Air Transport evolution by Luis S Francisco

By Luis S. Francisco Algarve University 24th March 2010 Air Transport Evolution and the new technologies, GDS's, Internet, eDistribution,… English version

Vice President, General Director, General Manager, Strategy Director, Executive Director, Director of Marketing & Sales Luis S. Francisco of Tour Operators and Travel Agencies GDS’s (Galileo e Amadeus) Airlines (Air Luxor, PGA-Portugália Airlines, Delta, Transbrasil, Japan Airlines, TAP) Czech Tourism, Algarve Tourism. 28 years of experience in tourism and aviation as:

By Luis S. Francisco Algarve University 24th March 2010 Air Transport Evolution and the new technologies , GDS's, Internet, eDistribution,…

Airlines Evolution
From…

and…

I’m a lucky guy!!! ... For being an active part in the "revolution" operated in the aviation industry and tourism in general. I started with dial phones, chips card, telex, billboards pionaises ... Evolved to dump PCs working in network (like TAPmatic) For the GDS (Galileo, Amadeus) Internet ... From aircraft with 100 to 250 seats to 600+ seats...

Reservations System

Some history

Talking abroad: the Telex

Telex… more modern

Did they use calculators?... Of course…

Documents to clients…

Computers appear… «uau, man…»

… but always evolving…

And how about DB’s?…

In 1992, the high-tech CRS Galileo claimed with pride that it’s database had a size of 10 football fields ... Today’s is just a room…

Mobiles appear… «thank God…»

The early days of Air Transport

Lack of airports, so…

First intercontinental airplanes

… vs. today’s airplanes

Prominent Organizations in the Airline Industry
IATA
International Air Traffic Association between 1919 and world war II
International Air Transport Association since 1945
IATA* has two functions
Trade Association (technical, legal, financial, traffic services and most agency matters) ;
Tariff Coordination (passenger fares and cargo rates, agents' commissions ) .
*IATA only controls International flights

SITA, OAG e ATPCO xtenho em UK
SITA - Societe Internationale des communications aeronautiques
Handles shared communication means, including network and devices (airlines, airports,…)
OAG - Official Airline Guide
Contains the airline schedule information, so for every flight essentially:
The departure and destination airports,
The departure and arrival times,
The flight number.
OAG maintains an airline schedules database, which holds flight details for 1.000 airlines and more than 3.000 airports
ATPCO - Airline Tariff Publishing Company
Is a fare distributing company.. worldwide.

Air tickets Issued manually, with many duplicates or coupons…

AGENCY IATA TICKET… Issuing dept needed…

AGENCY IATA TICKET (Qantas auth)

IATA-BSP Ticket

Boarding Pass

Boarding Pass Check

ATB Tickets

eTickets

eTickets ---» Ticket Less PNR / code only Online Check-in Home check-in Mobile Check-in Auto check-in at airport.

Travellers and tourists started to seek and obtain information about:
Products
Prices
Schedules
and to book online (travel agencies, hotels, hotel chains, airlines, ...).
IT’s in Tourism and Aviation

The 60’s:
Airlines begin development of computerized systems to manage information
American Airlines and IBM join forces to create a CRS - Computerized Reservation System - SABRE
Delta Air Lines launches DATAS (Delta Automated Travel Account System).
Historical development of IT’s in aviation

The 70’s:
With the liberalization of air traffic in the U.S., other airlines create their own CRS's
United Airlines creates APOLLO and TWA - PARS
CRS's used only for private use of each airline
CRS's placed in travel agencies in the U.S.

The 80’s:
Need to Globalize the offer (hotels, car rental, cruises, concerts, shows, trains, ...)
Appearance of GDS's
(Global Distribution Systems)

The 90’s:
Interconnection of networks around the world...
... the Internet
Airlines provide direct sales with Consumers.

Today:
There are no limits ...
... we may not even know where are we going to...
But we are sure we are going... fast!

What are GDS's:
Systems that connect all vendors worldwide with their distributors (travel agencies, tour operators, consolidators, charter operators, ...)
These become in its main users.
Global Distribution Systems

The integrated offering of GDS's:
Information
Reservations
Database of customers and suppliers
Issuing electronic tickets
Booking of additional services: hotels, car rental, cruises, concerts, trains, insurance, ...
Agendas
Trip Plans
Connection to multiple networks of airlines ... worldwide.

The main GDS's:
GALILEO
WORLDSPAN
AMADEUS
SABRE
ABACUS

United Airlines
British Airways
Swissair
KLM
US Airways
Alitalia
Galileo
Olympic
Air Canada
TAP
Austrian Airlines
Aer Lingus.
* no longer exists *

TWA
Delta Airlines
Northwest Airlines
Worldspan * * no longer exists

United Airlines
Lufthansa
Air France
Iberia
SAS
Amadeus
and few time after
Continental Airlines
Finnair.

All Nippon Airways
Cathay Pacific
China Airlines
EVA Airways
Garuda Indonesia
Dragonair
Abacus
Philippine Airlines
Malaysia Airlines
Royal Brunei
SilkAir
Singapore Airlines.

GALILEO
WORLDSPAN
AMADEUS
SABRE
ABACUS
GDS's progress to ... TRAVELPORT Operational and strategic partnership

Electronic Travel Market Suppliers Agencies Agencies Services Payment Consumer

Electronic Travel Market Suppliers Agencies Agencies Services Payment Communication Information Consumer

Flight booking
NN2YFAOLGW25FEBYSU3M/TP
After reply
P1.FRANCISCO/LUISMR P2.ALMEIDA/CLAUDIAMRS
PH.289000000
M.VEGETARIAN
T.123456789
F.CASH
...

Hotel booking
HOA25FEB-2NTLONDON/UI
Access to rack rates and corporate rates
HOA25FEB-2NTLONDON/UI @GBTA
Access to GEBTA special tariffs

Car booking
0CCRZINN1LIS 25FEB-28FEB EBMN
/ARR- 1000 /PUP- LIS /DO- LIS /DT- 1000
/RC- EQ /G- AV00000000000000 T ...
A simple booking to AVIS with special rates

Direct Sales Recasting the traditional channel of distribution AIRLINES CAR RENTAL HOTELS INTERNET CONSUMERS

Profound change in the market:
Airlines develop their own websites
Exceed GDSs
Establish connections to sell directly to consumers .
Direct Sales

Airlines force travel agencies to redefine their role and business model,
... going directly to their customers and dramatically reducing their commissions
This new situation forced GDS's to create web interfaces
... this led to major players on the Internet, such as Travelocity.
Direct Sales: conclusion

The new GDS’s… Internet based

Access to the final customer
Transmission of information as per customer profile
Easier and faster to make a sale
Flexibility in providing information
Via text, graphics, video, sound,…
On pages with total flexibility.
Advantages of the Internet vs. GDS's

Direct and selective marketing
New interfaces and attractive tools
Faster and effective processing
New forms of payment
Multimedia
Brand consistency
Always available 24 / 7 / 365
Opportunities the Internet provides

Huge cost savings
E-ticketing
E-brochures, e-flyers, e-information
Better communication
All this, both at a external and internal level ...
Opportunities the Internet provides

Internet: some figures!!
42% of all online purchases are travel related
Travel & Tourism market:
1999: $2.1 trillion
2010: $4.9 trillion
( Source : Satellite Accounting Research)
Online Travel Booking
1999: $6 billion
2002: $30 billion
2010: +$60 billion
( Source: PhoCusWright)

The Survival Strategies! With the Internet Consumer’s decision is more dispersed Appearance of Low Cost Carriers Democratization of air travel ... Airlines pushed to form alliances to ... survive!

Airline Industry Value Chain INBOUND LOGISTICS OPERATIONS OUTBOUND LOGISTICS MARKETING AND SALES SERVICE PROCUREMENT TECHNOLOGY DEVELOPMENT HUMAN RESOURCE MANAGEMENT AIRLINE INFRASTRUCTURE -Financial Policy - Accounting - Regulatory Compliance - Legal - Community Affairs Pilot Training Safety Training Agent Training In-flight Training Baggage Tracking System
Promotion
Advertising
Advantage
Program
Travel Agent
Programs
Group Sales
Ticket Counter
Operations
Gate Operations
Aircraft
Operations
On-board Service
Baggage Handling
Ticket Offices
Route Selection
Passenger Service
System
Yield Management
System (Pricing)
Fuel
Flight Scheduling
Crew Scheduling
Facilities Planning
Aircraft Acquisition
Information Technology Communications Product Development Market Research
Lost Baggage Service
Complaint Follow-up
Baggage System
Flight
Connections
Rental Car and
Hotel Reservation
System
Computer Reservation System, In-flight System Flight Scheduling System, Yield Management System Baggage Handling Training Flight, route and yield analyst training

Airline system Components Pricing And Revenue Management System Maintenance And Engineering System Flight Operation System Finance System (load factor) Crew Management System Central Reservation System Airport Management System Air Cargo System Business Processing System (check-in, luggage) Sales and Marketing System HR Management System CRM System (customer behavior)

Internet and its importance for airlines INTERNET EXTRANET INTRANET ACESS TYPE OPEN CONTROLED PRIVATE USED BY PUBLIC BUSINESS PARTNERS ORGANIZATION MEMBERS TYPE OF INFORMATION GENERAL SELECTIVE SHARE OWNER

The Survival Strategies! Alliances, Spin-offs and Cross-Holdings They are the largest and best strategy in terms of network expansion Global alliances covering different continents and different markets SkyTeam (11) Star Alliance (26) OneWorld (11)

The Survival Strategies! Alliances, Spin-offs and Cross-Holdings Partnerships include : sales and marketing, and operational code sharing schedule co-ordination joint sales offices ground handling and maintenance combination of frequent flyer programs...

The Survival Strategies! Alliances, Spin-offs and Cross-Holdings… the top airlines SkyTeam (11) Star Alliance (26) OneWorld (11)

Star Alliance

OneWorld

Sky Team

Low Cost vs “Healthy Quality” Carriers - « How was the trip to Moscow? » - « Everything went well but I'm completely exhausted » «... I'm completely exhausted » Here's a phrase that users of Long Haul airlines no longer say or feel, quite the contrary. While in EU, airlines follow a model of low-cost due to short flights of 2h to 2h30, the airlines flying out of Europe have opted for what I dubbed " Healthy Quality ".

The Survival Strategies! Important niche markets appear Quit well used by some airlines Going in the opposite direction of LCC .

Gulf and Far East Airlines such as Cathay Pacific, Singapore Airlines, Malaysia Airlines, Thai, Ethiad, Emirates and Qatar Airways Concern themselves more with the convenience and health of their passengers. Take the Emirates and Qatar Airways example.

Aim : the high quality standard (not the quantity). These companies have opted for Airbus, in particular, the series A330, A340 and A380, beside Boeing 777. Planes with enormous space, comfort and high technology ... ... luxury oriented for a healthy and sophisticated way to travel: Individual cabins with shower (1st class) spacious seats that transform into comfortable beds, bars, restaurants, gyms ...

Luxury in every detail, from the tissues used on the seats to the size and quality of individual LCD’s and huge list of films and programs. Special environment for transition zones Aircrafts with lights system that simulate the time at destiny.

Air Canada

Etihad

Air New Zealand

Etihad

Air France

Eurofly

Lufthansa

Emirates

Etihad

Thai Airways

Singap ore Airlines

Etihad

Ethiad

But not only in flight that there is the convenience and quality of these airlines. The airport lounges are authentic places of luxury and health. They are spaces that, just by itself, provide great relaxation and rest with spectacular surroundings as witnessed some of the photos from the terminal of Dubai Airport terminals / Lounges

Compared with low-cost terminals

Emirates offers a five-star lounge - "Emirates Terminal 3" - with individual spaces for their customers to relax and rest. The spaces are varied, to work, read, or even meditate …

Spaces inspired by Arab and Asian themes with water and plants that enhance the feeling of harmony and wellbeing. Lavish facilities, having SPA - Timeless Spa - with several therapists offering beauty treatments, massage therapies in a soothing and tranquil environment

Two Zen gardens are part of the unique design to create an oasis of calm within the bustling environment of an international airport.

The Qatar Airways Premium Terminal at Doha has jacuzzi, showers, rooms with 2 beds, various types of massages, meals, games, playstation and many others ... high quality and... Absolutely free!

Speaking of airports ...

Questions? please email me at: [email_address] Luis S. Francisco Senior Advisor in Tourism, Airlines, GDS's, Hotels, Tourism Boards, Country Branding; and Law Thanks!

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Air Transport evolution by Luis S Francisco

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