How IT Revolutionised the Airline Industry and is now Revolutionising Retail – Part 2 of the Speech to the Chemistry Club

Why IT Matters

As I said in my previous blog, I see three malaises in the UK’s attitude and support to IT, which we, as the leaders of the UK IT, should address – “3 Dragons to slay”.

BUT before approaching those Dragons with a view to killing them, let’s look at why IT matters:

IT matters now more than ever to almost every industry in this country and around the World.  The case is simply put:

  • In the 1970s, Government tax offices, banks and airlines set up Data Processing factories to carry out routine back office tasks
  • In the 1980s, systems moved out to support running the business with finance and HR and customer data-bases like the BA Executive Club
  • In the 1990s, IT became global with airline ticket distribution systems
  • And in the 2000s we had the dot.com Bubble which – although it burst – revolutionised the way that some industries and sectors operated.

So, over the last 10 years, we have seen:

  • Amazon transform the way we buy books (with Borders in the UK and US closing)
  • Apple transform the way we buy music on iTunes (with even the Beatles’ Apple catalogue giving into the irresistible force)
  • The video games industry become a mightier force than the film industry these days. (Do, by the way, try the Rugby World Cup game on the XBox – and, no doubt, other platforms. My family and I are eagerly awaiting the release of the next Assassin’s Creed game too – the recreations of Venice, Florence and Rome in the Renaissance are unbelievably realistic worlds.)
  • Betting has gone online
  • Travel has gone online, with technology enabling airlines to restore that most precious thing – the direct relationship with customers.

Technology has revolutionised the Airline Business

The air transport industry was turned upside down in the early 2000s by Ryanair and Easyjet who had made Internet distribution a core element in their business proposition.  Full service airlines committed that classic mistake – fighting the last war not the current one – believing that what the customer wanted in the 1990s was what they still wanted in the 2000s.

Before the Internet, customers could not make their own price comparisons. The Internet blew this all open. So at BA we totally changed the way we priced, and the way we marketed ourselves – and this needed some pretty smart technology. This “calendar-led selling” was launched in 2002 and now every airline uses the same techniques.  It flipped BA online sales from c5% online to 40% in little more than 3 years.

Now this is a story I have been guilty of telling many times before, but – if it has not happened to your sector yet – it probably will.

Now IT is revolutionising retail!

So in John Lewis we are just going through the 20% sales online barrier.  It feels to me, in Retail in 2011, just like being in the airline industry in 2003 and 2004.

I put a tracker up in the entrance to BA HQ showing each booking coming in and I used to look each Sunday at the weekly increase in sales.  I now look at daily sales from each of the John Lewis stores and each assortment, and johnlewis.com is coming through with 20, 30 even

40% increases in daily sales compared to a year ago. In the first half of the year, we were approaching 30% up online compared with last year.

IT-enabled Innovation in the Airline Industry

So, what happened in BA after the initial success of BA.com kept us in the game as a full-service network airline against the challenge of the low cost carriers?  We innovated – we were the first (or near first) large network airline to put in:

  • self-service kiosks at the airports
  • Manage my Booking on BA.com
  • Change my Booking
  • online check-in
  • dynamic packaging of air, hotel, car and excursions
  • mobile exec club app on iPhone, Blackberry and Android
  • mobile check-in.

to be continued…

About paulcoby
I am CIO at the John Lewis Partnership in the UK. I was Chair of SITA - the airline solutions company owned by the Air Transport Community - for 11 years. I am also on the Boards of Clydesdale and Yorkshire Bank and Pets at Home. Previously I was Head of BA Services and for 10 years CIO at British Airways. I am interested in Roman and Military History. The views expressed are entirely my own not my employers.

2 Responses to How IT Revolutionised the Airline Industry and is now Revolutionising Retail – Part 2 of the Speech to the Chemistry Club

  1. I am extremely impressed with your writing talents as well as with the structure to your blog. Is that this a paid subject matter or did you modify it yourself? Anyway keep up the nice quality writing, it’s rare to see a great blog like this one today..

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