The International Air Transport Association (IATA) has estimated that the airline industry could save $12 billion - 8% of its total cost base - by switching to Internet-based solutions. IATA director general Pierre Jeanniot warns that at the same time there is a "risk of being blinded by modern e-commerce hype".
Aerospace and defence manufacturers will also benefit in terms of cost and time savings relating to improved supply chain efficiencies, e-commerce specialists meeting in Toulouse, France, have heard. It is unlikely, however, that the industry will be able to support all of the ventures now emerging.
Jeanniot, speaking in New York, described e-commerce as "a promising field", and said "sensibly applied, e-commerce techniques could have a favourable impact on our operating cost base, now $150 billion, of $12 billion, everything considered". He adds that airlines should cease to be market-share oriented and become "bottom-line driven", but does not see e-commerce as an easy route towards this.
In the aerospace sector, e-commerce initiatives will aim to exploit "a 27% inefficiency" relating to industry fragmentation, over-complex supply chains, and excess inventory and monopolistic prices, says Ludo Van Vooren, senior vice-president business development with parts exchange PartsBase.com.
Efficiency improvements could reduce transaction costs by 30-70% on the procurement side when new business models mature, but in the shorter term, benefits will be through faster transaction times. A 10-30% reduction in cycle times gained through Internet-based tenders and bidding and web-based collaborative engineering is possible, says Nils Herzberg of software company SAP.
E-commerce would, however, have to involve all aviation companies to deliver these gains. "Fragmentation of the markets will deliver limited value," says Simon Jeacock, vice-president aerospace and defence at I2 Technologies, which is establishing the Honeywell/United Technologies' MyAircraft.com exchange. "Unless we get the airlines to play, we don't get anyone for original equipment manufacturers to sell to," he adds.
Source: Flight International
