Asian airlines maintain AI investments despite budget cuts due to Iran war oil shock

[SINGAPORE] Asian airlines are slashing capital expenditures to hoard cash during the worst oil shock in decades, but investments in artificial intelligence and data infrastructure are being spared the knife.

Such initiatives are being protected from sweeping budget cuts, with tech upgrades deemed essential amid skyrocketing operating costs.

This marks a departure from previous airline industry crises, where tech and infrastructure budgets were often the first to be frozen during cash crunches.

Thai Airways CEO Chai Eamsiri said his carrier is cutting and postponing various capital and operational expenditures to preserve cash, but has kept several major digital initiatives alive. This includes the rollout of a new enterprise data platform to overhaul the airline’s technological foundation.

“The rest, the other projects, investments, we (are) postponing… for the time being,” Eamsiri said at a panel at the International Air Transport Association (Iata) World Data Symposium on Wednesday (Apr 8) in Singapore. “This will be the foundation for the future of the airline.”

Scoot is also pushing ahead with its digital transformation, with the Singapore Airlines low-cost carrier having established a dedicated data strategy department to manage unstructured information via a new “data lake”. 

Its strategic goal is to build business intelligence dashboards that leverage generative AI (GenAI) to optimise massive operational costs, especially those related to aircraft and crew productivity.

“There (is) a lot of data that has been generated,” said Scoot CEO Leslie Thng. “There are a lot of insights that maybe as an airline we have not fully utilised.”

Singapore Airlines CEO Goh Choon Phong noted in his opening remarks at the Iata event that a flight from Singapore to London generates about two gigabytes of data for analysis.

Thng also noted that GenAI has already yielded tangible, immediate benefits in customer engagement. Incorporating the technology into Scoot’s chatbot has improved the accuracy and comprehensiveness of responses, resolving early issues where the legacy bot failed to engage customers effectively.

“This is where we believe that if we can do it well, it will actually help us to be more competitive,” he added. “Not just from a cost perspective, but actually improving customer engagement as well as operational efficiency.”

A new crisis playbook

Malaysia Airlines president and CEO Nasaruddin Bakar noted that although airlines are currently losing sleep over jet fuel premiums exceeding US$100 a barrel, they cannot afford to pause long-term tech development.

Pointing to lessons learned from past industry shocks such as Sars and the post-9/11 downturn, Nasaruddin said that continuous investment is the best way to ride out future turbulence.

“We need to manage this, looking into the short term… to manage day-to-day businesses,” he said. “But in the long run, we have to ensure that we have enough investments (into) the right things… to our infrastructure, and even technology as well.”

Meanwhile, Iata director-general Willie Walsh noted that airports now collectively handle about twice as many passengers as they did 15 years ago – a feat significantly enhanced by early digital transformation efforts such as self-service check-in.

“If we are to continue to grow, we will have to continue to look for more efficient ways of operating,” he said.