Feature

British Airways cites IT investment as key factor in 20% profit increase

Investments in IT have played a key role in boosting British Airways’ profits by 20% to £620m in the face of rising fuel prices and growing competition from no-frills airlines.

BA chief information officer Paul Coby said the airline had used technology to drive the streamlining of business processes, removing complexity and cutting costs.

The strategy helped BA transform its short haul flight businesses, which made a profit of £7m last year, after 10 years of losses, the airline said.

“The hidden multiplier is that if you are going to automate, you have to understand the process and simplify it. Complexity will kill you and slow you down. IT has been an enormous leader in simplifying BA’s business,” said Coby.

The IT department’s strategy is to ensure that, rather than having multiple IT systems with multiple sets of data, it has the minimum number of IT systems needed, based around a single set of customer records.

The airline has been investing in its BA.com website, which accounts for 33% of sales in the UK and 80% of sales worldwide, as its core IT system. The system has been designed and managed in-house. “We see this as our key differentiator,” said Coby.

“We said we would make dealing with BA so easy you would want to do it yourself online. We called the project Customer-Enabled BA internally, because it was about enabling our customers. It was not technology for technology’s sake.” 

The airline has recently completed a sophisticated programme to integrate the BA.Com website with the airline’s call centres, allowing both sales channels to operate using a single set of data.

“Our teams have worked with the call centre and talked with staff to understand the call centre operation. The clever thing is to take data and make sure it moves from one system to another. That has been the challenge,” said Coby.

Moving towards e-tickets, which represent 87% of tickets issued, has reduced costs and simplified BA’s operations. In the past, cardboard ticket stubs were collected, scanned, and sent through a central clearing house.

“Six months later you might found out what you flew and what your revenues were. With e-tickets, you find out your revenues as soon as you have clocked in,” said Coby.

The airline has set itself the target of selling 50% of tickets worldwide online within two years and handling 50% of ticket queries, changes and upgrades online. This will rise to 80% when Heathrow’s Terminal 5 opens for business in early 2008, said BA.

The IT department is also developing ways to make it easier for customers to manage excess baggage online and is working on an electronic shopping basket that will allow customers to buy complete holiday packages, including flights and hotels, online.

A project is underway to develop boarding cards that can be printed from a home PC. They will use barcodes that can be read by a scanner at the airport.

“Our philosophy has been to build systems for customer use, build it right and build it once. It is cheaper for the airline. It is also much simpler to change your processes because you have one system,” said Coby.

 

Quality Up, Costs Down

Innovative use of technology has enabled British Airways to improve the quality of its IT operations while reducing the costs, BA CIO Paul Coby told Computer Weekly.

“We have reduced the cost of running our IT operation by 40% over the past four years. We are not only doing more technically, we are running it more efficiently. Also, the quality has improved by two or three times. We have done that by simplifying and standardising how we run the technology,” he said.

 


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This was first published in May 2006

 

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