When IT gives wings to airline industry

BANGALORE, INDIA: The airline industry provides service to virtually every corner of the globe, and has been an integral part of the creation of a global economy. The industry, however, exists in an intensely competitive market and is undergoing unprecedented change. Rising costs, excess capacity, constraints on revenue growth, increasing number of demanding customers and legacy technologies are some of the challenges facing the airline industry today.

Most airlines have made strenuous efforts to reduce their costs, but soaring fuel prices and increased security requirements have outweighed savings. Restrictions on the industry’s expansion have constrained growth and exacerbated these problems.

Post the golden years of 2005-2006, the impact of the global economic recession, which began in 2008 has been greater than the 9/11 aftershocks on the airline industry. The economic downturn has affected both passenger traffic and freight volume.

Looking at demand, GDP remains a key traffic growth driver. Although global economy is on the slow road to recovery, the slope of the rate of change in GDP is again positive indicating a revival path for the airline industry as well.

The need for flexibility is driving change in the business models of airlines, their practices and processes. Airlines across the world are now focused on deploying more flexible IT to support new customer-focused business strategies and to manage risk in a volatile economy. In an era of tight budgets, growing global competition and game-changing technologies, the ability to innovate is a make-or-break proposition.

A recent survey of top airline CIOs has revealed that most airlines are consolidating their IT budgets for more new solutions rather than spending on maintenance of existing solutions with focus on new revenue generation and optimum operational efficiency. Airlines are also gearing for industry regulations like becoming carbon neutral industry by 2020, compliance to new legal and financial standards. So is the Internet and social networking, which is making everything more transparent in terms of services, prices and destinations.

While confronting current challenges, airlines must prepare for new opportunities in emerging markets, modernize their fleets with more fuel-efficient aircraft, and leverage technology to personalize the customer experience across the travel lifecycle.

How IT can help?

IT is a facilitator, it can confer the flexibility that today’s airline industry needs and allow it to respond to market demands quickly. There is a growing trend towards outsourcing non-core IT applications, development of appropriate e-commerce strategies and migration from main frame applications to IP-based technologies in the airline industry which can enable airlines to cut down on inefficiencies and improve bottom line.

From better use of business intelligence and improved flight scheduling to the use of passenger and baggage check-in kiosks to the use of e-ticket, e-boarding passes and baggage tags, the introduction of such technology into the airport terminal environment has significantly reduced the number of employees needed to provide the same or improved levels of service to passengers.

Common use of air terminal facilities and their infrastructures have reduced the airlines’ cost of doing business and, at the same time, smoothen the flow of passengers through those facilities. IATA, the global industry body, has a major initiative called “Simplifying the Business” which aims to consolidate all these into a common program. The adoption of satellite navigation systems can free individual aircraft from having to follow flight paths that waste fuel and flight time, resulting in a reduction in the overall cost of each flight.

Airlines today are investing heavily in customer-oriented technology; passengers can now trace their checked luggage at self-service airport kiosks, a development that makes use of computer technology to boost customer service while cutting labour costs. Mobile-phone services are a new growth area, with more and more airlines offering check-in, sales of tickets, notifications of flight status and delays via text messaging to their passengers.

Airport security has also changed dramatically in recent years. New and advanced technologies, such as networked-based video and analytics, intelligent command and control, thermal imaging, smart cards, biometrics and more are securing public areas including vehicle access, air operations, cargo, fuel depots and parking.

In order to develop and maintain brand loyalty while streamlining operations in an increasingly competitive global market, airports and air carriers have been challenged to transform their business processes and integrate new forms of technology to improve the traveler experience.

Self-service technology has played an important role in this industry transformation. Today, travelers can manage their air reservations and check-in using kiosk, web or mobile applications. These technologies can make traveling easier, quicker and more enjoyable. Indeed, with online booking and self-service check-in, carriers are starting to look beyond these functions to how they can leverage websites and kiosks to present passengers with a broader array of offerings.

Increasingly "user-friendly" websites offer passengers the option not just to book flights but to engage in activities such as managing frequent-flyer accounts, selecting in-flight meals and purchasing other ancillary services. Passengers are now demanding convenience of self-service options in a paperless environment, an important step that can help airlines to reduce costs and increase efficiency.

Airlines and their partners need to develop an extensive range of solutions to improve the passenger’s journey, streamline and integrate airline and airport operations, track baggage and cargo, and ensure that the highest levels of maintenance and aircraft safety and security are effectively communicated. Per unit labour and fuel costs are not expected to go down significantly in the near future. This means the number of actual units of labour (employees) and fuel used per passenger mile flown will have to be reduced to lower related costs.

Global Sourcing and application of technology in ways that will allow those reductions, while maintaining an acceptable level of customer service, must be undertaken. Successful airlines have seen benefits of Global Sourcing and creating world leading IT solutions. The objective is simple: delivering the highest quality to the passengers, latest in technology for simpler processes, thereby improving their overall experience and increasing the load factor.

(The author heads the Travel, Transportation & Logistics Business, & the Middle East at Sonata Software Ltd. The views expressed in this article are the views of the author and do not necessarily reflect the views or policies of CIOL)