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Airlines slash spending on IT

Antony Savvas

Airline investment in IT is set to reach a new low this year as airlines cope with huge financial losses, according to the 2009 Airline IT Trends Survey, co-sponsored by airline IT industry body SITA and Computer Weekly sister title Airline Business.

Delegates at the SITA Air Transport IT Summit in Cannes today heard that IT and telecommunications operating spend as a percentage of airline revenue is forecast to be just 1.7%, the lowest level recorded since 2002.

Airlines are seeking to reduce costs against a backdrop of $10.4bn in losses last year and an IATA forecast of $9bn in losses this year.

Many airlines are in "survival mode", said the survey, with 72% intending to renegotiate IT supplier contracts and 70% planning to invest in systems that lower overall enterprise costs.

Most airlines have already put in place measures such as rationalisation of IT suppliers, IT infrastructure consolidation, reduced head count and outsourcing.

Paul Coby, SITA Chairman and CIO at British Airways, said, "The drop in IT investment by airlines is a direct response to the $80bn in revenue that is expected to disappear this year from falling passenger demand. For the first time in several years, there will be a year-on-year decline in IT spend. The focus everywhere is on doing even more with even less."

But Coby was keen to stress that IT was seen by airlines as an essential tool to help them get out of the mess. He said: "Used well and effectively, IT will cut costs and protect revenues. IT has already accomplished a great deal in reducing distribution costs and expanding self-service functionality."

Coby said technology growth areas over the next three areas included IP telephony, service oriented architecture, software-as-a-service, Web 2.0, cloud computing, data security and biometrics.

The Airline IT Trends Survey polls senior IT personnel working within the top 200 passenger carriers. This year, 116 airlines responded.

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