Airlines Optimistic about Mobile Impact on Operations, But Change is Slower than Expected

By Gary Kim October 06, 2014

About 37 percent of airline ancillary sales come through websites, while 2.4 percent are generated directly by mobile phones, a new survey by SITA has found. By 2017, the mobile channel is expected to contribute nearly five times as much, representing 11.6 percent of total ancillary sales, SITA forecasts.

Airlines hope to make shopping services as widely available on smartphones as on a website, and 75 percent of airline companies might achieve this goal by 2017, SITA suggests.

Today, 28 percent of airlines offer a truly targeted experience on their website, but another 44 percent plan to add this capability over the next three years, growing to perhaps 70 percent within three years, respondents said.

But actual sales are only a part of the way airlines hope to leverage mobile capabilities. Mobile can be used to shift consumer interactions such as check in to self-service modes.

Most respondents indicated they are pleased with progress made on the mobile self-service front (66 percent), while 11 percent reported they are not happy. Yet, although mobile usage has grown in the last three years, it has been slower than many airlines predicted.

In 2010, mobile check-in was used by just 1.2 percent of passengers. Airline executives believed that would grow to as much as nine percent within three years.

By 2014, the global average for mobile check in was about 4.6 percent.

Possibly because they are highly focused on maintaining low operating costs, low -cost carriers have reached nine percent passenger use of mobile check in.

Some airlines have reached 15 percent usage of mobile check in, already.

Still, only around 40 percent of airline executives polled think mobile services are performing at least “as expected”.

Some might note that new technology innovations often take time to produce measurable results, so the slower-than-expected adoption is not terribly surprising.

The conventional wisdom is that investments in information technology and high speed access and other forms of communication contribute to better business performance.

Like many other bits of conventional wisdom, the relationship between economic growth, or firm performance and technology investment is unclear.

Though most believe that technology investment “causes” growth or better firm performance, some might argue that it is economic growth or firm performance that drives technology investment.

And, in any event, it takes time for human beings to adapt to new ways of doing things. The history of adoption of use of automated teller machines or debit cards provides examples. Even fast-adopted innovations such as the Internet, mobile phones or personal computers can take 15 years to reach 50 percent to 60 percent penetration.

Edited by Maurice Nagle

Contributing Editor

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