It is very difficult to make a profit when it comes to the airline. This is because of the cost involved such as such as the purchase of aircraft and its maintenance. However, a new concept emerged that could be used to make airlines more profitable and it is by transforming a traditional organization into a low-cost carrier. This is made possible by many factors but it can be said that the most significant component is the use of information technology specifically the utilization of the Intranet and Extranet networking system.
If this company is considering a major change in order to transform an airline based on conventional systems, and turn it into a low-cost carrier, then it is imperative to look at the way technology is shaping and continue to change the business landscape. The world has gone from the Industrial Age to the Information Age in just a relatively short period of time.
For thousands of years the tools needed to conduct business and even to communicate with one another is accomplished through the use of indigenous materials and crude technology. However, when the computer was invented the whole world was turned upside down because it radically altered the way people do things. The invention of computers and the creation of massive networks connecting computer all over the nation and all over the world revolutionized all aspects of business.
The world became smaller in terms of communication through the use of instant messaging systems. Business transactions are being done through the internet, and recently through a refined system called the Intranet and the Extranet (Muller, 2002, p.343).The last two are all computer networks but engineered to work for specific organizations.
Before going any further it is important to have a clear understanding of what a network is all about. A basic definition of a network is to have two or more computers that are linked together so that information can be exchanged between them. The following are the basic components of a network: a sending device; a communication link; and a receiving device (Cox, 2007, p.10).
A sending device can be a computer or server and the receiving device can be another computer, server or equipment (Cox, 2007, p.10). The communication link is where communication signals are transmitted. In other words a network is a system that enables an airline to make easy, fast, and efficient communications.
The development of computer networks is the answer to the urgent need of airline companies to receive and send information quickly and efficiently. This is not like the manufacturing business where a slight delay is tolerated. Most of the time a passenger has a small window of time when it comes to scheduling flights. A minor error can turn a vacation into a catastrophe in terms of missed flights and missed opportunities. In this regard there is a need for a more sophisticated IT infrastructure that can help airline managers and employees make the right decisions.
Robert Thierauf explains it this way, “Today’s worldwide marketplace provides not only more customers, suppliers, and competitors but also increased complexity for the decision-making process. The speed of communication simultaneously makes the environment less stable and predictable and reduces the available time for examining business information, knowledge, and intelligence” (Thierauf, 2001, p. 65).
An Intranet is one of the best tools that an airline company can use to increase its efficiency and therefore reduce costs. This in turn will allow them to evolve from an airline characterized by conventional methods into a low-cost airline. This company can only become a low-cost carrier by slashing costs. This is where the Intranet comes in.
The Intranet is basically a network that is limited to internal usage within the company. This is its limitation because the system can only be used by the employees and all the staff that works in the said organization. However, the upside to this arrangement is the significant savings that it can bring when it comes to their communication needs. Aside from that the flow of information is significantly enhanced.
This company can learn so much from looking at the Intranet model developed by Ryanair. This company is based in Europe and is an industry leader. In 2005 Ryanair invested in what they call their Cable and Wireless high-speed network. This system was worth ?1.3 million to build but Ryanair said that they can easily recover their investments.
This assertion is based on the assessment of Brona Kernan, the airlines IT head who said that it is because the system is user-friendly. It is also because of its speed and capacity (The Sunday Times, 2005, p.1). Kernan also pointed out that the whole system is run by a staff of just 16 IT professionals (The Sunday Times, 2005, p.1). Kernan also added another feature of the Intranet that explains why the company saved a great deal of money and she said:
By using the Ryanair intranet, pilots, cabin crew and check-in staff carry out a range of activities from booking annual leave to obtaining the weather reports needed for each flight. Engineering staff can get the details needed to maintain the aircraft … The crews come in , use the self-service terminals to print off everything they require, such as fuel reports, go to the aircraft and fly (The Sunday Times, 2005, p.1).
This is an efficient system indeed. However, it is severely limited when it comes to scope because the customers cannot access it. Most of the time an Intranet uses computer terminals and computer networks within the company headquarters. It can also be accessed from a satellite offices or branches, however, it is still a closed system because only employees and staff can use it. This is the reason why the Extranet was developed.
The number one challenge for modern management information systems is the creation of a seamless IT architecture that can ensure an error free e-business (Cox, 2007, p.20).Shifting needs, rapid changes in technology and the increasing sophistication of hackers are the major reasons why developers and creators of a company’s IT infrastructure are having a hard time dealing with external threats.
If this company decides to use an Extranet then it has to be protected from hackers and corporate spies (Flouris & Oswald, 2006, p.68). Aside from security, there is also the need for potential customers to be at ease with modern technology.
This company ha to evolve from being a conventional type of airline into an organization known for cost-efficiency. It will require the proper utilization of information technology. This can be done through the use of an Intranet and an Extranet.
But in order to increase efficiency even further and to provide a seamless IT infrastructure that does not require extensive training to use, it is best to integrate these two systems and produce a single system that can be used by both customers and employees at the same time. This move is not without precedent because the success of Ryanair, a European-based company using an integrated system is well documented (Flouris & Oswald, 2006, p.23).
This will enable the company to create facilities that consumers can easily access. The airline can create a website that can be accessed using a computer or even a hand-held devices such as newly-designed mobile phones that can access the World-Wide-Web.
This means that customers can make reservations online in the comfort of their home or even when they are on the road. They can make adjustments to their schedules as quickly and as efficiently as possible. This is an added reason as to why consumers will use the services of this company.
In order to increase market share the company should invest in terminals that will be scattered throughout key cities in Europe. In this way customers can use these terminals that are located near bus stations and other public places. The can use these terminals to type the information needed to make a reservation and other transactions. In this way those who are intimidated to use mobile phones or are afraid to do their transaction online will have an alternative means of sending information and transact with the company.
The best part of the integrated system is that the employees of the airline can also access information. They can use it just like the employees from Ryanair. This saves time and create an efficient system of communication that will allow them to do more work as opposed to traditional systems where they waste a lot of time waiting for instructions to trickle down from their supervisors and corporate leaders.
There two keys to success. First, the design of the system must ensure usability so that customers can easily access it and use it without having to consult a manual. The design must be intuitive in order to speed up the process of ticket reservation, cancellation of reservation, scheduling trips etc. Secondly, security must be top priority. The company must carefully develop protocols to limit access to the system. In the same manner the passengers can enter their personal information but they cannot access the information of the other passengers.
The success of low-cost airlines like Ryanair is a testament to the fact that a cost-efficient operation will bring profitability to the company. In the 21st century the best way to achieve cost-efficiency and increase market share is the proper use of information technology. It must be simple, fast and has a high-capacity to process information.
This means that the company must develop an integrated system that combines the capability of an Intranet and an Extranet. There are design and security issues that has to be dealt with but without a doubt this is the future of the airline industry. This company will never be competitive without investing in this type of technology that allow customers ease of use and speed up the communication process within the organization.
Cox, J., 2007. How will wireless change your company? Network World, 24(24), p.10-20.
Flouris, T. & Oswald, S., 2006. Designing and Executing Strategy in Aviation Management. UK: Ashgate Publishing Ltd.
Muller, N., 2002. Desktop Encyclopaedia of Telecommunications. New York: McGraw-Hill.
The Sunday Times, 2005. Get creative for awesome results. [online] Available at:
Thierauf, R., 2001. Effective Business Intelligence Systems. Westport, CT: Greenwood.