Tomorrow's world

The airline industry is still struggling to keep pace with advancements in the world's technology.
ANALYSIS
LOGGED ON: Several global airlines, including Middle East carriers, have turned to Amadeus for website support and development.
LOGGED ON: Several global airlines, including Middle East carriers, have turned to Amadeus for website support and development.
POWER SOURCE: Amadeus supports half of the world's top 50 carriers.
POWER SOURCE: Amadeus supports half of the world's top 50 carriers.
ON DEADLINE: IATA has introduced a June cut-off for airlines across the globe to replace all paper tickets with e-ticketing.
ON DEADLINE: IATA has introduced a June cut-off for airlines across the globe to replace all paper tickets with e-ticketing.

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A quiet, riverside location in Bangkok was the setting for last month's Horizons 2008, a two day event covering Amadeus' latest airline IT systems.

Social network MySpace, i-phones and digital imagery may have pushed the world's technological boundaries, but the airline industry is still struggling to keep pace.

According to Edward Nicol, CIO of Chinese carrier Cathay Pacific, there are two reasons for airline bosses' reluctance to upgrade IT technology. Firstly, commercial carriers notoriously operate over budget, making expensive systems difficult to afford.

 

"I would say 10 minutes is too long to complete a booking [online]. We think it should take no more than five or six minutes."
 

Secondly, with most carriers unwilling to invest in state-of-the-art systems, few rival airlines have a technological advantage. Nevertheless, analysts believe carriers that once eschewed new software can no longer afford to operate without the latest state-of-the-art systems.

Indeed, passenger demand for speedier check-in, coupled with IATA's mandate for all airlines to introduce 100% e-ticketing by June, is forcing carriers to update their IT technology.

It's a subject well known to the airline delegates gathered in Bangkok last month for Amadeus' Horizons conference. The two day event focused on the IT system developer's latest technology strategies, covering e-commerce, IT and global distribution systems (GDS).

Tehmton Cooper, head of global contact centres and e-commerce for Etihad Airways, believes Amadeus' latest software complements the airline's facilities. Moreover, he insists the new high-tech IT systems are an integral part of the Abu Dhabi-based carrier's sales and service proposition.

Since its launch four years ago, Etihad has worked with the IT company, incorporating several programmes such as in-house booking system Altea suite and online check-in.

Cooper says he is impressed with the products' adaptability, which enables Etihad executives to effectively market the brand.

"We have a unique factor which is miles plus cash [passengers using points accumulated from previous flights to reduce ticket prices]; we are the only airline to do that," he says. "We use it for different types of promotion, so it's a very flexible product."
 

 

According to Cooper, the latest developments give customers booking online more control over decision making.

"We believe in empowering the customer. Today's consumer is not a person who just stands back and says ok, this is what you're giving us, this is what we'll buy. There's competition and we realise this. By giving the customer maximum flexibility to choose we are confident they will choose us over someone else."

 

"It's [e-ticketing] made Asian Pacific airlines look at their IT strategy and even the smallest carrier is now looking at its in-house systems."

For Cooper, user friendly websites and quick booking systems are critical to securing more Middle East passengers. "It's a number one priority and I don't just mean how fast the booking engine reacts on the website, I mean the entire speed of the process," he says.

"I would say 10 minutes is too long to complete a booking. We think it should take no more than five or six minutes for a person to come and do that."

Elsewhere, Carsten Willert, general manager of e-commerce for British Airways, says 74% of Americans have expressed interest in a one-page booking system. While no carrier has installed such a programme, Cooper says Etihad will have one in place this year.
 

The airline, along with several other carriers, also plans to introduce new systems enabling passengers to book flights via mobile phones.

In the meantime, Cooper will continue working closely with Amadeus to develop Etihad's online technology.

"What we're looking towards now is the mobile area, so no matter where you've bought your tickets you can still come to the website and change the booking if you have to," he says.

"If you're stuck somewhere in Washington and want to change your return flight you don't have to wait until the next morning to make that phone call. You can go onto the website and change that booking."

With Etihad closing in on 100% e-ticketing, the airline's management has no concerns about meeting IATA's June deadline. Whether other carriers are in a similar position is unknown. But Damien Hickey, vice president of Amadeus' airline business group for Asia Pacific, says the switch to e-ticketing has forced carriers to introduce new IT software.

"It's made a lot of the Asian Pacific airlines look at their IT strategy, and even the smallest carrier on the market is having to look at the in-house systems they have because it's putting huge pressure on their resources," he says.
 

 

Essentially, airlines are being forced to update their systems and explore the options available to them.

With only one month until IATA's e-ticketing deadline, airlines are under pressure to make the conversion. According to Amadeus' Frederic Spagnou, the largest carriers have been preparing for some time.

 

If you're stuck in Washington and want to change your return flight, you don't have to wait until the next morning to make that phone call. You can go on the website and change it.

But smaller to mid-sized airlines are relying on IT software developers to prepare them for interline e-ticketing. Away from e-ticketing, Horizons 2008 also covered Amadeus' new airline retailing platform, Altea Customer Management Suite (CMS) and e-commerce developments.

During the next two years, Amadeus is introducing a GDS retailing platform that will enable airlines to advertise their services through travel agents. The new system is expected to provide a comprehensive list of fare categories, with carriers able to promote any unique features such as in-flight flat beds.
 

David Doctor, Amadeus' director for airline distribution, says the platform will enable airlines to better publicise their brand and improve relationships with travel agents. "We're empowering the travel agency to be able to interact better with customers and we're also allowing the airline to sell the product and get a return on its investment," he says.

"For example, BA spent some GBP150 million (US$295.9 million) in renewing their business class, but they don't get a return on this unless they can market it at the point of sale."

Some airlines have different ideas about what the retailing platform should provide, but Doctor is confident the new system will satisfy most companies. "We have this software being delivered and two streams of customers saying how it should work," he says.

"One lot say they want a base price and then a menu with a list of additional services. Then we have some customers, including Air Canada, asking us to have a base price where you can deselect items and the price comes down. That will soon be delivered in the products and attributes programme."

While developing this new platform, Amadeus has seen a considerable rise in the number of airlines adopting the Altea CMS. Some 60 carriers now use the passenger service software, with 11 more migrating this year.

The programme, which includes reservation, inventory and flight services, enables airlines to effectively manage and process passengers from booking to check-in. Amadeus is now launching the final element of the Altea suite, a departure control service that will go live this summer with Australian carrier Qantas.
 

 

Hickey says the suites have attracted established, high profile carriers and launch airlines.

"We have many healthy prospects in the pipeline from people like Singapore Airlines. We've been in negations with them for some time and we're hopeful they'll get through the process soon."

Other parties interested in Altea's developments include Thai Airways, a carrier which is already partnered with the IT software company, and Vietnam Airlines. The coming months will reveal whether such talks lead to more business for Amadeus. But in the meantime, the IT developer is keen to strengthen its e-commerce operation.

According to Qantas' general manager for direct sales John Lonergan, more passengers are using online booking systems. But despite its growing popularity, travellers were initially reluctant to buy tickets via the internet.

"We had to bribe customers to use e-commerce because we wanted to sell more flights," Lonergan says.
 

Since then, travel websites Expedia and airline.com have emerged as the most popular online portals for flight bookings. Interest in Amadeus' e-commerce platform has also increased, with e-retail - a state-of-the-art internet booking system for car, hotel, flight and insurance bookings - generating solid business.

Elsewhere, the company's e-merchandising offering, an airline specific shopping programme, and e-service, which allows passengers to modify details between booking and check in, are considered welcome alternatives to other reservation options.

Philippe Der Arslanian, Amadeus' global director for airline direct channel, says the company plans to expand in three areas, merchandising, servicing and web 2.0 user experiences. "We power today over 80 airlines, more than 250 websites and half of the world's top 50 carriers," he says.

Spagnou believes the popularity of Amadeus' e-commerce offering will encourage users to test the company's other products. "E-commerce is moving very quickly " he says. "That's why we have a lot of customers who use the software. It means they can experience our support and service."

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