Losses eat into airlines’ ICT investment

By Pocyline Karani

Airlines’ investment in Information Communication Technology (ICT) continues to decline, following a Sh790 billion loss posted by the industry last year, a report by an analyst, SITA has revealed.

Tasked with developing air transport communication and ICT solutions, SITA conducted a survey that traced trends in adoption of ICT, which also predicted that investments in the area would reach a new low this year, at the backdrop of a forecasted loss of Sh680 billions by IATA.

"ICT and telecommunications operating spend as a percentage of airline revenue is forecast to be 1.7 per cent. This is the lowest level recorded since 2002, as airlines seek to reduce costs... and as aircraft operators cope with unprecedented financial losses," said the report, which was co-sponsored by SITA and Airline Business. Presented recently at an industry conference, the report reveals that 72 per cent of respondents plan to re-evaluate ICT suppliers contracts, and another 70 per cent planned to invest in solutions that would lower overall enterprise costs.

Lowering costs

This forms part of an industry wide initiative dubbed ‘simplify the business’ that aims at re-evaluating airline business operations to lower costs though ICT. Most airlines have put in place measures such as rationalisation of ICT suppliers, infrastructure consolidation and reduced head count and outsourcing.

The initiative has gone miles into helping African carriers such as Kenya Airways cut costs by introducing concepts like online booking as they move towards a paperless ticket.

SITA chairman and British Airways CIO, Paul Coby said the drop in investments in ICT was a direct reaction to an expected drop in revenue this year due to fall in passenger demand globally.