Garuda Indonesia is set to be the first airline to switch its core information technology systems to the Future Airline Core Environment (FACE) from Lufthansa Systems, and the two companies have established a software joint venture in Jakarta.
The IT subsidiary of the German airline group, Lufthansa Systems (Stand A433) developed FACE specifically to provide an alternative to the global distribution systems, which it says charge the airlines an average of around $12 per ticket. The system is built around Unisys AirCore reservations and inventory, ticketing and check-in modules and is intended to reduce the cost per passenger boarded to around a quarter of that amount, or just $3. UK carrier BMI and fast-growing Qatar Airways have also opted to use FACE for their future passenger handling.
Last June, Lufthansa Systems and Garuda Indonesia announced the formation of Lufthansa Systems Indonesia, which will develop software and provide data center services for customers in the region. The airline’s president and CEO, Emirsyah Satar, said outsourcing his airline’s IT to the joint venture would minimize its costs while providing access to state-of-the-art technology.
Lufthansa Systems chief executive Wolfgang Gohde has predicted that the growth of low-cost competition, the development of alliances and the advent of e-ticketing will trigger massive changes in the airline business. Yet most airline IT systems are more than 20 years old, he said, when other industries would consider anything half that age already obsolete.
The first IT-enabled revolution in airline passenger processing was created by the original departure control systems of the early 1970s, with their ability to check in and board passengers at any location. The computer reservation systems that emerged at the same time have evolved into the global distribution systems of today.
Some global distribution system prov-iders are reacting to the changing environment by expanding the functionality of their old platforms. Lufthansa Systems believes airline IT providers must choose whether to be full service providers of passenger systems and their supporting IT solutions, which go beyond airline core processes–so-called value added systems–or specialized providers of the value added systems themselves. It plans to follow the full-service route, and is investing around $48 million in a replacement for its MultiHost passenger system. FACE is the cornerstone of that development.
Gohde expects the distribution landscape to change very rapidly as airlines seek to increase their market penetration and secure as many direct bookings as possible. So FACE, which is designed specifically to be independent of the global distribution systems, will enable airlines to use multiple distribution channels while adding new functions such as automated code share management.
The new system consists of modules that can be combined in multiple ways to meet the varying needs of low-cost, regional and full-service network carriers. It supports all traditional core processes of passenger airlines–from reservations, inventory, ticketing and departure control to passenger services–and will provide new functionalities in the flexible handling of different marketing channels. And because it is being offered for a pay-as-you-go fee per passenger, there is no requirement for major up-front investment.
The result, Gohde said, is that it will enable airlines to simultaneously improve their quality of service and achieve significant reductions in costs while becoming independent of the global distribution systems. As well as eliminating the global distribution system charges, replacing aging IT systems with FACE should reduce airlines’ IT costs by at least 40 percent and as much as 70 percent depending on how they run existing systems.
Within the next five or six years, he predicted, the inability of airlines to develop replacements for their obsolete systems means there will be just three or four global IT platforms. “Airlines won’t be able to do their own so standards will evolve. All airlines will have to change because the old systems won’t survive, and everybody will be able to choose the best platform for themselves.”