Currently, many airlines are looking at e-business in order to protect their assets and to secure customer's loyalty, and to be successful in today's competitive environment. Many of e-commerce principles are pioneered by airline industry, which includes business-to-business electronic information exchange and industry-wide electronic marketplace. With this unexpected environment there came an introduction to operations research modeling which is successfully reliable, low-cost communications with the Internet is not only providing new modeling challenges within the airline industry, but also providing similar opportunities for other industries.

An E-Business System (EBS) is a system which performs and co-ordinates business processes using computer and communication technologies and computerised data(Bocij, 2003). The system for delivering e-business, including e-commerce and other web-based systems, is a Work System. Work system is defined as “A view of work as occurring through a purposeful system”. It is a method of approach for understanding and analyzing systems used by the organizations whether or not IT plays an essential role. A Work System is a system of people, procedures, hardware, software, communication links and data, working together to achieve the business objectives of the organisation, which can manage complex relations and vast quantities of data and information using Work Systems (including EBS). [2]

E-Commerce is also electronic marketing, which is buying or selling of the products or services using electronic systems such as internet and other computer networks. With the increase in the usage of internet the amount of trade conducted electronically has grown to a larger extent. E-Commerce is mostly used in electronic fund transfer, supply chain management, online transaction processing internet marketing, electronic data interchange, inventory management systems and automated data collection systems. This technology is also using e-mails in the World Wide Web.

In the 21st century most of the businesses are implementing E-Business systems in order to make their customers to feel more satisfied (in our case the customers are the ones travelling through airlines and our objective is to make them feel more loyal). Most of the airline managers realize that a major business transition is taking place in the airline industry and they believe that various processes by which business strategies are developed will need to change. New value propositions are being promoted by e-commerce, which is being used to give competitive advantage to the airlines.

Airlines to be successful, Regardless of the business model they need to understand how web and e-commerce affects their business [3]. Also the airlines need to develop overall strategy covering: 1.Strategic management, 2.IT infrastructure, 3.Design, 4.Content, 5.E-Commerce systems, 6.Marketing and 7.Customer service. Airlines also need to be creative and entrepreneurial.

The main objective of this research is to create an e-business solution which helps in developing a Customer-Centric E-Business (CCEB) System Model for any Airlines system. This research focused on providing information for airline managers, employees for decision making about application of an e-business model to the airline industry. A questioner is prepared to create best customer relationships. Also to develop and to assess e-business comprehension to business efforts.

To figure out how fast the Internet economy is growing, the Centre for Research in Electronic Commerce at the University of Texas at Austin conducted a study of over 2000 Internet companies. It was found explosive growth from $322 billion in 1998 to $524 billion in 1999, a 68% increase. In Electronic business system the fastest growing sector was e-commerce, which increased drastically by 72% from $99.8 billion to $171.5 billion. Researchers estimate that over 50,000 companies make some or all of their money online [5]. Corporate spending for e-commerce infrastructure is increasing, irrespective with the current economic slowdown. Worldwide spending on software and IT services are projected to increase nearly 36%, to $1.15 trillion [6].

The Customer-Centric Electronic Business (CCEB) system model for airlines industry is still in its growing stage; therefore, there are only limited resources available. Customer-Centric Management is related to Customer Relationship Management (CRM). "CRM is widely implementing strategy for managing and improving the companies interactions with the clients and sales prospects, which involves using of technology to organize, automate and synchronize business processes.” [7]

Internet provides a new way for an enterprise to interact with the customer these days, so the airlines are investing heavily to decrease customer centric management through traditional channels.

Though the usage of internet by Asian countries is less when compared to those of North America and Europe, the World Wide Web is growing at an exponential rate. per-capita Asian Internet usage rates still pale by comparison to those of North America and Europe, the number of customers signing on to the World Wide Web is growing at an exponential rate. Airlines are seeking the benefits of not just selling online, but also buying.

In 1999, the average global load factor is 69%, United Airline's load is 71%, Cathay Pacific is 71.4%, and China Eastern Airlines is 58.9%. There are two reasons behind low factors of airlines in China: one is the fewer application of Information Technology; the other is outdated marketing strategies. [8]

Constraints and Limitation of Previous Models

Most of the previous researches about airline e-business systems have the following limitations:

  • E-marketing strategies are not widely adopted by airlines.
  • Customers need in today's fast growing e-business environment is not properly addressed.
  • Almost all current models are customer data rich and information poor.
  • Severe limitations and weakness in dealing with the challenge for most airlines to sustain and create profits in the face of heavier competition and product homogenization.
  • Most airlines focus on CSC (Customer Service Centre), but neglect the Customer-Centric requirements.

There is an urgent need for further research in the application and development of e-business models to airlines.

Approach for This Work:

System Engineering Approach to gain and Marketing Approach are used for better understanding of customer's requirements and to learn about customer's needs.

System Engineering:

  • Definition of the problem and system requirement
  • System Analysis
  • Preliminary System Design
  • Detail System Design
  • Model Validation and Simulation
  • Model Performance Measurement
  • System Installation and Operation
  • Analysis of Results


  • Product
  • Place
  • Price
  • Promotion

Research Outcomes

The rationale for this research is to address the issue of application and development of e-business for airlines industry and the results of this research program will address needs of community, industry and the field of study.

Benefits to the Community and Industry

There are many benefits for airlines and airline passengers; firstly, passengers could book and check in through internet 24 hours, 7 days a week, at anytime, anywhere. Secondly, airlines could reduce their sales cost. Significance of this will allow for new business model, based on the wide availability of information and its direct distribution to end customers.

The airlines can be connected to the passengers directly. The exchange of the digital information between the airlines and customers reduces the cost of customer contact and suppress place and time limits. Airlines through interactivity adapt customer behavior. In real time can be updated from time to time. Build customers confidence and be able to satisfy their needs. Airlines can enhance competitive advantages over their rivals. Profitable and sustainable revenue growth.

In order to satisfy the customers a flowchart with the stages undertaken for this work is explained in figure no. This flowchart begins with the analysis of needs, Design of questioner, construction and validation of the model, and finally ends with implementation and analysis.

In the above discussion we got to know the benefits of using an e-business system in the airline industry. All the above mentioned things happen when we please the customer. In order to please the customer getting feedback from them helps a lot.

In our study the customers are the ones who buy the airline tickets and travel. This survey includes 10 questions regarding the impacts if airline introduces the e-business process and strategy to improve passenger services and increase passenger loyalty. Questioner is included in Appendix 1.

By giving this questioner to the passengers buying the tickets for travelling in the airlines and getting feedback from them helps airlines a lot to improve their business strategy. The main objectives of the questioner is to get to know about introducing the web based booking, updates through emails, chat rooms for increased satisfaction, e-ticketing etc. After getting the feedback from the customers a design is modeled.

Model Design:

Model design includes:

  1. System analysis and concept design
  2. Design CCEB process
  3. Detail design
  4. Analyze data and test hypothesis
  5. Validate and simulate model

Features of e-commerce:

Airlines can increase market share and customer loyalty by achieving competitive advantage utilizing e-business models. One must fully understand the main features of E-commerce and their relevance to Airline competitive advantage [9] [10].

  1. Online/immediate/24-hour availability, directly connect buyers and sellers.
  2. Ubiquity
  3. Global
  4. Digitization
  5. Multimedia
  6. Interactivity
  7. One-to-one
  8. Integration
  9. Can be updated in real-time, therefore always up-to-date
  10. Reduce costs
  11. Increase productivity
  12. Improve level of customer service
  13. Strengthen customer relationships
  14. Enhance business intelligence
  15. Increase direct sales of products or services
  16. Generate advertising, sponsorship or brokerage revenue

Link between the above features and airline competitive advantage:

Airline industry is one of the competitive industries within the economic environment. In this section, we explore the effects of e-commerce and its potential for competitive advantage for airline industry by using Michael Porter's seminal work on industry analysis as a framework (Figure 11). Airlines also conform to those which Porter describes: 1.Cost Leadership, 2.Differentiation and 3.Focus. The proposition is that airlines that can successfully work in one of these areas will be able to establish and sustain a competitive advantage.

Some issues of e-commence

E-Commerce offers a wide range of advantages that collectively have been shown to be important enough to attract massive interest on the part of businesses. Though, e-commerce is growing very fast, it was witnessed dot-com failure by the world in 2000. The potential of e-commerce has been spotted by many and is one of the key factors behind the so-called "Internet Bubble" currently being exhibited within global stock markets. Still there are some issues with e-commerce some of them were given below:

  1. Concerns about total costs, including the costs of retaining and the telecommunications.
  2. Concern about security of sensitive data, such as credit card numbers, personal data and business confidential data.
  3. Concern about interoperability and the risk that competition between major suppliers (e.g. Microsoft and Netscape) will lead to incompatible sets of standards.
  4. Uncertainty about applicable law and appropriateness of the legal framework.

Process for formulating e-business strategy

Figure 12 illustrates an e-business strategy process that is conceptualized as a continuous cycle. The strategy team never completes its task; it simply works to develop a temporary understanding, makes commitments, and then evaluates the results as it cycles through a subsequent cycle in order to arrive at a new understanding [11].


This research revealed that the Internet contributes more to the core of business process and transformation than other comparable technologies such as the telephone. Whilst the source of competitive advantage is changing - with information becoming a key resource and electronic commerce a key facilitator.

The success of airline applications and the communications, data, and control afforded by the Internet are encouraging. This is also supported by The Wall Street Journal, it summarized the situation: "Eventually, many suppliers are likely to use the Web's fine-tuned interactivity to perfect yield management strategies similar to the way airline tickets are priced today, slashing prices to avoid surplus inventory or to quickly respond to changes in customer preferences."

The researchers have found that the development of the information economy is as much about strategy as it is about technology. The Internet is not just another medium or a distribution channel to reach customers. It is an important medium to find new customers and continue relationships with current customers. It is almost impossible for business and consumers to ignore this new technology. The users of Internet are not just so-called "techi's". They are people from all age group in many parts of the world.

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