News

Aviation moves toward 'self-service passenger model'

October 30, 2006

GENEVA, Switzerland — SITA's 8th Annual Airline IT Trends Survey, carried out in conjunction with Airline Business magazine, indicates that aviation will become the world's first totally Internet protocol-enabled industry, putting the power of the World Wide Web at the service of the airlines and passengers. The survey results released today reveal that for the first time 82 percent of airline locations now have IP connectivity, expected to rise to 89 percent by the end of 2007 and 93 percent by the end of 2008. In parallel, 78 percent of airline systems are now IP-enabled, a mark that is expected to hit 83 percent by the end of 2007 and 87 percent by the end of 2008. "This year's Airline IT Trends survey provides the clearest evidence yet that the airlines will be the world's first fully Web-enabled industry," said Paul Coby, SITA chairman. "IP is the underlying communication technology that enables many new applications, such as online reservation systems, so it has brought a radical change to air travel, ever since SITA developed the first Internet booking engine just over 10 years ago. It is also driving the self-service business model, which is both convenient for passengers and helps airlines keep ticket prices down." The survey shows just how rapidly airlines are deploying self-service technology and how quickly passengers are embracing it. Web check-in has now been implemented by 42 percent of airlines and this will increase to 72 percent by the end of 2007, while 27 percent of passengers are now using check-in kiosks and this number is expected to rise to 38 percent by the end of 2007. The survey also found that only 31 percent of self-service kiosks are common-use (i.e. can be used by customers of more than just one airline), but that is expected to rise to 40 percent by the end of 2007. "The speed at which the industry is moving toward a self-service passenger model is clearly borne out by the technology investment priorities of airlines," said Francesco Violante, SITA chief executive. "Eighty percent of airlines responding to the survey see projects with proven pay-back and cost savings, such as online booking, barcoded boarding passes and self-service check-in as their highest priority, up from 50 percent last year." Violante also pointed to greater optimism among airlines about the savings to be derived from business-to-business e-commerce.

"The trend for the last few years has been a declining expectation of savings from B2B investments, but this has now reversed with airlines anticipating savings in the order of 13 percent compared to traditional processes, up from the 10 percent we recorded in our last survey," he said. The survey establishes for the first time that the average airline IT headcount is 1.8 percent of the global airline workforce. Fifty-two percent of airlines have higher IT headcount than five years ago, and 52 percent expect to increase IT headcount over the next three years. The online booking revolution that saves airlines significant amounts of money on distribution costs continues to gain pace. Thirty-two percent of tickets worldwide now are sold online (compared to 20 percent in 2005) and 72 percent of these were sold through the airlines' own Web sites, leaving room for improvement as airlines seek to eliminate commissions on ticket sales. Just 8 percent of airlines sell no tickets through Web-based channels. Call-center ticket sales are at 18 percent, compared to 20 percent in 2005. The rise in online ticket sales is an indicator of further pressure on the traditional travel agent. The major issues highlighted by airlines with regard to online sales were the complexity of airline pricing/fares, 30 percent; lack of payment security/fraud, 19 percent; and lack of interlining/code-sharing, 15 percent. There has been growth in airlines issuing e-tickets, from 27 percent in the 2005 Airline IT Trends Survey to 59 percent of this year's respondents. This is expected to rise to 78 percent by 2007 and 90 percent by 2008. Just 7 percent of airlines now issue no e-tickets compared to 23 percent last year. Barcoded boarding passes also are on the rise, with 50 percent of airlines expecting to issue them by the end of this year. That number is expected to hit 79 percent by the end of 2007. This will facilitate self-service check-in, whether online or via kiosk.

Those two initiatives alone are saving the industry billions of dollars. The survey also provides further confirmation of the industry's appetite for in-flight passenger communications. The percentages of airlines expecting to offer the following in-flight communication channels by the end of 2008 are: Internet access, 59 percent; e-mail, 58 percent; SMS, 52 percent; and mobile phones, 46 percent.