Q&A: Lufthansa CIO Roland Schütz on Digital Transformation in the Skies

Deutsche Lufthansa AG is undergoing rapid digital transformation, in part to better leverage an influx of passenger data from smartphones and other devices via the Internet of Things, according to the airline’s chief information officer, Roland Schütz.

Mr. Schütz, who in February became the first CIO for all airlines in the Lufthansa Group, is responsible for consolidating digitization programs across a global collection of aviation businesses. That entails overseeing IT systems for 540 subsidiaries and equity investments, including airlines Lufthansa, Austrian Airlines, Swiss and Eurowings, among other units.

Passengers today expect “quick, direct and more personalized communications with real-time information consistently delivered on the web, to their phone or tablet,” he said.

At the same time, he adds, sensors, smartwatches and other wearable devices send streams of data back to airlines themselves. Opportunities to use that data to improve services “are almost endless,” he said.

Indeed, a study released this week by PricewaterhouseCoopers LLP said that over the next five to 10 years, airline revenue will rely less on selling seats in planes, and more on gathering and analyzing real-time passenger data to create algorithmic-based packages, which are automatically generated, that are tailored for individual travelers.

In this emerging tech-driven market, letting IT systems age can have disastrous consequences, such as a power outage last month that knocked out Delta Air Lines Inc.’s reservation tool and grounded thousands of passengers worldwide.

Mr. Schütz spoke with CIO Journal about how Lufthansa plans to leverage big data to drive business in the years ahead. Here are edited excerpts:

What is the key issue for CIOs in the airline industry today?

Digital connectivity. Anytime and anywhere, customers can interact with our business. They expect from us a quick, direct and more personalized communication with real-time information consistently delivered on the web, to their phone or tablet. We get to know them better and are able to create individualized profiles. For IT teams, this means a high demand for ever more apps, devices, data, and connected things. Digital transformation requires collaboration and a joint set of initiatives that combine business and technology. As such, IT must be involved much earlier in process, whether it comes to developing new products and platforms, the planning of the launch strategy, or new pricing systems.

How does this digital transformation impact your IT agenda for the coming year?

Digital transformation is on the top of our agenda and reshapes every aspect of our business. It is no longer just about getting from A to B by plane. We need to focus on the entire customer journey – the travel experience from reservation to arrival. As part of the digital transformation, the Internet of Things is a key enabler and will drastically improve passenger experience in the next few years.

What’s an example of how Lufthansa is using IoT?

A few weeks ago, we deployed beacons in our infrastructure at Munich airport, and included an interactive map of the terminal in the Lufthansa app. If a passenger has a mobile boarding pass for a flight to or from Munich, the map appears in the flight monitor, showing the way to or from the gate. Via Bluetooth, the beacons send signals to mobile devices. That way it is possible to determine passengers’ positions continuously and transmit them to an indoor navigation system. The site-specific information enables easier orientation and minimizes hassle and stress for travelers at major airports. We are able to provide passengers with directions to check-in or baggage claim, real time flight information on gates or departure times and customized marketing opportunities.

How does big data fit into all of this?

Smartphones connect us directly to travelers, so the importance of big data can’t be overstated. Analytics drives business by showing how your customers think, what they want, and how the market perceives your brand. It delivers valuable data to retain customers and increase revenue. At the same time, we need to deal with the influx of information. The variety of data must be analyzed to identify repeating patterns and derive predictive models. This creates great value, but for IT, it also means tremendous changes. There are higher data center requirements, and data and IT security are becoming increasingly important.

What emerging tools do you see having a big impact on the industry?

Wearable technology has gained real traction in the airline industry and has a huge potential. Smartwatches and augmented reality provides new ways to connect with customers With the Lufthansa app, passengers can use their watch as a boarding card and have their flight information on their wrist. The app reminds passengers of their flight the day before their departure, provides continuous updates about the status of the flight and displays boarding time, terminal, gate and seat numbers.