Survey Indicates Airline Industry Divided on Information Technology

SITA's annual airline IT (information technology) trends survey indicates that "pace-setting airlines" are embracing new IP (Internet protocol) and wireless-based technologies that enable new applications, such as e-ticketing and self-service kiosks, while "a significant minority of airlines are still lagging behind."

The survey's results show that:

• Over 25% of airlines don't expect to sell a majority of tickets over the Internet for five or more years.

• Only 68% of airlines expect to have more than half their ticket sales fulfilled as e-tickets by the end of 2007.

• At least 18% of airlines have no current plans to deploy self-service kiosks.

• Nearly 40% of airlines see implementation of bar-coded boarding passes more than three years away.

Peter Buecking, SITA Group's president, said, "Much of the disparity is regional.  Outside Europe and North America, Internet and wireless technology is [sic] less pervasive and what is available is less robust.  Inevitably this is slowing take-up rates at some airlines."

There are still airlines within both Europe and North America that are not keeping up with the technology leaders – partly because of financial conditions.  Results from the survey show that over 20% of airlines from these regions will not have the majority of their systems IP-enabled by the end of 2007 – more than a decade after its introduction to the airline industry.

Diverse Regional Markets

The survey's results also show regional differences in the way airlines are using technology to meet business objectives.  Airlines in North America have been "lack luster" in their uptake, while those in the "vibrant" Asia-Pacific region are making plans to deploy new inflight passenger communications services.  Europe is a mixed bag, with some leaders and some laggards, according to SITA.

Mr. Buecking said, "Even though it is a global industry, there are strong regional drivers at work influencing the priorities that airlines are assigning to IT investment.  In particular, there are very different economic conditions affecting airlines in North America and the Asia-Pacific markets, while European airlines are faced with fierce price competition."

Summary and Key Findings

The following is a summary of some of the survey's more important results:

Asia-Pacific Airline Findings

• Eighty-six percent sell some tickets online.

• One in ten of all tickets are sold online.  Of these, 70% are sold on the airline's own Website.

• Twenty-two percent of all tickets are electronic (e‑tickets)

• Thirty-six percent have deployed self‑service kiosks for passenger check‑in.

• Twenty-three percent use bar coded boarding passes.

• At least 73% expect to offer some form of inflight data connectivity by 2007.

• Forty-five percent plan to offer voice mobile telephony by 2007.

• Two percent of revenues will be spent on telecommunications and IT this year.

• Fifty percent have seen their 2005 IT budgets increase over 2004.

• Forty-six percent expect their IT budget to increase in 2006.

• Forty-six percent said short‑term projects with proven paybacks had the highest IT priority.

European Airline Findings

• Nearly one in four, of all tickets issued, is sold online, of which 85% are via the airline's own Website.

• Eighty-three percent sell some tickets online.

• Thirty-five percent of all tickets are fulfilled as e‑tickets.

• Fifty‑seven percent cited pricing complexity as a major business issue associated with online ticket sales, while 46% considered lack of interlining an issue.

• Thirty-one percent currently deploy dedicated kiosks, designed for check‑in to a single airline.

• Sixty percent will use common‑use kiosks by 2007.

• Only 17% currently use bar-coded boarding passes, compared to 67% of North American airlines.

• Forty‑six percent have completed the migration to IP (Internet protocol), and this rises to 57% when including those where a majority of the migration is completed, compared to 78% of North American carriers.

• Around 30% expect to be offering at least one of the airborne data connection options by the end of 2007.

• Twenty percent plan to offer voice mobile telephony by 2007.

• An average of 1.9% of revenues is currently spent on telecommunications and IT.

• Forty percent have seen their IT budgets increase over 2004.

• Twenty-nine percent expect their IT budget to increase in 2006.

• Fifty-four percent said short‑term projects with proven paybacks have their highest IT priority.  Customer service projects were ranked highest by only 20%.

North American Airline Findings

• Average investment by North American airlines in telecommunications and IT represents only 1.4% of revenues, compared to 1.9% in 2004 and much lower than the 2.0% and 1.9% spent by Asia‑Pacific and European airlines, respectively.

• None of the responding North American airlines plans to use RFID (radio frequency identification) technology soon, while 64% of Asia‑Pacific carriers expect to have deployed it within four years.

• Eighty-nine percent of CIOs (chief information officers) cited short‑term projects with proven payback as either their first or second priority for investments, while long‑term strategic projects were rated much lower.

• Sixty-three percent of tickets are sold through Web channels, far higher than the 24% and 10% of European and Asia‑Pacific airlines, respectively.  Fifty-five percent are sold on the airline's own Website.

• Eighty-five percent sell some tickets online.

• Fifty-six percent have deployed self‑service kiosks for check‑in.

• Sixty-seven percent use bar‑coded boarding passes.

• Eleven percent plan to offer voice mobile telephony by 2007.

• Fifty-six percent rated customer service or marketing advantage projects their highest IT priority.

• Forty-four percent ranked short‑term projects with proven payback their highest priority.

• Sixty-seven percent expect their IT budget to increase in 2006.

• Fifty-six percent have seen their IT budgets increase over 2004.

The "Airline IT Trends Survey" is commissioned annually by SITA and Airline Business magazine.  Responses were received from senior IT executives at the world's top 200 airlines, SITA says, together with key players in cargo, charter and regional markets.

Complete research results of survey are available for purchase on CD by contacting thomas.frank@sita.aero.  09-06-2005.