August 11, 2010, 3:05pm
Manila Bulletin
BANGKOK – After running a 40-year old IT system, the country’s flag carrier Philippine Airlines is outsourcing this function in what is seen a major move of the beleaguered legacy airline to bring its operation more cost efficient and globally competitive.
Amadeus, the world’s biggest IT solutions provider for the airline industry, is vying for the comprehensive PSS (passenger service system) system contract against two other bidders that include SITA.
The PSS system covers the reservation, inventory and departure control of a full-serviced airline.
John Chapman, Amadeus Asia Pacific vice-president for the airline group, told reporters he has met again with PAL officials early this week regarding its bid for the contract.
PAL has asked last year for bidders to submit their PSS proposals. The Lucio Tan-owned company, which is undergoing labor issue problems, is expected to announce the results of its decision by next month.
“We are having discussions with PAL,” Chapman said.
At present, Amadeus currently distributes PAL’s international bookings through its global distribution system, but runs on a 40-year-old IT system PACERS 2 system.
Amadeus would like to expand its partnership by proposing to provide its entire PSS, which covers the reservation, inventory and departure control of the country’s one and only legacy airline company.
Chapman has refused to say how much the PSS contract could amount to other than to say it is a fairly big undertaking because it would entail a lot of systems integration with the existing systems of PAL and to connect with other airlines.
“This is quite a big undertaking and it would depend on how complex their system is,” he said. Most of the PSS that it has provided to other airlines took between one to two years. He estimated that PAL’s full PSS Suite could be implemented within a year.
Amadeus Philippines country manager Albert Villadolid said the displacement of PAL employes as a result of outsourcing this function is inevitable but PAL can redeploy these people to the other functions of the company.
While adapting to the new Amadeus Altea Suite, which is being used by most legacy airline companies globally, could mean displacing some people because this means automating some functions, this new way of doing business would add more value to an airline because it would mean efficient operations and cost efficiency.
To the airline, the Altea Suite would reduce its cost, increased its revenues as this enables the maximization of last minute seat sales, and reduced fuel costs through load control with improved capacity management.
Outsourcing of IT system will enable the airline to allocate more resources to more critical areas of their business.
To the passengers, the Amadeus IT solution means improved experience because of automatic check-in, bonding and seamless recognition of frequent flyer status, improved customer satisfaction because of reduced queues, personalized service and better management of disruption and delays.
To the travel agents, the Altea Suite means single passenger name record, 100 percent synchronization of data and availability, common fares, single seat map, frequent flyer recognition and group bookings.
Chapman explained that the need for a full-serviced airline or the legacy airline is a lot different from the low cost carrier because of the different models by which each operates its business.
“LCC is a simple direct to customer transaction, it is a point to point transaction done in the cheapest possible way, but a full-serviced airline involves a more complex operating model and industry standards with big alliances of carriers with multiple points and different currencies,” he said.
Thus, the PSS system enables the airline to manage information that a legacy airline can use to earn extra revenue.
So far, 160 airlines are using the Amadeus platform because it provides better integration with travel agents and airline partners. It cuts cost, improved savings and improved customer service.
Airlines using the whole Altea Suite include Qantas and VAustralia. Cathay Pacific’s PSS with Amadeus would be fully implemented by 2011 and Singapore Airlines by 2012. Its MOU with Asiana Airlines is going to be confirmed in 6 months. It is also working with Thai Airlines and JINAIR.
It is also serving the reservations system of KLM, British Airways and TAM of Brazil .
“Altea Suite delivers a customer centric solution from reservation to departure and beyond,” hes aid.
Amadeus Altea Suites accounts for 64 percent of One World airline alliances, 30 percent of Skyteam carriers and 63 percent of Star Alliance Carriers.
Locally, aside from PAL, Amadeus has also an exclusive distribution agreement with Cebu Pacific, the Philippines low cost carrier, and is talking to other smaller airlines SeaAir and Zest Air.
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