The recent outages at Delta, Southwest, and indeed not so widely reported but at other airlines should be a wake-up call for the whole airline industry. With profits at their greatest ever, why has the comfort of passengers been sacrificed to airline IT shortcuts and failures? This is a question a lot of people should be and indeed are asking.
I will lay out four core reasons.
#1 Lack of investment in information technology (IT).
Airlines invest significantly in their core (aircraft and airport) technologies. Yet their IT investment lags the conventional industrial average significantly. At a time when airlines have been indeed making great profits across the board, airlines have stubbornly refused to spend more on their IT. Delta’s Ed Bastian is quoted as saying the airline has invested hundreds of millions of dollars in IT, yet he fails to see that the industry-leading carrier should, in truth, be investing at a higher rate.
Indeed, with no new decent technologies on the horizon that the airlines can adopt (see reason #2 below), they are happy to operate on the principles of both “if it ain’t broke, don’t fix it” and “as long as the other guys aren’t doing it, why should we?” Delta’s recent outage was a minor system failure that could have been kept minor with simple backup systems. Someone in IT architecture needs their head examined for failure to anticipate the impact of the single point of failure.
Bastian’s quote, “This isn’t who we are”, rings hollow. It is exactly who Delta is – i.e. a member of a laggard cluster of very powerful players who should be spending more and delivering more to their customer base.
#2 GDS/PSS giants don’t want it.
With Amadeus and Sabre now controlling the vast majority of airline reservations systems — meaning, passenger service systems (PSS) and related airline IT — and GDS-based, indirect distribution systems, they feel they are under no pressure to upgrade these systems. Sure they have updated the silicon (hardware), but the processes of airline-based IT are still founded on systems based on one-way messaging and telex-based processing designed in the 1950s. Real-time, massively scaled offer-and-sale mechanisms are just not present.
Instead we have “faked”* states of what someone thinks an airline availability state is, but no guarantees. It is high time we dispensed with these old legacy systems. It’s not that this is impossible. It is that the fat cats are not willing to kill the fatted calf. (If I can mix my animal metaphors).
The big PSS giants – add TravelSky to that list – are all based on the same antiquated technology designs and processes.
To make matters even worse, the contracts that exist on both the PSS and GDS side are shamefully restrictive to ensure that the airlines and their users have an actual disincentive to change the technology. (In the Delta incident, IBM’s Transaction Processing Facility, or TPF, was implicated in the blame by Reuters but this was not confirmed by the airline.)
#3 Fear of the unknown and the herd mentality.
The airline industry has operated as a club for many years – when it suits it. Innovation is always held hostage to operational excellence. Airlines who were early adopters of technology have now become laggards in embracing new technologies. The fear of change as seen in the slow adoption and the continued resistance to NDC is an example.
For the airlines, they don’t want to have to deal with the process of change. For the intermediaries, there is not just a fear of change by a systemic bias against change.
True there will be a lot of disruption with this change. But airlines need to get over themselves. Other industries who have just as many mission-critical systems in place have already done it.
Oh, yes, I guess that reason #1 comes back into play.
What is quite amusing here is that airlines now want to differentiate themselves. Therefore they need to embrace change. You cannot differentiate if you don’t think differently. The herd mentality must vanish.
#4 It’s complicated and time-consuming.
I would be remiss if I didn’t actually indicate that the whole processes of the industry and of its IT are REALLY complex and complicated. Much of it is self-induced pain. Simple processes take forever to implement. For small changes – the ROI frequently doesn’t get made because the process of adopting change is so hard and expensive. We need to bring back simplicity and ease of use and ease of change. It is not the customer who will not make the change it is the airline and its supplier stakeholders. The consumer has shown themselves to be quite adept at change.
Allow me to muse a little here.
All the wonderful new technologies the airlines crow about are really just at the periphery. Where the real work needs to be done is in the core. That is the selling systems and the inventory management systems. Airline selling systems are diabolically antiquated. Even the so-called real innovators in offer and sales management – companies like Farelogix, Datalex, OpenJaw, and our own Air Black Box — are still battling to bring modern retailing systems into general use.
Conventional retailing giants like Tesco and Walmart must be laughing at our industry’s naivety. Perhaps not so loud, though, since they can’t get travel to work either!
Companies involved in seat upgrades are as much of a symptom of the airline IT problem as an opportunity. It just shows how antiquated the technologies have become when a company exists to offer – an upgrade? That is not a company. It is hardly a product. It is a feature and should be so. With apologies to the companies trying to do this – I am sure it is a good idea but is it really one to build an entire company around? As someone who has led multiple teams that have brought change to the airline and travel IT world, I am incredibly frustrated by the slow pace of change in the industry today.
From our vantage point of being a small VC, we see some great technologies that cannot be implemented. It is almost heartbreaking to have to tell innovators that their idea cannot see the light of day. There is enough blame to go around. Perhaps now we can pay some serious attention to the requirement for change. And my prognosis? Unlikely to happen, but perhaps we can hope for some attention to it.
A final thought. Beware. there are now powerful players eyeing this situation with relish. Unless the industry takes heed of this wake up call, then better providers will enter the market.
Thanks for reading.
* RE: “faked” states… Priced availability as found in the initial results screen is not a true state of the real availability and associated pricing. It is an estimate without any form of trustworthiness behind it. This is well known to the consumer who wastes large amounts of computer resources in searching. There are a range of players doing this from Google to the GDSs.