The 12th annual SITA/Airline Business Airline IT Trends Survey has strongly supported growing optimism and has indicated that the worst may be over for an industry which sustained record losses over the last two years.

Globally, 56 percent of the 129 responding airlines expect an increase in IT spend next year with only 10 percent expecting a decrease in 2011. The charge for increased spending is being led by the Asian carriers; 75 percent of the responding carriers in this region are confident that IT spending will increase further next year. In all, 129 airlines responded to this year’s survey, including 14 percent classified as low cost carriers; 81 percent full service carriers; and 5 percent charter carriers.

After year on year declines, overall airline IT budgets in 2010 have stabilised, even showing a slight increase. The operating spend this year is an average 1.8 percent of revenue while capital spend is 1.4 percent, meaning no major change from last year. A significant number of small carriers were among the 45 percent who reported an increase in their IT budgets this year compared to last year. At the same time, about 50 percent of the airlines who stated budget decreases this year were European airlines.

Change in spending behaviour

According to SITA, the stabilising budgets and increasing business confidence translates into a change in spending behaviour for airlines away from short-term tactical remedies needed in 2009 and a return towards long-term strategic thinking.

“After the last two incredibly difficult years there is an emphasis still on accelerating IT projects which promise an early return on investment. The majority of airlines also want to extend their partnerships with strategic IT suppliers like SITA and IT outsourcing is a major element in this,” said Paul Coby, Chair of the Board, SITA.

The survey confirms a strong ambition among airlines to implement virtualisation technologies, with the initial priority on the IT infrastructure; 40 percent of airlines have already created a virtual infrastructure environment and this is expected to rise to 85 percent by 2013. Software and desktop virtualisation are the next steps in this transition.