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Tech companies have a leg up on airlines, experts warn

  • Airlines must increase their use of disruptive technology, warned officials at the Singapore Airshow Aviation Leadership Summit.
  • Big data is one field where technology firms could have a competitive advantage over traditional aviation players, said Henrik Hololei, director-general for mobility and transport at the European Commission.

As more tech companies enter the transportation market, their capabilities with big data and other disruptive technologies could spell trouble for airlines.

An Amazon-branded Boeing 767 freighter, nicknamed Amazon One, flies over Lake Washington during the Seattle Seafair Air Show on Aug. 5, 2016 in Seattle.
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An Amazon-branded Boeing 767 freighter, nicknamed Amazon One, flies over Lake Washington during the Seattle Seafair Air Show on Aug. 5, 2016 in Seattle.

"A tech giant who extracts customer behavior will be much better placed than an airline, for example, which only has information on its own operations," said Henrik Hololei, director-general for mobility and transport at the European Commission.

Speaking at the Singapore Airshow Aviation Leadership Summit on Monday, a day before the Southeast Asian nation kicks off its annual air show, Hololei pointed to Amazon as an example. The world's largest online retailer announced air cargo services for its U.S. deliveries in 2016, raising fears that CEO Jeff Bezos could soon compete with global logistics giants such as FedEx or DHL.

From Google's self-driving car to Uber's helicopter tie-up with Airbus, a number of Silicon Valley names are now concentrating research and investment on moving customers from point A to point B.

Tech firms enjoy access to huge stores of data and boast the ability to process that information, which means they "know better what the customer wants," Hololei said. Once a company flies a drone, it may have more ambitious plans in the pipeline, he cautioned.

Leveraging data analytics offers a number of benefits for airlines, from optimized on-the-ground operations such as baggage tracking to increased revenues.

"Technology is moving at a faster pace than we can use it," Bahrain's Transport and Telecommunications Minister Kamal bin Ahmed Mohammed said at the summit. "Airline operators will be forced to invest in technology."

In that spirit, Boeing has assembled 800 analytics experts to create a new division focused on using data for customer solutions. Called Boeing AnalytX, the unit launched last year and is already doing business with the likes of Korean Air, Delta Air Lines and Turkish Airlines.

Goh Choon Phong, CEO of Singapore Airlines, told CNBC that his company wasn't worried about its big data abilities.

"Airlines have their own advantage when it comes to data and interactions with customers," Phong said on the summit's sidelines. "I don't think you can find any other business where you have customers, in some sense, with you for the duration of a whole flight," he continued. That's an opportunity for airlines to get to know passengers even better, he added.

The carrier is currently hiring for several big data-related jobs, according to its website, as it embarks on a multi-year plan to upgrade operations. "If we can understand our customers better, surely we can use that data to serve them better," Phong said.

The executive also shrugged off the possibility of future competition from tech firms. Singapore, the carrier's home market, is so open that "anybody can set up an airline," he said, suggesting that general competition wasn't a new concern.