As the airline industry has become more competitive, carriers have looked to improve performance and competitiveness. Martın-Consuegra (2007) In previous chapters we investigate Time Series analysis of airlines industry and estimated the service separately and jointly. Aksoy(2003) argue that in service industries such as airlines, a major requirement for success is understanding and satisfying customer needs and expectations, creating, communicating and delivering customer value. Thus in this Chapter we check our SITA data includes evolution of self-service, along with the rise of mobile technology, which will increase workforce efficiency and enhance passenger processing.

IT implementation research in airlines structure.

The reinforcement of e-business activity in airlines has resulted in an increase of sales volume for airlines’ websites and a decrease for the traditional distribution channels. Moon (2006) In this segment we analyze SITA data includes evolution of self-service, along with the rise of mobile technology, which increases workforce efficiency and enhance passenger processing. Airline Business(2009) The data describes IT implementation between 2001 till 2009 alike our IATA’ research time investigation. IT and Telecommunication “Societe Internationale de Telecommunications Aeronautiques” (SITA) data base enables us to investigate the policy and IT trends of Airlines. We use SITA data bank provides a benchmark against which individual airlines and the industry as a whole can measure success in meeting the challenges presented by IT and internet revolution. SITA is multinational information Technology Company specializing in providing IT and telecommunication services to the Aviation Industry, and it is most comprehensive research of its kind.

Table 5.1 Airlines’ IT and telecommunication spend [1] 

Year

Average

Weighted average

2009

1.75%

1.74%

2008

2.20%

2.18%

2007

1.95%

2.07%

2006

1.85%

2.19%

2005

1.92%

2.27%

2004

2.13%

2.47%

2003

2.36%

2.85%

2002

2.25%

2.59%

2001

2.82%

3.44%

Above Table 5.1 indicates IT and telecommunication spend as a percentage of 116 airlines revenue. We presume that much of the first nine years of 21st century spent on IT trends to decrease revenue percent assign for new technology investment. In 2001 the weighted average spent for IT was almost two times bigger than in 2009. The reason for this are: rising fuel prices, financial crisis, terrorist attacks and other important factors often caused changes in forecast of industry financial performance.

Instead of the expected profit, Air Transport Association of America (ATA), an organization connected with the largest airlines in the U.S., announced that in March 2009 due to financial crisis passenger traffic was 10% lower than a year before. Thus, our main research questions’ goal is to investigate the problems faced by the airline industry, and try to find optimal solutions on how international air transportation system can cope with 21century watershed. Nowadays, IT technology deals mainly with passenger transportation support, and goods transportation is somewhat neglected. To reveal strong connection between IT technology investment and development of airline companies we expose Figure 5.1 indicates Average of Passenger transportation of main 160 airlines for the same period as in table 5.1 between January 2001 and April 2009. Between Feb2001 and Feb2002 during terrorist attack effect compared with the Average Passenger Transportation issue perspective, RPK shrunk by 180000 (A). At the same time Airlines’ IT and telecommunication spend diminished by o.85%. Moreover, during 12 months of Financial

A

B

Figure 5.1 Terrorist attack and Financial Crisis effect for Average Passenger Transportation of 160 major airlines

Source: IATA 2009 airlines data reported by carriers at the time of publication. (SAS) [2] 

Crisis between Feb2008 and Feb2009 Average Passenger Transportation decreased by B=80000 RPK. Similarly, in 2009 airlines’ IT and telecommunication spend 0.44% les of weighted Average than in 2008. That implies that annual revenue Passenger kilometers significantly impacts Airlines’ IT and telecommunication expenditure. After FC and another budget inconstancy main managers of air transportation companies are more reluctant to invest in Information Technology systems. The main obstacle to improve IT structure and solutions is lack of investment caused by financial instability. Nevertheless we argue that New Technology outlay is going to bring a profit for air companies and makes them more rival at the market. Pagiavlas et al. (2005) in his paper analyzes mobile business in the context of the airline industry as a strategic tool to create a sustainable competitive advantage through the implementation of an effective mobile business model. Nowadays, after reaching around 4.6 billion mobile cellular subscriptions by the end of 2009, International Telecommunication Union expects the number of mobile cellular subscriptions globally to reach five billion in 2010, driven by advanced services and handsets in developed countries and increased take-up of mobile health services and mobile banking in the developing world. ITU (2010) New technology of mobile phone’ check-in, e-ticketing, online or wireless connectivity on-board of the aircraft is becoming popular and common offering to airlines’ passengers self service. Wei (2005) argues that through the expanded use of the internet-based ticketing, airlines are able to reduce labor costs and in some cases eliminate commissions altogether so as to improve profit margins. Hence, main international organizations involve in business programs to lover industry costs and improve Passenger mobile based services.

Figure 5.2 Mobile based services to passengers own mobile phones [3] 

Compared with other mobile services issue perspectives in the Figure 5.1 the best developed system already exists in third airlines inform passengers about flight status and delay. Furthermore, optimised webside for mobile phones and payments via mobile phone systems are implemented by every 6th Passenger Transportation company. In contrast, 73% of Airlines has not sent baggage receipts to mobile phones yet, and 71% has not track/direct passengers at the airports with mobile phones. Nevertheless, plans for next two years position majority of responding airlines in the utilization mobile based service area close to the level of 50%. Nothwithstanding, in 2004 International Air Transport Associations set up Simplifying the Business program (StB). Thus, Bar Coded Boarding Passes (BCBP), IATA e-freight, Baggage Improvement and other programs and facilities are available. In the future Fast Travel Program which consists of four projects that the association says will save the airline industry over US$14 billion each year. IATA(2009) Therefore, in this segment we conclude our analysis of airlines’ performance and investigate IT investment effects on the profitability, their growth and survival. Since the tragedy in September 2001, the network or legacy carriers have sought ways to improve business values and minimize losses by cutting jobs, eliminating routes, decreasing infrastructure, streamlining production costs, improving customer services, and creating

Figure 5.2 Major IT successes in 2009. Source: SITA (2009)

a profitable market Will(2004). One of the most effective solutions for increasing business values attracting more customers, and increasing customer satisfaction is to provide Internet-based low-fare air travel tickets Marks (2004), i.e. to sell low-fare air travel tickets and expedite boarding processes through company web sites. Figure 5.2 indicates 2009 IT implementation success of upgrading virtual infrastructure, self service implementation, and on/offline distributions upgrade. Currently, many airlines are utilizing Enterprise Resources Planning systems (ERP) and their own web sites to market and sell their products to current and potential customers. Some airlines also offer discounts to customers who purchase their tickets online Hanke (2003). The main IT success in 2009 was 11% level of E-ticketing implementation, and 9% upgrading of Reservation Inventory System but across the world, 38% of airlines do not provide any mobile services yet, mainly via cellular phones. Hence, as a reason they claim that there is no clear business case yet, although 20 percent currently offer mobile phone check-in. SITA(2009) In Asia current number of issued boarding passes is sent directly to mobile phones as barcoded boarding passes (BCBP) to every third passenger, and it is the best result before Europe (23%) and North America (22%).

Figure 5.2 major IT failures of the last 12 months. Source: SITA (2009)

Through the expanded use of the internet-based ticketing, airlines are able to reduce labor costs and in some cases eliminate commissions altogether so as to improve profit margins. Wei (2005) Nevertheless, from the perspective of major failures of the last 12 months Figure 5.3 has identified a number of factors that determine adoption problems for IT implementation. Above figure reveals that biggest failure in the last year was implementation delay. Additionally, IT technology infrastructure and virtualization was unable to be upgraded with significant failure value of 9%. Compared regulation compliance, self service implementation and Sourcing of IT providers achieved the same 1% level.

Conclusions

Airlines representatives due to last financial crisis are much less optimistic in 2009 about their future IT spend. Thus, managers of air transportation companies look for savings in decreasing expenditure and developing passenger self service processes. The main obstacle to improve IT structure and solutions is lack of investment caused by financial instability. In general, as a result airlines’ market seen of most potential to reduce costs as via own website in through adding additional products. Mobile based services most likely already implemented to passengers own mobile devices are most likely to be notifications of flight status and delays. SITA (2009) argue that around 5% in their sample respondents currently send BCBP to mobile phones (although three quarters do not offers this facility) with 13%anticipating checking in 2012 (with 18% not offering this facility). Eventually, services most likely to be implemented currently to support on board aircraft are to enable to exchange data and authorized credit card transactions in real time. Eventually, IATA’ Simplifying the Business (STB) passenger process’ project accomplished its e-ticket program on June 1, 2008. STB rebuilt the airline industry to 100% e-ticketing during four years. Finally, air transportation companies’ industry saved the US$3 billion, according to the association. The Economist (2010).

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