iCargo, the next-generation airline cargo management systems

IBS Software Services offers software solutions to the global Travel, Transportation and Logistics industry. In an interview with CIOL Bureau, Larry Mays, Head Airline Cargo Business, IBS Software, gives us an insight on the airline cargo industry and the Core Group of Influence (CGI) to develop iCargo.

CIOL: Please elaborate on the Core Group of Influence

Larry Mays: CGI (Core Group of Influence) Forum is an alliance of IBS and the air cargo industry, represented by a selected group of progressive airline cargo operators. These comprise Australian Air Express, Air New Zealand Cargo (ANZ), Gulf Air Cargo, Nippon Cargo Airlines (NCA), Qantas Freight and South African Airways Cargo.

Together with the IBS technology and cargo domain expertise, the members share a common vision that an integrated new generation system, such as iCargo, can be a catalyst for change in the industry, freeing it up from the legacy system constraints on products and service.

CIOL: The CGI influences and validates the processes and functionality of iCargo to address the current and future requirements of the industry. Can you elaborate on this?

L.M: CGI influences the direction of product development and create the product roadmap for iCargo. It validates functional specifications and user interfaces and ensure functional adequacy for member airlines and for the industry in general. At every release of the product, a forum meeting is held where a demo of the product version is made. The inputs from the members serve as enhancements for our product.

CGI members may become iCargo users; two of them already are – NCA, ANZ. They will be able to influence its design and thus have the product support their cargo business strategy. They have the option but not the obligation to be iCargo customers.

In short, CGI is an unprecedented alliance of IT specialists and end users, united in a common goal, working together to produce the world’s definitive cargo management system.

CIOL: Explain about "iCargo" the airline cargo service system and future of this line of business?

L.M: iCargo is one of IBS’ next-generation airline cargo management systems, built from the ground–up on new-generation technology, that are flexible, scalable and viable migration options from current legacy based airline cargo management systems.

Built on the experience of over 400 person years and the active collaboration of the CGI, IBS cargo solutions offer the most comprehensive functionality and industry best practices. Add to this the fact that IBS is a strategic ISV partner to IBM for airline cargo solutions, and an IATA StB Preferred Partner for e-freight solutions. IBS airline cargo solutions are available in three versions iCargo, iCargoLite+ and iCargoLite based on the range of functionality on offer.

iCargo supports the needs of the entire cargo/freight logistics chain from shipper to consignee. It is an integrated, multi-hosting system which addresses cargo reservations, capacity control; load planning, cargo terminal operations rating, cargo pricing, cargo revenue accounting, and freight forwarding requirements of commercial cargo carrying airlines. The product design supports innovative business models and is built on a flexible architecture that enables carriers to respond quickly and efficiently to changing customer needs. The functional coverage and packaging of iCargo is such that it addresses the current and future cargo business needs of airlines.

CIOL: What is the future of this line of business?

L.M: Our vision for this LoB is to be the leading solution provider in the Air Cargo Industry by 2010. We expect a 30% growth.

As far as the industry is concerned, cutting over from the current airline reservation system to a new generation cargo system will be a very intense activity. Cargo reservations systems are business/mission critical since the freight business will not make money without making a reference to its reservations system. The reasons why airlines have not opted for new technology systems in the past are that the move can be extremely disruptive, and the technologies have not matured to meet the performance demands of such a real-time application.

What has changed is that technology has advanced considerably in the last few years and there are matured IT processes now to build large and complex applications such as iCargo. Most other businesses have already made moves to adopt new technology solutions. The airlines must do the same or get left behind.

There are tremendous opportunities to tap. The new technology is proven & robust and people are receptive to new-generation based systems. The incumbent providers are tied to their legacy strategies and the new entrants are poised to take advantage of this unique market opportunity. As airline CEOs are looking for new ways of increasing revenues & profit, cargo should become more important for the airlines’ business. Once the Cargo heads present the ROI model and articulate the business case, there are certainly going to be greater investments in cargo management systems.

CIOL: How effective has the present air cargo IT solutions been to the industry?

L.M: Currently the air cargo industry uses IT solutions for capacity management, reservations and terminal operations. Most airlines use legacy-based systems developed as far as four decades back, are hard to maintain, improve and expand because there is a general lack of understanding of the system. The cost of ownership of such systems is high. The air transportation industry is just waking up to the myriad advantages offered by the more flexible and dynamic new-generation solutions such as IBS’ suite of IT solutions for air cargo management.

Current air cargo IT solutions are relatively efficient at handling basic functionality. However they cannot scale and most importantly cannot adapt to dynamic business environment. In most airlines, cargo is not strategic so cargo management has less focus and therefore low investment.

CIOL: How many clients do you currently have and what is the expected growth in the year ahead?

L.M: We currently have the following clients:

NCA- Nippon Cargo Airlines: The launch customer for iCargo is the third largest all Cargo carrier in the world. As Japan’s only all-cargo airline, Nippon Cargo Airlines Co. Ltd. (NCA) has consistently expanded its routes to major global markets since its establishment in 1978.

iCargo’s role in NCA: NCA wanted to optimize the inventory of their flights. Through iCargo they will be able to view the capacity and the revenue generated by each flight before it takes off. They are also expanding rapidly and needed a system that would cater to this growth (scalable) and will help the airline adapt change their business model) to the changing market requirements.

Air New Zealand (ANZ): ANZ Cargo operates over 380 international flights per week, serving 32 cities in 18 countries around the globe. It is one of the top 50 cargo airlines in the world.

iCargo’s role in ANZ: iCargo’s implementation at ANZ will integrate their domestic and international cargo systems. This means that iCargo will become the enterprise solution for the airline completely addressing the current and future business requirements of Air New Zealand’s entire air freight business, which has seen a growth of 20 percent in revenue in the last fiscal. The Cargo Management System will also manage the revenues and will help optimize the use of resources.

ANA- All Nippon Cargo: All Nippon Airways Company, Limited or ANA is an airline headquartered in Tokyo, Japan and is the country's second-largest domestic and international airline.

iCargo’s role in ANA: ANA’s migration to a new-generation system from a legacy system was a result of their need to capitalize on new opportunities for business in the industry. They also wanted to expand their horizon in terms of reach and improve the services across verticals.

CIOL: Future of IT solutions for aviation industry in India? Pls explain with figures?

L.M: Considering that the Indian aviation industry is currently growing at a rate of 18 percent annually, India is expected to be the driving force behind the world’s civil aviation business that is globally expected to grow from US$ 5.1 billion to US$ 5.6 billion this year.

The number of air travelers in India increased by a record 38.5 percent in 2006-7, and the numbers are expected to double over the next decade. India's Civil Aviation Ministry expects that air passenger traffic will rise to 80 million by 2020.

Buoyed by the impressive growth in passenger traffic in India, foreign airlines are on an expansion spree in India. According to data compiled by the Airports Authority of India (AAI), 16.21 million people flew on international routes to and from India during April-October 2007-08.

This was a growth of 17.1 percent over the same period in the last fiscal. Also 25 percent of all companies’ sales are dependant on air transport.

To stay at par or ahead of competition especially from foreign players, airlines in India will have to provide world-class services and facilities. This will only be possible if they choose to use new-generation technology that offers them the flexibility to cope with dynamic market changes and the scalability to sustain growth.

IBS’ new-generation solutions have proved their effectiveness in managing the mission-critical operations of the world’s best airlines, and the busiest international airports etc. IBS adopts global standards - something the Indian aviation must look towards to sustain competition and the ever-changing markets.

CIOL: How difficult is the task to grow the IBS Cargo LoB to become the number one or two providers of cargo solutions to the airline industry?  

L.M: IBS’ Cargo Management Systems offer complete end-to-end management of airlines’ cargo business from ULD management to accounting. There is a lot of interest among airlines to use our new- generation systems. Carriers want to be more competitive against the integrators and therefore need systems that can communicate with supply chain logistic systems of the manufacturers.

We have been in talks with many carriers and there have been quite a few Requests for Proposals (RFPs). We already have the top three cargo airlines as our customers…and by the end of this year we expect to add another two of them to our clientele.

Incidentally, iCargo recently won the “Emerging Cargo IT Systems Provider of the Year” award at Air Cargo India 2008 that concluded at Mumbai in Jan 08. We consider this a great recognition. At this rate we don’t think it’s difficult for us to be the top supplier of new-generation Cargo Management Systems. We foresee our solutions to top the chart in a couple of years.

CIOL: What has been your growth of the Indian company over the years? Also mention the projected growth figures?

L.M: IBS has seen a steady and sustained growth consistently posting a CAGR of 47.5 percent in the last ten years, resulting in a 700 fold increase on capital invested at inception in 1997, as against a 35 fold increase in staff strength over the same period. We posted a topline of INR 200 crs in the last fiscal.

IBS has been rated as one of the top 8 IT start-ups in India by Red Herring and one of the top 10 products companies by Business Today.We have set ourselves a target to grow into a Rupees 1000 Crores company by 2010, which means we are on the fast track of organizational development. We plan to foray into two new Lines of Business, which will make us a one-stop shop for Airline solutions. In the coming months we also expect to close a couple of acquisitions to consolidate domain expertise. We are looking at companies specializing at providing IT services for aircraft engineering and aircraft maintenance and overhaul.

CIOL: What is your expansion plans down South India?

L.M: We recently inaugurated a development/Business centre at Bangalore. We plan to open another centre in Chennai and will start work on our fully owned campuses at Kochi and Kozhikode.