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
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
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.