Introducing Airline Information System By Siddhartha Tripathi Wednesday, May 27, 2009

Agenda Evolution of Airline Industry Classifying Airlines and Introducing IATA Airline Industry Value Chain Introducing Airline system Components Challenges facing Airline Industry IT trends in Airline Industry Developing IT Roadmap for Airline Most Urgent IT Improvements IDC Recommendations Using IT to Improve Operations:- Visiting few Airline Operations IT Enabled Airline Success Story Before we say “Thank You”

Evolution of Airline Industry

Classifying Airlines and Introducing IATA

Airline Industry Value Chain

Introducing Airline system Components

Challenges facing Airline Industry

IT trends in Airline Industry

Developing IT Roadmap for Airline

Most Urgent IT Improvements IDC Recommendations

Using IT to Improve Operations:- Visiting few Airline Operations

IT Enabled Airline Success Story

Before we say “Thank You”

Evolution of Airline Industry We have evolved from this … Contd..

We have evolved from this …

And this Contd..

To this Contd..

And Some Stats to think !! 28% of all online purchases are travel related Travel & Tourism market: 1999: $2.1 trillion 2010: $3.9 trillion ( Source : Satellite Accounting Research) Online Travel Booking 1999: $6 billion 2002: $30 billion ( Source: PhoCusWright) Contd..

28% of all online purchases are travel related

Travel & Tourism market:

1999: $2.1 trillion

2010: $3.9 trillion

( Source : Satellite Accounting Research)

Online Travel Booking

1999: $6 billion

2002: $30 billion

( Source: PhoCusWright)

US majors – internet sales And Some More Stats to think !! 20% American Airlines 22% United Airlines 22% Northwest Airlines 22% Continental Airlines 24% Delta Air Lines 24% US Airways 33% America West Airlines 36% Alaska Airlines % Flown Booked Online Carrier

Types of Airlines( US Classification) Acc. To US Federal Government Airlines categorized into Major A major airline is defined as an airline that generates more than $1-billion in revenue annually. There were 12 major airlines as of 2000 National Scheduled airlines with annual operating revenues between $100-million and $1-billion. Examples of national airlines include Aloha, Atlas Air, Airtran, Emery Worldwide, Evergreen, Hawaiian and Midwest Express. Regional Airlines service particular regions of the United States, filling the niche markets that the major and national airlines may overlook Large regional - These are scheduled carriers with $20-million to $100-million in annual revenue. They operate aircraft that can accommodate more than 60 passengers. Medium regional - These airlines operate on a smaller scale, with operating revenues of under $20-million, and often use only small aircraft. Small regional - These airlines don't have a set revenue definition, but are usually referred to as "commuter airlines." They use small aircraft with less than 61 seats. Contd..

Acc. To US Federal Government Airlines categorized into

Major

A major airline is defined as an airline that generates more than $1-billion in revenue annually.

There were 12 major airlines as of 2000

National

Scheduled airlines with annual operating revenues between $100-million and $1-billion.

Examples of national airlines include Aloha, Atlas Air, Airtran, Emery Worldwide, Evergreen, Hawaiian and Midwest Express.

Regional

Airlines service particular regions of the United States, filling the niche markets that the major and national airlines may overlook

Large regional - These are scheduled carriers with $20-million to $100-million in annual revenue. They operate aircraft that can accommodate more than 60 passengers.

Medium regional - These airlines operate on a smaller scale, with operating revenues of under $20-million, and often use only small aircraft.

Small regional - These airlines don't have a set revenue definition, but are usually referred to as "commuter airlines." They use small aircraft with less than 61 seats.

Prominent Organizations In Airline Industry IATA International Air Traffic Association between 1919 and WWII 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

IATA

International Air Traffic Association between 1919 and WWII

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).

Introducing SITA, OAG and ATPCO. SITA Societe Internationale des communications aeronautiques (SITA) handles shared communication means, including network and devices OAG Official Airline Guide Published by the homonymous company 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 1000 airlines and more than 3000 airports and is updated around ten times a second. ATPCO Airline Tariff Publishing Company ( ATPCO ) is a fare distributing company

SITA

Societe Internationale des communications aeronautiques (SITA) handles shared communication means, including network and devices

OAG

Official Airline Guide

Published by the homonymous company

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 1000 airlines and more than 3000 airports and is updated around ten times a second.

ATPCO

Airline Tariff Publishing Company ( ATPCO ) is a fare distributing company

Introducing GDS GDS:- Global Distribution System, 4 Major GDS System architectures are largely based on a mainframe TPF (Transaction Processing Facility) Sabre Created by American Airlines Amadeus Created by Air France Iberia Lufthansa SAS Galileo Created by Aer Lingus Air Canada Alitalia British Airways KLM Swissair TAP US Airways WORLDSPAN Created by Delta Northwest Trans World Airlines

GDS:- Global Distribution System, 4 Major GDS

System architectures are largely based on a mainframe TPF (Transaction Processing Facility)

Sabre

Created by

American Airlines

Amadeus

Created by

Air France

Iberia

Lufthansa

SAS

Galileo

Created by

Aer Lingus

Air Canada

Alitalia

British Airways

KLM

Swissair

TAP

US Airways

WORLDSPAN

Created by

Delta

Northwest

Trans World Airlines

Airline Industry Value Chain INBOUND LOGISTICS OPERATIONS OUTBOUND LOGISTICS MARKETING AND SALES SERVICE PROCUREMENT TECHNOLOGY DEVELOPMENT HUMAN RESOURCE MANAGEMENT FIRM INFRASTRUCTURE from C ompetitive Advantage: Creating and Sustaining Superior Performance , copyright 1985 by Michael E. Porter. -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 We Need Process and Efficient System, To derive value from Value Chain

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

Lost Baggage Service

Complaint Follow-up

Baggage System

Flight

Connections

Rental Car and

Hotel Reservation

System

Airline system Components Pricing And Revenue Management System Maintenance And Engineering System Flight Operation System Finance System Crew Management System Central Reservation System Airport Management System Air Cargo System Business Processing System Sales and Marketing System HR Management System CRM System Compliance and Network Security Inventory and Content Distribution Agile Business Process and Demand Mgmt. Emergency Response & Business Continuity

Airline system Components Central Reservation System Compliance and Network Security Inventory and Content Distribution Agile Business Process and Demand Mgmt. Emergency Response & Business Continuity System to book ticket on airline. Should at least provide for Internet booking:- Internet Booking System enables passengers, travel agents and corporate customers to search for flights and fares, and book airline seats on the internet. E Ticketing:-e-Ticketing replaces a conventional paper ticket with an electronic ticket. All booking and ticket details are stored in the airline’s computer system. Passenger is issued e-ticket receipt for security and immigration purposes. Booking through ATM and Kiosk Integration with Major Global Distribution’s Integration with call center for telephonic booking

System to book ticket on airline. Should at least provide for

Internet booking:- Internet Booking System enables passengers, travel agents and corporate customers to search for flights and fares, and book airline seats on the internet.

E Ticketing:-e-Ticketing replaces a conventional paper ticket with an electronic ticket. All booking and ticket details are stored in the airline’s computer system. Passenger is issued e-ticket receipt for security and immigration purposes.

Booking through ATM and Kiosk

Integration with Major Global Distribution’s

Integration with call center for telephonic booking

Airline system Components CRM System Compliance and Network Security Inventory and Content Distribution Agile Business Process and Demand Mgmt. Emergency Response & Business Continuity Remember 80/20 rule. 20% customer give 80% revenue. The CRM system should provide Prediction into customer buying behavior Identify frequently flying and high profile flyers Integrate to DW/BI system Forecast demand Identify customers for marketing campaign based on customer profile and past data Provide for customer feedback through various touch points ( SMS, PDA, Survey):- Involve Customer The crux is to identify behavior of customer/ prospect for better retention and service

Remember 80/20 rule. 20% customer give 80% revenue.

The CRM system should provide

Prediction into customer buying behavior

Identify frequently flying and high profile flyers

Integrate to DW/BI system

Forecast demand

Identify customers for marketing campaign based on customer profile and past data

Provide for customer feedback through various touch points ( SMS, PDA, Survey):- Involve Customer

The crux is to identify behavior of customer/ prospect for better retention and service

Airline system Components Pricing And Revenue Management System Compliance and Network Security Inventory and Content Distribution Agile Business Process and Demand Mgmt. Emergency Response & Business Continuity The use of Real-Time Dynamic Pricing Engine positions airlines to Adapt inventory controls to the very dynamic market conditions including influx of low-fare competition, alternate pricing models, and distribution channel differences. It allows integrated controls for selling over e-commerce channels along with traditional distribution channels and provides the infrastructure for customer-centric revenue optimization Revenue Management System Revenue Management System (RMS) enhances airline revenues by optimizing traffic and yield mix with the help of past data, current trends, and demand forecast for different flights, segments and fares.

The use of Real-Time Dynamic Pricing Engine positions airlines

to

Adapt inventory controls to the very dynamic market conditions including influx of low-fare competition, alternate pricing models, and distribution channel differences.

It allows integrated controls for selling over e-commerce channels along with traditional distribution channels and provides the infrastructure for customer-centric revenue optimization

Revenue Management System Revenue Management System (RMS) enhances airline revenues by optimizing traffic and yield mix with the help of past data, current trends, and demand forecast for different flights, segments and fares.

Airline system Components Finance System Compliance and Network Security Inventory and Content Distribution Agile Business Process and Demand Mgmt. Emergency Response & Business Continuity System to provide the easy/configurable view of how airline is performing. The system should at the minimum provide for Automating extracting data from revenue accounting and other sources Allow upload of manual data such as budget and target Should integrate with Forecasting and Procurement system Provide KPI as Load factor By period , sector, route, origin and destination By market-By point of sale/agent wise, product Allow user to create reports on demand Should integrate with DW, Audit controls

System to provide the easy/configurable view of how airline is performing. The system should at the minimum provide for

Automating extracting data from revenue accounting and other sources

Allow upload of manual data such as budget and target

Should integrate with Forecasting and Procurement system

Provide KPI as

Load factor

By period , sector, route, origin and destination

By market-By point of sale/agent wise, product

Allow user to create reports on demand

Should integrate with DW, Audit controls

Airline system Components Sales and Marketing System Compliance and Network Security Inventory and Content Distribution Agile Business Process and Demand Mgmt. Emergency Response & Business Continuity System to Manage sales and marketing. The system should at the minimum provide for Managing sales record and integration with Financial and revenue system Alerts based on defined competitors events Daily KPI monitoring Campaign management Target and actual achieved reporting by Reason Route, flight, slot and carrier type Configurable parameter Alerts integrated with CRM system

System to Manage sales and marketing. The system should at the minimum provide for

Managing sales record and integration with Financial and revenue system

Alerts based on defined competitors events

Daily KPI monitoring

Campaign management

Target and actual achieved reporting by

Reason

Route, flight, slot and carrier type

Configurable parameter

Alerts integrated with CRM system

Airline system Components Business Processing System Compliance and Network Security Inventory and Content Distribution Agile Business Process and Demand Mgmt. Emergency Response & Business Continuity The use of System to define new business scenario and processes including New fares in response to campaign . Security and baggage handling process Baggage tracking Procurement policy IT Material Easy to use reporting and data analysis Defining new distribution channel Check In process Catering and dining forecasting process The Crux is to use system to define process and track and improve the business process

The use of System to define new business scenario and processes including

New fares in response to campaign .

Security and baggage handling process

Baggage tracking

Procurement policy

IT

Material

Easy to use reporting and data analysis

Defining new distribution channel

Check In process

Catering and dining forecasting process

The Crux is to use system to define process and track and improve the business process

Airline system Components Maintenance And Engineering System Compliance and Network Security Inventory and Content Distribution Agile Business Process and Demand Mgmt. Emergency Response & Business Continuity System to Cover aircraft maintenance and engineering operation To ensures real-time, total control of the maintenance environment To optimizes daily operations and complement managerial decisions, resulting in significant cost savings and improvement in overall performance. Should integrate with with flight operation systems and different finance and human resource management applications.

System to Cover aircraft maintenance and engineering operation

To ensures real-time, total control of the maintenance environment

To optimizes daily operations and complement managerial decisions, resulting in significant cost savings and improvement in overall performance.

Should integrate with with flight operation systems and different finance and human resource management applications.

Airline system Components HR Management System Compliance and Network Security Inventory and Content Distribution Agile Business Process and Demand Mgmt. Emergency Response & Business Continuity System to manage Most Important Resource ( Employee) Managing employee lifecycle in organization including Recruitment requisition, Interview and reference check Employee Induction and training Leave Management Performance Management Security Checks Retention and Motivation scheme Productivity Improvement

System to manage Most Important Resource ( Employee)

Managing employee lifecycle in organization including

Recruitment requisition, Interview and reference check

Employee Induction and training

Leave Management

Performance Management

Security Checks

Retention and Motivation scheme

Productivity Improvement

Airline system Components Flight Operation System Compliance and Network Security Inventory and Content Distribution Agile Business Process and Demand Mgmt. Emergency Response & Business Continuity System to manage Flight daily operations from a compact interface and report operational results Movement Management Graph of Schedule with status Aircraft Availability Produce Delay Report Handle Incoming SITA, GDS message Update Schedule

System to manage Flight daily operations from a compact interface and report operational results

Movement Management

Graph of Schedule with status

Aircraft Availability

Produce Delay Report

Handle Incoming SITA, GDS message

Update Schedule

Airline system Components Air Cargo System Compliance and Network Security Inventory and Content Distribution Agile Business Process and Demand Mgmt. Emergency Response & Business Continuity System to provide Tracking and Managing Cargo. The system should at the minimum provide for Use of RFID tags to determine cargo location in Bay area Tracking Cargo till it reaches it’s end destination Suggesting bay area for cargo depending on other cargo in line Pricing based on weight/ Location and type Reporting capability and integration with procurement system

System to provide Tracking and Managing Cargo. The system should at the minimum provide for

Use of RFID tags to determine cargo location in Bay area

Tracking Cargo till it reaches it’s end destination

Suggesting bay area for cargo depending on other cargo in line

Pricing based on weight/ Location and type

Reporting capability and integration with procurement system

Airline system Components Crew Management System Compliance and Network Security Inventory and Content Distribution Agile Business Process and Demand Mgmt. Emergency Response & Business Continuity System to schedule crew staff. The system should at the minimum provide for Scheduling of cabin crew Compliance to labor laws Crew teaming alert ( to alert if 2 people on same flight/ team has tendency to fight) Crew hour logging The crux is to have a motivated and energized crew either on Board/ Front Desk or ground operations

System to schedule crew staff. The system should at the minimum provide for

Scheduling of cabin crew

Compliance to labor laws

Crew teaming alert ( to alert if 2 people on same flight/ team has tendency to fight)

Crew hour logging

The crux is to have a motivated and energized crew either on Board/ Front Desk or ground operations

Airline system Components Airport Management System Compliance and Network Security Inventory and Content Distribution Agile Business Process and Demand Mgmt. Emergency Response & Business Continuity System to make sure that compliance and integration with Airport scheduling system, security measures, circulars, are taken care of. Should integrate with airport scheduling system Should integrate with airport security system, for checking passenger Departure control system integration

System to make sure that compliance and integration with Airport scheduling system, security measures, circulars, are taken care of.

Should integrate with airport scheduling system

Should integrate with airport security system, for checking passenger

Departure control system integration

Challenges facing Airline Industry Key Challenges & Trends Growing Demand Limited Capacity Compliance Safety Innovation Market Liberalization Multi-modal Distribution` Rising Costs Maximize assets' utilization Key Goals Achieve demand-driven supply chain efficiencies and real-time visibility Attain ‘sense & respond' capabilities to improve customer experience

Challenges facing Airline Industry Attaining Sustained profitability Managing Customer demand of various touch point Turning inflexible operative chains into responsive and adaptive service networks Enabling new business models for long-term business transformation Smooth real-time synchronization of information both internally and across the value network not only to allow faster deployment of new strategic customer-facing services, but also to improve supply chain efficiencies — as a transition is taking place from a sequential supply chain mode of operation to a meshed workflow, where multiple supply networks must be automatically managed and synchronized in real-time. Economic and competitive pressure Yields / fares are falling Costs not falling proportionately (esp. fuel) Emergence of low cost carrier and distribution model GDS’s continue to increase charges Increased competition from LCCs and reinvigorated airlines IT costs associated with legacy hosting / reservation architecture are high Current systems do not provide modern interfaces that customers demand and employees expect Inflexible systems – hard to maintain / improve Transaction oriented systems do not easily support product-based or customer-centric views Systems were not built to meet current user demands – web sites, screen scrapers and more Legacy systems do not exploit low-cost, scaleable technology or modern web-based economics Need for Accurate real-time business performance management capabilities Need for Fully automated, paper-less, and process-oriented collaborative workflows that conform to the regulatory environment.

Attaining Sustained profitability

Managing Customer demand of various touch point

Turning inflexible operative chains into responsive and adaptive service networks

Enabling new business models for long-term business transformation

Smooth real-time synchronization of information both internally and across the value network

not only to allow faster deployment of new strategic customer-facing services,

but also to improve supply chain efficiencies — as a transition is taking place from a sequential supply chain mode of operation to a meshed workflow,

where multiple supply networks must be automatically managed and synchronized in real-time.

Economic and competitive pressure

Yields / fares are falling

Costs not falling proportionately (esp. fuel)

Emergence of low cost carrier and distribution model

GDS’s continue to increase charges

Increased competition from LCCs and reinvigorated airlines

IT costs associated with legacy hosting / reservation architecture are high

Current systems do not provide modern interfaces that customers demand and employees expect

Inflexible systems – hard to maintain / improve

Transaction oriented systems do not easily support product-based or customer-centric views

Systems were not built to meet current user demands – web sites, screen scrapers and more

Legacy systems do not exploit low-cost, scaleable technology or modern web-based economics

Need for Accurate real-time business performance management capabilities

Need for Fully automated, paper-less, and process-oriented collaborative workflows

that conform to the regulatory environment.

Challenges facing Airline Industry Empowering employees to be more productive Demand for any time access to business application through secured layers How to accelerate competitive advantage and differentiate airline through improved employee, aircraft and alliance leveraging? Compliance with Industry standards Automating customer touch points with transformational technologies, such as e-ticketing and self-service kiosks, remains the focal point for investment. Decreased customer loyality Tracking customer luggage/ cargo by use of RFID Need for same day revenue reporting Integration with ever emerging payment mode and Desired security from Internet fraudulent transaction Merger and acquisition Entering the wireless arena

Empowering employees to be more productive

Demand for any time access to business application through secured layers

How to accelerate competitive advantage and differentiate airline through improved employee, aircraft and alliance leveraging?

Compliance with Industry standards

Automating customer touch points with transformational technologies, such as e-ticketing and self-service kiosks, remains the focal point for investment.

Decreased customer loyality

Tracking customer luggage/ cargo by use of RFID

Need for same day revenue reporting

Integration with ever emerging payment mode and Desired security from Internet fraudulent transaction

Merger and acquisition

Entering the wireless arena

IT trends in Airline Industry

IT trends in Airline Industry

IT trends in Airline Industry

IT trends in Airline Industry

IT trends in Airline Industry

IT trends in Airline Industry Some Finding From SITA & Airline Business Survey No. Of Participating airlines:- 100 Region:- Asia Pacific Asia-Pacific airlines spend an average of 2.0% of revenues on telecommunications and IT 50% of airlines have seen their IT budgets increase over 2004 46% of airlines expect their IT budget to increase in 2006 Short-term projects with proven paybacks were rated the highest IT priority by the most airlines – 46% At least 73% of airlines expect to offer some form of inflight data connectivity by 2007 45% of airlines plan to offer voice mobile telephony by 2007 36% of airlines have deployed self-service kiosks for check-in 23% of airlines use bar coded boarding passes 86% of airlines sell some tickets online 9.7%, or 1 in ten, of all tickets are sold online. Of these, 70% are sold on the airline’s own website 22% of all tickets are fulfilled as e-tickets

Some Finding From SITA & Airline Business Survey

No. Of Participating airlines:- 100

Region:- Asia Pacific

Asia-Pacific airlines spend an average of 2.0% of revenues on telecommunications and IT

50% of airlines have seen their IT budgets increase

over 2004

46% of airlines expect their IT budget to increase in 2006

Short-term projects with proven paybacks were rated the highest IT priority by the most airlines – 46%

At least 73% of airlines expect to offer some form of inflight data connectivity by 2007 45% of airlines plan to offer voice mobile telephony by 2007

36% of airlines have deployed self-service kiosks for check-in

23% of airlines use bar coded boarding passes

86% of airlines sell some tickets online

9.7%, or 1 in ten, of all tickets are sold online. Of these, 70% are sold on the airline’s own website 22% of all tickets are fulfilled as e-tickets

IT trends in Airline Industry Some Finding From SITA & Airline Business Survey No. Of Participating airlines:- 100 Region:- Europe European airlines spend an average of 1.9% of revenueson telecommunications and IT 40% of airlines have seen their IT budgets increase over 2004 29% of airlines expect their IT budget to increase in 2006 Short-term projects with proven paybacks were rated the highest IT priority by the most airlines – 54%. Customer service projects were ranked highest by only 20% At least 31% of airlines expect to offer some form of inflight data connectivity by 2007 31% of airlines have deployed self-service kiosks for check-in 17% of airlines currently use bar coded boarding passes 83% of airlines sell some tickets online 24%, or nearly 1 in four, of all tickets are sold online Of these, 85% are sold on the airline’s own website 35% of all tickets are fulfilled as e-tickets 20% of airlines plan to offer voice mobile telephony by 2007

Some Finding From SITA & Airline Business Survey

No. Of Participating airlines:- 100

Region:- Europe

European airlines spend an average of 1.9% of revenueson telecommunications and IT

40% of airlines have seen their IT budgets increase over 2004

29% of airlines expect their IT budget to increase in 2006

Short-term projects with proven paybacks were rated the highest IT priority by the most airlines – 54%. Customer service projects were ranked highest by only 20%

At least 31% of airlines expect to offer some form of inflight data connectivity by 2007

31% of airlines have deployed self-service kiosks for check-in

17% of airlines currently use bar coded boarding passes

83% of airlines sell some tickets online

24%, or nearly 1 in four, of all tickets are sold online Of these, 85% are sold on the airline’s own website

35% of all tickets are fulfilled as e-tickets

20% of airlines plan to offer voice mobile telephony by 2007

IT trends in Airline Industry Some Finding From SITA & Airline Business Survey No. Of Participating airlines:- 100 Region:- North America North American airlines spend an average of 1.4% of revenues on telecommunications and IT 63%, or more than 3 in every five, of all tickets are sold online. Of these, 55% are sold on the airline’s own website Customer service or marketing advantage projects were rated the highest IT priority by the most airlines – 56%. Short-term projects with proven payback were ranked highest by 44% At least 11% of airlines expect to offer some form of inflight data connectivity by 2007 11% of airlines plan to offer voice mobile telephony by 2007 56% of airlines have deployed self-service kiosks for check-in 67% of airlines currently use bar coded boarding passes 85% of airlines sell some tickets online 67% of airlines expect their IT budget to increase in 2006 56% of airlines have seen their IT budgets increase over 2004

Some Finding From SITA & Airline Business Survey

No. Of Participating airlines:- 100

Region:- North America

North American airlines spend an average of 1.4% of revenues on telecommunications and IT

63%, or more than 3 in every five, of all tickets are sold online. Of these, 55% are sold on the airline’s own website Customer service or marketing advantage projects were rated the highest IT priority by the most airlines – 56%. Short-term projects with proven payback were ranked highest by 44%

At least 11% of airlines expect to offer some form of inflight data connectivity by 2007

11% of airlines plan to offer voice mobile telephony by 2007

56% of airlines have deployed self-service kiosks for check-in

67% of airlines currently use bar coded boarding passes

85% of airlines sell some tickets online

67% of airlines expect their IT budget to increase in 2006

56% of airlines have seen their IT budgets increase over 2004

Business Transformation to Support Innovation Source: IDC European Vertical Market LOB Survey, October 2006 – N. of respondents: 18 Top Business Initiatives in the CEO Agenda Airlines, Railways, Public Transport (Ranked in order of Importance) Customer Service enhancement Supply chain efficiency improvement IT organization responsiveness and efficiency improvement Regulatory Compliance Efficient Sourcing & Procurement Mobile Workforce Growing demand, limited capacity & profit pressure are requiring new dynamic & responsive IT systems Continuous Demand-Driven Innovation

Customer Service enhancement

Supply chain efficiency improvement

IT organization responsiveness and efficiency improvement

Regulatory Compliance

Efficient Sourcing & Procurement

Mobile Workforce

Growing demand, limited capacity & profit pressure are requiring new dynamic & responsive IT systems

IT trends in Airline Industry Summary The writing on wall is clear. More and more companies are planning to spend on IT in areas of IP enabling Outsourcing for advantage E-ticketing Migration of legacy RFID solutions VOIP Call Center Data and Voice connectivity Infrastructure upgrade Airlines are Looking to Outsource and adopt/ develop customer centric best of breed solution

Summary

The writing on wall is clear. More and more companies are planning to spend on IT in areas of

IP enabling

Outsourcing for advantage

E-ticketing

Migration of legacy

RFID solutions

VOIP

Call Center

Data and Voice connectivity

Infrastructure upgrade

Developing IT Roadmap for Airline Airline Website Launch Study Of Airline IT System Evaluating IT readiness Understanding Long Term Plan Building Framework For Internal Portal Deciding IT Infrastructure Launching Basic Intranet Portal Launching Basic FFP/CLP Pain Point Prioritization & Application Launch Schedule Time Frame 0- 1 Year

Developing IT Roadmap for Airline Time Frame 1- 3 Year Inventory Application Revenue Management Application Crew/ Aircraft Scheduling Application Other Back end Application Integrated Back End System Cargo Management System Airline maintenance System Central Database Dynamic Packaging Introducing Online FFP/CLP Transitioning Website Into Shopping Portal Web Check in, SMS check in Application Integrated Backend System` Introducing E-ticketing/ Web Booking Customer Focused Application Introducing Wireless Network System

Developing IT Roadmap for Airline Planning IT system for Empowered Airline Time Frame 3+ Year Data Warehouse &BI Central Database Demand Forecasting System Alert Systems Integrated Back End System CRM System Wireless Network (Wi-Fi) Internet Network Mobile Network Front Office/Cal Center Robust Delivery Network

ROI-IT Empowered Enterprise Do you Know? Delta Airlines uses special RFID technologies to monitor the performance of aircraft engines to compare latest data with historical data to anticipate potential problems. Maintenance costs have been reduced by half . Move toward ticket less travel Faster sales closure, lesser load on call center Use of RFIP for better cargo tracking Revenue Management system, improves identifies yield improvement areas. More Profitability Better scheduling and lesser flight delays Improved customer retention Reduced time in booking and size of queue Flight schedule change sent to customer:- happy customer Revenue through shopping at Airline Portal Better fare management and Dynamic packaging of inventory 1-3 year Reduced Distribution cost Increased distribution channel Increased customer delight Improved top-line Better informed employee Reduced Employee Administration cost Profile based application access through Portal 0-1 Year Benefit Time Period

Move toward ticket less travel

Faster sales closure, lesser load on call center

Use of RFIP for better cargo tracking

Revenue Management system, improves identifies yield improvement areas. More Profitability

Better scheduling and lesser flight delays

Improved customer retention

Reduced time in booking and size of queue

Flight schedule change sent to customer:- happy customer

Revenue through shopping at Airline Portal

Better fare management and Dynamic packaging of inventory

Reduced Distribution cost

Increased distribution channel

Increased customer delight

Improved top-line

Better informed employee

Reduced Employee Administration cost

Profile based application access through Portal

ROI-IT Empowered Enterprise Event driven responsive organization with focus on customer Integrated and loosely coupled system for business agility Customer retention and partition Improved customer buying behavior forecasting Mobile work force, improved productivity Airline portal starts to suggest customer on flight and promotion based on his/her past behavior Web 2.0, greater involvement and social networking, more clout to airline Ticket less airline Improvement exception management in Airline Operation and supply chain, through alert systems Stabilized, yet flexible IT environment for growth Overall, company will witness improved Top line, growth and customer satisfaction, with each successful IT initiative. 3+ Year Benefit Time Period

Event driven responsive organization with focus on customer

Integrated and loosely coupled system for business agility

Customer retention and partition

Improved customer buying behavior forecasting

Mobile work force, improved productivity

Airline portal starts to suggest customer on flight and promotion based on his/her past behavior

Web 2.0, greater involvement and social networking, more clout to airline

Ticket less airline

Improvement exception management in Airline Operation and supply chain, through alert systems

Stabilized, yet flexible IT environment for growth

Overall, company will witness improved Top line, growth and customer satisfaction, with each successful IT initiative.

Most Urgent IT Improvements IDC Recommendations Remove Legacy Silos-based platforms Improve Networks Improve Mobile Workers Efficiencies Improve Security & Safety SOA IP, Optical Wireless Networks IT Security, Sensor Networks, Surveillance Advanced Demand Mgmt. Advanced Planning, Scheduling

Airline Networks Need to Rely on Advanced Communication Networks Key Goals: Real-time monitoring of mobile assets and cargo Increased operational accuracy Higher transport efficiencies VoIP, IP-based video surveillance to improve safety while reducing communication costs Enabling flexible deployments of new workforce applications and customer services Optimized Mobile Workforce efficiencies are instrumental to enhance mobile assets utilization & improve the customer service Internet Back-end Wireless Devices Wireless Network backbone Sensor Networks RFID Biometrics Explosive detection Etc…

Key Goals:

Real-time monitoring of mobile assets and cargo

Increased operational accuracy

Higher transport efficiencies

VoIP, IP-based video surveillance to improve safety while reducing communication costs

Enabling flexible deployments of new workforce applications and customer services

Sensor Networks

RFID

Biometrics

Explosive detection

Etc…

Intelligent continuous schedule light schedule and resources allocation can be optimized up to hours before actual operation Using IT to Improve Operations Weather forecast Ground-Delay Air-Delay Other Factor Flight schedule Fleet assignment Crew planning Proactively System Can Re-schedule Activities Based on Expected situtaion Flight Delay reduced/ Avoided Happy Customer

Intelligent continuous schedule

light schedule and resources allocation can be optimized up to hours before actual operation

Dynamic management : Intelligent queuing Passenger information is available to airline (amount of luggage, nationality, number of children, visa status etc separate passenger into fast/medium/slow based on their demand service rate Using IT to Improve Operations Server (check in- Counter) Fast Medium Slow Server (check in- counter) queue Queue Slow Queue Before Using Intelligent System to Bifurcate Passenger After Using Intelligent System

Dynamic management : Intelligent queuing

Passenger information is available to airline (amount of luggage, nationality, number of children, visa status etc

separate passenger into fast/medium/slow based on their demand service rate

JetBlue: A Success Story Gained competitive advantage where others failed Proper technology and management methods Reducing costs resulting in reduced pricing Improving service Massive Automation Automation of services with software Combination reservation system and accounting system Supports customer services and sales tracking Electronic tickets No paper handling or expense Encourages online ticket purchases Avoids travel agents Significant savings in cost Maintenance information system Logs all airplane parts and time cycles Reduces manual tracking costs Flight planning software Maximize seats occupied on a flight Reduced planning costs

Gained competitive advantage where others failed

Proper technology and management methods

Reducing costs resulting in reduced pricing

Improving service

Massive Automation

Automation of services with software

Combination reservation system and accounting system

Supports customer services and sales tracking

Electronic tickets

No paper handling or expense

Encourages online ticket purchases

Avoids travel agents

Significant savings in cost

Maintenance information system

Logs all airplane parts and time cycles

Reduces manual tracking costs

Flight planning software

Maximize seats occupied on a flight

Reduced planning costs

Massive Automation In-house software for tracking operational data Updated on a flight by flight basis Accessible by airline’s 2,800 employees Managers are able to respond immediately to problems Wireless devices for employees Report and respond to irregular events Quick response Events recorded for future analysis Training records stored electronically Easy to update Efficient retrieval Away from Tradition Decision to not use the hub and spoke routing method Paperless Cockpits Laptops for Pilots Harnessing IT to maintain a strategic gap JetBlue: A Success Story (Cont.)

Massive Automation

In-house software for tracking operational data

Updated on a flight by flight basis

Accessible by airline’s 2,800 employees

Managers are able to respond immediately to problems

Wireless devices for employees

Report and respond to irregular events

Quick response

Events recorded for future analysis

Training records stored electronically

Easy to update

Efficient retrieval

Away from Tradition

Decision to not use the hub and spoke routing method

Paperless Cockpits

Laptops for Pilots

Harnessing IT to maintain a strategic gap

See What E-Distribution can do Continental Airlines' Web Site Generates Record Sales ; Hitting $2 Billion Annual Rate HOUSTON, Aug. 11 -- Continental Airlines today announced that its continental.com web site is generating record sales volume for the airline, recently setting a single-day sales record and achieving record sales volume of $2 billion for the most recent 12-month period, ending July 31. “ We’ve made a significant investment in our web site’s features and functionality to make it a full-service travel site,” said Jim Compton, executive vice president-marketing. “Seeing this dramatic growth in the site’s usage is rewarding because this is such an efficient method for ticket sales.” On one day in July, continental.com racked up $8.5 million in sales , setting an all-time single-day record . This record volume is equal to 34% of the worldwide passenger sales volume that Continental achieves from all sources in an average day. Continental Airlines Press Release, Aug 11 2005

Innovation in Technology key to sustained profitability for airlines Identifying, improving and Integrating business process using IT can create a true “Dynamic Business Platform” to fuel the growth of Airlines Airlines will continue to outsource non-critical operation for improve profitability GDS may come under threat from GNE Increasing distribution channel for ticket delivery, improved customer experience, customer involvement is the key to success in Airline Business Bigger Airlines are more at threat because of changing environment, then newly emerged LCC’s. Airlines will Use RFID, Wireless network, hand held devices, Intelligent systems to maintain service differentiation and gain customer loyalty. Airlines are in a stage where they are evolving from transaction centric enterprises to customer focused enterprise. Collaborative application, bio-metric sensors and workflow automation tools will continue to gain more acceptance with Airlines. Few Thoughts before Inviting Question

Innovation in Technology key to sustained profitability for airlines

Identifying, improving and Integrating business process using IT can create a true “Dynamic Business Platform” to fuel the growth of Airlines

Airlines will continue to outsource non-critical operation for improve profitability

GDS may come under threat from GNE

Increasing distribution channel for ticket delivery, improved customer experience, customer involvement is the key to success in Airline Business

Bigger Airlines are more at threat because of changing environment, then newly emerged LCC’s.

Airlines will Use RFID, Wireless network, hand held devices, Intelligent systems to maintain service differentiation and gain customer loyalty.

Airlines are in a stage where they are evolving from transaction centric enterprises to customer focused enterprise.

Collaborative application, bio-metric sensors and workflow automation tools will continue to gain more acceptance with Airlines.

Thank You! Questions? Please email me at: [email_address] Siddhartha Tripathi Manager Marketing BSIL www.bsil.com