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Airline IT Trends Survey 2012 launched at the IT summit; includes a short video discussing the results.

Airline IT Trends Survey 2012 launched at the IT summit; includes a short video discussing the results.

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  • We should recognize up front that the 2012 survey was conducted between February and April 2012, on the back of a reasonable year in terms of airline profitability, despite difficult conditions.Now in June we see more pessimism. World GDP growth is dropping towards 2% , oil prices have remained stubbornly high… and now threaten to rise further, and the euro zone crisis may have a global impact on the climate for air travel… So whilst I present the results here as collected, we could experience a different reality in IT spend as pressures on profitability mount across the Industry once again.
  • CHECK IATA forecast JUNE.....revenue...outlook etc. (see press release KI)Operational IT Spend is stable at 1.65% of revenue; Outlook for 2013 is cautious. Global economic pressures are evident in the airlines spending outlook for 2012 and beyond. We compare here the ACTUAL spend in 2011, compared to the PLANNED spend for 2012. It is important to note that the ACTUAL spend in 2011 turned out to be lower than the PLANNED SPEND reported in the 2011 survey. This was despite a positive year for the Airline Industry in respect of profitability performance. Now that we are facing the prospect of low global growth, potential seismic tremors from the eurozone, and yet higher spikes in oil prices, we can perhaps expect that this planned spend is optimisitic. Let’s hope not.
  • For 2012, the survey shows continued, but cautious, optimism, with stable operational IT&T spend (as % of revenue) compared to last year. The airlines outlook for 2013 is more guarded, taking into account a significant economic downside risk. Only half of the airlines are still expecting the absolute IT spending to rise, however, their expectations’ for spending increases – in absolute terms - have declined over the last three years.
  • IT Investment drivers remain unchanged; while mobile services for passengers tops the investment priorities yet again.  The airlines top 3 investment priorities remain unchanged in 2012. The airlines’ focus continues to be investments that “improve customer service” and “support revenue opportunities”. “Reducing cost of business operations” is also still a top priority, recognising the value of technology to improve operational efficiency. Not surprisingly, For a second consecutive year, mobile services for passengers top the list of investment programs for airlines, with 6 out of 10 airlines planning for major investments in the next 3 years. Upgrades to airline core passenger management and customer relationship systems also draw significant investment in the same time period. Passenger services via Social Network begin to feature on the agenda this year, with almost 60% of airlines making R&D investments.
  • GRABBER!!!This survey is a showing the ambition o airlines to introduce certain technology within a certain time, as we have seen again and again over the years the plans might not have happened as quickly as it was originally expected.So we projections give in the following are an indication of then ambition, showing a trend towards adoption or maybe reduced usage of technology.
  • The key
  • We asked Airlines to say which channels they see as one of the top two channels beyond 2012 …
  • Key points: Airlines believe that in the near future, websites and mobile phones will be the dominant communication channels with passengers. For customer service, the majority of airlines believe that the smart phone will be the channel of choice for customer service communication (91% smart phone vs. 60% websites) 31% believe that Social media will eventually become one of the dominant channels to interact with passengers For passenger processing, smart phone and websites are equally important channels. Only 4 out of 10 airlines believe that the Kiosk will still be one of two dominate channels for passenger processing, much less than the 71% who believe that websites & mobile phones will take over this role in the future. For Sales, Websites are remain one of the key channels. While mobile will join websites to have almost equal weight. Kiosks play a less dominate role here. So what about kiosk, is mobile set (and websites) set to take over? Is the kiosk, who, today, is the main self-service channel in terms of adoption as well as passenger usage. Lets take a look!
  • Good afternoon everybody. Let me get straight into the first of the four topics we will cover. For each we will provide 8 to 12 minutes of insight to the survey results before handing back to Arthur for discussion.Like many aspects of the airlines business, Airline sales channel strategies are continually evolving. In recent times, there has been much coverage on the indirect channel, including the channel to travel agents using direct connect. Today I would like to focus on the direct sales channel, where airlines are selling direct to the passenger. There are two compelling trends taking place: one concerning the move to a more complex multi-channel strategy got Direct Sales; the other on the airlines’ commitment to personalise offers to their customersClearly dominated in recent years by web-technology developments, we are now entering a new era, where new channels can change the game.As we saw on the last slide, beyond 2015 airlines believe Mobile apps will stand almost shoulder to shoulder with the website for dominance of the direct sales channel, with social media becoming a challenger too..
  • ABSOLUTE % FRO WEB AND GDS…. Selling via airline websites has driven direct distribution and has been adopted rapidly since the early 2000’sAirlines continue to expand ticket distribution through direct channels, with sales through airline websites set to grow by 35% in the next 3 yearsButthe direct sales channel strategy is about to get much more complex, with emerging sales channels such as mobile and social media expected to eclipse the adoption rates previously seen with websites. Today, the contribution to sales from new channels stands at just XX% of revenue.Looking ahead, growth of tickets sales via emerging sales channels is significant with sales expected to more than quadruple in the next 3 years.This is a remarkable shift to the new channels, considering that sales is starting from almost zero, and is expected to increase to around 12% of overall sales by 2015. 12% represents c. $60BN based on the April forecast of $500BN revenue from IATA for 2012Sales via mobile apps will represent the largest proportion of all emerging channels, at 7% by 2015 (more than all other emerging channels combined) and a four fold increase on the 1.5% of sales today.Sales via social media channels is also expected to grow from 0.4% today to 3% by 2015. Only a few airlines sell via Social Networks today, so it remains to be seen if such optimism is realistic. But then we must remember too that Social Media as is several twists and turns down the hype cusrve compared to Mobility. Surprising ly kiosk sales are also increasing … up from XX to just under 2% in 2012.Overall, if the trend constinues … by 2020, the new emerging channels will represent Right now, the main focus is MOBILE. Today it already accounts for more sales than social media & Kiosk combined and this trend is continuing. It is however, early days…Nine out of ten airlines are planning to sell tickets via mobile phones by 2015, establishing mobile as a mainstream distribution channel for airline tickets. Growing from zero just a few years ago, mobile phones as a distribution channel are expected to generate significant growth in years to come. .Airline ticket sales via mobile phones will be common place by the end of 2015; ancillary service sales is the next ambition.9 out of 10 airlines are planning to sell tickets on mobile phones by 2015, establishing mobile phones as a mainstream distribution channel for airline tickets.
  • The survey also shows a significant increase in the number of ancillary services airlines plan to sell via mobile phones in the future. 83% of airlines have the ambition to sell ancillary service on smart phones by 2015. The list of services sold on mobile phones will replicate the airlines’ website sales functionalityAnd 8 out of 10 will enable ticket modifications and ticket upgradesThe survey also shows a significant increase in the number of ancillary services airlines plan to sell via mobile phones in the future. In previous surveys the focus was to sell tickets, now 83% of airlines have the ambition to also implement ancillary service sales on smart phones by 2015. The list of services sold on mobiles is to replicate the airlines’ website sales functionality by offering: ticket modifications (82% by 2015), ticket upgrades (79% by 2015), onboard services (79% by 2015), baggage fees (74% by 2015)
  • New personalised channels provide the means to accelerate ancillary sales By 2015, almost 8 out of 10 airlines plan to personalise their service offers (price, type of service) via the airlines direct channels. The smart phone (and social networks), even more than the airlines websites, are channels that allow airlines to offer the passengers context specific services which makes it an ideal platform for ancillary service sales. For example, if the sales platform is location aware such as smart phones, it enables a highly personalised service and can be made relevant to the passengers individual circumstance. Offer upgrades on the way to the airport, offer lounge access when in duty free etc. etc. examples are plenty. Not only is it more helpful to the passenger; it also increases the chances of sales. No surprise than that 83 % of airlines plan to sell ancillary services on mobile phones by 2015.
  • The majority of airlines will be selling direct and getting personal through new channels
  • Group 1:Promotion (39%, 87%)Group 2: Complaints Handling (22%,63%)Flight search (18%, 67%)Notification about flights (13%, 70%)Group 3:Check-in (1%, 51%)Missing baggage (4%, 53%)Flight Re-booking (3%, 41%)
  • Key points: Airlines believe that in the near future, websites and mobile phones will be the dominant communication channels with passengers. For customer service, the majority of airlines believe that the smart phone will be the channel of choice for customer service communication (91% smart phone vs. 60% websites) 31% believe that Social media will eventually become one of the dominant channels to interact with passengers For passenger processing, smart phone and websites are equally important channels. Only 4 out of 10 airlines believe that the Kiosk will still be one of two dominate channels for passenger processing, much less than the 71% who believe that websites & mobile phones will take over this role in the future. For Sales, Websites are remain one of the key channels. While mobile will join websites to have almost equal weight. Kiosks play a less dominate role here. So what about kiosk, is mobile set (and websites) set to take over? Is the kiosk, who, today, is the main self-service channel in terms of adoption as well as passenger usage. Lets take a look!
  • Group 1:Flight search (55%, 90%)Check-in (50%, 90%)Boarding passes (46%, 85%)Ticket purchase (44%, 90%)Flight status notification (43%. 90%)Group 2: Ancillary Services (14%, 85%)Customer complaints (12%, 72%)Missing baggage (10%, 78%)Group 3:NFC enablement (4%, 51%)Geo-location 3%, 54%Entertainment onboard (7%, 57%)social planning 3% today, 59% by 2015
  • The majority of Airlines will be selling direct and getting personal through new channelsSocial media will have found its place in at least three core airline functions: marketing, customer service, salesSelf-service will have embraced bag drop and boardingIntelligent, mobile self service will touch every aspect of the passenger journey

Transcript

  • 1. INDUSTRY INSIGHT SESSIONS:IT TRENDS 2012,AN AIRLINE VIEWArthur Calderwood 1 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 2. Airline IT Survey: Background Representing 53% of global passenger traffic2 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 3. Balanced views – across regions and size REGION PASSENGERS CARRIED 3 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 4. IT Trends 2012,An Airline ViewIT Spend & Priorities
  • 5. IT spending to remain stable in 20125 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 6. Budget outlook to 2013: Confidence is reducing6 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 7. Top 3 investment priorities remain unchanged: Industry Insight Sessions: IT Trends7 2012, An Airline View
  • 8. IT Trends 2012,An Airline ViewVisions and ambitions for2015 …and beyondNigel Pickford
  • 9. By 2015…..• Airlines will get personal – selling direct to passengers through new channels• Social media will be a major platform for marketing, customer service and sales• Self-service will have come of age: no more queues at bag drop or boarding?• Mobile will be the dominant channel, enriching the travel experience from booking to boarding and beyond9 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 10. • The future will be driven by an insatiable demand for more and more • information Passenger • control • interaction • personalisation + Workforce10 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 11. Mobile Apps and Web will dominate passengerinteraction beyond 2015 11 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 12. Mobile Apps and Web will dominate passengerinteraction beyond 2015 12 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 13. IT Trends 2012,An Airline ViewThe Future of DirectSales Channels
  • 14. New sales channels ready for take-off? By 2015, 12% of sales through mobile, social media and kiosks.14 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 15. Majority of airlines aim for multi-channelcapabilities in direct ancillary sales by 2015 Each new channel in use by at least 65% of airlines by 201515 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 16. ‘Personalisation’ - a priority for direct channels16 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 17. By 2015……Airlines will have got personal – selling directto passengers through new channels 17 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 18. IT Trends 2012,An Airline ViewDoes Social Media havea mainstream role?
  • 19. Where does social media provide most value?1.2.3.91% 19 of airlines plan to invest in social media; most make R&D investments Industry Insight Sessions: IT Trends 2012, An Airline View
  • 20. Multiple Social Media Apps used by the majority in 2015 Today 20 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 21. Selling via social media is accelerating Plans for embedded applications by 20159 out of 10 Promoting via social media Up 2-FOLD 63% Selling via social media Up 4-FOLD 21 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 22. By 2015….Social media will be a major platform formarketing, customer service and sales22 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 23. IT Trends 2012,An Airline ViewHow far and how fastwill Self Service evolve?
  • 24. Mobile Apps and websiteswill dominate passengerprocessing beyond 201524 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 25. Technology tailored to the passenger journeyCheck In 89% 90%New ServicesMissingBag 52% 78%FlightTransfer 25 47% Industry Insight Sessions: IT Trends 2012, An Airline View * Increase or continue with functionality
  • 26. Transforming check-in with ‘Fast Bag Drop’ 76% Today plan for kiosks By 2015 with bag tag printing by 201526 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 27. Expanding full self-service to boarding27 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 28. Rich mobile self service features by 2015 Today 28 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 29. By 2015• Self-service will have come of age: no more queues at bag drop or boarding?• Mobile will be the dominant channel, enriching the travel experience from booking to boarding and beyond29 Industry Insight Sessions: IT Trends 2012, An Airline View
  • 30. By 2015…..• Airlines will get personal – selling direct to passengers through new channels• Social media will be a major platform for marketing, customer service and sales• Self-service will have come of age: no more queues at bag drop or boarding?• Mobile will be the dominant channel, enriching the travel experience from booking to boarding and beyond30 Industry Insight Sessions: IT Trends 2012, An Airline View