Competition remains intense
The IT market is very competitive and this is reflected in high pressure on prices and margins. Providers from emerging markets such as India benefit from the ongoing trend towards outsourcing thanks to their comparative cost advantages.
For several years the market for airline IT contracted, but in 2011 it stabilised at around the EUR 7.5bn mark. Airlines spend around 50 per cent of this total on operating services, 30 per cent on projects and 20 per cent on IT products. There is still no sign of any lasting change in airlines’ general disinclination to invest.
With a share of 30 per cent of outsourced airline IT services, Lufthansa Systems has a leading position in the EMEA region (Europe, Middle East, Africa). In Asia and America the market share is 3 per cent respectively.
The main competitors in the airline IT market are Sabre Airline Solutions, Amadeus, HP, SITA and the Boeing subsidiary Jeppesen. However, none of them has such a wide-ranging product portfolio as Lufthansa Systems. New players in this market include Google, Amazon and Apple.
Prompted by the economic upswing at the beginning of the year German industry increased its IT investment in 2011. The trend towards cloud computing also boosted the growth rate. In total the volume of the German market for IT Services came to EUR 34.2bn, according to BITKOM, the industry association. This represents year-on-year growth of 3.5 per cent. Lufthansa Systems competes successfully in this market against all the major providers of consultancy services and IT outsourcing. In 2011 the company again achieved a place in the top 5 in the well-known “Lünendonk-Listen”, a register of IT advisory and systems integration companies in Germany.