Airline IT Budgets Set to Rise As Airlines Focus On the Connected Traveler
Written by Marisa Garcia – Flightchic.com
Airline IT Budgets were static in 2017 and showed a moderate increase in 2018, but 2019 will bring a greater allocation of cash and resources as airlines pursue a growing number of digital initiatives, SITA reports in its Air Transport IT Insights report.
Total airline IT spending in 2016 was $21.9 Billion and it rose to a moderate $24.8 Billion in 2017, with $30.6 Billion spending estimated for 2018. For 2019, 76% of CIOs surveyed expect their operating spend to increase and 66% expect their capital spend to increase.
The top two priorities expressed by CIOs are applications to support mobile services (90%) and Cybersecurity (89%). Other priorities include cloud services (80%); data centers (70%), and business intelligence applications (62%).
“Mobile services and cybersecurity have clearly been on the agenda since 2017 for IT services investment — with double digit growth in terms of the ‘major programs’ in place over the past year, making them almost ubiquitous among airlines,” SITA reports.
Self-Service Push Continues
Airlines continue to push self-service innovation as part of their in-airport experience, and are making plans to introduce technologies that will tackle the challenges of passenger growth.
- 88% of airlines will invest in self-service solutions for irregular operations
- 71% will invest in identity biometric identity management solutions
- 63% have planned programs to introduce real-time wait time monitoring
- 49% have planned programs for interactive wayfinding and navigation solutions
- 58% plan to introduce self-boarding gates using a combination of biometric and document IDs by 2021
- 43% plan to introduce self-boarding using only biometric identity by 2021
There is also a prioritization of mobile as the primary means of checking-in for flights. While 50% of airline passengers still checked-in with an agent in 2018, airlines would like to decrease this to 27% of all check-in at agents by 2021. Mobile app check-in is expected to increase from 11% of all passengers in 2018 to 29% of all passengers by 2021. Automatic check-in will also play a role in the evolution of passenger services. While only 1% of passengers experienced automatic check-in in 2018, this share is set to rise to 10% of all passengers by 2021.
Airlines have already made significant progress on the foundations for this self-service and mobile future.
- 95% of airlines offer web check-in
- 54% offer mobile check-in
- 81% of airlines allow printing of bag-tags at the airport
- 16% allow printing bag tags at home
- 72% of airlines offer assisted bag drop
- 45% offer unassisted bag drop
- 16% offer bag drop via robot
With the adoption of IATA Resolution 753, 68% of airlines are expected to offer passengers real-time baggage tracking updates by 2021.
Airlines have also generally accepted the importance of a mobile-first approach to customer interactions, with many mobile services now “almost universal,” according to SITA.
In terms of sales activities, 90% of airlines now offer mobile flight search and 83% send mobile promotions. Only 8% currently use mobile to sell movies or other in-flight entertainment options, though 39% plan to do so by 2021. Only 16% of airlines currently sell newspapers or magazines through their mobile channels, but 33% plan to do so by 2021.
Airlines are broadly using mobile for notifications, but they are not using the full capabilities of mobile devices. At present, 89% are using mobile to notify their customers on flight status but only
13% are using location-based notifications; 79% plan to introduce location-based notifications by 2021.
Mobile customer service will also get a boost in coming years. While 49% of airline CRM and issues resolution is currently conducted on mobile channels today, 47% of airlines plan to introduce these services by 2021.
Airlines also plan a greater adoption of AI-driven chatbot services. While only 28% of airlines offer those today, 55% have plans to introduce them by 2021.
Some of the cutting-edge technologies still have only modest adoption by airlines, but that will change dramatically over the next three years.
- 32% of airlines have planned major programs in artificial intelligence (AI); and 52% have planned R&D in AI by 2021.
- 10% have planned blockchain programs and 59% have planned blockchain R&D by 2021.
- 8% have planned cognitive computing programs and 43% have planned R&D in cognitive computing by 2021.
While the Google Glass wave that swept aviation was short lived, airlines have not given up on the idea of wearables as a helpful tool for operations.
- 13% have planned major programs in wearables by 2021, and 37% have planned R&D.
Digitalization Has Advanced, But Requires Leadership
SITA notes that airlines have made great leaps in digitalization on the whole, but there are still oceans to cross. Airlines would benefit from dedicated leadership for their digital innovations.
Nearly all airlines now have big digital plans underway with 58% reporting a firm digital strategy in place at the organization and 39% saying they are actively working to develop a digital strategy. However, only 9% of airlines currently have a Chief Digital Officer (CDO) to lead them in a firm direction. The majority of airlines (74%) said they have no plans to introduce this role in their organization.
Airlines are welcoming third-party tech partnerships to help accelerate their innovation with 42% of airlines having already forged such partnerships and 27% currently developing a partnership strategy.
The highest priorities for partnerships overlap areas where airlines feel they need the greatest investment of IT resources and also areas where they may perceive the job ahead to be most challenging.
- 34% have established Internet of Things (IoT) partnerships and an additional 33% plan to establish such partnerships by 2021.
- 30% have established Cybersecurity partnerships and an additional 45% plan to establish such partnerships by 2021.
- 32% have Biometrics partnerships in place and another 37% want to forge these partnerships by 2021.
- 29% currently have AI partnerships in place and another 53% plan to establish these partnerships by 2021.
- 27% of airlines have Blockchain partnerships in place and an additional 49% plan to forge these partnerships by 2021.
Cutting Edge Priorities
Airlines have specific areas of interest, both internal and customer-facing, to apply some of the more cutting-edge technologies.
The top use-cases for AI are:
- 85% virtual agents and chatbots
- 66% predictive analytics
- 63% targeted advertising and personalization
- 54% pattens recognition
- 50% band perception improvement, including social media/customer sentiment analysis
Among use-cases for Blockchain, airlines feel these would be of major benefit:
- 40% passenger identification
- 34% Tokenizing Frequent Flyer Programs
- 31% Tokenizing e-tickets
- 24% Item custody-change tracking
- 22% Maintenance efficiency
- 20% Smart contracts