About the company
Airline operators were historically highly protective of their business processes and proprietary systems, seeing them as the basis of their market differentiation. But that attitude has been challenged by the widespread formation of alliances between airlines, such as OneWorld and Star Alliance, which have forced operators to adopt industry-standard business process.
That has prompted an IT-driven services revolution in the airline industry, and Amadeus has been at the forefront. Having started life as a ticket distribution company, Amadeus is today the world’s largest airline booking service, providing an assortment of back-end services for the travel industry. The likes of British Airways, Qantas, Iberia and Lufthansa now use Amadeus’s IT-based services to support processes ranging from booking and check-in to customer service.
The company employs around 8,600 people and has its headquarters in Madrid. However, the heart of the business lies in its data centre in Erding, Germany, the largest civil data centre in Europe. This gigantic facility handles almost 500 million transactions a day, around half the size of search giant Google’s legendary workload. Such is the company’s dominance of its market that whenever someone books a journey online, there is a good chance both the flight search and the booking pass through Erding.
In 2008, the company grew its revenues 2.2% to ?2.9 billion despite a fall in travel bookings. Privately owned since 2005 following a ?4.35 billion deal with UK private equity groups Cinven and BC Partners, Amadeus is rumoured to be considering an ?8 billion IPO early next year. The Financial Times reports that such an offering could generate six to seven times the initial investment of the private equity owners.
Julia Sattel is Amadeus’s vice president of airline IT. Having joined the company in 1995 from a background in sales and marketing in the mobile industry, she is now responsible for developing the varied services used by nearly 500 airlines and 100,000 travel agencies worldwide. Here she explains how IT-driven services are changing the industry, and how Amadeus manages its mammoth data centre facility.
Information Age (IA): How has the airline industry’s use of IT changed in recent times?
Julia Sattel (JS): I remember, ten or 15 years ago, airlines would say, “Our internal systems are sacred – we have to be proprietary for competitive advantage.” Many airlines used in-house systems that were highly customised and specific to that airline.
But I think airlines have matured tremendously. Now they belong to alliances, and have to adapt to the way an alliance operates by becoming seamlessly integrated. We see a great deal of push, drive and willingness to change. There is not one airline that doesn’t understand that, and those that didn’t have perished, unfortunately.
IA: What does Amadeus offer those organisations?
JS: We try to help them re-engineer their business processes; not so they’re doing the same thing they’ve been doing for 50 years with different systems, but by using technology to gain huge efficiencies.
The heart of the philosophy is that we build systems with a big upfront investment on our side and share that across the industry. Of course, there is still customisation, but all customers are essentially using the same system, which enables them to benefit from economies of scale.
For an airline to develop what we have developed would eat up their budget for the next ten years. They should be investing that money in marketing and customer service: in their business.
IA: Was it difficult to change the attitude and encourage them to shift from a proprietary model to a shared services platform?
JS: Airlines are used to working in a specific manner: the way a booking is done, the way a seat is allocated, these things come from rules specific to that airline that have developed over many years.
We had to show our airline customers that they can get the same results with much less effort using a different process that leapfrogs the existing one.
Europe’s largest data centre
IA: What kind of IT infrastructure supports your services platform?
JS: We have the largest civil data centre in Europe, and among the biggest in the world, in Erding near Munich. We have 20 times more page views, clicks and interactions than the New York Stock Exchange – the numbers are mind-boggling. You can only do this when you have the latest technology.
When a customer searches for a low fare across a month, that requires huge computing capacity. We allow the airline to optimise yield by calculating in real-time where the best revenue is for them, and that also absorbs tremendous capacity. We’ve rewritten all our code and changed our machines and the whole set-up to be able to do that.
The funny thing is that the data centre was built for big machines, which today are considered legacy, so the space we actually need is getting less and less because processing capacity has increased dramatically. We now have spare room.
IA: The events of 9/11 represented a major crisis for the airline industry and sparked massive change. Did it affect how you manage passenger bookings?
JS: Security is now a massive focus for us. By putting the customer information at the centre of our new passenger management system, airlines are in a position to follow the customer through the whole trip. If a traveller has three or four legs to travel, you can now follow him or her, whereas in the past if you flew from New York to Paris and then to Rome, nobody knew where you were.
This trackability – building everything around passenger information – gives tremendous possibilities for ensuring security and knowing the coordinates of a passenger.
IA: You handle a large quantity of sensitive passenger information – what about the security of your
JS: We follow all the data protection laws and our legal department watches them closely. Also, the data centre is heavily protected – we spend an awful lot of money and effort to secure it.
We have a whole [internal] organisation around data security that we didn’t have ten years ago in any shape or form. We have managers accountable for security in each part of the organisation, so there is top-level accountability. I think that is very important.
Eco-friendly airline IT
IA: Data centres have become something of a political football in the green debate, as has the airline industry. What kind of response have you had to green concerns?
JS: The environment is at the top of my private list of priorities. We have enabled airlines to save huge amounts of fuel with our load and balance system, which lets them optimise the fuel they have to carry on the plane. Optimising that from the operational side saves hundreds of thousands of litres of kerosene.
I find it unacceptable for airlines to waste fuel through bad systems. Sometimes I would rather give [them the service for free] than for them to pollute the environment unnecessarily.
IA: What is the environmental impact of the data centre itself?
JS: We have environmental initiatives running as part of our corporate governance, and [the data centre] was spotted very early. I’m extremely impressed by how [the data centre team] convert waste into saving by reusing heat, and rearrange the machines to avoid them heating up so much.
The savings they’ve achieved are quite impressive. I think there are always creative ways to deal with [the problem]. That’s my personal conviction. If we don’t address it, we’re not worthy of being a player in this space.
Amadeus’s Erding data centre
• Largest civil data centre in Europe
• Processes over 470 million transactions a day – 50-60% of Google’s workload
• Deals with over 7,000 user requests every second
• Average central response time of 0.3 seconds
• 99.99% uptime (less than 50 minutes downtime a year)
• More than 3 million bookings a day
• Power usage effectiveness (PUE) of 1.5᠄