PSS: "The core of the airline e-landscape" Commentary by Frank Socha, Chairman, eConference '07 |
Airlines must begin replacing their legacy mainframe system environments with new and modern open architecture based systems. This is especially true for PSS or Passenger Service Systems. (For clarification, by our definition, PSS stands for the airlines' core applications of Reservations, Inventory and DCS). You have probably heard this before, but let’s put this statement into perspective. First of all, nobody will seriously claim that mainframe systems will stop working tomorrow. But, their end is certainly getting nearer. Why is this the case? Let’s look at a couple of reasons: |
At quite a few airlines, reservation and related applications are still run in-house! The coming years and the necessary upgrades will show if this is the most economical way of running airline IT.
Applications are running on old mainframe technology, dating back to the Sixties. The resulting problem is that upgrades and on-top developments eat into the major part of every IT investment:
Out of any amount spent on new system applications, at least 50 percent will go towards testing and integrating with parts of the old system. So, only 50% or less will actually go towards new solutions! |
Some of the required changes will never be implemented satisfactorily, e.g. E-TKT, IET...
Applications are inflexible and the system design is not robust. |
|
Quickly changing market rules, new market entrants, competition and other reasons will force every participant to be able to quickly change business parameters. With old application design, this is a very depressing exercise, as many of those changes will require a fairly complete regression testing application before online implementation. Cryptic input formats and thus high training costs. These are only a couple of highlights. But, what will be the triggers that will change the future of the airline business so dramatically? Several come to mind immediately: Economic Growth: Until 2020, World GDP is estimated to grow at an annual rate of 3.0 %. Industry Growth: The ICAO long term forecast for growth over the period 2002-2015 provides for an average annual increase of 4.4 %. Changing Industry: new mega markets (Asia Pacific), new mega cities and new aircraft models (787/A380). Different Pricing Models: from "no frills" to "full service" offered by one single airline. Changing Customer Behaviour: short-haul "no frill" vs. long-haul "full service." The list goes on and on. All of these factors will require a flexible system that will enable the airline to quickly react to changing market conditions- literally overnight. The growing demand will also require flexibility that can better cope with performance peaks and lows and thus is scaleable accordingly. Mega search engines will keep the reservation system much busier than ever before. You want more reasons: please look into your own markets and you will notice the changes that are obvious. But, can systems cope with the changing environment? And, at the end of the day, will every airline still be able to satisfy their customers accordingly, in a sustainable fashion? In the long-term, I would say no! That is, unless modernization takes place! The way new systems are introduced today will completely replace the old legacy systems and the way they were applied, including hosting solutions and yearly regular new licenses that needed to be purchased, etc. This all will become extinct. But, what will the future requirements be?:
Those airlines whose systems are able to fulfil all of these requirements today have certainly already chosen the appropriate technology. For others, this will mean the start for a search for the appropriate system environment for the next 20 years. Airlines will also have to decide whether it will be wise to continue to maintain their own in-house IT department. We think it is not! We believe that all in-house IT will be outsourced by 2012 at the latest! Outsourced IT does also mean a different business model:
All services will be provided by the airline’s IT partner, meaning cost structures are based on the chosen application modules and by Passengers Boarded. One final observation: closing an IT department or at least scaling it down does not go in parallel with staff layoffs! Staff is needed where many airlines tend to do too little: in Customer Service. And those who stay in an airline’s IT Department will change their approach, rather than running it, they will manage it in cooperation with a strong service-provider partner. I invite you to further discuss these and other important related issues at the 2007 eConference in Singapore. Please also do not hesitate to contact me directly for help and advice. Sincerely,
|
 |
|
| eNewsline: www.eNewsline.net | |
Senior Publication Staff: Frank Socha - Chief Technical Advisor/Editor Roger Williams - Creative Director/Associate Editor Ritesh Gupta - Senior Correspondent Christopher Staab - Business Development & Advertising |
|
e Newsline is published on a quarterly basis by Airline Information. eNewsline.net is a registered URL of Airline Information. Articles for eNewsline are written by contributing airline personnel, travel and subject area specialists, and the writing staff of eNewsline. The opinions expressed by contributing writers do not necessarily express the opinions or policy of the owners and officers of Airline Information. ................................................................................................................................................. eNewsline Subscriptions you will receive an email reminder each quarter with a link to take you to the current issue. Advertising in Online Media about advertising possibilities and rates.
|