Airlines mull big spend on passenger IT
Brussels, June 27, 2011
Airlines carrying 57 per cent of the world’s passenger traffic have reported a real increase in IT and telecom (IT&T) expenditure and are ready to spend big on passenger mobile services, said a report.
Overall, operational IT&T spending has remained stable at 1.8 per cent but this represents a significant increase in actual expenditure following a return to profitability in the last 12 months after two years of recession, according to results published recently in the 13th annual SITA/Airline Business Airline IT Trends Survey.
Compared with 2010, 50 per cent of airlines are reporting an increase in total IT&T spend while 32 per cent report no change and 18 per cent state there has been a decrease.
Despite concerns about market conditions and fuel prices, the outlook for 2012 is also positive with 54 per cent of survey respondents expecting budgets to increase, and 29 per cent expecting them to remain the same. Ninety-one per cent of airlines plan to invest in passenger mobile services and 93 per cent are prioritizing virtualization technology.
“I see IT spend as the barometer of overall air transport industry confidence. Passenger numbers and revenues are picking up, so we are seeing airlines focus precious investment funds on the areas that really make a strategic difference – like IT,” said Paul Coby, chair of the board, SITA.
“Airline IT departments are delivering major transformational initiatives using advanced applications for areas like revenue management and optimising load factors. Virtualisation and cloud computing are going to be critical for both IT efficiency and managing cost. 93 per cent of this year’s survey respondents plan to implement virtualization technologies.”
“Survey respondents are also telling us of their success in pushing more traffic and sales through their websites with corresponding improvements in ancillary sales and up-selling,” he added.
“Airlines continue to increase the proportion of tickets sold via their directly controlled distribution channels and I predict that 2011 will see them overtake indirect distribution for the first time. If you extrapolate the trend, by 2014 58 per cent of tickets will be sold directly. This channel shift will reduce the share sold through GDSs and online travel agents,” Coby continued.
Passenger mobile service offerings from airlines are set to explode in the next three years with 91 per cent of responding airlines planning to invest in mobile device-based services for passengers over the next three years.
The priority is on mobile services which support check-in, flight status notifications, electronic boarding passes and travel distribution. Airlines anticipate that by 2014, 15 per cent of all passengers will use mobile phones to check-in, the report said.
Eighty-five per cent of airlines either already sell (33 per cent) or plan to sell (52 per cent) tickets through mobile phones by 2014, and most plan to extend mobile functionality to include ticket modification/upgrades and sales of onboard services, according to the report.
This year’s survey underlines how travel distribution has become a multi-channel environment with kiosks and social networks joining mobile phones as important emerging sales channels; 70 per cent of airlines already sell, or plan to sell, tickets through kiosks and social networks by 2014. At present, 19 per cent sell tickets through kiosks, and 16 per cent through social networks.
Hani El Assaad, SITA regional vice president Mena, said at the Air Transport IT Summit, hosted by SITA, said: “The air transport industry has been quick to capitalize on the mobile computing revolution which started three years ago with the arrival of the first 3G-enabled smartphones.”
“The number of airlines actively selling tickets on mobile phones has almost doubled from last year and we see clear plans now to offer richer functionality in the form of ticket upgrades and modifications.”
“The survey confirms increasing interest in social networks as distribution channels. With the increase in channels, travel offers need to be delivered to passengers in a far more targeted and personalized way based on traveller preferences and the context of the channel used. This fits with the airline strategy of taking more control over distribution with more tickets being sold directly via airline websites and call centres,” he added.
Today, 80 per cent of airlines either already have or plan to have some presence on social networks and using social networks for “promotion of products and services” has the highest level of implementation to date (41 per cent), the report said.
The survey also revealed a strong shift towards the adoption of alternative usage of self-service kiosks. For example, the number of airlines with flight transfer kiosks has quadrupled since last year’s survey; 11 per cent have already implemented it, and 39 per cent plan to do so by 2014. – TradeArabia News Service