Cloud services take to the sky
I always enjoy it when someone from outside the tech industry shares their views at conferences, so I was particularly keen to hear James Hogan, chief executive of Etihad Airways, speak at the Broadband World Forum last week.
Hogan detailed how broadband has revolutionized the airline industry, shifting power away from high street travel agents to consumers, and helping air operators to cut costs – a benefit that allowed new players like Etihad to enter the market in the first place.
“Air travel was uniquely positioned,” Hogan said, adding that most airlines “had an understanding of the power of extending” existing in-house systems to the public.
Today, a raft of airline applications for smartphones and tablet PCs means Etihad is quickly approaching the point where the majority of its sales come from online transactions, Hogan said. He cited US research that shows a third of frequent fliers book and pay for their flight via a smartphone, while a separate JD Power survey reveals that a similar number (37%) of travelers want real-time information on the progress of their luggage through baggage halls.
There is a flip side to web-enabled consumer power, though. Hogan notes that it is much easier for modern consumers to compare the pros and cons of a particular airline, and to share that view quickly using social media. “One, offhand, comment can thrust your firm into the spotlight,” Hogan notes, adding. “We no longer control the message.”
While the Internet has instigated a channel shift for consumers, it is also opening doors to a better on-board experience. Hogan notes that cloud technology means airlines can eliminate the bulky servers, which could open the way to truly on-demand in-flight entertainment along with the ability to keep working on e-mails while flying.
Hogan concedes that privacy and security remain key issues for in-flight broadband, however he notes that airlines can ill afford to be put off by such concerns due to the fast pace of development to customer experience. With that in mind, Etihad will have its first two cloud-enabled aircraft in service by the year-end, with a further three due by March. “We’re settling on fleet-wide connectivity,” he said.
There remains, however, one key hurdle to aircraft connectivity – the long lead time on new planes relative to the pace of change in technology. It’s a problem often also cited by the automobile industry and, like those firms, Hogan sees ramping his firm’s involvement in tech R&D as the most obvious answer. One example will be working with social media “gurus” to develop an effective strategy - an ability Hogan concedes the firm doesn’t have on its own at present.
The crux of Hogan’s presentation is that the Web creates risk for the airline industry, but that the savvy operator will manage that risk and turn it into an opportunity for growth.