‘Chaos’, ‘shame’, ‘misery’. On the morning of Tuesday 29th August, there wasn’t a single national news outlet – from the Daily Mail to Sky News – that didn’t feature at least one of these words in its headlines following the UK air traffic control system crash.
While these articles followed a particularly unusual event, the stories of passengers abandoned in departure lounges, dealing with limited support on the ground, closed call centres and crashing airline apps are all too familiar.
There’s also reason to believe these problems will only get worse. Airspace congestion, war and climate change are contributing to the disruption that began with Covid. The result has been additional stress and expense for airlines and passengers alike.
This inevitably harms customer satisfaction – at CMAC, we surveyed 1,100 UK adults who had taken at least one flight in the last year, finding that most believed disruption had become worse and many were dissatisfied with the airline response.
Our survey also found a significant number of passengers had been forced to arrange and pay for their own alternative accommodation, transport and meals when dealing with delays.
Given the current wave of employee strikes – alongside the other issues airlines face – we strongly believed it was time for fresh research into how airlines are managing disruption, how this is affecting passenger satisfaction and the key steps to retaining customer loyalty.
We conducted our research with the aim of gaining passenger insights that would empower airlines – allowing them to understand how people feel about the existing response to delays and cancellations, which allows airlines to address the areas where they might be falling short.
A worsening problem affecting customer loyalty
Our research found that the majority of people (71%) have experienced airline disruption, while most believe it is getting worse. Almost half of UK travellers also said their experience of flight delays or cancellations – and the service they received – made them less likely to fly with that airline in the future.
The good news is that embracing a better approach is very achievable. Our data shows that by just making sure a human employee is on hand when disruption occurs can make a world of difference.
We also found that passengers are frequently expected to make their own alternative travel and re-accommodation arrangements when flights are disrupted – 53% who had booked alternative transport following a delay said they did so without airline support, while some 61% of people who booked last-minute hotel rooms received no airline support.
If this continues the industry’s reputation is at risk, however it offers an opportunity for airlines to change their approach. Every passenger with a bad experience is also someone whose long-term loyalty could be won through a better approach when things go wrong.
Empowered teams and the human touch
We examined what this better approach might look like and our data shows the importance of an empathetic, human touch during flight cancellations or delays.
We found that while passengers are broadly happy to embrace technology when it comes to booking and checking in, if disruption happens, they want to be able to speak to a human.
Some 82% of passengers said they want a real person to help them when things go wrong, with 77% saying that human support will always be superior to technology in times of crisis. As many airlines move towards ‘digital transformation’ and are trialling AI and technology-only solutions, this is an important customer view to consider to ensure satisfaction and repeat business.
Technology needs to be used as an enabler, not a replacement, for airline and ground handling staff to provide quick, in-person and meaningful re-accommodation and alternative transport solutions to disrupted passengers.
Realising the potential of this human workforce means ensuring staff receive the right training and tools, enabling them to focus on passengers and reassure them that action is being taken, while providing regular updates and realistic timeframes.
Alongside having staff on hand to answer questions, tools – such as user-friendly apps – can also be used to help travellers easily find and book alternative travel or hotel rooms on their own terms. Meanwhile, airlines can also make use of live dashboards to gain full visibility and control when supporting customers during times of disruption.
With these things in place, there’s a big opportunity for airlines to win the long-term loyalty of passengers, despite the challenges our industry faces.
Download the full whitepaper to gain insight into passenger pain points and how airlines can more effectively meet expectations and earn long-term loyalty.
In today’s digital age, data is the lifeblood of innovation. The airport and airline industry, with its intricate operations and vast customer touch points, can create lasting value by harnessing the power of data to improve the traveler’s experience, reduce operational costs, and increase revenue. In our increasingly digital world, unlocking the value in data requires companies adopt a modern data strategy to become more data-driven. Let’s delve deeper into what it means to be a data-driven organization and its implications for airlines and airports.
What is a data-driven organization?
A data-driven organization must do more than collect vast amounts of data. They must:
Harness data as an asset
Drive sustained innovation using these assets
Create actionable insights to supercharge the customer experience
Airports and airlines recognize the importance of data to enhance customer experiences. They’ve shifted from traditional brick-and-mortar activities to omni-channel experiences, driven by evolving customer expectations.
New technologies, like generative AI, are challenging us all to think bigger about what is possible to meet traveler’s expectations. Imagine an airport where real-time insights can predict flight delays, optimize ground operations, and personalize passenger experiences. That’s the power of being data-driven.
By adopting the right mindset, data-driven organizations:
Create compelling new customer experiences
Unlock new revenue streams
Differentiate themselves from competitors
Ryanair, for example, uses data to optimize the supply of food and beverages on 3,000 daily flights with a goal to make sure “no one is disappointed” according to Aoife Greene, Ryanair’s deputy director ancillary and head of retail. Ryanair uses passenger nationality, flight time, flight destination, and time-of-day to predict the right in-flight product mix to delight customers and improve revenue.
Creating a data flywheel with data products
We suggest using the concept of a “data flywheel” to Think Big, Start Small, and Scale Fast to power new experiences and capabilities. It’s an iterative cycle where organizations focus on solving customer challenges using data products. Data products can be thought of as an evolution of traditional data sets. They represent a curated, managed, and trusted presentation of data or insights for a specific purpose.
In the same way we shop grocery aisles and ecommerce sites for physical products, data products are easily discoverable and accessible by anyone with access rights. For example, Manchester Airports Group (MAG) and Ryanair worked together to make MAG’s airport gate change events available as a data product to improve the customer experience. The real-time data product ensures gate change information is aligned across MAG’s airport flight information display screens and Ryanair’s customer facing applications.
In the broader context, data products and adopting the flywheel approach can help companies use data to improve use cases spanning the end-to-end traveler experience and operations. For example, data can be used to enhance and personalize in-flight entertainment, to streamline baggage handling and visibility, or even optimize flight paths for fuel efficiency based on weather conditions.
Just as other industries are embracing experimentation to test consumer reactions to new features and experiences, airports and airlines can adopt a similar approach. By continuously designing experiments, such as A/B or multivariate tests, and leveraging data-driven insights, they can stay attuned to changing passenger expectations and innovate accordingly.
This is the power of the “data flywheel”.
Amazon Web Services (AWS) use the flywheel as an integral part of our AWS Data Driven Everything (D2E) program that helps customers unlock value using data. D2E is used by hundreds of customers to activate priority use cases using the flywheel and Amazon’s working backward approach. By continuously collecting feedback and iterating, organizations can create data products that add value consistently and repeatedly for priority use cases.
Building a modern data community
At the heart of a data-driven organization is the Modern Data Community that supports empowering employees with data-driven insights and decision-making capabilities. By pushing decision rights to the edges and promoting a culture of experimentation, airports and airlines can foster agility and innovation.
The community is comprised of three stakeholder groups. First, data producer teams are often aligned with business domains (flight operations for example) sharing data in the form of products and ensuring their quality. Next, data consumer teams may use a collection of data products to gain insights. For example, marketing consumers may use products containing traveler’s past purchases, booking preferences, and customer service interactions to fine tune customer segmentation models.
Consumers drive the creation of new insights and innovations using data and often become data producers by creating new, higher-order data products. In the marketing example, the fine tuned customer segmentation model can be published as a higher-order data product for use by consumers.
Last, data platform teams form the backbone that operate the marketplace ensuring data products are accessible, reliable, and secure. They can use tools like Amazon Lake Formation and Amazon DataZone to facilitate efficient and secure sharing of data products across the organization.
What about data governance
Being data-driven doesn’t mean compromising on governance. Modern data strategies balance innovation with compliance. Tools like Amazon Macie, which uses machine learning to discover and protect sensitive data, ensure that organizations can innovate responsibly. AWS Clean Rooms helps customers and their partners more easily and securely collaborate and analyze their collective datasets—without sharing or copying one another’s underlying data—protecting personal identifiable information (PII). For the aviation industry, where safety and compliance are paramount, achieving a balance between security and collaboration is crucial.
Conclusion
The aviation industry is on the cusp of a data revolution. From enhancing passenger experiences to optimizing operations, the possibilities are endless. As technology evolves, airports and airlines that embrace a data-driven approach will lead the way, setting new standards for efficiency, customer satisfaction, and innovation. Generative AI, for example, is a transformative technology that requires a modern data strategy and foundational ecosystem to realize its full benefits.
By understanding the principles of a modern data strategy, the data-driven organization, and leveraging modern data platforms, the airport and airline industry can soar to new heights, delivering unparalleled value to passengers and stakeholders alike.
To learn more, join myself (Brian Buch) and Craig Suckling, AWS Global Lead of Data Strategy, at the World Aviation Festival September 27-28 in Lisbon, Portugal to discuss how a modern data strategy can help maximize value using data.
We will co-host a workshop on September 27 with Ryanair and Massimo Morin at 10:30 and we will also be available for meetings at Booth 1-180.
The world of aviation has always been about movement, connection, and evolution.
As Lisbon’s skies get ready to welcome aviation professionals from across the globe for the annual World Aviation Festival, the pivotal role of technology in reshaping our dynamic industry is more pronounced than ever.
Today’s traveler expectations have transformed, heavily influenced by the turbulence of the pandemic. Frequent cancellations, shifting flight schedules, and evolving travel restrictions have amplified the demand for flexibility in travel bookings. Moreover, with the rise of environmental consciousness, options like CO2 offsetting and the availability of convenient services like cancellation insurance have become the norm rather than the exception.
At the same time, we also live in a world where consumers can buy anything with a single click on platforms like Amazon. In this evolving landscape, the traditional airline retail experience seeks rejuvenation to match the pace.
As we look into the future of the airline experience, it’s becoming clear that it’s not just about convenience anymore. Other industries have progressively raised the bar for customer expectations. In response, airlines are navigating this shift, aspiring to provide a more seamless and advanced booking experience.
Our extensive OAG Airline Transition Tech Report delves into these transformative shifts. Labeled as the transition from “Old to New,” it’s clear this isn’t merely a trend but a crucial strategic evolution towards a more sophisticated travel paradigm.
As we gear up for the festival’s discussions, we bring forward three illustrative data charts from our report. These visuals not only depict the trajectory of tech innovations but also underscore the pressing need for and the inescapable nature of this transformative journey.
1. The Role of Ancillaries: More Than Just Add-Ons
As a result of technological progress and changing traveler preferences, the aviation industry has witnessed a steady rise in its ancillary businesses.
What began as simple add-ons mostly offered by low-cost carriers has matured over the last decade into a cornerstone of the financial landscape for many airlines.
The potency of ancillaries was on full display in 2022. A record was set, with ancillaries contributing an astonishing 15% of total revenue for airlines.
Direct channels, such as an airline’s official website, have given airlines more control over their offerings.
Furthermore, with the introduction of NDC, the promise of tailored experiences for travelers has come closer to reality. The future of distribution promises to deliver a refined, personalized touch to each customer, effectively revolutionizing how airlines engage with their patrons.
2. Virtual Interlining: Reshaping Airline Inventory and Expanding Travel Choices
The aviation industry, traditionally characterized by formal network collaborations and partnerships, is undergoing a transformation with the advent of Virtual Interlining.
A brainchild of innovative platforms like Kiwi.com and Dohop, this model first made waves in the early 2010s. Instead of relying on time-honored interline and codeshare agreements, Virtual Interlining hinges on groundbreaking technology and fresh, entrepreneurial strategies.
This strategic shift is doing more than just shaking up airline inventory management. It’s also unlocking a new world of options for today’s travelers. More flexible, convenient, and, most importantly, cheaper flight options, are now at passengers’ fingertips, aligning perfectly with the demands of our fast-paced, convenience-oriented consumer era.
Our data models reveal a significant surge in self-connecting passengers in recent years.
These are travelers actively choosing to book connecting flights across different airlines, without traditional interlining. From a modest 55 million travelers making such choices six years ago, 2022 saw this number leap to an impressive 179 million.
The figures underscore a clear shift in passenger behavior and preference, pointing towards a more flexible future for air travel.
3. Payment Processes: The Unseen Barrier in Airline Retail
When it comes to booking travel, there exists a curious phenomenon unique to airlines: astonishingly high booking abandonment rates.
While other e-commerce sectors consistently convert more interested shoppers into buyers, airlines see potential passengers frequently leaving their carts behind. One primary reason can be traced back to the way airlines manage payments and customer experience, which often exist as siloed departments.
The tangible fallout of this separation is evident in the alarming abandonment rates on airline websites close to 80%, sometimes even touching a staggering 90%. It paints a picture of a missed connection between what a customer wants and what the booking process delivers.
But the silver lining here is the immense opportunity that lies ahead.
Airlines, by enhancing the retail payment experience, especially through direct channels, can not only mitigate this dropout but also unlock a wealth of potential revenue.
The broader travel industry seems to have recognized the goldmine that is payments.
According to recent survey data, a whopping majority of travel businesses, over 80% to be exact, view fintech and payments as a top-tier investment priority.
Curious about the future of travel payment solutions and how they might transform the airline booking experience?
As we usher in a new era of technological advancements, the airline industry is in the throes of a seismic transformation. Two parallel systems are driving this change – the historically grown legacy system, and a modern, dynamic, adaptive system. This critical transition is setting the stage for what we at OAG like to call “Travel Done Right”.
To explore this transition in-depth, we have published a comprehensive report, see the download link here, offering detailed insights into this complex evolution.
Below is a teaser into some areas we cover, including an overview of the 50 most promising Travel Tech companies driving this change.
The Legacy System and Its Challenges
The legacy system, a stalwart of the airline industry for decades, is slowly yielding to obsolescence. Dating back to the 1970s, its outdated interfaces and limited flexibility pose significant challenges in today’s fast-paced, technology-driven world.
Even essential upgrades or replacements become herculean tasks due to their inherent rigidity. Furthermore, it struggles to integrate with innovative third-party software solutions essential for maintaining competitiveness.
The Modern System and Its Promises
In stark contrast, the modern system offers improved usability, scalability, and cost savings.
It’s designed for today’s airlines and travelers who expect intuitive interfaces, customization options, and data-driven decision-making. Cloud-native software solutions enable easy integration with business applications, giving airlines real-time insights into customer behavior.
Driving Forces of the Transition
Two intertwined trends drive the transition towards the modern system: new technologies and changing customer needs.
Airlines can now offer products in more flexible ways due to advancements like NDC, which allows more individualized inventory packaging.
Changing customer needs also play a significant role.
Today’s travelers expect flight booking and new ancillary products, including CO2 offsetting and cancellation insurance, to be readily available. As a result, airlines are under pressure to match the seamless retail experiences offered by platforms like Amazon.
The Transition Across Major Airline Functions
This tech transition is not limited to IT infrastructure but extends across the entire airline value chain. Physical aspects, such as how aircraft are powered, are also experiencing change, as exemplified by the rise of Sustainable Aviation Fuel (SAF).
However, the transition predominantly focuses on the customer-facing side of the airline business. How flights are offered, packaged, sold, and re-booked is undergoing dramatic change, slowly but steadily making for more seamless travel journeys.
In our report, we meticulously navigate through five crucial chapters, each exploring a specific aspect of the airline industry undergoing this significant transition:
Airline Revenue Management: The Shift from Dynamic Offers to Continous Pricing
Airline Distribution: The Transition from Traditional GDS-led Distribution to NDC
Airlines Ancillaries: The Transition from Up-selling to Right-selling
Airline Inventory: The Evolution from Network Agreements to Virtual Interlining
Airline Payments: The Movement from Fixed to Flexible Purchasing Schemes
Hesitation and the Need for Change
Despite these promising advancements, many airlines remain hesitant to move away from the legacy system due to perceived stability and the industry’s inherent risk aversion.
However, recent IT outages have spotlighted the legacy system’s vulnerabilities, indicating it’s time for a more robust technology stack.
This paradigm shift will pave the way for “Airline Retail of the Future,” enabling airlines to create the right offer at the right time. Flexibility in purchasing tickets and ancillary services throughout the travel journey, and options like buy-now-pay-later models, will redefine the travel experience.
What’s Next?
While the transition to “Travel Done Right” has just begun, the potential benefits are significant. To bring this new era into fruition, airlines not only need to invest in radical transformation efforts but should also closely observe the rapidly evolving Travel Tech ecosystem.
Emerging startups and tech players are already showing the way, illustrating how the legacy system can be disrupted and replaced with newer, more flexible, and customer-friendly ways of doing business. These entities are leveraging data-driven technologies to create innovative solutions that can dramatically improve the travel experience, from ticket purchasing to ancillary services.
As such, airlines stand to gain immensely by keeping a close eye on these trailblazing companies. In the spirit of this forward momentum, we aim to shed light on those with the most advanced data capabilities, guiding the industry towards this exciting transition.
The Rise of Travel Tech Companies
Leveraging digital technologies like Machine Learning and AI, many of these emerging startups are detangling airlines from outdated tech systems, accelerating the industry towards a modern, dynamic, and customer-friendly system.
In the below mapping, we highlighted 50 of the most promising Travel Tech companies in a structured overview.
The future of aviation has always seemed like a distant one. But the future we look to today – of flying EVs and net-zero flights – might be out of reach for decades.
Innovation has undeniably been slow. There hasn’t been a quantum leap in ages – only incremental nudges towards better ops, safety and efficiency.
In a sector characterised by intense competition and paper-thin margins, funnelling cash into R&D for technologies that might be a dead end isn’t the smart choice right now.
So what is the smart choice? The answer so far has been ancillaries.
But in the face of mounting environmental awareness and evolving customer expectations, the industry needs to start looking beyond its siloed offering if it wants to stay relevant and keep the cash flowing.
Ancillaries – how did we get here?
The concept of ancillary sales in aviation didn’t really exist until low-cost carriers (LCCs) emerged. Up until this point, all-in bundled fares were the norm. But as LCCs started to displace flagship carriers and take more market share, the adoption of product unbundling and ancillary sales became increasingly common.
In 2022, ancillary sales totalled US$102 billion – 15% of total airline revenue. In the US domestic market, seat bookings alone account for more than US$4 billion.
That’ll only continue if passengers keep choosing air travel as their main mode of transport. But today, consumers are hyper-aware of their impact on the climate.
Travellers and governments are pressing aviation to do more to fight global warming.
Ancillaries aren’t going to remain sustainable, unless aviation retailing starts to think beyond the flight.
Moving beyond the airline ecosystem
Carbon offsetting isn’t cutting it anymore. People are demanding more action on the environment from aviation.
More could be coming. But the industry can survive this, with multimodal travel.
It offers a life raft, until we get net-zero flights and EVs. It’s an opportunity for airlines to meaningfully reduce their carbon footprint, while shoring up a new kind of ancillary revenue.
Far from competing with airlines, multimodal travel opens new opportunities for ancillary sales, beyond the aircraft and beyond the airport.
Passengers are increasingly booking direct, too – and this keeps customers in the airline’s ecosystem, where these new ancillaries can be offered meaningfully, in context.
Retailing has always offered relevant products like airport transfers, car hire and hotel for decades. What’s new is the inclusion of modes that would traditionally be seen as eating the aviation industry’s lunch.
The potential opportunity here is staggeringly vast, and this doesn’t even account for cross-border rail travel.
But ultimately, multimodality is better for the customer.
Keeping up with customer expectations
Customers want to feel represented by the brands they buy from, including travel brands.
Allowing them the flexibility to book air, rail and road transport in a single booking wins you the direct booking and the ancillary revenue, instead of forcing customers to book piecemeal trips – or into the arms of your competitors.
For corporates who’ve got all eyes on their ESG strategies, this kind of tangible reduction in emissions is extremely attractive. This isn’t just a “nice to have” anymore, thanks to the European Union’s Corporate Sustainability Reporting Directive (CSRD).
Multimodal travel will have a profound effect on the outcomes of sustainability reports, and adoption will likely be widespread. But as timely and on-point as it may be culturally, climate action is only a fringe benefit.
Because when the chips are down, most customers are all about convenience.
Visit most airline.com sites, and you’ll only be able to search for airports they fly to – not destinations. Passengers don’t travel to airports; they travel to resorts, hotels and experiences.
Aviation’s missing link is completing the whole journey in a single booking.
Imagine being able to search for a destination, and getting the nearest airport, plus a rail or public transport connection to take you the rest of the way – without having to book anything separately.
Travellers get a better experience. The airline increases ancillary revenue, with higher-quality data on what their customers actually want: data that can be measured against events that impact mass travel – like Taylor Swift’s tour, World Cup matches and festivals.
Multimodality is an affirmation of customer values, in an experience that reflects them as an individual. Facilitating their freedom is precisely what airlines should be doing.
So, how do we get there? Well, the tech to do this already exists.
Because we built it.
The road to multimodality
There are several routes into a multimodal future – all riddled with problems.
The travel ecosystem is a fractured, fragmented collection of disparate, often old systems: GDS, EDI/EDIFACT et al.
These can only support a limited number of verticals, like air and hotel – not rail, ferry, ride hailing, or any other modes. Attaching these modes to bookings takes airlines into a further fragmented realm of micro vendors, with literally thousands of APIs and platforms dedicated to single functions.
Airlines could consume multimodal content via all these distinct APIs – but imagine how resource-intensive it would be to integrate each mode, each supplier, each platform.
Even existing aggregators only offer a limited breadth of products, requiring multiple integrations.
Snowfall has created the answer to this, with Junction – our flagship travel technology platform.
Discover the tech behind multimodal travel at World Aviation Festival
Come and see the future of aviation for yourself – meet us at stand 1-106 at World Aviation Festival 2023.
Offers & Orders is not a new topic within the wider travel industry; but it is an entirely new method of selling products that enables airlines to create and distribute personalised offers to travellers. It’s not surprising that new methods and old habits don’t cohabitate well. As a result of this mismatch the customer experience today is deeply affected by legacy standards, processes, and technology. Airlines in the past have struggled to create and manage the attractiveness of offers, whilst delivering on efficient orders, in addition to keeping the customer at the centre of it all. Some may view Offers and Orders as a challenge to bridge the old and the new and the end customer simply having to deal with the result. The opposite is true however, and instead of the customer being an inconvenient truth, it could be the solution to the very problem.
As an industry, many commentators have been quick to dismiss how imminent such a switch to one single order across the journey is, but research suggests that we are closer than we think. According to Datalex’s research findings outlined in ‘The Digital Airline 2023’, over 9 in 10 (92%) of airlines believe their underlying PSS system is significantly or somewhat hampering the simplification of order management and ease of booking, suggesting that this is a significant headache for airline executives. In addition to this, 60% of airlines surveyed intend to move away from their current PSS provider towards an Offers & Orders enabled technology platform in the next 1-2 years. With just 1% of airlines planning this in the next 5 years or more, and only 8% stating that their PSS does not hamper them at all, it is clear from the majority that they have reason to start this transition sooner rather than later.
By moving to a unified Offers & Orders future, airlines can take back control of what they sell, merchandise and manage in a personalised way. But equally, customer-centricity is crucial for the long-term success in the next phase of airline retailing and should be acknowledged as such. A recent survey by McKinsey indicates the true value of a customer-centric approach, with $40 billion annual value creation opportunity available to airlines.
If airlines chose to ignore this transition, they will be left behind. In order to remain competitive and to future-proof their position in market, airlines must be cognisant of the inevitable move to Offers & Orders. Datalex has cautioned airlines by stating that “the cost of doing nothing cannot be underestimated”, as voiced to by Conor O’Sullivan, Chief Product Officer, when speaking to the course of the transition to Offers & Orders. Not moving may result in losing any competitive edge you had, because while your airline may have a fabulous onboard experience or relatively accessible digital experience by today’s standards, your future customers won’t buy it if you don’t engage them in an advanced digital way.
The moment of truth comes when you stop investing in the past and start investing in the future, and this is true for technology and people. If an airline continues on their current trajectory, they are sustaining costly and outdated systems with less and less people available to attract to work on these systems. This may not be true today but will be true as soon as the transition starts, and the airline will be left behind. While there will be undeniable upfront costs for the transition to take place, the cost of not starting will be much more.
Partners like Datalex are ready for the future with standalone Offer & Order Management but recognises that airlines will exist in a parallel universe in the transition state. We support this, via connection to legacy systems as needed, but there is still huge value to be had in the transition state. AI-based pricing for example can be implemented to reflect real-time price optimisation, fulfilled as a price adjustment if required to conform to existing downstream processes awaiting transformation. Once the initial transition begins, your airline’s roadmap will evolve in the coming years, there is no “end-state”, just a future vision that will be continually optimised.
At Datalex, we are committed to delivering against its vision for Offers & Orders and has a clear transition path across all phases from initial optimisations for Modern Retailing towards 100% Offers & Orders. To learn more about how airlines can go back to first principles and accelerate value creation through customer-centric modern airline retailing for an Offers & Orders future, download Datalex’s Offers & Orders whitepaper. In addition, visit the Datalex team at booth at World Aviation Festival on 26-28th September in Lisbon to find out more about our progressive airline digital retailing work. Datalex’s Chief Revenue Officer, Bryan Porter, will also be on-stage discussing the steps required to deliver a better and more personalised customer experience through NDC – a key part of the journey to 100% Offers and Orders.
To keep pace with the ever-increasing needs and demands, airports worldwide are constantly evolving. With air travel on the rise again, airports are not just expected to facilitate passengers and cargo movement; they also need to expand their horizons to cover other crucial aspects, like:
execution of seamless operations with low to minimal manual intervention,
augmenting safety and health protocols,
optimizing the use of facilities, preventing wastage, and becoming sustainable,
scaling up scrutiny and security, and,
boosting passenger experience.
At the same time, with the high scarcity of human resources in most of Europe and North America, the need to establish measures to utilize resources efficiently has never been as critical.
The challenges are not new; airports have been addressing them over the years by embracing technology at different stages of their growth. However, each of these challenges has evolved and needs airports to adopt state-of-the-art technologies to keep up with the changed dynamics. This evolving era of airport digitalization and digital disruption, which saw its inception decades back, constitutes what we call ”smart airports”.
Within the smart airport ecosystem
Smart airports stimulate the need for an integrated and comprehensive ecosystem that demands the airports to be not only fully functional but also intuitive, efficient, and predictive. This also requires that the manual airport processes, which are often slow and error-prone, be reduced and digitally governed to bring automation, efficiency, and accuracy to day-to-day functioning.
Smart airports are functional, intuitive, efficient, predictive, and digitally governed.
Therefore, it becomes imperative that digital technologies and solutions like cloud networks, biometrics, mobility solutions, data science and related fields, immersive technologies and IoT, and other sensors-based solutions, be leveraged increasingly to encompass the diverse areas of airport operations and processes.
Although the smart airport concept is blooming in several spheres, the following are the three regions where we think airports can drive maximum gains:
1. Achieving airport operational efficiency through data and digital engineering
Airports are structurally complex, and a single channel does not drive their smooth functioning. A deeper understanding of the intricate association and dependency of various airport departments has brought awareness that siloed operations cannot be the solution to achieving operational efficiency and resilience. Airport stakeholders need to be transparent and readily available with real-time data they can exchange to deliver consistent and exceptional performance.
With the right technology and data solutions, airport stakeholders can achieve efficiency and productivity.
To achieve this, more and more airports should start adopting networking and collaborative frameworks like AOP (Airport Operational Plan) and ACDM (Airline Airport Collaborative Decision Making). These frameworks encourage initiatives to promote data sharing and transparency within and between airports.
Data science and AI must be leveraged to derive meaningful insights from past and present data. Building such data-rich integration platforms can help airports extract immediate and real-time information from various interconnected departments. This will help smoothen communication and increase responsiveness in multiple ways. For instance:
Swift and efficient allocation of gates and counters to airlines
Smooth passenger flow management with better predictability
Better resource management
Improved runway slot adherence
Further, airports can also employ sensor-based solutions in various areas to improve efficiency. For example, using RFID-based solutions that can read data instantly from numerous items like luggage and cargo and can aid in bulk item transportation with proper tracking and tracing. Also, it simplifies the manual and time-consuming inspection of assets by instantly reading information like expiry date, next due scan date, etc., from the asset and sending it back to the data source.
Similarly, technology in the form of mobile solutions can also stand out in comparison to the usual paper-based checks. Their highly interactive and data-rich interfaces allow airport staff to send immediate updates, retrieve data, and take corrective actions.
2. Upscaling the passenger experience
Since passengers spend more than 60% of their total travel time at the airport premises, their comfort and convenience put a lot of onus on the airport’s authority. Even with many initiatives to smoothen the process, passengers invariably express their distress towards adhering to the airport’s elaborate checks and protocols. The actual journey that begins from flight take-off for passengers exhausts them beforehand due to the:
need to reach airports hours before flights take off,
long and unpredictable waiting times in several queues,
the exhaustive process of baggage tracking and collection,
extensive scans and scrutiny, and,
being unheard and feeling lost in the complex airport maze.
Understanding passengers’ needs, their interaction with various touch points across the whole journey, predicting their next move, recommending them with the right offer, and intuitively guiding them in the right way are some areas where airports can effectively act. Again, customer data plays an important role here. Keeping track of customer preferences, concerns, and historical transactions can help airports in improving those relationships and bring in a personal touch.
The long-term vision of airports for a passenger aims to shift the notion of “being stuck inside the airport” to “experiencing a world of leisure and excitement.”
With features like smart parking, virtual queues, digital identities, baggage notifications, personalized merchandizing and recommendations, smart menus and smart washrooms, virtual assistance, and an immersive feel, more and more airports can work to provide a different experience beyond the usual to the passengers.
3. Bringing in greener initiatives
Now that the aviation industry’s contribution towards global greenhouse emissions is well established (around 3% of the total emissions), airports need to pace up to achieve their target of becoming carbon neutral by 2050 or before. The path to net zero is long and challenging, and although there are measures being taken, much is yet to be done in this zone.
By embracing smart operations using data and analytics, airports can reduce their carbon emissions.
Some ways to become a green airport would involve the following:
Tracking & Mitigation
The first step requires thorough analysis and regular tracking of direct and indirect sources that contribute to emissions. After that, airports need to define immediate short-term and long-term sustainability targets. To achieve this, airports must start by leveraging sustainability tracking solutions and showing progress towards net zero objectives. For example, using cloud-based sustainability platforms that offer detailed dashboards and provide periodic details on fuel consumption, offset achieved, emissions via waste, business travel, etc., and other sources and provide a clear progress report using science-based targets.
Moderating the consumption
Although some airports are also considering shifting towards renewable energy sources by setting up solar panels and using CNG, reducing incidents from day-to-day airport operations (wherein the consumption of resources like fuel, water, and electricity goes much beyond the need) should also be tracked. Keeping a continuous and consistent check on these expenditures would certainly go a long way in keeping up with the net zero goals.
Technologies like sensor-based IoT devices could also be harnessed to regulate the usage of electricity, water, and air conditioning as per need by sensing a human presence. Similarly, computer vision-based ML solutions could be used to build smart dustbins that identify types of waste and help in proper disposal. Leveraging AI and analytics could aid airports in measuring the food, paper, and other waste passengers generate. This can help drive eco-conscious passenger initiatives.
Conclusion
In the stride to become exceptionally performant, there is a continuous need for airports to explore further upcoming avenues and adapt. Also, emerging technologies and innovations play a huge role in curating specific solutions, and the coming times will see them being leveraged even more. It would be apt to say that with all these digital disruptions, the long-term vision of airports will be to bring efficiency, comfort, and luxury inside the terminals.
We at Nagarro bring in the much-needed technological and domain capabilities for building smart airports. To know more about how we can support you in your net-zero journey, contact our experts at explore.tnl@nagarro.com.
With the current landscape increasingly focused on digitization, AODB solutions sit at the backbone of modern airport operations, playing a pivotal role in the transformation of the aviation landscape. As the single source of truth, these solutions harness the power of real-time data and seamlessly integrate the complex array of airport systems and processes.
Making AODB solutions future-proof
The dynamic needs and ambitions of digitally-driven airports represent a difficult challenge for existing AODB solutions and their static software architecture: accessibility becomes increasingly important and providing stakeholders with access to AODB solutions from anywhere will ultimately become the status quo of modern airport operations, crucial for streamlining the operational workflows. Additionally, scalability is of utmost importance as the operational demands dynamically fluctuate throughout the year: AODB solutions should be able to scale both up and down based on changes in the volume of traffic. Therefore, highly accessible and easily scalable solutions are highly sought after, providing real-time data integration on a collaborative platform with particular focus on predictive capabilities, intuitive user experience and flexible integration with an unlimited number of airport systems.
An important operational concern of any airport is the ability to maintain uninterrupted operations at all times. Airports strive to minimise scheduled downtimes and the digital transformation process should increasingly enable continuous operations, upgrades, and maintenance without causing disruptions to the vital functions of the aviation ecosystem. Given the pivotal role an AODB plays in the operational management, the ability to ensure zero downtime and seamlessly provide software upgrades to AODB solutions without any impact to stakeholders and live operations is not simply a convenience – it becomes a necessity of utmost significance.
Complexity – no longer sufficient
As the operational brain of any airport, AODB solutions have become increasingly complex but the new era of digital transformation in airports deems this complexity no longer sufficient: the large volume of real-time data that can be harnessed for a variety of purposes means that standard AODB solutions which are operated separately and only used by a small group of stakeholders fail to maximise the potential of these data powerhouses.
Due to its highly strategic role within airport operations, AODBs tend to be last in line to undergo significant transformation and implement innovative changes. In reality, the innovative transformation within these solutions should sit at the centre of digitisation and should provide stakeholders with access to a highly accessible solution, providing a comprehensive suite of features designed to streamline and enhance every facet of airport operations. Some key features that quickly become an absolute necessity in AODB solutions include:
Real-Time Data Integration – flexible data engines should enable AODB solutions to seamlessly integrate live data from various airport systems, providing users with real-time processing of all operational data. The sharing of operational information with a wide variety of stakeholders promotes informed decision-making and cross-functional collaboration between all parties involved in the management of airport Additionally, any such solution should allow extensibility of its data model to include both new types of systems and data that appeared recently or will appear in the future.
Collaborative Platform: collaboration is key in streamlining airport operations and AODB solutions should become a platform which fosters this among all airport stakeholders, including airlines, ground handlers, airport staff, authorities and any other relevant Important capabilities such as A-CDM tools along with the implementation of collaboratively-agreed rolling plans as part of the AOP module make AODBs a centralised hub for communication, enabling synchronised operations in real-time and facilitating swift responses to unexpected operational changes or scenarios. Importantly, existing licensing models based on usage or number of users have rapidly become outdated and modern solutions must enable stakeholders to access the solution with the appropriate level of permissions based on their role in managing airport operations.
Predictive Analytics: as the single source of truth, AODBs have access to a very large volume of operational data and while reporting historical data is a key functionality, predictive analytical capabilities are becoming a key element in the process of transforming digital operations and increasingly critical for any AODB solution. Predictive capabilities should leverage the power of data analytics in order to provide predictive insights into potential disruptions and operational By proactively identifying issues, airport staff can take preventive measures, minimising disruptions and enhancing operational efficiency.
User Experience: In the realm of complex and efficiently managed airport operations, the success of AODB solutions often hinges on their ability to simplify complexity. Given the large volume of operational data that needs to be managed, providing stakeholders with a pleasant user experience is paramount: it enables them to fully focus on the critical decision-making for operational
The Cornerstone of Digitisation
As the aviation industry propels into the digital age and airports focus on the digitization of their operations, AODB solutions should become the technological cornerstone of this digital transformation process and empowers airports to not only meet but exceed their expectations in this new era of agile, data-driven, and passenger-centric airport operations. They should harness the power of real-time data with a suite of innovative yet fully comprehensive features that allows airports to streamline their operational workflows whilst providing all stakeholders with the insights required to adapt swiftly to dynamic operational scenarios.
In an industry where efficiency, collaboration, and passenger satisfaction reign supreme, AirportLabs’ SkyCore AODB emerges as a beacon of innovation and is a proven solution in some of the largest and most complex operations in the world, as well as in airports of a smaller scale.
Pay us a visit on September 26th – 28th at the World Aviation Festival in Lisbon, where you can schedule a demo of SkyCore AODB, take part in our our keynote presentation about the future of airport operations and engage with us during the panel discussion, where industry leaders will share insights on the role of emerging tech innovation in shaping the aviation industry.
Can low-cost-carriers squeeze more flights into their already packed schedules? Computer says yes.
Flight schedules are probably airlines’ most critical factor towards commercial success and for decades flight scheduling analysts have been tasked with the critical but challenging role of making sure they are profitable.
Arranging flight schedules is probably the most critical factor for determining if an airline thrives or flounders.
Increasing aircraft utilization is the number one strategic goal of all the low-cost carrier CEOs with which we have spoken.
Why? The airline industry is highly capital intensive and operates on razor thin profit margins. This is especially true for low-cost carriers (LCCs), for which the margin per available seat kilometer is only around 0.8 Euro cents, compared to 2.6 Euro cents full-service carriers; approximately 70% less.
Abrupt changes in the broader operating environment can quickly make such economics untenable.
This reality came into stark relief during the COVID-19 pandemic of 2020 and 2021, during which 63 airlines failed or restructured, including LCCs such as Norway’s Norwegian Air, the UK’s Flybe and South Africa’s Mango Airlines.
Maximizing airplane utilization by increasing the number of sectors (a flight leg between two points) an aircraft can serve over a given period is achieved through optimizing the flight schedule.
Not only does maximizing aircraft utilization drive top- line uplift, but it also yields improvements in bottom- line performance.
Aircraft operating costs: Boeing has calculated how airlines can reduce aircraft related operating costs by increasing airplane utilization. A 5% reduction in aircraft related operating costs is achievable by increasing aircraft utilization by 20% when the average flight distance is 500 miles (800 kilometers) or less, which is a typical flight length for low-cost regional and domestic carriers.
Cabin crew costs: Improving aircraft utilization can directly increase daily flight hours per crew member, and improvements in crew productivity can lead to significant improvements in operating costs. Prior to the pandemic, Lufthansa modelled a 0.20 Euro cents improvement on CASK for its Eurowings subsidiary between 2019-2022 by taking various steps to improve crew productivity, of which one lever was flight schedule optimization.
Artificial Intelligence. It is hard to dispute that the future lies with AI, but are airlines doing everything they can to stay ahead of the curve? AI has existed for a while but has only hit the mainstream in the last few years. The most common use cases are routine task automation, customer service improvement, and rule-based tasks such as revenue optimization. All of these use Machine learning and AI to study the previous actions of humans and apply them automatically to future decisions. What happens when you allow the AI to transform from a decision-support system into a decision-making system? Let’s dive into how Generative AI is changing the airline industry.
What is so special about generative AI?
Artificial Intelligence and Machine Learning refer to any model that can create a result based on supplied data. When moving into the world of Generative AI, we reach models that can create something entirely new after understanding the provided data. The most known instance of generative AI today is ChatGPT. The way it works is that when given two words, the AI can predict the next most probable word. Such a model is driven by a Goal supplied to it by the user. Now imagine taking that same thought process, but instead of text, we apply it to market data.
When provided with rich data that every airline has, Generative AI can understand an airline’s market down to the most granular level and then make market move decisions, taking into account the actions and reactions of all market participants: The airline, The buyers, and the competitors.
Truly understanding demand using AI
Demand is the bread and butter of any revenue management department. If we can forecast and understand demand accurately, we can price correctly and capture the most revenue.
Analysts spend hours upon hours dissecting data to predict how demand will change. The most significant limitation of humans is that we can consider at most 3-5 factors when deciding. When it comes to demand, the amount of factors that need to be considered is in the tens. By feeding the same data airlines use today into a generative AI engine that can digest internal and external data such as weather, stock prices, entertainment shows, and other things that impact demand, airlines can genuinely understand and react to live demand. Instead of five factors per decision, the AI will consider ten or twenty and do it faster and more accurately. A generative AI engine can create tens of thousands of demand curves and discover the most probable one and its demand elasticity.
Dealing with the competition
Competition is one of the most significant impacts on any revenue management decision. The actions of our competitors affect decision-making directly, and the key to success is to understand and foresee what my competition will do. Once again, the knowledge of historical competitor actions can inform us of their future decisions, but what about other factors?
Competitors adapt their pricing strategies, and relying on historical data is not enough anymore. When applying a Generative AI engine to competitive analysis, a brand new dimension of simulating competitor reactions comes into play. Imagine if you could decide on a tentative price, see how your competition reacts, and determine if it was the right decision. Imagine doing that ten thousand times for every single pricing decision, all in milliseconds. This isn’t a dream. It’s done today in e-commerce.
Generative AI engines also learn from live data, so every single pricing decision gives it another data point as to the pricing strategies of their competitors, allowing the forecasting of competitive behaviours to become much simpler and more accurate.
Putting it all together, from decision support to decision making
The possibilities with Generative AI engines are immense, but how can you harness them to your goals? The greater the degrees of freedom given, the greater the result such an engine can produce. An AI engine that accurately forecasts demand, optimizes prices to the fare base level, controls inventory allocation across RBDs, and publishes automatically creates a significant revenue uplift. Such an engine is agnostic to the airline type because it learns the singular market for each airline. A legacy airline and an ultra-low-cost airline are just different markets for the AI to learn. A Generative AI engine is a decision-making machine that can empower airlines to capture hidden and lost revenue by transforming the entire pricing approach.
The power of generative AI
Now, Imagine taking everything above and giving it a voice. By applying existing LLM technologies, You can talk to the Generative Pricing and Inventory Engine. Ask why it made a particular decision, and discuss the best way to increase the load factor by 10% in a certain O/D. Ask it to make you a report about competition performance over the last week, every Monday at 8 am, and send it to your email. Generative AI can empower airlines across all departments, giving a voice to the airline’s private data for the first time.
AI is the future, and the future is already here. With shifting market shares and revenue generation, the first-to-market advantage of airlines willing to embrace generative AI and empower their departments with its possibilities will be evident in the coming years. Fetcherr is leading the charge and bringing the future to airlines today, with Azul and Virgin Atlantic already in production.
Interested in learning more? Join the airlines embracing the future and contact us at info@fetcherr.io. Don’t forget to mark your calendar for September 27th, when we will host a workshop showcasing our system in production and present a case study with one of our customers.
Within the airline IT and commercial departments, everyone is talking about the Order Transformation, or the airline’s digital transformation in more general terms. Ignoring this completely will put an airline into a position of vulnerability in the next few years – vulnerable to the competition which has moved forward, and vulnerable to your PSS (Passenger Service System) provider which might dictate your pace of change.
There are several elements to consider in the case for change – future state architecture, functional benefits, how to transition and many other aspects. However, none of the elements are quite as daunting as trying to build the business case.
Luckily, airlines do not need to start from scratch. Some work has been done over the years which can be used as a reference or starting point. These are mainly the McKinsey study from 2019 and the more recent business case created by IATA (International Air Transport Association) with the Modern Airline Retailing Consortium specifically for the Order Transformation. Of course, many airlines will have their own experience with similar business cases due to investments in NDC (New Distribution Capability), enhanced eCommerce and similar digitally transformative projects.
There are several factors to consider when working through the business case for the Offer and Order Transformation.
The starting point and approximate target state: without knowing this, or at least having an idea of what the target state may be, it will be difficult to identify costs and benefits. And, while we may not know with which solution providers we may be working, or which new ancillaries or better services we may be able to offer in three, five or ten years, having an idea of the direction is essential.
What the revenue drivers are likely to be: this will often be linked more to the offer transition than the order component, however several airlines have already found that they cannot realise their offer vision without solving the “order” challenge as well. Moving to dynamic pricing may be possible with enhancing the offer and not the order, however will you be able to exploit all the benefits? Or do you calculate factors such as a potential increase of conversion of sales due to the better offers or improved customer servicing you can enable through order? There are many potential revenue drivers, however many of these are often based on various prerequisites – some of these not being technical but rather contractual.
The cost savings: this element ranges from potential distribution cost savings to process enhancements which simplify the business to, potentially, having the ability to remove certain solution components altogether. Often, the challenge on the cost saving element in such a large transformation programme is that the business case is made for a three or five-year period. However, with the offer and order transformation, many of the benefits will only be achieved towards the latter part of the transformation, thus only having a positive contribution once the transformation is complete. Thus, we recommend creating a post transformation calculation as well, which should help show if the cost of the transformation will render financial benefits during or only after the project, and which savings (and revenue) can be expected after completion. The removal of software and solutions is an important one. There are considerable opportunities to modernise the system landscape and interfaces well beyond just the offer and order management solution, as the processes are undergoing considerable change. Thus, a solid sketch of the future potential solution and business processes will certainly help understand which solutions are needed in the future and where savings can be achieved.
The less obvious and substantiable factors: can factors such as customer satisfaction be converted into revenue? There are studies which clearly state that customer satisfaction and conversion are linked. Or that personalisation and increased conversion go together. However, conversion, the effects of customer service and satisfaction and similar are much more difficult to put into numbers which are not based purely on statistics. Furthermore, there are many other factors which could influence this. For example, if we enhance customer service capability considerably and NPS (Net Promoter Score) shows that we have great customer satisfaction, however we then have considerable delays due to airport congestion, customer satisfaction may well sink.
The investment: of course this could (and some may argue, should) be part of the cost aspect. I have separated this to differentiate between cost savings in operations, servicing, processes, and sales from the actual capex spend. The main investment factors will be in new solution components (or re-engineering existing ones) and into the workforce needed for the project. The investment into people and processes should not be underestimated at this stage. Moving to offer and order without considerably reviewing and rethinking business process and data flows will end up in the rebuilding of legacy. However, with the redesign towards a retail environment, we must also invest into a retail mindset, and an organisation which is structured and trained to understand, live and breathe airline retailing.
While the above categories (cost, revenue, etc.,) are obviously part of any business case, Travel in Motion has seen some of these ignored or forgotten. In some cases, we have seen airlines and vendors challenged to define and decide which elements should be considered for each, and for example, if the soft factors such as improved customer service should be considered or not. These choices will be individual to each airline, and may either be ignored (after careful consideration), included, or used to sway a decision.
Pulling the business case together will not be an easy task. It cannot be done in isolation. The business case must be part of a concept phase where the future target state is discussed, where the architectural concepts are outlined, where the business is involved in helping identify process improvements and current challenges to be overcome and numerous other aspects. Thus, to create a solid business case, there must already be investment into time and resources, and potentially external support from companies such as Travel in Motion or many of our other industry colleagues and competitors. There will be workshops to share knowledge and align concepts between departments, and some airlines have even held workshops with vendors to understand their views on the change. Not a single vendor in the airline commercial space is ignoring this change and each has their own ideas and plans for the transition, which makes them great sources of ideas.
Do not expect the business case to be completed in a week. It is complex and multi-faceted. Do not assign one person in your organisation to try to master this – it is an unfair expectation, as this is extraordinarily complex and requires many parts of the organisation. Do not ignore the true costs, and use a realistic view of the potential revenues. While we would never criticise what companies like Bain and McKinsey did in their studies, we would say that those are ideal and very generic cases.
After all those “do not’s”, here is what we think you should do: plan a process of several months for the concept design of your offer to order transformation, involving various departments in the airline with clear expectations of what offer and order should deliver. Do not shy away from external help, be that from IATA to get an industry perspective, vendors to understand their paths to the future or industry experts like us to give a broader perspective and potentially an “outside in” view.
In an era marked by dynamic shifts in the aviation industry, ancillaries have emerged as a pivotal driver of airlines’ financial success. The trajectory is undeniable, with global ancillary revenues surging from $42.6 billion in 2013 to $102 billion in 2022, even amidst the pandemic disruptions. Capturing 15% of total airline revenue, these numbers underscore the strategic significance of ancillaries for bolstering airlines’ economic resilience and growth.1
Currently, one of the fastest growing ancillary solutions in the airline industry is seat blocking. According to a poll from Amex Trendex, 61% of people would be willing to pay extra to ensure the seat beside them remains empty.2 It’s a desire that airlines can tap into to not only redefine the economy passenger experience but also boost their revenue potential.
Here are some key takeaways you need to know about seat blocking and why airlines should be including it in their ancillary strategy today.
Today’s passengers want more flexible perks
Seat blocking meets the demand of economy passengers who crave a bit more elbow room but are reluctant to splurge on a Business or premium cabin upgrade. It offers an affordable middle ground—the chance to enjoy an extra seat’s worth of space—or even an entire row—without breaking the bank. Coupled with seat upgrades and other offerings, seat blocking helps create a well-rounded catalogue of perks, with a variety of price points to choose from.
Airlines need to differentiate themselves
In an industry categorized by fierce competition and tight profit margins, building brand loyalty is a key focus. Ancillary solutions are increasingly being used not only as a flight feature, but as a key differentiator. By offering seat blocking and other ways to elevate travel, airlines can expand the ways in which customers are able to get more enjoyment out of their travel journey and in turn foster future loyalty.
Consumer travel motivations and airline operations are evolving
Airlines are constantly adapting to changes in consumer behaviour and operational efficiencies. For instance, low-Cost Carriers have demonstrated that unbundling services from the base fare leads to increased revenue streams, which has encouraged larger airlines to follow suit. At the same time, passengers, no longer singularly motivated by price, are seeking more comfort in their travel experience. Ancillary services like seat blocking cater to these shifts in operations and consumer mindsets by allowing passengers to pay to tailor their experiences while giving airlines a new profit line.
Since 2009, Plusgrade has enabled airlines to monetize empty seats through seat blocking amongst other solutions. Check out Seat Blocker and other ancillary revenue opportunities by visiting the Plusgrade booth at this year’s World Aviation Festival or plusgrade.com.
In an era where environmental consciousness is paramount, industries worldwide are stepping up to address climate change. For the aviation sector, this mission is particularly daunting due to its substantial carbon emissions. Embarking on a responsible journey toward sustainability demands the creation of high-integrity climate action budgets. Discover how this sector can lead the charge in combating climate change through a carefully orchestrated five-step approach.
Step 1: Anchoring to scientific benchmarks
Aviation’s profound environmental influence cannot be overlooked. As aviation enterprises embark on the journey of creating climate action budgets, it’s crucial to tether their strategies to well-defined scientific benchmarks.These benchmarks, sculpted by experts like the Intergovernmental Panel on Climate Change (IPCC), establish the financial implications of emissions reduction. Such alignment with authoritative guidance assures aviation entities contribute responsibly.
Step 2: Cultivating peer group insights
Peering into the strategies of peer groups unveils a treasure trove of strategic wisdom. Airlines and airports, seeking to refine their compensation budgets for carbon removal, can tap into platforms like Patch. These platforms provide a window into how peers are investing in carbon removal solutions, offering a real-time snapshot of industry trends. By aligning their budgets with these insights, aviation stakeholders not only stay current but also drive the industry’s collective momentum towards a more sustainable future.
Step 3: Navigating financial terrain
While peer comparisons are informative, it’s vital for aviation companies to chart their financial voyage. This involves delving into their profits, emissions, and the fraction of profits earmarked for climate initiatives. The journey isn’t just about feasibility—it’s about a sustainable commitment. This step anchors budgets to fiscal realities while fostering lasting climate impact. By aligning financial strategies with ecological aspirations, aviation entities establish a foundation for enduring and impactful climate actions.
Step 4: Framing with Precision
The aviation industry’s course must be carefully calibrated. The climate targets they choose steer the budget’s trajectory. Whether it’s adopting science-driven goals, striving for net-zero emissions, or dedicating a percentage of spend to climate endeavours, the strategy defines the budget’s essence. Through this lens, aviation stakeholders set their aspirations within a clear framework. By aligning their budget decisions with their chosen climate ambitions, aviation entities solidify their commitment and guide their resources toward meaningful environmental transformation.
Step 5: Navigating with strategy and caution
For an industry as pivotal as aviation, a portfolio strategy is essential. Airlines and airports should contemplate backing multiple carbon removal projects to optimise impact while guarding against risk. Guided by predetermined guardrails, like minimum pricing thresholds and standards of permanence, they harmonise choices with principles, ensuring the chosen projects resonate with their mission.
Taking flight now: Aviation’s path to sustainability
Given its substantial impact on the planet’s health, the aviation sector bears a profound responsibility to address the climate crisis. With the potential to be a driving force for change, the sector’s commitment to crafting high-integrity climate action budgets carries the weight of leadership by example. By embracing their duty to environmental preservation and actively championing carbon removal solutions, the aviation sector not only advocates for a greener future but also contributes to the scaling of emerging carbon removal technologies crucial for achieving IPCC targets. In doing so, the sector plays a pivotal role in mitigating some of the most devastating consequences of climate change and setting a course towards a more sustainable world.
If you’re eager to delve deeper into this topic and unlock comprehensive insights, the full guide is available to download now. Discover practical steps that will empower the aviation sector to drive meaningful change and contribute to a sustainable future.
Airlines and airports want to simplify and automate processes as much as possible to deliver superior passenger experiences by improving operational performance, as well as have smarter usage of data to maximise existing cost structures and generate new and more valuable revenue streams. All that together will lead to higher customer satisfaction and retention, that will generate more income and maximise usage of precious existing staff and infrastructure.
Why biometrics are gaining ground
Travellers are increasingly demanding a seamless journey experience, enabled by contactless and easy-to-use technologies, which put their safety and data privacy at the forefront. Airlines and airports are determined to simplify and automate processes as much as possible to be able to build sustainable and long-term growth.
Biometrics are unique personal identifiers, which can be used to verify, identify and automate bureaucratic processes. Therefore, facial recognition provides greater security and efficiency in an airport environment where passengers are normally required to show government-issued photo identification and boarding pass. This applies all the way from check-in to boarding – and can be extended to the ultimate destination and afterwards.
How are biometrics transforming the ecosystem?
The IATA (International Air Transport Association) Annual Review 2023 mentions that the “Digital identification IATA’s One ID will allow passengers to streamline their journey with advance information sharing and a contactless process at the airport based on biometric recognition”. In turn, “airlines can offer a seamless experience across different channels and touchpoints”.
Travellers can move from the check-in to the gate using a single biometric travel token, that can provide their information direct to governments without airports and airlines acting as intermediaries.
There are tangible benefits of the technology for stakeholders in the airport ecosystem. Boarding an aircraft using biometrics through a seamless journey increases efficiency, and Vision-Box observed that biometric technology is capable of boarding 480 people in 20 minutes – about half the normal boarding time.
Putting the focus on the passenger
The key elements of seamless travel experiences are the passengers themselves and their motivation is to have a smooth and stress-free experience – the airport can be an incredibly stressful environment. Integrating external services and leveraging biometric tokens enable the personalisation of each journey, enhancing security, convenience, and overall travel efficiency. Embracing these advancements in technology helps opening the path to a future where travel becomes an effortless and memorable experience for every passenger.
A critical aspect of achieving this seamless experience lies in personalisation. Each traveller’s journey can be tailored to meet their specific needs and preferences. The use of a single biometric token plays a significant role in digitising the entire experience, enabling more efficient, seamless, and personalised processes.
Getting the most out of the journey
A traveller-centric focus is the first prerequisite to get the most out of an investment in biometric technologies. Reducing both stress and friction, by simplifying the steps that passengers require to get through the airport, should be the primary goal.
The speed and accuracy of data capture and recognition are also critical to effective biometric operations. Using a system with real-time recognition help to keep the transaction time at each touchpoint to a minimum. Both hardware and software infrastructures also need to be easy for airport/airline staff to use and integrate with their existing systems.
Going further, a biometric layer that integrates smoothly with existing infrastructures at the airport contribute to the return on investment by aviation stakeholders, and a reduction in the total cost of ownership. At Vision-Box, we are strongly committed to helping airlines and airports to get into the digital travel world and create seamless travel experiences, so they can grow and scale their own businesses organically. In this light, using biometric technologies to deliver seamless travel journey is the future-proof solution that will highly leverage competitive advantage.
Article by Alessandro Minucci, Chief Product Officer at Vision-Box
As a legacy-ready ecosystem, Vision-Box’s Seamless Journey Platform enables the airport to shift towards contactless travel, permitting a controlled upgrade path from non-automated and non-biometric boarding pass-based workflows, towards a full automated biometric-enabled journey.
Among the numerous technical challenges facing the aviation industry, two stand out as both critical and urgent: the adoption of NDC and the application of AI technology. At the nexus of these we find particularly promising use cases for AI, enabling aviation businesses to adapt to, design and create new NDC capabilities faster and more efficiently. While AI will help organisations lower overhead costs and generate operational efficiency, NDC adoption harnessing new intelligent retailing and offering generation capabilities holds the promise of increased revenue generation and lower distribution costs. The perfect pairing.
One of the first and widely touted uses of AI technology continues to be a low effort – high reward opportunity to lower overhead costs: chatbots. Training an AI chatbot on vetted marketing and sales material creates a reliable lead nurturing tool. Adding a layer of operational and booking data onto that generates a customer service tool that can assist with new bookings, changes to existing bookings, loyalty program management and call handling during IROPS. Chatbots can also be trained to deal with rote employee enquiries that usually land in the HR inbox and drain precious resources that could be applied elsewhere.
While not as headline-grabbing, a more advanced, high effort application carries the potential of even more savings and operational efficiency: AI-powered translation of airline-specific NDC schemas into a standardized version. An otherwise resource-intensive task, this standardization initiative will ease the integration with OTAs and facilitate the adoption of IATA’s NDC framework across the travel industry.
How would it work? Large Language Models (LLM) such as the GPT series, PaLM, LLaMa and Claude are trained on billions of text files, code and data points. With this, a LLM can be tasked to create a blueprint structure based on the industry standard NDC format. Then, with advanced prompt engineering, this LLM can convert an airline’s unique JSON structure into the supported schema, at far greater speed and scale than would have traditionally been accomplished.
A key strength of NDC is the improved ability to personalize and enhance offers, with dynamic pricing and greater inclusion of ancillary products and services such as accommodation, car rentals and attractions all included. Rich content can also be integrated into these offers, giving providers better control over product marketing. However, the collection, parsing and mapping of data needed to produce these personalized offers requires significant upfront investment in, among other things, new tech stacks, changes to workflows, and specialist staff such as business analysts, developers and NDC experts. These are some of the obstacles on the road that hinder progress for airlines on their journey to expose NDC content to the market. AI can offer a way past them and towards the finish line.
How would this work? Once the NDC framework is in place, AI can be layered on top to analyze a multitude of datasets and feed customized offers back into the NDC. AI can connect to internal and external datasets, creating a large sample of previously disconnected datapoints to identify patterns, relationships and correlations. Information like market trends, historical pricing and client preferences can thus all be used to generate personalized and highly dynamic pricing to maximize revenue.
While AI and NDC may seem like an obvious and indeed essential next step in aviation technology, many organisations find themselves at a loss when it comes to leveraging these technologies. The truth is, despite a goal of NDC to drive standardization, while adoption is still in its infancy there remain significant obstacles to both the producers and consumers of NDC APIs due to a lack of standardization and practical experience in this space – coupled with the ongoing shortage of IT talent – makes this a formidable challenge for airlines and the wider aviation sector.
Now, more than ever before, finding a reliable and experienced IT partner who can lead or augment existing in-house teams can make all the difference between successful adoption and pricey failure or delay. We recommend an approach that pairs in-house education with external service contracting. Ensure your team reads up on these technologies, have them attend webinars and in-person events where possible – and don’t dismiss social media channels such as YouTube or Reddit for staying up to date with rapidly developing AI capabilities. At the same time, reach out to software development agencies and start conversations with vendors. You want to find someone who has AI expertise as well as industry-specific knowledge, all while fitting your project requirements. A good partner will also help you make the business case to stakeholders to garner buy-in for budgets and leadership commitment.
Curious about AI use cases in aviation? Contact DataArt at aviation@dataart.com to learn more and to discuss your NDC project. And mark your calendar for September 26 at the World Aviation Festival in Lisbon, and be a part of our panel discussion on ‘Modern Airline Retailing in an Era of ChatGPT, Emerging FinTech, and Flexibility in the Next Normal – What Does It All Mean for the Ongoing Retailing Revolution? ‘
Since the creation of NDC, airlines have been offering access to their API for free without enforcing many restrictions. The main reason is that it encourages the adoption and usage of the API by travel agencies and other third-party developers, which can help to increase the distribution of the airline’s content and services. However, with volumes growing in the NDC world, a new issue arises; “look-to-book”. In the late 90s and early 2000s, look to book was already a challenge, with availability queries increasing considerably as airlines started to offer direct access to availability to the GDS. This was somewhat managed over time, but now has come back in full force.
1. About look-to-book
The look-to-book ratio is a comparison between the search requests (AirShopping) versus the actual bookings. The term is an industry-specific version of the more general “conversion rate”. While airlines earn money with bookings, shopping requests cost money. Indeed, high look-to-book ratios impact both performance and costs of airlines, as they require significant resources to process large volumes of search requests.
There are two aspects which an airline must consider – security and cost. In terms of security, OWASP, a group of leading security experts, identify “unrestricted API usage” as a security risk that can “lead to DoS due to resource starvation, but it can also lead to operational costs increase” From a cost perspective, the airlines will be paying both availability calls as well as the shopping engine consumption, which is often limited to levels which were agreed pre-NDC. This does not allow for the high look to book seen today, which can easily reach 10,000:1.
2. AirlineProfile: the mitigation step
AirlineProfile, an IATA NDC Standard message, is a way for airlines to indicate their supported itineraries to agencies. By supporting this, agencies can avoid sending shopping requests to the airline for routes it doesn’t sell. While this does reduce the number of shopping requests, it still has a lot of limitations. It does not account for seasonal routes (all supported routes throughout the year need to be included), it requires the agency to implement it, and it still does not reduce the number of queries for routes that are sold by the airline. Thus, while the airline profile is helpful, it will not solve the airline look to book issues.
3. Taking action
There are several actions available for airlines when it comes to look-to-book:
Absorb the costs: Most airlines, today, pay for those shopping costs. While this is viable short-term, when it comes to very large shopping volumes, it may result in exponentially growing costs.
Block/Throttle: By applying limits/quotas, and applying blocking or throttling in the shopping requests, it is possible to mitigate the costs. This comes with the risk of losing some sales and is not an optimal solution.
Put a price on it: By asking the API users (aggregators, agencies) to pay for their excess usage, airlines can shift induced costs to the agencies. To put it in more crude terms, excessive shopping queries must be blocked, or someone will pay for them. The fact is, by implementing a pricing model for their NDC API, airlines can incentivize travel agencies and other third party developers to use the API more responsibly and efficiently. This can help to reduce the costs associated with high look to-book ratios while also improving the performance of the airline’s systems.
4. Looking outside
Airlines have become API Providers, and by entering this realm, it would be wise to look at the existing giants. Google, Microsoft, and plenty of other companies have been providing APIs for a long time now, having to deal with high volumes of search queries as well. All of those APIs have two things: usage limitations, and pricing models for users who need higher lookto-book ratios. Some common pricing models include:
Pay-as-you-go: This model charges users based on the number of API calls they make. It is a flexible model that allows users to pay for only what they use. An example of a pay-as-you-go API pricing model is Apigee by Google Cloud.
Subscription-based: This model charges users a fixed fee for a certain period, during which they can make an unlimited number of API calls. This model provides more predictable revenue for the airline. An example of subscription-based pricing is Azure API Management by Microsoft.
Transaction-based: Stripe, a payment processing platform, offers a transaction-based pricing model where users are charged a percentage of the value of each transaction processed through their API.
Ultimately, it’s up to each airline to determine the best model for their NDC API based on their specific needs and goals, as well as their partners.
Working towards a Gold Standard of Airline NDC API Onboarding
Current status
Airlines have been onboarding agencies, aggregators, and other partners for a couple of years now. With NDC presented as the holy grail of standardization, one would expect this technical onboarding process to be pretty… standard. However, when looking at the state of the industry today, we could not be further from the truth.
Let’s look at what it means for an agency to get connected to an NDC airline today. We will focus on the technical aspect of it, but of course, commercials are a key factor in the go-live process as well.
The long path to go-live
A critical step to going into production is for implementers to pass the airline certification process. However, this is only the third piece of the equation. First, implementers need to familiarise themselves with the API through documentation, before using the sandbox environment where they build the connections. As we will see, each step on this journey can be quite tedious.
1. Documentation
The airline’s NDC API documentation exhibits significant disparities and limitations resulting in many challenges for implementers.
Firstly, the documentation showcases a wide range of formats employed by different airlines, each varying in detail and structure. While most airlines offer implementation guides, they differ in presentation and format. They are available in either PDF format or accessible through searchable Wikis on their websites. In more comprehensive instances, airlines go the extra mile by sharing Postman or SoapUI projects that include ready-to-run scenarios, facilitating implementers in jumpstarting their implementations with tangible, functional examples.
When examining the actual content, certain deficiencies come to light. While default scenarios are consistently addressed, there is a noticeable lack of information from the majority of airlines regarding API limits and error cases, let alone providing guidelines or mechanisms for testing them. As a result, implementers are frequently left to speculate or manually test these error cases without sufficient guidance.
Overall, the first thing the implementers will see of your API is documentation. Making sure it is easily readable and well-structured is key to being able to quickly kickstart any implementation.
2. Sandbox
After understanding the API documentation, agencies usually gain access to a sandbox environment, or a test environment provided by the airline. The sandbox environment allows agencies to experiment, simulate transactions, and test their integration without affecting live systems or incurring any financial implications.
Obtaining sandbox access can sometimes be a multi-step process involving registration, approval, and acquiring necessary credentials such as API keys. The complexity arises from configuring the integration to work seamlessly with the sandbox environment, ensuring the correct handling of requests and responses, and addressing any technical challenges encountered during testing.
This brings us back to the first issue, with a lot of documentation skipping the whole “authentication/security” part of the API. Airlines should explain the required steps for authentication, including obtaining API keys or tokens, with clear examples.
The additional problem with some sandbox environments is how much they can differ from the actual production environment. Some sandboxes are lagging behind the production environment, while others are used for experimental features. Both cases result in instability and divergences between documentation and actual implementation.
3. Certification
Once agencies have successfully tested their integration in the sandbox environment, they need to undergo a certification process. Certification involves demonstrating compliance with the airline’s technical and business requirements. This process ensures that the agency’s integration meets the necessary standards and is ready for production usage.
Certification processes vary a lot among airlines, requiring agencies to fulfil specific criteria, such as passing specific test scenarios, properly displaying the airline offering, and proving their technical capabilities. Agencies may need to provide test logs, validate the accuracy of offer display, handle many scenarios, and sometimes even demonstrate error handling capabilities. The complexity lies in meeting the airline’s expectations, ensuring that the integration is robust, scalable, and able to handle real-world scenarios effectively, while properly reflecting the airline’s values.
While some airlines are very upfront with the validation methodology (going as far as putting the full list of scenarios on their onboarding platform), others do not yet provide such a structure. Therefore, implementers end up seeing more and more test cases, without a clear view of the end of the implementation. This results in, undoubtedly, the most frustrating part of the process for the agencies, sometimes with many months of back-and-forth on the testing scenarios.
Is there a solution?
This article was a bit bleak, so let me reign it back a little. While it is unavoidable to have differences between various companies, there can be light at the end of your NDC tunnel.
There is undeniably a willingness in the industry to simplify. As a key example, IATA has been trying to help airlines bring a kind of “standard methodology” for many years. One approach that IATA took was the “At Scale” certification, which required a “good enough” onboarding methodology. This certification is now discarded, but its contents are part of the IATA ARM (Airline Retailing Maturity) index. However, while it is a good base, it is not yet “strict” enough to enforce similar methods for all.
The state of the airline industry, when it comes to onboarding processes, is very reminiscent of the early days of web APIs. Each airline is trying its spin on the onboarding formula, with some more successful than others. Luckily, airlines are now learning from each other and discussing this topic at various forums. Those discussions will drive the way to a more aligned, and hopefully better, onboarding method for all.
One question remains, though. Should we let the industry slowly define those better processes through trial and error, or should IATA drive this shift by enforcing strict guidelines for a proper onboarding standard?
From interactions with many airlines and agencies in the past, we feel strongly that there is a need for clearer definitions. If these are not standardised at an industry level, we should at least work together to define the best practices to follow.
The relationship between airlines and ancillaries is a delicate balancing act. The necessity for optimising profit-per-booking must be achieved without inconveniencing passengers in the checkout or irritating them with pestering post-booking marketing. Each new ancillary therefore has to overcome a lot of cynicism and multiple hurdles before it reaches the point where it warrants a serious review.
Could it be that international connectivity has now reached that milestone?
The category has had its fair share of failures: from complicated international-calling-cards to click-and-collect SIM cards. The tantalising prospect of customers’ need to keep mobile devices connected during their stay has remained unmet due to cumbersome delivery methods and inconsistent solutions. However, with the long overdue digitisation of SIM and the resultant move from a physical SIM card to a digital eSIM that is all changing, and changing fast.
This could mean that a major new category in ancillaries, with the potential to match revenues in car hire is ready for take-off in 2023.
Ancillary revenue – recovery & growth
A recent report by Ideaworks and Cartrawler projects airline ancillary revenue will increase to $102.8 billion worldwide in 2022, compared to $65.8 billion in 2021 and the $109.5 billion record of 2019. Coming out of the pandemic, ancillaries’ recovery has outstripped the pace of total airline revenue, and the volume of passenger return. The value per passenger now sits at a touch under $30, up over $8 on its pre-pandemic level.
Airlines’ fundamental business will always be selling seats but customers now expect to have convenient, pertinent services made available in a one-stop-shop and increasingly airlines’ financial well-being depends on them providing those services in the most profitable way possible. With supply-side pressure on margin in existing ancillaries, it’s therefore essential that airlines have a long-term vision for ancillary management and a pipeline of new opportunities to feed into it.
International connectivity – the need & market size
Everyone will have their own experience of where international connectivity can go wrong. The road trip of a lifetime that turns into the journey from hell when your teenagers are separated from social media and YouTube; the all-important business trip that fails as the essential presentation doesn’t download in time on coffee-store WiFi; the panic as the booking details or health documents held in the cloud are suddenly inaccessible as your device drops off grid. But when international connectivity goes right, the enhancements to your trip are massive: sharing your experiences online in real-time, planning and booking dining and experiences as you need them, and an endless stream of entertainment literally at your fingertips.
The market that serves this is currently a mix of paid-for international roaming with your home carrier (sometimes packaged up in a day-rate but often on a rack-rate that can run up sizeable bills) and purchase of a local pre-paid SIM card on arrival. It is worth an estimated $20 billion each year and is set to grow rapidly over the next 3-5 years.
– Increased category penetration
Around half of international travellers choose to turn off data-roaming on their devices; relying on WiFi or managing without their phone for the duration of their stay.
o Customer Need
Penetration has been increasing each year in line with a need for always-on connectivity and dissatisfaction with WiFi security, log-in protocols and stability
o Awareness
More convenient access to connectivity plans through eSIM have seen penetration growth accelerate in the last 12 months and will see the rate of acceleration increase further over the next 1 to 2 years.
– An ever-upwards trend on data
The amount of data consumed by mobile users doubles every eighteen months as streaming and photo quality increases and 5G brings data-hungry rich content mainstream, creating a need for larger and larger packages.
The key players in the market currently are the mobile network operators/carriers who generate a profit on their customers’ roaming activity and the retailers like Sim Local who have positioned themselves in airports and travel hubs to serve passengers as they land in destination. As the digital revolution takes hold the most likely beneficiaries will be those who can provide the right product at the right moment in a customers’ journey and can be trusted to deliver.
What is eSIM and how prevalent is it?
An eSIM (embedded Subscriber Identity Module) is basically a SIM card that is built in to a mobile device’s chip-set that can connect you to any operator offering eSIM services. The eSIM works the same way as a traditional SIM card, but you don’t need to acquire and insert a physical product. The eSIM is pre-installed in the device, and you can activate it by installing an “eSIM profile” from any network. The move from a SIM card that needs to be sold in a bricks-and-mortar retail environment to a digital product that can be bought and delivered over the air is a market disruption that mirrors the switch from CDs and tapes to Spotify and Tidal.
SIM cards are still the most prevalent method for getting connected, but almost all smartphone releases from Apple, Samsung and Google for the last four years have had dual capability. The game-changer for the market came in September 2022 when Apple announced that in the US the iPhone 14 would be the first major device to remove the SIM card slot and become eSIM only. Experience says that where Apple lead others will follow, and so it is likely that most devices in most markets will be eSIM only from the next release cycle.
How will this fit in with an airline’s booking flow
As with all ancillaries the watch-words are ‘relevance’ and ‘simplicity’ when it comes to placing eSIM in front of passengers.
Possible Touch Points for Customers
Customer Choices
eSim allows travellers to save money and be in control of their spending.
What are the models and choices
Congratulations! You’ve decided eSIM is going to benefit your customers and your bottom line, but what now? You’ve got some choices on who to partner with, and some options on what level of integration you can stomach.
Working directly with Mobile Network Operators Mobile Network Operators are territory-specific: they buy the spectrum from government, run the infrastructure and in theory should always provide the best value. However, there are almost 2,000 worldwide with no consistent tech interface and so if this is your route you’ll have to get ready for quite a mess of integrations and an industry for keeping on top of commercial negotiations and product amendments.
Working with Roaming Providers
A spate of new companies have sprung up on the back of eSIM technology, purchasing data wholesale and packaging it up into Roaming bundles for travellers. Roaming suppliers can provide a convenient one-stop shop with impressive country coverage but access to 4G and 5G quality connections is inconsistent, the pricing is typically high for customers (particularly at higher data allowances) and potential commissions are often low.
Working with a Marketplace
The well-trodden path through similar territory has led to aggregators or marketplace platforms providing a single point of integration for airlines and access to a full range of suppliers in car hire and stays. The model of CarTrawler and HostelWorld is also in place in eSIM, with the supply management bringing together roaming providers and Mobile Network Operators from across the world in one service with commissions benefiting from the scale of the organisation.
Summary
Airlines need new ancillaries and the revenue streams that go with them, but they need to exercise caution in selecting categories that satisfy a real customer need, represent a good long-term revenue stream, and can be implemented without impeding booking time or irritating customers. Connectivity has always ticked the first two boxes, but with the arrival of eSIM it’s just got over its final barrier and is ready for take-off.
The world’s leading travel marketplace for eSIMs, Sim Local has been selling SIM cards to travelers for over 10 years, through its global airport retail, affiliate and vending network. Partnering with local telecom operators their technology provides travel companies with multiple partnership and integration options to bring eSIM connectivity to their customers as an ancillary.
Untapped potentials of AI in the Airline Industry?
Inspired by a follow-up on my customer insights blog last December and an AI assignment for my Executive MBA studies, I wanted to share some learnings from that work. The aim was to look for an AI use case that can be implemented for an airline venturing onto the new distribution transformation path – something that many airlines are just starting to consider. There is a wealth of data to be tapped into, but what exactly might some of the possibilities be for using this data in a meaningful way? What does the new world allow an airline to do that it didn’t before? Will it deliver as promised, and how can this be measured?
While there is much talk about how AI can revolutionise pricing and revenue management, are there other potential uses of the data that can now give insights that an airline didn’t have before?
Much has been said about the ability to make more targeted offers and thereby increasing revenue per customer and flight, might there be other untapped golden nuggets to be derived from the offer data?
The airline industry is highly competitive, where customer satisfaction and operational efficiency are crucial to success. As airlines have access to vast amounts of data, it is no surprise that many are turning to artificial intelligence to help them gain a competitive advantage.
One of the most significant benefits of AI for the airline industry is its potential to improve customer experiences. Especially when looking at finding patterns and opportunities that might be undetected today, AI has the potential to process a huge amount of data with an efficiency that only a few solutions already do. Including more and different data sources than what is traditionally done can provide customer insights from a different angle. By analysing customer data, airlines can tailor their offers and services to meet their customers’ needs and preferences better.
A look at some use cases
Traditionally, airlines have pushed out the availability (or made it available in a “pull” fashion) and the prices, and only got to know about the customers when they purchased a flight. However, there is considerable knowledge about how customers behave before they buy – knowledge which airlines to date have never had access to. But my interest was piqued when thinking about what offers customers didn’t buy, since this says as much about their needs as what they finally purchased. Having a complete picture of who did not buy what can lead to new insight into what appeals to whom – in a different way than previously possible.
For example, AI can provide personalised recommendations for flights, hotels, and other travel-related services. AI can analyse a customer’s past purchases, preferences, and other data to deliver tailored recommendations more likely to meet their needs.
AI can also provide real-time information and support to customers during their journey. Chatbots, for example, can provide instant customer support, answering their questions and providing guidance throughout their journey. This can help to reduce customer frustration and improve their overall experience.
Airlines can increase operational efficiency by optimising their processes and reducing costs by using AI. For example, to optimise flight schedules, crew assignments, and other operational tasks.
AI can also improve maintenance operations, reducing downtime and increasing aircraft availability. By analysing data from sensors and other sources, AI can predict maintenance issues before they occur, allowing airlines to address them before they cause disruptions proactively.
Finally, AI can help airlines to boost their revenue by optimising pricing and increasing ancillary sales. AI can analyse customer data and market trends to predict demand and optimise pricing accordingly.
AI can also be used to increase ancillary sales by providing tailored recommendations for ancillary services, such as seat upgrades, baggage allowances, and lounge access. By tailoring these offers to each customer’s preferences and needs, airlines can increase their likelihood of purchasing.
The challenges
While the potential benefits of AI in the airline industry are significant, several challenges come with its implementation. These include the cost of implementation, the complexity of the technology, and the need for skilled personnel to manage and operate the systems.
To overcome these challenges, airlines need to take a phased approach to AI implementation, starting with small proof-of-concept projects to demonstrate the potential value of the technology.
Another challenge is data privacy and compliance. Airlines need to ensure that their use of AI complies with all relevant data privacy regulations and that customer data is adequately secured. This requires a strong governance framework and robust security measures to protect sensitive data.
Airlines need to ensure they have the right personnel to manage and operate AI systems. This requires a mix of technical skills, such as data engineering and data science, and soft skills, such as communication and stakeholder management. Airlines should invest in training and development programs to build these skills in-house and ensure their personnel are up-to-date with the latest AI technologies and best practices.
Potential – but only by doing it right
In conclusion, AI has enormous potential in the airline industry, providing airlines with tools to increase revenue, improve efficiency, and provide customers with personalised offers that cater to their needs. However, implementing AI solutions has challenges, and airlines must be aware of them and take steps to mitigate them. It’s essential to have a dedicated team with the necessary skills and expertise to manage the project and communicate the process and results effectively. With AI, the airline industry can move towards a more sustainable customer-centric business model, identifying new opportunities that emerge from the direct distribution model.
AI has the potential to transform the airline industry, and airlines that embrace it will have a competitive advantage over those that don’t. While the airline industry is still in its infancy in using AI, it’s clear that it is a technology that will play a significant role in shaping the airline industry’s future. It’s exciting to see what the future holds, and we can’t wait to see how AI will continue to transform the airline industry.
Letsfly Co-founder – 3 Key Elements For Airlines & Retailers To Improve Distribution Strategies
The travel & airline industry always undergoes a rapidly changing commercial landscape. Understanding how to navigate it is a key component of success.
One of the biggest challenges airlines face is the shifting dynamics between carriers and their distribution partners. Could this be a sign of fragmentation for airline distribution? If so, then could there be signs of reaggregation emerging on the horizon?
GDS to NDC and Direct API
GDS has historically dominated the distribution market, and airlines must seek flexible and cost-effective distribution solutions and other alternatives. As a result, Next Generation Distribution Solutions (NDC, Direct API) surged in popularity as they offered more agile adoption methods.
However, there are still critical aspects that require special attention, and airlines and retailers must first know how to analyze them, before defining their approach. And that begins by looking beyond the traditional solutions, and preparing for success by knowing how to effectively adopt a New Distribution Solution.
How to prepare for success with a New Distribution Solution
Kelvin Fu, Co-founder of Letsfly (a provider of high-quality content so airlines and travel organizations lower distribution costs and reach new markets), believes that the New Distribution Solution model presents both challenges and opportunities. Which is why he states that it’s important for airlines and retailers to first understand three key aspects to prioritize their efforts.
The 3 critical elements airlines and retailers must prioritize
How to cover more markets at lower costs for airlines
How to support the sales of diversified products more flexibly, such as ancillaries and bundles
How to ensure a satisfactory ticket purchase and post-sales service experience for travelers under the New Distribution Solution
To achieve success, companies need to focus on important areas such as expanding market coverage while reducing costs, supporting the sales of diversified products like ancillaries and bundles, ensuring a seamless customer experience throughout the ticket purchasing process and post-sales services, and assessing technical performance and effectiveness.
According to Kelvin Fu, Co-founder, Letsfly:
“It’s crucial to have a distributor with extensive and quick market coverage, who can establish direct API connections, and handles the entire case, this especially means post-service. Only in this way will distribution strategies be optimized in the New Distribution Solution model”
How to solve the 3 critical key elements:
Ensure your distributor has extensive and quick market coverage.
Reduce third-party process, build direct API connection with distributors.
Partner with a distributor that provides end-to-end solutions to your case.
By focusing on these key aspects and collaborating with distribution partners – airlines and retailers can be in a position to adapt in this rapidly changing landscape. Through this, they optimize their distribution strategies and provide a better overall experience for their customers.
“It is essential to pay attention to issues such as market coverage, product diversification, customer experience, and technical performance to succeed in a rapidly changing market. By doing so, airlines and retailers can benefit from greater efficiency, cost savings, and customer satisfaction.” – Kelvin Fu, Co-founder, Letsfly.
New Distribution Solutions have been around for some time, but airlines always need to adapt to changing consumer preferences and seek to diversify their product offerings. As a result, more airlines have been adopting lightweight and flexible distribution methods, moving away from the traditional GDS model. While this trend was initially led by low-cost carriers looking to save costs, it has evolved into a more fragmented market.
Flexible, Adaptable, and Tailored Solutions
To tackle this issue, Letsfly offers tailored solutions that are more flexible and adaptable. The goal is to offer airlines and retailers a distribution solution that helps expand market coverage while keeping costs low, support the sales of diversified products, ensure satisfactory customer experiences, and improve technical performance.
“New innovations will continue to emerge and disrupt the industry, as more companies are open to adopt these solutions. Those who understand how to navigate this landscape successfully can expect to achieve greater efficiency, cost savings, and customer satisfaction.” – Kelvin Fu, Co-founder, Letsfly.
Collaboration and Customer-Centric Strategies
As with any industry, the travel, aviation and hospitality sector will always continue to evolve, and collaboration with distribution partners is key to success in this ever-changing industry. Airlines and retailers must be open to embrace new technologies and collaborate closely with their distribution partners to achieve success.
Many new companies are emerging to innovate and potentially replace the traditional GDS’s position, and become the new dominant solution. So it is important for airlines and retailers to work together with their distribution partners.
This will help to foster long-lasting relationships with customers in order to remain competitive in an industry that is constantly changing.
In the end, success in the travel industry is all about the customer. By investing in strategies that are customer-centric and tailored to their needs, airlines and retailers can build long-lasting relationships that will keep customers coming back for more.
It won’t be an easy road, but those willing to embrace change, experiment with new approaches, and collaborate with their distribution partners will be the ones that thrive in it.
Letsfly is an innovative company focused on providing high-quality content to travel organizations while helping airlines lower their distribution costs, reach new markets and maximize profit. Its mission is to improve travel distribution with cutting-edge technology and provide long lasting value to its customers. The company was founded in 2014, with headquarters in Beijing (China) and offices in Hong Kong, Sydney, Singapore, and Dublin.
