Tuesday 25 November 2014
 
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ANALYSIS

Francesco Violante

Airlines getting ‘smarter, more mobile and personal’

Dubai, June 24, 2013

Over the next three years, all airlines plan to invest in IT systems which will allow them to get to know their passengers better and deliver tailored services directly to them, a report said.

This year 100 per cent of airlines surveyed plan to invest in business intelligence (BI) solutions, which allow them to know more about their customers and have better information for decision making in their operations, according to the 15th annual SITA/Airline Business IT Trends Survey.

This is a huge jump from last year, when one in five airlines had no plans at all. By 2016, 97 per cent also plan investments in mobile passenger services and personalization. Together these will help boost sales via direct channels, from 54 per cent up to 67 per cent, and change how airlines deliver services to passengers.

At the launch of the 2013 Airline IT Trends Survey Results, Francesco Violante, SITA CEO, said: “All airlines are investing in business intelligence to improve their operations and boost revenues. We see a strong desire to increase revenues using techniques borrowed from the retail industry, including personalization.

“Nearly three quarters of airlines rate business intelligence for sales and marketing as a high priority. The airlines’ investment plans show the future of the industry is smarter, more mobile and more personal.”

The need for investment in business intelligence is evident, he added.

Only 9 per cent of airlines currently rate data quality as meeting all their requirements, while just 7 per cent have achieved the necessary integration of different data sources from across their company.

Violante added: “Sharing and integrating data is fundamental to successful business intelligence solutions. To make it work all parties across our industry need to collaborate. By sharing data and working together, we can maximize return on investment and deliver a better passenger experience, as well as improved financial performance.”

Over the last three years, offering mobile services to passengers has topped airlines’ investment list. It retains the number one place with 97 per cent of airlines now investing, or planning to invest, in this area in the coming three years.

By 2016, nine out of ten airlines plan to sell tickets via mobile phones. They expect to be rewarded with a leap in mobile sales to more than $70 billion by 2016, or 10 per cent of total sales, up from just below 3 per cent today, according to the survey.

By using this and other channels, airlines aim to reduce their dependence on indirect sales and open up the opportunity to maximize ancillary sales.  Mobile phones, kiosks and social media will represent nearly 14 per cent of ticket sales by 2016, while indirect sales through GDSs will reduce from 46 per cent to just 33 per cent of sales in the same time period.

Violante said: “Mobile’s dominant role is clear. Airlines continue to focus on services available via the airline website, such as flight search and check-in. But in an effort to differentiate passenger services a new battleground of mobile functionality is emerging. The result will be a much deeper integration of personalized mobile services at every step of the journey for passengers on the move.”

Check-in apps, for example, are already available from 61 per cent of airlines and flight search from 65 per cent, he said.

The focus for these airlines will now shift over the next three years to add new services, such as missing bag reporting (60 per cent of airlines), re-booking (63 per cent), and customer feedback (57 per cent).

Currently, 53 per cent of airlines provide mobile boarding passes through their own airline application and this is set to rise to over 80 per cent in 2016. Third-party travel wallets, such as the Apple Passbook, Samsung Wallet and Google Now, are also starting to feature.

Today, only 21 per cent of airlines provide boarding passes through other apps, but it will reach 62 per cent in three years, giving passengers more choice.

The main challenges airlines face when trying to implement mobile services are the pace of technology change, too many platforms and system integration. To keep up with all the changes, airlines may increasingly use APIs such as SITA’s Boarding Pass from developer.aero.

This year’s survey revealed that ancillary revenue is of growing importance. Direct sales channels, such as the airline website, currently drive these revenues. Despite the fact that indirect channels account for nearly half of ticket sales, airlines earn on average nine times more ancillary revenue through direct channels.

This looks set to continue, with 89 per cent of ancillary revenues expected through direct channels by 2016, an increase from 87 per cent today.

As well as boosting ancillary opportunities, direct sales save distribution costs. Over the next three years, nearly half of the airlines (49 per cent) plan major programs to upgrade their core passenger management systems as the shift to more direct sales across multiple channels continues.

The Airline IT Trends Survey is an independent poll of senior IT personnel working within the top 200 passenger carriers.

Airlines representing half of the global passenger traffic responded to this year's survey: 14 per cent of respondents are classified as low cost carriers, and 26 per cent are airlines carrying over 20 million passengers. – TradeArabia News Service




Tags: SITA | Survey | Airlines | Business Intelligence |

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