How can an industry continually strive to cut costs and still be expected to provide first-class service? This is the dilemma confronting the airline industry. While air travel is a large and growing industry itself, it is also central to world trade, investment, tourism and global economic growth. The globalization of other industries depends on the air transport and related industries being able to deliver a reliable, yet low cost, array of services at the touch of a button.

SITA Cuts Costs at Global and Local Levels

By its very nature the air transport industry is based on the kind of global network that today's multinational companies both aim to imitate and utilize. The industry discovered that if it shared its communications facilities, all concerned saved money. The task of coordinating an integrated global communications network fell to the Societe Internationale de Telecommunications Aeronautiques, or SITA, as it is now known. Founded as a cooperative in 1949, SITA provided the first direct communications link between European airports. It is now a 730-member-strong worldwide organization headquartered in Geneva and comprising two main parts, SITA SC and SITA INC. As well as providing services to airlines and airports, it helps companies in related industries such as logistics to achieve savings from the sharing of infrastructure. In fact, it is now the biggest provider of information technology and telecommunications solutions to industries involved in air transport. However, SITA remains committed to its original aim--encouraging the shared use of new technology to help its customers become more cost efficient. It must now respond to new challenges faced by the air transport industry while continuing to cut costs and increase efficiency.

The question remains whether SITA will be able to continue to help the industry reduce expenditures and still provide enhanced services to its customers. The emerging technology used in call centers, assisted by the convergence of telecommunications and computer communications, is an area the industry hopes will provide significant advantages for users and savings for providers. The airline industry is counting on SITA to help it meet these new challenges. So what exactly is the former monopolist, now run as a normal company, doing to ease the worries of its shareholders, the majority of whom are airlines?


SITA's New Strategic Initiatives

SITA aims to save money not only for the 588 airlines it works with, but also for other companies in the air transport industry, such as global distribution services like Galileo and shipping companies like DHL, which will in turn mean savings of up to 25 percent for airport hubs too. For SITA to achieve these cuts it has to actively seek new ways of working with its customers and if necessary transform itself in order to do so. The company began this process with the restructuring of its global organization two years ago, and is now implementing a series of initiatives to increase revenues across the industry and at the same time, according to SITA SC CEO director-general, Hans-Peter Kohlhammer, transform SITA from a technology network company into a value-added integrated service provider.

Under the banner of 'Transform 2006' SITA has outlined four key objectives that will dramatically change its relationship with the air transport industry. The first is fundamental: to reduce overall communication costs for the industry; the second is for SITA to remain the preferred provider of Travel and Transportation Industry (TTI) communications services; the third is for SITA to build on its community role, working in partnership with industry bodies like the International Air Transport Association (IATA); the fourth and final objective is for SITA to guarantee its customers that it is tenable long-term, and can continue to be of value to its owners.

SITA's objectives are to be realized by five further strategic initiatives. Firstly, in its new role as a communications services integrator SITA wants to take complexity away from its customers. It plans to outsource communications and network applications so that airlines can focus on their core business: service and transportation. Secondly, SITA will expand its range of professional services. Customers, by availing themselves of the new services, can keep costs down and access cutting-edge communications technology. Thirdly, SITA is pioneering a new approach to airport hub networks in a further effort to reduce costs for customers. By consolidating individual 'pipes' connecting local area networks to airlines in the airport network, SITA aims to save customers up to 25 percent on costs. Working in partnership with Equant, part of the France Telecom Group, SITA has flight-tested this kind of integrated airport infrastructure in 50 airports across the world with another 100 to follow by the end of 2005.

SITA's final two initiatives involve voice services and IP (Internet Protocol). New, improved voice services and IP convergence are shaping up to fundamentally change the way airlines and their customers contact each other. The industry is taking advantage of the fall in prices for IP services, and increased reliability of VoIP (Voice over IP). Call centers, for example, plan to add multimedia technologies to their services over a shared network infrastructure. Webenabled call centers can take calls from potential customers browsing the Internet. Simply by pressing a 'call me' button customers are able to speak directly to an agent via VoIP telephone SITA has introduced Cisco Systems' and Hewlett-Packard's IP technology, a vast improvement over earlier versions, which had a reputation for being both risky and, worst of all, costly. A related initiative is SITA's 'IP Everywhere,' intended to hasten the industry-wide adoption of IP. The company reported that significant progress was made throughout 2004.