Delta Air Lines' low-cost digital alternative offers ticket kiosks and screens on the backs of seats. Will it fly financially?
Anyone who has flown in the same airplane as restless kids knows how annoying they can get. Delta Air Lines Inc.'s new low-cost airline, Song, says it has a solution for children and adults who want a better in-flight experience, and that plan relies heavily on information technology.
The self-proclaimed all-digital airline launched April 15 with four flights a day from New York to Florida, and it plans to offer 144 fights on 36 Boeing 757 planes between even more cities by year's end. The move marks Delta's entry into the low-cost airline market, and it's counting on technology to differentiate Song from competitors during a challenging time for all airlines. Song will be the first to use Matsushita Avionics Systems Corp.'s eFx technology for narrow-body planes beginning in September (see story below).
On board, kids (and adults) can play video games against other passengers on personal video screens installed on the back of every seat. Passengers also can rent movies for about the same price they'd pay at the neighborhood video store, shop online, watch satellite TV, or download customized MP3 audio for the flight.
Song's in-flight technology sets it apart from the competition, says Mapes, managing director of marketing.
"Parents are willing to pay for games that will keep their children occupied," says Tim Mapes, managing director of marketing for Song. Passengers can run their credit cards through a swiper attached to the seat-back screen to buy the video games or movies. Some of the on-board technology, such as satellite TV and displays of connecting gate information, will be free. When available, the rest will be "fairly priced" based on research indicating how much passengers are willing to pay for various services, Mapes says. Song views the in-flight technology as a key differentiator between itself and other low-cost airlines such as ATA, JetBlue, and Southwest Airlines.
Edmund Greenslet, who spent 23 years on Wall Street as an aviation analyst and is now publisher of newsletter "The Airline Monitor," doubts Song will stay aloft for long. "I don't think an airline within an airline is an avenue that's going to be the salvation of the big carriers. In the past, none of them have worked," he says. "You have a culture, a system, and a pay scale that is different, and you're trying to graft these things together. It never works."
Song's technology extends beyond in-flight entertainment, though. For instance, the airline boasts the first voice-recognition ticket-purchasing system. Company executives want customers to benefit from IT every time they deal with the airline. "Technology is such a major part of the lives we all lead today," Mapes says. "We found a lot of appeal to a tech-based airline."
Delta, which reported a loss of $1.3 billion in 2002 on revenue of $13.3 billion, has spent the past few years improving its own information technology. For example, it consolidated 30 customer databases into one operational database and three analytical databases, while adding kiosks and plasma screens with real-time flight information at its gates. "We're using technology to let customers help themselves," says Mike Childress, senior VP of development for Delta Technology, the parent company's IT division. "Song is all about giving customers choices and freedom and experience to travel in a different way. It's taking all those things we're doing with Delta and figuring out how to take them to the next level." He also believes Song's Web site and on-board technology will help Delta. "A lot of it will bleed back into Delta," he says.
The experience at Song's gate and ticket counter relies heavily on IT. At the gate, 52-inch plasma screens deliver information about flight arrivals, departures, delays, and gate changes in real time. They also display standby and upgrade lists.
The Business of Going DigitalDigital business isn't about changing code; it's about changing what legacy sales, distribution, customer service, and product groups do in the new digital age. It's about bringing big data analytics, mobile, social, marketing automation, cloud computing, and the app economy together to launch new products and services. We're seeing new titles in this digital revolution, new responsibilities, new business models, and major shifts in technology spending.