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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