IT to save airlines?

By Leon Engelbrecht for SITA
Johannesburg, 19 May 2008

African airlines are being urged to use ICT to gain the efficiencies they require to effectively compete against an aggressive incursion into the African market by subsidised Middle Eastern airlines.

Cranfield University researcher Dr Frankie O'Connell says Middle Eastern airlines are aggressively targeting the African market. He says Middle Eastern governments are expanding airports to turn that region into the transfer hub between African and European destinations.

"African airlines will have to use technology to drive down costs to stay in business," he told an airline IT society conference in Sandton. The Airline IT Society, known by its French acronym, SITA, is a major ICT vendor to the airline and airports industries.

O'Connell adds that 50% of the world's top international airlines gave their IT departments a 60% increase in 2007. He says US-based Delta Air Lines justified the increase in spending after a period of decline by saying through its president and COO Frederick W Reid that "technology and process is going to make the difference between airlines that are profitable, and those that are not".

The British academic adds that network and interconnectivity "are very important strategies for the future". He urged African airlines to invest in IT processes that will significantly reduce costs, which includes incorporating IATA initiatives such as "Simplify the Business", a move to e-ticketing.

They must also strengthen marketing strategies to attract and keep more passengers by using customer relationship management technology and applied business intelligence (BI) tools such as frequent flyer programmes (FFPs). "Technology is set to play a key role in communicating with passengers," O'Connell avers.

FFPs, he notes, typically track the number and frequency of flights taken and help identify valuable passengers. This data is augmented by information provided by partners, including hotels and car rental firms. "Airlines have very little understanding of their customers and have little knowledge about their most valuable passenger, and applying BI is the most obvious way of addressing this.

It can also be used to flag valuable passengers if they have not taken any flights recently, which might mean they had defected to another carrier.

Ethiopian Airlines IT VP Kemeredin Bedru says African airlines face several obstacles in exploiting ICT. Most notably is the continent's poor ICT infrastructure and the high cost of using what there is, which he says limits the continent's ability to engage in e-commerce and e-ticketing.

Bedru also bewails the continent's low Internet penetration and credit card usage for the same reason, saying this needs to be addressed if African airlines are to compete.