air transport evolution 2011 by luis francisco

By

Luis S. Francisco

Algarve University, PortugalMarch 2011

Air Transport Evolution

and the new technologies,

GDS's, Internet, eDistribution,…

English version

Vice President, General Director, General Manager, Strategy

Director, Executive Director, Director of Marketing & Sales

Luis S. Francisco

of

Tour Operators and Travel Agencies

GDS’s (Galileo e Amadeus)

Airlines (Air Luxor, PGA-Portugália Airlines, Delta, Transbrasil,

Japan Airlines, TAP)

Czech Tourism, Algarve Tourism.

Extensive experience in tourism and aviation as:

Airlines EvolutionFrom…

and…

and…

To…

I’m a lucky guy!!!... For being an active part in the "revolution" operated in the aviation industry and tourism in general.

I started with dial phones, chips card, telex, billboards pionaises ...

Evolved to dump PCs working in network (like TAPmatic)

For the GDS (Galileo, Amadeus)

Internet ...

From aircraft with 100 to 250 seats to 600+ seats...

Reservations System

Some history

Talking abroad: the Telex

Telex… more modern

Did they use calculators?... Of course…

Documents to clients…

Computers appear…

«uau, man…»

… but always evolving…

And how about DB’s?…

In 1992, the high-tech CRS Galileo claimed with pride that it’s database had a size of 10 football fields ...

Today’s is just a room…

Mobiles appear…

«thank God…»

The early days of Air Transport

Lack of airports, so…

First intercontinental airplanes

… vs. today’s airplanes

Prominent Organizations in the Airline Industry

IATA - International Air Traffic Association between 1919

and world war II - 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

SITA, OAG e ATPCO xtenho em UK

SITA - Societe Internationale des communications aeronautiques

- Handles shared communication means, including network and devices (airlines, airports,…)

OAG - Official Airline Guide

- 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 1.000 airlines and more than 3.000 airports

ATPCO - Airline Tariff Publishing Company - Is a fare distributing company.. worldwide.

Air tickets

Issued manually, with many duplicates or coupons…

AGENCY IATA TICKET…

Issuing dept needed…

AGENCY IATA TICKET (Qantas auth)

IATA-BSP Ticket

Boarding Pass

Boarding Pass Check

ATB Tickets

eTickets

eTickets ---» Ticket Less

PNR / code only

Online Check-in

Home check-in

Mobile Check-in

Auto check-in at airport.

• Travellers and tourists started to seek and obtain information about:

• Products

• Prices

• Schedules

• and to book online (travel agencies, hotels, hotel chains, airlines, ...).

IT’s in Tourism and Aviation

The 60’s:

• Airlines begin development of computerized systems to manage information

• American Airlines and IBM join forces to create a CRS - Computerized Reservation System - SABRE

• Delta Air Lines launches DATAS (Delta Automated Travel Account System).

Historical development of IT’s in aviation

The 70’s:

• With the liberalization of air traffic in the U.S., other airlines create their own CRS's

• United Airlines creates APOLLO and TWA - PARS

• CRS's used only for private use of each airline

• CRS's placed in travel agencies in the U.S.

Historical development of IT’s in aviation

The 80’s:

• Need to Globalize the offer (hotels, car rental, cruises, concerts, shows, trains, ...)

• Appearance of GDS's

(Global Distribution Systems)

Historical development of IT’s in aviation

The 90’s:

• Interconnection of networks around the world...

• ... the Internet

• Airlines provide direct sales with Consumers.

Historical development of IT’s in aviation

Today:

• There are no limits ...

• ... we may not even know where are we going to...

• But we are sure we are going... fast!

Historical development of IT’s in aviation

What are GDS's:

• Systems that connect all vendors worldwide with their distributors (travel agencies, tour operators, consolidators, charter operators, ...)

• These become in its main users.

Global Distribution Systems

The integrated offering of GDS's:

• Information• Reservations• Database of customers and suppliers• Issuing electronic tickets• Booking of additional services: hotels, car rental,

cruises, concerts, trains, insurance, ...• Agendas• Trip Plans• Connection to multiple networks of airlines ... worldwide.

Global Distribution Systems

The main GDS's:

• GALILEO

• WORLDSPAN

• AMADEUS

• SABRE

• ABACUS

Global Distribution Systems

• United Airlines

• British Airways

• Swissair

• KLM

• US Airways

• Alitalia

Galileo

• Olympic

• Air Canada

• TAP

• Austrian Airlines

• Aer Lingus.

* no longer exists

*

• TWA

• Delta Airlines

• Northwest Airlines

Worldspan

*

* no longer exists

• United Airlines

• Lufthansa

• Air France

• Iberia

• SAS

Amadeus

and few time after

• Continental Airlines

• Finnair.

• All Nippon Airways

• Cathay Pacific

• China Airlines

• EVA Airways

• Garuda Indonesia

• Dragonair

Abacus

• Philippine Airlines

• Malaysia Airlines

• Royal Brunei

• SilkAir

• Singapore Airlines.

• GALILEO

• WORLDSPAN

• AMADEUS

• SABRE

• ABACUS

GDS's progress to ...

TRAVELPORT

Operational and strategic partnership

Electronic Travel MarketElectronic Travel Market

Suppliers AgenciesAgenciesServices

PaymentConsumer

Electronic Travel MarketElectronic Travel Market

Suppliers AgenciesAgenciesServices

Payment

Communication

Information

Consumer

Flight booking

NN2YFAOLGW25FEBYSU3M/TP

After reply

P1.FRANCISCO/LUISMR P2.ALMEIDA/CLAUDIAMRS

PH.289000000M.VEGETARIANT.123456789F.CASH...

Hotel booking

HOA25FEB-2NTLONDON/UIAccess to rack rates and corporate rates

HOA25FEB-2NTLONDON/UI@GBTAAccess to GEBTA special tariffs

Car booking

0CCRZINN1LIS 25FEB-28FEB EBMN

/ARR- 1000 /PUP- LIS /DO- LIS /DT- 1000

/RC- EQ /G- AV00000000000000 T...

A simple booking to AVIS with special rates

Direct Sales

Recasting the traditional channel of distribution

AIRLINES CAR RENTALHOTELS

INTERNET

CONSUMERS

Profound change in the market:

• Airlines develop their own websites

• Exceed GDSs

• Establish connections to sell directly to consumers.

Direct Sales

• Airlines force travel agencies to redefine their role and business model,

• ... going directly to their customers and dramatically reducing their commissions

• This new situation forced GDS's to create web interfaces

• ... this led to major players on the Internet, such as Travelocity.

Direct Sales: conclusion

The new GDS’s… Internet based

• Access to the final customer

• Transmission of information as per customer profile

• Easier and faster to make a sale

• Flexibility in providing information

• Via text, graphics, video, sound,…

• On pages with total flexibility.

Advantages of the Internet vs. GDS's

• Direct and selective marketing

• New interfaces and attractive tools

• Faster and effective processing

• New forms of payment

• Multimedia

• Brand consistency

• Always available 24 / 7 / 365

Opportunities the Internet provides

• Huge cost savings

• E-ticketing

• E-brochures, e-flyers, e-information

• Better communication

• All this, both at a external and internal level ...

Opportunities the Internet provides

Internet: some figures!!

42% of all online purchases are travel related

Travel & Tourism market: 1999: $2.1 trillion 2010: $4.9 trillion

(Source: Satellite Accounting Research)

Online Travel Booking 1999: $6 billion 2002: $30 billion 2010: +$60 billion (Source: PhoCusWright)

The Survival Strategies!

With the Internet

Consumer’s decision is more dispersed

Appearance of Low Cost Carriers

Democratization of air travel

...

Airlines pushed to form alliances to ... survive!

Airline Industry Value Chain

INBOUNDLOGISTICS

OPERATIONS OUTBOUNDLOGISTICS

MARKETING AND SALES

SERVICE

PROCUREMENT

TECHNOLOGY DEVELOPMENT

HUMAN RESOURCE

MANAGEMENT

AIRLINE INFRASTRUCTURE

-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

Airline system Components

Pricing And

Revenue ManagementSystem

MaintenanceAnd

EngineeringSystem

Flight OperationSystem

FinanceSystem

(load factor)Crew Management

SystemCentral Reservation

System

Airport ManagementSystem

Air CargoSystem

Business ProcessingSystem

(check-in, luggage)Sales and Marketing

System

HR ManagementSystem

CRM System

(customer behavior)

Internet and its importance for airlines

INTERNET EXTRANET INTRANET

ACESS TYPE OPEN CONTROLED PRIVATE

USED BY PUBLIC BUSINESS PARTNERSORGANIZATION

MEMBERS

TYPE OF INFORMATION

GENERAL SELECTIVE SHARE OWNER

The Survival Strategies!

Alliances, Spin-offs and Cross-Holdings

They are the largest and best strategy in terms of network expansion

Global alliances covering different continents and different markets

SkyTeam (11)

Star Alliance (26)

OneWorld (11)

The Survival Strategies!Alliances, Spin-offs and Cross-Holdings

Partnerships include :

sales and marketing, and operational

code sharing

schedule co-ordination

joint sales offices

ground handling and maintenance

combination of frequent flyer programs...

The Survival Strategies!Alliances, Spin-offs and Cross-Holdings… the top airlines

SkyTeam (11) Star Alliance (26) OneWorld (11)

Star Alliance

OneWorld

Sky Team

Low Cost vs “Healthy Quality” Carriers

- « How was the trip to Moscow? »- « Everything went well but I'm completely exhausted »

«... I'm completely exhausted »

Here's a phrase that users of Long Haul airlines no longer say or feel, quite the contrary.

While in EU, airlines follow a model of low-cost due to short flights of 2h to 2h30, the airlines flying out of Europe have opted for what I dubbed "Healthy Quality".

The Survival Strategies!

Important niche markets appear

Quit well used by some airlines

Going in the opposite direction of LCC.

Gulf and Far East

Airlines such as Cathay Pacific, Singapore Airlines, Malaysia Airlines, Thai, Ethiad, Emirates and Qatar Airways

Concern themselves more with the convenience and health of their passengers.

Take the Emirates and Qatar Airways example.

Aim: the high quality standard (not the quantity).

These companies have opted for Airbus, in particular, the series A330, A340 and A380, beside Boeing 777.

Planes with enormous space, comfort and high technology ...

... luxury oriented for a healthy and sophisticated way to travel:

Individual cabins with shower (1st class)spacious seats that transform into comfortable

beds, bars, restaurants, gyms ...

Luxury in every detail, from the tissues used on the seats to the size and quality of individual LCD’s and huge list of films and programs.

Special environment for transition zones

Aircrafts with lights system that simulate the time at destiny.

Air Canada

Etihad

Air New Zealand

Etihad

Air France

Eurofly

Lufthansa

Emirates

Emirates

Etihad

Etihad

Thai Airways

Singapore Airlines

Etihad

Ethiad

But not only in flight that there is the convenience and quality of these airlines.

The airport lounges are authentic places of luxury and health.

They are spaces that, just by itself, provide great relaxation and rest with spectacular surroundings as witnessed some of the photos from the terminal of Dubai

Airport terminals / Lounges

Compared with low-cost terminals

Compared with low-cost terminals

Emirates offers a five-star lounge - "Emirates Terminal 3" - with individual spaces for their customers to relax and rest. The spaces are varied, to work, read, or even meditate …

Spaces inspired by Arab and Asian themes with water and plants that enhance the feeling of harmony and wellbeing. Lavish facilities, having SPA - Timeless Spa - with several therapists offering beauty treatments, massage therapies in a soothing and tranquil environment

Two Zen gardens are part of the unique design to create an oasis of calm within the bustling environment of an international airport.

The Qatar Airways Premium Terminal at Doha has jacuzzi, showers, rooms with 2 beds, various types of massages, meals, games, playstation and many others ... high quality and... Absolutely free!

Speaking of airports ...

Speaking of airports ...

Questions? please email me at: luis.sfrancisco@gmail.com

Luis S. Francisco

Senior Advisor and Consultant in Tourism, Airlines, GDS's,

Hotels, Tourism Boards, Country Branding;

Thanks!