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.
Takeoff with AI: Five Reasons the Airline Industry Should Embrace AI
Technology is revolutionizing the way that businesses interact with customers, streamlining operations and uncovering new opportunities for growth. Artificial Intelligence (AI) is playing an increasingly important role in the airline industry, allowing businesses to take advantage of a range of benefits that enable them to stay competitive and profitable. By leveraging the power of AI, businesses can gain a competitive edge in the airline industry and identify new opportunities for success.
Here are the top five reasons to use AI in the airline industry:
1. Optimized Operations
Airline companies can optimize network planning, adjust flight schedules, and manage aircraft capacity to maximize efficiency and reduce costs using AI. This can help airlines to better manage fuel consumption and emissions. AI can also be used to automate routine tasks and processes, allowing airlines to focus on more important tasks.
2. Improved Customer Service
AI can provide personalized service to customers, such as recommending travel itineraries and providing real-time information about flight status and delays. AI chatbots can also be used to answer customer queries and resolve issues quickly and efficiently. This can help improve the overall customer experience and increase customer satisfaction.
3. Revenue Optimization
Gathering detailed insights on customer demand is an essential prerequisite to optimize the revenues and margins of the overall network of any airline. As such, solutions that harness the power of AI are a clear competitive advantage for airlines – under the right conditions, they can bring highly accurate forecast capabilities that can be leveraged to make better informed decisions, and ultimately have direct impact on the bottom line both from a revenue and cost perspective.
4. Cost Savings
By leveraging AI-driven automation, airlines can reduce operational costs and increase operational efficiency, leading to a substantial increase in profitability and market competitiveness.
For instance, airlines can automate their inventory management, pricing, and revenue management processes to optimize their operations and reduce the risk of overbooking, which has a high cost per offloaded passenger, not to mention a very poor customer experience. AI algorithms can analyze historical data and current market trends to make real-time pricing decisions, thus reducing manual labor and human errors. This can also lead to increased sales and revenue uplift.
In addition, AI-powered predictive maintenance can help airlines identify potential aircraft malfunctions before they occur, leading to fewer flight cancellations and maintenance costs. AI can also streamline operations, such as baggage handling and check-in, leading to a reduction in staff and labor costs.
By embracing AI, airlines can unlock significant cost savings and gain a competitive edge in the market, making it a worthwhile investment for any airline looking to stay ahead in the industry.
5. Increased Scalability
AI can help airlines scale up their operations quickly and efficiently. This technology can be used to automate customer service inquiries and other processes, streamlining workflow and allowing airlines to focus on more important tasks. Additionally, AI can be used to provide predictive analytics and insights that can help airlines identify potential opportunities and make decisions more quickly and accurately. With the help of AI, airlines can stay ahead of the competition and be up-to-date with the latest trends.
AI has the potential to revolutionize the airline industry. By automating routine tasks, making better decisions, improving customer experience, and optimizing maintenance, AI can help airline companies become more efficient, cost-effective, and competitive.
Smart airline retailing: The new merchandising and revenue frontier
During the pandemic, when air passenger traffic was at an all-time low, a few smart airlines demonstrated record-breaking sales by earning even more than 50% of their revenue from their ancillary products and services. Indeed, ancillary sales revenue is no longer seen as an airline’s secondary option. Instead, it has now taken a front seat in the airline business model.
In this context, we need to note that the traditional way of retailing does not cater to today’s tech-savvy customer who is information-rich but time-poor. In the current era of disruptive technological changes and a highly commoditized travel world, airlines have a cut-throat competition where products and services that may be cutting edge today can become outdated soon.
Adopting the advanced retailing concept in the airline industry is going to be one of the biggest transformations in the industry.
Customer loyalty is not what it used to be. With increased transparency on comparative prices and easier access to booking tools, travelers are increasingly loyal to those that provide the best prices and experiences. These fluctuating trends and rising consumer expectations make it challenging for airlines to keep up with the changing times.
The USP in this competition is the outstanding customer experience that revolves around a customer-centric approach. This allows an airline to deliver a positive and personalized experience at every stage of its customer journey. They can interact with customers based on their needs, adopt a fact-based approach to decisions using customer data as a primary source of insight, and embrace new channels to build a customer-focused culture, creating value across the way.
Many forward-thinking airlines have already embarked on adopting smart merchandising strategies to deliver a tailored, personalized, and seamless experience to individual travelers.
Smart merchandising strategies driven by an AI-based retail rule engine
In this blog, we will attempt to explore various best practices, frameworks, strategies, and techniques for an airline to deploy a successful merchandising strategy. This strategy will deliver exceptional customer experiences along with higher conversion rates.
The mantra behind successful merchandising revolves around five key areas, and they are:
Identify the right personas for your travelers
Contextualize your offer in real-time
Deploying the best packaging techniques
Target the right time and stage of the journey
Deliver a seamless digital experience
1. Define the right persona for your travelers
An airline caters to millions of passengers in a year. Every customer has unique needs and has a different perception of products and service values. If you understand those differences and are flexible in how you offer the services they need, you can gain a competitive advantage.
Customer segmentation is a strategy to divide customers into various groups or personas having similar characteristics, wants, and needs.
Traditionally, airlines used to segment customers based on the booking class, which today holds limited relevance and doesn’t reflect complex passenger behavior. To overcome this challenge, airlines can leverage technologies like artificial intelligence and machine learning to develop self-learning models which analyze the below-listed factors and self-calibrate to optimize the personas.
Geographical: Country, state, climate, food habits, etc.
Demographic: Age, gender, marital status, family size, nationality, ethnicity
Behavioral: Spending pattern, price sensitivity, need for flexibility, loyalty index, CLI
At the same time, each persona defined by the airline must be:
Measurable: In terms of volume, purchasing power, and other characteristics, an airline can predict as well as target the revenue and profit a segment can make.
Accessible: The persona is easily accessible so that the airline can approach them.
Differentiable: Each persona must be unique and reacts differently to the market mix.
Actionable: Airlines be able to provide value to the segment.
A good segmentation strategy should have a persona for each passenger category and reveal underserved segments. For example, an airline receives most of its bookings from guest users, and the airline does not possess any historical data individually for these customers. But, by using engaging factors like demographical and geographical, airlines can achieve segmentation. In a recent survey conducted with an airline, it was discovered that young travelers between the age of 18-35 going from Oslo to Switzerland during winter had shown an affinity towards XL baggage for carrying their skiing kits. So, using such insights, airlines can target customers with similar personas to elevate sales.
2. Contextualize your offer in real-time
Now that we know each traveler’s persona has specific needs, the second step is to set the right context so that the customer understands the value that a recommended ancillary is going to deliver. For example, a business executive taking an early morning flight from an airport that experiences a high passenger load around the time of departure can open an opportunity to sell fast-track ancillary.
Contextualizing helps the traveler understand the benefits of the offer then and there.
Airlines can tap into such opportunities by leveraging an intelligent merchandising engine. These build a knowledge graph for each persona to understand their affinities towards ancillaries. They then evaluate it with real-time contexts like load factors, routes, flight duration, and peak hours through a robust scoring algorithm for ancillary recommendation across various stages of the travel lifecycle. Doing so significantly improves the likelihood of making a purchase hence, delivering a higher conversion rate.
3. Deploy the best packaging techniques
Airlines use various offer creation and packaging techniques like bundled ancillaries, unbundled ancillaries, and hybrid bundling (branded fares) to personalize an offer. Each of these techniques plays a role when targeted to the right customer. Branded fares or bundled ancillaries deliver a simple approach to building an all-inclusive fare, reducing the complexity of choice and making comparison and purchase decisions easier for passengers. But at the same time, with evolving customer expectations, it is a huge challenge for an airline to decide which ancillary items to bundle and which items to offer separately.
The best-fit package results in value to the customer and higher per-passenger revenue for the airline.
Deploying an intelligent merchandising engine that can generate multidimensional insights on ancillary sales performance across all channels and travel lifecycles can help revenue managers optimize their packaging techniques or even take a step ahead to tailor the bundles in real-time for a customer.
4. Target the right time and stage of the journey
Airlines can maximize their ancillary sales by encouraging customers at various stages of their travel lifecycle, beginning from the inspiration that starts the planning in the first place, all the way through the booking process, to pre-and post-trip engagement. Each stage offers a unique upsell or cross-sell opportunity that a traveler may consider.
The most important thing that airlines need to keep in mind here is to offer the customer the right product at the right time.
Not everything can be sold during the booking; travelers develop their needs as they proceed. Airlines can use their data to understand customers’ specific needs to determine the behavioral factors, purchasing patterns, and affinity factors for each persona.
The choice of the product can be determined by the customer persona and contextualization. In contrast, the stage of the journey should be targeted, considering when it will be needed the most. On the other hand, the choice of the channel can be determined by the accessibility factors, and the price should prove to be a good value to the customer – it should neither be too high nor too less.
For instance, a family of four going for a week-long summer vacation would be interested in booking a hotel room at the time of flight booking. A few days before departure, when they start packing, they might opt for extra luggage and finally may need a taxi on the day of departure. Whereas a backpacker who is a price-sensitive traveler may look for a cozy hostel room at the time of booking and may be interested in some good adventure deals as per destination.
5. Deliver a seamless digital experience
Delivering a one-click buying experience that enables customers to make informed purchases can be a differentiator among competitors. Along with the perfect offer, an airline should focus on the user experience they deliver to the customer.
The user experience should be fast, easy, and intuitive so that a customer can easily navigate to buy and manage their purchases.
An average user experience can easily make customers disinterested, even if they see a good offer. On the other hand, a good user experience delivers high-quality content and information about a product, which in turn converts lookers into bookers.
Airlines need to understand the challenges associated with different distribution channels, primarily indirect and direct.
From a customer perspective, shopping through an indirect channel provides a disjointed user experience where they are not presented with personalized offers and don’t have access to the products they could purchase from an airline. From the airline’s perspective, they have to manage multiple EMDs for the ancillary purchase per ticket while distributing via a GDS channel.
To overcome these challenges, digitally matured airlines have adopted IATA standards such as New Distribution Capability (NDC) and ONE Order to modernize their product retailing and create a transparent shopping experience. NDC allows airlines to easily sell ancillary along with rich content directly to aggregators like OTA and GDS via a set of standard XML APIs (which was not possible earlier) and get away with the challenges of EMD issuance for ancillary purchases.
The capabilities of NDC clubbed with AI models can help airlines build a smart & advanced retailing system that offers customers a better product and more value. NDC enables airlines to sell flights and ancillaries the retail way, and AI-based technologies enable the airlines to add a personalized and contextual wrapper, so you are selling the right thing and have a higher look-to-book ratio. This enables the airline to transition from non-personal selling to retail-driven personalized selling.
The power of digital airline retailing is no more a secret. Revenue managers have identified its real potential and are leveraging it to target more sales. As we enter the digital revolution, the right set of techniques along with technologies like AI/ ML and big data could be the first step towards deploying successful merchandising strategies towards building a great customer experience and path to profitability.
The flight to stability: learning from the financial markets to inspire robust technology in the airline industry
The financial markets have seen remarkable growth and success in recent years, driven largely by the adoption of advanced technology infrastructure and automation. In the world of high-frequency trading, speed and efficiency are essential, and the transition from manual to electronic trading systems has been crucial in meeting these demands.
By enabling faster and more efficient trading, electronic systems have increased liquidity, tightened bid-ask spreads, and lowered trading costs, all of which have helped to drive growth and profitability in the capital markets. The benefits of automation and advanced technology infrastructure extend beyond just the financial markets, with other industries, such as the airline industry, beginning to explore their potential.
However, the airline industry is still grappling with outdated systems that are not equipped to handle the volume of data and volatility inherent in the industry. Recent events, such as the COVID-19 pandemic, the Southwest Airlines computer outage and Lufthansa IT failure, have exposed the industry’s limitations. Thus the capabilities of the financial markets’ systems provide a valuable example for the airline industry to follow.
The financial markets have developed robust technology infrastructure, utilizing state of the art technology available at every period, including advanced machine learning algorithms and AI, which enable high-frequency trading and automated trading. These systems can process vast amounts of data with hundreds of millions of actions per second and operate on millisecond timescales, all without crashing. By implementing cross-industry technologies like ML algorithms and AI, airlines, even though lagging decades behind financial markets, can modernize their infrastructure and move towards more efficient and stable systems, enabling them to make smarter decisions based on real-time data and predictive analytics.
The potential benefits are significant. By leveraging third-party vendors, airlines can streamline and optimize their operational processes, resulting in cost savings of up to 10-20%. Furthermore, according to a recent ‘Precedence Research’ report, the implementation of AI in the airline industry is projected to grow at a CAGR of 35.38% from 2022 to 2030, offering a significant growth opportunity for airlines to enhance their operations and improve the passenger experience.
The benefits of implementing new technology and infrastructure upgrades extend beyond operational efficiency and increased profitability. By modernizing their systems, airlines can also enhance the passenger experience. For instance, airlines can leverage data analytics to personalize the travel experience for each passenger, offering customized services and recommendations based on their preferences. Additionally, AI-powered chatbots and virtual assistants can help passengers navigate the booking and check-in process, reducing wait times and improving overall satisfaction.
While the airline industry faces several challenges in modernizing its technology and infrastructure, cloud-based systems that offer remote control and easy onboarding, along with third-party vendors, can provide a flexible and scalable solution for airlines to optimize their operations while reducing operational risk.
According to a report by Allied Market Research, the aviation analytics market was valued at $2.78 billion in 2020 and is projected to reach $8.21 billion in 2030, registering a CAGR of 11.72%.
In conclusion, the aviation industry can modernize their technology and infrastructure with cross-industry technologies like ML algorithms and AI, as well as by collaborating with third-party tech enablers. This can enhance operational efficiency, reduce delays, improve the passenger experience, and increase profitability. By adopting these innovative strategies, airlines can make smarter decisions based on real-time data, leading to higher revenue and stability. This will give them a competitive edge in the industry and enable them to stay ahead of the curve.
Article by Dr. Uri Yerushalmi, Co-Founder and Chief AI at Fetcherr, Former CEO and Head of AI for a major algo trading firm. Three decades of experience in software development and AI.
Accelerate your airline’s transition to retailing with offers and orders
As the industry looks to modernize its retailing and back-end capabilities, only a handful of progressive airlines have begun the transition to distributing their dynamically created offers using NDC. Even fewer airlines have started looking at ONE Order to simplify the fulfilment of customer-centric retailing.
While industry discussions and initiatives have been ongoing for around a decade, why is the journey to retailing with offers and orders taking the industry so long? And with the expected benefits of increased airline revenues, improved traveler experiences, and greater cost and process efficiencies, how can we throttle up the pace?
Accelerate your airline´s transition to retailing with offers and orders by adopting a three-phased approach that addresses six critical areas for transformation success.
Once a year, when I’m not busy helping airlines figure out their latest integration challenges around NDC or their IBE, I like to go scuba diving and snorkelling. If you’ve never been, I really recommend you give this a try – the underwater world will blow your mind. While scuba diving is allegedly an “adventure” sport, what I like to do most is just lay still in the water and watch the fish go by. It’s fascinating to watch the interactions between the fish, and soon you come to realise that a reef is a real community. The place is usually teeming with little fish going about their business – which usually involves avoiding being eaten by the big fish! However, the little fish also help to keep the reef clean, and some of them even clean the big fish of parasites contributing to a healthy ecosystem. All the fish have to get along, so it’s not simply a case of the big fish eating the little fish (luckily for them!).
One day I got to thinking about the plethora of airlines we have in the world, and all the various systems they choose to use for their various services. In total, there are more than 5000 airlines in the world and about 25 providers of what we would typically call “PSS” services. Here, just like in the underwater world, we also often have big fish and little fish happily living alongside each other. Smaller airlines have very different needs to a larger airline, but often use some of the same reservation system providers – small and big fish in the same big pond. Usually these are the bigger system providers, although there are also some pretty big airlines that use smaller, more niche providers. So, what motivates an airline to be a small fish in a big pond, or a big fish in a little pond? Let’s start with the small airlines, who essentially have two choices: one of the smaller, more niche providers or one of the big two providers of “classic” PSS services. While in earlier times the choice of vendor may be influenced by the airline’s chosen business model (LCC vs. FSC), there is less of a clear demarcation here these days. Most airlines operate a hybrid model with aspects of both an LCC and FSC, and as such need flexibility. The smaller providers tend to be more focussed on the retail aspects of distribution with extensive ancillary product and bundling capabilities in their base product offering. This matches well with the needs of the airlines, who also have to be nimble enough to react to changing market situations with great flexibility. New products can be defined on the fly, while cloud-native applications allow safe, rapid deployment of new features.
The obvious choice for a larger airline would of course be one of the larger PSS vendors. These may not be as flexible in terms of speed to market or modern airline retailing capabilities, as they tend to still rely on legacy artefacts such as PNRs, e-tickets and EMDs for booking, fulfilment, and settlement. However, they do make it work through add-on components and, if your airline has been in business for a few decades, this probably makes perfect sense. While this is not “wrong” per se, it does imply some upstream and downstream complexity within distribution and the afore mentioned processes. Complexity in IT systems typically equates to cost, and as such smaller providers may be able to offer more attractive pricing. On the other hand, the larger providers have the benefit of economies of scale and are often perceived as “a safe pair of hands” (the old adage “nobody ever got fired for buying IBM” springs to mind).
However, the industry is moving in a different, more modern direction with NDC, ONE Order and the transition to offers and orders, pushing the vendors to evolve. Some have embraced this change and are moving forward where they can, while others have been rather hesitant; big fish are not always the most nimble. There are also some airlines that are realising that modern airline retailing is the way forward and are also pushing where they can. But this is change that is of more an evolutionary nature, and as such will take time to show tangible benefits. Together though, airlines and vendors large and small must drive this change forwards and continue to innovate and evolve. Smaller providers have this in their own hands and need to invest in their products and show innovation in driving this transformation forward. The larger vendors have traditionally built-up capabilities based on the needs of their community of users. Here, the onus is on the airlines to communicate their expectations towards their providers in terms of industry change and ensure that the industry as a whole keeps moving in the right direction.
Considering all of the above, it really seems that, just like the coral reef, there is a real community within airlines and vendors, and the fish all need each other to get along, survive and indeed thrive. Without the smaller airlines and providers, the innovation needed to drive lean operations and enable airlines to grow would be missing. Without the bigger airlines, the economies of scale would not work and (at least in the case of some larger airlines) the thought leadership to drive the industry towards modernisation would be lacking.
Working for more than two decades in the industry, jointly my colleagues from Travel in Motion and Oystin Advisory have worked with airlines of all sizes and business models and discovered that the biggest challenge is not necessarily choosing the right PSS vendor – at least not initially. It is about understanding and formalizing the airline’s business needs and challenges based on the overall strategy. Part of executing this strategy is then to choose the right set of products for an airline to suit their own unique needs and enable to them to survive, thrive and drive their business to the next level. Based on this, and unlike the fish in the sea, you have the choice of ponds you want to swim on. Either, as a small fish in a big pond or as a big fish in a small pond. Or, you can even make your own pond.
The idea of dynamic pricing – optimizing prices based on demand and propensity to buy – is not a new concept. For centuries, businesses have implemented this strategy to adjust prices for products and services based on customer demand. Revenue leaders have adopted this across many industries, including hospitality, tourism, entertainment, retail, energy, public transportation, and commercial airlines with the goal to maximize sales volumes and product or service value by stimulating pricing urgency and market demand.
While the retail and entertainment industries have excelled in innovating their dynamic pricing models and technology, the airline industry has been left behind with legacy methodologies that are no longer able to keep up with today’s volatile market and ever-changing landscape. With market demand fluctuating, historical reports and sequential modeling used today can only tell a fraction of the story. And without the proper context, airlines are stuck in the past, lagging behind other industries and far from realizing the full revenue potential of dynamic pricing.
Many airlines still rely on static pricing, which uses a limited number of price points tied to the reservation booking designators (RBD) which are then filed through ATPCO. To provide their travelers with more optimal offers, some airlines started to introduce continuous pricing, offering more gradual prices. Lufthansa Group was amongst the first airlines to serve continuous priced offers on their direct and New Distribution Capabilities (NDC) channels in 2020 and immediately saw an increased revenue and conversion rate. However, with the constraint and heavy reliance for this industry on filed fares and RBD, there are comparatively few successful initiatives that involve true dynamic pricing applied to all sales channels.
On top of this, ancillary revenues – those generated through extra baggage, in-flight refreshments, internet access, seat selection, etc., which bring the industry around $55 billion according to McKinsey – are often managed through separate and isolated IT systems, meaning airlines struggle to understand how changes in dynamically priced fares also impact ancillary sales and total revenue optimization.
As long as outdated systems and obsolete methodologies remain in place, airlines will continue to fall behind other industries in maximizing revenue potential. Technological advancements, alongside successes in other industries, indicate the time is right for airlines to unlock the potential of dynamic pricing for their sales channels. This industry needs to break free from legacy technology constraints and start implementing optimal pricing strategies that take into account how decisions such as price, offer, channel or customer may impact the business outcomes and revenue performance. So what is the next step to transforming airline pricing?
Artificial Intelligence (AI) enables a transformation in airlines’ commercial performance and customer experience. Specifically, deep learning – a cutting-edge form of AI that uses neural networks trained to perform specific tasks under different conditions – creates context by looking at past behaviors, identifying good behavior versus bad behavior, and rewarding good behavior. This results in reduced forecasting errors, allowing analysts to rapidly respond to changes through added context (i.e. search data, ancillary revenue, cargo capacity, etc.). This revolutionary technology can find its path to desired business and revenue outcomes by correlating vast amounts of data, even in environments where data is sparse or noisy, a very real situation experienced by the travel and transportation industry today.
Dynamic Pricing with Deep Learning
Airlines need to sell the right product to the right customer at the right time, in the right channel, and at the right price. When embracing advanced deep learning technology, it provides automated, AI-driven revenue management capabilities that maximize airline profitability and total revenue optimization.
When it comes to dynamic pricing, deep learning and cloud development empower real-time customer segmentation and react much faster to any market change or surge in demand or commission rates. The Revenue Operating System puts into action AI-driven revenue management using deep learning to make predictions directly from context such as market forces, competitive forces, customer forces, and network changes.
Harnessing the Power of Data
Through the adoption of advanced AI, digital-first airlines are able to harness the power of data, going beyond historical data and leading the charge in dynamic pricing and other commercial decisions. With The Revenue Operating System, airline analysts can discover similarities between markets, competitors, leading demand signals, and events.
Identifying such signals before they are clearly visible in data-sparse subsets of the airline network helps focus attention where it’s needed most. With the right insights readily available and continuously updated, airline teams can, in real-time, start to resolve complex questions that used to be answered with guesswork or tribal knowledge.
Dynamic pricing powered by deep learning is the key to creating optimal offers for airlines. And as part of FLYR’s total revenue optimization ecosystem, commercial teams are now able to automate pricing decisions in real-time, optimize total revenue including ancillaries, create personalized offers optimizing customer conversions and lifetime value, create trusted load forecasts to optimize capacity plans, direct marketing spend and energy towards high yielding returns, and confidently sell cargo capacity earlier.
Charles Ruesch, Head of Offer & Distribution at FLYR
Follow @flyrlabs on Twitter and LinkedIn for the latest news and updates on AI-driven revenue optimization.
One Order: The proof of the pudding is in the eating
NDC has transformed airline distribution. Well, while that particular statement can be debated for many hours, one thing that can be said is that it has changed the vocabulary of airline distribution.
The mindset of airline distribution has genuinely been transformed to think in terms of “offers” and “orders”, about APIs and dynamic bundles and so on. Indeed, many airlines are implementing these concepts in their distribution landscape.
But what has really changed, beyond some terminology? Well, for certain, airlines are thinking much more like retailers. They are thinking about the customer (purchasing) experience, products, bundles, segmentation, and they are thinking about how to get these into their distribution channels as offers – through NDC and their digital direct channels. The transformation of an offer into a sale of products is resulting in the creation of orders. However, most orders still rely on a system which also uses legacy artefacts such as PNRs, tickets and EMDs.
“Airlines become more retail-focussed, more confident in their capabilities as retailers and more well-equipped…”
As airlines become more retail-focussed, more confident in their capabilities as retailers and more well-equipped with tools to enable this, the more creative and ambitious airlines will become. More products in bundles, different products in different markets, integrations with providers of travel-related services that see the market developing as the technical obstacles of legacy artefacts are steadily removed from the equation. This gentle transformation is also driving changes elsewhere throughout airline organisations, as the knock-on effects of these begin to be noticed. Orders created within an order management system provide a vehicle for simplified settlement processes between sales channels (retailers) and the airlines as sellers. While the full complexity of airline revenue accounting, proration, BSP and other settlement flows cannot be eliminated overnight, the ONE Order accounting standards are enabling change. As the maturity of NDC distribution increases and orders become more prevalent, airline IT providers are presented with opportunities to bring further simplification, leveraging NDC and ONE Order. Providers of Order Management Systems (OMS) are now able to integrate directly with airline accounting systems in real-time, bypassing much of the legacy complexity associated with PNRs, tickets and EMDs.
However, there is more to being a successful airline retailer than creating offers, converting them into orders and feeding the fruits of these sales into the airline’s financial systems. At some point in time, there will be a customer who has expectations based on their wider retail experiences. The retail possibilities that airlines are now becoming exposed to go far beyond their own domain. While the additional bag will (hopefully) be visible at the time of check-in, and the lounge may be run by the airline, what about the pre-booked parking, fast-track security or the express train to the airport? The airline is unlikely to be the entity responsible for delivering the service in these cases, but the expectations of the customer are the same as when they present at the desk to drop off their bag – it should just work. However, interacting with all these new parties to ensure “it just works” is unchartered territory for many airlines. More and more, this involves pushing an order notification to the external service provider via the OMS to fulfil a service. Interactive two-way messaging related to order fulfilment is new. And, in the envisaged world where the PNR and ticket are superfluous, even the interactions with the check-in providers need to be brought into the era of APIs and open integration standards.
“IATA has anticipated this and has developed a set of standards within the ONE Order framework to enable the delivery of services using orders…”
In conjunction with airlines, vendors and other industry stakeholders, IATA has anticipated this and has developed a set of standards within the ONE Order framework to enable the delivery of services using orders. These messages can be used by an OMS to trigger the delivery by pushing information to the responsible party or can be used by delivery providers to pull the necessary information proactively. They can track consumption of services as well, which is key to triggering accounting and settlement processes. However, certification for ONE Order capabilities is still very light compared to NDC. While the certifications only may only be taken as a loose measure of maturity, it would appear that there may be a vast gap between what airlines can now sell and what (or rather how) they can deliver.
The reasons for this apparent mismatch are manifold and varied in their nature (technical, process-related, commercial), and some may be easier to resolve than others. What is more concerning though is the apparent lack of awareness of this mismatch among the broader industry. Great focus has been placed on promoting the need for modernisation in how airlines define and sell their products and services. However, there is still one key component that will become a challenge sooner rather than later – where the customer gets to seamlessly experience all those products and services that the airline invested so much effort in to get the customer to purchase.
The collaboration between airlines and their OMS partners is, generally speaking, mature, collaborative and based on a common understanding of business value and goals. The relationship between airlines and their ground handling partners is of a very different, operational nature and is often very cost-driven to extract the maximum value at the lowest cost. On the other hand, the relationship between OMS providers and ground handlers is non-existent in most cases.
Planning and executing the smooth delivery of products is key to being a successful retailer. Achieving this requires close alignment between all stakeholders: airlines, their OMS providers and crucially, the ground handlers and other partners, in and around the airport, in the air or wherever else they may be. So far, the focus has been on the selling aspect of retailing and increasing revenue and airline wallet share. However, if airlines are really to succeed as retailers, customer satisfaction will be determined by what, and how, they deliver. The proof of the pudding is in the eating.
Historically it has always been labor costs representing the largest share of airline operating costs. However, in the middle of the 2000s, increasing oil prices caused the cost of fuel to overtake labor costs . IATAs1 “Fuel Fact Sheet” from October 2021 tells us that fuel costs accounts for 19% of operating costs for airlines in 2021, up from 16.2% in 2020.
Thereareafewreasonswhycostsin general, but fuel costs specifically, are a key topicforairlines today. First, airlines have suffered massive losses during the COVID pandemic. Almost all airlines have increased their debts whose interest in turn increased their cost base. So, in order to return to profitability, airlines will need to increase revenues or reduce costs even more than pre-COVID.
Second,sincetheOctober2021update fromIATA,theworldhassignificantly changedagain.Asaresultofsanctions relatedtoRussia’sinvasion of Ukraine, oil prices have skyrocketed. Therefore, the cost of kerosene will be an even larger portion of airlines’ cost base in 2022 and beyond.
Anadditional,third,reasonwhyfuel efficiency is important, is also because of Russia’s invasion of Ukraine. As both Ukrainian airspace and Russian airspace is closed for most airlines, routings have been heavily affected. Many profitable routes have become unprofitable because of longer flying times. Other routes are no longer possible (with given aircraft types) as a result of longer distances and limits to the MTOW. The less fuel efficient an airline is, the higher the cost impact and the more routes are no longer possible.
At last, most recent reason for airlines to look into fuel efficiency is EASAs refined fuel-carriage rules . Carrying less extra2 (buffer) fuel makes the plane lighter and therefore saves fuel in itself. However, taking less fuel buffers on-board can only be achieved if ground operations and flights actually are more fuel efficient and the variance in fuel requirements decrease.
In this case study we will look at three ways in which real-time data and predictions can help airlines to be more fuel efficient.
Long Taxi-In Times
In an ideal world scenario, after landing, an aircraft directly taxis to its destination gate (preferablyonasingleengine). Unfortunately,real-lifescenariosareoften different. We often see longer than normal taxi-in times at many airports we work with. There typically is one single reason why taxi-in times are longer than they could be: the destination gate is not available.
Therecanbe different reasons for a gate not being available. Sometimes a gate is not available because the previousflight has a ground delay and this delay was not known and/or communicated in time to the party responsibleforgate planning. If the delay hadbeencommunicatedintime,agate change might have been possible, allowing the inbound aircraft to have an as low as possible taxi-in time.
Anotherreasonforagatenotbeing available is that some equipment (e.g. GSE) isblockingthegateareaoroneofthe requiredpre-arrivalsafetychecks has not been carried out. These kinds of situations eitherphysicallyblockthegateforthe aircraft or prevent the aircraft from parking because taxi-in clearance is not given.
All of the situations described above lead to inbound aircraft holding (or even worse, taxiing around) while they wait for the situation to be resolved. In the meantime, obviously, they are burning kerosene, emitting CO2 and other pollutants as well as causing noise pollution.
Long Taxi-Out Times
Like with taxi-in times, an ideal departure means that the aircraft moves in one single flow from its departure gate to the runway and into the sky. However, at many airports aircraft are queuing and holding before departure (especially during peak hours). If we take a closer look at this phenomena, we find that unpredictability lies at the core of the problem. First, let’s establish that as long as an aircraft is waiting for departure at its departure gate, it is not using any fuel (assuming it is connected to ground power and pre-conditioned air). So, in a perfect world we would hold each aircraft at its departure gate until we know that it can have an uninterrupted taxi-out. In real-life this is difficult as many aircraft might be ready for departure around the same time. If too many pushback clearances are given at the same time, we get congestion and queuing. If we allow for too little pushback clearances, we do not fully utilize capacity on the taxiway and runway and lower our gate capacity by artificially increasing turnaround times.
ManuallycreatedExpected-and Target-Off-Block-Times (EOBTs and TOBTs) are designed to give operational planners clarity about when aircraft are ready for pushback. Accurate EOBTs and TOBTs should theoretically enable planners to achieve perfect outbound flows. However, these human estimations are notoriously inaccurate and/or updated very late into the process. This leads to situations where capacity is either not fully used (which increases capacity demand at later times) or where too many aircraft are pushed back at the same time causing congestion.
UnnecessaryAuxiliaryPowerUnit(APU) run time
After landing, pilots will turn on the aircraft’s APU in order to generate electricity for the aircraftwhichisalsorequiredfortheair conditioner.TheAPUisanenginethat usually sits in the tail of the aircraft. It is very fuel inefficient and also makes a lot of noise. After the aircraft has arrived at the gate, it should ideally connect to ground power and pre-conditioned air as soon as possible. Once connected, the pilot can turn off the APU.
Unfortunately,inrealityweseethatthe connectionofgroundpowerand pre-conditionedairdoessometimestake unnecessarily long or does not happen at all. This means that aircraft are running their3 APUslongerandconsumingunnecessary amountsoffuelwhilealsoharmingthe environment.
The abovementionedproblems can be easedwithtwo sets of features.
Predicted Off-Block Times
The POBT gives airports and airlines a continuous prediction of when aircraft are going to leave their gate. With the use of the art Machine Learning technology to process large volumes of aircraft, airline, flight, airport and other data that hold information about potential delays. In essence the POBT is an automated alternative to human estimations. The advantage is that the algorithm can process much more data, is never distracted, never forgets, has no personal preference or bias and gives continuous updates. As a result the POBT has always proven to be more accurate than human estimations thus far.
In relation to long taxi-in times and inbound holding,POBTallowsoperationalairport planners to identify gate issues early on and makechangesinordertoshorten taxi-in times.SeattleTacomaAirporthasbeen using Assaia’s POBTs for almost a year now and as a result has achieved an almost 10% reduction in taxi-in times (up to 5 minutes, on average 49 seconds). Based on average aircraft operating costs as provided by the FAAthis reduction in taxi-in times results4 in a cost saving for the airlines of $122 perflight,oranannualtotalsavingof morethan$25millionforallflights at SEA. Furthermore, these reduced taxi times alsoreduceCO2emissionsby13kgper flightor2.6millionkgsofCO2peryear (whichequatestotheCO2absorptionof 124,000 trees ) at SEA.
Forthetaxi-outproblem,wealready established that more accurate information about whenflights are ready for departure hasadirectrelationwiththeabilityto achieveuninterruptedtaxi-outflows.The graph below shows the average error of EOBT versus POBT for delayed flights out of one of the large US airports. We can see that at D-60 the POBT is almost 5 minutes more accurate than the EOBT. Furthermore, we can also see that the stability of the predictor (measured by the width of the confidence interval) is much narrower. So, more accurate and stable predictions lead to better departure sequencing, more uninterrupted taxi-out flows and lower kerosene usage.
GPU, ACU and APU Detection
In order to maximize GPU and ACU usage andminimizeAPUburntimes,our TurnaroundControlproductaccurately tracks the usage of these items in real-time. Thisallowsairportsandairlinestostart managing APU burn times more e officers to directly contact the respective airline or ground handler in order to resolve the situation.
Another way to address the same problem is by analysis of historic data. GPU/ACU/APU usage reports can be created in order to be discussedwithairlineand/orground handlerstakeholdersinordertoimprove adherence to most efficient usage practices.
Fromwork that we have been doing with one of the major airports in the US we have recordedanaverage4minutereduction timeinGPU/ACUconnectiontime.This saves airlines more than $7 and more than 5kgofCO2emissionsperflight.Fora mediumtolargeairportthisequatesto $1-$1.4 million per year which is a multiple of the cost of Assaia’s TurnaroundControl!
Want to learn more?
If you are eager to learn more about this particular case study please contact: Christiaan Hen, Chief Customer Officer, at firstname.lastname@example.org.
Digital transformation is no longer an option. In fact, it’s a prerequisite to organisational resilience, success and your ability to comfortably pivot in an ever-changing world.
With the prevalence and unprecedented growth of technology acting as a catalyst to digitisation, there’s no better time than the present to embrace the cloud and all of its glory.
Now, more than ever, this necessary shift in technology and service is disrupting businesses in the most positive way:
Digital transformation investments are set to amount to almost £5,23 trillion, between 2020 and 2023 alone.
Enterprises that have undergone digital transformation are predicted to account for £39.6 trillion of the global nominal GDP in 2023.
There are an abundance of benefits that can come out of digitally transforming your business.
You can have recommendation or prediction engines like Netflix. Or simple, yet ingenious chatbots to deal with a multitude of customer journeys. You could even get process automation throughout your entire organisation to cut costs and speed-up delivery.
With digital transformation, the choices are abundant.
But first, you need to consider your existing infrastructure.
Legacy Tech Doesn’t Cut It In 2022
In order to fully embrace the new, it requires a re-evaluation of the old.
Most companies still have antiquated IT systems and are dependent on technology that can no longer serve them.
The big problem with relying on outdated, obsolete technology is that you fall behind. You end up slower than your competition. Unable to keep up with change and vulnerable to threat.
The term ‘legacy’ describes these outdated and inefficient technologies, systems or infrastructures.
Cambridge Dictionary defines it as “a legacy product or system is one that is no longer available to buy or no longer used very often, but that is still used by some people or companies”.
In relation to IT systems and infrastructure, having any form of legacy technology will ultimately act as a hindrance to the longevity and potential growth of any business.
With outdated technology, you run the risk of falling behind, losing out on missed opportunities and laying waste to valuable resources. Legacy technology simply doesn’t work. And the advantages that come with Cloud don’t compare.
In fact, the stats speak for themselves:
A study on the cost of maintaining legacy systems in the US revealed that ten of the government’s legacy systems cost about £255 million a year to operate and maintain.
Stats have also revealed that banks and insurance companies dedicate upwards of 75% of their IT budgets to preserving legacy systems.
To add insult to injury, legacy systems can cost an organisation up to a staggering 15% budget increase every year for maintenance.
The Cloud: Your Key To Digital Longevity
To have a basic understanding of the Cloud, it’s important that we establish definitions for a few key terms.
The Cloud – is essentially a collection of IT services (servers, software, databases) that exist on the internet. While these servers exist in data centres across the world, they can be accessed and managed by users at any given time and in any given place.
Cloud migration – is a company’s decision to move their data, software and IT infrastructure to one of these cloud ecosystems. This way, they have open access to unlimited storage and greater flexibility, security, compute, as well as secure backup
Cloud providers – are third party companies that provide cloud computing services.They offer customers a cloud-based platform that replicates and improves standard IT infrastructure, practices and even software.
CloudOps – is enacted once you’ve migrated to the cloud. Your next step is to manage, maintain and optimise your new environment for optimal results. CloudOps is essentially the process behind making your new investment perform at its absolute best.
How Well Does The Cloud Work?
To begin unpacking the cloud, we need to answer a very simple, but important question:
Does it work? (And if so, how well?)
These facts might clear things up a bit:
Gartner predicts the public Cloud market to reach over $623.3 billion by the year 2023. This means that more enterprises and SMBs are investing in Cloud technology and understand the positive effect it will have across industries.
Forbes cites advantages such as significant cost reductions, improved scalability and faster innovation as a few of the basic benefits of Cloud technology. That’s right, only a few of the basic benefits.
Accenture indicates that businesses that take a strategic approach to new technology achieve more than twice the revenue growth of those that don’t. A strategic approach entails using Cloud in a way that tailors it to your company’s specific needs.
Still not completely convinced?
The Cloud is also environmentally friendly. That’s right. Cloud technology will significantly reduce carbon emissions, save massive amounts of electricity and heavily cut back on resource usage (hardware, facilities, housing).
The Cloud will save money in more than one way. Besides cutting down on hardware, labour and maintenance costs, overall productivity is also improved and you save huge amounts on capital expenses with affordable pricing models.
Security on the Cloud is also extremely safe and constantly improving. Cloud providers employ the best security professionals to ensure that your data is encrypted and kept safe from cyber attacks. Gartner even predicts that by 2025, 99% of Cloud security failures will be the user’s fault.
Get Started On Your Cloud Migration Journey
Every business will inevitably undergo some form of digital transformation. It’s simply a matter of when.
And the cloud, with all of its many advantages, is essential to that journey.
To remain competitive, to evolve and to innovate in an age that puts technology at its core is critical to any organisation. While it might appear to be a fairly complicated and uncomfortable shift to take – you can rest assured that this isn’t necessarily the case.
You need to either have the right talent, or work together with the right people that understand the value, importance and impact of your data, as well as the role that it plays in your success.
Retooling revenue management for the entire organization
Over the past two years, uncertainty has become the new normal for airlines. This has made the lives of revenue management analysts and their commercial partners especially hard as the majority of pricing decisions and forecasts are based on historical purchasing patterns.
So how can airlines move forward and focus on driving revenue to pull themselves out of the effects of the pandemic?
The obvious answer is by pursuing anything that can restore top-line growth. One of the smartest ways for airlines to do this is by investing in their products and operations to help them be more competitive in the marketplace. Revenue management (RM) systems, such as the one developed by FLYR Labs, help airlines maximize revenue opportunities and support their business growth.
Business areas that can benefit from retooling revenue management
Network, channel sales strategy, and marketing are among the top three business areas that can also benefit from retooling revenue management.
The network planning and scheduling group builds an airline’s product. Revenue management is the gatekeeper to this network, setting the market fare for access onto flights. They are also one of the first teams to see where a network strategy is succeeding or falling apart and can relay insights back to the network team in order to make the airline’s product stronger.
This insight into forward-looking revenue trends can also be used by marketing and sales strategy teams to influence the right moments to move inventory and volume or when to hold back during times of organic demand.
Do your current RM tools need an upgrade?
Many airlines invest in revenue management as a core competency and see it as key to their success. However, the range of tools available at present depends on the resources of the airline. For example, smaller airlines tend to buy an off-the-shelf product, while larger operators build their own tools and systems. Within these tools, the Revenue Management System (RMS) creates demand forecasts and price optimizations, and the analysts interact with demand and post-processing to arrive at the optimal price for their network.
As the pandemic has shown, there are weaknesses in the majority of existing revenue management solutions. Many have been built so that operators are steering their airlines using strictly historical data. Similarly, other airline groups remain heavily dependent on historical data such as the network planning teams who typically look at last year’s profitability to create next year’s schedule. Although
helpful to look at historical bookings and pricing to predict future pricing, this methodology leads to a lack of reactivity. It only works well when the coming year looks similar to the last 12 months.
In the brave new world in which we now live, predictability is no longer the norm. There is now a growing appetite for change, spurred on by the recent volatility in the market and an eagerness to look at other possible ways to approach the revenue maximization problem.
Improving reaction speeds with the latest RM solutions
The Revenue Operating System® by FLYR applies the latest AI innovations to maximize revenue, deliver measurable results, and add clarity to revenue decisions. Importantly, it differs from traditional revenue management tools in that it delivers much-improved reactivity to the volatility found in today’s marketplace. It can capture the sparks of demand that pop up but aren’t always obvious, applying analyst-grade intuition and decision making and applying it to every flight, every day, throughout the entirety of the network.
The Cirrus platform is built to serve airlines of all sizes and operating models and does not limit startup, low-cost, or network carriers from enjoying the benefits of solution capabilities, as they currently reside with other legacy systems. In fact, The Revenue Operating System offers a configuration specifically designed for the smaller or startup segment of the airline industry.
In addition to revenue maximizing pricing strategies, Cirrus also natively produces load factor and revenue predictions (both common KPIs across commercial airline functions). These metrics can be easily and quickly understood and communicated in order to bolster collaboration and empower data-driving decision making across the organization. This is an improvement compared to most native revenue management solutions whose primary model outputs are only abstract metrics or concepts such as unconstrained demand.
In recent years there have been many buzzwords thrown around between revenue management practitioners in this industry, such as NDC, total revenue optimization, and continuous pricing. However, the market is beginning to see airlines test cases that adopt these advancements in technology. With the introduction of The Revenue Operating System, airlines not only have a solution that offers backwards compatibility into their current legacy processes, but also one that has been built to optimize future technological opportunities – a world where airlines can create more personalized, real-time offers that provide the right product and right price to each customer.
If the past two years have taught the industry anything, it is that flexibility and reacting to change is essential to returning to top-line growth. Revenue management will continue to play an important part in creating competitive advantage, and, as can be seen with Cirrus, the future of revenue management is already here.
Kyle Holden, Head of User/Flight Analytics at FLYR
For more information about FLYR Labs and how we use advanced and intuitive technology to understand context and help airlines achieve their ultimate revenue potential, contact us today
Business travel is dead. Long live business travel.
During a panel hosted by Guy Johnson, News Anchor, Journalist and Aviation Enthusiast, Bloomberg at the Aviation Festival, London, Alex Cruz, Senior Advisor and former Chairman & CEO of British Airways, Johan Lundgren, Chief Executive Officer, easyJet, Martin Gauss, Chief Executive Officer, Air Baltic, Shai Weiss, Chief Executive Offer, Virgin Atlantic Airways, and Julie Shainock, Global Managing Director, Travel and Transportation Industry, Microsoft, shared their views on the future of business travel in a changing marketplace.
“We know that we’re going through rough periods. I think it will recover. But I don’t believe that the permanent impact on business travel will be COVID or COVID related endemic measures. It will be CSR (corporate social responsibility) sustainability measures that corporations will adopt, at least for a while,” said Alex Cruz, Senior Advisor and former Chairman & CEO of British Airways. “I still want to test what happens when you have to compete between two different suppliers and who’s going to travel, etc. But I think, yes, the COVID related business travel recovery will happen faster than it seems. But there will be some permanent impact from a sustainability perspective at a corporate level.”
“The day trip to Brussels or a day trip to New York may be cut down by technology”
Shai Weiss, Virgin Atlantic, agreed with Cruz, adding, “The day trip to Brussels or a day trip to New York may be cut down by technology—you have Microsoft here—or because of CSR. But we’ve already started to see the recovery of the business traveller. I think, in the estimates, we’re saying business travel may return to pre–pandemic levels probably in 2023. We’re already 30% booked on business travel into the summer of next year versus where it was in 2019. And that’s not a bad indication of where it is. But the truth is the equilibrium is unclear to any one of us because every time we predict something, something comes up.” Weiss added that pandemic measures affect how executives who might otherwise travel business class choose to use their time, avoiding travel because the health requirements may add too much time to the journey. “I think they’re more sensitive to the allocation of time.”
Martin Gauss, CEO of Air Baltic, said the business traveller profile is changing. “We are still 30% down on the total passengers, but in business class, compared to 2019, it’s only 15% down. So we see more proportional business class travellers. It’s not the corporates because they don’t fly business. It’s a lot of other people who now want that freedom, that privacy that you have in business class. We see business class travel coming back, but not the same people,” he said. “I think more people will look for all the things you have if you book business class…The big corporations probably will not allow shorter trips on business, but individuals, smaller companies, will go for it because of the things you have if you’re travelling businesses. That’s how we see today, and that’s how we plan our hybrid model. We have a full-service business class in the front and an ultra-low-cost cabin in the back. It works very well, especially now in the pandemic.”
“The global financial crisis, there was a debate then, that business travel would never come back to the same levels, we just wouldn’t spend the money. It took, what, two years to recover?”
Johan Lundgren, CEO easyJet reminded attendees that there have always been doubts about recovery following a black swan event. Still, the demand for all travel classes returns, sometimes sooner than expected. He also sees a shift in the business travel profile. “You remember the global financial crisis, there was a debate then, that business travel would never come back to the same levels, we just wouldn’t spend the money. It took, what, two years to recover? And after 9/11 [there were predictions that] people would not fly…I think it’s difficult to see at this point, to know exactly what will happen. I think that there will be some mitigation. There will be more businesses in general, and there will be more growth from that end…The mobile and the remote work has blended. People will go on more leisure trips, I think, and take two days also to work. So that’s a type [of travel]. How do you categorize that—as business travel or as holiday travel?”
“Face-to-face travel can never be replaced. That is something that will always be there”
Julie Shainock, Global Managing Director, Travel and Transportation Industry, Microsoft, spoke to whether technology would make a significant difference, in this crisis, with people opting out of travel altogether now that virtual meetings are more accessible than ever to handle remotely. “You know one of the tools—Teams or Zoom—now, Teams would be my preference. But it’s a tool that’s here to stay. But there’s one thing I will tell you hybrid events are here to stay as well. I think you’re going to see more and more hybrid events come out as we move into 2022 and 23. You might have a mainstage event here, and then you might have regional events somewhere else. But the one thing I will say is face-to-face travel can never be replaced. That is something that will always be there. I agree with everyone. You may not do that one day or one-hour short trip—although I did do one recently, I went for a three-hour meeting. But you will still have face-to-face meetings. Nothing will replace that. I recently was at some face-to-face meetings, where we got more done in four days than we did in the past four months, just by being face to face. Those are the kinds of things that will never be replaced from a business aspect. The other piece I think you’re going to see is this whole leisure/business, and the leisure/leisure aspect will play a role going forward. People will do both, just depending on where they are and what they can accomplish.”
Shainock also had an optimistic prediction for future events, even as Covid-19 continues to complicate travel. “I mean, you have 250 million daily active users on Teams. That’s a big number. You’re going to continue to see Teams being used in this way. But my preference would be to travel. I think the World Aviation Festival, Terrapin, did a fantastic job of getting the PCR tests available to all of us here so that we could come to a meeting. I think that you’re just seeing some of the flexibility that the world will adjust to. I do think we’re going to adjust over time. This won’t be the last variant. There will be more variants. I think that it will eventually move from the pandemic directly to an endemic, and then it’ll be more like the flu, where we get a vaccine every year.”
Artificial Intelligence (AI) and Machine Learning (ML) are critical tools in the modern airline competitive toolbox, but they can be clunky. They are often overwhelming projects and can sometimes initially yield underwhelming results. But the promise of AI to build more meaningful and efficient connections with staff and customers gives airlines good reason to embrace this technology, even in its awkward infancy.
When informing AI systems, the quality of the data supplied can impact the result. The models used to process that data can shape what the neural network makes of it. Computers don’t think like people because people are still figuring out how to make computers feel. Besides, people haven’t quite figured out how they process information either. That’s why it’s essential to have standards for the structure and the use of data that will inform AI applications.
That was one of the salient points made during a fascinating discussion on AI systems at the Aviation Festival, London. The panel led by Alan Talbot, CEO and Founder, Bridge Solutions, Ltd, included Ben Dias, Data Science and Analytics Director, easyJet, Justin Bundick, Senior Director, Data Science & Automation, Southwest Airlines, Oz Eliav, GM, Cockpit Innovation, ELAL, and Alex Mans, CEO, FLYR Labs.
They tackled the question: How can airlines find new data sources to create a more complete single view, operations and support real-time and agile decision making?
“How can airlines find new data sources to create a more complete single view, operations and support real-time and agile decision “making?
Justin Bundick, Senior Director, Data Science & Automation, Southwest Airlines, spoke to the importance of data set integrity, saying: “We need to be staffing and doing a lot more accuracy monitoring. A lot of companies call it ‘drift monitoring’…You have to spend a lot of time and due diligence on that. In the past, you might have been able to deploy a model and check in on it every month or every 60 or 90 days. You need to do it daily or weekly now because of the volatility. You must ensure that you have the right staff to go in and do the deep-dive analysis, and make sure that dataset ‘A’ doesn’t need to switch to data set ‘C.’”
“I think there are a lot of companies pushing very strongly in this space, both from a data and analytics perspective,” Bundick added. “Whatever company you’re in right now, you have to look at your business strategy, translate that into a digital AI strategy that then converts into a data strategy, which then converts into a tech stack strategy, to be able to host and utilize that data. And involved in that, there will also be an IoT strategy. Especially in an industry like ours, where not all the data you need is created by transactional systems, it’s interactions that you need to capture. So, all of that must be tied together. It’s multiple layers of strategy that you have to deploy across multiple different parts of the business.”
“Until the business strategy and data strategies align, you don’t get anywhere.”
Ben Dias, Data Science and Analytics Director, easyJet said: “Until the business strategy and data strategies align, you don’t get anywhere. People processes are important. Even if you have all the business strategies aligned to the data strategy and all the data in one place, if you’re asking the wrong questions of the data, you won’t get the right answers in your business roles. So you have to also train the data literacy skills across the company. You might start with the data scientists and data analysts, but you have to eventually get out to the business as well—having essential, excellent training for people.”
Dias added: “I think that there are two key priorities for me to make it happen. The first one is the literacy level across the company because even if you made the data available, if you’re not able to use it, it won’t help. And it is also creating that platform that is easy to use and available and has the data in it. That’s, that’s hard when you are looking at a company that has been here for a while. The data has built up over time, and the data sets are all over the place. Bringing them together, and making them available, is a challenge, but it’s not insurmountable. You need to bring the data and make it accessible, maybe not in one place—just making the data available and upskilling the people across the company to use it. Those are the two things, I think, that will accelerate the process.”
Oz Eliav, GM, Cockpit Innovation, ELAL spoke to the role of automation in the data gathering process. “Automation is also contributing to the accuracy and objectivity of data,” he said. “If you have the objective data, then you can probably make actionable insights actual intelligence based on this automated data with no human intervention.”
“It takes a lot more investment from your technology organization. It takes a lot more skillset from an overall platform and data engineering perspective. But it’s really powerful.
Speaking to the agile application of AI, Southwest’s Bundick suggested: “It takes a lot more investment from your technology organization. It takes a lot more skillset from an overall platform and data engineering perspective. But it’s really powerful. Because by building those types of platforms for your AI, you’re able to deploy it. But not only that, you’re able to monitor those AI that you’re deploying and be able to make adjustments to them when there’s volatility happening. You can change them out without having to bring down a system updated in the system itself.”
Alex Mans, CEO of FLYR Labs, suggested airlines have underutilized their data. “Inform yourself with the broader data you have access to…Find ways to extract signal get past the noise get past the data sparsity collect more data and focus on making maximum use of that before you look too far out,” he said. “But equally important is structuring the data so that it can be processed efficiently. “Data sources change over time….Most airlines that we work with, we build our own canonical model on top of wherever data sets they have—because it’s never perfect.
“Once you get that out of the way, things will move a lot faster in the future.”
“Most importantly, we cannot afford as an enterprise SAS company to go and custom hook-up every data source we need wherever and however it sits. We need our software to read from a predictable common format. So we always install our own canonical data model because it creates a consistent system boundary between different airline systems and our solution. That enables us as a technology vendor to move much faster on deploying new capabilities. Because every airline we work with, the data we’re looking for, regardless of the airline, is structured the same. We still go through the steps of converting the airline’s data into our respective format, just because once you get that out of the way, things will move a lot faster in the future.”
While legal compliance to data regulations is an essential requirement, the ethical use of data is also a concern, with AI systems guiding decisions that directly impact people, Justin Bundick pointed out. “At Southwest, we are starting to spend a lot of time on governance processes around the ethical use of data and having the right touchpoints in place to understand the features we are using. Do we agree with those features? Should we be using them? What policies do we put in place around that? Even more than that, as we start to monitor the efficacy of our algorithms, we also monitor how the features that we are using are influencing potential decisions made. Are those decisions driving unethical behaviour? We don’t have the magic bullet yet. I don’t know that many companies do, but it’s something that we’re very focused on. It’s one of our priorities, as we move into 2022, to establish that. We’ve got a rough framework right now; we want to make that a robust framework by the end of 2022.”
What price do you put on loyalty, and how do you make that currency grow in ways that go beyond transaction? This is one of the central questions airlines have had to answer since miles and points programs were first introduced to the industry in the early 80s to ensure return flyers and reinforce brand loyalty. It proved to be a brilliant scheme, which has kept airlines afloat through hard times. But does this offering resonate with younger generations? That was one of the critical discussion topics during a special panel session at Aviation Festival, London. Matthew Hall, Head of Loyalty Planning and Management, Air Canada, Sid Krishna, Director of Loyalty and Cobrand, Spirit Airlines, Anthony Woodman, Vice President Customer Journeys and Reward, Virgin Atlantic Airways, Pekka Antila, Head of Loyalty, Finnair, Grant McCarthy, Director of Loyalty CarTrawler, and Kian Gould, Founder & Chairman, Omnevo shared their views.
“I see a lot of complexity in loyalty and loyalty programs and a great opportunity to simplify the value proposition”
Pekka Antila, Head of Loyalty, Finnair, believes there is an advantage in simplifying the loyalty program transaction. “My background in leisure travel I still look at loyalty through those eyes. I see a lot of complexity in loyalty and loyalty programs and a great opportunity to simplify the value proposition. First, by simplifying the way we communicate [value]. We could be more relevant for a large number of consumers.”
One example was the airline’s partnership with ePassi, which allows consumers to use their Finnair loyalty program points as currency at retailers around Finland. “Our members can redeem their points with close to 30,000 merchants in Finland—at restaurants, gyms, yoga schools, and cultural venues… You need to encourage your members to identify themselves and connect, but it’s so easy after that. You just choose a merchant, open your app, and redeem your points for the service that you like.”
Sid Krishna, Director of Loyalty and Cobrand, Spirit Airlines, shared how the airline made loyalty points meaningful to low-frequency, highly changeable leisure flyers by embracing digital wallets and mobile payments appealing to a new generation of “mobile humans.” “What we did with the co-branded card products we have—one of the first things we focused on—was to make sure that we had the ability for those cards to be presented in the Apple Wallet and all of those different [mobile payment options]. Because we have seen, and the data have shown, that people who end up putting their card on their digital wallet have more engagement with the program in the end. I think the push will always be there to book these folks into mobile. Also—for the millennials and Gen Z—the focus area that we’re talking about today is that they are more [active] on their mobile phones than any other system that they’ve ever been on. So that’s our best way to tap in into these folks.”
Anthony Woodman, Vice President Customer Journeys and Reward, Virgin Atlantic Airways, suggested that aligning the brand value proposition is essential to loyalty as the consumer mix changes, with younger Millennials and GenZ having different expectations of the brands they transact.
“We’re working on the seamless experience, the overall digital journey for your customers”
“One of the most critical things for younger customers mixing experience, so that is a lot of the loyalty value proposition. [We’re] working on the seamless experience, the overall digital journey for your customers…That the end-to-end experience is seamless and perfect is critical for these younger customers… The question that I always come back to is, what does your business represent? More and more, we find that customers are purpose-driven and that they want to interact with companies that have a clear value proposition—a purpose statement at heart. It’s not as simple as, ‘We have a business, we sell some stuff. We want some younger customers. Can we give them some points?’ You have to say that we are a brand committed to selling value propositions to customers. And if we don’t, then actually, let’s start there before we get too involved in the micro-loyalty economics.”
Matthew Hall, Head of Loyalty Planning and Management, Air Canada, agreed with Spirit Airline’s Krishna on the importance of a mobile-first experience and emphasized that one of GenZ consumers’ expectations is to ensure the value of their data. “We’ve got to build the mobile experience first…For Gen-Z—they are the most privacy-aware folks that I’ve ever seen. It’s not so much to say privacy. It’s more that they know what their data is worth. So to get them to give up their data will take more convincing. See, it’s less about the machine or being worried about privacy, per se, as they mature [as consumers]. It’s that they say, ‘I know what it’s worth. I want to make sure I know what my data will be useful.’ So making sure that these privacy policies are very clear versus just the long-form T&C’s.”
Hall’s comments, coupled with the insights from Antila, Woodman and Krishna, suggest that GenZ expects companies to apply their data in a way that adds value. Simplifying transactions because the offers, booking flow, and transactions are informed by the data consumers have willingly supplied. Making consumers enter information they’ve already given or switch out of a payment method they have already indicated they prefer would erode the loyalty proposition, as would pushing products or services unrelated to their consumer identity and behaviour.
“Gen Z’s are a lot less tolerant of screw-ups from airlines when it comes to technology.”
Kian Gould, Founder & Chairman of, Omnevo emphasized the importance of this, saying, “Gen Z’s are a lot less tolerant of screw-ups from airlines when it comes to technology. We all have had these experiences of going through airline checkout where you have noticeably recognized that you’re interacting with four different sites because they all look different. This is something Gen Z is very intolerant of—if it doesn’t work right. They will just stop. It is much more than an error, whereas older generations will tolerate more. This has always been one of the most critical aspects when we’re doing rollouts with airlines when it comes to the payment question. You need to accommodate much more than just the standard payment options… Someone might not have enough points to pay for half of the journey, and they want to use WeChat to pay for the rest or AliPay. So you have to support that entire Payment ecosystem, from native payments and third-party payments and cash, and Miles payments. That’s one of the most complex aspects of creating these marketplaces, but it has a huge impact on conversion.”
Grant McCarthy, Director of Loyalty CarTrawler, said the personalization of loyalty program communications is also critical to loyalty building.
“They want to say, ‘You know my lifestyle. You know I want to travel to Orlando, and I go to Disney. You’re going to offer me a car which will meet my needs…a hotel that meets my needs as well.’”
“There’s a great study by McKinsey where they’re saying the same thing. The different generations would suggest ‘extra me.’ You think about loads of programs and join one, and you stay in it forever. But Gen Z are less [tolerant of] the big rubber stamp emails—[and just booking] if it’s a pretty pointless destination [to them.] They want it to be personalized to them. They want to say, ‘You know my lifestyle. You know I want to travel to Orlando, and I go to Disney. You’re going to offer me a car which will meet my needs…a hotel that meets my needs as well.’ So you want to follow-up personalization. The broad-brush approach to people, which we have taken historically, [won’t work]. This is a new generation. So if you offer a truly personalized offering, they are more inclined to convert and spend money to help you make money. If you don’t offer a personalized solution, they are more inclined just to switch off and go to another partner, another supplier. There’s no loyalty anymore to a particular brand. If you don’t deliver what they want in a personal way, they walk and go to somebody else.”
A final thought on the brand loyalty proposition from McKinsey’s ‘True Gen’: Generation Z and its implications for companies:
“Young people have always embodied the zeitgeist of their societies, profoundly influencing trends and behaviour alike. The influence of Gen Z—the first generation of true digital natives—is now radiating outward, with the search for truth at the centre of its characteristic behaviour and consumption patterns. Technology has given young people an unprecedented degree of connectivity among themselves and with the rest of the population. That makes generational shifts more important and speeds up technological trends as well. For companies, this shift will bring both challenges and equally attractive opportunities. And remember: the first step in capturing any opportunity is being open to it.”
Stroopwafels in demand: Corendon launches in-seat ordering
While prevalent already at sporting venues and on trains in-seat ordering is gaining traction with airlines.
As air travel recovers, the technology is helping to boost revenue opportunities and enhance convenience for passengers. Factors that have prompted Corendon Dutch Airlines to introduce an in-seat ordering service across its fleet of three Boeing 737-800 aircraft.
Working with AirFi, the Dutch leisure airline has already trialled the service, which gives passengers the ability to order their favourite snack or item of duty free onboard and have them delivered directly to their seat.
According to Gert-Jan de Vries, Manager Cabin Crew & Inflight Sales, Corendon Dutch Airlines, “Passengers loved this feature and learned how to use the in-seat ordering functionality very quickly when we ran a trial in January. We saw an instant use of the system.”
For those preferring to make their purchases in the more traditional way, a trolley service will continue, however, the digital ordering system allows those who didn’t use the trolley service, or simply want to purchase that second cup of coffee or extra Stroopwafel, to do so at any point during their flight, at the crew’s discretion.
“With AirFi’s in-seat ordering, we provide a more discreet way for our guests to request what they want, when they want it. The result is that our guests are more content during the flight, and as an airline we earn additional revenue that might have otherwise been lost,” de Vries adds.
“They’re the first European airline to adopt our ground-breaking in-seat ordering capabilities”
As Job Heimerikx – CEO, AirFi explains, “Corendon has been a partner of AirFi for many years and we’re incredibly excited to announce that they’re the first European airline to adopt our ground-breaking in-seat ordering capabilities. By offering hybrid service that begins with the traditional trolley service then switches to in-seat ordering, Corendon is truly maximising the potential of its onboard retail programme.”
The carrier’s onboard digital shop, The Corendon Café, is fully integrated with AirFi’s ePOS (point of sale solution) and IFE system, and under the full control of cabin crew, who can restrict the service during certain events, such as turbulence.
“Passengers need simply connect to Corendon’s streaming IFE and shopping platform using their own mobile devices by selecting the appropriate Wi-Fi network onboard”
Crews will perform a first trolley service before activating the new service. To make a purchase, passengers need simply connect to Corendon’s streaming IFE and shopping platform using their own mobile devices by selecting the appropriate Wi-Fi network onboard. There they can select their choice of snack or drink from a virtual menu and place their order.
Crew are then notified of the order on their tablets, marking the request “in progress” or “complete” for other crew members to see. Passengers also see their order status via messaging on the wireless IFE platform streamed to their mobile device. A crew member will then deliver the items to the passenger’s seat, at which time payment is taken. As a cashless airline, Corendon accepts all major debit and credit cards.
“An additional benefit is the ability to monitor stock levels, with crew marking products as ‘out of stock’ when they become unavailable.”
An additional benefit is the ability to monitor stock levels, with crew marking products as ‘out of stock’ when they become unavailable. The airline is currently trialling optimised loading using data from its AirFi’s ePOS solution to help drive down operational costs without compromising sales opportunities.
In 2020, AirFi and Singaporean LCC Scoot launched “ScootHub” with in-seat ordering in a regional first. The initiative facilitated a shift from printed menus and in-flight magazines at each seat to a fully digital solution, saving the airline 156 tonnes of paper annually.
Consumer Data Informs Brand Strategy as Airline Marketing Teams Adjust to New Normal
The COVID-19 pandemic has re-shaped consumer behaviour. Airlines discussed adaptive marketing and brand strategies to ensure growth and recovery at the Aviation Festival, London. The panel discussion, led by Ross Sleight, CSO, Somo, included insights from Annabelle Cordelli, Vice President of Marketing, Virgin Atlantic Airways, Jayne O’Brien, Head of Marketing and Loyalty, JetBlue Airways Corp., and Tyri Squyres, VP Marketing, Frontier Airlines, as well as Seth Cassel, President, Everymundo, and Perri Maxwell Chaikof, Director of Product Marketing, Ada.
“I think one thing that we’ve all learned both personally and professionally is you question everything that you used to know—rethink it”
Of the impact of the pandemic on consumers, Tyri Squyres, VP Marketing, Frontier Airlines, said: “I think one thing that we’ve all learned both personally and professionally is you question everything that you used to know—rethink it. Anything that I thought was a steadfast marketing role, you question it. If you had your systems, how you’re advertised, how you thought about your customer, you would rethink it. You retry things that maybe didn’t work before. We found a lot of success in testing things we had done before, and maybe we didn’t get the success [we hoped for]. And we would find that all of a sudden now it was something that would work and was really affecting customers. Customers have changed mindsets. Technology has changed. People have been in their own houses a lot more, so customer sensibilities have changed as well. You need to constantly test and try new things and listen to what customers are saying to make that beneficial. For me, that was the biggest thing that I am looking forward to in 2022—our whole testing plan—the things that we’re going to experiment with, and not be afraid to do some different things and think about things.”
Annabelle Cordelli, Vice President of Marketing, Virgin Atlantic Airways, shared what she learned to prioritize during the pandemic. “I think it’s bought people into sharp focus—in the broadest sense—that’s the customers who are trusting and buying a brand, but also our people delivering that service,” she said. “With everything up in the air—our lives were thrown into disarray—deeply understanding and listening to what people want and being able to adapt to that [is important]. I’ve certainly learned that things are possible, things that you never thought were possible before. I think if you’ve got that combination of really deeply understanding what customers want, what they’re dreaming about, what’s keeping
them awake, their fears at night, and getting under the skin, you can look within and work out how you’re going to try some different things. What are you going to do to challenge yourself, create [offers] that fuel the dreams and address the worries? I think it’s the combination of those two things for me.”
“We’re all living change. We’re all living in uncertainty. We’re constantly evolving.
Jayne O’Brien, Head of Marketing and Loyalty, JetBlue Airways Corp, agreed with her counterparts, saying:
“We’re all living change. We’re all living in uncertainty. We’re constantly evolving. Well, we think that we’re just back to knowing what’s going to happen and something else happens. One of the key learnings for us is the need to be flexible all the time. And the need to be listening to our customers, our marketplace, and our crew members. It’s terribly important, I think. During the earlier days of 2020, information flexibility, helping customers and helping crew members, was probably at the forefront of what we were concerned with. It was less about making sure your price or product information is out there but just making sure that people understood the different requirements of travel and what we were doing to keep people safe and secure. That was for our crew members as well as our customers. The first [priority] is just supporting customers and crew members. In terms of how we go to market, what we’re talking about has evolved for all of us. We need to keep our eye on what matters most to our customers. What do they want to know? How can we make the experience easier? How can we give them the information they need to make that trip? [Customers are] worrying about all the different regulations in different places. Early on, it was about how are the aircraft cleaned? What are the touchless features? What’s the touchless experience? Do I have to wear a face mask? Then it evolved to what type of COVID test do I need to go? And the different laws—they’re all different when we fly to different places, not just the UK. If you look particularly at the Caribbean or South America, each location has slightly different requirements. So the need for customers to understand [those requirements] easily became a priority for us. You’re giving them that information straight up… That is our primary focus, and you have many ways of doing it. We rely very heavily on our channels, our website, obviously comms or emails. You can target customers specifically, looking at where they’re going and what information they need. Using data was there already, but it’s coming back much more to the foreground.”
What is the reality of the behaviour today? Where are things headed? So you are optimizing today but also trying to keep an eye on tomorrow and creating new propositions
Cordelli of Virgin Atlantic Airways said of the airline’s use of data to inform marketing strategy: “I would say fusing lots of different data, depending on what question you [are trying to answer]. It depends on whether you’re trying to optimize today or you’re trying to create tomorrow. We’re using everything from our voice of the customer data. We ask how people want to travel and [their] concerns [about travel]. [We’re] looking at trend data mixed with search data—you get that long and short term. What is the reality of the behaviour today? Where are things headed? So you are optimizing today but also trying to keep an eye on tomorrow and creating new propositions. I think then linked to that big believer when you get some ideas and back to try things is get a concept and then put it out in front of people. So we’re doing a lot around quick turnaround reach. Agile research methodologies to get what people think about that—and how you adjust. Just be focused on deep listening, and then be flexible around adjusting to make it better, and you probably don’t have to change it again.”
Seth Cassel, President, Everymundo, said consumer behaviour data also informs their marketing strategy. “We’re looking at search data, for example, and understanding what our users are looking for, whether that’s searching on-site or searching in Google,” he said. “What we see, especially on Google, is there’s a lot more activity. You can take away from that the demand is there. There’s demand for certain markets. You can segment that data—it’s not all data, it is aggregated data, but it’s very insightful to understand what people are looking for. The fact that they’re actively looking and searching in a non-brand way searching, a flight from A to B. What we see is not necessarily a commensurate rise in brand search, which suggests a dissipation of some brand loyalty. So as you start to plan your marketing initiatives, you recognize that maybe an investment to rebuild some of that loyalty is critical to get back to where it once was. Or maybe it’s a new world, and you can’t necessarily expect the same level of loyalty that you saw before.”
“…Another way to listen to customers is to go to the airports, fly, and talk to customers”
Squyres of Frontier Airlines suggested that rebuilding loyalty requires more effective, personal messaging.
“We were cautious, in the beginning, about tone. It was a tricky place to be, where you’re trying to get attention but have the appropriate tone. In hindsight, we probably [wavered],” Squyres said. “We have a playful, fun brand. We were probably a little too conservative in the beginning. People needed a reason to smile and think about travel again. I learned to test some of the [messaging]. We could have taken a small sample size, sent an email with a clever headline and seen how customers responded. Because, as soon as we did, we started to see a great response. People were looking for a reason to smile and think about really positive things. I think the trial and the testing is really important. Then another way to listen to customers is to go to the airports, fly, and talk to customers. Talk to the flight attendants who are working on those flights. Talk to the team members and take care of crew members. First, they love to be heard. Second, they have great insights into what customers say. Every day, you have a flying focus group sitting in the lounge before they get on the flight and then on board. I find that’s where I get my best insights—my best ideas.”
JetBlue’s O’Brien agreed with Squyres on the importance of one-to-one contact with customers and crew. “We do a lot of what we call Blue Unity Days at JetBlue. That’s about getting out there in the front line. We [met] with our crew members throughout the pandemic and listened to our customers by helping at our airports. There is nothing like sitting, working and being there in the frontline and listening…because you see firsthand what customers are experiencing and the pain points. We also make it a policy to reach out to our most valuable Mosaic customers. They’re part of our TrueBlue loyalty program—just talking to them about how’s it going. You can’t sit in the ivory tower—it’s a new world. You’ve got to go and experience it. Certainly, during the pandemic, I was flying weekly, up and down and around the US. It sounds really simple, but it’s back to basics. Listen to the customer. Listen to your crew members and just design everything around what you’re hearing.”
Perri Maxwell Chaikof, Director of Product Marketing, Ada, brought the conversation back to data and emphasized the importance of inter-departmental collaboration where marketing supports revenue management.
“Airlines own a lot of data already. The challenge is to leverage that information in the right places to get the most out of every interaction with your customers.”
“You have so much more data about your customer than the average e-commerce business. Airlines own a lot of data already. The challenge is to leverage that information in the right places to get the most out of every interaction with your customers. So I’ll use a specific example now and talk a little bit about AirAsia, one of our larger airline partners. They deployed data across all their social channels with their customers. If you want to talk to someone at AirAsia, whether you’re on WhatsApp, WeChat, their website, or in their app, your first point of contact is an interaction with Ada, which is a fully automated experience. Ada is connected to [the airline’s] back-end systems. If I’m logged in, I can speak with Ada, and it will say, hey, Perri, welcome back. Are you asking about your upcoming flight on X? Would you like to upgrade your seat? Do you want to add a meal? Do you want to pay for your baggage now? Their ability to turn a support inquiry into a revenue-oriented conversation allowed them to drive an 8x increase in their ancillary revenue. I think it’s just a great example. You have so much data at your fingertips already. There’s so much you can do with what you already have to not only the customer experience but drive business value as well.”
By Marisa Garcia
Note: Please note that quotes were edited for clarity.
The aviation industry is rebounding from the pandemic with flights having resumed and passenger confidence rising. There still, however, remain many challenges for airlines, airports and ground handlers stemming from the coronavirus and its latest variants – be it due to labor shortage, ever-changing governmental regulations or highly volatile air traffic. Therefore, from continued unexpected contingencies to labor-related issues, effective planning and resource management has never been more important. That is where optimization software, driven by advanced technologies such as hybrid Artificial Intelligence (AI), Machine Learning and proprietary algorithms, has proven an essential solution.
Addressing the “What Ifs” with Staff & Equipment Planning Software
For airlines maintaining on-time arrivals and departures is critical. Managing multiple resources from staff to equipment and planning for their effective utilization requires sound planning. Similarly, ground handlers must content with various operational disruptions, intercepting and resolving them quickly. For airports to function optimally, both airlines and ground handlers too must operate efficiently. Without this, there is a domino effect which has negative consequences across all areas. Helping to drive better planning is feature-rich optimization software. It supports optimum workload and shift demand planning, infrastructure utilization. For example, an airline leveraging AI-driven planning software can be applied to develop long-term, mid-term and short-term resource planning scenarios for staff and equipment. It can improve the assessment of flight schedule changes using “what if” analyses. It can drive significant improvements across many areas. They range from customer service, gate services and passenger bus services, to aircraft services, aircraft movements, loading/unloading, baggage services, cargo line maintenance, crew transport and turnaround supervision.
By applying staff and planning software, many benefits can be derived. They include:
Better adherence to Service Level Agreements (SLAs) with SLA-based planning
Maximization of resource revenues
Optimal balancing of airport, airline and passenger demands
Improved service times and safety performance
Reduced capacity-related delays
Enhanced customer service achieved by more consistent, reliable operations
Flexible Shift Schedules
When it comes to supporting optimal flight schedules, managing staffing fluctuations is critical. Employee illness, family needs, workers being detained due to a major traffic jam, or other contingencies can arise at any time, causing a last-minute disruption to a shift schedule. The pandemic has only increased these circumstances. Robust planning software facilitates the automatic planning of rosters with built-in flexible shift times so that fluctuations in staff requirements can be managed. The software provides precise demand forecasts and target staffing level capabilities that reflect flight schedules.
Optimized Workforce Planning
Pre-pandemic labor shortages have been further exacerbated by increasing staff absenteeism due to individuals contracting COVID-19 and forced to endure quarantine periods. In addition, we have seen many staff members fired due to their failure to comply with vaccine mandates and others who have resigned from their jobs because of these mandates. Leveraging advanced workforce planning solutions, airlines, airports and ground handlers gain agile decision-making support to achieve appropriate staff levels, improve management of work volumes and related staffing capacities, support work process guidelines and improve forecasting of future human resource demands. These solutions facilitate the development of optimized staff schedules, which not only help management meet critical staffing demands, but also enables staff to secure schedules that best address their preferences. This, in turn, helps promote increased staff satisfaction, productivity and retention.
Today’s most advanced software solutions incorporate extended monthly planning features that enable planners to perform their role covering periods of six weeks instead of having to develop plans to address four to six individual scenarios to cover this timeframe.
User-Friendly, Feature-Rich Solutions
Color-coded weekly visualizations, enhanced Gantt chart, user-friendly navigation and other features support ease of use and convenience. As a result, planners can optimize their time, planning and decision-making to develop effective schedules to a high degree of precision and detail. They can easily create alternate plans, schedules and what if scenarios that maximize efficiency and resource utilization. When accompanied by robust employee portals, optimization software enables workers to easily log in to view their work schedules and any schedule changes. This is in contrast to tedious paper schedules having to be distributed to employees and changes communicated verbally. Mobile apps further support online workflows, quick roster assignments, workload adjustments and the easy, digital communications of this information.
Pertaining to COVID-19 status, a digital tracking capability of the most advanced workforce management solutions allows for COVID-19 positive cases or those deemed suspect to be entered into the system to mark infected or potentially infected employees for quarantine and blocking from work assignments.
Among the projections planners can now achieve with AI-driven staff planning software are:
Workload demand by qualification
Impact of using part-time staff
Workload characteristics such as work volume and peak periods
The software also helps planners in answering key question such as:
How can we maintain or increase service levels?
What are the relevant flight and workload key performance indicators (KPIs) for internal communications?
Workforce Management Solutions
In addition to advanced planning solutions, workforce management software solutions empower planners with the ability to address a myriad of criteria ranging from an organization’s corporate culture and governance requirements, to its service level agreements (SLAs) and government and industry regulations. These solutions deliver critical performance features, including:
Daily working time demand planning that accommodates an airline’s, airport’s and/or ground handler’s needs in updated real-time
Staff vacation planning functionality which captures, verifies and automatically approves vacation requests, while balancing them with minimum staffing requirements
Automated schedule creation and publication that supports various planning strategies (i.e., fixed shift patters, free rosters, working time flexibility, use of external service providers, etc.)
Categorization and management of staff absences, while automatically checking them against SLAs
Informing employees regarding schedule changes, while continually monitoring planned and actual deviations
Communication of each employee’s deployment status via an employee portal
Classification and aggregation of working time, payroll, accounting, timesheet data processing and corrections, and working time evaluations
Creation of reports and dashboards
Easy changing of business requirements without the need for programming.
Supporting the Recovery
While the industry has a long way to go to return to its pre-pandemic levels of operation, a recovery is clearly underway. Challenges, however, have persisted. For example, the new year started off with a rash of flight cancellations. In the United States alone, over 8,000 flights were cancelled from January 1st through January 3rd, impacting more than one in ten scheduled flights based on data from the tracking service, FlightAware. Many of these cancellations came as a result of the surge in coronavirus infections among staff members. Major weather events have also wreaked havoc on airline operations. These and other disruptions will always be factors the industry must address. What is helping the industry better address the “what if” challenges are optimization software solutions that facilitate greatly improved resource planning.
Dr. Wolfgang Vermöhlen, Product Manager Aviation Division, INFORM GmbH
New Technologies. New Strategies. New Beginnings – for the Americas Aviation Industry
Aviation Festival Americas brings together aviation leaders driving change across the globe.
In its 14th year running, as a leading event in the aviation industry, Aviation Festival Americas 2022 continues to be the meeting place where new strategies and relationships are sparked to deliver the solutions you need.
Hear from 200+ of the most influential voices in the industry, across 6 dedicated conference themes.
Join decision-makers from every major airline and airport, as well as solution providers, for 2 full days of education, networking and strategizing!
Aviation Festival Asia always has the most exciting and relevant topics at the forefront of the agenda. 2022 will have new topics that are crucial to industry improvements and recovery with new business models being at the heart of the programme. We present to the aviation industry new changes in the market and translate them into actionable take-aways that drive innovation, experience and revenue.
Over two days Aviation Festival Asia will feature 150 speakers from airlines and airports sharing case- studies and what is needed for the next steps across the industry. This combined with travel technology companies sharing products, solutions and services both onstage and on the exhibition floor then whether you’re in passenger experience, retailing, IT, digital transformation, distribution, loyalty, marketing, operations, communications or innovation, there’s content tailored just for you.
The World Aviation Festival is the world’s most important aviation technology conference and exhibition. The event is for the leaders of the world’s airlines, airports and their most senior executives in charge of the latest tech and strategies that are driving the industry forward.
In 2022 we will be moving to the RAI in Amsterdam to bring our community of 5,000 global executives together once again to be inspired by 400 speakers over 2 incredible days.