Shifting PrioritiesShifting Priorities

A few months ago, Steve Scheper thought global expansion would be one of Delta.com's major undertakings in 2002. The airline's managing director of E-business anticipated a Latin American Web site and other online initiatives to aid customers with international bookings. But Delta Air Lines Inc. has postponed those plans, concentrating instead on security, cost cutting, and customer service. Its IT staff heads into the new year with revised priorities-and there's no guarantee they won't change again.

Businesses across the country have been forced to react to the uncertain economic climate and aftermath of Sept. 11, causing their IT departments to adjust equally fast to shifting circumstances. That's especially true in the hard-pressed airline industry where, the Bureau of Transportation Statistics says, the number of passengers this quarter is expected to be down 30% compared with the same quarter last year.

"I feel like I'm doing the budget every day," Scheper says. One of Delta's fast-track projects, to be completed in a few weeks, will let online customers print boarding passes from their PCs, which should help them get through airports easier and faster.

Southwest Airlines Co. is scrambling, too. "There's so much happening right now, and we're trying to anticipate [things], but it's hard to do that," says Ross Holman, CIO of the Dallas airline. Prior to last fall's terrorist attacks, Holman planned to implement a new automated baggage-tag system in the first half of this year. Southwest rushed to implement the system, which makes it easier to track a passenger's luggage, last quarter in light of new security concerns.

Some airlines are tackling one of the most visible problems-long lines at airports-via their ticketing systems. Delta's new system for printing boarding passes will not only improve customer service, but will reduce the costs associated with printing and handling boarding passes by the airline itself. "It was something we knew we wanted to do," Scheper says, "but we decided to accelerate our plans due to the increased waiting times at the airports."

Northwest Airlines, in Minneapolis, has its own customer-service priority: integrating its reservation systems with those of other airlines. That will let customers with electronic tickets more easily switch from one airline to another if a flight is delayed or canceled. Under the current system, an E-ticket holder must get a printed ticket or boarding pass at the Northwest counter and show it to the competing airline. When E-ticket reservation systems are integrated, a passenger will be able to go directly to a competitor's gate, where an agent can view the passenger's information electronically.

For Southwest Airlines, E-tickets have presented a different problem. With about 85% of its bookings handled electronically, Southwest doesn't use boarding passes. But rigorous airport-security measures have made passenger documentation even more important, so Southwest has launched a project to give customers printed boarding passes at the ticket counter or gate. The project will require either packaged or homegrown software and new printing stations at all Southwest counters and is expected to be completed by midyear.

Cost cutting is another priority. Southwest's Holman accelerated plans to use an electronic portal to better manage the schedules of its crews. The portal, based on Caleb Technologies Corp.'s PairingSolver software, can help bring efficiency to the scheduling process by grouping individual flights into single or multiday trips. By optimizing schedules, the airline cuts hotel and meal costs because fewer employees require layovers. AirTran Airways, which deployed the same software in December, reduced crew-related expenses by about 5% in the first month, says Jim Tabor, general manager of operations performance for the Orlando, Fla., airline.

IT projects that were on the drawing board prior to last fall remain on track if they help meet the most pressing business objectives. Delta.com has remained faithful to a Web-site initiative that uses technology from ITA Software Inc. to give potential customers additional search capabilities to identify flights and fares. The Atlanta airline stuck with the implementation, which will be deployed this spring, because it promises to improve customer service and reduce call-center costs. It costs about $2 million per year for a large airline to license software, ITA says. "Frequent-flyer redemptions are the most time-consuming booking processes, so anytime we can drive one of those bookings to Delta .com, we can save money," Scheper says.

Business-technology managers with the airlines are braced for more changes, including government mandates, that could cause them to revisit priorities in the months ahead. Case in point: The Aviation Security Act, signed into law in November, is intended to improve airport and airline security. One provision requires airlines to submit electronic passenger lists to the U.S. Customs Service for U.S.-bound international flights, forcing some airlines into quick-response IT projects (see "Careful Collaboration," Dec. 3, p. 20).

Biometric security systems could be next. Southwest's Holman expects the Department of Transportation to mandate such systems this year. Holman has met with a half-dozen biometric companies in the last three months but says he'll hold off on purchases until regulations are enacted. "I don't want to start deploying something and then, if they don't pick what we pick, have to change," he says.

United Air Lines Inc.'s CIO Eric Dean says his staff has kept up with new security rules and regulations. "Thus far, I'm not unduly alarmed by what's been asked of us," he says. But Dean admits that sweeping mandates-for example, a requirement for sophisticated biometric capabilities at all airport counters-could exact a heavy toll on IT, especially considering United laid off more than 30% of its IT department in September.

Other IT execs find themselves in a similar situation: fewer resources, yet increasing and unpredictable demands. After a difficult 2001, there's no sign yet that the coming year will be any easier. -with Sandra Swanson