UK airline BMI is adopting a new business model that will rely on IT as a strategic tool to cut costs and allow it to compete with low-cost carriers.

As well as switching to a single-class service, the airline will use internet-based services to speed up the check-in process for passengers, while at the same time cutting more than £30m a year from its costs.

BMI is already two years into a cost-reduction programme, called Blue Sky, which aims to strip £100m of costs out of the business by 2006.

'All of these initiatives are focused on taking costs out of the business, to respond to the threat posed by the low-cost carriers,' said Richard Dawson, BMI's group IT director.

'The changes in the new business model mainly involve increasing the speed through check-in of passengers on the ground. We want to process them faster and more efficiently by increasing self-service.'

To achieve this, Dawson has unveiled a series of technology initiatives as part of a wide-ranging e-enablement project.

The scheme includes the increased use of e-tickets and self-service kiosks. It will also provide online check-in services, which will launch on 1 January next year.

Dawson says he wants to increase the use of e-ticketing from 63 per cent to nearly 100 per cent by the end of 2006.

Self-service check-in is expected to grow from being used by 30 per cent of passengers to 64 per cent over the same period. The airline already has 44 kiosks in operation across the UK.

A key component of the IT initiative will be driving sales onto the airline's web site, rather than through other channels. 'Online sales are an integral part of our e-strategy,' said Dawson.

About 38 per cent of the airline's current bookings are made online, and Dawson hopes to increase this figure to 50 per cent by the middle of next year.

The IT function at BMI is almost entirely outsourced to Fujitsu, under the terms of a £60m deal announced last year.

'We rely on Fujitsu and other third parties, including project management firm DAV, to do most of our work,' said Dawson.