Tightening the Belt

  PMO   Portfolio Management  

No industry needs to cut costs more urgently than the airline industry. Last year's events have put the airline industry in a very precarious situation. By the very nature of its capital structure, airlines always carried a heavy debt load, which naturally results in a high operating cost. Coupled with increased demand for better customer service and its own inefficiencies, the problems of most of the major airlines are exacerbated even more.

To give you an idea, analysts and airline executives are suggesting that airlines need to cut costs in billions for the next few years to maintain viability. United alone says that it needs to cut close to $1.5 billion annually for the next six years.

This means that all activities and departments--including the IT department--must do their share and cut costs. An airlines industry study conducted last year by Giga Information Group suggested several options that airlines could implement. These included:

• Establishing Centralized Contract Management
• Renegotiating Contracts With Service Vendors
• Consolidate People and Systems
• Outsource Everything You Can
• Hire Temporary Workers
• Go …

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