SITA Exclusive: IT Trends in Middle East Aviation

Technology firm predicts a bigger and better spend on IT solutions.
ANALYSIS, Aviation

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With record participation in SITA’s airline technology survey this year, Hani El Assaad predicts a bigger and better spend on IT solutions in the Middle East.

Aviation technology specialist SITA had reason to celebrate last month, with the announcement that its annual Airline IT Trends Survey attracted a record number of participants in 2010. With such a favourable response, it would appear the independent questionnaire has been largely accepted by a target group of senior technology professionals working in the top 200 international passenger carriers.

Also encouraging were the survey results, which suggest there is growing optimism that the worst is over for a global industry that has sustained record losses over the last couple of years.

“Although the last two years have been incredibly difficult, there is still an emphasis on accelerating technology projects that promise an early return on investment,” explains Hani El Assaad, regional vice president of SITA in the Middle East and North Africa. “The majority of airlines are also looking to extend their IT partnerships with strategic suppliers, such as ourselves, and outsourcing is a major element in this.”

In total, the survey attracted responses from 129 airlines around the world, including 14% that classified themselves as low cost carriers, 81% full service carriers, and 5% charter carriers. From this figure, an encouraging 56% of respondents were expecting an increase in IT spend over the next year, with only 10% noting that a decrease was possible.

While the estimated declines were more prominent in developed markets, such as Europe and North America, it was actually the Asia, Middle East and North America regions that carried the most optimism.

“Asia led the charge for increased spending, with 75% of respondents expecting an increased budget for IT solutions next year. However, the Middle East and Africa (MEA) was very encouraging too,” explains El Assaad.  “In total, around 22% of our responses came from the MEA region, covering large and significant carriers in more than 40 countries. Although the sample size is not large enough to make exact statistical statements on a regional basis, we do aim to provide regional observations where possible, as trends can vary from one part of the world to another.”

As part of these regional observations, El Assaad explains that IT budgets in the Middle East and Africa have been less affected by the recession, compared to airlines in other geographical locations. The survey also shows that airlines in the MEA region have generally been able to keep their IT spend, as a percentage of revenue, at a higher level than airlines in other parts of the world, which is expected to continue in 2011.

“The expectations for increases and decreases for the Middle East and Africa IT budget in 2011 are similar to global levels,” he continues. “In other words, only 10% of airlines expect a decrease next year.”

Despite the bright forecast, some of the trends observed by the survey are a little more concerning. For example, moving passengers to self service is a strong global trend, especially when it comes to check-ins.

But according to the questionnaire results, many airlines in the Middle East and Africa have failed to catch onto this trend as much as their regional counterparts.

Fortunately, there is a sincere ambition to add check-in on kiosks and web within the MEA region, in addition to mobile phone solutions for passengers by 2013.

Such nuggets of information are essential reading for anyone with an interest in the aviation sector and will ultimately help SITA to better serve its airline customers in the Middle East, and the wider industry as a whole.

“The aviation industry in the Middle East is still growing above global average and airlines continue to expand their fleets and networks. To support the growth there is significant new airport construction and the modernisation of older airports is on the rise.

There is also an increased demand for airport-wide integrated IT and communications systems and an emphasis on border security,” states El Assaad. “Throughout the region, interest in self service systems is rising, along with a growing level of environmental awareness.

For example, the Arab Air Carriers Organisation (AACO) was the first organisation to recommend adoption of the new SITA Aircraft Emissions Manager solution to its members.”

The primary challenges to overcome before the region can reach its full potential include crowded airspace, privatisation, de-regulation and political stability, according to the executive.

“Aviation infrastructure in the Middle East region has not been in sync with the fast-paced growth of airlines in the past, leading to crowding of the airspace. Efficient capacity management is critical as the market continues to expand,” he says.

“Several carriers in the Middle East are seeking privatisation. However, regional regulations do not promote adequate financial and operational transparency, which is a hindrance for attracting private investment. Also, deregulation initiatives are taking place, however these are at a country level and the lack of co-ordination can be challenging for the sector.”

Rather than view such challenges with a negative approach, El Assaad is full of optimism, stating that the Middle East has captured the world’s attention even with these hurdles and once the issues are addressed, the region will continue is rapid ascent.

For SITA, this will mean stronger demand for its airport, airline, air traffic management and border management solutions. “We’re in a great market at a great time, so the future is very exciting indeed,” he concludes.

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