As borne out by sharp increases in interest evident by this year's Airline Business/SITA Airline IT Trends Survey, everyone is looking to address today's opportunities for instant connectivity with passengers to gain a competitive edge
just where are canny chief investment officers choosing to invest their IT budgets? Right now, they are spending on technology to engage with customers whenever the consumers want and wherever they are, which means mobile solutions are taking centre stage. Airlines are not only matching their enthusiasm for smartphones and tablet computers with tools that allow them to manage their journey, but also expanding beyond self-service into mobile sales.
The promise of real wins is on the horizon for airlines able to take advantage of convergences between mobile technology and social networks to have deeper, more responsive interaction with customers. Some are already pushing the boundaries of the former to innovate around providing a more personalised experience for passengers, while exploring opportunities offered by the latter, including the use of Twitter and Facebook. However, no-one has found the magic bullet to utilise social media in a really transformative way just yet, and mobile and social-networking initiatives are generating their own challenges.
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| Read the Airline IT Trends executive summary here |
Now add in the quickening pace of getting mobile services to market. Over the past year, the number of airlines selling tickets via mobile devices rose from 18% to a third, while the number with no plans has halved to 14%. The percentage selling onboard services via mobiles has grown from 10% to 17%. While airlines are slower off the mark with products such as ticket upgrades, modifications and baggage fees, the nay-sayers with no plans are now in the minority.
We are now in the digital age, in which the customer is finally taking control, according to Ursula Silling, founder of and chief executive at XXL Solutions, who notes that by 2025, "almost every customer will have spent most of his life in a digital form, one way or another, and this is starting today".
Fleshing out this image of the contemporary "me-centric" passenger, SITA chief executive Francesco Violante predicts: "Passengers will expect to be fully informed at all times of their travel arrangements via their mobile device. This information will be both personalised and fully contextual, taking into account the passenger's physical location, what point they are at in their journey and their personal preferences. We will see mobile technology, supported by social media, impacting passenger management."
Contextual information delivered via the smartphone is already here: in March, strategic technology research team SITA Lab teamed up with Copenhagen Airport to develop an augmented-reality smartphone app that utilises triangulation and signal strength from wi-fi access points to determine the location of individual passengers' mobile phones inside the airport. Using the app and the iPhone's camera to scan their immediate surroundings, passengers can find information on services nearby, as well as locations of airline desks and boarding gates.
SITA Lab last year developed an in-flight contextual mobile portal for British Airways, which allows passengers to access travel-related services and other information, based on their destination, in real time. SITA Lab is extending this vision of a personalised itinerary for each traveller - accessible from any mobile device.
Trendy gadget geeks will love it, but there is pragmatism behind SITA's thinking. "Airlines and airports alike will struggle in the coming years to handle passenger growth and this is why new technology developments such as augmented reality are so important for managing passenger flow through the terminal and onto the aircraft," says Violante.
For Air France-KLM too, mobile technology and services are about more than just booking or checking-in. "It's about customer interaction," says Edouard Odier, executive vice-president for information systems. The airline is investing in a "mobile competence centre" to provide the resources and creativity to develop new mobile services.
Since February, passengers have been using the Air France or KLM Connect service to receive real-time information on their flights, with updates by phone, text or email on any cancellation, delay, change of boarding gate or delayed baggage delivery. The airline has launched an iPhone app and is now thinking about developing one for the iPad.
Spanish low-cost carrier Vueling sees an opportunity to modernise the sales process, through leveraging mobile solutions to deliver added-value customer services that improve the passenger's journey and keep industry costs down. Mobile platforms, web personalisation, new-generation content management and micro-payment enablers are just some of the areas in its sights.
"Investing in these areas gives us an opportunity to increase revenues, drive down customer service costs and improve customer services, booking and check-in processes, which will lead to longer and stronger customer loyalty," says they company's IT manager Samuel Lacarta.
Social media websites are increasingly being used as an opportunity to build closer, more direct relationships with customers. The 2011 Airline IT Trends Survey highlights that 80% of carriers will be using these channels to promote products and services over the next three years, up from 41% currently.
About a quarter of airlines already use social networks for customer relationship handling, disruption and emergency communication, flight information and operational updates. But by 2014 this will extend to over two-thirds or more of all airlines. Even ticket sales via social media, currently a minority sport played by 16% of carriers, will be embraced by 70% within three years.
However, while no-one doubts the impact of social media, airlines are still working out how best to exploit it. Duncan Alexander, vice-president of Mercator, the IT division of the Emirates Group, observes the explosion of social media is not only redefining how communities come together and work, but has orchestrated changes in government policy. "This will have a direct impact on airlines, as there is an uncontrollable channel of feedback and commentary that has been created, but [which] also can be used as a promotional and even sales channel," he says.
"It is difficult to predict what the impact of social networks might be for airlines. Great when things are going well, but when things go wrong, one person can tell a million 'friends'. It is probably a 'devil you don't, devil you do' scenario for global brands."
Vueling recently joined the roll call of airlines selling tickets to passengers via Facebook, developing a widget people can use to book without having to leave their profile pages. It also blogs, runs two Twitter accounts with customer service support in real time and operates Flickr and YouTube channels.
"All these platforms improve the customer experience and [his/her] relationship with the company, making it closer and more direct," says Lacarta.
Philippines low-cost carrier Cebu Pacific Air has a different take on the mobile and social media rollercoaster. It is investing in its self-service capabilities via the web and a consumer-centric customer relationship management system, as well as integrating social networking and customer service channels to respond to connected customers. Technologies for mobile ticket and ancillary sales are in the pipeline, but not a high priority.
Candice Iyog, vice-president for marketing and distribution, acknowledges social networking, search engines, and the growth of mobile commerce creates smarter and empowered travellers able to almost instantly compare fares between low cost carriers, both online and on mobile devices. However, this scenario is not without its challenges.
Weighed against the opportunity to respond to market demands with greater agility and relevance to customers, is the demand for rapid information processing from customers and business partners.
The potential for customer interaction and engagement, customer experience, social marketing and promoting loyalty generated by the combination of web and mobile is just the starting point for brand demarcation. Apply this to staff interaction and workflow as well and you are talking about creating a "unique selling proposition" says Silling at XXL.
She believes the technology airlines use to have a view of their customers should be part of their business culture and that working methods should follow a similar approach. "[For] example, self-servicing for customers: this should also be done by staff, including booking their staff tickets and authorisations via self-service/digitally," she says. "The technology is there, but many companies have not yet realised this and underestimate even the educational part of this."
This evolution in corporate mindset should extend to investing in IT for marketing campaign management, something rather low on priority lists as airlines battle cost pressures and new developments. "In many airlines, a CEO with a main focus on finance had been appointed," says Silling. "But now, probably the era of the customer experience CEO has come and will bring more changes to drive the cultural and customer experiences change to achieve sustainable profitability."
Behind the scenes technology |
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The less glamorous but vital side to the industry's current focus on mobile technology is investment in service-oriented architecture. Airlines are pumping money into technology that allows integration between their cool customer-facing initiatives and their back-end powerhouse systems.
Responsiveness and agility is also a motivator in investment in cloud computing and virtualisation. And the requirement for a timely reaction to the changing safety environment is also prompting a fresh look at airline safety platforms.
None of these technologies has the transformative thrill of mobile solutions, but do offer some hefty benefits when it comes to efficiencies and best using resources.
"The important thing is providing the ability to integrate between the new Facebook stuff and the stuff at the back end and that's to do with architecture, application programme interfaces [APIs] and the right programming," says Ian Tunnacliffe, director at Travel Technology Research, adding that a dominant theme in airline negotiations for back-end service systems is now what APIs vendors can provide.
The impact of this technology is that it offers quick adaptability to new client demand, adds Cristina Ortega, chief information officer at Iberia, and this means "reusability - cost savings - and capability of evolution".
Infrastructure as a service/server and storage virtualisation is already mainstream, according to the Airline IT Trends Survey, and 40% of airlines are implementing software as a service, with another 16% evaluating it. Desktop virtualisation is underway at 11% of airlines, but 26% are evaluating and only 23% have no plans.
"Airlines are keen to harness this technology to get benefits of quick deployment, agility and flexibility. Of course, being able to buy 'on demand' provides cost savings too," says SITA chief executive Francesco Violante, who also notes that cloud computing and virtualisation technology will meet the challenge of data inflation generated by new mobile solutions.
Air France-KLM is trialling cloud computing, recently deploying a cloud application for its cargo sales force. Also on the agenda is a workstation virtualisation project to be deployed either later this year or in 2012. "It is not a technology that will transform - it's more efficient and will save us money," says executive vice president for information systems Edouard Odier. "Mobile technology is a way to have new services for customers or employees and workstation virtualisation is a way to save on maintenance costs of equipment, and it is much more reliable."
Investment in a new safety platform is slightly left-field compared with the big hitting trends common to most airlines, but Mercator, the IT division of Emirates Group, is making a significant outlay and working with a community of airlines to build a new state-of-the-art safety platform.
Vice president Duncan Alexander explains: "It is core to all airlines to ensure that [their] safety policy and systems are able to receive issues from any direction, assess these and audit corrective and preventative actions. We live in a litigious world and governments will continue to focus on this area of our sector."
Technologies on the back burner? |
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Technologies sitting on the investment back burner vary according to airline business model and whereabouts in the global market, but with the focus on web and mobile, it's no surprise that the future of self-service kiosks is up for debate.
Pointing to the mass consumer market for tablets and smartphones, Duncan Alexander, vice-president of Mercator, the IT division of the Emirates Group, says: "These devices are an access point to an airline's internet shop, services - check-in, flight status, general information - and frequent-flyer programmes. Why have a kiosk when the customer has one in their hands?"
It is a view shared by low-cost carrier Vueling, which is probably going to halt further development of self-check-in kiosks. Current technology appears to be sufficient, says IT manager Samuel Lacarta, adding that "most of the features offered in a kiosk can be accessed over the web or mobile phone at much lower cost".
Vueling and its fellow low-cost carrier Cebu Pacific Air have little interest in onboard wi-fi, which makes sense given the short-haul nature of their businesses. Low-priority investments are rather different in long-haul, where Iberia has downgraded voice over internet protocol (VoIP). It is a case of "late adoption due to an existing proprietary platform", explains CIO Cristina Ortega.
At Air France-KLM, biometrics are dismissed as better suited to immigration and inspection organisations. Edouard Odier, executive vice-president for information systems, says: "Maybe you are happy to have a biometric passport, but maybe you are not happy to have your biometric data stored by an airline.e_SDRq
Source: Airline Business
