The Service Provider perspective
SITA CEO Francesco Violante discusses why IT is crucial to the survival and recovery of the air transport industry. The speech was given 1 July in Cannes, France, at the Air Transport IT Summit.
Transcript of Speech:
This industry is in survival mode!
It means that we - Service Providers - need to understand, more than ever before - how we can help recovery and help prepare for the future. In the past, technology has proved to be a critical tool for recovery. But in today's crisis, IT must be a weapon in the survival toolkit.
In this presentation, I want to look at three areas:
- The IT dependency of the industry ...
- The digital future of the industry ... and
- What is needed to deliver that future
All three have a fundamental impact on the Service Provider.
Let's start with IT dependency
Today, the focus is on recovery - and we need technology to do even more to help us. IT systems are already the backbone of the industry's business activity - supporting mission-critical operations. In our 24 x 7 passenger-connected world, passengers and processes already rely 100% on IT. The inter-dependency between IT and the air transport industry has increased dramatically.
But the future business requirements of our industry will make us even more dependent. In this connected, 'always on' environment, how can Service Providers best satisfy industry demands?
Think of our increasing reliance on e-commerce and e-business: today we sell over 600 million tickets online each year. This will reach a billion tickets in three years, according to our IT survey.
Today, we have 15% of passengers using Web check-in. This will double in three years' time.
We will also have a greater reliance on airport communications. Nearly 300 million passengers now use kiosks for check-in each year. By 2012, that will be around 500 million. Human interaction at airports will be become rare.
It will be a digital future - where web and wireless technologies converge to provide an ANY TIME, ANY WHERE environment.
It is a future that meets the industry's critical needs for:
- A much lower cost base ...
- Easier air travel for passengers ...
- More effective processes and operations ... and
- Increased revenue generation opportunities
This future must be seen from three perspectives connected together:
- The digital passenger ...
- The digital airport ... and
- The digital aircraft
The digital passenger of today and tomorrow will expect an online, connected experience - both at the airport and on-board.
While digital aircraft will make new demands as they connect to the airport.
As we saw in the opening video, the changes we are seeing are consumer-driven.
Passengers are eager to embrace new technology.
The result is a world where 'digital travellers' increasingly make up the passenger base.
If we look at some numbers, our latest IT Trends survey tells us that by 2012, nearly two out of every three passengers will use self-service technology to check-in.
That's around 1.5 billion people who will depend on technology to facilitate their travel.
Today, mobile is a small part of that. But it is mobile technology that represents the next step-change opportunity for the industry.
There are around four billion mobile phones in the world. Of which, currently, only about 10% are SMART phones.
But over the next few years, that will move towards 50% and beyond - so the majority of passengers will soon have a Web-connected computer in their pockets.
Passengers will be able to go from booking to boarding, using their mobile phone as a single interface to the airline.
Within three years, nearly 80% of airlines will have optimized their Web site for mobile phones.
This will open the way for the easy mobile purchasing of airline tickets.
By 2012, the same percentage of airlines will also have implemented mobile phone check-in.
By that time, we will have seen a 450% growth in passengers using a mobile device to check-in, lowering costs and providing a substantial ROI. And over 40% of airlines will offer e-boarding.
By 2012, over 13% of Bar Coded Boarding Passes will be sent directly to mobile phones.
This provides a powerful tool for automation in areas such as lounge access, border control and e-boarding.
It is becoming clear that passengers will expect TECHNOLOGY to 'guide' them through the airport - NOT PEOPLE, OR PAPER.
Shared communications infrastructure will be needed to provide real-time connectivity between the systems and between the different stakeholders.
The airport will become a technology hotspot.
Stakeholders will be greatly dependent on its reliability and availability.
At the end of last year, our Airport IT Trends Survey found that over 90% of airports saw the upgrading of IT INFRASTRUCTURE as a high or medium IT investment priority.
Over 70% of airports rated PASSENGER PROCESSING as a high investment priority.
In this regard, the Common Use Passenger Processing Systems - CUPPS - is a major breakthrough for our industry.
It is the first time that industry organizations - of both airlines and airports - have worked together to define a standard approach to passenger processing. The technology underpinning it will deliver millions of dollars of savings to the industry and simpler travel for passengers.
We can expect wireless connectivity to be ubiquitous, bringing a step-change in productivity and efficiency in ground operations. But the digital vision will not stop at the aircraft door.
68% of airlines plan to invest in IP broadband connectivity both to and from aircraft over the next three years. The mobile passenger is connected onboard via the technology already available - for example, by OnAir - as we will hear later today.
The aircraft will become another 'NODE ON THE NETWORK'. A FLYING DATA CENTRE linked through wireless broadband to an airline's ground-based network.
High-speed upload capabilities will produce time-savings and operational efficiencies in areas such as software loading and in-flight entertainment loading.
The huge volumes of data generated by e-enabled aircraft will be used to improve aircraft turnaround - and give us the CO2 data necessary to measure our environmental performance.
These are not distant scenarios!
The technology is already available - and other barriers to adoption are being removed.
A lower cost, 'always on' environment is just around the corner.
But it will place additional pressure on the industry's IT infrastructure and systems.
We will need to embrace new models centred on cloud computing, Software-as-a-Service and virtualization to keep costs down.
Our research shows nearly 90% of airlines expect to make some investment in virtualization technology within the next three years - while over 75% of airlines will also be looking at Software-as-a-Service.
Virtualization looks particularly promising - with case studies indicating that significant TCO savings can be made.
If these are the scenarios - let's look at what the industry needs from Service Providers to deliver and support this digital vision.
There are three vital components that must be balanced:
- Innovation ...
- A community "mindset" ... and
- Quality of service
Let's start with innovation
Innovation sustains the competitive edge of the industry. But without continual investment that edge is quickly eroded.
So - a Service Provider must have the capacity to invest in order to exploit emerging trends.
Many airlines and airports in today's economic environment can no longer afford large-scale innovation.
They will be dependent on the vertical Service Providers to fulfil this role.
So investment capacity and a strategy that gives a strong focus on vertical innovation are key.
Larger "horizontal" Service Providers cover many different industries.
Their relatively small presence in the air transport sector does not justify expensive investments - unless they can be re-used across other industries.
That means their innovation agenda is not always driven by the specific needs of air transport.
Air transport needs targeted-innovation driven by an industry-endorsed agenda.
This innovation can be achieved through industry initiatives such as the Baggage Improvement and Fast Travel Programmes.
But it can also be achieved by working closely with all the individual players that make up the industry eco-system.
At SITA, we run a number of customer-advisory boards, user groups and workshops to gain a deeper insight into industry and customer-specific issues.
This allows us to focus better our investments.
It requires us to go right down to the ultimate end-user: the passengers and the industry workforce.
It requires that we run pilot projects, proof of concepts and trials to gain real-world experience.
In this way, Service Providers can evaluate and gain the necessary insight to separate good innovation from bad innovation.
The second key component for an industry Service Provider is to have an air transport "community mindset".
By this I mean a way of thinking - a DNA - that goes beyond just having specialist knowledge or know-how.
The Service Provider must be an integral part of the industry itself - sharing the same objectives and priorities - and having an interest in the success of the industry.
It is vital to contribute to that success by making the "common" assets of the industry operate better and more efficiently.
And also by building and developing new industry assets - such as infrastructure, services or standards - that can be deployed and used worldwide.
Creating community assets, act as a global baseline for further innovation.
This is different from taking an ad-hoc project approach that provides only a narrow improvement and that requires expensive bespoke maintenance throughout its life-cycle.
With community assets there are durable benefits.
Because they evolve - enabling them to remain 'fit for purpose' and enabling them to continue providing value.
Their global scale and high usage ensures a low Total Cost of Ownership for the industry.
Take WorldTracer as an example. It is used by over 440 airlines to match mis-handled baggage logged from 2,200 airports.
It is an industry-wide system originally designed for dedicated terminals.
But it has now evolved to a Web service that is cheaper to operate - and can be accessed using any browser-equipped device - including kiosks - which you can see in the exhibition area outside.
It is a good example of value delivered for the industry.
This is a critical point.
Service Providers must generate value for the industry.
That is not to say we cannot benefit from technologies developed for other industries. We need to encourage new solution providers that can bring fresh ideas and knowledge.
But there is an urgent need to examine emerging technologies to validate how best to apply them to this industry.
A good industry Service Provider does this and then forges the partnership that can deliver value to the industry.
At SITA, for example, we work with global technology leaders such as Orange Business Services and Oracle to ensure the industry has use of the latest technologies.
Through our partnership with Orange, we have access to their research and development resources.
This amounts to something like 5,000 researchers working in 18 centres across four continents.
The third key component of an industry Service Provider is quality of service.
The digital visions I outlined mean that air-travel and IT are entwined.
This means MANUAL back-up processes can only address minor IT failures.
This puts more pressure on us to ensure that our infrastructure and services are reliable.
The reliability of our technology will determine how well our customers can perform.
There will be less tolerance for disruption, so Service Providers must raise the bar in terms of service reliability.
The cost of downtime to our customers is now too great for us to aim for just 'high availability'.
The focus must now be on 'CONTINUOUS AVAILABILITY'.
The ultimate goal must be ZERO DOWNTIME for the whole end-to-end service or process - not just individual components.
We need to rethink service provision.
We need to provide integrated end-to-end SLAs with the ability to monitor and report with near real-time data on service performance.
The solution is not to build flawless systems, but architectures that can survive defects and ensure continuous uptime of the industry's IT infrastructure.
To do this, we will need to work closely with our strategic partners and customers.
This is our aim - and from the many discussions we have with our customers, I know it is also an aim shared by the rest of the industry.
So those are the three critical components - innovation, community mindset and high quality of service - that a Service Provider needs to have to support the air transport industry as it evolves.
This industry is facing a digital future.
Service Providers are the key to delivering this digital future at a cost point that this industry can afford, assuming the risks of developing and deploying global solutions.
In other words, the Service Providers must embrace this future and maximize its potential for the benefit of all the players in this fascinating air transport world.