The figure has gone up from a relatively small 4% of business in 2000 to the current level of 38% of mainline tickets, with plans to extend this to 54% by the end of 2005. The company’s ‘no frills’ service, bmibaby, relies almost exclusively on the web for ticket sales, with well over 90% of business coming in through this channel. So with the Internet generating more than £1m of business each day, this is now a business critical channel. To support the applications which are crucial to its success, bmi selected Attenda to ensure that its web site is always open and its business,‘always on’. The company views Attenda as a key business partner and one whose role will increase as more and more business goes on line. As a true partner, Attenda also shares the risk, being remunerated for its services on a variable, transaction-based pricing model.

bmi is the UK’s second largest full-service airline. Operating 1700 flights a week, the company’s main operational base is London Heathrow, where it holds 12% of all take off and landing slots. Founded in 1938, bmi has weathered the ups and downs of the aviation market and in 2004, turned in a £2m profit on £830m worth of business. The company employs more than 4700 people and counts Lufthansa and SAS as significant shareholders. bmi operates four distinct areas of business: mainline, regional, long haul and bmibaby, its ‘no frills’ subsidiary, formed in January 2002.

bmi does not see itself as a technology management company - its main role is to sell seats and provide airline services to customers. It came to the decision some time ago to leave technology management to specialist companies, so consequently, most of bmi’s services are hosted externally and most of its IT selectively outsourced.

The key role of the Web Applications Managed Service from Attenda is to maintain the availability of the web site. This is a commodity market and customers don’t really differentiate between the different low cost airlines - they are interested in departure and destination airports and the frequency and cost of the flight. All these being equal, if the bmi web site is not available or highly responsive for booking, the customer will turn to another supplier’s site.

Originally, the flybmi and bmibaby web sites were hosted by different companies; the front-end content of both sites was hosted by one supplier, while the booking engines (AMADEUS’ e-travel for flybmi and Skylight for bmibaby) were hosted separately by a second. In the light of capacity problems with the ‘front end’ servers, the bmibaby content was taken off and put on to the same server as the booking engines. Then, in Spring 2004, as both contracts came up for renewal, the decision was taken to consolidate the front-end content of both airlines and host everything in the same place. This would be more efficient moving forward and should produce economies of scale. Following a thorough evaluation, Attenda was selected to supply the web applications managed service.

As part of the selection process, bmi also considered how it wanted to buy the hosting service and it was at this point that the transaction-based pricing idea was conceived. Richard Dawson, bmi’s IT director explains why. "This gave us the opportunity to move from a fixed price model to a variable pricing model, so that as the business grew, we would pay more and if it were to shrink, we would pay less. As a company, we have been trying to move more and more of our contracts on to a variable priced basis." Attenda was sufficiently confident in its own ability to deliver ‘IT certainty’ that it was happy to effectively share in some of its new client’s business risk by agreeing to this pricing model.

The second aspect, which was important in the selection of a partner, was disaster recovery."The third, added Mr Dawson, was that we wanted to work with an organisation that was good at managing the performance of web sites and which could work with us to help us to improve the way our web sites operated. Then, most important, we wanted a company which was willing to work with us on the basis of giving us incremental increases in capacity as our business grew or where we needed to handle temporary ‘peaks’, such as those following promotional activities. For example, the peaks in our business tend to occur around the launch of a new schedule - this is when customers get the best prices, so when they are published we get a huge peak in activity. So we wanted to work with a company which could take our volume information and flex the capacity according to our needs, on a permanent or temporary basis. Attenda was able and willing to do this."

Audrey Bell, bmi’s services manager adds her reasons for the selection of Attenda: "I think that Attenda’s firm commitment to, and demonstrable experience in ITIL processes was a strong factor. We are in the process of adopting ITIL processes internally so we were keen to select a supplier with expertise in this area. Then, for many of the other companies reviewed, hosting was only a small part of their business, while Attenda had a proven track record,and proven capability. Finally, the ‘knowledge factor’ was another element in our decision - we were impressed by the depth and breadth of Attenda’s knowledge."

The project began in October 2004, bmi’s servers were moved to Attenda’s datacentre and the new infrastructure began ‘live’ use on 5th January 2005. For flybmi, Attenda now hosts all of the front-end content and first stage planning, with Amadeus continuing to supply the booking engine via its e-travel solution. Customers on the flybmi site can plan their trip on the Attenda-managed server and also check flight availability. When they are ready to make a booking, they are automatically passed through to the e-travel server, which hosts the booking engine. This process is totally transparent for customers. Everything for bmibaby, including the booking system, is hosted on Attenda servers and the reservations are then passed on to Navitaire, the reservations host.

bmi very much views Attenda as a key business partner rather than just a supplier. Says Richard Dawson: "given that they are handling over £1m of revenue per day, they have to be a partner really! They work very, very cooperatively with us. They are an excellent company and we are very pleased with them."

Audrey Bell has also been very pleased by Attenda’s performance to date - particularly as regards the availability of the web sites. "It’s a huge impact on our business if our web sites are not available. We plan to turn over £300 million through the two web sites this year, so every minute they are down would cost us, as bookings can’t be made. This is especially the case for bmibaby, where with well over 90% bookings coming on line, it is vital that availability is there or we lose clients and money! We work 24x7, 365 days a year and we stipulate a very high availability level from Attenda. So far, we have had no service availability issues at all."

bmi has also benefited from Attenda’s expertise in problem solving and readiness to help to address problems in areas outside their specific responsibility. Audrey Bell is delighted that Attenda has managed to resolve issues relating to bmibaby that had been outstanding for some time: "There were certain configurations on the booking engine, which we never managed to get to work properly before. Attenda investigated these, even though it is beyond their remit really, and came back with solutions. The expertise they had in this area has definitely been of benefit to us."

She is clear as to Attenda’s strengths. "They are prepared to work with you, listen to you and understand the applications you are using. I’m a firm believer that relationships should be two-way - that’s how you get results. Attenda’s people make proactive suggestions. They make sure that if there are any potential issues, they are caught early on."

So how is the variable pricing working in practice? "Very well," according to Richard Dawson."The pricing works on the basis of the number of bookings made through the website, rather than the number of visitors. We may get 300,000 people per day having a look and checking prices, but there is currently a conversion rate into bookings of around 8%. So we can relate the actual revenues to the fees we pay for the managed services (although there is, in reality, an element of the ‘visitors’ figure built into the booking fee). The other element is that as the volume increases, the price changes and the unit cost reduces."

As bmi moves forward, its business model is changing. It is increasing the capability of the web sites all the time, as are other airlines, with online check in and online change currently being added, by way of example. bmi’s contract with Attenda allows them to do this - volumes for these types of transactions were predicted up front and so are included. The fundamental thing is that bmi still only pay for bookings, so they can add in all kinds of additional functionality without incurring additional cost. This avoids having to constantly renegotiate contracts.

And the partnership is one which is getting stronger as the two companies move forward. Since bmi is very impressed with Attenda and what they have achieved to date, the company is including them in evaluations for other types of services too. "This is an indicator of the confidence we have in Attenda as a service provider," says Richard Dawson and he is emphatic about the importance of the relationship:

"Attenda is going to be an increasingly important partner as we increase the volume of business that we do online. We are an £800m turnover company. If we were to go fully online, Attenda would be responsible for servicing all of that revenue - that is the potential size of this relationship and that is pretty substantial. In reality, we will probably continue to transact part of our business through the travel agents, but as we are moving more and more towards online and bmibaby grows, I can see a situation where Attenda could be handling £500m of our business per annum."