Technology: Between a Rock and an IT Place

As the news site Anna.Aero points out, route reductions are providing opportunities for some airlines to expand and others to cut back.

The overriding issue derailing airline recovery especially in the U.S. is, of course, oil.

For that reason I don't see airlines adding significant capacity in the foreseeable future. The U.S. network carriers will continue to pull out of unprofitable cities and shut down unprofitable routes. Fuel prices leave them no alternative.

The Scrantons and Binghamtons will be hit, but where there are potential profit opportunities, carriers like Southwest Airlines will fill the void.

Southwest is now the king, domestically; it will grow its market share at the expense of those carriers that weren't wise enough or cash-rich enough to hedge their fuel price position.

These are among the airlines' darkest days. But what's overlooked in all of the talk about skyrocketing fuel prices is that many of the big carriers not only missed the fuel-hedging boat, they missed the update-your-IT boat, too.

The untold story is that many airlines are still operating back office computer systems designed in the IT Stone Age. What that means is not only are they hobbled by all of the inefficiencies of an old data system — it also means they are hobbled in their desire to respond quickly to the demands of a fast-changing marketplace.

Without up-to-date IT systems operating behind the scenes – Qantas and British Airways, for example, are two carriers employing these advanced systems — network carriers can't compete.

The network carriers' dilemma is that they cannot afford to update those IT systems -- but they also cannot afford not to update them. This is what's called living between a rock and an IT place.

Airline Futurist • Miami • www.us.amadeus.com

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