Bringing Value To Low Cost Carriers
Fortunately for travelers, today's low-cost carrier
airlines are continuing to grow rapidly and expected
to attain 35 percent of the North American market over
the next four to five years. The key to low-cost carriers'
success is a combination of providing travel basics to
the consumer while running on a lean and focused operating
Sounds simple enough until you consider some of the
challenges faced by these carriers. So how can EDS help
them achieve success in the midst of these obstacles?
- Low cost carrier growth.
- As low cost carriers look to evolve their business
models and differentiate their services to travelers,
their margins are suffering from the rapid growth.
As they move up market to fill the void left by big
network carriers, they must implement scalable environments
to address growing complexities. Business infrastructure
must broaden to sustain growth, which could allow for
international routes, more outsourcing and codesharing.
The risk is that low-cost carriers could start to feel
the same high-costs pressures that made their network
competitors so vulnerable.
- During this period of growth, low-cost carriers will
find that scalability will not remain linear, and they
will, at some point, face a costly system migration.
Turning to EDS for the hosting of solutions and applications
on a leveraged platform environment can provide that
necessary extension of scalability while also significantly
driving down the carriers' cost of operations.
- Increased capital spend for core
- Thanks to this rapid growth, low cost carriers are
currently ordering more new planes than the traditional
network carriers. But this increased capital spend
leads to reduced cash levels and liquidity, which may
lead to an increased need to outsource some operations.
- Certain, non-core functions can take resources and
focus away from a company's core strategic goals. EDS
Business Process Outsourcing (BPO) services can make
a big impact for low cost carriers by integrating the
people, processes and technologies needed for maximum
efficiency. EDS' BPO portfolio of services includes
customer relationship management, financial process
management, human resources, finance and accounting
and supply management services.
- Additionally, the use of Speech Enabled Self-Service
drives the contact fees down from dollars per interaction
to cents. Speech Enabled Self-Service will also allow
for the immediate expansion of capacity at peak times
or in times of staff shortages.
- Public awareness and market branding.
- Large network carriers have lowered their fares to
compete with low cost carriers. As pricing transparency
increases, low cost carriers need to continue and even
increase their public awareness and customer loyalty
by shifting from traditional to online distribution
to improve their service and optimize revenues.
- EDS can help any airline with enhanced
Web sites, loyalty programs, and improved channel
to optimize revenue and improve service. EDS redesigned
Mexicana Airlines Web portal, helping them to provide
a scalable infrastructure - increasing sales from US
$600,000 up to US $1.5 million monthly.
- High fuel costs.
- With oil prices currently hovering near twenty-year
highs, and increases projected to continue through
2005 and beyond, low cost carriers are feeling the
pressures of lower yields cutting into their margins.
EDS can offer low cost carriers ways to save money
and still provide the same level of service to their
consumers by outsourcing functions such as call centers,
internal business processes and IT operations.
- Fuel Hedging, winglets and tankering are options
that all airlines are pursuing. EDS offers several
solutions including (ATK) Financial Hedging, procurement
options and portals.
- Business pressures.
- As the business landscape in the travel industry
continues to change, low cost carriers will most likely
experience financial limitations now and well into
the future. Collaborations with strategic partners
could lead to joint venture opportunities and leveraged
- EDS can help low cost carriers expand their market
reach through interline e-ticketing and reservation
systems support for commercial code share agreements.
- Security Issues.
- Recently enforced government regulations have created
operational inefficiencies and higher costs for low
cost carriers. How can carriers follow these mandated
regulations and still attain their goals of high customer
service and lean operations? EDS offers several solutions
including RFID Bag Tags, equipment locators, CAPPS/APIS,
Smart cards/ePass, ETE disaster recovery.
- For example, many of today's travelers
may soon be lucky enough to participate in a unique
After an initial screening and registration, these
travelers are issued a card embedded with radio frequency
identification (RFID) technology, and cleared to enjoy
shorter waiting times, preferred baggage handling,
and access to select waiting areas - thanks to the
use of RFID, real-time location system (RTLS) and Biometrics.
- Biometric solutions are being used today in airports
as an effective tool for authentication and access
control. When used in conjunction with key cards and
RFID chips, these technologies can not only safeguard
airports, but also simplify the entire travel experience
for travelers worldwide.
- Effective use of emerging technology/infrastructure.
- As transportation enters a new era,
technology must move ahead and become more efficient
to enable simple
processes, cost controls, labor reductions and flexibility.
Technology must also provide a platform for improved
customer services. Low cost carriers can better connect
with their customers through mobility devices and "edge" technologies.
Companies want to reduce dependency and spend on legacy
system maintenance costs so that they may redirect
their IT spend to prepare for the future. This goal
is especially true for low cost carriers, where maintenance
costs are quickly approaching 85 percent, thus driving
down the ability to invest in customer focused or competitive
- Commercial off-the-shelf COTS applications, leveraged
opportunities, near-shore / flexible operating models,
kiosks, and Microsoft .NET technology are just of few
of the enablers for low cost carrier technology. EDS
offers integration, integration of COTS, SOA, Web services,
eFares, utility compute (EMC, Sun), ITO and Digital
EDS Integrates Reservations Systems For New US Airways
EDS is working in partnership with the newly-formed US
Airways to integrate the reservations systems as the
company moves to become the nation’s largest
low-fare airline. The EDS reservation system currently
used by America West Airlines will be expanded throughout
US Airways. The EDS reservations system today handles
25 to 30 million passengers boarded by America West
each year. Once combined,
the system is expected to handle about 85 million passengers
for the merged carrier and support service to 229 destinations
in Europe, the Caribbean and North America.
- Source : EDS