Airline IT Trends Survey 2013
Transcript of Airline IT Trends Survey 2013
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FOREWORD
The Airline IT Trends Survey, co-sponsored by Airline
Business and SITA shows an airline IT climate that is
cautiously improving. IT budgets are expected to improve at
the majority of airlines in 2013, while the global level of IT
operational spending should reach an estimated US$10 billion
in 2013.
Airline IT investment priorities continue to focus on mobilizingthe passenger journey, as they have done for the last three
years, but airlines are also showing a strong interest in
improving business intelligence to better understand their
operations and customers.
The overall impression from this years survey is one of an
industry that is fast adopting the digital world. This is bringing
many advantages in the form of automation and new services,
but also challenges in making sure these technologies can
be widely adopted so that passengers benefit at both ends of
their journey.
For the last 15 years we have been tracking the key technology
trends of airlines. More recently we have complemented
this research by publishing surveys on technology trends
in the wider air transport industr y, including airports and
passengers. Taken together, they provide a unique perspective
on the way technology is shaping the future of air travel.
For this we thank our survey respondents. We appreciate it is
only possible to provide such a comprehensive industry view
through their continuing support. We hope you will continue to
support our research in the years to come.
We welcome any feedback or comments on the survey.
For more information on all our surveys and accompanying
features and analysis, visit www.sita.aero/surveys.
For more information go to:
www.sita.aero/surveys
www.sita.aero/ittrendshub
Or search the App Store for SITA IT Trends Hub
Francesco ViolanteChief Executive Officer, SITA
Max Kingsley-JonesEditor, Airline Business
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CONTENTS
Investment in IT is edging up 6
Mobile and business intelligence are top investment priorities 7
Deeper integration of mobile services 8
Mobile services are transforming operations 9
Direct channels drive ancillary revenues 10
Airlines want deeper insights 12
Check-in landscape is evolving 13
Methodology 14
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At the global level, operational IT spending remained stable
in 2012 at 1.46% of revenues. On the back of higher industry
revenues it meant IT spending in absolute terms stayed at the
same level as 2011.
This year, airlines are expecting IT spending to pick up slightly
to 1.52% of revenues. This will translate into an increase
in absolute IT spending, should the anticipated growth of
industry revenues for 2013 be confirmed.
This optimism for increased IT spend looks set to continue
with the majority of airlines anticipating further budget
increases in absolute terms in 2014, while less than one in
five is expecting a tightening in IT spend.
INVESTMENT IN IT IS EDGING UP
58%EXPECT IT SPENDING TO INCREASE IN 2013
1.46% 1.52%
2012(ACTUAL)
2013(PLANNED)
Increase Same Decrease
2012 2013 2014
29%
53%
17%21%
58%
22%
23%
58%
19%
Operational IT and telecoms spend as apercentage of revenues
Change in available absolute IT spending
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MOBILE AND BUSINESS INTELLIGENCEARE TOP INVESTMENT PRIORITIES
Leveraging consumer mobile technology remains the hotspot
of IT investment. Offering mobile services to passengers has
topped the investment list for the last three years with almost
the entire industry now investing, or planning to invest, in
this area, of which 66% of airlines will make a significant
investment.
Another important area of IT investments this year is
business intelligence (BI). It was ranked fourth in last years
survey, when one in five airlines had no plans to invest. This
year, all airlines surveyed are showing interest, with nearly
two-thirds running a major investment programme.
A third area high on the investment agenda for airlines is
customer relationship solutions with 97% of airlines looking
at approaches such as personalization that build loyalty and
offer customized services to passengers. Almost all airlines
(92%) plan to monetize this investment through higher
ancillary revenues.
100%OF AIRLINES ARE MAKING BUSINESSINTELLIGENCE INVESTMENTS IN THE NEXT3 YEARS
Passenger servicesvia mobile device
Business Intelligence solutions
Customer relationshipmanagement e.g. personalisation
Expansion of ancillary services
Passenger services via social media
Wireless crew services in-flight
Wireless passenger services in-flight
Major program R&D/Pilot Program No plans
66% 32%
37%
3
3
8%
7%
29%
44%
44%
53%
36%
36%
39%61%
60%
49%49%
41%
35%
19%
Airline investments in IT over the next 3 years
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Airlines are making a big commitment to a mobile future for
passenger services 97% of airlines are investing in this
channel with the intention of mobilizing the entire journey.
The initial focus is on services already available via the airline
website, such as flight search and check-in. But this is giving
way to a new battleground of mobile functionality that offers
differentiated services to passengers on the move. The result
will be a much deeper integration of mobile services within
the passenger experience.
Check-in apps, for example, are already available from 61% of
airlines, while flight search is higher at 65% of airlines. The
focus for these airlines will now shift over the next three years
to add new services, such as missing bag reporting (61% of
airlines), re-booking (63%), and complaint handling (57%).
Mobile boarding passes
The replacement of magnetic strip boarding cards with the 2D
bar-coded version has been a major industry success story.The mobile variant is fast gaining momentum and looks set to
be the de facto boarding pass of the future.
However, the best method of storing and displaying the
mobile boarding pass on the passengers device is still being
debated within the industry.
Currently, 53% of airlines provide mobile boarding passes
through their own airline application and this will rise to over
80% in 2016, making it the dominant method in the short-term.
Third-party travel wallets, such as the Apple Passbook,
Samsung Wallet and Google Now, are also starting to feature.
Today, only 21% of airlines provide boarding passes throughother apps, but it will reach 62% in three years, giving
passengers the option to use their preferred method.
NFC has also been much talked about but it is still a work-
in-progress. A lack of standards, low global penetration of
enabled phones and the need to deploy new equipment at
airports is causing the majority of airlines (59%) to adopt a
wait-and-see approach.
DEEPER INTEGRATION OFMOBILE SERVICES
62%OF AIRLINES WILL INTEGRATE BOARDINGPASSES WITH 3RD PARTY WALLETS BY 2016
% Implemented
0 20 30 400
40
20
60
80
50 60
Missingbaggage
Rebooking
Onboard entertainment
NFC for boarding
Geo-location
Travel sales
Check-in
Flight search
Boarding
Flightnotification
Promotions
Baggagestatus
Customer complaints
%p
lannedby2016
Promotions
Niche Functionality
Established
Next Differentiator
Airline adoption of mobile services for passengers by 2016
Implemented by 2016Already implemented No plans
Airline App 3rdParty Wallet NFC Enabled
41%
3%
37%
38%
59%30%
53%
17%
21%
% of airlines offering mobile boarding passes
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MOBILE SERVICES ARETRANSFORMING OPERATIONS
This years survey reveals a rapidly growing adoption of
mobile solutions not just for passenger services, but also for
the airline workforce.
The initial focus is on improving productivity in the aircraft
by moving from paper to digital processes using tablets and
wireless connectivity. Over the next three years around eight
out of 10 airlines plan to provide flight crews with electronic
flight bags (EFBs) and automate cabin crew services.
Passengers should see the benefit in improved onboard
service. By using tablets in the cabin, staff can access the
airlines customer relationship data to tailor their service to
the individual, as well as capture and resolve issues.
A second wave of services using tablets for airline workforce
will focus on airport operations such as ground operations
and aircraft maintenance. Up to now they have been a lower
priority, with only a few airlines implementing tablets in these
areas but over the next three years that will jump to over 70%
of airlines.
75%+OF AIRLINES WILL DEPLOY CREW SERVICESON TABLETS BY 2016
% Implemented
0 10 20 30 400
50
100
50
Electronic flight bag
Cabin crew servicesCrew rostering/comms
Ground operations
Aircraft maintainance
Flight dispatch
Flight planning
Passenger transfer
Runners-Up
Next Wave
Mainstream by 2016
%I
mplemen
tatedby2016
Airline adoption of tablets for operations by 2016
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A recent analysis published by IdeaWorks showed ancillary
revenue can exceed 20% of total revenues for some airlines.
Ancillary services are now a much more important part of the
revenue mix. They not only offer airlines the potential to grow
revenue but also, importantly, the opportunity to dif ferentiate.
Results from this years Airline IT Trends survey show that
today the vast majority of ancillary revenues are earned
through direct sales channels, such as the airline website,
with the remainder through indirect channels. On average
airlines earn nine times more ancillary revenue through
direct channels than indirect, even though the indirect
channel accounts for nearly half of ticket sales.
A large part of the discrepancy is due to the lack of standards
and control over what is presented to the end customer, which
make ancillaries through indirect channels very challenging.
Recent new approaches may change this trend and enable
more transparency across all channels. However, for now
airlines see direct channels as by far the most significant
contributor to ancillary revenues, with 89% of non-ticketingsales expected through this channel by 2016, an increase
from 87% today.
DIRECT CHANNELS DRIVEANCILLARY REVENUES
Direct
Channel
89%
ry sales
14%OF SALES FROM MOBILE, KIOSK, ANDSOCIAL MEDIA BY 2016
Proportion of ancillary revenue for 2016 by channel
1 IdeaWorks press release dated 05 June 2013. Available at www.
ideaworkscompany.com/category/press-releases
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Using new sales channels saves distribution costs and
boosts ancillary opportunities
Airlines are aiming to use new direct sales channels to
strengthen their grip on ticket sales at the expense of indirect
channels. New channels via mobile phones, kiosks and social
media will represent nearly 14% of ticket sales by 2016, while
indirect sales through GDSs will reduce further in the same
time period.
Investment in mobile services is one of the main IT priorities
with nine out of ten airlines planning to sell tickets via mobile
phones by 2016. Airlines expect to be rewarded with a leap in
mobile sales, estimated to reach over $70 billion by 2016, or
10.3% of total sales, up from just below 3% today.
Sales through kiosks more than doubled over last year
as airlines enhance their capabilities beyond check-in.
Today kiosk sales accounts for over 1% of sales and survey
respondents expect this to double again by 2016.
Social media as an alternative sales channel remains behind
expectations with only 1.6% of ticket sales generated this
way despite 22% of airlines having invested in social media
embedded apps for ticketing. The volumes through social
media have not visibly increased from last year, indicating
non-sales activities, such as marketing and customer service,
offer the most beneficial use of this channel.
Mobile apps for ancillary sales to become mainstream
Airlines expect mobiles to contribute 9.9% of ancillary
revenue by 2016, more than seven times the figure of today.
But the ability of airlines to boost non-ticketing revenuesthrough mobile apps depends on multiple developments in
many airlines. Today, 58% of airlines can sell tickets through
a mobile app but only 30% of airlines can currently sell any
kind of ancillary service via this channel.
However, airlines are star ting to ramp up their mobile
capabilities. For example, only 12% of airlines today can
collect baggage fees through this channel, but by 2016 this
will have increased to 84%, while 90% of airlines will be able
to offer priority boarding, lounge access and seat booking.
US$70BOF SALES THROUGH MOBILE BY 2016
Already implemented Implemented by 2016
Established Emerging
Mainstreamadoption
Airline Services
e.g. Seats, Priority
Tickets Other travel
services e.g.
car hire, parking
95%90%
Baggage
Fee
84% 74%
Percentage of airlines with sales capabilities viamobile devices
2.0%
1.6%
10.3%
2012 2013 2016PLANNED
mobile
social
kiosk
Percentage of total sales through new channels
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This years survey shows business intelligence (BI) has moved
up the IT agenda. Airlines want to know more about their
customers and have better information for decision making in
their operations.
72% of airlines rate Sales and Marketing as the highest
priority area for BI investments, indicating a strong desire by
airlines to drive revenues higher using techniques borrowed
from the retail industry such as personalization, which
depends on having access to customer interactions.
Using BI for improving operational awareness is another
area getting serious attention. 88% of airlines rate it a high,
or moderately high, priority over the coming years. Having a
clearer picture of operations will allow airlines to optimize
performance across their route network and enable them to
proactively mitigate disruption.
Underlying BI systems is the need for timely and accurate
data. Achieving this remains a common issue across the
industry with only 9% of airlines rating data quality as meeting
all their requirements, while only 7% of airlines have achievedall the necessary integration of different data sources from
across their company.
AIRLINES WANT DEEPER INSIGHTS
72%OF AIRLINES RATE SALES AND MARKETINGAS THE HIGHEST PRIORITY AREA FORBUSINESS INTELLIGENCE INVESTMENTS
Areas of priority for business intelligence investments
Sales
& Marketing
Passenger
Experience
Operational
Awareness
1st 2nd 3rd
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While the majority of passengers still check-in with an agent
at the airport, self-service continues to become more popular
with passengers. However, the landscape for self-service
check-in is shifting as mobile phones become a serious
option for passengers and airlines explore the possibility of
eliminating the check-in process altogether.
Since 2009, the rate of growth of passengers using web
check-in, as well as kiosk check-in, has slowed. Today, mobile
represents only 3% of check-ins, but by 2016 it is expected
to climb five-fold to 15% and in doing so will have taken just
three years to exceed the number of passengers using kiosk
check-in today.
Airlines still see passenger demand for kiosk check-in, with
usage expected to increase to 18% of passengers by 2016
from 14% today.
Early adopters are focusing attention on alternative
approaches such as automatic check-in systems that can give
passengers a passive role in the check-in process with seats
allocated automatically based on pre-defined preferences.By 2016, 8% of passengers plan to use automatic check-in.
Kiosks will offer more options
The role of kiosks is evolving with airlines packing in
additional functionality to make them a far more versatile
tool. While check-in is the primary purpose, passengers can
now purchase a range of airline ser vices and complete a
number of tasks.
The priority today for most airlines is adding baggage
functionality to bring self-service to those passengers with
more than hand luggage. Almost eight out of 10 airlines will
offer bag tag printing in 2016, up from 29% today.
A quarter of airlines have kiosks that provide important
information, such as flight status and gate direction, and
nearly half of airlines expect to introduce this functionality in
the next three years.
As their functionalities broaden, kiosk will provide a greater
opportunity to upsell services by offering upgrades, priority
boarding, lounge access and enable passengers to add
additional baggage.
CHECKIN LANDSCAPE ISEVOLVING
8%OF PASSENGERS WILL USE AUTOMATICCHECKIN BY 2016
Proportion of passengers using check-in channel
Airline adoption of kiosk functionality by 2016
Runners-Up
Next Wave
Mainstream by 2016
% Implemented
%I
mplementatedby2016
0 10 20 300
50
100
Flight transfer
Rebooking services Ancillary service sales
Lost baggage reporting
Ticket sales
Info services kiosk
Bag tag printing
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ABOUT SITAS AIRLINE SURVEY
The Airline IT Trends Survey, co-sponsored by Airl ine
Business and SITA, is a well established as the global
benchmarking survey for the airline industry. The SITA
surveys (www.sita.aero/surveys) investigate emerging trends
and technologies that are set to transform the industry in
the years to come. Business Intelligence, Mobile Travel andPassenger Management are at the forefront of this change,
and tracking their evolution is an important element in this
survey. Many other emerging and established trends will be
tracked, and, as every year, we benchmarked the industry IT
spending in 2013 and beyond.
The survey was first produced in 1999, and was designed
to offer all air transport industry stakeholders the latest
facts, figures and trends related to technology adoption and
spending. Comparisons to previous surveys are made where
appropriate, although the respondent sample may vary
between years.
Questionnaires were sent to a senior IT executive in each of
the top 200 passenger carriers, including low cost operators,
together with carriers representing important players in
the regional and leisure sectors during spring this year. The
survey represents the views and insights of over half of the
top 100 carriers, providing a clear insight into IT strategic
thinking and developments for the industry. The response to
this survey is confidential, and the responses are received by
an independent research company. The data analysis is based
on the aggregated response of all airlines.
For more information go to:
www.sita.aero/surveys
www.sita.aero/ittrendshub
Or search the App Store for SITA IT Trends Hub
RESPONDENTS PROFILE
The respondents this year are passenger airlines including
low cost operators, together with carriers representing
important players in the regional and leisure sector. The
Survey is truly a global one, and we received a significant
response from major carriers in every geographical region.
METHODOLOGY
Total passengers carried by respondents
Split of respondents
500
1,000
1,500
2010 2011 2012 2013
Millions
Africa/Middle East
Asia-Pacific
Europe
Americas
23%
32%
30%
15%
Regions
10 19.9Million
5 9.9Million
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For further information,
please contact SITA by
telephone or e-mail:
Americas
+1 770 850 4500
Asia Pacific
+65 6545 3711
Europe
+41 22 747 6111
Middle East, India & Africa
+961 1 637300
SITA AT A GLANCE
The air transport industry is the most dynamicand exciting community on earth and SITA is its heart.
Our vision is to be the chosen technology partner of
the industry, a position we will attain through flawless
customer service and a unique portfolio of IT and
communications solutions that covers the industrys
every need 24/7.
We are the innovators of the industry. Our experts
and developers keep it fuelled with a constant stream
of ground-breaking products and solutions. We are
the ones who see the potential in the latest technology
and put it to work.
Our customers include airlines, airports, GDSs and
governments. We work with around 500 air transport
industry members and 2,800 customers in over 200
countries and territories.
We are open, energetic and committed. We work in
collaboration with our partners and customers to
ensure we are always delivering the most effective,
most efficient solutions.
We own and operate the worlds most extensive
communications network. Its the vital asset that
keeps the global air transport industry connected.
We are 100% owned by the air transport industry
a unique status that enables us to understand and
respond to its needs better than anyone.
Our annual IT surveys for airlines, airports and
passenger self-service are industry-renowned and
the only ones of their kind.
We sponsor .aero, the top-level internet domain
reserved exclusively for aviation.
In 2011, we had consolidated revenues of
US$1.517 billion (1.09 billion).
For further information, please visit www.sita.aero
SITA 2013All trademarks acknowledged. Specifications subject to change without prior notice. This literature provides outlineinformation only and (unless specifically agreed to the contrar y by SITA in writing) is not part of any order or contract
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