact that U.S. air travelers are getting a relatively good deal on the average domestic fare prices paid this year does not mean that every passenger is scoring a great deal.
The calculation of the average fare price includes a large number of factors that impact the percentage of seats sold at various prices. Business travelers and leisure travelers willing to spend extra for comfort frequently end up paying twice or three times more than the price of the average fare. Conversely, those willing to forego “extras” or even service features that used to be considered basic (like the ability to choose a seat or carry on a bag for free) frequently pay half, or even only a third of the “average” fare price.
Then there are business travelers who pay somewhat lower fares for full service treatment because the big corporations for which they work negotiate substantial net discounts based on the high volume of business travelers they place a particular carriers’ flights. Then there are those who travel for free, or virtually free, by using mileage points earned as members of carriers’ frequent flier programs.
Price-sensitive travelers tend to make up a much greater share of passengers on board any given flight. But the wide gap in prices paid by the most and the least price-sensitive travelers can push the average price up even though relatively few travelers pay those higher fares.
Not surprisingly, data from A4A, the carriers’ trade association, illuminates the effect that different carriers’ marketing approaches can have on the average prices paid by their passengers.
U.S. Carriers’ Average Domestic Round-trip Fares* – 1st Half 2018
Carrier Fare Market Share
Southwest $261.52 23.3%
American $411.63 19.6%
Delta $413.01 18.8%
United $428.70 14.4%
Alaska $320.78 6.3%
JetBlue $296.36 5.5%
Spirit $ 90.32 4.3%
Frontier $114.71 3.1%
Allegiant $133.65 2.5%
Hawaiian $349.12 1.5%
Sun Country $268.60 0.4%
Southwest, which continues to be a discount carrier though it no longer positions itself as industry’s absolute low price leader, had an average roundtrip domestic fare price, excluding fees and taxes, of $261.52 in the first half of the year.
American, the world’s largest airline, had a first half average fare of $411.63, while No. 2 Delta’s was $413.01 and No. 3 United’s was a relatively whopping $428.70.
But because Southwest, which has a very small international footprint, carries an industry-leading 23.3% of all domestic travelers (to the Big Three’s 19.6%, 18.8% and 14.4%, respectively), its first half average domestic round-trip fare of $261.52 has an out-sized effect on bringing down the industry’s average fare price.
The carrier with the lowest average domestic round-trip fare in the first half of this year was Spirit Airlines, at just $90.32. Thus, though it carries only 4.3% of domestic passenger, Spirit, which features Spartan service and extra fees for virtually any service beyond a seat on the plane also has a strong downward pull on the industry’s average fare. Though slightly pricier – and, in each case, smaller that Spirit – fellow “ultra low cost carrier” Frontier, Allegiant and Sun Country exert similar downward pull on the industry’s average price.