The airline industry provides an interesting example of how enterprise technology has been used over the years. It was on the cutting edge of the internet revolution during the 1990s, where online management and booking systems were the norm, which created good examples for other industries, such as retail and banking, about how to put purchasing power in the hands of the consumer.
However, fast forward a couple of decades and the general consensus is that airlines are slow moving when it comes to implementing innovative systems and applications, due to them being hindered by complex legacy systems, increasing safety regulation and high fuel costs.
Computerworld UK spoke to Dr. Gunter Küchler, Member of the Executive Board of Lufthansa Systems, a wholly-owned subsidiary of Lufthansa airline that was set up in the 1990s, which has revenue in the hundreds of millions of euro, and provides technology services to over 300 different airlines, including BA, Air France, EasyJet and Thomas Cook.
Lufthansa Systems is a consulting business, providing process-driven applications for airlines, but also provides operation services running out of four data centres, one just outside Frankfurt, one in the US, one in Singapore and one in London.
Küchler explains how the aviation industry is slowly progressing away from its legacy systems, to heavily virtualised environments.
“There is an area of legacy in aviation, such as boarding or reservation systems, which are based on old, complex mainframes, but this will die away over the next three to five years,” says Küchler.
“The drive is cost and ability. If you compare complex, high availability UNIX systems to virtualised environments, they are far less stable. Virtualised environments are much easier to manage, more reliable, they require less hardware, less manpower, and are far more efficient.”
He adds: “If, as an airline, you are in competition with somebody who has a solution on virtualised systems, you simply cannot compete from a legacy system. On the one hand, airlines are slow to adapt, but we have to remember that due to their global business they were very much at the front of IT compared to other industries 20 years ago. They invested early, so now have to think about these heavy legacy systems.”
Küchler explains that most airlines have some level of government control, which means that they are often operating to represent a country, rather than to be efficient. This has resulted in less IT investment than would have occurred otherwise. However, with the cost of fuel increasing, he says that IT is still a “big priority” for airlines, as there is a growing pressure to better manage the industry’s extremely complex processes and drive down costs, as well as better connect with customers through mobile and social media.
When asked what the main priorities for IT management in the airline industry are today, Küchler instantly says that mobile and social media are always at the top of the agenda. However, he quickly follows this by saying: “In my opinion, I would say that there is no airline out there with a clear mobile strategy.”
He believes that social media has been mildly successful, with large airlines using it in the US to interact and connect with their customers, but this has not translated into the internal use of mobile.
“Most employees of an airline are never in an office. If they were able to have mobile access to their schedules, or were able to walk through an airport with an iPad scanning passengers’ ticketed barcodes, telling them where exactly they had to be, this could really drive efficiency and improve productivity,” he says.
Küchler believes that airlines need to clearly adopt a strategy that doesn’t just focus on developing user-friendly applications for employees, but assesses how these applications will connect to complex legacy systems.
“Today you still have a lot of paper in the cabin and the cockpit, which of course could be brought onto a mobile device. However, this is not just about the mobile device, it’s about getting access to all the legacy systems, through many interfaces to get all the data you need,” he says.
“Airlines have a full range of back-end systems they have to attach to. I wouldn’t say it’s hugely difficult, but you need a strategy around it. It’s not just about the application on the mobile device, it is about connecting it the whole way through the middleware, down to the back-end systems.”
He adds: “There are dozens of them, and you are dealing with hundreds of interfaces that you have to provide. It’s not the app on the mobile that’s hard.”
Finally, Küchler states that airlines also need to use big data analytics to better manage their revenues and figure out how to get the best paying passenger into their aircrafts. This includes running analytics on all types of data to better understand how to present prices and schedules, as a slight change in an airline’s seat/load ratio can make a difference to whether or not it is profitable.
He argues that with the big data capabilities available to the airline industry today, they are able to accurately estimate the personal behaviour of every single ticket holder.
“Airlines should have a system that tells you how much a customer is willing or able to pay for a ticket," he says.
“Airlines should be running analytics on every request made by every passenger – that’s about 10 times as many passengers you would have. You should also be using information available on the internet and pricing of competitors. That’s very complex mathematics combined with a very complex know-how of airline processes."
Although Küchler recognises this as an important tool for airlines, and he says that all of them are doing it to a certain extent, he says that it is not always being done to the same level of quality.
“These systems have existed for the last decade, but they are developing every year and are increasing in complexity. Before we had what we called point to point, where airlines only looked at the ticket from the original to the next destination. Today it is far more detailed and complicated,” he explains.
“It takes between one and three years to implement a solid big data analytics system. However, what we can do today, in half a year we can do more – the upgrading of the technology will never end.”
Nevertheless, it is worth doing, says Küchler: "The savings or additional revenues streams that are created, at a minimum, are in the millions of dollars region. It absolutely makes the cost worth it.”