ITA Software – the fallen ‘David’ of modern day Airline technology business

 “There comes the David to fight the mighty Goliath” -that was the theme that got promulgated among the Airline industry critiques. This happened at a time when ITA software made its foray into Airline Reservation Systems. Two years later, today, the David had beaten a hasty retreat from the battle field.

Why, why didn’t the fanfare last only for 2 years? Why didn’t the ITA (with full backing from Google) make inroads into the markets of Amadeus, Galileo, Sabre or Worldspan? The question lingers around without any of facts, but straddles with widespread speculation.

Let’s examine some of the available facts. In first place, ITA wasn’t an enterprise software of any sort. It didn’t address the end to end Airport/ Aviation market. It tried to create a vent in market by pushing its passenger reservation system, hoping to get a larger pie in the forthcoming days.  The 2005 contract with Air Canada was a big impetus for ITA, but died a short life due to the financial crisis faced by the Airlines.

ITA kept on struggling until 2011 when it managed to cut a deal with American Airlines. However, the deal was so small to quench its thirst and it started fizzling out. Added to this predicament was the priority of Google which prevented ITA from pursuing something so far afield — airline reservations systems — from its search business.

Google/ ITA started realizing that even with their current wherewithal, they may not make a big dent in technology systems that enable airlines to process tickets, maintain departure and control systems, choreograph crew scheduling, and handle baggage. This understanding fomented in the board meetings and that’s when Google ITA decided to pull off from the Airline Reservation system market.

And we heard them right – R.I.P for ITA passenger reservation system!

The 15 Giants of Travel Industry

 

It was quite a clumsy Friday afternoon, and I found myself flipping thru the pages of a leading Airline industry magazine. Out of the blue, something that struck me was the assorted list of the top 15 travel companies of 2013. While the usual suspects such as British Airways, Delta Air Lines, Singapore Airlines and United Continental found themselves holding on their respective slots, what surprised me was the company that topped the list as ‘Numero Uno ‘- the China Airlines !

Again, what further caught my attention was the huge market capitalization that these companies command.  Just do a simple math, and you would know that the sum total of the market capitalization of the top 15 companies amounts to a whopping $ 383 billion. This would be the GDP of couple of Africans countries put together!! Again on similar lines, the sales total comes to a hilarious $296 billion.

Being an Airport/Aviation IT buff, I was eager to know the share of the pie that these companies invest in software to run their business.  I also wanted to check the software systems in place. To satisfy my curiosity, I pursued some secondary research. The result was amazing!

I found that all pure Airline companies from the list –China Airlines, Eva Airways, British Airways, Delta Air Lines, Singapore Airlines, and Southwest Airlines – use both Amadeus and Sabre for running their business.  An exception to the above is United Continental, which is contemplating on discontinuing the contract with Amadeus.

On the software side, these airline companies invest anywhere between 0.65 – 1.25 % of their revenue on software investments. This huge market addressed only by few software vendors such as SABRE, Amadeus, Galileo and Worldspan. It’s interesting to note that there is a huge market for small and medium software vendors who can apply value added services.  The obvious question is how to break in and get a share of pie. And the answer is simple – fortune favors the brave!

Baggage Blues at Airport

Some of us would have had the chance of being at the receiving end due to the lack of coordination by the Baggage handling department at Airports.  While we would have boarded the destined airplane, our baggage would have trailed behind, or were loaded onto another airplane. The situation puts us in a fix, especially if we have a corporate meeting or family functions to attend, immediately after our landing.

Ever imagined where the folly lies? The problem and solution lies within the domain of Baggage handling department.  That said, it must be noted that the for effective Baggage handling, two things are important; One the coordination between different ground handling staff, second an effective  baggage handling system or software.  While the efficiency (or lack of it) of the staff is easy to identify and fix, what challenges is the legacy system implemented at some of these Airports.

A baggage-handling system has three main jobs- (1) Move bags from the check-in area to the departure gate, (2) Move bags from one gate to another during transfers, (3) Move bags from the arrival gate to the baggage-claim area.

The measure of the efficiency of a baggage-handling system is simple: Can the bags move from point to point as fast as the travelers can? If the bags move slower, you'll have frustrated travelers waiting for bags, or bags failing to make connecting flights on time. If the bags move too fast, you might have bags making connecting flights that passengers miss.

Each airport has its own requirements. For instance, the time allotted for a bag to make it from the check-in area to the gate is determined by how fast a passenger can make the same trip. In some airports, it might only be a short walk to the passenger terminal, while in others; passengers might have to take a train.

To eliminate the scope of any baggage related issues, the system in question should incorporate functionalities that help to move bags from the check-in counter to the departure gate in an almost completely automated way. It should have Destination-coded vehicles (DCVs), unmanned carts propelled by linear induction motors mounted to the tracks, can load and unload bags without stopping and automatic scanners scan the labels on the luggage. It should also have conveyors equipped with junctions and sorting machines automatically route the bags to the gate.

Again, all these information needs to get into the baggage handling software used in the Airports. Some of the leading software used in this segment are Amadeus Altea, Sabre and Galileo. While these software do a commendable job in tracking the baggage, they need to scale up to meet new challenges  in Airport IT management.  

Airport IT- The emergence of a new segment, the Airport Owners !

While Airports are one of the most sophisticated infrastructures that human kind has ever seen, an advocate of information technology often grapples with the question “ Why hasn’t Information technology come closer Airports as much as it should have? ".  The question looks apt especially in the back drop of slow paced investments in IT projects for the last few years.

The answer although is simple, gets complicated when we examine the nuances. Traditionally the Airlines, rather than the Airport Owners, have been the major decision makers in sourcing the IT infrastructures. On other hand, the Airport Owners focused their energies more on the security and maintenance of the facilities, leaving the operations to the Airlines. The made the Airport owners take a back seat in technology decisions.

However with the economic meltdown, Airline companies started facing the heat of the dry market and therefore less focused on IT infrastructure. This promulgated the Airports to shoulder more responsibilities and take greater control of their facilities and assets. Some of the Airports in Europe and Asia started managing their operations by themselves including passenger-processing infrastructure, baggage handling, catering, below-the-wing services, and the communications infrastructure.

 

Now all these services required the support of Information Technology. And as it states in the axiom “demand meets supply”, the Airports and IT companies started to drifts towards each other. The impending problems however was the lack of standard measures in terms of processes, understanding requirements, satisfying the regulations and implementation of successful IT infrastructure – Software, Hardware and et al.

To accentuate the IT investments and make them work as intended, Airport Consultants Council (ACC) set up the ACC IT&S Committee, in the year of 2008. The committee drafted the guidelines that serve as a reference document for any future Airport IT Implementations.

The members of the committee were from - Air-Transportation IT Service, Inc., ARINC, Arora Engineers, Inc., Airport Process Design. , Convergent Strategies Consulting, Inc. (CSC), Daktronic, Inc., AECOM,  Glover & Associates , Cisneros Incorporated, Paragon Project Resources, Inc., Roy D. McQueen & Associates, SAIC, The Jim Willis Group, SITA, Stellar Services, and XIP Consulting, LLC.

Thus with the dawn of the new era, the IT implementations is expected to get consumed and controlled by the Airport owners more than the Airline companies.

Facts Byte - Istanbul Ataturk Airport

There are few facts about Istanbul Ataturk Airport that some of the airlines buffs like us should never leave it to the mercy of Internet ; We ought to know them like the back of our hand.

• Its the biggest and busiest airport in Turkey, Istanbul Ataturk Airport's IATA code is IST
• It serves more than 100 000 passengers (pax) each day. In 2011, a total of 37,452,187 pax passed through its domestic and international terminals, reflecting a 17 per cent increase in comparison to 2010.
• It serves passengers 24/7, more than 485 companies such as airlines, ground handling companies, public authorities and commercial companies function at IST.
• The electricity consumption at the airport amounts to that of a town with a population of 25, 000 using an annual 116 million kw/h.
• The car park can accommodate 7,074 vehicles. Plus, there's an open parking area with a capacity of 2,250 vehicles.
• The duty-free area, operated by ATU, comprises 6,030 square meters.
• The catering services at 65 sales points are operated by BTA. On average, 1 ton of coffee, 15 tons of meat, 46 tons of fruit, 85 tons of vegetables were consumed monthly in 2011.

For further reads, I recommend you to go thru the wikipedia links and its offcial website.