Record $50 billion IT spend as airlines and airports share digital ambitions | SITA

 
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Record $50 billion IT spend as airlines and airports share digital ambitions

Published on  13 November by Matthys Serfontein , President, Air Travel Solutions, SITA
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I was heartened to see the results of this year’s SITA Air Transport IT Insights. They confirm to me that the digitization of air transport is well under way. Airlines and airports alike are demonstrating ambitious plans for a digital future, spending record amounts on IT to improve the passenger journey from end-to-end.

According to the new SITA report, overall investment in IT by the air transport industry continues to rise, hitting $50 billion in 2018. This comes on the back of several years of flat budgets for airlines. Airport IT spend also continues to grow.   

Good news for aviation’s digital future

Total IT spend by airlines as a percentage of revenue went up 4.84%, while airport IT spend increased to reach 6.06% of revenue in 2018. This is great news for the industry, made even better by the fact that CIO predictions for 2019 are very optimistic as well.

I’m particularly satisfied to see the alignment between airlines and airports, reflecting common goals and priorities. I see this as critical; it’s right that we’re seeing common intentions and ambitions as aviation heads towards its digital future.  

A healthy IT spend benchmark for aviation

These figures give air transport CIOs an important spending benchmark as they plan their IT strategies. As I said, they spotlight that the aviation is moving ahead rapidly with its digital transformation.

It’s significant that the 4.84% and 6.06% figures for airline and airport IT spend compare very favorably with IT spend in other industries. We know from analyst benchmarks that yearly IT spend across several industries spans from 1.5% to 8%, with construction at the lower end, and banking at the high end. So the air transport industry sits high on the range.

Investment shows accelerating digital transformation

With cloud, cybersecurity and business intelligence (BI) taking the top spots for IT investment, it’s obvious that we’re seeing the acceleration of digital transformation in the air transport industry.

Again, the alignment between airlines and airports is telling. Cloud services stand as the top IT investment priority for airlines and airports at 100% and 88% respectively. Cybersecurity takes second place for both parties, followed by BI at 95% for airlines and 87% for airports.

In addition, airports have major programs and research and development plans for common use infrastructure, such as kiosks by 2022 (86%) together with self-service processes (85%). On the airline side, mobile apps for passenger services (92%) are receiving significant investment as well.

Banking on the potential of BI

Both airlines and airports have high expectations for BI in terms of providing more effective operations, improved passenger flow and baggage processing, for example.

Currently, 62% of airlines have some form of major program in place for BI. At the same time, 33% plan a pilot or R&D in the area.

  • The leading use for BI for airlines is passenger processing for operations, with 44% having instigated an initiative already.
  • Aircraft turnaround is ranked as the second area of focus for airlines in 2019.

Airports are mainly focusing their BI initiatives on improving airport operations across the board. Here, leading the way are BI and analytics initiatives for passenger processing and flow management.

  • 83% of airports said they’d implemented or were looking to implement a BI solution to find ways to further automate the passenger journey, making it more streamlined.
  • This is followed by using BI to improve flight operations (80%) and baggage processing (78%).

More synergies from this strategic alignment?

So, good news all round. As I said – and as borne out in our new Air Transport IT Insights 2019 report – airlines and airports are clearly moving forward with their digitization and innovation strategies. And critically for the air transport industry, they’re aligned on the technologies they’re embracing. Looking ahead, it will be interesting to see what synergies will come out of this strategic alignment. 

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