introduction to airline information system 4880

IntroducingAirline Information

System

By

Siddhartha TripathiTuesday, April 11, 2023

Agenda

1. Evolution of Airline Industry

2. Classifying Airlines and Introducing IATA

3. Airline Industry Value Chain

4. Introducing Airline system Components

5. Challenges facing Airline Industry

6. IT trends in Airline Industry

7. Developing IT Roadmap for Airline

8. Most Urgent IT Improvements IDC Recommendations

9. Using IT to Improve Operations:- Visiting few Airline Operations

10. IT Enabled Airline Success Story

11. Before we say “Thank You”

Evolution of Airline Industry

We have evolved from this …

Contd..

And this

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To this

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And Some Stats to think !!

• 28% of all online purchases are travel related• Travel & Tourism market:

– 1999: $2.1 trillion– 2010: $3.9 trillion

(Source: Satellite Accounting Research)

• Online Travel Booking– 1999: $6 billion– 2002: $30 billion

(Source: PhoCusWright)

Contd..

US majors – internet sales

Carrier % Flown Booked Online

Alaska Airlines 36%

America West Airlines 33%

US Airways 24%

Delta Air Lines 24%

Continental Airlines 22%

Northwest Airlines 22%

United Airlines 22%

American Airlines 20%

And Some More Stats to think !!

Types of Airlines( US Classification)

• Acc. To US Federal Government Airlines categorized into– Major

• A major airline is defined as an airline that generates more than $1-billion in revenue annually.

• There were 12 major airlines as of 2000 – National

• Scheduled airlines with annual operating revenues between $100-million and $1-billion.

• Examples of national airlines include Aloha, Atlas Air, Airtran, Emery Worldwide, Evergreen, Hawaiian and Midwest Express.

– Regional• Airlines service particular regions of the United States, filling the niche markets that the

major and national airlines may overlook Large regional - These are scheduled carriers with $20-million to $100-million in annual

revenue. They operate aircraft that can accommodate more than 60 passengers.

Medium regional - These airlines operate on a smaller scale, with operating revenues of under $20-million, and often use only small aircraft.

Small regional - These airlines don't have a set revenue definition, but are usually referred to as "commuter airlines." They use small aircraft with less than 61 seats.

Contd..

Prominent OrganizationsIn Airline Industry

• IATA – International Air Traffic Association between

1919 and WWII – International Air Transport Association since

1945 • IATA* has two functions

– Trade Association (technical, legal, financial, traffic services and most agency matters);

– Tariff Coordination (passenger fares and cargo rates, agents' commissions).

*IATA only controls International flights

Introducing SITA, OAG and ATPCO.

• SITA– Societe Internationale des communications aeronautiques (SITA) handles shared

communication means, including network and devices • OAG

– Official Airline Guide – Published by the homonymous company – contains the airline schedule information, so for every flight essentially:

• The departure and destination airports,

• The departure and arrival times,

• The flight number.

– OAG maintains an airline schedules database, which holds flight details for 1000 airlines and more than 3000 airports and is updated around ten times a second.

• ATPCO– Airline Tariff Publishing Company (ATPCO) is a fare distributing company

http://www.oag.com/

http://www.atpco.net/

Introducing GDS• GDS:- Global Distribution System, 4 Major GDS• System architectures are largely based on a

mainframe TPF (Transaction Processing Facility)– Sabre

• Created by– American Airlines

– Amadeus• Created by

– Air France – Iberia

– Lufthansa – SAS

– Galileo

• Created by– Aer Lingus – Air Canada – Alitalia – British Airways – KLM – Swissair – TAP – US Airways

– WORLDSPAN• Created by

– Delta – Northwest

– Trans World Airlines

Airline Industry Value Chain

INBOUNDLOGISTICS

OPERATIONS OUTBOUNDLOGISTICS

MARKETING AND SALES

SERVICE

PROCUREMENT

TECHNOLOGY DEVELOPMENT

HUMAN RESOURCE

MANAGEMENT

FIRM INFRASTRUCTURE

from Competitive Advantage: Creating and Sustaining Superior Performance, copyright 1985 by Michael E. Porter.

-Financial Policy - Accounting -Regulatory Compliance - Legal - Community Affairs

Pilot TrainingSafety Training

Agent Training

In-flight Training

Baggage Tracking System

•Promotion•Advertising•Advantage Program•Travel Agent Programs•Group Sales

•Ticket Counter Operations•Gate Operations•Aircraft Operations•On-board Service•Baggage Handling•Ticket Offices

•Route Selection•Passenger Service System•Yield Management System (Pricing)•Fuel •Flight Scheduling•Crew Scheduling•Facilities Planning•Aircraft Acquisition

Information TechnologyCommunications

Product DevelopmentMarket Research

•Lost Baggage Service•Complaint Follow-up

•Baggage System•Flight Connections•Rental Car and Hotel Reservation System

Computer Reservation System, In-flight SystemFlight Scheduling System, Yield Management System

Baggage HandlingTraining

Flight, route andyield analysttraining

We NeedProcess and Efficient

System, To derive value from

Value Chain

Airline system Components

Pricing And

Revenue ManagementSystem

MaintenanceAnd

EngineeringSystem

Flight OperationSystem Finance

SystemCrew Management

System

Central ReservationSystem

Airport ManagementSystem

Air CargoSystem

Business ProcessingSystem

Sales and MarketingSystem

HR ManagementSystem

CRM System

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Agile Business Process and Demand Mgmt.

Emergency Response & Business Continuity


Central ReservationSystem

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System to book ticket on airline. Should at least provide for

1. Internet booking:- Internet Booking System enables passengers, travel

agents and corporate customers to search for flights and fares, and book

airline seats on the internet.

2. E Ticketing:-e-Ticketing replaces a conventional paper ticket with an

electronic ticket. All booking and ticket details are stored in the airline’s

computer system. Passenger is issued e-ticket receipt for security and

immigration purposes.

3. Booking through ATM and Kiosk

4. Integration with Major Global Distribution’s

5. Integration with call center for telephonic booking


CRMSystem

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Remember 80/20 rule. 20% customer give 80% revenue.

The CRM system should provide

1. Prediction into customer buying behavior

2. Identify frequently flying and high profile flyers

3. Integrate to DW/BI system

4. Forecast demand

5. Identify customers for marketing campaign based on customer profile

and past data

6. Provide for customer feedback through various touch points ( SMS,

PDA, Survey):- Involve Customer

The crux is to identify behavior of customer/ prospect for better retention and

service


Pricing And

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The use of Real-Time Dynamic Pricing Engine positions airlines

to

1. Adapt inventory controls to the very dynamic market conditions including

influx of low-fare competition, alternate pricing models, and distribution

channel differences.

2. It allows integrated controls for selling over e-commerce channels along

with traditional distribution channels and provides the infrastructure for

customer-centric revenue optimization

3. Revenue Management System

Revenue Management System (RMS) enhances airline revenues by

optimizing traffic and yield mix with the help of past data, current trends,

and demand forecast for different flights, segments and fares.


FinanceSystem

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System to provide the easy/configurable view of how airline is performing.

The system should at the minimum provide for

• Automating extracting data from revenue accounting and other

sources

• Allow upload of manual data such as budget and target

• Should integrate with Forecasting and Procurement system

• Provide KPI as

• Load factor

• By period , sector, route, origin and destination

• By market-By point of sale/agent wise, product

• Allow user to create reports on demand

• Should integrate with DW, Audit controls


Sales and MarketingSystem

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System to Manage sales and marketing. The system should at the minimum

provide for

• Managing sales record and integration with Financial and revenue

system

• Alerts based on defined competitors events

• Daily KPI monitoring

• Campaign management

• Target and actual achieved reporting by

• Reason

• Route, flight, slot and carrier type

• Configurable parameter

• Alerts integrated with CRM system


Business ProcessingSystem

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The use of System to define new business scenario and processes including

1. New fares in response to campaign .

2. Security and baggage handling process

3. Baggage tracking

4. Procurement policy

• IT

• Material

5. Easy to use reporting and data analysis

6. Defining new distribution channel

7. Check In process

8. Catering and dining forecasting process

The Crux is to use system to define process and track and improve the

business process


MaintenanceAnd

EngineeringSystem

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System to Cover aircraft maintenance and engineering operation

1. To ensures real-time, total control of the maintenance environment

2. To optimizes daily operations and complement managerial decisions,

resulting in significant cost savings and improvement in overall

performance.

3. Should integrate with with flight operation systems and different finance

and human resource management applications.


HRManagement

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System to manage Most Important Resource ( Employee)

Managing employee lifecycle in organization including

• Recruitment requisition, Interview and reference check

• Employee Induction and training

• Leave Management

• Performance Management

• Security Checks

• Retention and Motivation scheme

• Productivity Improvement


Flight OperationSystem

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System to manage Flight daily operations from a compact interface and

report operational results

1. Movement Management

2. Graph of Schedule with status

3. Aircraft Availability

4. Produce Delay Report

5. Handle Incoming SITA, GDS message

6. Update Schedule


Air CargoSystem

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System to provide Tracking and Managing Cargo. The system should at the

minimum provide for

• Use of RFID tags to determine cargo location in Bay area

• Tracking Cargo till it reaches it’s end destination

• Suggesting bay area for cargo depending on other cargo in line

• Pricing based on weight/ Location and type

• Reporting capability and integration with procurement system


Crew ManagementSystem

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System to schedule crew staff. The system should at the minimum provide

for

• Scheduling of cabin crew

• Compliance to labor laws

• Crew teaming alert ( to alert if 2 people on same flight/ team has

tendency to fight)

• Crew hour logging

The crux is to have a motivated and energized crew either on Board/ Front

Desk or ground operations


Airport ManagementSystem

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System to make sure that compliance and integration with Airport scheduling

system, security measures, circulars, are taken care of.

1. Should integrate with airport scheduling system

2. Should integrate with airport security system, for checking passenger

3. Departure control system integration

Challenges facing Airline Industry

Maximize assets' utilization

Key Goals

Achieve demand-driven supply

chain efficiencies and

real-time visibility

Attain ‘sense & respond'

capabilities to improve

customer experience

Key Challenges & Trends

Growing Demand

Limited Capacity

Innovation

Market Liberalization

Multi-modalDistribution`

RisingCosts

Challenges facing Airline Industry1. Attaining Sustained profitability

2. Managing Customer demand of various touch point

3. Turning inflexible operative chains into responsive and adaptive service networks

4. Enabling new business models for long-term business transformation

5. Smooth real-time synchronization of information both internally and across the value network– not only to allow faster deployment of new strategic customer-facing services, – but also to improve supply chain efficiencies — as a transition is taking place from a sequential supply chain mode of operation to

a meshed workflow, – where multiple supply networks must be automatically managed and synchronized in real-time.

6. Economic and competitive pressure– Yields / fares are falling– Costs not falling proportionately (esp. fuel)– Emergence of low cost carrier and distribution model– GDS’s continue to increase charges– Increased competition from LCCs and reinvigorated airlines

7. IT costs associated with legacy hosting / reservation architecture are high

8. Current systems do not provide modern interfaces that customers demand and employees expect

– Inflexible systems – hard to maintain / improve– Transaction oriented systems do not easily support product-based or customer-centric views– Systems were not built to meet current user demands – web sites, screen scrapers and more

9. Legacy systems do not exploit low-cost, scaleable technology or modern web-based economics

10. Need for Accurate real-time business performance management capabilities

11. Need for Fully automated, paper-less, and process-oriented collaborative workflows – that conform to the regulatory environment.

Challenges facing Airline Industry

12. Empowering employees to be more productive

13. Demand for any time access to business application through secured layers

14. How to accelerate competitive advantage and differentiate airline through improved employee, aircraft and alliance leveraging?

15. Compliance with Industry standards

16. Automating customer touch points with transformational technologies, such as e-ticketing and self-service kiosks, remains the focal point for investment.

17. Decreased customer loyality

18. Tracking customer luggage/ cargo by use of RFID

19. Need for same day revenue reporting

20. Integration with ever emerging payment mode and Desired security from Internet fraudulent transaction

21. Merger and acquisition

22. Entering the wireless arena

IT trends in Airline Industry

IT trends in Airline IndustrySome Finding From SITA & Airline Business SurveyNo. Of Participating airlines:- 100Region:- Asia Pacific

1. Asia-Pacific airlines spend an average of 2.0% of revenues on telecommunications and IT

2. 50% of airlines have seen their IT budgets increase

3. over 2004

4. 46% of airlines expect their IT budget to increase in 2006

5. Short-term projects with proven paybacks were rated the highest IT priority by the most airlines – 46%

6. At least 73% of airlines expect to offer some form of inflight data connectivity by 2007 45% of airlines plan to offer voice mobile telephony by 2007

7. 36% of airlines have deployed self-service kiosks for check-in

8. 23% of airlines use bar coded boarding passes

9. 86% of airlines sell some tickets online

10. 9.7%, or 1 in ten, of all tickets are sold online. Of these, 70% are sold on the airline’s own website 22% of all tickets are fulfilled as e-tickets

IT trends in Airline IndustrySome Finding From SITA & Airline Business SurveyNo. Of Participating airlines:- 100Region:- Europe

1. European airlines spend an average of 1.9% of revenueson telecommunications and IT

2. 40% of airlines have seen their IT budgets increase over 2004


4. Short-term projects with proven paybacks were rated the highest IT priority by the most airlines – 54%. Customer service projects were ranked highest by only 20%

5. At least 31% of airlines expect to offer some form of inflight data connectivity by 2007


7. 17% of airlines currently use bar coded boarding passes


9. 24%, or nearly 1 in four, of all tickets are sold online Of these, 85% are sold on the airline’s own website

10. 35% of all tickets are fulfilled as e-tickets

11. 20% of airlines plan to offer voice mobile telephony by 2007

IT trends in Airline IndustrySome Finding From SITA & Airline Business SurveyNo. Of Participating airlines:- 100Region:- North America

1. North American airlines spend an average of 1.4% of revenues on telecommunications and IT

2. 63%, or more than 3 in every five, of all tickets are sold online. Of these, 55% are sold on the airline’s own website Customer service or marketing advantage projects were rated the highest IT priority by the most airlines – 56%. Short-term projects with proven payback were ranked highest by 44%

3. At least 11% of airlines expect to offer some form of inflight data connectivity by 2007

4. 11% of airlines plan to offer voice mobile telephony by 2007


6. 67% of airlines currently use bar coded boarding passes



9. 56% of airlines have seen their IT budgets increase over 2004

Business Transformation to SupportInnovation

Business Transformation to SupportInnovation

Source: IDC European Vertical Market LOB Survey, October 2006 – N. of respondents: 18

Top Business Initiatives in the CEO AgendaAirlines, Railways, Public Transport

(Ranked in order of Importance)

1. Customer Service enhancement2. Supply chain efficiency improvement3. IT organization responsiveness and efficiency improvement4. Regulatory Compliance5. Efficient Sourcing & Procurement6. Mobile Workforce

Growing demand, limited capacity & profit pressure are requiring new dynamic & responsive IT systems

Continuous Demand-Driven Innovation

IT trends in Airline Industry

SummaryThe writing on wall is clear. More and more companies are

planning to spend on IT in areas of 1. IP enabling2. Outsourcing for advantage 3. E-ticketing4. Migration of legacy 5. RFID solutions6. VOIP7. Call Center8. Data and Voice connectivity 9. Infrastructure upgrade

Airlines are Looking to Outsource and adopt/ develop

customer centric best of breed solution

Developing IT Roadmap for Airline

Airline Website Launch

Study Of AirlineIT System

Evaluating IT readiness

Understanding Long Term Plan

Building Framework For Internal Portal

Deciding IT Infrastructure

Launching Basic Intranet Portal

Launching BasicFFP/CLP

Pain Point Prioritization&

Application Launch Schedule


Inventory Application

Revenue ManagementApplication

Crew/ Aircraft SchedulingApplication

Other Back end Application

Integrated Back End System

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CentralDatabase

Dynamic Packaging

Introducing Online FFP/CLP

Transitioning Website Into Shopping Portal

Web Check in, SMS check inApplication

Integrated Backend System`

Introducing E-ticketing/ Web Booking

Customer Focused Application

Introducing Wireless Network System

Planning IT system for Empowered Airline

Data Warehouse&BI

Central Database

DemandForecasting

SystemAlert Systems

Integrated Back End System

CRM System

Wireless Network(Wi-Fi)

Internet Network Mobile Network Front Office/Cal Center

Robust Delivery Network


ROI-IT Empowered Enterprise

Time Period Benefit

0-1 Year 1. Reduced Distribution cost

2. Increased distribution channel

3. Increased customer delight

4. Improved top-line

5. Better informed employee

6. Reduced Employee Administration cost

7. Profile based application access through Portal

1-3 year 1. Move toward ticket less travel

2. Faster sales closure, lesser load on call center

3. Use of RFIP for better cargo tracking

4. Revenue Management system, improves identifies yield improvement areas. More Profitability

5. Better scheduling and lesser flight delays

6. Improved customer retention

7. Reduced time in booking and size of queue

8. Flight schedule change sent to customer:- happy customer

9. Revenue through shopping at Airline Portal

10. Better fare management and Dynamic packaging of inventory

Do you Know?Delta Airlines uses special RFID technologies to monitor the performance of aircraft engines to compare latest data with historical data to anticipate potential problems. Maintenance costs have been

reduced by half.

ROI-IT Empowered Enterprise

Time Period Benefit

3+ Year 1. Event driven responsive organization with focus on customer

2. Integrated and loosely coupled system for business agility

3. Customer retention and partition

4. Improved customer buying behavior forecasting

5. Mobile work force, improved productivity

6. Airline portal starts to suggest customer on flight and promotion based on his/her past behavior

7. Web 2.0, greater involvement and social networking, more clout to airline

8. Ticket less airline

9. Improvement exception management in Airline Operation and supply chain, through alert systems

10. Stabilized, yet flexible IT environment for growth

Overall, company will witness improved Top line, growth and customer satisfaction, with each successful IT initiative.

Most Urgent IT ImprovementsIDC Recommendations

Remove Legacy

Silos-based platforms

Improve Networks

Improve Mobile

Workers Efficiencies

Improve Security

& Safety

SOA IP, Optical Wireless Networks

IT Security, Sensor

Networks, Surveillance

Advanced Demand Mgmt.

Advanced Planning,

Scheduling

Airline Networks Need to Rely on Advanced Communication Networks

Key Goals:1. Real-time monitoring of mobile assets and cargo2. Increased operational accuracy 3. Higher transport efficiencies 4. VoIP, IP-based video surveillance to improve safety while

reducing communication costs5. Enabling flexible deployments of new workforce applications

and customer services

Optimized Mobile Workforce efficiencies are instrumental to enhance mobile assets utilization &

improve the customer service

Internet

Back-endWireless Devices

Wireless Network backbone

Sensor Networks

•RFID

•Biometrics

•Explosive detection

•Etc…

Intelligent continuous schedulelight schedule and resources allocation can be optimized up to hours before actual

operation

Using IT to Improve Operations

Weather forecastGround-Delay

Air-DelayOther Factor

Flight schedule

Fleet assignment

Crew planning

Proactively System Can Re-schedule Activities

Based on Expected situtaion

Flight Delay

reduced/ Avoided

HappyCustomer

Dynamic management: Intelligent queuingPassenger information is available to airline (amount of luggage, nationality,

number of children, visa status etcseparate passenger into fast/medium/slow based on their demand service rate

Using IT to Improve Operations

Server(check in-Counter)

Fast

Medium

Slow

Server(check in-counter)

queue

Queue

Slow Queue

Before Using IntelligentSystem to Bifurcate Passenger After Using

IntelligentSystem

JetBlue: A Success Story• Gained competitive advantage where others failed• Proper technology and management methods• Reducing costs resulting in reduced pricing• Improving service• Massive Automation

– Automation of services with software• Combination reservation system and accounting system• Supports customer services and sales tracking

– Electronic tickets• No paper handling or expense• Encourages online ticket purchases• Avoids travel agents• Significant savings in cost

– Maintenance information system• Logs all airplane parts and time cycles• Reduces manual tracking costs

– Flight planning software• Maximize seats occupied on a flight• Reduced planning costs

Massive Automation– In-house software for tracking operational data

• Updated on a flight by flight basis• Accessible by airline’s 2,800 employees• Managers are able to respond immediately to problems

– Wireless devices for employees• Report and respond to irregular events

• Quick response

• Events recorded for future analysis

– Training records stored electronically• Easy to update

• Efficient retrieval

– Away from Tradition

• Decision to not use the hub and spoke routing method

• Paperless Cockpits

• Laptops for Pilots

• Harnessing IT to maintain a strategic gap

JetBlue: A Success Story (Cont.)

See What E-Distribution can do

Continental Airlines' Web Site Generates Record Sales;

Hitting $2 Billion Annual Rate

HOUSTON, Aug. 11 -- Continental Airlines today announced that its continental.com web site is generating record sales volume for the airline, recently setting a single-day sales record and achieving record sales volume of $2 billion for the most recent 12-month period, ending July 31.

“We’ve made a significant investment in our web site’s features and functionality to make it a full-service travel site,” said Jim Compton, executive vice president-marketing. “Seeing this dramatic growth in the site’s usage is rewarding because this is such an efficient method for ticket sales.”

On one day in July, continental.com racked up $8.5 million in sales, setting an all-time single-day record. This record volume is equal to 34% of the worldwide passenger sales volume that Continental achieves from all sources in an average day. Continental Airlines Press Release, Aug 11 2005

1. Innovation in Technology key to sustained profitability for airlines

2. Identifying, improving and Integrating business process using IT can create a true “Dynamic Business Platform” to fuel the growth of Airlines

3. Airlines will continue to outsource non-critical operation for improve profitability

4. GDS may come under threat from GNE

5. Increasing distribution channel for ticket delivery, improved customer experience, customer involvement is the key to success in Airline Business

6. Bigger Airlines are more at threat because of changing environment, then newly emerged LCC’s.

7. Airlines will Use RFID, Wireless network, hand held devices, Intelligent systems to maintain service differentiation and gain customer loyalty.

8. Airlines are in a stage where they are evolving from transaction centric enterprises to customer focused enterprise.

9. Collaborative application, bio-metric sensors and workflow automation tools will continue to gain more acceptance with Airlines.

Thank You!Thank You!

Questions?Please email me at:[email protected]

Siddhartha TripathiManager Marketing BSILwww.bsil.com

introduction to airline information system 4880

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