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 email@example.com.
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.
In a panel discussion led by Sinead Finn, Founder, Affinity Ltd., Bryan Porter, Head of Commercial — EMEA, Accelya Group, Jason Coverston, Director, Office Domain, Navitaire, an Amadeus Company, Sophie Dekkers, CCO easyJet, Achim Tyler, Vice President of Global Sales, Infare Solutions, and Krassimir Tanev, Chief Commercial Officer, Blue Air each shared their views on changes in the marketplace since 2019 and the rapid adaptation required to stay ahead, particularly in revenue management systems.
“In the last 20 months or so, is it’s very much a switch towards away from looking at historical behaviour and historical data into much more forecasting and forward-looking; which is a challenge, because who knows whose crystal ball is right,” said Sophie Dekkers, CCO, easyJet. “But we are having to switch and use much many external data sources to help make sure the points that we’re looking at in terms of forecasting are correct… In terms of the revenue management system itself, it’s trained to price at certain points with certain low matter. We’re in a very different time now, with a much later booking window. We were at about 75% of our sales were coming in the last three months [before travel]. Recently that changed to around 63% now [booking] in the last three months for travel next three months. That’s still very near-term [bookings] versus what the system had learned over the last 25 years, built to look much further out.”
“How do you stimulate demand? Once they get to the website, the conversion is there because the prices are attractive at the moment.”
Customer behaviour has also shifted somewhat in terms of apprehension to book, although Dekkers said the airline had seen a marked improvement in conversions, returning to 2019 levels. “But it’s the demand traffic in the first place that isn’t coming in. Once they come in, they see the prices, and they’re converting. So, our conversion rates are the same as in 2019. But it’s the demand that’s still depressed. If we look at searches on Google for flights, generically, they’re still down about 40% of what they were from 2019. That demand is the challenge—how do you stimulate demand? Once they get to the website, the conversion is there because the prices are attractive at the moment.”
Krassimir Tanev, Chief Commercial Officer, Blue Air, explained that the company as a whole had reshaped its business model from a hybrid budget airline to a true low-cost airline, with a greater focus on ancillaries.
“We have deployed a robust commercial plan over the last 12 months, focused on three main pillars that underpin our developments. The first one was network development, or rather, network enhancements, adding more value to our customers by focusing first on primary airports. We have tried our best to expand our operations rapidly and flexibly into the gaps that full-service carriers have opened up. We’ve opened up new markets like London Heathrow, Amsterdam Schiphol, Milan, Linate, and Frankfurt, just to name a few. The second priority for us was the customer experience elevation. Here, we also made significant progress. We used this time to upgrade our products. We have added a new fleet with a state-of-the-art, cost-efficient 737 Max 8 aircraft. And on top of that, we have also enhanced our customer experience capabilities and customer notification platforms–we’ve added new chatbots. Our digital systems, we’ve improved overall. We focused on adding more value to the customer experience. And last but not least, we focused a lot on actually driving growth in ancillaries. We know that most carriers have reported weaker or softer yields throughout the pandemic. But one thing that we delivered very well was that we provided more opportunities to our customers. We increased our ancillary yields by more than 50% thanks to our new ancillary strategy, where we have unbundled our products further. We have created new product features and new product bundles for our customers. And we have deployed dynamic ancillary pricing, just to name a few of our actions. But more importantly, we have enhanced, or we have increased our exposure to the VFR (visiting friends and family) markets, which has proven to be much more resilient compared to other market segments.”
“We work very quickly with existing customers to start consuming new types of datasets”
Bryan Porter, Head of Commercial — EMEA, Accelya Group, shared some examples of how the company’s airline customers had adjusted RM when historical data proved less useful. “Norwegian started using Accelya’s airRM revenue management solution back at the end of 2019. So we implemented a solution that effectively used historical behaviour to predict future behaviour. We built in all the forecast models, and, of course, along comes COVID–none of that is effective anymore. [How we deal with that is] we work very quickly with existing customers to start consuming new types of datasets. This is taking in market insight data and competitive fare data and utilising that to optimise prices. We also started pulling in data from the look-to-book activity that we’ve seen on some of our customers’ websites and other data that allowed us to focus on price optimal optimisation on an intraday basis. So if there’s a sudden, unscheduled event or a sudden fluctuation, our customers were able to cater for that. We effectively moved midstream with Norwegian. At the same time, we had customers coming to us—Iberia being one of them—who had barely been using their traditional RM system and suddenly found that it wasn’t fit for purpose. So they started working with us, implementing some of the solutions similar to what I’ve just described for Norwegian.
“Another example is we have seen the rise of new low-cost carriers that have effectively started during the pandemic. They don’t have any huge debt burden, and the cost of entry into the market is lower than it’s ever been. So we’ve had airlines coming in, who have no historical data to optimise their prices effectively, and are looking for new tools that can suddenly get them into the market. It’s been an interesting time for us. We’ve managed to onboard 11 new customers during the pandemic—our team’s been very hard at work. We’ve effectively introduced 280 discrete additional value points to our product set. We focused on new data integration, better visualisation to allow revenue managers to identify trends and start making more active decisions, as well as to look at automation and intraday optimisation.”
“One of the things that we’re working on with some of our newer customers is total offer optimisation.”
Porter also discussed how the company’s acquisition of FareLogix has helped refine the pricing of both fares and ancillaries. “One of the things that we’re working on with some of our newer customers is total offer optimisation. Through our flex merchandising module, we’ve started revenue managing ancillaries. We can start using price optimisation across the ancillary products and start doing that with bundling as well. [We’re] working with a large European airline currently to effectively couple our airRM revenue management solution with our merchandising solution. We are introducing AI (artificial intelligence) and ML (machine learning) to enable ‘willingness to pay’ models. We’re not just looking for an entry bid price, but ultimately at what the customer is willing to pay and utilising that to optimise price.”
Achim Tyler, Vice President of Global Sales, Infare Solutions, said data supply to inform RM models has increased.
“We’re looking in the future, then looking into historical data. We don’t throw away any information we collect—it’s still available. If you want to go back to 10 years and further, if you want to look into the market, we still do that. But last year and this year was always about the future… We invented a product called Market Trends, which observed the scheduled flights versus the flown flights, how prices were changing how quickly they were changing, how [many flights were] cancelled. That was last year. This year… there’s not too much churn. We focused this year more on optimising costs for our customers in the way we source our data. We did a couple of projects regarding API access to data—NDC API projects… We have already about ten customers on NDC APIs. NDC is the most efficient way for airlines to access the information they have on their website, which is our quality aim… We also see shopping data and ancillary data as a newer trend, talking about dynamic pricing and continuous pricing. You can imagine it’s going to be much, much more data. We work together with airlines and RM vendors to make this most efficient for all of us. A lot of data needs to be collected and consumed. You have to run all the algorithms, on top of that, to get to the really good revenue results.”
“One of the things that we’ve found is that our crystal ball is not as good as the crystal balls that our customers have—and they each have a different one.
Jason Coverston, Director, Office Domain, Navitaire, an Amadeus Company, also mentioned the importance of working closely and collaboratively with airlines to collect the correct data and refine predictive models. “You’re just talking about how much data it takes to react,” he said. “One of the things that we’ve found is that our crystal ball is not as good as the crystal balls that our customers have—and they each have a different one. So we try and get out of the way of our customers. For example, [one of our] customers realised they
needed to react more quickly [to] data coming in from Infare. We have a team dedicated to helping customers operationalise the data they get. So, we came in, and we created a pipeline. They were able to implement exactly the logic and algorithms they wanted. We take a very non-structured approach to deliver value to the customer. When it came to the algorithm choosing fares and exactly how to write the logic around how to compete, that was completely up to the customer. But they needed a bit of help in operationalising that because it wasn’t part of their out of the box system. So, whether it’s [data sources like that], or maybe somebody’s got a new Google TensorFlow model that they need to get into the system. We don’t use our crystal ball to decide [for our customers what they need, such as] you need willingness to pay, you need probability, you need x, y, and z. Instead, we say, we’ve got some patterns that we’ve seen to be successful, and they’ll show you what other customers have done. But at the end of the day, you can invent entirely new steps in the process so that you can be agile as the world changes from month to month.”
By Marisa Garcia
Revenue Management and Pricing
RM, continuous pricing and Demand Forecasting Panel Discussion: Rebuilding and adapting forecasting models with different inputs and future strategies to ensure that we capture demand?
From its very inception, IATA’s New Distribution Capability (NDC) has evoked heated debate. Sometimes that debate is related to the purpose of the NDC technology but mostly it’s about who will pay.
Such fundamental challenges have hampered the standard from gaining significant traction before now and while adoption is progressing, many predict there are further hurdles ahead.
Traditional airlines in Europe, such as those in the Lufthansa Group and Air France-KLM, have largely embraced the NDC technology standard and talk about it in the same breath as their modern retailing future. Other carriers, meanwhile, have taken a step back and returned to traditional distribution methods.
It might be time to accept that NDC is not a magic wand transporting the air passenger transport industry into the e-commerce world of Amazon, but a stepping stone in that evolution.
By acknowledging that NDC is a means to an end, airlines, travel intermediaries and technology partners can more easily face up to the challenges of implementing NDC, some of which might be considered challenges to their overall future survival and growth.
An e-retailing mindset
A change in mindset from all players is critical to move towards modern retailing.
At a recent airline conference, one former airline executive said airlines risk losing share of wallet to non-travel retailers such as Amazon or Google, not only because of the traditional mindset but also because of the ongoing reliance on legacy technology.
Many advocate it is not just digital transformation that is required, but complete system transformation if carriers, and other players in the distribution ecosystem, are to meet the growing expectations of consumers.
Going forward, IATA’s recently announced plan to move from the NDC certification index to an Airline Retailing Maturing (ARM) index might focus minds on the end objective rather than the technical barriers to getting there.
One further challenge to NDC achieving greater traction is the various versions of the standard that airlines have used to develop solutions. This might be resolved through the launch of a new version carriers can unite around.
With so many hurdles it’s hard for airlines and intermediaries to see the real value NDC might provide let alone achieve it. But there are small steps carriers can take to unlock the potential.
Unlocking the value of NDC
Small developments such as ensuring technical specifications and documentation are easily available to developers and automating contract signing are easy wins for airlines to implement.
Making it easy for aggregators to access and sell NDC content and even incentivising travel firms for selling could also help demonstrate the value in changing to newer ways of retailing.
Finally, and requiring more of a mindset shift, is the decision by airlines to outsource their IT function so they can focus on flying planes and the passenger experience instead of trying to make legacy systems fit for the digital world.
It’s not hard to see why it still might take a few years before NDC has more of a presence but it’s important to note that steps taken in its development and implementation will not be wasted. This is progress towards the potential rewards of airline retailing which, as McKinsey and IATA estimated in a 2019 report, could be worth up to US$40 billion in additional annual value.
By Viktor Nekrylov, Managing Partner, DRCT
Viktor Nekrylov is managing partner at DRCT, the trusted tech partner for airlines and travel sellers. Powered by AI, DRCT’s technology integrates with existing selling platforms to solve the pain points of dated, legacy distribution systems. http://www.drct.aero/
During the Aviation Festival, London, Guy Johnson, News Anchor, Journalist and Aviation Enthusiast, Bloomberg, David Neeleman, Founder JetBlue, Azul and Breeze Airways, and Robin Hayes, CEO, JetBlue Airways, discussed what it takes to grow in new market conditions and build a more sustainable industry.
Neeleman explained the opportunities which inspired him to found Breeze Airways and launch during these challenging times for airlines. “I just saw trends that were developing in the United States, where the smaller and medium-sized cities you had to go through a hub on most all of these cities if you want to go anywhere. But, at the same time, the cities were growing. And especially in the post-COVID era, a lot of people want to go live in cities like these. They don’t really want to live in the big cities anymore. They can telecommute. So a lot of these cities are vibrant and growing, but they just lack air service. That affects the quality of life. Just for people to go to Florida or get to the mid-Atlantic region and different places they want to go, we can see that traffic.”
“..there’s a great market out there if you can do things that can simulate traffic with low fares and convenience for people to travel.”
As Neeleman elaborated, “If you go to a market and say five people are flying this route every day, can we take it to 100 people every day. We’ve seen that. We’ve seen some markets go up 20 times what the X-day was because of traffic stimulation. So we’re looking at 400 routes today. You know, when Ryanair started saying, ‘we’re going to go from 40 million people to 60 million people to 100 million,’ I thought that’s insane. But obviously, Wizz does it now. So, you know, there’s a great market out there if you can do things that can simulate traffic with low fares and convenience for people to travel.”
Hayes agreed. “To me, it made perfect sense because, with all the consolidation that’s happening over the years, so many cities have lost direct service. It’s all being hubbed. So here’s a business model that is almost infinite in size that allows an airline like David’s new airline, Breeze, to take advantage of that. I think it’s terrific, and I think it’s going to be a great success.”
“We’re going to see the actual effect on the planet. As we go ahead the next five years, ten years and 15 years, we can make adjustments.”
Johnson also asked the CEOs about the ambitious sustainability commitment the airline industry had made for 2050, net-zero carbon emissions, and whether it was achievable. “I think so,” Neeleman replied. “I mean, you look at what’s happened in technology over the last 25 years, and you project that ahead for the next 28 years, I think there’s no doubt that we’ll figure out how to solve this problem. And then, as we go along the continuum, there are a lot of other examples of cutting down carbon production. We’re going to see the actual effect on the planet. As we go ahead the next five years, ten years and 15 years, we can make adjustments.”
Hayes noted that airlines must remain financially sustainable while meeting climate sustainability targets. “I think airlines are going to have to—in addition to solving the segment sustainability challenge—they’re going to have to figure out ways of making money doing it. But again, the industry has shown so much creativity over the years in doing that.” Hayes said JetBlue is looking for those opportunities through JetBlue Ventures. “For example, travel products—that’s going to do $100 million EBITDA next year. You know, it was pennies on the dollar just literally two or three years ago. Airlines will have to figure out other ways to drive margins and revenue because I’m not sure consumers will accept higher fares. Why? Because at the end of the day, it’s going to, it’s still going to be a very competitive industry. You’re going to have airlines like David’s Breeze starting up. You’re going to have low-cost carriers growing. You’re going to have JetBlue and airlines like JetBlue, right. All of us will still build a business model around low fares. So, to sit there as an airline and say, ‘I can get higher fares from this in future because there’ll be a willingness to pay,’ I don’t think we can make that assumption. Certainly, the challenge I set out for our team to accomplish this goal. I want to protect margins, and I don’t want to increase fares doing it. Now, some would look at that and say, ‘You can’t do all of that.’ But I think we have to think big and think outside the box to find how we can do all of those things at the same time.”
“For example, in the US, at the moment, is I think there’s a great opportunity for sustainable aviation.”
Hayes also said that these airline sustainability targets would need broader support than the airlines alone. “I think that the industry has to demonstrate a global commitment to this, right? Because governments get the upper hand when they can quite rightly point to a problem. We must take a leadership position now. Where I think governments can help is by providing an incentive. For example, in the US, at the moment, is I think there’s a great opportunity for sustainable aviation. Still, it needs some form of tax incentives that allow producers—allows people—to make investments. There’s lots of money out there. The banks and other financial institutions want to point at sustainable technologies. So the money’s there, but you’ve got to create an incentive structure that allows that pick-up in demand in the early days.”
“This industry has shown a remarkable ability to adapt; whether fuel prices are $50 or $100, airlines have figured out that they can make money.”
Hayes continued, “This industry has shown a remarkable ability to adapt; whether fuel prices are $50 or $100, airlines have figured out that they can make money. We are used to very big swings in energy costs…I mean, look at how much efficiency and how much cost airlines have taken out during COVID… We’ve already gone through a lot before, yet we could do more. I’m not saying it’s going to be easy. We will have to get very creative in driving other revenue streams. You know, at JetBlue, we’re talking about all these people flying on vacation. We’ve got a very little share of wallet beyond their flight. That should be relatively straightforward to convince people to spend more money with us. Now we’re able to drive support. You know, we’ve got a much higher revenue stream for the same capital base. That’s going to help fund some of these sustainability investments.
By Marisa Garcia
Keynote JetBlue and Breeze Fireside Chat: What will be the longer term effects of the last 2 years and how can we effectively respond to rebuild a more sustainable industry?
During a breakout chat conducted at Aviation Festival, London, Alison Taylor, Chief Customer Officer, American Airlines, shared some of the airline’s changes to its retailing strategy as it adapted to the COVID-19 pandemic.
One of the strategies has been offering customers menu options to book ancillaries and services on-demand on the day of travel, such as requesting wheelchair assistance, adding a lap child to the booking, getting a day pass for the airline lounge, or booking preferred seats.
“Even now, you can buy flagship dining—which was only ever for our first and business class—for that day for that airport. They’re opening at JFK, Miami, and soon they’ll be LA. We’ve tried to become more nimble at the options we offer for the customers and how we deliver those offers. Of course, NDC always helps us with that.”
“We want people to be able to purchase where they want to purchase”
Taylor said the airline had employed an “educational” approach to merchandising, informing customers on the options available to them more than pushing a sale or a particular sales channel. “We want people to be able to purchase where they want to purchase. It could be via GDS, or it can be direct. That’s not for us to worry about. We just want the customers to be able to purchase it, but it has enabled some things for us on the retailing side that we’ve never done before.”
Rich content options available through ATPCO and Routehappy have helped the airline get creative in presenting offers to different customers. “We had rich content that we could supply whether you’re a leisure agency, corporate agency, or corporate direct. For us, that freed up that content. We have a lot of leisure operators absorbing that into their systems, making sure that it’s enabled through ATPCO and NDC. That has helped us to deliver the content they needed. We dealt with some cruise lines as well. [The COVID pandemic has] broadened the audience that wants that [rich content]. They had to have a lot of information available to their customers on travel, health protocols, safety, wellness, and the leisure agencies needed that quickly. We could do that by working with Routehappy and ATPCO… We’ll continue that journey now, but it was very much at the forefront of the pandemic because the leisure operators needed to inform their team members and also the travellers.”
Taylor shared that the pandemic has also resulted in a marked shift in buying habits and preferred sales channels and increased the demand for customer support teams.
“One of the things that we needed to do for returning customers—who were younger—[was to simplify enrollment].They weren’t going to fill out a whole screen of forms.”
“It’s quite different depending on the country, of course. When you talk about American Airlines now, one of our major markets is the US, without a doubt. In the US, we have seen that many of our travellers are buying through agencies because they need that extra helping hand, and they want the servicing aspect of being able to travel. I’ve been seeing many operators here while I’m in the UK, and they have seen that shift as well. So I’m sure we’re not the only ones. But, at the same time, we have seen new customers, booking on AA dot com, and new customers becoming AAdvantage members. We had to change our AAdvantage Program very quickly. One of the things that we needed to do for returning customers—who were younger—[was to simplify enrollment]. They weren’t going to fill out a whole screen of forms. They just needed a one-click to join the AAdvantage Program and become members. We did that very quickly. It’s something we’ve been talking about but hadn’t done. We did it in a matter of weeks, which greatly helped the number of young millennial memberships for AAdvantage. Also, even our corporate brand card—we have MasterCard, Citi, Barclays, of course, very strong here in the UK. We even had to change how we talked about our partnerships onboard and on the ground, changing the scripts to appeal to a different audience when we send to different channels…[Another] shift for us was people needing more servicing. We have large servicing centres, and we added almost 3000 [staff] to reservations. Because those that did book direct, and all those agencies, just needed more servicing. The calls were much longer. The calls to our reservation teams are five times longer than normal because they’re asking about border closures, border openings, and of course, what you’d expect about [travel health] protocols.”
“…recognize our customers and understand what they may need without constantly asking them the same questions again”
Personalization continues to be a priority for American Airlines, Taylor shared. “Personalization has been on our roadmap for a while—this is really important for us so that we can recognize our customers and understand what they may need without constantly asking them the same questions again. It even means—eventually—we can serve up different surveys for them as well…We just want to be customer-centric in using our data. I’m going to give you an example. If we know that you never buy flowers on Valentine’s Day, why are we serving you up via AAdvantage, something to do with a florist, right? So [we want] to make sure that we’re relevant at every touchpoint. Maybe we also know that you don’t open emails at a certain time. We can be relevant with that in our communication or the offers we are providing you, whether on the ground or in the air. It also helps us to adapt our offers. We want to get to the stage where we know that if you’re in your seat, we can utilize our IFEC data and understand what you watch, so we serve that up to you more naturally. That’s down the track, but those are the things that we’re working through. We’re working through with AAdvantage Program on entertainment, understanding whether you enjoy lounges, as well. Data enables all of that. Our customer journey is very important to us. My title is Chief Customer Officer because we want to put the customer at the forefront, not just commercial or business deals, etc. This is important for us. We’re completely enhancing our AA dot com app to make sure that we’re at the forefront of that. What the app will eventually serve you up will be more personalized as a result.”
By Marisa Garcia
Panel: How does American Airlines plan to offer enhanced travel retailing to help drive recovery?
Context is everything: decoding post-pandemic demand through new data points
Airlines need to sell the right product to the right customer at the right time and at the right price. Any additional information that can be utilized to make that happen provides much-needed context to those pricing decisions.
In traditional revenue management systems, observations can be made about demand leading up to a flight departure, the capacity of a flight or route per day, and the impact of holidays or regional and global events. However, the legacy science, systems, and processes that used to drive commercial decisions for airlines are unable to keep up with the new, volatile environment that the industry has found itself in.
Even before the pandemic, adaptability was key for airline strategy. Anything from extreme weather conditions to a marketing initiative from a competitor can impact demand and make forecasts redundant. Being able to apply context to pricing puts airlines in the best possible position to gain revenue uplift.
Adaptability was at the core of how Cirrus™ was designed and enabling airline analysts to understand and interpret context means they have the confidence to use our insights to make better commercial decisions.
How does Cirrus provide extra context to pricing decisions?
FLYR’s Cirrus technology maps every piece of commercial data or input to all others, even in the noisiest or most data-sparse environments. This includes bookings, schedules, competitors’ schedules, pricing or capability, ancillary transactions, and third-party demand signals.
By mapping and understanding this context within our airline customers’ networks, we can accurately forecast future performance and set appropriate pricing strategies, even for markets that have not been flown before, or which have seen dramatic disruption in their environment.
Key areas we provide context on are:
Forecast – Airline forecasting is more critical than ever. However, legacy systems are limited by data scarcity resulting from the use of a narrow scope of metrics heavily reliant on flight-vs-flight and market-vs-market information, none of which will quickly surface clear trends at the required level of granularity. Cirrus solves this challenge by giving airline executives and commercial teams a new superpower, Forecasting at the Speed of Change. By identifying similarities across markets, origins, destinations, flight durations, departure schedules, and competitive pressure, Cirrus’ Deep Learning algorithms can identify trends before they are visible in data-sparse subsets of the airline network. 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.
Geography – Cirrus tracks the length of each flight segment and which airports are operated into and out of. Similar airports are mapped via embeddings, for example, the South Florida markets or the LA 5, to better predict pricing. This analysis can be done with far greater insight and automation.
Seasonality – Cirrus models seasonality with any persistent shifts in demand reflected. So, in the post-pandemic world, we can assess what the new seasonality may look like, as we cannot rely on previous years’ data. Using legacy systems can work can take months, as airlines have access to this information but are unable to utilize it efficiently. Cirrus uses machine learning to absorb this data and turn it into a richer set of insights than is possible using legacy ruled-based systems.
Itinerary – Cirrus can forecast Willingness To Pay (WTP) for a given market and differentiate WTP between customers looking to fly non-stop, on convenient single connection routes, or on more complex journeys.
Speed and Granularity – In traditional revenue management systems, if system demand falls short of forecast, the airline might take more than a week to observe and then react through broad system-wide changes in parameters. Instead, every day Cirrus learns about demand on an individual flight level, observing bookings continuously, forecasting those changes daily, and amending prices accordingly.
Competitor capacity and activity – Cirrus utilizes real-time competitor pricing when making revenue optimal decisions and when displaying market trends. The platform also knows when an airline’s strategy is optimal compared to a competitor’s actions. Cirrus’s competitive strategy is complex and highly depends on context, for example, the type of competitor and how many competitors there are for a certain route. For example, if you are only up against one non-stop competitor on a route, the best action may be to not match on price. However, if there’s another competitor in the market, it might be suboptimal to ignore competitive pricing. Airlines can price closer depending on the competitive landscape, in a game-theory-style strategy.
How can analysts manage these context data points?
Cirrus brings analysts the ability to combine all these context points within a single interface. Previously, analysts would hold historical and current performance data in separate places, often managed through spreadsheets, and then use another program to influence decisions. In Cirrus, analysts have access to all the above context data points and can see forecasts, revenue, load factor, and competitor positioning to review how pricing compares.
However, Cirrus is not 100% self-driven. If an analyst prefers to implement a pricing strategy different from that of Cirrus, there are many familiar pricing influence options available to the user. For example, when looking at their own pricing relative to competitors, they can choose to meet a competitor’s pricing by only 20% or 50%, or adjust by a specified Dollar amount.
The data afforded through Cirrus is incredibly rich. Analysts have access to over 150 metrics within the user interface, and if they want to explore any specific metric, they can click on it and see a trend graph. The ability to overlay this amount of rich, granular details together is rare in legacy revenue management software.
How does context affect the baseline expectation and resulting revenue?
For every flight or market in an airline’s network, Cirrus generates a ‘baseline expectation’ for revenue and load factor. This baseline is a much more accurate alternative to year-over-year metrics or historical averages, which cannot be relied upon due to COVID-19. Once established, the baseline can objectively compare actual revenue and load factors as it builds over time.
We can characterize how similar or dissimilar airports, routes, departure times, and competitor presences are across the network in the form of a ‘vector’. Such vectors help produce market – and flight-specific – forecasts and strategies that perform even under the most volatile conditions.
FLYR runs true A/B tests to compare flights that remain underpricing control of a legacy revenue management solution to those managed by FLYR. Using this comparison, we can measure revenue and load factor uplift. Typically, we see a significant revenue lift of 5-7% amongst our customers.
For more information about FLYR and how we use advanced and intuitive technology to understand context and help airlines achieve their ultimate revenue potential, contact us today.
During the Aviation Festival in London, an expert panel of airlines and payment services providers discussed some of the challenges of retailing and payments during the COVID pandemic. They shared their views on payment strategies to encourage more people to fly while keeping up with the industry’s financial challenges.
The experts tackled how airlines can keep up with the power shift towards customers and offer more flexibility to give consumers that “Uber experience.” In the process, they provided an overview of the current marketplace opportunities and some predictions on trends that will take hold in payments over the coming years.
“Now we’re looking forward to shaping a new way of interacting with customers at different touchpoints”
Thomas Lindner, Senior Director IT Distribution, Payment and Order Management, Lufthansa, said of adapting to new technology trends: “With the time to reassess what change of behaviour the customer will see, and demand from us, and especially as an airline supported by state aid, we had to make up our mind so we’ll be able to repay those billions in loans. Therefore, we came up with more creative ways to offer services to the customer. On the overall industry side, we had issues in acquirers having risk-aversion to that exposure with the airlines. We had a multi-acquirer strategy to juggle that, but that, of course, was a shift in the styles as well. Now we’re looking forward to shaping a new way of interacting with customers at different touchpoints.”
Frank Gubba, Product Manager Loyalty and Payments, Icelandair, agreed with Lindner on the challenges of keeping up payments during COVID. “The problem was suddenly that refunds were higher than transactions. You went out also to have good discussions with our acquirers, looking into things and how can we bring this to a turn-around. We had a financial restructuring, then, in the latter part of 2019. And we were getting everything involved in negotiations with all the key stakeholders. What helped us was to look more strongly into the reporting to understand the new normal for airline travel. It helped to be upfront and very transparent with our partners. For us, the risk mitigation part moving forward is very critical—having various providers in place and the recalibration of our mix for forms of payments. Not be so much dependent on credit and debit cards. Looking ahead, for us, to ensure like a frictionless journey, being close to the customer.”
“I will tell you—buy now, pay later, or whatever name you want to give that flexibility option was nowhere on our radar two years ago.”
Keith Wallis, Senior Director Distribution and Payments, Air Canada, suggested that many solutions were already in the marketplace though airlines were slow to adapt. “I would say the pandemic just massively accelerated everything. As being in charge of payments in Canada, I will tell you—buy now, pay later, or whatever name you want to give that flexibility option was nowhere on our radar two years ago. And it is rapidly becoming the thing that our customers are very excited about. For something like travel, which is aspirational, inspirational, and typically has a larger than average cart size, I can’t believe that buy now, pay later options weren’t already in our industry. But some vendors approach us with solutions that I don’t believe had travel on their radar two years ago.” Wallis pointed out that consumers have built a habit of online purchasing during the pandemic and have new expectations of what merchants need to offer. “I think as an industry, we need to do better. If you didn’t have one of the three major cards, you weren’t doing business with us five years ago. I’m proud to say that’s not the case now, but our customers expect even more than that. Geographically, it’s different. By customer segment, it’s different. People want flexibility and choice in a frictionless experience. We need to do much better than we’ve done historically.”
Michiel Kossen, Partnerships and Business Development in Airline, Travel & Hospitality at Adyen, said the company had helped airlines manage those high refund balances caused by the lockdown. The company is focusing on flexibility as the market reopens. “We took the opportunity to start projects that have been on the shelf for a long time. We’re expecting that there will be differences in how customers are dealing with the situation. And [we’re trying to define] how, as an ally, we can be flexible—adding new payment methods in different markets.”
Chris Fendley, Executive Vice President, Enterprise Partnerships, Mastercard, suggested the pandemic has called attention to the importance of collaboration in finding new solutions which ensure greater flexibility on payments.
“As an industry, we’re now looking and seeing real change around how passengers are dealt with, how the different partners in the industry work together, transparency of data..the whole ecosystem and managing things like access to credit, which is key”
“As an industry, we’re now looking and seeing real change around how passengers are dealt with, how the different partners in the industry work together, transparency of data…the whole ecosystem and managing things like access to credit, which is key. Also, things like customer service, where you need customer chargebacks, we all learn how painful it was when the whole system got shut down. There are legacy payment systems that are not fit for purpose. They need to evolve, and the industry needs to work together. At MasterCard, we have some solutions, but it needs to be done collaboratively with everybody.” Fendley offered some examples. “We’ve been on a bit of an education campaign on virtual cards for B2B flows. In the last 12 months, we’ve found that the agencies are looking for protection around the payment flows. Traditional VSP cash doesn’t provide the same level of protection for them or the consumer at the end of the day. I’m fully supportive of multiple solutions…But however this evolves, you need to have protection on both sides of the fence.”
In terms of B2B transactions, Air Canada’s Wallis said, agencies’ preferences in different regions affected their ability to deal with the shutdown’s financial impact.
“In North America, my experience is those travel agencies are very keen to pass through the customer’s card and allow the airline to be the merchant. They’re not interested in the fees. They’re not interested in the liability. They just want to pass that through and let us do the work. In Europe, we find that agencies are much more interested in owning that customer experience. They will take the customer’s card and be the merchant of record, assuming the costs and liability to own all aspects of that customer relationship, including the payment. I think the pandemic highlighted that many agencies who didn’t do that were very much at the mercy of travel suppliers and whatever policies we had on refunds. They were struggling to get a refund from 10 or 20 different suppliers. Those who had decided to own that aspect of the relationship were completely in control of what they could do for their customers. So, sure there’s a cost. But it’s an interesting discussion now around what is the value you can generate as an agent by owning everything, including the payment aspect.”
“..half of the millennials and all of Gen Zed, that segment is very different. Cards are not nearly as important to them.”
Wallis also pointed out that the consumer preference for credit card payments is generational. That’s true even in North America, where credit cards are widely entrenched and encouraged by points earning schemes. He advised planning for the needs of the up-and-coming consumer.
“If you look at the data in time segments—so what has happened in the last 12 months—you can see the changes in consumer segments. The bottom half of the millennials and all of Gen Zed, that segment is very different. Cards are not nearly as important to them. They pay direct when they pay online. And buy now, pay later solutions are very strong in those segments. Those are the future buyers. That’s the segment we need. I don’t need to devise new solutions for people in my age bracket—we have to understand what’s coming and be prepared for it. So it’s really about finding out not what you need to do now, what you need to start now for what [is coming up over the next five] years.”
By Marisa Garcia
Panel: How can airlines keep up with the power shift towards customers, and offer more flexibility to give that Uber experience?
It’s been a short while now since World Aviation Festival, which as always, was a pleasure to speak at. And even though the news of Omicron has somewhat muddied the waters for the return to normal travel, I still feel invigorated and optimistic about the future of the industry.
As a recap, I want to share with you my five biggest takeaways from the event and what I’m excited about going into 2022 and beyond.
1.The growth of Account to Account payments
By far and away the biggest payment trend in recent times is just how quickly Account to Account payments are growing. Most of us in the industry knew it was coming, but at what speed and that it was nowhere near reaching its full potential pre-pandemic.
2. Build for tomorrow. Not today. I’ve noticed a shift in thinking. Companies have started to adapt their innovation and product strategies to have more shelf-life and value for the consumer over time. Instead of trying to put out the immediate fire, or get something out as soon as possible, there’s more of a shift towards reflecting. During these uncertain times when the industry has been rocked so heavily by the pandemic, we can at least be thankful that this slowdown has allowed for more meaningful, longer-term planning. Most merchants are now shifting their thinking towards the question “What does 2023/24 look like? How can I build for that consumer?”
3. Airlines are becoming more consumer-focused.
The modern customer, predominantly Gen Z or millennial, demands an effortless digital experience and more flexibility. During the pandemic, refunds became a huge bone of contention for them. It became clear that the flexibility that they expected wasn’t really there. Cash settlement speeds and the handling of refunds / chargebacks were ranked as the top two challenges faced by companies in 2020 during the height of COVID-19 and they’re actively looking for ways to alleviate these pain points to help win consumer loyalty.
4. Lower costs and faster settlements.
All of this adaptation needed by the Airline industry is leading to some good upsides in the long run. For example, those who are looking to implement faster cash settlements and improve transaction operations are not only just left with happier customers. Those who are offering Trustly’s unique collection method are skipping out on the middlemen, meaning a much lower cost of distribution.
5. Bank on the right proposition For the last five years, Trustly has been focusing on shaping a relevant Global Bank proposition with its distributing partners for the industry. Throughout this time we’ve built up a solid idea of what works, what doesn’t and what is missing. In my opinion, the way forward is through banks that provide automation, guarantees, real-time messaging, reconciliation and instant settlement, all delivered through proven industry specialist partnerships.