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September 14, 1998

Mobility Is Up, Costs Are Down

Creative IT shapes transportation's future, from Web-based shipping to 'documentless' travel

By Mary Hayes

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TRANSPORTATION

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With data from Hoovers Online

What's the quickest way from point A to point B? That's probably the foremost question, and the primary business challenge, for a transportation company. Whether it's swift boarding of business travelers onto airplanes or expedient delivery of goods, transportation companies are constantly looking to IT to help them meet their goals.

There are several IT trends among thetransportation companies listed in the InformationWeek 500, and most are related to improved mobility. Wireless technologies such as radio frequency, satellites, lasers, and mobile computers remove the restrictions that wires and cables place on an industry that's all about movement. And the Internet is emerging as the primary framework for allowing transportation companies to run more efficiently. Many companies are moving to IP-based networks to improve communications among geographically dispersed divisions, interact better with customers, and run their businesses 24 hours a day, seven days a week.

In the airline industry, which has been grappling with stiff price competition for nearly a decade, companies are relying on IT initiatives to save money while gaining customers and revenue. Airlines say the second most important factor customers consider after price is service.

"In the '90s, we're all flying with fewer flight attendants, less leg room, and less food-at a whole lot less cost to the customer," says Robert Reeder, VP of information and communication services at Alaska Airlines, a subsidiary of $1.7 billion Alaska Air Group Inc. in Seattle. "What we've tried to do is use technology to differentiate ourselves."

For Alaska and American airlines, that means using IT to improve the airport experience for travelers. Both airlines are implementing portable and wireless technologies to expedite the check-in process and eliminate long lines. Efforts are particularly focused toward business travelers, who are more likely to pay higher fares and develop loyalties to airlines.

"We're trying to address the hassle factor of getting from your car to the airplane," says Scott Nason, VP of IT for American Airlines, a unit of $18.6 billion AMR Corp.

In fact, last year both airlines were exploring methods of completely automating the check-in process, but those plans went awry in the aftermath of the TWA Flight 800 crash off Long Island two years ago. Although a bomb has been largely ruled out as the cause, public outcry prompted the Federal Aviation Administration to make the check-in process more stringent: Airline agents must see a picture ID of every passenger and ask several questions about baggage contents and possession before allowing a passenger to board an aircraft.

But both airlines are finding ways to improve the check-in process, even with the new rules. Alaska is rolling out 80 check-in kiosks at 20 airports, with more rollouts planned for this fall. The kiosks are placed in a variety of locations throughout airports, including parking garages. To check in, a customer enters a confirmation or ticket number on a touch-screen keypad, or swipes a frequent-flier member card through a magnetic reader.

The screen asks the passenger security questions such as "did you pack your bags yourself?"; they are answered via the touch screen. The check-in process takes place over a radio frequency network connected to a back-end server at the airport, and the kiosk issues a boarding pass from an on-site printer. Because there's no one to collect a ticket, only passengers who purchase tickets using the paperless method-an increasingly popular method among business travelers-can use the kiosk. Passengers can proceed directly to gates and show IDs to boarding agents.

Alaska Airlines is considering ways to expand the process-such as issuing frequent-flier smart cards that encode the identity of the passenger and can be detected by a radio frequency signal. "If you walked up to a kiosk and it knew you were there, you wouldn't have to touch anything," Reeder says. In the future, Alaska Airlines hopes to include seat maps on kiosks, allowing passengers to choose from available seats. Alaska also plans to test a handheld ticketing system-equipped with an input device, radio frequency capabilities, and portable printer-that will let agents issue boarding passes to customers standing in line at the ticket counter.

Alaska is also trying to eliminate the misery of the boarding process, with a new application for gate terminals that will let agents include more information on overhead LCD panels, such as which rows are boarding. The application will also include an automated voice capability for announcing boarding rows. "We'd like our agents to be dealing with people, and let the processes take care of themselves," Reeder says. "With more information on the message boards, we won't have 140 people asking the same question. That's rough on everybody."

Travel Without Documents
American plans to roll out a program later this year for its Gold and Platinum customers-those who fly more than 25,000 miles a year-that will let them board by swiping a magnetic card through the gate reader, eliminating boarding passes for those passengers altogether. "We call it documentless travel," Nason says. American is seeking FAA approval to let frequent fliers sign a permanent security statement, which would eliminate the need for a passenger to check in at a service desk for each flight.

American struck a deal with MobileStar Network Corp. to install wireless networks in 46 of its terminals later this year, allowing customers to download data and send E-mail. "If MobileStar becomes a popular service to road warriors, our hope is that they'll only fly American," Nason says. Users will have to purchase a wireless network card and pay a monthly service fee, and the network will be confined to American terminals.

In addition, American is counting on speech-recognition technology to help cut costs and improve the experience of customers seeking flight information over the telephone. American moved from a live operator service to a menu-based system some time ago in order to cut labor costs, but it requires customers to navigate the system using a telephone keypad. American hopes the speech-recognition system will continue to help it keep costs low, by using "automated" operators rather than live operators, while making it easier for callers to get flight information by avoiding the keypad menu.

In July, American rolled out a speech recognition-based flight information service for its Executive Platinum members-those flying more than 100,000 miles a year. American plans to eventually expand services based on the technology to additional passengers. "I don't think it will be long before you'll be booking all of your flights that way," Nason says. "Speech recognition has matured to the point where reliability is so good, we'll recognize what you've said in the vast majority of cases."

Net Plans
The Internet also figures considerably in the airlines' plans. Alaska and American have implemented IP-based networks and are moving some data off mainframes to servers that are more accessible via the Web. American has taken a leadership role in the industry with its rapidly growing Web sites, including the overhaul of its frequent-flier site this summer to include personalized information about each member's traveling preferences.

American's growing intranet is improving communications among hubs and terminals, and giving managers better insight into how those locations are managing operations and customer service, such as mishandled baggage, Nason says.

The Internet is equally important among companies that move goods and packages. "We believe the Internet represents a fundamental shift for application delivery and ubiquitous availability of applications," says Rob Carter, corporate VP and chief technology officer for FDX Corp. in Nashville, Tenn., the $15.9 billion parent of Federal Express. FedEx is in the midst of a massive project to move from a mainframe and 3270 terminal environment to one made up of Web-based servers accessed from thin clients.

In the United States, FedEx already has 1,200 sites hooked up via IP-enabled T1 lines over a frame relay network; it's expanding the network internationally. FedEx is testing 1,000 Windows-based terminals that would replace as many as 30,000 mainframe terminals. It's also testing Java-based network computers for a Web-based application for finding missing packages.

Laser array technology is improving FedEx's ability to load and move packages. The company has been installing ceiling-based lasers at loading sites that read package bar codes, freeing field operators from the scanning guns that required one hand to operate and made it difficult to sort and load. Another type of laser-based scanning system notifies operators where to sort a package based on the bar code reading. The goal is to improve delivery times while reducing the risk of misplaced packages, Carter says.

UniGroup Inc., which operates United Van Lines and Mayflower Transit Inc., is expanding its satellite communication network to improve the speed of shipments and customer service. The $1.7 billion company's mobile communications network, used to track vans using global-positioning technology, has paid for itself within three years, UniGroup CIO John Hamilton says.

UniGroup provides mobile communication for 1,100 independently owned moving agent sites worldwide. Each van is equipped with an antenna, keyboard, and control unit, which provide the agent site with a van location report every 60 minutes. That lets customers find out the status of shipments of household goods, and improves yield management by deploying nearby and available vans for spot shipments. After loading, the van operator enters the transaction into the control unit, eliminating the need to place a phone call.

The system has also allowed UniGroup to operate better globally, 24 hours a day, seven days a week. In years past, an agent in Paris would notify a shipping agent in San Francisco of an arriving package by sending a fax, but the electronic data interchange automatically updates the information in the network.

In many cases, an IP network is the basis for the electronic data exchange, and the Internet is emerging as an important tool for the company. In the coming months, UniGroup plans to put knowledge-based training and sales certification training on the Internet, reducing travel costs and increasing the amount of training that's easily available to agents.

The most important aspect of the Web, Hamilton says, is its ability to unify. "The challenge in this industry is that there are so many parties that participate in one shipment," he says. "A team computing process is absolutely critical in achieving success." Or, in the case of transportation companies, achieving the goal of getting the goods from point A to point B.

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