Airlines: Up Above the World so High

Globally, most traditionally airline companies have been heavy
users of IT, but our national carriers, Indian and Air India, (the merger is yet
to happen) had bucked the trend as long as they enjoyed monopoly of the skies.
It was opening up of the sector to private players like Jet Airways and Sahara
Airlines that sparked off the first phase of automation and even the
state-controlled airlines had to follow suit; however, it was the advent of
economy airlines like Air Deccan and SpiceJet that really saw the airline sector
embracing IT with utmost fervor. Vijay Mallya's high-profile entry into the
industry with Kingfisher Airlines gave IT adoption another massive boost across
Indian skies.

Tech at the Forefront

Unlike many other sectors, CXOs of airline companies are generally free from
the RoI fetish that dictate virtually every IT deployment today. The closer IT
is entwined with core business processes, the harder it is to calculate the RoI.
And with IT getting more strategic for airlines, the chances of being able to
pinpoint the RoI become more and more remote. The industry depends so heavily on
IT that RoI from every IT project cannot be questioned for a large number of
projects.

Perhaps the most significant contribution of IT in airlines, at least on the customer front, has been on e-ticketing

Perhaps the most significant contribution of IT in airlines, at
least on the customer front, has been on e-ticketing. While global airlines had
already started it, in India it was Air Deccan first, followed by SpiceJet, and
then all the biggies followed. While everyone wondered if the no-frills model
would really work, nearly four years after introduction it has proved to be a
tremendous success. In fact, the online ticketing sites of airline carriers have
become the biggest e-commerce success stories in India. The low-cost carriers
not only pioneered e-ticketing, they also ensured that all airlines realize the
importance of a robust Internet delivery system to support it.

The Web-based ticketing revenue model has helped pull down
costs. The process of issuing a physical ticket involves the need to procure the
ticket, storage, handling issues such as lost tickets, monthly monitoring,
reconciliation, and delivery. The costs associated are people costs, process
costs, and finally, the cost of time. What e-Ticketing does is take away all
these steps from the entire process of ticketing as the customer logs on to the
airline website, makes a booking online, and uses a printout of the booking
confirmation and a photo identity to get his boarding pass.

Global Distribution Services (GDS) is another important
component of the IT set-up of airline carriers. All traditional carriers host
their seating inventory on the database of GDS such as Galileo, Amadeus, Sabre,
Abacus, and Worldspan. Travel agents access this database to allocate tickets
and the GDS and then bills the airlines, a fixed price based on the sector
covered. What these low cost carriers did was to create their own airline
distribution system. While Air Deccan hosts its inventory in India developed by
InterGlobe Technology Quotient (ITQ), SpiceJet's inventory is hosted on
Navitaire, an Accenture-owned company, which is one of the most popular airline
inventories especially with low-cost carriers. While tradition carriers spend
16-18% of the expenses on distribution, the distribution cost of their low cost
counterparts is only 3-4%.

Rajneesh De

rajneeshd@cybermedia.co.in

With inputs from Stuti
Das