Article

Economies of Air

The air travel industry continues to be a big spender on kiosks, as airlines strive to improve passenger experience through self-service options.

April 3, 2002 by

There may be no other destination with as much promise for the kiosk industry as airports. A renewed emphasis on customer service has fueled a rise in self-service units both by airlines and airport operators. Kiosks seem to be getting an increasing portion of the $10 billion airlines spend annually on information technology.

Airlines see self-service kiosks as a way of saving money as well. Some units can do the work of two full-time agents and cut check-in time to around 30 seconds. Consequently, air carriers are finding it easier to justify the cost of substantial kiosk rollouts.

"Certainly, there has to be some economic benefit," said Jim Bailey, head of corporate strategy and business development for Kinetics, Inc., a Lake Mary, Fla.-based kiosk maker. The company's self-service units are deployed at more than 120 U.S. airports.

Whether a portion of that economic benefit is realized through cutting jobs is a tricky matter. Many airlines admit the machines can do the work of two employees but are quick to point out their agents are needed elsewhere.

Bailey said that while kiosks are equipped to handle some agents' duties, he doesn't foresee airlines laying off employees because of kiosks.

"Of course (airlines) see it as a productivity tool. Of course they want to keep their cost down," he said. "I've faced that question often by the employees in the airport who say `These machines are going to take my job over,' and my answer to them is `No, these machines allow you to spend your time with the customers that need your help.' "

Continental Airlines, which has 332 self check-in stations in 63 U.S. airports, sees its Kinetics-made machines in the same light.

"The eService Center kiosk has always been justified on the basis of increased customer satisfaction," said Continental's Erica Roy. "We have since realized that in many cases we are also able to realize operational benefits as well, namely with real estate and staffing. In 95 percent of our stations, we are real estate-constrained, and are thus able to leverage eService Center kiosks as additional processing portals. That said, there also comes a staffing efficiency, where one agent may handle up to two to four consecutive eService transactions at once. This allows us to more effectively deploy our labor, which will translate to shorter lines and more time for those customers requiring more personalized attention."

Continental plans to add 250 machines over the next 12 months. Thus far, the company has spent more than $10 million on its eService Center program, including the necessary hardware, software and site preparation costs. The airline, which discarded its original fleet of NCR kiosks in 2000 to make room for the smaller, more innovative Kinetics equipment, is reporting tremendous success with the units.

"The original platform of kiosks, which were introduced in 1995 and removed by end of year 1999Â…was unable to expand at the same pace of the technological curve during this time span," Roy said. "We had no remote monitoring, limited capability to expand software functionality, and software upgrades were a manual process.

"Our new platform affords centralized upgrades, processing and remote monitoring. As a result, we upgrade our software more often and have significantly improved uptime. Since our platform replacement, our self-service usage has increased from five percent of our eTicket customers to more than 25 percent in just 12 months."

The Price of Innovation

The cost for an airline to implement a successful kiosk program depends on several factors. Continental's $10 million campaign is small compared to United's recently announced rollout of 800 kiosks, a large part of the company's $150 million investment in technology.

Nevertheless, to get ahead, an airline can't take the initiative lightly.

"It really depends on the leap of faith the airline wants to make," said Bailey. "If they're committed to the technology, they're going to fill the airport with them. Because what you don't want is people waiting in line to use them. The airlines that said `We're committed and we're going to make it work,' are the ones that have succeeded. The people that want to try four or five here and there, it may or may not work."

Depending on the quantity ordered and the configuration, Bailey said the Kinetics machines cost between $5,000-$7,500 each. But there are added costs.

"The thing that hurts (buyers) more than the cost of our product is really the infrastructure cost," he said. "It's easy for an airline to spend $10,000 to have the data cabling and power cabling put in to support a $7,000-$8,000 kiosk."

As long as customers get simple, efficient service from the units, the airline industry will continue supporting kiosks.

"They're jumping in with it," said Bailey. "The proof of the pudding is there. It builds loyalty. The frequent flyers love the product because they're familiar with it. They use it all the time, and they count on it. And I think because of the wide acceptance of ATM's around the world today, you're seeing more first-time users."

Emerging Trends

The next big market for kiosk makers is in international airports. Bailey said global expansion is in the works for the industry, but it's a process that will take time. Thus far, he said, Air Canada, British Airways, AeroMexico and KLM Royal Dutch Airlines have sound initiatives underway.

"(Most foreign airlines) are way behind the U.S.," Bailey said. "The Europeans are still tied to the ATB document, the magnetically-coded card. North America's pretty much gone away from that."

Off-airport locations may soon become another market for the check-in units. Continental, for example, has experimented with kiosks in the offices of corporate clients, such as AT&T. Thus far, the company has no plans to expand the pilot program.

"Airport hotel, car rental and parking facilities will eventually host common-use self-service kiosks, which will enable check-in for multiple airlines," Continental's Roy said. "This initiativeÂ…involves a transaction fee-based model. Our expectation is that third-party kiosk providers will become more predominant in the next 12-24 months."