Star Alliance carriers are teaming up to switch over to its long-awaited common IT platform
Few IT projects in airline history have promised as much as the Star Alliance common platform. It was originally conceived early this decade with the aim of producing 10%-plus annual savings, increased flexibility and adaptability, as well as reduced legacy costs.
After a slow start, not helped by the industry downturn, it was finally launched in late 2005, with Lufthansa and United Airlines signing for a system based on the Amadeus Altea IT suite. It covers reservation systems, pricing calculations, ticketing, flight schedules and availability, customer databases, inventory, revenue management, departure control, check-in and rebooking.
Air Canada was planning to join its Star partners but, by the time Lufthansa and United were prepared to commit, the Canadian carrier had decided to do its own thing, choosing last September to develop a bespoke system from ITA Software that suits its sales and distribution approach.
Lufthansa and United, meanwhile, are both on track to switch over to the Star platform. Lufthansa expects to do so either late this year or early next year. The carrier has been running tests on the platform's inventory and reservation modules. United, which has a much bigger task ahead of it due to the need to migrate from its ageing Galileo system, is looking at late 2008 or 2009.
Aman Khan, vice-president IT at Star, believes these commitments justify the way in which Star has tackled this project. "When we started, the idea was that Lufthansa and United would be the driving airlines, validating what Amadeus has to offer and putting together a benchmark of requirements for other carriers. Once that is in place, it is easier for other carriers to make decisions - and that is what is happening now," he says.
In short, Lufthansa and United have developed a framework that other carriers can follow. "Airlines are comfortable that they are not buying an off-the-shelf product - it is suitable for Star carriers," adds Khan.
Another good reason for the three carriers to join Star's platform is that they all operate an IT backbone based on technology from Lufthansa Systems. Once Lufthansa migrates from this there will be a significant reduction in economies of scale, not to mention the synergies of being on the same system as Lufthansa. Costs are liable to rise. That said, Croatia Airlines has not yet decided whether to keep some of the Lufthansa Systems products.
While it was always expected that those carriers operating in Lufthansa's sphere of influence would tend to play follow the leader, Star is promising more to come. A major coup would undoubtedly be Singapore International Airlines, and Star is in exclusive negotiations about bringing the carrier on board. Japan's All Nippon Airways has also been discussing the project on an informal basis, although the carrier's heavy weighting towards domestic traffic would mean that developing a strong business case may prove difficult due to the lack of potential interline traffic.
Khan says that 10 carriers are evaluating the system. "They are all at different stages and they are also looking at alternatives. We are putting together business cases. By the end of the year I would expect two, maybe three carriers will have made decisions."
Khan makes it clear that he is not pushing for, and does not expect, the Star platform to be an alliance-wide system. "From a Star point of view and a vision point of view this makes sense, but we shouldn't be naïve. There will be some carriers who will decide to do something else, such as Air Canada."
But he is philosophical about the latter's decision to go with ITA: "Each carrier has to make decisions based on its business case and business model."
As the project develops, Khan says it is becoming clear it is something bigger than just an IT project. "We are not treating this simply as a new application - we are using it to review our processes, such as departure control. This alone involves 800 different processes, and we have simplified them dramatically."
Despite predictions that SkyTeam at least would follow Star's lead, neither it nor the oneworld alliance have done so. Oneworld in particular has followed a more bilateral strategy.