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Airlines increase IT spending to mobilise and socialise their business
- — 24 June, 2011 03:06
Half of the world's top airlines are spending more this year on IT and telecoms, according to the annual SITA/Airline Business Airline IT Trends Survey.
Airlines said they would be spending more on areas such as mobile transaction systems, support for commercial social networking efforts, virtualisation technology and cloud computing. The total airline IT and telecoms spend predicted for 2011 is $20 billion (£12.5 billion).
Every year the survey questions senior IT personnel from the world's top 200 airlines, and this year it was found there would be a 1.8 per cent growth in IT and telecoms expenditure.
"This represents a significant increase in actual expenditure following a return to profitability in the last 12 months after two years of recession," said SITA.
Compared with 2010, 50 percent of airlines reported an increase in total spend, while 32 percent said there was no change, and 18 percent revealed there would be a decrease. The outlook for 2012 is also positive, with 54 percent of survey respondents expecting budgets to increase.
The survey found that 91 percent of airlines plan to invest in passenger mobile services and 93 percent are prioritising virtualisation technology.
Paul Coby, Chair of the SITA board and ex-chief information officer at British Airways, said, "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.
"Virtualisation and cloud computing are going to be critical for both IT efficiency and managing cost."
As for increased spending on mobile services, the focus in on mobile check-in, flight status notifications and electronic boarding passes. Airlines anticipate that by 2014, 15 percent of all passengers will use mobile phones to check-in.
The survey found that 85 percent of airlines either already sell (33 percent) or plan to sell (52 percent) tickets through mobile phones by 2014.
Check-in area kiosks and social networks are also joining mobile phones as important emerging sales channels, with 70 percent of airlines already selling or planning to sell tickets through kiosks and social networks by 2014.
At present, 19 percent sell tickets through kiosks, and 16 percent through social networks.
At the SITA Air Transport IT Summit in Brussels it was revealed that KLM has employed 23 dedicated social media staff at its hub at Schipol Airport to address the tweets and Facebook mutterings of its customers.
Christoph Klingenberg, CIO at Lufthansa Passage, said at the conference: "Airlines that are spending more on IT are more productive than those that are spending less."
However, airlines were warned that it wasn't just a case of throwing IT money at the business to improve it. Nawal Taneja, professor emeritus at the department of aviation at Ohio State University, said, "Airlines have to do things from the point of view of their customers, not their own.
"They have to change their culture, satisfying safety and on-time performance demands is a given, it's what they do above that that counts."
Taneja said airlines had to do more to satisfy the personal demands of their customers and that they could do that through social networks and using their company data to build systems that could truly predict business outcomes from operational events.