Harnessing the digital revolution

As digital technology evolves, the air transport industry is working to adopt and integrate the latest in IT and communications in an effort to drive out unnecessary costs, enhance the passenger experience, and improve operational efficiency.

“We are so interconnected … we need to work to common standards using new technology; we need to cooperate on the standards and compete like mad for the passenger and cargo at the other level.

“IT is changing the way the world works, again; it’s a game changer for all consumer and customer-focused industries like ours. You have to understand this stuff, and if you don’t, your competitors will and they’ll eat you for breakfast.”

Henry Harteveldt, vice president and principle analyst for Forrester Research, was named one of the 33 most influential people in the travel industry by Travel Weekly Magazine in 2007. According to his research, the U.S. is the only country right now where there are more people who say they fly for business purposes than leisure.

“We see in Europe what’s going on with some of the austerity measures, and I think this cannot be good for the travel and tourism industries,” remarks Harteveldt.

“We all have to be keenly aware of what this means if people have later retirement ages, potentially less holiday time, less disposable income, and so on. We really have to monitor this.”

What it means, he says, is “If you’re a carrier in a developed nation, you need to prepare for a shift in the passenger base. You will have to serve more leisure passengers who will be older than you are. They will want more circuitous shopping paths that allow them to shop by different things than simply origin and destination.

“They’ll need larger fonts or dynamically adjustable fonts on websites, larger buttons, and easier to use control fields; that also extends to kiosks and check-in boxes.”

Looking toward the future, Harteveldt says emerging markets over the next ten years should anticipate more first-time fliers and business passengers.

“There will be two distinct groups of passengers: those that are comfortable with technology, and those that aren’t,” he explains. “Anticipate the digital divide amongst your customers, and also anticipate potentially different forms of payment, and mobile emerging as the primary digital gateway.”

Total Integration

“I think technology has been seen for so long as sort of an add-on to this industry,” relates Dubai Airports CEO Paul Griffiths.

“But if you look around the planet now, and look at those industries that have really got it right ... and where is IT in their story? The answer is it’s right at the heart of those industries.”

IT is actually driving the new trends for the business, says Griffiths.

While IT plays an important role as airlines look for quick wins from IT and returns on IT spending, airports are taking a slightly longer term view, he says. “But my contention here is that if we continue to look at the components of the supply chain in isolation, we are never getting to solving the problem.

“If you look at the actual components, what we’re seeing here is that there are several very important components, which unfortunately today do actually exist in different silos. This is founded on the fact that the history of this industry is very much disjointed.

“We’re living in an era where there is restricted market access and limited opportunities to consolidate.”

The parts of the supply chain need to look at the whole value, comments Griffiths, and the risks and rewards should be far more aligned.

“This misalignment of cost and benefit across the entire supply chain, I think, lies at the heart of the solution. The reason is, if you look at the way the different areas of profitability actually have performed over the last decade, this story tells itself.

Since 2001, explains Griffiths, the airlines have lost $50 U.S. billion, while other supplies in the supply chain have recorded profits. “There’s no easy fix to this,” he relates, “but I really think that the role of supply technology needs to change, and it needs to become not a supply chain, but an integration chain, where the supply organizations act as partners and facilitators.”

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