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United Air Lines Talks New Technology

By Kim S. Nash  |  Posted 2002-09-13 Print this article Print

United Air Lines saved $25 million through voice recognition. But it'll need a lot more projects like this in order to survive.

It's a grim time to be an airline. People aren't flying. Almost every major U.S. carrier is parking part of its fleet, cutting routes and losing money. Collectively, the industry lost $7.7 billion last year and is expected to lose another $4 billion this year. It probably won't break even until 2004.

PDF DownloadA nasty economy did in TWA early last year. It filed for bankruptcy protection in January 2001, then was bought by American Airlines. The attacks of Sept. 11 devastated an already weak industry. And two days after US Airways announced a Chapter 11 filing last month, United Air Lines, which lost $2 billion in 2001, warned that it, too, may have to file for bankruptcy protection.

What could help?

Like its rivals, United says it is doing everything it can to generate new revenue and slash costs. United most urgently wants to reduce labor expenses—a task now falling to its newly appointed chief executive, Glenn Tilton. During the same week that this issue of Baseline was going to press, Tilton was said to be meeting with union leaders to discuss concessions.

In the cost-cutting that United has done to date, technology has often played a role. Rono Dutta, United's former president, made that clear in July when he told analysts that the company's reduction of its staff of reservations agents—from 7,500 to 2,500—had been achieved "primarily through the use of technology." (Dutta left United after Tilton was hired.)

United's Web site now accounts for 8% of the company's overall customer-service traffic. But taking on even more of the load—60,000 calls per day—is a voice-recognition system that helps callers get routine departure, arrival or gate information. American, Continental, Delta and other airlines also run voice-response systems. But United's application is one of the oldest in the industry. It has saved United $25 million since it went live in the fall of 1999. That's equivalent to the average salaries of about 140 customer-service people over three years, United says.

The voice-enabled flight information system, or "flifo" in airline parlance, works like this: A customer dials United's toll-free number and is told to press "1" for flight arrival, departure or gate information. The call is automatically shunted to the voice system. A voice asks the caller to respond to simple questions such as, "Would you like arrival or departure information?" The interactive voice-response software, which is from SpeechWorks International in Boston, recognizes the verbal answers from preprogrammed vocabulary lists.

When it has gathered enough variables to find what the caller wants, the system populates a database field with a query carried by BEA Systems' Tuxedo transaction processing software to United's Apollo reservation system, a 30-year-old mainframe program. Apollo returns information, via Tuxedo, to the SpeechWorks software, which then turns the data pieces into a spoken sentence. "United flight four-oh-five is scheduled to arrive on time at 8:20 a.m. in Denver, Colorado... " The process can take as few as two minutes.

Voice technology is a mix of trade-offs. For example, at United, the software is slightly slower, typically, than a human agent working in ideal conditions to answer the same queries. That means average phone fees—the cost of the 800 number, mainly—are higher for the computer than for a service agent.

On the other hand, automating such routine stuff frees more service people to handle more money-making calls—customers who want to book flights. Also, the computer system doesn't "busy out" during an unexpected flood of calls, such as when there's a surprise storm. "Before we had this, we would choke out some revenue because the lines were busy, and those customers may go right across the street and call American," says Bob Bongiorno, managing director of customer service applications at United.

Trying to staff a call center in case of emergency would mean paying lots of people to do nothing most of the time. United also would have to build or rent more space, buy new computer gear and do extra training, he says. And software, of course, is more predictable than people. As Bongiorno puts it: "It works 24/7 and doesn't get sick, need a vacation or have any other personal problems."

The system handles about 60,000 calls daily, at a cost of about 15 cents each. Human agents answering the same queries would cost United 65 cents per call, Bongiorno says. That puts the potential savings from the application at $30,000 per day, or $11 million a year.

Saving money is why most companies install voice response, says Jackie Fenn, an analyst at Gartner Inc. Voice technology works best in simple, high-volume applications. Where live agents will always outmaneuver voice software is in situations that invite more free-form responses, as in: "Hello. This is United Air Lines. How may I help you?" Callers could say anything. Has the hurricane off Florida's east coast delayed flights to Miami? Are toenail clippers banned in carry-on bags? In a situation like that, "the thing will blow," Fenn says.

Senior Writer
Kim has covered the business of technology for 14 years, doing investigative work and writing about legal issues in the industry, including Microsoft Corp.'s antitrust trial. She has won numerous awards and has a B.S. degree in journalism from Boston University.
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