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Emerging technology--like mobile communications, information management, the Internet, biometrics, or new kinds of aircraft--can bring significant business efficiencies across a broad spectrum of an airline's operations. It can add value to different functions by reducing costs, enhancing revenue, and improving customer service, as well as customer safety and security. This book is intended to provide the reader, a practitioner in the airline or airline-related industry, with (1) an overview of the impact of emerging technology on the airline industry, (2) a conceptual framework for developing and aligning business and technology strategies, and (3) an appreciation of the organizational changes required to gain the most benefit from the implementation of leading technologies.
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DRIVING A IRLINE BUSINESS STRATEGIES THROUGH EMERGING TECHNOLOGY Dedicated to the memory of my parents Dharam Pal and Shanti Devi Driving Airline Business Strategies through Emerging Technology NAWAL K. TANEJA Ashgate © Nawal K. Taneja 2002 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the publisher. Nawal K. Taneja has asserted his moral right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act, 1988. Published by Ashgate Publishing Limited Gower House Croft Road Aldershot Hants GUI I 3HR England Ashgate Publishing Company 131 Main Street Burlington, VT 05401-5600 USA Ashgate website: http://www.ashgate.com British Library Cataloguing in Publication Data Taneja, Nawal K. Driving airline business strategies through emerging technology I .Airlines - Management 2.Airlines - Planning - 3.Airlines Technological innovations I.Title 387.7'0684 Library of Congress Control Number: 2002102526 ISBN O 7546 1971 0 Printed and bound in Great Britain by MPG Books Ltd, Bodrnin, Cornwall Contents viii List of Figures List of Tables Foreword Preface AcknowledRements X xi Xlll xv 1 Challenges Driven by the Changing Airline Customer and Industry Dynamics 1 1 1 The Changing Airline Custpmer Demographic Trends and Implications What do Customers Want? 10 Industry Dynamics Competition Technology 14 14 18 2 Opportunities Driven by Emerging Technology 27 Operational Planning 28 Products Development Aircraft On the Ground Challenges 37 37 42 48 Airline Profitability Measurements 50 V 3 Market Segmentation and Customer Relationship Management 57 Market Segmentation Evolving Strategies Segmentation Techniques 57 58 63 Customer Relationship Management What CRM is and What it is not Critical Success Factors 72 72 75 4 E-Business and its Application to Airlines Overview of E-Business Description of E-Business and its Evolutionary Stages of Development E-Business and its Effects on Four Constituents 85 87 87 92 99 100 100 104 105 106 Key Drivers of E-Business Vision Technology Processes Metrics Transformation Process 5 Opportunities Driven by Emerging Aircraft Technology 109 Long-Haul International Markets The Airbus A380 The Boeing Sonic Cruiser Concept 109 109 115 Regional Markets 118 Personal Transportation Fractional Aircraft Ownership Personal Aircraft 122 123 126 VI 6 Forces Transforming the Air Cargo Market 13 1 Changing Needs of Shippers 13 1 Evolving Industry Structure Independent Units of Combination Carriers Consolidation an