Outsourcing Is The Key Word As It Works Out Cheaper

Updated: Nov 28 2002, 05:30am hrs
Information Technology has begun to play a pivotal role in the way the aviation industry functions. While airlines look for the latest in Internet technology or e-business solutions, airport authorities look at integrating new applications and telecommunication systems and logistics companies look for a streamlined and effective way to handle the entire distribution cycle.

One company which provides all these services to the global aviation industry is Societe Internationale de Telecommunication Aeron-autiques (SITA). Soon Hook Lim president (Asia Pacific) SITA who is based in Singapore shared his views on the latest technologies involved in global air transportation in this telephonic interview with Sambit Datta of The Financial Express. Excerpts:

Could you describe in some detail to what extent the travel sector has changed with the use of technology What has been the contribution from SITA in this industry
The travel sector has benefited a lot from the use of technology. According to the IT Trends Survey recently conducted by SITA and Airline Business, the board of directors for airlines have recognised more the value of IT to the whole business.

Sixty per cent of airlines now have IT people represented at the board level. Internet technologies are changing the way airlines are managed and marketed. Airlines are now looking to benefits from potential cost savings and business opportunities arising from having an IP platform and e-enabled global IT infrastructure.

SITA has always been working hard to make this happen. We created IT technologies for the air transport industry. We connected the entire industry (including airlines, airports, aerospace, GDS (global distribution systems), freight forwarders and travel agents) through a global network. We are also a leading provider of airport and airline applications. We also provide air ground communications and consulting to the air transport industry.

What sort of technology is being used at various points in the travel business, particularly airlines - CRS, other backend systems, mode of connectivity, Internet
The mode of connectivity is IP through SITA with gateway to the Internet. Advanced technologies are used in all areas of automation, including reservation system, departure control system, ticketing, fare system, flight operations, catering, cargo, etc.

What are the various processes that airlines are actually outsourcing today, thanks to technology and connectivity
Outsourcing is the key word now as it works out cheaper to outsource than having an in-house IT system. However, IT vendors need to calculate ROI for pilot projects as this helps to sell the next stage and other projects. The growth of global alliances is placing even greater pressures on the IT departments of airlines. Even though budgets have been cut, the trend to outsource will still continue to let internal resources focus on core aspects in order to maintain the competitive edge. The definition of outsourcing can be very wide in the aviation industry network, applications, maintenance, research & development, etc.

Can you comment on the investments being made by airlines in IT and what sort of ROI do they see
In the APAC region, airlines on an average invest about 2.2 per cent of revenues in IT annually whereas the worldwide industry average is about 2.9 percent. As for ROI, all we can say is that technology improves productivity and decreases the cost of business.

To what extent are hotels connected online for booking Is this more visible overseas Why arent hotels in India accepting bookings online
This year hotels are projected to generate $4 billion of their revenue from leisure bookings online, while airlines are expected to earn $13.2 billion worldwide, according to Forrester Research.

Compared with airlines, online hotel booking has been slow to mature. Travel experts point to the poor quality of the websites themselves which are difficult to navigate and offer little selections. In India, besides the poor quality of websites, people are also wary of the security system as the bookings require credit card details to be submitted online. Unlike the airline industry, which is dominated by a handful of carriers, most hotels are independently operated franchises.

That complicates travel websites efforts to track room rates, which can vary depending on the owners preferences. Expectations for more online reservations in the future are high. Forrester Research predicts that hotels revenue from leisure bookings online will jump from 4.5 per cent to 7.9 per cent by 2006.