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Asian carriers to spend more on IT next year

Press Trust of India  |  Brussels 

Buoyed by the improved scenario in the aviation sector, about 75 per cent of Asian carriers, including many from India, would increase their spending on information technology next year in order to provide better passenger facilities.

According to a new study, 2010 Airline IT Trends conducted by SITA and released here during SITA Air Transport Summit, the airlines would be spending about 1.8 per cent of their revenue and the Asian carriers are leading the charge of increase.

The numbers of airlines stating an expected IT budget increase in highly developed markets such as Europe and North America are below the global averages.

"75 per cent of the responding carriers in this region are confident that IT spending will increase further next year.
"After year on year declines, overall airline IT budgets in 2010 have stabilised, even showing a slight increase.

"The operating spend this year is an average 1.8 per cent of revenue while capital spend is 1.4 per cent, meaning no major change from last year," said Jurgen Kolle, senior Director Portfolio Marketing SITA.
Kolle said that majority of Indian carriers have also expressed interest in increasing their IT budget.
"This shows the maturity of the Indian carriers. Begin a growing market, this will help them grow their business and sustain," he added.
Senior IT professionals of 129 carriers, out of 200, responded to this year's survey, of which 14 per cent were classified as low cost carriers, 81 per cent full service carriers and five per cent were charter carriers.
Airlines, carrying over one billion passengers annually, took part in this year's 12th annual SITA/Airline Business Airline IT Trends Survey which indicated that the worst may be over for an industry which sustained record losses over the last two years.
Globally about 56 per cent of responding airlines expect an increase in IT spend next year with only 10 per cent expecting a decrease in 2011.
Interestingly, a significant number of small carriers were among the 45 per cent who reported an increase in their IT budgets this year compared to last year.
At the same time, about 50 per cent of the European airlines have said that their budget would decrease this year.
"The stabilising budgets and increasing business confidence translates into a change in spending behaviour for airlines away from short-term tactical remedies needed in 2009 and a return towards long-term strategic thinking.

"After the last two incredibly difficult years there is an emphasis still on accelerating IT projects which promise an early return on investment.
"The majority of airlines also want to extend their partnerships with strategic IT suppliers like SITA and IT outsourcing is a major element in this," said Paul Coby, Chair of the Board, SITA while launching the 2010 Airline IT Trends.
The airlines have also shown interest in implementation of virtualisation technologies, with the initial priority on the IT infrastructure.
About 40 per cent of the airlines have already created a virtual infrastructure environment and by 2013 it may increase to 85 per cent.
Also by 2013, those airlines carrying bulk of the world's air traffic are on course to sell the majority of airline tickets direct to passengers, in order to save the passenger's time and money.
SITA is the world's leading specialist in air transport communications and IT solutions.
It provides and manages business solutions for airline, airport, Global Distribution System (travel agents), government and others over the world's most extensive network, which forms the communications backbone of the global air transport industry.
Currently, about 40.8 per cent of the tickets are sold directly to travellers by the airlines, while rest are through the travel agents.
Of this 40.8 per cent, 25.8 per cent are sold through Internet, 10.7 per cent through airlines' call centre and 4.3 per cent through other media.
The airlines have planned to bring this 40.8 per cent level of direct sales up to 55.1 per cent by 2013, thus reducing their extra cost and expenditure.
"While sales through airline call centres and interlining will remain largely static, direct channel sales through websites are expected to jump to 37.9 per cent," said Kolle.
Addressing the Summit, SITA CEO Francesco Violante, said that "this year's survey tells us there is a climate of increasing business confidence.
Airlines are investing in IT to provide richer functionality to their online customers and creating additional channels to market in order to increase the level of direct sales now that online distribution is almost universal".
In order to increase online sales, airlines are prioritising the implementation of new functionality on their web sites in the following ways: online shopping tools (61 per cent have already implemented this); change/cancel/rebook (52 per cent); and frequent flyer redemption functionality (51 per cent).

This is in line with overall airline strategy to migrate passengers to self-service including a multi-channel check-in environment.
The airlines have also planned to reduce the number of passengers processed via agent check-in from 50.7 per cent to 28.9 per cent by 2013.
Kiosk check-in is expected to remain static at just below 20 per cent while web check-in options will grow from 21.6 per cent today to 35.5 per cent in 2013, and mobile check-in will advance from 28 per cent today to 70 per cent by 2013, the survey sugggested.
The next wave of implementation would be around booking portals for travel agencies which 41 per cent of the airlines have already done and other 43 per cent are planning to do by 2013.
About 70 per cent of the airlines have devised a strategy to use the passenger's mobile phone as a further distribution channel to sell air tickets.
Currently, only 18 per cent of the airlines are selling tickets over mobile phones.
Some 85 per cent of the largest airlines responding to the survey plan to offer such services by 2013.
The mobile phone will become an essential tool for airline travel by 2013 with 86 per cent of airlines planning to offer flight notifications; 80 per cent, online check-in; 76 per cent, send electronic boarding passes to mobiles; and 68 per cent using the mobile phone to target passengers with travel offers, said Violante.
The Airline IT Trends Survey is an independent poll of senior IT personnel working within the top 200 passenger carriers; 129 airlines responded to this year's survey, including 14 per cent classified as low cost carriers; 81 per cent full service carriers; 5 per cent charter carriers.

First Published: Thu, June 24 2010. 18:00 IST