CREATING VALUE USING
MOBILE TECHNOLOGY IN BRAZIL
A Case Study in a Brazilian Airline Company
Kelly Juliana Alvarenga
Responsfabrikken Telecom Integrato,Av. Paulista, 1754 - 5 ° andar - ZIP 01310-920, São Paulo, Brazil
Claudio Luis Cruz de Oliveira
Faculty of Administration and Accountancy, Santa Cecilia University
Rua Oswaldo Cruz, 277, ZIP 11045-101 – Santos – SP, Brazil
Production Engineering Dept. of Polytechnic Engineering School, University of São Paulo
Av. Prof. Almeida Prado, 128 Tr.2 Biênio 2
° Andar, ZIP 05508-900 - São Paulo – SP, Brazil
Fernando José Barbin Laurindo
Production Engineering Dept. of Polytechnic Engineering School, University of São Paulo
Av. Prof. Almeida Prado, 128 Tr.2 Biênio 2 ° Andar, ZIP 05508-900 - São Paulo – SP, Brazil
Keywords: Mobile check-in, Innovation, Value creation, Strategy, Competitive advantage.
Abstract: The growth of mobile telephony in Brazil have been enabled the development of mobile business
applications. These solutions create some strategic opportunities for Brazilian companies to mitigate
structural gaps using a new platform to connect a wide number of customers. The aim of this research is to
verify: (a) the possibility of achieve a competitive advantage developing an innovative mobile application
(b) the opportunity to create sustainable strategic value with this solution. If the issues “a” and “b” are truth,
the mobile is contributing to a unique strategic positioning for the airline company analysed on case study.
1 INTRODUCTION
Mobile telephony has offered many features, but it
mainly transformed transactions that require direct
and agile communication. Such features caused
deeply impacts on the customer’s behavior (Baloco,
Mainetti & Rangone, 2006). On this scenario, an
increasingly number of companies is looking for
ways to create strategic value by using mobility as a
new communication channel.
This paper aims to verify: (a) if a Brazilian
airline company acquired competitive advantage and
(b) created sustainable strategic value by using
mobile phone application.
Contribution of information technology (IT) to
business was analyzed trough the following
references:
• Four eras of IT: Zwass (1998);
• Impact of IT and Internet on strategy: Porter &
Millar (1985), Porter (2001), Tapscott (2001);
• Virtual value chain: Rayport & Sviokla (1995);
• Mobile applications, Baloco, Mainetti &
Rangone (2006);
• The value creation on e-business: Amit & Zott
(2001).
A case study was conduceted to analyse the
propositions (a) and (b). The case refers to
deployment of the first mobile check-in project on a
Brazilian airline company that enables the delivery
of the boarding pass on the passenger mobile phone
through an internet request.
The innovative project is on pilot stage since
October 2008 in the major Brazilian airports: two
airports in Sao Paulo (Congonhas and Cumbica);
two in Rio de Janeiro (Galeão and Santos Dumont);
one in Minas Gerais (Confins) and one in Distrito
97
Alvarenga K., Cruz de Oliveira C. and Barbin Laurindo F. (2009).
CREATING VALUE USING MOBILE TECHNOLOGY IN BRAZIL - A Case Study in a Brazilian Airline Company.
In Proceedings of the International Conference on e-Business, pages 97-102
DOI: 10.5220/0002190200970102
Copyright
c
 SciTePress

Federal (Brasília). The experimental stage objective
is to mature processes and technology, to know the
passenger’s experience in order to turn it even better,
to identify the system’s flaws and finally, among
other things, it will allow a broader analysis of the
project.
2 CREATING VALUE WITH
e-BUSINESS AND MOBILE
2.1 Internet and Mobile as an Strategic
Tool
Zwass (1998) traced the evolution of information
systems in four eras: (i) Operational support, from
1950 to 1970 decades; (ii) Administration support,
from 1970 to 1980; (iii) Strategic tool, from 1980 to
1990; (iv) Ubiquitous computing, since 1990. The
fourth era is recognized by the electronic integration,
the power of processing is not restricted to
computers but any kind of devices connected to the
Internet.
In order to highlight the role of information
technology in competition Porter & Millar (1985)
explored the "value chain" concept: "A company’s
value chain is a system of interdependent activities,
which are connected by linkages. Linkages exist
when the iway in which one activity is performed
affects the cost or effectiveness of other
activities...Careful management of linkage is often a
powerful source of competitive advantage because
of the difficulty rivals have in perceiving them and in
resolving trade-offs across organisational lines".
The virtual integration promoted by the Internet
introduced new concepts to the competition. Rayport
& Sviokla (1995) referred to the physical world of
resources that managers can see and touch as the
"marketplace", and the virtual world made of
information as the “market space". For example,
banks provide services to customers at branch
offices in the marketplace as well as electronic
online services to customers in the market space.
For the authors, the traditional value chain model
treats information as supporting element of the
value-adding process, not as a source of value itself.
Company's managers look at far more possibilities
for creating and extracting value thinking in terms of
virtual value chain and physical value chain than
they would have by considering exclusively the
traditional value chain. For instance, Federal
Express created value for its customers allowing
them to track packages through the FedEx website
on the Internet.
The market space promotes a virtual integration
of the industry agents. In such markets as
burgeoning national economy without a physical
infrastructure connecting the agents, a virtual
platform can be created first. For example, the China
Internet Company developed a network of Internet
sites for forty industrial cities. The network provides
multimedia documents that describe a wide range of
products, a complete catalogue of Chinese laws to
trade and export, a translation service, and news.
These services and information were not available
before because the Chinese did not have an adequate
physical infrastructure. In the case analysed, new
connections among the agents of the industry will be
enabled by the Internet integration.
Rayport & Sviokla (1995) highlighted five
implications of the virtual value chain for
management:
• Digital assets, unlike physical ones, are not used
up in their consumption;
• New economy of scale;
• New economy of scope;
• Transaction cost compression;
• Shift from supply-side to demand-side thinking.
Porter (2001) considered the Internet as the best
IT platform to create a unique strategic positioning
because its architecture and standards make it
possible to build truly integrated and customised
systems that reinforce the fit among activities.
Tapscot (2001) is even more emphatic, claiming
the Net is much more than just another technology
development. The Internet enabled a "New
Economy" for this author. The strategists will no
longer look at the vertically integrated corporation as
the starting point for creating value. Rather, they
will start with a customer value proposition and they
will identify discrete activities that create value and
parcel them out to the appropriate web partners.
Despite the relevant role of e-commerce
applications, Turban, Rainer, Potter (2003) pointed
other ways to create value through the Internet as
costumer support, collaboration with other
companies, e-learning and intranet. The authors
called e-business the wide range of business
applications through the Internet.
2.2 The Role of Mobile Applications
The mobile technology expanded the Internet
domains to the ubiquitous computing claimed by
Zwass (1998). The portable devices allowed a lot of
new uses of TI. Baloco, Mainetti & Rangone (2006)
detailed the main mobile commerce (m-commerce)
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applications:
• Sales Force Automation (SFA)
• Field Force Automation (FFA)
• Supply Chain Management (SCM)
• Fleet Management (FM)
• Operations support
• Customer Relationship Management (CRM)
• Mobile and Wireless Office (MWO)
Service providing in e-business demands an
intense association between the supply chain
players. A unique strategic position may emerge
from the links between these players (Porter, 2001).
2.3 Creating Value in e-Business
Researching companies over the world, Amit & Zott
(2001) detected four sources of value creation
through the Internet:
• Efficiency – composed by cost reduction,
information exchange optimization between
company and costumers, supply chain
integration.
• Complementarities – created when a set of
components worth more than the sum of each
component separated. Companies can combine
their won products and services or extend the
complementarities to other partners on the
supply chain.
• Retention – prevents customers and strategic
partner’s migration to other competitors.
Customer familiarity with e-business interfaces
and unique applications tend to leverage the
loyalty.
• Innovation – Traditionally, new products and
services. On the Internet, may be a change on
the way of transaction. For example: eBay
introduced auctions between costumers in large
scale (C2C) allowing low price products
commerce between individual costumers.
These sources of value will be used to verify
how the airline company created value in e-business
applying the mobile solution.
3 CASE STUDY
3.1 Research Methodology
In order to investigate the development of
competitive advantages by mobile telephony, the
methodological approach was case study and one
company was selected due to the existence of a main
project based in this kind of technology. The
development of the case study comprised three
major processes: information gathering, analysis
value creation, and consolidation of the study. The
activities permitted the identification of competitor
views, market structure, and internal vision for each
analysed industry:
Information Gathering: (i) internal
environment: in-depth interviews were performed
with professionals of different areas the company
(Yin, 1991). Most strategic areas were selected,
according to relation with mobile solution. Examples
of these areas include: Operations, Information
Technology, Marketing, and Customer Service
Department. The interviews covered comprehensive
levels in the organisation in order to allow the
mapping of different views on operational
restrictions and enhancements. Therefore, subjects at
the operating level as well as upper management
were interviewed. (ii) External environment:
analysis of trade publications, industry websites and
competitor companies, best-of-class features of
internationals companies, public government
records.
Value creation: as a result of the case study,
some considerations about the value creation of
mobile solution will be presented.
Consolidation: analyses of the impact of the
new strategic positioning in the business results.
3.2 Mobile Industry in Brazil
80% of mobile phones in Latin America are
concentrated in six countries, by decreasing order:
Brazil, Mexico, Argentina, Colombia, Venezuela
and Chile. Brazil is the largest market, going from
102,047,000 mobiles at 1
ST
quarter of 2007 to
140,789,000 at 3
rd
quarter of 2008 (Teleco, 2008).
Prepaid mobile phones in Brazil are responsible
for much of the growth of mobile telephony. They
began to be marketed in 1998 reaching 80.8% of
mobile phones in 2005. According to Anatel
(Teleco, 2008) this number grows to 81% of mobile
phones in Brazil, these phones represent a density of
79 mobile phones per 100 habitants. This is not a
uniform distribution, being larger on South and
Southwest and smaller on North and Northwest
regions of the country.
Growth of mobile phones in Brazil is larger than
the broadband internet, as shown on table 1.
Population quickly accepted the mobile
telephony and some services where naturally
absorbed by this communication channel, such as
alerts, several types of transactions, payments,
localization, among others.
As the majority of Brazilian uses prepaid cell
CREATING VALUE USING MOBILE TECHNOLOGY IN BRAZIL - A Case Study in a Brazilian Airline Company
99

phones, it demands a different solution approach.
Users chooses prepaid plan by economic reasons and
because they are simpler. Plans which include data
transfer packages and provide e-mail and internet
access are still expensive for most people. In other
countries which already have the mobile check-in
solution, boarding pass delivery is made through e-
mail message, as users have data transfers packages,
they can receive this information on the phone. In
Latin America context the delivery have to be done
through SMS, so everyone can receive the boarding
pass.
Table 1: Evolution of connection types (IBGE, 2007).
3.3 Mobile Check-in Solution
In 2008 the IATA associated airlines developed the
capacity of 2D barcode generation (bi-dimensional)
in the boarding passes. Aggregated to mobile
technologies is possible to deliver these barcodes on
the passenger’s mobile phones that use the airline
transportation service. The Japanese airlines JAL
and ANA offered this service, but Japanese
technology works only on Japanese networks and
mobile phones. In some countries, there is an
integrated solution with m-payment systems, the
mobile solution starts earlier, when the ticket is
bought. In Japan this kind of solution is being
replicated to other transportation companies like
subways and trains.
Mobile check-in is offered as a benefit to
ease service deliver to the passenger. After
purchasing the ticket, the passenger receives the
localizer. With this code, access the airline website
and chooses the mobile check-in. The passenger
provides his personal information, reserves the seat
and finalizes the transaction. Up to two hours before
the flight, the passenger receives in the mobile
phone a message containing the 2D barcode and the
flight details like date, time, departure gate and seat
(figure 1). The passenger is not additionally charged
by using the mobile check-in.
Mobile check-in uses specialized technologies both
the most used internet and software development
technologies.
Figure 1: Received message.
Designed to generate more economy to the air
transport industry, better convenience to the
passenger and more flexibility to the airports, the
International Air Transport Association (IATA)
issued a policy (Resolution 722 c/ATA Resolution
20) requiring that all associated air companies use
boarding pass containing 2D barcodes (BCBP). Up
to the end of 2010 all boarding passes should have
this barcode.
By choosing the mobile phone check-in, users can
receive two types of message. On the first case, the
user receives a message with the bi-dimensional
barcode in an image format (Binary SMS) in
addition to text. On the second, users receive a
regular text message with a hyperlink to access the
barcode image through a mobile internet connection.
• Binary SMS: it’s a kind of SMS which allows
the delivery of 2D barcode as an image. This
kind of message is delivered through two
distinct protocols. The NSM (Nokia Smart
Messaging) is a protocol recognized by most of
the mobile devices (Nokia, Motorola and Sony
Ericsson). The E-SMS (EMS) is recognized by
other sort of mobile devices (LG, Samsumg,
Siemens and some Motorola);
• Message with link: can be SMS link or WAP
push, these options work like a contingency to
mobile devices that do not supports binary
SMS, like Apple iPhone some models of
BlackBerry, HTC and HP. But in this case, the
solution depends on the availability of mobile
internet connection at the airport.
Studies show more than 60% of the message
traffic analyzed on this case is based on NMS
format.
The mobile check-in involves an intense
association with the following players:
• Airline: provides access to reservation system
through APIs allowing the user to visualize the
unreserved seats and choose yours. Before
boarding, the airline is responsible for the
passenger identification procedure, like
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traditional check-in made in Brazil;
• Mobile Phone Operators: responsible for
message’s delivery to its customer’s mobile
phone. As this is a pioneer project in Brazil,
some operators needed to adapt your platforms
to allow the delivery of binary SMS.
• Integrator: owner of integration platform,
responsible for messages delivery to all mobile
phone operators. The integrator is also
responsible for the project’s approval within
each mobile phone operator. In Brazil, this is a
mandatory procedure for message’s delivery
other than peer-to-peer messages;
• System developer: responsible for mobile
check-in system, it develops the application
which communicates with airline back-end’s
system, delivers the code on the integrator’s
platform and generates managerial reports.
3.4 Results
Although the project is considered on pilot stage, it
is possible to analyze the early results. The mobile
solution is implemented since October 2008 in the
main Brazilian airports. The airline company did not
advertise the solution in any kind of mass media.
The mobile check-in communication is enabled on
the website and it is also disseminated through buzz
between consumers.
The airline company is monitoring three factors
to determinate the best moment to roll-out the
check-in solution: supply-chain capacity including
airports and telecom operators; passenger’s
satisfaction and return on investment.
Airports infra-structure in Brazil is near a
collapse because of passengers’ growth in the last
years without adequate investments on capacity
increasing. It is not unusual for a Brazilian passenger
wait more than one hour in a check-in queue,
beyond the uncomfortable experience there is a real
risk of flight missing in some cases.
Other airline companies provide special services
for high level consumers; these clients use
differentiated queues to avoid the long wait. This
kind of expensive service is not a possibility to the
analyzed airline company because of its aggressive
trade-offs to low the ticket costs. In this scenario, the
mobile solution is a relief to their passengers
because they can by-pass the queue using their cell
phones.
Despite the scarce communication, the mobile
check-ins grew 74% since its implementation (figure
2). This growth is generated by frequent flyers and
new users who know the service by other user’s
indication. A quality analyze was undertaken to
know better the passenger experience, it indicated
the majority of the passengers approved the mobile
check-in. It is considered easier and quicker than
the regular way, although consumers observed the
airline company employees do not know the mobile
check-in operational details yet.
Figure 2: Mobile check-ins evolution (scale was ommited
for confidentiality purposes).
Other issue faced by users is to select the correct
brand/model phone on mobile check-in process; it
causes problems to identify what kind of message
should be delivered, so a web page containing a
guide was published, and the device can be
identified using a picture for comparison.
Considering the financial perspective, the airline
company achieved an outstanding operational cost
reduction. The traditional check-in cost is about US$
8.00 while the mobile check-in can save up to 70%
of this value. This reduction became reliable the
project roll-out, the unique factor is delaying this
launch is the airports infra-structure.
Although the airport can also be benefited
because of higher flexibility to use the physical
space (eg. some check-in stations can be converted
into luggage delivery), it is not equipped with
modern devices to read the cell phone bar codes in
order to allow the passengers entering on the gate.
The company handled this issue providing stations
to the passengers print the check-in tickets before
flight.
Other constraint is the difficulty of a major cell
phone operator to adjust their systems to support the
mobile check-in. As soon as this operator supports
the solution, its roll-out will be performed.
3.5 Project Evolution
The mobile check-in project is still an innovation in
Latin America, but there is no guarantee it will be a
differentiated solution on the future. Considering
this changing environment, the airline company is
studying new technologies to maintain the
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101

innovative pace.
Multimedia Messaging Service (MMS) and
Location-Based Service (LBS) technologies can add
significant evolutions to the project. The MMS is a
delivery option to devices unable to handle binary
SMS, but the delivery of this kind of message is not
yet supported by all mobile operators companies in
Brazil. The LBS enables the passenger localization.
The company defined some opportunities to
continue providing a differentiated service to their
consumers:
• Delay alerts and weather conditions on arrival;
• Possibility of including miles through SMS
message to a Frequent Miles Program, receiving
a SMS reply with the miles balance just after
the inclusion;
• Sending SMS with cancelled flights or new
boarding instructions;
• Possibility to selling the seat of the passenger
that is not in the airport area, for example, 30
minutes before the flight.
4 CONCLUSIONS
The analyzed solution generated a competitive
advantage to the company (Porter & Millar, 1985;
Porter, 2001). This can be concluded based on the
fact of any other Brazilian airline company is
offering, or even planning, this kind of solution.
Although the company is aware about the copy risk,
it is preparing to launch new features, in order to
take advantage of its pioneer position.
According to Amit & Zott (2001) view of
sources of value, the airline company created
strategic value as follows:
Innovation – Beyond the fact of the mobile
check-in became an innovation in Brazil nowadays.
The mobile platform will continue to produce a lot
of new features as related on project evolution.
These possibilities give the opportunity to the airline
company to build a visionary position based on
innovation.
Efficiency – The presented solution decreased in
70% the cost of check-in operation. Additionally, the
check-in process became more flexible, reducing
queues and easing the passengers flow on the
airport.
Retention – Passengers experience more
comfortable services, saving time and getting precise
information about check-in. As other companies do
not offer this service, it is expected the application
increase the customer loyalty.
Complementarities – Integrating the mobile
phone operator to the supply chain of airline, the
analyzed company created a new way to add value
to its processes, giving benefits to all involved
players.
According to the case study results, the
hypothesis (a) was verified because until this
moment the company achieved a competitive
advantage based on the mobile application (b) but it
is difficult to verify whether this solution will
sustain a strategic position as the other players can
launch similar solutions.
The future steps of this competition motivate
new analyses in order to develop new studies aiming
to design a more complete scenario of mobile
contribution to competition in Brazil.
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