Technology will be the key to survival as the air transport industry struggles to weather a crisis potentially worse than the aftermath of 9/11, senior industry figures have warned.
Soaring oil prices are pushing airlines over the brink, with 24 folding in the past six months, and the industry is turning to IT for salvation believing it can drive down operational costs.
There will be no achievements without innovation and an element of risk and companies have to be ruthless, said Idris Jala, managing director and chief executive of Malaysia Airlines.
“There is no need to be clever and think about it, we know how our customers behave and we have to give them what they have at home, let them behave as they would at home,” he said.
“And I believe in killing puppies. If you have a pet project that is not working, you have to kill it. There is no breakthrough without breakdown.”
Successfully meeting the 1 June deadline for delivery of 100 per cent e-ticketing will save $3bn (£1.5bn), accounting for nearly half of the $6.5bn ( £3.25bn) savings that IT is already on the way to delivering, said Giovanni Bisignani, director general and chief executive of the International Air Transport Association (Iata) at an industry summit in Brussels last week.
“The oil crisis will change the scope of the chief information officer (CIO) role. You will be asked to supply data to support very difficult decisions. Oil at $135 a barrel makes fuel saving critical to survival,” he said.
Bisignani identified key areas for improvement, including investment in new technology, more effective flight planning systems, and more attention to virtualisation. And he promised that Iata would develop guidance on green business best practices.
Bisignani told delegates at the conference, organised by airline IT supplier Sita, that more progress is needed with pa rtners delivering computerised reservation systems, also known as global distribution systems (GDS).
“Our partners in the value chain must deliver similar efficiencies to airlines,” he said.
“It’s no secret that the airlines are held hostage to GDS, which took advantage of their position. The industry is in crisis, and they must come to the table with better efficiencies or we will use other ways to distribute products.”
Bisignani said that in the past six months 24 airlines have terminated operations, and that as the summer season ends September could see the situation become even more serious.
“The determining factor of those who survive to 2010 could be the strength of IT capability,” he said.
“And governments must rise to the challenge by focusing on risk management, using available technology effectively, taking better advantage of security intelligence, harmonising global standards and taking responsibility for the bill.
“Many governments have created biometric passports and now we have to start using them."
“And we need to push governments much harder to move forward with the Single European Sky, this will deliver $5.5bn in fuel savings.”
Sita research suggests that paperless travel could be a reality for all travellers across the world within five years, and could save up to $600m (£ 300m) by reducing flight delays by six per cent.
In 2006, US airlines lost $7.7bn (£3.85bn) in direct operating costs as a result of flight delays.
Mobile phones could act as personal travel folders containing boarding passes, baggage tracking information, biometrics, itineraries, e-ticket information, frequent flyer profiles, and visa information.
And they could be used to pinpoint a passenger’s location, allowing an airline or airport to prompt them to approach their gate. A trial at Manchester airport sent redemption vouchers to passengers’ phones, boosting their spending to 45 per cent more than that of other shoppers.
“One thing that I can predict confidently is that technology will continue to transform our industry and will do so at a faster rate than ever before,” said Paul Coby, British Airways chief information officer and chairman of Sita.
“CIOs should be reducing costs of legacy systems year on year. At BA we’ve cut, since 2001, the cost of running our technology, the operational bill, by more than 50 per cent which has enabled us to increase the amount we spend on smart investment in technology."
“It’s really important to keep faith with technology; smart use of technology is going to be key to how you survive this.”
How mobile phones can help:
Mobile phones could be used for payments, passenger flow management, marketing and inflight entertainment.
There are 3.2 billion mobile phones in the world, which will rise to an estimated five billion by 2011.
Mobile advertising revenue is forecast to reach $14bn (£7.1bn) by 2012.
Transaction values for mobile payments could total $22bn (£11.2bn) globally by 2011.
At least 90 per cent of airline passengers carry a mobile device when travelling.
More than 75 per cent of airlines plan to offer mobile check-in by the end of 2009.
Ninety per cent of airlines plan to also offer their passengers optional SMS notifications.
