Airlines need innovative service delivery models: Time to adopt a fully managed and outsourced passe

Published: 03rd September 2009
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A core process for the airline industry is Passenger Revenue Accounting (PRA), which involves accounting for and calculating the yield on each ticket sold. To speed the process, which can be very manual, and reduce costs, it is critical to incorporate the right technology into PRA operations so that airline managers can access, process and analyze information with speed to meet efficiency and revenue goals.

The results of the annual Airline IT Trends Survey by SITA provides significant insight as to the main reasons why airlines should consider new technology or alternative application access methods, and the obstacles that stand in the way of successfully implementing the right technology. Major findings suggest:

* Cost reductions and efficiency improvement are by far the key catalysts for IT projects

* The top two obstacles to implementing an IT strategy are a lack of skilled IT personnel, and a lack of funding

* In addition to reservations applications, frequent flyer and passenger revenue accounting applications are among the top IT applications or systems that airlines plan to move to an outsourced/ASP delivery method

For airlines seeking a cost-effective alternative to investing in a capital intensive on-site PRA system, a fully managed and outsourced PRA service on an ASP model may prove quite advantageous. Such solutions reduce the system acquisition time and upfront capital outlay in acquiring and managing expensive PRA platforms. The service provider provides the PRA technology on a hosted platform and is also responsible for system refresh from both technology and functionality point of view. The airlines pay a predictable unit transaction fee based on volumes of passengers processed rather than fixed software maintenance fees. This helps clients free up resources for other strategic initiatives.

In addition, such a solution enables airlines to outsource the complexity of data center management and PRA processing to experts, often in an offshore location, thus providing significant cost advantages over managing operations on-site. With the right service provider, the airlines also benefit from process improvements and best practices in PRA, thus giving them advantages beyond cost savings in terms of increased productivity, efficiency and quality.

In summary, adopting this service delivery model is a benefit to PRA operations. In an era of rising costs and revenue pressures, the impact of moving to a outsourced PRA service can be enormous.

By Sanjay Jain

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