airline it trends 2012 executive summary[1]

8/12/2019 Airline IT Trends 2012 Executive Summary[1]

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The Airline ITTrends Survey

Executive summary

2012A joint Airline Business and SITA survey

The Airline ITTrends Survey


2/122 |The Airline IT Trends Survey|2012

Foreword

Francesco Violante

Chief Executive OfficerSITA

Max Kingsley-Jones

EditorAirline Business

The Airline IT Trends Survey, co-sponsored by Airline Businessand 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 years 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 BusinessIT zone atflightglobal.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 absolute

IT spending

*Compared to the previous year

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 makeR&D investmentsin 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 driversIT&T investment programmes

in the next three years

No plansR&D/pilotMajor programme

Passenger services

via social media

Expansion of ancillary

services

Business Intelligence

solutions

Improve customer

relationship management

e.g. service personalisation

Upgrade core passenger

management system

Passenger services

via mobile device

55%

58%

52%

35%

44%

22%

35%

28%

56%

38%

23%

6%

20%

9%

18%

55% 33% 12%

Enabling

new market/

revenue

opportunity

Reducing

the cost of

business

operations

Customer

service/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 airlines 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 years respondents plan to have direct connections to

third party travel agents.

Travel Distribution

Dominant channels for direct

sales 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/staf

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

201590%

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 strategy

through direct channels


Lounge access

Retail services

(e.g. in-flight,

merchandising)

Baggage fees

Ticket upgrades

On-board services

(seat allocation,

meals, etc)

Ticket modifications

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 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 passengerprocessing beyond 2015

Emerging kiosk functionality

Social media

Agent/Staf

Kiosk

Website

Smart phone 71%

39%

13%

3%

71%

Flight

transfer

Lost

baggage

Bag-tag

printing

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 media

integration

Passengerprocessing

Salestransactions

Travel planning

Customer servicecommunication

Communication& marketing of

service oers57%

39%

19%

19%

13%

High value

23%

24% 27%

No plans

By end of 2015

In evaluation

Implemented

Utilise NFC technology

for passsenger processing

Access to entertainmenton-board on passengers

own device

Re-booking from

irregular operations

Missing baggage

communication

Notication about

ight status

Send mobile boarding

passes 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

Ground

service

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 frequentlymentioned by all respondents in this years 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 withprevious 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 Issues

l Travel Distribution

l Passenger Operations

l Infrastructure

l Successes & Challenges

A comprehensive 100+ page PDF report is available to purchase, this will include commentary &

analysis covering all of the following survey questions:

l Priorities for investment decisions

l Key technology investment trends and areas in the next three years

l Long-term strategy for implementing virtualisation technology

l Strategy for selling products/services via passengers mobile phones

l Strategy for the integration of social networks

l Evolution of self-service technology (including via passengers mobile phones)

Methodology & Further Analysis


12/12

www.sita.aero

www.flightglobal.com/airlines

airline it trends 2012 executive summary[1]

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