Airlines braced for net but lack IT investment

While airline carriers worldwide plan to shift to an e-commerce service model over the next year, they hinder their prospects of advancement through scant IT investment and poor skills, an industry survey has revealed.

The Airline IT Trends Survey, commissioned by SITA, an application service provider for the air transport industry, and Airline Business Magazine, surveyed 150 global carriers, 70 of which responded. SITA did not name the airlines involved, domestic or otherwise.

The survey showed that 87 per cent of airlines intend to move to an online service model in the next year.

The study found that 49 per cent of respondents planned to form industry partnerships to consolidate customer relationship functions and supply chain functions; 17 per cent intend to partner with industry hubs to integrate their IT system; and 16 per cent of carriers were motivated by potential cost savings.

However, the vice president of SITA Australasia, Mike Hargis, suggested airline carriers needed to look past their ambition and raise IT expenditure levels from 2.5 per cent of total outlay to 4 per cent. Those that did would have a competitive advantage, he asserted.

Also, 60 per cent of airlines surveyed had no chief information officer (CIO). The industry lacked personnel with sufficient experience to manage top-tier IT legacy systems, said Hargis.

The skills scarcity drove 85 per cent of airlines surveyed to outsource their IT operations, as they also lacked staff expertise in desktop, networking and data centre management. The outsourcing trend would continue for the next few years, Hargis predicted.

He insisted he was "not trying to paint a bleak picture" of the airline industry in terms of internet uptake, but maintained it had been "slow to embrace the web".

Systems integration would continue to be a key factor in airlines' IT strategy over the next year, he added. "Everyone wants seamless information alliances and knowledge sharing to (manage) the information for check-in, frequent flyers, customer relationship, crew planning and route scheduling," Hargis said.

The total value of an airline's B2B chain would outweigh the value of the carrier itself, he said.

Online ticket sales comprised 10 per cent of total sales for airlines using the web; the other 90 per cent of sales were through travel agencies or call centres. 37 per cent of airlines planned to offer online ticket sales in the next year, and this would reach 50 per cent by 2003, Hargis said.

He added that, provided suburban agents lowered their travel rates, big-name online airlines would not hurt smaller players.

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