Airline recovery hinges on IT

Airline IT chiefs believe recovery of the airline industry will rely on investments in IT to help cut costs.

But slashed budgets, difficulties finding suitably skilled IT staff and a lack of board-level support for projects are major obstacles to achieving their aims, according to the fifth annual Airline IT Trends Survey 2003.

The survey, conducted by SITA, the data networking operator for the airline industry, with Airline Business magazine, found that IT investment increased slightly to 2.4 per cent of carriers' revenue in 2003.

But a decline in turnover meant that, in real terms, IT investment has actually fallen to around $10bn globally.

Three-quarters of chief information officers predict that budgets will stay the same next year. Half of airlines have deferred IT projects in the last year and five per cent have been forced to cancel planned roll-outs due to budget cuts.

Financial applications and customer relationship management projects topped the list of projects either cancelled or delayed. Implementations of sales and front-end systems and hardware upgrades have also been canned or postponed because of cutbacks.

"Any type of investment is very tightly scrutinised. Not surprisingly, most respondents say the objective of IT is to reduce costs of improved efficiencies," said Peter Buecking, SITA president.

The lion's share of IT spend is being channelled towards web-based applications - in particular e-ticketing, e-commerce and web-based procurement, with respondents claiming that electronic processes can save them seven per cent on traditional methods.

Airlines are also boosting their online sales capabilities, with over 70 per cent now selling tickets directly to customers over their own websites compared with just 41 per cent a year ago.

"In the early days using the web was all about reducing cost, but there's been a psychological change and now airlines want to try to get back in control of the sales process," said Kevin O'Toole, editor of Airline Business.