Preferential Bidding: Unraveling the Mystery

Air Line Pilot, November/December 1999, page 29
By Capt. Peter Forman (TWA)

Preferential bidding is out of the laboratory. At least eight U.S. and Canadian pilot groups use it, some more successfully than others. If your airline has not already looked at this technology, chances are that it will within the next few years.

The stakes are high. A preferential bidding system (PBS) can offer thousands of trip combinations to choose from—a distinct improvement over the hundred or so choices a pilot sorts through with preconstructed lines of time. Polls taken of pilots at airlines with successful PBS implementations show that 80–90 percent prefer it, compared to traditional bidding.

Preferential bidding is not without its faults. In less-successful implementations, the negative aspects of PBS can offset the positive. Fortunately, past problems can be identified, and then other users can avoid those problems.

The concept behind preferential bidding is easy enough to understand. Bidders create requests that include desired days off, desired trip types, and many other criteria. A computer then considers these requests while combining trips together to build a schedule for each pilot, in seniority order. The computer is instructed to build schedules that do not conflict with trips from a previous month, vacation time, or training activities.

The results are assignments that come closer to the schedule a pilot will actually fly during the month, than do assignments derived through traditional bidding.

Advantages

The most obvious benefit of PBS is the previously mentioned enormous increase in available trip combinations. Nearly any prebuilt line of time contains compromises of sorts. One prebuilt line may contain desired days off but fails to offer desirable trips. Another may offer desirable trips but in a spacing inappropriate for a long-distance commuter. What a pleasure to receive a line that has desired days off, desired trips, and trip spacing that suits your lifestyle.

Once a pilot learns the fine art of preferential bidding, work can mean more than just a chance to earn a paycheck by flying airplanes. Ask for a long Florida layover during the week of a popular spring fly-in. Schedule as many layovers in your hometown as possible, particularly if you're working on an important holiday. When specific trips can be brought into your schedule without compromising your overall schedule, flights can take you where you want to be.

Although time is required to learn a new bidding system, a pilot who becomes proficient at using PBS saves considerable time each month in the bidding process. Most vendors offer a default bid, which is used if a pilot enters no specific bid for a month. Quite a few PBS pilots let their default bid run month after month and achieve very satisfactory results, or they make minor modifications to that bid for accommodating specific days off or for capturing especially desirable trips.

Disadvantages

Negative aspects of PBS are sometimes direct results of the positive. For example, because many pilots desire weekends off, junior pilots will work most weekends, and the most junior pilots will typically work almost every weekend during every month. Another example of heavy demand for days off occurs in December. Demand for time off at the end of that month, particularly between Christmas and New Year's Day, results in junior pilots working almost solid schedules during these holidays.

Other negative aspects of PBS can be traced to the concept itself. For example, PBS does not typically recognize "trips missed" for vacations, training, etc. A pilot using traditional bidding can effectively increase his or her time off by obtaining long trips that extend into the vacation period.

In future PBS implementations, negotiating vacation credit values that approximate the trip credits typically dropped through traditional bidding may be possible, but no such contract language has yet been achieved.

Also, pilots sometimes do not receive the bids they theoretically could have received. This type of problem can be caused by bidder errors, by system limitations, or by system errors. How often bidder and system errors occur depends to a large extent upon how carefully an airline introduces the PBS.

Implementation

No PBS program can just be unwrapped, loaded on a computer, and then run successfully at an airline. Every PBS product must be customized to an airline's unique rules. Negotiations must take place between airline management and pilots. Such steps require months at best, and a few pioneering efforts have stretched into years.

Setting reasonable rules for a PBS system is absolutely critical to its success. Think of PBS as a tug-of-war of sorts. On the one hand, the system is trying to give each pilot the combination of trips that comes closest to what was requested. The competing force is the PBS's efforts to ensure that all pilots can be built a schedule and that the trips left over are not too numerous or too bunched up. With the right vendor's product, with reasonably efficient trips in a good mix of lengths, and with reasonable rules concerning what constitutes a successful run, the results can be spectacular, giving pilots bids that are similar to those of someone with much more seniority. Allow the rules to become too restrictive or provide the wrong combination of trips, and the system spends more effort just trying to reach a conclusion, to the detriment of bid quality.

A vendor must be selected. Several companies offer systems, and their salesmen will all paint rosy pictures of their products. The products vary tremendously in capabilities, however, so to ensure an informed decision, experienced pilot groups can be consulted through ALPA's Economic and Financial Analysis Department or the Collective Bargaining Committee, and the pilots should ask potential vendors for demonstrations.

Most PBS vendors seem to be concentrated in Canada. This situation can be traced back to the efforts of CP Air (now Canadian) pilots. In the early 1970s, some of their more senior international pilots would ask schedulers to group together certain trip combinations. This practice became widespread enough to inspire the creation of a computer program for sorting out who wanted which trips. Pilots liked the results, and Canadian chose to create a much more sophisticated bidding program, which is in use today. The potential for PBS also motivated a couple of Canadian pilots to start their own PBS companies, one doing business in Montreal and another in Vancouver.

When considering different PBS products, evaluating all aspects of the bidding system is important.

Users will typically focus on the methodology for entering a bid. Does the PBS use a weighted system or a priority system? Is the bid-entry program accessible from home as well as from the airport, and is it easy to use? These concerns focus on the user's ability to navigate a way through the bidding process; and in aviation terms, it is much like checking out an aircraft's instrument panel.

That the pilot group's computer experts evaluate the logic the system uses to arrive at its conclusions is also crucial. Some PBS systems have significantly more optimizing features than others. Consequently, some PBS systems can deliver the full promise of preferential bidding better than others. The process of evaluating a system's logic is similar to unfastening the cowling of engines to see if the machinery is capable of taking you where you want to go.

Expect plenty of controversy within MECs and scheduling committees as rules for an upcoming PBS are hammered out. Some elements of your contract may be detrimental when you're using a PBS. Champions of the contract will defend provisions that the PBS revolutionaries wish to topple. Swordplay is inevitable. During this turmoil, the question may be asked, "Do we make the contract conform to this product, or do we make the product conform to our contract?" The answer is actually quite simple. Change the contract when it is in the best interests of the pilot group, and change the program to serve your contract when that is possible and in the pilots' best interest.

How well a pilot group and its airline management work together will determine, to a large extent, the likely success of preferential bidding on that property. The airline wants to save money with PBS and will typically favor tighter solutions with fewer unassigned trips. The pilot group will focus on quality-of-life issues and will gravitate toward solutions with more choice and higher quality results. Some PBS programs can produce extremely tight results in terms of open time and number of reserve pilots created. With such programs, pilots' insisting on reasonable settings is especially important so that quality of results are not overly compromised.

Not only is cooperation essential, but both pilot group and management must believe that PBS can succeed. At one major U.S. carrier, a PBS product's implementation dragged on for years, the victim of both vendor problems and unrealistic requirements. As the vendor improved the product, however, corresponding progress in implementation did not take place. Not until a second vendor's product was brought onto the property did the airline and pilot group agree to more realistic requirements and recapture the type of atmosphere necessary for success. The first vendor's product has since been introduced elsewhere. A mindset that a product is inadequate can, by itself, prevent the success of that product.

Plan on unique challenges that require a cooperative solution. An example of successful problem solving took place at Aloha Airlines. The contract required a minimum number of days off for pilots each month. Unfortunately, some of the trips at the airline were short in duration and lacked the credit value to build a full month without exceeding the maximum number days of work. The answer? This airline and pilot group cooperated to create a special type of bid that worked the maximum number of days allowed in the contract, but fell below the minimum hours of the PBS window. This allowed the pilot to receive a full paycheck for working only these shorter, lower value trips. Nobody would be forced to bid this special bid; but some of the more senior pilots liked the shorter work days, bid the special bid, and thus the trips that filtered down to the junior pilots were of a value that the trips could be combined and still allow the necessary number of days off. A pilot group and airline management that can find win-win solutions is far more likely to succeed in PBS than an airline in which these two parties have antagonistic relations.

A common technique for introducing PBS at airlines has been to introduce a small portion of the pilots to PBS, work out the problems they have with the program and with using it, and then introduce other pilots in stages. Some program glitches will almost inevitably pop up, and these are best discovered while a small group is using the product and individual results can be inspected under the microscope.

Education can make or break PBS. The computer program may work fine, but if users flunk bidding, they will not like PBS. Quality documentation is essential, and vendors rarely produce it. A vendor, not wanting to admit weak points in its bidding system, fails to address how to work around any weaknesses. Also, technical writers at PBS companies generally do not wish to take the dangerous leap into suggesting bidding strategies. As a result, the best documentation so far has come from pilots who know the program. Documentation should be revised often as common user errors become known. One advantage of introducing PBS in stages is that those pilots who have already learned the system become resources for answering questions in the ramp office.

Scorecard

Take a look at previous PBS implementations and you'll soon see a pattern. Where PBS was introduced quickly and with cost savings as the overriding concern, efforts have faltered. Where the PBS introduction included much pilot involvement, where airline and pilots worked together well, and where the quality of results carried substantial weight, efforts have succeeded.

Canadian introduced PBS with pilot satisfaction as a primary motivation, and the airline received cost savings as an inevitable result. Currently, Canadian uses a robust system named SOLO, which also creates trips, looks after hotels and allowances, integrates with dispatch, and tracks crews.

The introduction of PBS at Aloha Airlines could be characterized by a cooperative atmosphere. Their PBS product was created in Vancouver by Mercury Scheduling Systems (formerly Softouch), and Aloha pilots speak well of the results.

Comair was one of the first airlines to use PBS. The company introduced an early version of a product from SBS of New York. Unfortunately, this early PBS effort would not always respect seniority in trip and days-off assignments. Add in a number of inefficient trips, and the result is a PBS implementation the pilots wish to change.

Comair pilots are currently exploring other options.

TWA has tried two preferential bidding systems and currently uses one from AdOpt of Montreal. The pilots received both systems well once education and program tweaking were completed. Pilots performed much of the initial work in developing PBS at TWA, so quality of results has always been a priority.

Delta Express also uses the AdOpt product, but their experience varies significantly from TWA's. At Delta Express, the emphasis for PBS has been on cost savings. The program was introduced quickly, without adequate educational materials or training programs. Errors in the program, even after 3 years of production, have been slow to correct with no contractual protection for the consequences. Less open time is allowed, compared to traditional bidding at Delta. Furthermore, the airline allows little trading for trips in open time so that a pilot's options are limited once the schedule is received. The result is an implementation with a large number of dissatisfied users.

Northwest Airlines is completing implementation of a product from Montreal-based Airware Solutions. Northwest pilots have steered the airline's efforts, to a large extent, and have insisted on careful testing and quality education. The process has been slow but has yielded a high level of user satisfaction throughout seniority levels.

Other airlines are in the process of trying to use PBS. America West tested one product, then switched to AdOpt. Hawaiian is also working with its second vendor and has conducted live runs with a PBS from SBS. The results of these efforts will not be known for some time yet.

Duel in Montreal

Two of the most powerful PBS products on the market today are both created in Montreal. AdOpt and Airware Solutions take quite different approaches to building pilot schedules, approaches so radically dissimilar that you are not likely to see the two borrowing ideas from each other and evolving toward similar products over time. A look at these PBS vendors illustrates how different one PBS solution can be from the next one.

AdOpt's system is based upon assigning points for various positive and negative aspects of a schedule (although at least one airline has additional options with AdOpt). This approach is quite powerful for several reasons. First, several criteria can be working simultaneously for creating the schedule. Second, bid requests such as total pay hours and total number of commutes can be emphasized, due to the program's ability to compare multiple completed schedules.

One of the biggest drawbacks to such a points-based PBS is difficulty in setting the point levels correctly. You may desire three commutes, for example, but the system is so crafty it has found a way to build your month in only two commutes by using some less-efficient trips. If you could bid a second time, you might give trip efficiency more points, and perhaps on your second try, you'd achieve a desirable schedule. The problem is that each pilot has only one chance to get his bid right each month. You may be awarded the schedule you asked for, but this is not necessarily the schedule you wanted.

Airware's PBS works upon a priority system, with requests listed top to bottom. The advantage of this approach is that bidders can more easily keep their requests properly ordered.

Another excellent feature of the Airware product is its ability to make quality-neutral trip swaps with schedules that have already been built. For example, assume that a pilot senior to you received trips by asking for 4-day trips worth more than 20 hours. You would really like to receive a type of 4-day trip with a long layover in DEN. If none of the trips you request is located in open time, the computer will consider the trip held by the more senior pilot, provided that trip can be replaced by another trip that is at least as good as the previous trip, according to the senior pilot's bid requests. This feature becomes especially important to junior pilots, because it greatly expands their pool of available trips. The trip-swapping system works just as well at enabling days-off requests and has produced runs with up to 97–98 percent of days-off requests respected. Other vendors may offer features that try to duplicate this power, but none so far expand choices as well as Airware's approach.

One drawback of Airware Solution's approach is that trips are brought into the pilot's schedule one at a time. To finish the schedule, a trip stretching over the end of the month or a short trip is sometimes required. When these types of trips become scarce, quality can degrade. Also, because trips are brought into the schedule one at a time, a trip that indirectly threatens one of your other requests may be brought in. For example, if a group of days off is especially important to you, you may have to specifically ask for a trip adjacent to the days off to maximize your chances of success.

Tip of the iceberg

Pilot groups have already realized substantial quality-of-life improvements with properly introduced preferential bidding systems. Much potential for improvement still remains, however.

Over the past two decades, the power of affordable computers has doubled every year and a half or so. Some of this additional power could be directed toward providing more-exhaustive efforts in building a better schedule for each pilot. Faster computers can also be used to give pilots more choice. Right now, most PBS products allow a pilot to enter only one bid. Not long from now, a pilot may be able to enter one bid, and if a certain level of success is not achieved, ask the system to throw out that bid and consider one with an entirely different strategy. At present, most vendors discourage such approaches because of the additional computer run time involved.

Substantial improvements to PBS results can also be obtained through contractual changes. The building blocks for a monthly schedule are individual trips. A better mix of trips means better monthly schedules. But what is a better mix of trips?

The first criteria is for trips that allow the PBS product to produce results easily. When the PBS system labors and run times go up, quality takes a hit. Because the PBS must build around such obstacles as training and vacations, the requirement for short "filler" trips increases compared to traditional bidding. Unfortunately, most airlines with PBS still build trips in the same fashion as they did with traditional bidding. So far, no PBS programs can simultaneously combine the process of building trips with building monthly schedules. In the near future, however, we could see PBS programs capable of breaking a long trip in two when it transits the airport where the trip started. Such a feature would prevent the PBS system from taking extreme measures when a short trip is needed to complete a schedule, but one is not available.

Once a workable mix of trips is produced, the next step is to build trips that appeal to pilots. Preferential bidding works as a truth serum, of sorts, because it shows which trips pilots want and which they don't. If 90 percent of a trip type disappears early, chances are that demand for this type of trip exceeds supply. Similarly, if the trips passed down to the junior pilots are similar in characteristics, their supply is exceeding demand.

PBS can provide improvements for pilots who live some distance from existing domiciles, beyond its current ability to minimize commutes by placing trips back-to-back.

The efficiencies of PBS allow airlines to more economically operate smaller domiciles and thus pilot groups can more easily push for the creation of bases in locations desirable to pilots. And a pilot who cannot fly from home may still benefit from the power of PBS. If a number of pilots live in a particular city that the airline serves, creating trips with multiple layovers in this city would appeal to some of the pilots. The pilots spend more time at home, and the airline spends less on hotels. Such an approach would be impractical in traditional bidding but could work well with a PBS.

Of course, not all contractual improvements to PBS involve the characteristics of trips. One area of improvement concerns the concept of holiday pay. In traditional bidding, the importance of holiday pay was minimal. Senior pilots bid lines with holidays off and junior pilots worked them. In PBS, though, a pilot has the option of deciding not only whether to work a specific holiday, but also which holiday trip. Assume that some type of holiday pay was offered for pilots who work trips over Christmas Day. A mid-seniority pilot might choose to work a Christmas flight that has a long layover during Christmas in his or her hometown. The pilot makes some extra income and still spends the holiday at home. Better yet, one less holiday trip needs to be assigned beneath him. Both the pilot who bids the trip and the pilot who doesn't have to fly the trip benefit. The airline can also benefit because excessive absenteeism over important holidays is less likely with this approach.

How well the PBS suits a pilot's needs is affected by parameters that define an acceptable run, according to the airline's needs. These parameters cannot be set too tightly if high-quality results are expected.

For pilot groups to realize the full benefit of PBS technology, sharing PBS knowledge is essential so that intelligent implementations and contract language take place.

In past decades, airline pilots have seen new technologies improve our ability to navigate the sky. Now is the time for computers to help us achieve a better quality of life.

Peter Forman, a TWA MD-80 captain, formerly chaired the TWA ALPA Preferential Bidding Committee. Significant input for this article came from F/O Mike Dudley (Aloha); Capt. Del Brummett (America West); Capts. Nick Atamanchuk and Marc Darby (Canadian); Capt. Rob Bosma (Comair); F/O Edward Powell (Delta); F/O Bob Raben (Hawaiian); and Capt. Troy Wheeler (Northwest).