Pricing & Revenue Management Blog

Airline Industry IT Glitches: Are Softwares Up To Date?

Sep 14, 2016 11:32:44 AM
| |

Why Is the Airline Industry So Full of Software Problems?

Ticketing and distribution systems can also face computer glitches that, in the dynamics of yield management, can have a ripple effect. These can be costly mistakes if the airline is not fast to correct it, due to a complex networked structure of legacy carriers, hiding errors and inconsistencies.

A Threatening Glitch

In August, Delta suffered failures that threatened its operation for several days, due to a system-wide computer outage, and was forced to cancel more than 2,100 flights and delay much more. According to the airline, its backup system failed to take over its IT system.  

In July, Southwest had a router failure slowing operations for nearly a week and United Airlines flights were grounded because of another glitch. What is going on?

Are Airlines’ IT Systems Up To Date?

Although experts say that computer systems in the aviation industry are not more complicated than the ones used in other areas, such as banking or commerce, the chain of events it causes is more widespread.

Apart from paying grievances, airlines have to rebook flights, work rerouting options and find the best fares and combinations to their angry passengers at the lowest possible cost.

Despite the market dynamics behind the Ticketing and Distribution systems, there are some decisions that in the long run can be costly for the airline industry.

1. High Load Factors

Mark Gerchick, author and former Chief Counsel at the Federal Aviation Administration, told the LA Times that “load factors are high and there is much less flexibility in the system. You now have much more of a waterfall effect with each glitch”.

2. Multitasking Computer Systems

Gerchick also pointed out that an airline’s computer system is no longer just responsible for ticket bookings, but seat assignments, loyalty reward programs, and ancillary sales. “I imagine the amount of information on these systems is greater than 20 years ago. I imagine the demands must be grand”, he said.

According to him, airlines are reluctant to spend on technology. “People can tell if a fleet is old but they have no idea what’s going on in the back room. That is very different. They just assume the computer systems work. But you need to look at it through the prism of revenue. You are going to lose money if it screws up.”

3. No Space for Updates, Maintenance, and Testing

Sam Kidd, an Account Manager at Zerto, a data disaster recovery software company, also told the LA Times that any business handling great deals of data must regularly invest in software and hardware and they must test it on a regular basis. However, “it’s more difficult and costly for a 24-hour operation like an airline to upgrade or test its computer system without interrupting regular operations,” he said.

Bill Curtis, Senior Vice President and Chief Scientist at Cast, a software analysis and measurement company in New York, said that, as airline computer systems become larger and more interconnected, airline executives need to understand how important it is that the systems be well maintained and staffed.

“In general, there is simply not enough appreciation for the importance of software.”

4. Outdated Legacy Technologies

Airlines have avoided the steep cost of rebuilding their reservations systems from the ground up; former airline executives told Reuters.

According to experts approached by the Associated Press, airlines depend on “huge, overlapping and complex IT systems to do just about everything”. As a result, after years of rapid consolidation in the aviation business, these computer systems may be a” hodgepodge of parts of varying ages and from different merger partners.”

“These systems are also being worked harder, with new fees and options for passengers, and more transactions - Delta's traffic has nearly doubled in the past decade.”

Glitches can increase as airlines merge, forcing their IT teams to combine the booking or scheduling systems of two carriers, leading to computer problems to be on the rise.  Gary Leff, a specialist on airline loyalty programs, told The Wall Street Journal that these were “legacy systems grafted onto other legacy systems”, and that companies can’t possibly be fully prepared “for every circumstance that could cause a problem.”

In fact, after the Delta incident, two US senators sent a letter to the U.S. airline executives seeking to learn why their airline computer systems fail so often and what the nation’s airlines plan to do about it.  

The members of the Commerce, Science and Transportation Committee fear that too many airlines still “rely on 1960s technology to run their systems, making them unusually vulnerable to cyberattacks”, and ask operators how are they checking if IT systems are both reliable and resilient.

How is the Airline Industry Taking Care of IT Glitches?

After the July event, United Airlines said in a press release that its computer network is reliable and includes redundant systems, and continues to “invest and improve on the reliability of those networks” to deliver better service to their customers.

On the other hand, in a video statement, Delta Chief Executive Ed Bastian said: "Over the last three years, we have invested hundreds of millions of dollars on technology infrastructure upgrades and systems including backup systems to prevent what happened yesterday from occurring. I'm sorry that it happened." 

Worldwide airline executives are aware that they have to do something to improve responsiveness. On the SITA Airline IT Trends Survey 2016, CIOs claim that maintenance is their top priority.

  • 66% are focused on service continuity IT solutions, such as investments in new data centers.
  • 34% are focusing on innovation and enriching assets, such as software development.

How to Avoid Airline IT Glitches?

 

Source: SITA Airline IT Trends Survey 2016

However, despite the figures, Computer Economics told Reuters that American and Canadian airlines were projected to spend an average of 3% of their revenue on information technology, compared to 8% in commercial banks and 4% in healthcare firms.

Given this scenario, the airline faces a dilemma: should airlines continue investing to “patch” the problems that old legacy technologies give them?  Or should they make a hard (even painful), but long term decision to change and switch to new technologies? 

How is your airline dealing with IT glitches?

Request a walk through

Tags: Airline Industry
Related Articles

Airline Profits: The High Price of Doing Nothing – Infographic

Jun 28, 2017 8:00:00 AM | Sergio Mendoza, PhD
Airline Profits: The High Price of Doing Nothing – Infographic

Airlines can add up to 5% additional net revenues to the bottom line if they improve their pricing processes, access real-time data to calculate fares, and rely on cloud-based technology to uncover hidden revenue opportunities, according to "The High Cost of Doing Nothing," our recently published infographic.

Read More

It's Time Airlines Consider a New Pricing Approach

Jun 14, 2017 1:12:31 PM | Sergio Mendoza, PhD
It's Time Airlines Consider a New Pricing Approach

Shortly after unveiling our pricing intelligence platform at the Aviation Festival in Miami last month, my colleague and Airnguru co-founder Javier Jimenez and I were interviewed by Airline Profits. And when it comes to airline profits, we quickly formed a consensus - there aren't enough of them.

Read More