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  • 1. Virtual airlines, future of aviation - JOEA SCARIA ( Times of India) FOCUSING on IT solutions for travel, transportation and logistics domains for well over a decade has provided IBS Software Services a ringside view of the revolution happening in the skies, seas and the earth as people and cargo are constantly moved across oceans, continents and the skies. The company presently operates out of a dozen global locations with a team of 2,000 and has made five acquisitions so far. IBS, a product-led services company, also provides upstream logistics solutions to the largest oil and gas companies in the world and on-board property management solutions for luxury cruise liners.IBS chairman & CEO V K Mathews sees significant opportunities for solutions providers to turn the passenger and cargo movement businesses far more efficient. When V K Mathews settles into an airline seat, theres a lot more playing on his mind than what would catch the eye of an average traveller who may look for features like seating comfort or in- flight service quality. Having been in the travel business as a professional and entrepreneur for well over two decades, Mathews feels that landmark changes are yet to happen in the world of aviation. We are in a world that is defined by electronic decision-making, but the fact of the matter in aviation is that it all boils down to efficient movement of people and things from one place to another.What is most striking is that even in 2010,80% of the time cargo is waiting to be moved at some location and only 20% of the time it is actually moving.Its clear to see how much of an improvement in efficiency is yet to be achieved. What that means is extra cost, because cargo idling at some location adds to inventory holding cost, and what the situation should spur is a new dimension to capacity usage utilising the benefits of technology.It is quite clear that thought leadership is the key here. Our business is to redefine the business of our clients to help them achieve better efficiencies, and not mere code writing. In other words,as a product company, we play the role of a Michelangelo in contrast to the work of brick layers who put the ideas to a usable format. The IBS chief feels there has, for long, been a focus on the cost side,and that it ought to shift to the value side,enabling companies to tap more value than merely eking out savings through cost arbitrage. He winces at the present situation in which aircraft, which are million-dollar assets, idle frequently and are utilised suboptimally,all for want of adequate tech support for optimisation and rationalisation of their usage. In fact,the question should be whether an airline company should be handling all the components involved in passenger or cargo movement.The future will belong to virtual airlines,a concept in which about five major global entities would take up the business of flying aircraft in large numbers around the world and the airlines that we know of today will be able to use that capacity to run services under their individual brands. Mathews says there are compelling reasons to adopt this model.First,there will be economies of scale as the few companies that operate aircraft will fly massive numbers of planes as against multiple airlines flying far fewer numbers of aircraft today.Secondly,the virtual airline concept will help those in the business of operating branded travel services to operate without the massive fixed cost component of owning aircraft,and instead operate with variable costs.Thirdly,the aircraft-flying companies can better internationalise their costs,like using pilots from different parts of the world,as against the current practice where pilots are restricted in aircraft use linked to their companies. When an operator,whether an aircraftoperating entity or a branded travel service operator,can make their costs flexible,then the business is safe, says Mathews,who feels the challenge today for the travel and cargo industries is to stay relevant in an age of seamless electronic distribution. IBS presently has roughly 170 active customers,including the best airlines and airports in the world,and some of the Forbes 10 international oil majors.With such a premier clientele,we are
  • 2. investing even more on training our staff and being very selective on recruitment so that we continue to provide thought leadership in the industries we cater to.