The flight operations industry has undergone significant changes in recent years, with a number of trends emerging that have had a significant impact on the marketplace. These trends have caused convergence of flight operations management systems with respect to airspace management and the different functions required to efficiently manage airlines operations.
9/11, SARS, continuing conflicts in the Middle East, the resulting decline in travel, and increased fuel, security, labor, and insurance costs have had a dramatic effect on legacy markets, such as Europe and North America. The world-wide growth of low-cost airlines has put pressure on existing suppliers, while at the same time increasing market share by reaching an otherwise unavailable marketplace.
These factors are driving consolidation and rationalization by major network carriers, and are also leading to strategic investments by airlines in the areas of operational planning and control, revenue and network management, and customer loyalty. Alliances of major airlines and their associated regional carriers are creating virtual buying groups and substantial new competitors in market segments in which the individual airlines were weak, and many major airlines are outsourcing their non-core business activities as a means of reducing costs.
The industry is also seeing an increase in collaborative decision making (CDM) between the different airspace users as a way to improve capacity and efficiency, and reduce the estimated worldwide cost of $2 billion annually that results from inefficient air traffic management systems.
The effects of convergence and the development of hardware technology, operating systems, and wireless technology should continue the trend toward the creation of a real-time integrated operations control system where the air traffic control authorities, airline operations centers, and pilots all access the same information to make decisions and can seamlessly communicate and implement those decisions throughout their networks.
Since 2001, airlines have reduced their capital expenditures, which has resulted in an increased length of sales cycle and a reduction of the resources that prospective customers can apply to evaluating and improving internal systems. There have also been new entrants in most segments of the crew scheduling and dispatch markets. These factors have combined to lead to an intensification among vendors that has led to price declines in certain product-market segments.
All of these developments have led to a significant increase in interest for certain products and services that we offer. As well, the continuing deregulation of the airline industry in Asia (excluding China and Japan) is leading to a record number of new start-up airlines, a phenomenon similar to the previous North American and more recent European experiences.
Trends in the airline industry have created a market for firms capable of using technology to increase productivity and fully integrate operations management, while still interfacing well with legacy systems.