a joint airline business and sita survey...

2012The Airline IT Trends Survey

Executive summary

2012 A joint Airline Business and SITA survey

The Airline IT Trends Survey

2 | The Airline IT Trends Survey | 2012

Foreword

Francesco ViolanteChief Executive OfficerSITA

Max Kingsley-JonesEditorAirline Business

The Airline IT Trends Survey, co-sponsored by Airline Business and SITA, is now well established as the leading global benchmarking survey for the airline industry. Now in its 14th year, the 2012 survey represents the views and insights of over half of the top 100 carriers, providing a clear insight into IT strategic thinking and developments for the industry.

There were mixed results for airlines over the past year, with some markets and sectors remaining robust while others struggled. High fuel prices and an uncertain economic outlook are keeping the pressure firmly on airlines, particularly in Europe.

Against this backdrop, the survey shows cautious optimism on the level of IT investment. IT spend as a proportion of revenue is expected to stay stable in 2012, and only half the respondents expect IT spend in 2013 to increase in absolute terms.

Airlines are clear on the increasing importance of mobile phones to communicate with passengers and enable them to purchase tickets and ancillary services, track baggage, and a number of other functions. Mobile devices and social media are seen as key enablers in airlines’ drive towards greater personalisation of service.

The Airline IT Trends Survey provides a valuable insight into industry strategic thinking on IT and we appreciate it is only possible through your continuing support. We thank all those who participated in this year’s survey and hope you will continue to support it in the years to come.

We welcome any feedback or comments on the survey. For more information on our previous surveys and our sister survey on airport IT Trends, together with all our accompanying features and analysis, visit the Airline Business IT zone at flightglobal.com/ITzone


expect IT spending to increase by 2013

Global economic pressures are evident in the airlines spending outlook for 2012 and beyond.

For 2012, the Airline IT Trends Survey shows continued, but cautious, optimism, with stable operational IT&T spend (as % of revenue) compared to last year.

Airlines are more guarded about their outlook for 2013, taking into account a significant economic downside risk. Almost half of the airlines surveyed are still expecting their absolute IT spend to rise. However, the percentage of airlines anticipating growth in IT spending has decreased over the last three years.

Management and Strategic Issues

49%

Operational IT&T spend as % of revenue

Change in available absoluteIT spending

❯❯

*Compared to the previous year

Decrease

Same

Increase

201320122011

The Same DecreaseIncrease

66%51% 49%

11%

23% 22%

26%

21%

29%

2012 (planned)2011 (actual)

1.65%1.57%


56%of airlines to make R&D investments in passenger services via social media

The top three investment priorities remain unchanged in 2012. The focus continues to be on investments that ‘improve customer service’ and ‘support revenue opportunities’. ‘Reducing cost of business operations’ is also still a top priority, recognising the value of technology in improving operational efficiency.

For a second consecutive year, mobile services for passengers tops the list of investment programs for airlines, with six out of ten planning major investments in the next three years. Upgrades to airline core passenger management and customer relationship systems also draws significant investment for the same time period. Passenger services via social media begins to feature on the agenda this year, with almost 60% of airlines making R&D investments.

Priorities in the IT investment decision - investment drivers

IT&T investment programmes in the next three years

No plansR&D/pilotMajor programme

Passenger servicesvia social media

Expansion of ancillaryservices

Business Intelligencesolutions

Improve customerrelationship managemente.g. service personalisation

Upgrade core passengermanagement system

Passenger servicesvia mobile device

55%

58%

52%

35%

44%

22%

35%

28%

56%

38%

23%

6%

20%

9%

18%

55% 33% 12%

Enabling new market/

revenueopportunity

Reducing the cost of business

operations

Customerservice/passenger

experience

50%56%

42%


Airlines are continuing to expand their ticket distribution through direct channels. Emerging sales channels such as mobile and social media will have a significant impact on future growth in direct sales.

In the past, selling on an airline’s website has been crucial to

driving the transition to direct distribution. Although sales through airline websites will continue to see growth, selling via smart phones is set to become an almost equally important sales channel in the future.

In addition, airlines continue to look for alternative ways to increase control over their direct distribution channels. By 2015, 64% of this year’s respondents plan to have direct connections to third party travel agents.

Travel Distribution

Dominant channels for directsales beyond 2015

❯❯

70%believe that smart phones will be one of the top two dominant sales channels

Direct connection with selected travel agents (excl. GDS)

Kiosk

Social media

Agent/staff

Smart phone app

Website

70%

86%

21%

6%

13%

34%

30%

36%

No plansBy end of 2015Currently


of airlines plan to sell via mobile phones by 2015

90% Nine out of ten airlines are planning to sell tickets via mobile phones by 2015, establishing mobile as a mainstream distribution channel for airline tickets. Growing from zero just a few years ago, mobile phones as a distribution channel are expected to generate significant growth in years to come.

The survey also shows a significant increase in the number of ancillary services airlines plan to sell via mobile phones in the future. 83% of airlines have the ambition to sell ancillary service on smart phones by 2015. The list of services sold on mobile phones will replicate the airlines’ website sales functionality.

Sales via mobile phone Ancillary services strategythrough direct channels


Lounge access

Retail services(e.g. in-�ight,

merchandising)

Baggage fees

Ticket upgrades

On-board services(seat allocation,

meals, etc)

Ticket modi�cations

Airline tickets

27%

51%

13%

11%

55%

39%

61%

35%

36%

18%

21%57%22%

23% 56% 21%

10%

26%

53%

60%


Airline - social media

Airline - kiosk

Airline - mobile app/web

Airline direct website

15%

71%

23%

57%

22%

42%

28%

8%

35%

26% 57% 17%


believe that smart phones will be one of two dominant channels for passenger processing

71% The survey respondents believe that beyond 2015, websites and mobile phones will be the two dominant channels for processing passengers.

Kiosks will continue to play a significant role, with ¾ of airlines increasing the number of check-in kiosks. When it comes to new functionality, however, opinions are split. About half of the respondents do not plan to deploy kiosks for flight transfer or lost baggage reporting. Only 39% of airlines believe kiosks will remain one of the dominant channels to process passengers in the future, highlighting that mobile phones and websites are set to play a more important role for passenger operations in the long-term.

Passenger Operations

Dominant channels for passenger processing beyond 2015

Emerging kiosk functionality

❯❯

Social media

Agent/Staff

Kiosk

Website

Smart phone 71%

39%

13%

3%

71%

Flighttransfer

Lostbaggage

Bag-tagprinting

66%

37%

5%

No plans

SameIncrease

46%

48%

10%

53%10%

24%

Decrease


of airlines believe social media provides the greatest value as a marketing channel

57% Nine out of ten airlines plan to engage with passengers through mobiles by 2015, and the adoption of new services provided on mobile phones is speeding up. Airlines believe that smart phones can support most, if not all, customer facing interactions including customer service, commerce, in-flight entertainment and passenger processing.

Social media will feature most strongly in promoting services and supporting customer service according to the survey respondents. 57% of airlines believe social media will play a more significant role in the “communication and marketing of service offers”, while fewer airlines see its role in passenger processing (13%) or travel searching (19%).

Plans for mobile service Plans for social mediaintegration

Passengerprocessing

Salestransactions

Travel planning

Customer servicecommunication

Communication& marketing of

service offers57%

39%

19%

19%

13%

High value

23%

31%

24% 27% 33%

41%

No plans

By end of 2015

In evaluation

Implemented

Utilise NFC technologyfor passsenger processing

Access to entertainmenton-board on passenger’s

own device

Re-booking fromirregular operations

Missing baggagecommunication

Notification aboutflight status

Send mobile boardingpasses to mobile phones

Check-in 50% 22%

27%

21%

43%

18%

25%

23%

33%

24%

31%

49%

10%

46% 23% 15% 15%

10% 25% 43% 22%

32% 17% 43%

10%


Personalisation & Business Intelligence

already, or plan to, personalise service offers to their passengers

78% Almost eight out of ten airlines already, or plan to, ‘personalise’ communication and service offers to their passengers. The current focus is personalisation via the direct distribution channels. Websites, smart phones and social media provide great potential for more personalisation in travel. The richness of data from these channels gives significant opportunities to tailor messages to the specific passengers needs.

Service personalisation as well as efficient operation, depends on the availability and analysis of data. The sharing of data between stakeholders becomes essential. In recognition of this dependency, around half of the airlines already share or planning to share data with third parties.

Plans to provide ‘Personalisation’by 2015

Attitude to share data for better business intelligence

Indirect channelsDirect channels

78%

47%

Government organisation

Airport operators

Groundservice

providers

In-house

25%30%

78%

28%

23%

By end of 2015Curently

25%

49%

28%

30%

34%

19%


The statements below have been selected as they reflect issues or projects frequently mentioned by all respondents in this year’s survey. Please note that these statements are directly taken from the survey responses and reflect the opinions/wording of our respondents.

Within your airline what do you consider were the major IT successes of the last 12 months?

l Reducing costs, ancillary services, mobile services

l Crew rescheduling system delivery. E-ticketing database migration. Departure control system migration

l Implemented new MRO, flight operation, customer service and e-commerce all together

l Baggage reconciliation system; mobile boarding pass; simplified interline settlement

l Data collection and integrity

Within your airline what do you consider were the major IT failures of the last 12 months?

l Using a consulting firm to effect an IT transformation programme

l Lack of integration/coordination across silos

l Adapting to social media challenges and opportunities

l Securing adequate skilled staff. Improving IT staff remuneration. Procrastination in evaluation of business systems

l It has taken longer to scale up the IT organisation and to refresh/renew the skill base in line with what is needed for the future

What do you see as the biggest future IT challenges facing your airline?

l Integration and business intelligence; resourcing and skills; managing a range of vendors in general cloud/outsource space

l IT transformation programme (reduce IT costs while not decreasing the value of delivered services)

l Too many projects with limited specified field knowledge and resource of project team staff

l Consumerisation of corporate IT

l Data warehouse, revamp of e-commerce, enterprise resource planning and more

Verbatim Responses


The survey was first launched in 1999 and comparisons are made where appropriate with previous surveys, although the sample may vary between years. Questionnaires were sent to a senior IT executive in each of the top 200 passenger carriers, including low cost operators, together with carriers representing important players in the regional and leisure sectors during spring 2012.

The survey objectives are to monitor key IT trends within the airline industry including:

l Management/Strategic Issuesl Travel Distributionl Passenger Operations l Infrastructurel Successes & Challenges

The survey covers the following key questions:

l Priorities for investment decisionsl Key technology investment trends and areas in the next three yearsl Long-term strategy for implementing virtualisation technologyl Strategy for selling products/services via passengers’ mobile phonesl Strategy for the integration of social networksl Evolution of self-service technology (including via passengers’ mobile phones)

Methodology & Further Analysis

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