Travel firms beginning IT comeback

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By Jennifer Disabatino

(IDG) -- In the months following September 11, many IT projects in the travel industry came to a screeching halt unless they involved security. New technology initiatives didn't fit into the business plans of companies that were in survival mode as a result of the terrorist attacks and the economic slowdown.

But top IT managers at a half-dozen airlines and other travel businesses now say their companies are making exceptions. Some quick and relatively inexpensive IT projects are getting the green light from senior management as long as they promise a rapid return on investment or have a direct effect on customer-facing systems, these users said.

For example, Curtis Robb, president and CEO of Delta Technology Inc., said parent company Delta Air Lines Inc. increased the Atlanta-based IT operation's 2002 project budget from the $160 million he initially requested to more than $200 million.

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That still amounts to a 17 percent reduction from what Delta Technology spent on IT projects two years ago, before the economy soured and the attacks took place. But Robb, who is also Delta's CIO, said business executives at the airline "gave us about $40 million more than we asked for because they had a whole list of projects that would produce payback this year."

For example, Delta this month announced plans to more than triple the number of self-service check-in kiosks it operates at U.S. airports and to increase the functionality of the devices so they can be used by more travelers. Robb said the airline is also upgrading systems at seven of its reservation centers, four of which have already been completed.

David Zitur, CIO and senior vice president of finance at Carlson Travel Group Inc., said that the Plymouth, Minnesota-based travel agency operator has cut back on some of its IT projects -- a process it began even before the terrorist attacks occurred, because of the slow economy. He declined to provide specific details about Carlson's IT budget for this year.

But Zitur said Carlson is funding a series of IT upgrades at its Cruise Holidays subsidiary, which it bought out of bankruptcy last summer. For example, Carlson is adding sales analysis and customer relationship management tools to an Internet portal used by Cruise Holidays' 162 franchises. That will give the travel agents and Carlson the ability to analyze the popularity of cruises and identify repeat customers, Zitur said.

Forrester Research Inc. last month released the results of a recent survey on technology spending plans in the travel industry. The 24 companies that responded said they increased their IT budgets by an average of 12 percent this year, according to Cambridge, Massachusetts-based Forrester. The research firm said much of that extra spending is being invested in short-term projects involving customer-facing technologies.

"The ROI for these projects is definitely a short one," said Forrester analyst Henry Harteveldt. On average, he said, the surveyed companies reported that they expect 61 percent of the projects they're pursuing to pay off in one year or less. And 70 percent of the planned investments are expected to cost less than $1 million each, he added.

The limited number of new IT initiatives started by American Airlines so far this year has all been "convenience, security or customer-facing, ease-of-use kinds of projects," according to CIO Monte Ford.

One project that got the go-ahead is a planned relaunch of American's Web site. Fort Worth, Texas-based American is also deploying handheld wireless devices for its maintenance crews so they can access information from repair manuals without having to leave the planes, Ford said.

American declined to disclose details about its IT budget. Ford acknowledged that the airline has cut the number of projects it's working on and stretched out some existing ones since September 11. "Most of what we've done is reduction in scope," he said.

Not every travel company is ready to loosen its purse strings for IT projects that aren't security-related. Eric Dean, CIO at United Air Lines Inc. in Chicago, said his company hasn't approved much new IT spending that doesn't involve passenger safety and security. United this month announced that IBM has completed implementing the first phase of a new data warehouse for the airline, but Dean said that project was budgeted more than a year ago.

Small Projects

But the situation is different at Miami-based Royal Caribbean Cruises Ltd. It put a $180 million IT infrastructure overhaul, code-named Project Leapfrog, on hold after September 11. But now, CIO Tom Murphy said, the company is funding some smaller projects.

Royal Caribbean is upgrading its Web sites with new flash media capabilities, and it is spending $1.4 million on a supply chain management system upgrade that will extend the technology across the entire company, although Murphy said that project has been cut back from an original budget of $20 million.

It's still uncertain when Royal Caribbean will restore funding for Project Leapfrog. But Murphy said every IT project that does get approval has to fit into the centralized framework of Leapfrog. "We do have a restart plan," he said.