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 model.

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 operations.

 

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 distribution 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 business environments.

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 travel program. 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 advantage activities.

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 Document Management.

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