Information Technology Transformation - Airline Industry

Information Technology Transformation - Airline Industry

Information Technology Transformation - Airline Industry
Introduction
Information Technology has changed the way airlines sell their products and services over the last decade.   No longer does one have to engage a travel agent to book a flight. Airline branded websites now allow consumers to book a flight online while travel portals such as Expedia, Priceline and Orbitz enable travelers to search airlines’ databases for the lowest fares. This paper will examine how the airline industry is using cost leadership, differentiation, innovation, operational effectiveness, and customer orientation strategies to effectively sell products and services by leveraging information technology.
Priceline.com® uses a cost leadership strategy that allows airlines to offer the lowest available fare to consumers through a reverse auction process.   For example, a person needs a round trip flight from Atlanta, Georgia to Dallas, Texas departing on November 5, 2010 and returning on November 7, 2010. She is willing to pay $200.00 for the ticket. This information is entered online at Priceline’s website. Priceline searches its database of participating airlines for available seats in this price range and displays them back to the customer. Priceline.com® broadened their low-cost leadership position by eliminating booking fees on airline tickets and offering “Pricedrop Protection on its published-price airfares” (Ek, 2009).
In 2003 Delta Airlines launched Song, a low-cost airline that leveraged innovations in information technology to differentiate itself from others in the market. Song installed personal video screens on the back of every seat on their planes. These screens allowed passengers to enjoy inflight entertainment such as movies and video games, satellite television, and online shopping. Song’s website was an example of the airline’s customer orientation strategy. “The Web site lets passengers vote services and products on and off the airline. During the flights, Song will...