Airlines drown in fuel

By Leon Engelbrecht for SITA
Brussels, 23 Jun 2008

Twenty-four airlines - including SA's Nationwide - have crashed in the last six months at least in part because of skyrocketing fuel prices, said International Air Transport Organisation director-general and CE Giovanni Bisignani. Airline CIOs must now do their best to keep the industry flying, he added.

Bisignani said the industry faces a "perfect storm of increasing costs and falling demand" as the impact of the US sub-prime crisis, and food as well as fuel price increases redirected consumer spending.

The IATA chief warned that should fuel prices stay around the $135 a barrel price for oil, the industry will lose over $6 billion this year; a move that will undo years of IT-driven process and productivity improvement.

Airline IT Society (Sita) chairman Paul Coby - also CIO of British Airways - said: "Airline CIOs and IT departments must respond to the current challenging times with imagination and vigour.

"With oil at these nightmarish prices, the whole industry faces a challenge arguably greater and more long-lasting than 9/11 [the suicide plane attacks on New York and Washington DC]," Coby said.

"Because IT underlies almost everything that happens in an airline these days, we are able to delight customers with online selling and servicing, at the same time as cutting costs and equipping our colleagues with the tools to do their jobs.

"In 2001 after 9/11, I said there were no IT projects, only business projects. These days - because technology underlies so much of the airline business - I say there are only IT projects, no business projects. Surviving the oil crisis will depend to an enormous extent on IT and on the CIOs who make it work in airlines."

Coby argued: "IT had in many ways been the salvation of the air transport industry after 9/11, delivering savings with IATA's '100% e-ticket campaign', providing customer self-service online and at airports, and massively reducing distribution costs. Now CIOs and airline technologists had again to step up to the mark.

"CIOs should be talking to their airlines about how IT can improve customer service and cut costs across the whole airline, rather than simply running old IT systems. Services-oriented architecture means you really can link up old legacy IT with modern Web services - get this right and you can respond agilely to the challenges that now face us.

"The modern airline IT department must have the ability to see across the whole airline business - no longer is it just about IT; in the future the airline CIO needs to think about the customer proposition, the business process and the people as well as the systems before thinking about IT.

"In this new airline crisis, it is up to us, the airline CIOs, to deliver value through great customer service, giving our colleagues the tools for their job and at the same time delivering cost savings for shareholders," he concluded. Coby delivered his presentation at Sita's annual IT summit in Vlaamsbrabant, just outside Brussels, in Belgium.