Management Information is the key to easing the lot of the long-suffering passenger, argues Kieron Brennan. Airlines should draw on methods used in related sectors to enable them to fully develop the concept of the 'seamless' journey.

You're a tycoon, living in Grand Cayman. Suddenly, one morning, a major business opportunity presents itself, which means you have to get to a meeting in Osaka in two days' time. Wouldn't you rather be a parcel?

All you do is ring Federal Express, DHL or UPS, explain the problem, and spend a little time putting your business and home affairs in order. By the time you've finished and packed a bag, a courier has arrived. If he's anything like his company's television advert, he's moving so fast that he's barely visible. From that moment his company looks after you every step of the way.

Your journey may consist of several legs, but a succession of equally efficient couriers shepherds you through every transit point and ushers you on to the next leg. Because the parcel company is focused on getting you to your meeting on time, rather than just on dealing with one particular leg of your journey, the couriers would be constantly scanning information on flight delays and traffic conditions, ready to alter arrangements if needed.

You don't notice any of this; in fact, you never needed to know the original plan. If you chose FedEx, and left your airbill number with your family and colleagues, they could find out exactly where you were at any time by accessing the FedEx home page on the Internet. Best of all, the company is not just content to get you to your destination, it also guarantees to get you there on time, and will give you your money back if it fails to do so.

Imagine the competitive advantage a travel company would have if it could offer such a service. Many travel agents can plan and book complex itineraries, but their service ends as soon as the journey begins, which is exactly when serious complications can arise for passengers.

The problems with journeys are not the times during which travellers are moving through the air or over the ground, but the times in between when they are stationary and waiting for a segment to start - the interfaces between the journey's component parts, or the seams. These interfaces need to be managed, but in the passenger travel business - unlike the parcel transport business - no company seems willing to take overall responsibility for journey management. The seams can at times be smoothed, as when an airline provides a limousine service to the airport from home or office, or when an 'executive club' is made available to premium-fare passengers at an airport. But these are still only ways to market specific journey segments rather than attempts to manage the whole journey.

Since no single organisation will accept responsibility for passengers throughout their journey, customers are forced to manage their journey interfaces themselves. The evidence is that business travellers find this a chore which they would happily pay handsomely to be rid of. 'I look forward to the day when I'm treated as well as a parcel,' read one reply to a survey of airline passengers.

It may seem odd that business people, who generally prefer to be in control, should want to be treated like parcels. It seems too passive a status to appeal to people who are usually entirely aware of the consequences of their actions. But there is nothing quite like managing a journey to induce a sense of frustrating impotence. Much of the time is spent waiting; the schedulers and air traffic controllers are in charge of time-keeping. The passenger is just 'work-in-progress'.

It does not have to be like this. FedEx and its imitators have shown that journey seamlessness is valued by customers, and that a fair approximation of seamlessness can be contrived with information technology. They do not have to own or control the travel segments to manage a parcel's journey through them. All they need is information about each segment and all the seams between them, an ability to integrate it to produce an optimum schedule, and the flexibility to change schedules, at short notice, in the event of unexpected delays or other problems.

Of course, it's not quite so simple for passengers. They require rather more care and service than just being physically moved from place to place, so seamlessness is a much harder target. And, of course, schedule flexibility is vital for true seamlessness. The passenger transport infrastructure is both inflexible and all too vulnerable to disruption by unforeseen events.

But another travel sector, which does handle passengers, is showing the way ahead. As the parcel couriers have shown the travel industry the full range of possibilities for journey management, so the package holiday operators of the tourism industry are starting to teach passenger travel companies a thing or two about technical possibilities and flexible responses to customer demand. Demographic change is leading to shifts in demand patterns in tourism. Its customers are becoming older, richer and more demanding, expressing a growing desire for short breaks and more diverse destinations. These developments mean that the travel segment interfaces are becoming more important, and tour operators are responding by investing in the technology needed to deliver more flexibility.

Tourists have clearly shown their willingness to pay premium prices for holidays tailored to their wishes and adaptable to their whims. Many of them are also business people, and it would be surprising if they were to prove any less willing as business travellers to pay for the flexibility and tailoring which they prize as tourists. There is a major business opportunity in this concept of the seamless, flexible, supplier-managed journey. All the necessary components already exist - what the decisive innovator has to do is pick them up and fit them together.

What are the key pieces, and what kind of company is best placed to integrate them? If one of the obstacles to seamlessness is the start-stop-start nature of travel, and the queuing and waiting that accompanies it, the journey managers - be they travel service suppliers or the customers themselves - will favour interface sites (seaports and stations) where waiting times are short.

In most modern airports, for example, passengers have to turn up at least an hour before a flight and may have to wait and queue to check-in. By contrast, passengers travelling from London to Paris or Brussels on the Eurostar train through the Channel Tunnel turn up 30 minutes before departure and check-in automatically, by inserting their tickets into a computer-controlled mechanical gate. Airlines are responding with interface improvements such as fast-track transit for premium passengers, telephone check-in systems and ticketless travel using 'smart cards'. These are emerging as competitive 'differentiators' at interface sites. Limousine services and executive clubs are almost mandatory for premium fare, international airline passengers.

But this is a piecemeal response, not true seamlessness. Some may argue that true seamlessness is a theoretical pipe-dream, with the passenger journey manager needing to control the interfaces. Airlines would have to own airports, for example. But this is plainly wrong. It might be convenient to own all the assets that form and link the travel segments, but it is certainly not necessary. All you need is instant access to the relevant information.

Information can transform the travel product and rewrite the rules of the entire travel industry. The power balance between travel agents, ports and carriers could shift dramatically, with power moving away from asset owners to those integrators of information who are bold enough to question the value chain - the financial returns gathered by the separate companies - and who understand the appeal of seamlessness.

Travel agents are the closest to being information integrators, albeit in a cursory, unsophisticated way. They handle larger numbers of journey segments than anyone else, have a better grasp of the whole journey, and can enjoy the closest contact with customers. But such intermediaries are always at risk during periods of rapid technological change, because their share of the returns from the value chain is the most vulnerable to capture by larger and better-resourced players. In this case, travel agents lack the technological competence to 'own' travel information. Their own technology is crude, and they are totally dependent for the service they offer on the carriers' computer reservation systems (CRSs).

Travel agents are well positioned to become integrators, but they are inadequately resourced, and so far they have failed to develop a competitive advantage in gathering and exploiting customer information. Recent decisions by US airlines to cap commissions to agents pose fundamental questions about the value agents add, and suggest that they are losing the struggle for the lion's share of the value chain reward.

IT service companies do have the technological competence - or at least have the ability to acquire it - but they lack the market position. They will need to forge alliances with existing players. An alliance of a large travel agent and an IT service company makes a certain amount of sense, but the travel agency industry is fragmented. A powerful alliance, with global reach, would require the formation of a federation or network of agency firms, which might tip the alliance's power balance too much in favour of the IT partner. Consider the inauspicious precedent set by the UK financial services industry in the mid-1980s. Banks and insurance companies bought up as many estate agency firms as they could, usually paying far too much for them, and the results were disappointing.

Airlines are much better resourced and more technologically competent than travel agents, and almost as well positioned. They already have contact with customers through their own databases, and their CRSs are ideal platforms on which to build the more sophisticated communications systems needed to develop seamless journey products. But airlines face two problems: first, their asset control covers only a small part of the journey and few of the interfaces; and second, as the owners or part-owners of the CRS integrated information networks, they are far from impartial.

Neither problem need prove insoluble. Virgin Atlantic is working at eliminating journey seams by doing deals with hotel chains and car hire companies. This suggests that the first problem - lack of ownership - can be addressed in theory by an alliance strategy. On the second problem, the Sabre CRS's ownership by American Airlines' parent AMR Corp has suggested that, although conflicts of interest with other airlines may arise, they are probably tolerable.

Adopting revolutionary, leading-edge technology is not the issue; rather, it is the evolutionary application of existing approaches. The nature of the opportunity can be seen in some of the examples of travel innovations that are already out there. Many of the components that could be knitted together to deliver seamlessness are already evident.

One example is the ground transport link from home or office to the airport. Road traffic monitoring and management systems exist in many countries. In the Netherlands, for instance, a motorway traffic management system is in place to allow the authorities to monitor conditions. Variable speed limits can be applied and accidents responded to rapidly. But this information is not yet used by operators providing road transport services to Schiphol.

In Paris a system exists that monitors the performance of the different modes of transport connecting the city with its airports. At its simplest, this would allow a passenger arriving at Charles de Gaulle to establish the transport mode which offers the fastest route into the centre of Paris at that exact moment. This would represent another small step towards smoothing the seams, if airlines, the airport and ground transport providers really want to improve the traveller's lot.

In the same way, existing technologies could be exploited to improve journey links when schedules go awry in the air - the bane of an air traveller's life. For example, a recent flight from London to Boston turned back when one of the passengers fell ill 90 minutes after takeoff. When the aircraft eventually departed for the second time, the flight was five hours behind schedule. The cabin crew, in a sincere attempt to serve their customers, were in and out of the flight deck trying to make alternative arrangements for passengers who had missed connections.

This seems absurd in today's world of on-board data links and satellite communications. If it is possible to call a travel agent from a taxi on the way to Frankfurt airport to reschedule a flight to Paris, it is reasonable for passengers to expect the same functionality on a delayed longhaul flight.

The biggest challenge in exploiting these possibilities lies not in the technology, but in the change in attitude required to move from being a provider only of journey parts - as an airline is - to a seamless journey bundler. If British Airways, for example, wanted to offer flexible, seamless journeys in Europe, it would have to make flights by rival airlines available as well as its own. And those rival airlines would have to agree to their inclusion on their competitor's 'options menu'.

Airline alliance-building both helps and hinders the eclectic approach to bundling travel products. Clearly it helps by making it easier to manage intra-alliance interfaces. But by introducing implicit 'most-favoured carrier' pacts between allies, it makes it harder to achieve complete seamlessness because the vast majority of products offered by other airlines is excluded.

The important thing for BA would be not to 'own' the corporate entities which are its alliance partners, but to achieve full 'ownership' of the customer with seamless, flexible offerings. It would clearly be in a position to encourage customers to choose its own and its allies' travel segments, but its prime objective would be to achieve full control of the entire journey channel. Vendors of seamless, flexible journeys will jeopardise their credibility if they favour one segment supplier over all others. The air segment is important on intercontinental journeys, but on short haul journeys the air segments are shorter and the interfaces correspondingly more important, in which case the customer will value punctuality above all else.

The new competitive battle is for control of the passenger, not for traditional priorities such as market share or cost leadership. This is confirmed by airlines' use of loyalty programmes as information sources and their drive to 'disintermediate' travel agents. Customer satisfaction, achieved by exploiting information, will be the overriding goal.

The search for seamlessness and flexibility will lead to the evolution of a new kind of IT-rich travel firm. It may be the result of knitting together a set of separate businesses such as travel agencies and IT service providers, or it may emerge from the existing asset owners such as airlines, or indeed a combination of these approaches.

But perhaps the most intriguing possibility is that this new breed of journey vendors will become so committed to customer-focused strategies that they start to offer guarantees. A package that offers a guarantee to get customers to their meetings on the other side of the world on time, or refund their money, would be impressive. A package that also promises compensation for business lost as a result of its failure might prove irresistible. Seamlessness is not just a marginal product improvement; it might well become the key competitive differentiator between airlines in the future.

Source: Airline Business