Information and Communication Technologies in Virgin Atlantic - Essay Example

Information and Communication Technologies in Virgin Atlantic This report seeks to examine and analyze Virgin Atlantic, and one of the integral business processes of the organization. The business process in focus in this paper is online ticket booking (or e-ticket). The sale of tickets is the main source of revenues for any airline, thus an airliner such as Virgin Atlantic needs to ensure that their ticket booking system is effective and efficient (Buhalis, 2003:806). To achieve this, an organization must institute a series of different tasks to achieve excellent results. This report critically examines and evaluates online ticket booking, with a comprehensive discussion of the advantages and disadvantages of the process and offering proposals on how to improve the efficiency of the process and the effectiveness of the entire operation. In addition, the report presents proposals on improving the process to ensure customers do not encounter the problems as well as to achieve the optimal utility of the process. Introduction ‘Business process’ is a general term referring to the collection of structured and interrelated activities that serve a particular objective for a particular organization. A business process is best visualized using a flowchart as a series of tasks with interleaved decision points or incorporating a process matrix as a series of activities adhering to rules based on the process data (Zhang and Wedel, 2008:5). In essence, business processes are the building blocks of any given organization thus the need for efficiency and effectiveness. To maintain and improve the quality of business processes, organizations usually adopts a systematic approach called business process management. This is where the idea of information and communication technology comes in. Experts in information and telecommunication technology have developed business processes management system as a software platform that permits user design, management, and execution of the entire end-to-end business processes on a single engine (Cordella, 2006:197). In recent times, the groundbreaking developments in the information and communication technology sector have had profound implications on the operational, strategic, and structure of organizations. With emphasis on the airline industry, the emergence of internet and the subsequent development of extranets and intranets forced airlines to rethink their strategies on technological innovation and enhance their competitiveness in their market niche. The internet has proved a source of opportunity to tackle distribution costs and reengineer the structure of the airline industry (Alamdari and Mason, 2006:123). These technological innovations seek to monitor a wide range of business processes in the airlines, as well as identifying ways of improving these processes. This report examines the implementation of the online ticket booking by Virgin Atlantic Airways to achieve cost reduction and competitive advantage objectives. The report works on the assumption that the previous booking systems had flaws in efficiency and effectiveness, thus the company sort to redesign the booking process to attain some competitive edge against its competitors and increase its effectiveness and efficiency in general (Olugbenga, 2006). Virgin Atlantic Airways Limited Virgin Atlantic Airways Limited, famously as simply Virgin Atlantic, is a British airline headquartered in West Sussex, England. The airline, founded in 1984, has become the second largest carrier in Britain serving the major cities in the world. Currently based in Manchester airport, Heathrow airports, and Gatwick in London, the airline operates long-haul services to more than thirty destinations worldwide, as far apart as Shanghai and Las Vegas. Virgin Atlantic enjoys huge popularity, receiving top business, trade, and consumer awards worldwide. The airline has credit for pioneering a range of innovations and setting new service standards, with its competitors seeking to follow the same path. The company remains customer driven despite the enormous growth, with special emphasis for innovation, quality, and money. Today, the airline has had more than 60 million passengers since beginning of operation, with over 10,000 employees worldwide (Virgin Atlantic). The company formally began operations on June 22, 1984, with an inaugural flight to Newark, with the simple aim of providing the highest quality possible at an excellent money value for all classes of travellers. The Virgin Group owns 51% of the airline, and the remaining 49% by Singapore Airlines. Richard Branson, the proprietor of the Virgin Group, formally sold the 49% stake to Singapore Airlines at a cost of ?600.25 million in 2009. Virgin Atlantic currently offers three travel classes: Economy, Premium Economy, and Upper Class, all incorporating award-winning in-flight entertainment. The company has 38 aircrafts, which includes 13 Boeing 747s, 6 Airbus 340-300s, and 19 Airbus A340-600s. In addition, the company announced the order of 15 Dream liners 787-9, with delivery between 2011 and 2014 (Virgin Atlantic). Similar to other retail organizations, the airline needs decision making on a daily basis in all the levels, including operational, strategic, and tactical, to ensure that the company runs smoothly. However, the organization faces the biggest challenge in the tactical level, especially in the sales department for the sale and distribution of tickets (Alamdari and Mason, 2006:123). There are essentially two ways of instituting tickets sales in the airline industry: direct sales from the airline company or its designated agents or online ticket booking from the website of the airline company or that of its agents. More organizations are integrating ICT tools into their management platforms. It is evident that ICT plays an important role in the twenty-first century knowledge based economy, thus organizations tend to rely upon ICT solutions to develop and grow their businesses. The current revolution on the use of ICT has some profound implications on the social and economic development and seems to pervade all aspects of human life (Smith, 2006:75). The use of ICT is globally spread and regarded as an integral management tool for the effective and efficient administration of all organizations, as well as service delivery to the clients. According to researchers, governments, communities, and businesses are integrating ICT into their structures, products, and procedures. ICT plays an important role in information dissemination and sharing, thus increasing the supply of information. Others claim that ICT removes time and space constraints in accessing flow of required information. It also reduces the costs of production, as is transmission, sharing, production, and access of knowledge occurs at minimum costs (Cordella, 2006:199). Furthermore, the degree of uncertainty and inefficiencies while using ICT decreases because businesses are able to interact more efficiently. The nature of services and products offered by Virgin Atlantic are complex, as they require up-to-date information on a global scale. This complexity also results from the market and location of the customers. Therefore, the company requires a system that distributes its inventory on a global scale and still ensures that it is up-to-date. In addition, Virgin Atlantic offers low cost flights, thus they require an online booking system (e-tickets) to minimize overhead costs from ticket agents as well as increase effectiveness and efficiency. Such systems allow the interaction of all partners in automate procedures, support smooth communication, and handling process (Buhalis, 2003:809). Such systems would support accounting, administration, cargo handling, and passenger processes by coordinating sales and marketing, inventory management, departure control, ticketing, and revenue and yield management systems. Airlines also require decision support systems to monitor bookings and traffic in order to identify customer behaviour, traffic trends and flow, and performance of sales agents and partners. In addition, they need to monitor the pricing of their main competitors for various city pairs. These systems may also allow airlines to assess situations against competitor performance in order to adopt reactive and proactive measures (Clemons et, al, 2002:535). A base with broad information promotes a more suitable decision-making concerning the core operational and strategic activities, such as sales and marketing, yield management, pricing, and schedule planning. Online Ticket Booking The entire travel industry is adapting the concept of online ticket booking, especially the short and long haul airline industry. The advent of the internet has proved important to the consumers, giving them the power to choose offers that suit them when using online ticketing systems. Consequently, the concept tends to create price conscious consumers, thus commoditising the airline industry. In this regard therefore, majority of the airlines perceive their websites as the future sales point. For instance, Ryan Air and Easy Jet have been selling and distributing more than 93% of their tickets through the online system, achieving cost savings worth millions of dollars and recycling the realized savings on the offers to the customers (Zhang and Wedel, 2008:5). Eventually, this enhances their competitive advantage in the market. As different business entities, Global Distribution Systems developed offers for the airline industry to provide the backbone in the establishment of info structures for the transactions that various internet travel portals undertake. Additionally, these business entities underwent reinvention to become the major technology suppliers for the airline industry. At about the same time, a number of no-frill airlines emerged in the United States and Europe. The airlines sought to achieve low cost input in all their operational areas. Therefore, they developed a simple distribution strategy, harnessing the benefits of the internet to enhance their communication with their consumers. The internet and other ICT tools facilitated the reengineering of the airline industry through a number of ICT-enabled innovations, including paperless (electronic) tickets, auctions and online promotions, context-relevant and online advertisement, publication and commission capping of fares, incentives for self-booking online, and clear and transparent pricing led by reactive and proactive yield management (Cordella, 2006:201). Online Ticket Booking at Virgin Atlantic Virgin Atlantic implemented the online booking system several years ago. The system enables consumers to book flight tickets at the comfort of their surrounding, whether in the office, on a car, or even at home. In essence, the consumer interacts with the booking system through the website of the company or the agent, and has the freedom of choosing the ticket that suits their needs. However, the company still relies on the direct sale of tickets, as this method accounts for more than 75% of ticket sales. Despite the small utility of the online booking system, records from the company show that the system results to cost savings and improved efficiency to both the consumer and the company (Koo et al., 2010). However, it is important to note that the online booking system has both merits and demerits to the company. One of the most significant advantages of the system is the convenience and efficiency of booking flight tickets from any location as long as internet connectivity is available. Therefore, a consumer is able to avoid the hassle of driving to the company or the travel agents by a few clicks and confirming the booking. In a matter of hours, the ticket is ready at the airline’s office. This saves both the consumer and the company in terms of time and costs, as the online process skips the concepts of queuing, document printing, and other avoidable inefficiencies dominant in the manual booking system. Additionally, the online booking system permits third party booking (Clemons et, al, 2002:542). In addition, online booking enables the company to review and analyze the trends and patterns of the consumers easily, thus facilitating the institution of exciting flight packages and offers. This benefits both the company and the potential passengers, as there is direct communication between the two parties. The consumer is able to communicate their issues and grievances directly to the company. Subsequently, the company is able to address such grievances first hand, enriching their knowledge on the tastes and preferences of their clients (Smith, 2006:75). This is very important to the management of the organization as it facilitates ideal decision-making. Also, the company manages to cut operational costs as effective as possible, as the online systems eliminates travel agents, reduces the number of staff in the booking department due to the automation, reduces paper flow, saves time by eliminating the never-ending queues, and eliminates human errors common in the manual system. The online booking process is simple, but can be frustrating for individuals lacking experience with the internet. Searching for the best tickets deals may be tricky to some individuals. Another eminent problem is that some of the offers incorporate strict conditions, such as Flying Club miles-plus-money booking that does not allow third party online booking. Another major problem with online booking is the lack of information and assistance concerning the ticket deals. The fact that the communication is virtual may not be rewarding to the consumer in terms of help. On the other hand, dealing with a travel agent is beneficial as the consumer is able to ask for assistance in obtaining the best deals, as well as speculation on the possibility of cheaper ticket deals in the future (Koo et al., 2010). In summary, online booking of tickets reduces the hassle of physically visiting the travel agents or the airline as the consumer may do this at the comfort of their location. However, an individual must have some technical knowledge concerning online transactions. Otherwise, online ticket booking is very essential to both the company and the potential passenger due to the cost effectiveness and deficiency. Online Services Improvement Virgin Atlantic has an opportunity to tailor their official website to suit the needs of their “future customers.” The airline industry is trending towards online ticket booking and purchase as the most efficient method of selling and distributing their products. These “future customers” tend to have increased expectations, require after-sales services, reliability, uniqueness, and convenience in purchase. According to researchers, the “future customer” is accustomed to the self-service mentality and automation, and is more knowledgeable (SITA, 2008:16). The concept of paperless communication and online ticket booking and purchase improves customer services, as they increase the flexibility and efficiency of the process. Therefore, customers are able to purchase tickets online, check-in online, print e-boarding tickets, and select their seats (Buhalis, 2003:824). The future customers see things in a global perspective, and thus expect transparency and higher service quality in the market. Using ICT to Improve Ticket Sales Process For Virgin Atlantic to achieve competitive advantage in the airline industry, it needs to develop and implement innovative strategies to improve the sale of ticket, as this forms the primary source of income. The company may integrate ICT tools to achieve this, including developing an efficient booking system incorporated into the official website of the company (Olugbenga, 2006). The company may also institute electronic ticketing to get rid of the paper flow in the current system. In addition, the consumers may check-in online, eliminating the issue of queuing and time-consuming confirmation of consumer arrivals. If Virgin Atlantic were to design and implement such a system, then the company will be a world leader in the industry in terms of efficiency and cost savings. Conclusion ICT may support all business functions, thus integral in the efficient operation of the entire travel industry. ICT provides tools for searching for profitable and meaningful niche market segments and identify value added components for the services and products, as well as differentiate these services and products through special media to market segments (Smith, 2006:81). Flexibility and cost effectiveness are among the products of ICT in this process, as they are integral in cost efficiency maximization and cost reduction. The impact of ICT on the airlines industry is persuasive, as information forms the core foundation of the daily operations and the strategic management of organizations. This is evident from the implementation of Virgin Atlantic online ticket booking. The online service has significantly improved the services of the company in all levels of management. Subsequently, there has improvement in tickets sales, with increased efficiency and effectiveness. At the strategic level, airlines must continuously assess all the external elements of the environment, as well as customers’ needs and competitors, and subsequently adapt to them to enhance their competitiveness (SITA, 2008:5). Bibliography Alamdari, F., Mason, K. (2006). The future of airline distribution. Journal of Air Transport Management. 12 (99), p122-134. Buhalis, D. (2003). eAirlines: strategic and tactical use of ICTs in the airline industry. Information and Management, 41, 805–825. Clemons, E., Hann, I., Hitt, L. (2002). Price Dispersion and Differentiation in Online Travel: An Empirical Investigation. Management Science. 48 (4), p534-549. Cordella, A. (2006). Transaction costs and information systems: does IT add up? Journal of Information Technology, 21(3), 195–202(8). Koo, B., Mantin, B, O'Connor, P.,(2010). Online distribution of airline tickets: Should airlines adopt a single or multi-channel approach? forthcoming, Tourism Management Olugbenga, F. I. (2006). 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