As consumers, we encounter applications of AI and machine learning almost every day. Self-driving cars on the road, type-ahead search results, and recommended shows on your favorite streaming service are just a few of the ways artificial intelligence is embedded into our day-to-day lives. And it’s no secret that modern companies employ this technology to build and maintain a competitive edge.
In the back office, many industries seek to adopt AI-based solutions to improve operations, enhance commercial decision-making, and drive better outputs. While the aviation industry initially may have been cautious to adopt, matured AI-powered solutions – specifically deep learning – have unlocked incredible new opportunities for commercial teams who have long relied on tools and techniques of the past.
Overcoming Constraints of Legacy Systems
Most airlines rely on historical flight data to form the basis for forward-looking forecasts, which typically end up as inputs into pricing optimization. While this may have been successful in the past, the volatile nature of the current demand environment largely invalidates the applicability of past years’ data on predicting the future.
To counteract this, many airlines try to rely on historical data from a year they believe is most representative of the current time, often focusing on 2019 to determine 2022 decision-making. There are obvious limitations to this. First, the demand environment among consumers is fundamentally different post-pandemic. Second, airlines are operating vastly different networks with differing routes, capacities, and competitors than they were three years ago. Additionally, there is no responsiveness in a forecast that cannot decompile the inputs that drive demand. In all cases, airlines often struggle to confidently predict the arrival of bookings, which hinders a range of commercial functions.
Deep learning algorithms represent an opportunity to break free from these limitations. While no human can comprehend and understand the individual context of billions of data points, deep learning thrives with vast amounts of data – from bookings and searches to events, promotions, and competitor prices. When trained and deployed effectively, these models empower analysts with predictive and responsive forecasts that guide strategic decisions across commercial functions.
Aligning Cross-Functional Decision Making
Due to the often siloed nature of airlines, data and reporting that support decision-making either come from a disparate team or are internal to the division. In both cases, humans often manipulate raw data from expectation, experience, or intuition. As that information is passed downstream to other functions, teams are only as confident as the resource before them. This “multi-step metrics” approach means trust must exist universally – and often blindly – across teams and functions. When that trust breaks down, metrics are either ignored or manipulated to match expectations, rather than actually supporting decision-making.
This doesn’t detract from the value that human experience brings to the table. Rather, it highlights the value of new AI-powered solutions that enhance decision-making abilities by replacing a need to rely on instinct with one grounded in data and modern science.
Consider a scenario within airlines: revenue management, network planning, and marketing typically rely on their own forecasts to answer commercial decisions. With a single source of truth for forecasts, cross-functional collaboration advances from reconciling expectations to managing decisions in alignment amongst teams. An RM analyst that notes higher-than-usual final forecasts can not only correct their inventory strategy but also empower network planning to consider additional capacity.
The Human Element
Think about how the introduction of computers to airlines replaced much of the manual, repeatable, effort that came from processing reservations and ticketing requests. These “task manager” systems, far outdated by today’s standards, still represent the core principle of many of today’s tools – take repeatable “if-then” tasks, and complete them as fast as possible.
Deep learning solutions flip the paradigm. Instead of telling a computer what process to follow, human experience, captured through data, helps train deep learning models to complete complex tasks, much like onboarding a new hire to the industry or teaching a young student in school. Put another way, rather than relying on computers to repeat mathematical equations, deep learning models are akin to teaching the computer how math itself works, and through training, the model itself will learn the optimal way to solve any equation, regardless of if it was explicitly shown how to do so.
While previous generations of technology improvements justify why airline analysts may be weary of machine learning models replacing their roles, the reality is that deep learning models allow teams to deploy AI as an omniscient analyst, one who individually understands and recalls the contexts of billions of decisions made in past years, something far beyond the scope of human knowability. Analysts are now more than just analysts; they are teachers, providing guidance to systems meant to support even the most complex decision-making.
Lastly, human analysts will always be able to see around corners to act on information the data itself can’t see, such as schedule changes, operational considerations, natural disasters, or breaking news that changes consumer demand and sentiment. Helping convey and “teach” deep learning models the impacts of these events pairs the wisdom of a hivemind AI with real-time human intelligence. This future of AI-equipped commercial teams within airlines is already here, and we suspect it will continue to grow in ubiquity as the airline industry writes its next chapter.
Article by Benjamin Tumbleson, Manager, AI Customer Delivery, FLYR Labs
Visit Skift to read more on this topic from Alex Mans, founder and CEO of FLYR Labs.
There is a lot of talk about customer experience, customer centricity, net promotor scores and the like amongst the airlines. Seemingly more now than ever before. But where and when does customer centricity come into play? And more crucially, why is it not working – or at least, not the way the customer feels it should?
What is Customer Experience?
To get us all on the same page, we should define what we mean by the term “customer experience”. Basically, we are talking about how an airline engages with customers in any form – through personal contacts at a counter or on board a flight, through digital means such as an airline website or mobile app, through visual means such as airport signage and onboard materials or through communication such as emails, phone calls, chats, and others.
A good customer experience instils trust, is easy and quick, provides clarity, and focuses on the customer’s need and should be (where possible and feasible), in the customer’s interest even if that clashes with the airline’s. Now, that doesn’t mean that a good customer experience results in an airline always giving in, but it does mean the airline finds a solution.
Also, what may be perceived as a great customer experience for me because it is all digital and self-service does not mean it is a good customer experience for my grandmother.
Let’s start with the customer journey to get a better understanding of where and when the customer experience really comes into play. This is fairly simple: the experience encompasses everything from the first interaction with an airline until well after any trip I take. That was easy, wasn’t it? Well, perhaps we can break it down a bit more to get a little more insight.
First, let’s consider the inspiration phase where the airline is sending promotional mails, or a customer is hunting for prices and destinations on an airline website. In this phase, the airline should focus on an initial understanding of the customer – who is asking, and why? Sometimes the airline will know quite a bit about certain customers, in others they know very little. In such cases, creating a meaningful mail or putting the right products and destinations on the website can be done by applying segmentation and sampling logic.
During the shopping phase, very much like in the inspiration, the airline may or may not know the customer. However, the contents of the shopping request and the meta-information related to the request (e.g., what time and which weekday was it made, which channel etc.) can help in figuring out the intent of the customer and give some context. And in the cases a customer is known, previous behaviour and purchases (or the lack thereof) can help.
In the pre-travel phase, which are the days and hours leading up to the event and can be somewhat emotional, and stressful, for many who do not travel often, some guidance can help. While many airlines send emails, these are seldom helpful or focused on a specific customer or journey. But hey, it really isn’t that hard to get the context and content right. I don’t need the weather for 10 days if my return flight is two days later. Or instead of a generic, text-only email which is nearly two pages long, how about a mail which is simple to understand, focused on my journey and my travel class, and has links if I need to know more? Has anyone ever asked the customers what they want to know?
At the airport, the biggest challenges are often the signage, and the lack of control over many processes such as security and managing crowds. However, where an airline should be able to take influence is in their staff, or the representation through the ground handlers. The often-heard stories of customers who know more about flight delays than staff should be long gone and shows the lack of a communication strategy within the airline. Better pre-flight information via email or the app can help and simplifying the search for relevant information through enhanced chat and FAQs would serve customers well.
Each flight experience and airline is different. In flight, there are of course many aspects of customer experience we could talk about, from levels of service to staff friendliness and onboard facilities, however this would be enough to cover a blog post itself. Most airlines do a really good job and hats off to them.
Perhaps one of the biggest areas in which improvements can be made is when the need for changing travel plans arises, be that willingly or not. Or, when during a journey, unexpected things happen – because they inevitably do. How do we communicate and interact with the customer? How much information do we share? Can we be proactive in suggesting smart alternatives and solutions?
After the journey, a simple follow-up mail with a thank you would work wonders. I have rarely received one. And when things didn’t go to plan, how about an apology mail? I have never received one of those either. I don’t expect more – I don’t need miles or vouchers – at least not if the disruption wasn’t drastic. But not receiving a “thank you” or “we’re sorry” basically shows that for the airline, the journey is somewhat “fire and forget”. Does the airline even know or care how my journey went?
Well heck, why doesn’t it work?
I have a theory. and will turn this theory into a call to action. First and foremost, I wonder how many C-Level airline executives, VPs and directors actually travel, well, like travellers would travel. In my experience, none. They have staff tickets and people who book for them. They never follow the customer’s path. When missing a flight, they can easily no-show, knowing they can go-show on the next flight. Sure, they sometimes have to deal with being a “passenger available for disembarkation”, however they can also get insight into booking figures or call duty travel to rearrange flights, often with other airlines with no cost to the “customer” at all. Why don’t designated decision makers search, book, rebook and travel like the 99% of people sitting on their aircraft? Why don’t they use the apps to check-in or try to change their bookings like a consumer would? That could result in some eye-openers, I’m certain. Most likely it would also lead to a better understanding of the Net Promoter Score (NPS). Oh wait, you don’t measure that? Or you do, but don’t analyse the results and take action?
Surveys such as NPS are a great means to understanding satisfaction. However, it is not enough to conduct a survey. Two airlines we have worked with over the past years had task forces in place to evaluate NPS surveys and create action plans for improvement. These were very structured processes, with a dedicated team and empowerment to influence the different departments in the airline to constantly improve customer service. The issues, actions and improvements were presented twice a month at executive level, with buy-in from all departments within the airline. In both cases, NPS scores increased, and while the increases were only marginal in the first six months, they grew considerably faster once the improvement team and the processes were established and the first “quick wins” identified and implemented.
We suggest that airlines start doing two things if you do not already:
Make sure that decision makers can travel like customers a few times each year. Make them book online or via the app – or even with a travel agency. Travel like the masses – don’t call in for privileges, sit in the back, book non-flex tickets.
Measure and act and get help doing so if necessary.
Why are we asking you to do this? Well, as an industry, we have moved so far towards this vision of retailing and customer centricity. All the talk is about systems and technology, about retailing and customer data, about segmentation and creating personalised offers. That is all great, and we share the vision here at Travel in Motion. However, there is more to it than a vision of airline retailing with offers and orders, or other buzzwords like NDC, ONE Order, Dynamic Offers, Continuous Pricing and what have you. At the end of the day, the customer has to be happy.
Three ways selling miles is driving record-breaking growth for airlines
Over the past couple of decades, airline reward programs have made significant strides in shifting their reputation from cost centers to profit engines for their parent companies. As the effectiveness of these programs grew, so did member appetite for points and miles. So much so that loyalty currency retailing—the sale of points and miles directly to members—now ranks as the second largest revenue driver for most loyalty programs globally.
Who knew selling points and miles packed such a punch? Here’s three reasons why mileage retailing is a key factor in building a profitable loyalty program:
1. Members who buy miles are more valuable
Members who buy points and miles will go on to fly more and engage more within their program lifetime—taking up to five times more revenue flights over the following 12-month period, and redeeming 6-10 times more points than non-purchasers.1 For cobrand card members, their card spend also increases by 37 percent in the three months post-purchase.
2. Mileage sales bolstered airlines and hotels during the pandemic
When travel came to a standstill during the global pandemic, loyalty programs became a crucial touchpoint for airlines to maintain member engagement and brand relevance.
Even without immediate travel plans, members were buying miles, highlighting that mileage sales are more than just a needs-based activity. The desire to travel is an insatiable itch, and members want to have the points and miles they need to travel better, sooner, and with more perks. Data from Points, the world’s leading provider of loyalty solutions, revealed that some loyalty programs even experienced record-breaking points/mileage sales in the height of the pandemic.
3. Selling miles speeds up the member earn-burn cycle
Buying miles emboldens members to top up their balances on their own terms—decreasing the time between onboarding and redemption and speeding up the all-important earn-burn cycle which is critical to fostering lifetime loyalty. Highlighting this program utility with a data-led marketing strategy ensures mileage promotions are customized down to a member level in order to nudge them towards the next step of their consumer journey all while maximizing mileage yield.
It has been a challenging summer for passengers. Booming consumer demand faced off against staffing shortages, ultimately leading to flight cancelations and a huge demand for customer support.
New research from data analytics firm Beyond identified key pain points for consumers, as well as trends in how well airlines responded online. This analysis translated into the company’s proprietary Actual Promoter Score (APS) ratings can deliver a view of how well airlines are meeting their passengers’ support needs and help drive adjustments in policies or staffing to react.
The Actual Promoter Score is derived from net sentiment analysis of online conversations about an airline. All data from across social media, review sites, news feeds and message boards are passed through both a positive/negative analysis and through a taxonomy analysis, that has been developed specifically for the airline industry. This approach allows for a deep analysis of passenger sentiment across all touchpoints from flight booking, through check-in to baggage reclaim and all the experiences onboard the aircraft.
Three key areas of customer frustration reviewed for the company’s latest research cover Flight Cancellations, Refunds, and Contacting Customer Support. As passengers return to the air, the research shows how flight cancellations become the flash point for a chain reaction that can easily overwhelm a customer support team. It is vital to have the technology and passenger strategy to protect the resilience of a customer support function to enable it to flex up during periods of high demand and keep online conversations focused on the positive messages that drive sales.
The findings from the 2022 Summer of Travel Discontent include high praise for airlines that were able to develop and deploy self-service solutions for passengers to handle rebookings. Self-service customer support technology is not the entirety of the solution. Companies must still have human support specialists available to resolve passenger issues.
This research has been produced by Beyond using in-house tools and extensive secondary research. Beyond can also help airlines optimize the inflight service experience, delivering happier passengers – and higher Actual Promoter Scores – with expertise reinforced by data.
You will find Beyond at the World Aviation Festival in Amsterdam, stand 12.89. They are looking forward to discussing this piece of research and how combining cutting-edge technology with innovative product design, and powerful data services can help monetise your passenger journeys and enhance your service efficiency.
When the Travel in Motion team was brainstorming about what the subject of our next blog and TiMCAST should be, I proposed the topic of the future of Departure Control Systems (DCS) in the context of order management. Our partner Daniel Friedli looked at me, smiled and said: “This will be our shortest ever blog, because there is no future for today’s systems of departure control”. As so often within the team, an interesting and energized discussion started, confirming that this an important topic. In the end, we agreed not to agree on the outcome related to the future of departure control systems, and here is why.
With the changes in the airline industry related to commercial business processes and the underlying technology systems, almost no areas remain untouched. That also goes for the DCS applications. These systems drive the “over the wing” passenger check in and boarding processes, and in addition very often the “under the wing” weight and balance of the aircraft. While the “under the wing” utilisation of DCS is mainly an airport operational process with (hopefully) no influence on the passenger experience, the “over the wing” components of DCS are key to the passenger experience and to many airline processes before, during and after the journey.
Over the past years, progress has been made allowing airline commercial systems to transform towards retailing and customer focused solutions as opposed to the flight related transactional legacy systems the industry. The New Distribution Capability (NDC), ONE Order, dynamic offers, the future of interline, and Settlement with Orders can all lead to process simplification should the airlines chose to embrace them. From a technology perspective, the implementation of these systems and the related potential new solutions will, at least partly, replace substantial parts of the traditional airline Passenger Service Systems (PSS) into which DCS is often embedded, or which feeds a third-party DCS with the relevant passenger and trip-related data.
To date, in the traditional environments, the reservation and ticketing components of the PSS would feed the DCS, either directly through interactive data exchange (especially if the DCS was a component of the PSS) or through forms of offline data exchange via a method often in EDIFACT-based legacy formats and teletype. In essence, the DCS was designed to support the passenger process for checkin and boarding in a very rigid and legacy-driven way. This demonstrates the potential to modernise this process, especially as leveraging passenger touch points for ancillary sales, improved passenger experience and learning about passenger behaviour was not core to the processes supported by a DCS.
The challenge for “over the wing”
As mentioned, the “over the wing” part refers to the actual check-in of the customer and related baggage, government data exchange, seat assignments and the boarding process. Currently, this solution is often a part of a traditional PSS or a stand-alone system if the PSS does not include this or if, for example, operational or regulatory reasons mean the PSS DCS cannot be used. By its legacy system nature and its lack of focus on the passenger experience, business opportunities such as the upsell of ancillaries during these airport processes is very often a challenge. The challenge can be characterised by the overly complex process of selling services and collecting payments during checkin. In addition, there is the lack of a 360-degree view of the customer to provide individual and dynamic services. This also leads to an inconsistent customer experience, driven by different system environments, best manifested at numerous different touch points, such as check in desks, kiosks, and self-bag drops at the airport. To make matters worse, the same airline could use different vendors’ solutions at different airports, all with differing levels of capabilities.
With the advent of ONE Order, or the concept of the order in general, the value of legacy DCS – as an IT solution, not the business processes and practices it addresses – is put in question. And, while the need for such systems will remain for years to come, the industry will witness a transition to more interactive and retail-focused solutions which will rely on the interaction with the order as a single source of truth.. The DCS of the future might basically be a user interface on any device which interacts with the order management solution to query which customer is about to travel, what the individual’s needs could be and dynamically propose ancillary services, trigger the exchange of data with governments and update information received. Further, the “check-in status” will be recorded in the order directly, as will information such as baggage tag numbers, seat assignments, advanced passenger information status and other relevant travel data. But the order will be the one and only master record as a single source of truth, allowing various transactions from different system to simultaneously update the order in real-time. Through this the customer will be individually identified at every single touch point during the check in, boarding process and upon arrival. By accessing the order, as well as the customer profile, individualised offers and tailored services can be created for the traveller. This can greatly enhance the customer experience as well as the airline’s servicing and sales opportunities, and greatly streamline airline processes, increase their revenue, and increase customer satisfaction.
The need for a system that supports the passenger airport process will remain. Not only legal and regulatory requirements such as advanced passenger information demonstrate the need for such systems but also the inherent capability to “register” a customers readiness to travel. However, the facilitation of these processes will be integrated into the airline’s order system more and more, should the airline choose to enter this strategic path. In these cases, we will see a merge of the traditional DCS capabilities into Order Management Systems (OMS). Albeit for years to come, many airlines will remain on legacy PSS, and specific airport environments will dictate a legacy DCS as we know it today.
So, in essence there is no clear “yes or no” answer about the future of DCS – it is the famous “it depends”. While the need for “under the wing” operational support systems such as weight and balance systems will remain, the future of the “over the wing” depends on the path an airline takes: will its commercial operations be based on full offer and order, what are the requirements of the local airport environment and, last but not least, how big is the appetite to innovate and transform?
But there is at least one consistency: within the TiM Team we had another enticing discussion. And, even if we were not all completely aligned, we did agree that we, as avid industry observers, will closely follow the developments and continue assessing the need and feasibility of the DCS as it is today.
Separating Speculation from Situational Awareness in the Aviation Threat Landscape
Aviation as a Target
As passenger numbers recover from the pandemic, companies are dusting off investment plans in their digital infrastructure in an increasingly hostile threat landscape. Prior to the pandemic, roughly $899 billion was spent on air transport worldwide, amounting to $2.7 trillion in global economic impact. Likewise, global commercial airlines reported $865 billion in revenue, a potential gold mine for malicious actors.
The introduction of global lockdown measures to thwart the spread of the novel Coronavirus caused an unprecedent collapse in global mobility, resulting in a 74% plummet in international tourist arrivals, a loss of an estimated 62 million jobs worldwide, and a $4.5 trillion drop in the Travel and Tourism sector’s contribution to global Gross Domestic Product (GDP).
The key role Aviation plays in economic security, passenger travel, and global trade in conjunction with its status as an industry which collects, transmits, and hosts vast amounts of Personally Identifiable Information (PII) and financial data, marks the aviation sector as an enduring high-value target to both state-sponsored and criminal actors.
Depending on the sophistication, scale and frequency of attacks, cyber incidents in this space have the potential to compromise or expose passenger or employee data, disrupt critical services, damage or destroy highly specialized equipment, and may ultimately result in the loss of human life. Simply put, the stakes couldn’t be higher.
The challenge is amplified by the range of services and companies that are part of the supply chain for the airline and transport industry. With travel companies, airport logistics, cargo, in-flight entertainment, catering services extending the attack surface available for attackers to probe for potential weaknesses.
Today, the rapid adoption of new ‘seamless’ technologies into the ecosystem of the air transport sector is giving way to an emerging extension of a global landscape that is already under siege. Defending digital territory of this magnitude takes actionable insight.
Whether the services are provided by wholly owned subsidiaries or key suppliers, the customer data which flows through the ecosystem to provide a seamless customer experience need to be secured and monitored to ensure a breach does not disrupt passenger journeys, damage passenger confidence, or incur significant fines.
Staying Airborne During the Pandemic
To keep the collective industry afloat, individual nation-states devoted more than $243 billion to support the preservation and advancement of their respective air transport enterprises and chosen national champions. Meanwhile, the global air transport industry sought out new digital solutions to adapt to new health and safety standards.
To reduce restrictions on travel impeding the recovery of international tourism, the aviation industry accelerated the fielding of new Digital Travel Credentials (DTCs) to enable passengers to securely authenticate, store, and communicate valid travel documents and vaccination requirements. Likewise, to personalize passenger experiences and directly deliver targeted content to consumers, airlines embraced the rapid proliferation of new carrier specific new distribution capabilities (NDCs).
Ready to take full advantage of developing technology in the industry, malicious actors orient and adapt attack techniques to exploit emerging trends. In the case of Digital Travel Credentials, between January 2021 and February 2022, IBM X-Force uncovered more than 100 doppelganger webpages impersonating authentic National Public Health Authority (NPHA) websites issuing COVID-19 DTCs. The actor-controlled sites imitate government Ministries of Health, and similar NPHAs from over 10 countries, harvesting user credentials and generating fraudulent certificates.
IBM X-Force Research- Dredging the DarkWeb
Dredging the Darkweb, X-Force uncovered several instances where criminal actors posted enticing advertisements containing links promising access to application downloads related to Departure Control Systems, Flight Management Computer, and Flight Management Systems. The posts proclaim to have information regarding cargo flight timetables covering international air, as well as Codeshare information. Those that take the bait do not land on the app, but instead find themselves on a SecureFiles page, leading to a “Download” button, likely enabled to harvest credentials.
In the almost-anonymous non-indexed space, criminals bring their data to sell (or make freely available) on file-sharing sites, forums, and underground markets. Researching the new NDC apps in the air transport environment, X-Force unearthed potential log sales for at least 6 International Air Transport Association (IATA) accredited level 3 and 4 organizations, as well as databases for airlines providing charter domestic, international passenger, and cargo services. Further searches yielded more furtive aviation-related data such as cockpit recordings, flight records, information regarding directors of flight operations, and licensing information for individual air transport pilots- all potentially posing a significant risk to airlines.
While our IBM X-Force team researchers monitor the dark recesses of the internet for evidence of breach and emerging threats our IBM security consultants are supporting clients around the globe in securing their infrastructure, applications and workforce. Using the principles of ZeroTrust when migrating critical data and services to the cloud, transforming and accelerating application development by implementing DevSecOps practices and tooling to build security in at the beginning, and transforming the culture and awareness of security from the board room to the check-in desk. As a key transformation partner helping our clients secure their Hybrid Cloud journey IBM has unique insight into the challenges facing the industry and services and solutions to support them.
To hear more about the threats and challenges facing the airline and travel industry please join IBM at the cybersecurity panel: “How can we increase cyber resilience and reduce the business impact of cyber risk in the aviation industry?”
The event takes place at 12:35 on the 6th of October within the World Aviation Festival Event. You’ll get a look into the cost of a data breach in the aviation industry, learn how to assess, reduce, and manage industry risk, and learn about your peers’ experiences with building resiliency to mitigate impact and cyber risk.
How Can Airlines Maximize Revenue From Existing Visitors?
Improving the sales performance across direct digital channels is a key objective for any modern airline. But with an army of users online at any one time, each looking for a flight or holiday specific to their individual needs, how can the aviation industry present the most relevant information to every single user?
Converting more users is a key target for most e-commerce sites, but maximizing revenue from each visitor is equally important. And to do that, you need to connect with your customers on a one-to-one level.
Traditionally, airlines have segmented digital audiences with business rules. If people fulfilled certain criteria or acted in a particular way, they would be targeted as part of a segment. When an airline’s sales pace was slow, strategy often relied on offering vouchers or incentives to drive bookings to broad segments.
Whilst such offerings would improve booking pace, it was ultimately diluting the revenue taken by the airline by providing discounts or value adds to people who would have booked without any incentive. Segmentation simply can’t account for the varying motivations of individuals, treating everyone in the same group exactly the same way.
The challenge for airlines was set: how can they better profile – on an individual basis – every user to drive higher revenue through strategic sales-led initiatives, avoiding revenue dilution whilst achieving higher conversion goals?
Machine learning is the key to understanding individual online users in real-time and at scale. By implementing a personalization platform, a customer-centric approach is able to form the basis of every sales and marketing decision.
Utilizing real-time customer-level signals throughout the user journey, technology can respond automatically to shopping behaviors. At BD4, we call this ‘Human touch e-commerce’ – and our work within the aviation and travel industry proves that individual-level modeling works.
Ensure effective allocation of incentive funds and optimize budgets
With a deep understanding and connection to customers, airlines are able to present individually tailored messages which are relevant to each person within their broad audience profile. Deploying automated AI allows airlines to offer digital interventions at the most appropriate stage of the booking process, removing the risk of revenue dilution for customers who were already determined to book.
To prove the effectiveness of a targeted approach, multiple tests under transparent control periods are run, from the initial Learning phase (as we know every airline and indeed every company has nuances in their audiences), to a Training period. This is followed by a Test and Control period, highlighting the impact of the tailored interventions, before implementing the optimized solution across the site. Driven by AI technology, the platform continually learns and improves the algorithms to ensure airlines are always adapting, and moving forward with their audience.
The latest AI-driven interventions for airline customers focus on providing intelligent incentives to drive bookings – intelligent in a way that only those users who needed an incentive to be converted saw a discount campaign. The individually targeted incentives have shown up to 6% uplift in revenue per user, and saved more than USD 1 million versus a more traditional, scatter-gun segmented approach to distributing vouchers and incentives. All this was achieved with a significant return on investment – up to 8 times! Read more about this specific project in our case study .
Helping airlines form meaningful connections with their customers
At BD4, we work with multiple airlines and well-known holiday brands, including easyJet holidays, Royal Air Maroc, and Etihad Airways.
The different stages of the digital buying journey enables a multitude of use-cases to connect with customers on a personal level. By interacting with customers on a one-to-one level, technology is able to humanize a company within the digital realm. And it’s this human touch e-commerce that helps companies maximize the value from each customer.
Discover more about BD4 online or visit them on stand 12.610 during the World Aviation Festival 2022.
The 2022 CarTrawler Yearbook of Ancillary Revenue published by IdeasWorksCompany, is a comprehensive analysis of the ancillary revenue performance of 75 global airlines. Released this week, the report breaks down ancillary revenue performance from 2019 to 2021, investigates how airlines have recovered since the pandemic, the new or expanded ancillary products they’ve introduced to accommodate changing customer needs and behaviours, and much more.
Responding to a crisis
The airline industry has certainly had a tough time over the last two years, and the aftershocks are not over yet, with staff shortages due to illness still impacting travel. However, there has been strong recovery, thanks in part to the airlines’ ability to pivot and respond not only to changing mandates, but to changing customer needs and behaviour.
Ancillary products and their revenue have been a key driver of the airlines’ path to recovery, and The2022 CarTrawler Yearbook of Ancillary Revenue shows promising results from the 75 airlines covered. Due to the pandemic, the yearbook is comparing 2021 to 2019 rather than 2020, to give a more accurate view of ancillary revenue performance after the pandemic.
Recovery is happening
In 2019, the global estimate of ancillary revenue was $840 billion. In 2021, that estimate is $462 billion – a significant decrease – although still a 32% increase on 2020’s performance ($350 billion), showing strong recovery, despite ongoing obstacles. While some markets (Asia and the South Pacific) are still not travelling at the same rate as pre-pandemic, most markets have shown strong travel increases from 2020, with MENA at 102% YOY in 2021, Europe at 84.3% YOY and North America at 79% YOY.
Many airlines saw significant increases in ancillary revenue from 2019 to 2021, including Wizz Air, the top performing airline whose ancillary revenue accounts for 56% of total revenue, an increase of 10 percentage points from 2019. Please see article here to learn more about Wizz Air’s ancillary revenue.
All carrier categories saw their ancillary revenue increase from 2019 to 2021 with low cost carriers seeing the highest increase at 36.3%.
Ancillary revenue per passenger also increased significantly with the top performer, HK Express, now having a per passenger revenue of $88.21 – an increase of $60.36 from 2019.
The five largest US airlines (Alaska, American Delta, Southwest, and United) generated $16.4 billion from their frequent flyer programs in 2021 – down from $19.5 billion in 2019, however, when this revenue was measured on a per-passenger basis, the result for 2021 was $30.88 per passenger up from $25.71, a 20.1% increase. This shows passengers may be flying less, but spending more.
Changes to increase conversion
Airlines have continued to optimise their ancillary products to drive conversion, and accommodate changing customer needs and behaviours, following two years of very little travel. Some expanded product offerings include large carry-on fees, extra legroom zones, subscription-based benefits, price freeze, and prepaid change flexibility.
To see a complete breakdown of 75 airlines’ ancillary revenue performance in 2021, insights into how to better optimise products to increase conversion, changes that airlines have made or are planning to make to their products and much more, download
The Third Horizon of Opportunity – High-Performance Retailing
The event season is a great time of year to lift our heads from the busy day-to-day and look at what is on the horizon, at the trends shaping the airline industry. The funny thing about horizons is that you never really get there, but it’s where new eras dawn. Accelya’s Tye Radcliffe, SVP of Product Strategy for the Order group, gives his perspective on the market as the industry emerges into the third horizon of value. Tye will be talking to people about this topic while ‘on the circuit’ over the coming weeks. So, what does it mean?
The first horizon
The first horizon was operational – getting passengers from A to B. The industry depended heavily on big, monolithic mainframes that enabled just that – and very successfully. Then the internet arrived. Airlines began investing in their digital direct storefronts so customers could start making bookings from their computers. Customers began to want and expect more. Plus, airlines wanted to be more innovative and directly service the needs of their customers! It was a frustrating time for many.
The second horizon
Airline frustration with the status quo made way for the second horizon characterized by airline-controlled distribution with NDC – and the freedom to create offers. The industry’s new rally cry was one of ‘retailing!’. Airlines would use data and rules to tailor core offers, ancillaries, and bundles. The offers would be made according to the customer’s wants and what’s right for the airline business – at that time.
The third horizon
Replacing monolithic with modular, and embracing ONE Order and science rather than rules, brings us into the third horizon of high-performance retailing.
ONE Order collapses data into a single order record. People or technology can access the data anywhere across the retailing and travel experience. This new accessibility makes way for a seamless interdependence between offer creation, order management, payment, fulfilment, and settlement. If an element in the experience changes, voluntarily or otherwise, a high-performance retailing platform adapts as a result. For example, suppose someone’s interline flight segment is cancelled while they are at the airport. Data science models and flexible, best-of-breed retailing technology could step in to power a better experience. Ancillary purchases could be automatically rolled into a new flight option. The customer could be offered half-price lounge access from a third-party provider to compensate for their wait. This offer could be made at any touchpoint from airport operations crew to a message to their phone in real-time. All this would happen without disruption to downstream processes such as accounting and revenue integrity.
The interdependence of best-of-breed retailing components, acting in unison according to changes in the retailing or travel experience, would create a perpetual motion of value to customers, the airline, and its partners. That is high-performance retailing.
This scenario may be on the near-term horizon for innovators and visionaries. But if your airline is not there now, how can you prepare for high-performance today? Think A to F.
A to F
A – Accounting and Finance: Prepare downstream processes for retailing
B – Bundles and Ancillaries: Introduce dynamic retailing of products such as premium seats, meals, WIFI, lounge access, and bundles
C – Core Offers: Add more agility to your revenue management processes by using more data sources such as competitor data
D – Distribution: Control your channels with NDC and encourage channel adoption with distinctive offers
E – Enrich: As you get more sophisticated, consider enriching your retailing strategies with data science to finetune offer creation and optimization
F – Freedom: Break free from legacy constraints by swapping monolithic with modular and embracing best-of-breed.
If this topic interests you, join me at the World Aviation Festival for my roundtable on October 5 at 11.20 am.
Article by Tye Radcliff, SVP Product Strategy (Order Group)
If you would like some fresh thinking about airline retailing, then check out Accelya’s Air Transformation Lab. This is where we ask a fundamental question: when it comes to the path to distribution freedom and high-performance retailing, where is your airline on this route? Join us on this exploration into airline retailing from various vantage points to inspire your journey ahead.
Airports must include parking in their development plans as the aviation sector experiences ongoing growth. One of the most significant non-aeronautical assets of airports remains to be parking, although the emergence of new technology and travellers’ choice of multimodal transportation in many locations continue to challenge the industry.
In this context, parking is not only a crucial asset for the airport’s bottom line but also a strategic tool to attract and retain passengers. As such, airports are increasingly focusing on this area to optimise the value of their assets and develop a sustainable business model. It is indeed important for airports to diversify their revenue streams to reduce the reliance on aeronautical revenues and alleviate airport congestion.
2. What are the main challenges facing the airport parking industry?
The main challenges that the airport parking industry is still facing include the fact that media portrayal of airport parking is almost always negative. Unfortunately, coverage of the industry is usually driven by events such as companies failing or negligent team members.
This makes it hard to communicate the benefits of off-airport. This perception must be changed.
The reality is that long-stay parking, as an alternative to “Kiss & Fly” drop-offs from family or friends, has a substantial role to play in lowering carbon emissions by minimising car trips to and from airports.
Long-term parking is also a much less expensive alternative to “Kiss & Fly” drop-offs and can be very convenient for families who wish to avoid driving long distances.
If more people could be convinced to park their cars at the airport, it would help relieve traffic congestion and pollution in city centres, as well as reducing parking charges in some locations.
Another major issue is making sure that the customer feels confident while leaving the car during their travels. If a customer is not confident in the security of their vehicle, they will be less likely to use long-term parking.
The most important issues for customers are how safe the car will be and whether it will be returned in the same condition. To provide customers with confidence, many parking lots have 24-hour security, which ensures that their vehicle is always secure. But the idea of parking on-site at the airport is still perceived as more convenient and less stressful. A recent survey of travellers found that they still prefer to park on-site at airports, but will consider off-site parking if the price is right.
3. Off-airport parking
While on-airport parking is the most convenient option for travellers, it can also be the most expensive. Off-airport parking options are often more affordable and can help relieve some of the pressure on airports during peak travel times.
Since comparing platforms is not limited to off-site airport parking but can be used for services in general, the opportunities for expansion are endless, especially for airlines and travel agencies. If a business wants to expand into new markets, it can just create a profile on our website and share its own unique offerings with travellers.
4. How Parkos approaches it
At the busiest airports, high-quality off-airport shuttle and valet services are
well-established, provide convenience for travellers, and are more affordable. People who prefer not to travel through congested and frequently confusing airport roads prefer off-site options.
According to Parkos, the best way for airports to continue profiting from parking without the hassle of setting up a reservation management system is to focus on expanding their reach. Airports will be able to offer parking to a larger group of travelers if they are available on comparison platforms. In this way, the capacity will be monitored constantly and the pricing will be set according to demand and capacity.
We “Parkos” also provides airport managers with real-time data regarding their revenue, user numbers, and parking space availability. This information can help them decide whether or not to expand their parking structure and make important investment decisions accordingly.
5. How will technology help make airport parking more efficient in the future?
How can airports solve these problems? New parking technologies are helping airports address some of these issues. With a growing number of travellers each year, Lyon-Saint Exupéry Airport for example, has been struggling to keep up with the demand for drop-off points close to the terminal. In an effort to improve the situation, Stanley Robotics recently introduced autonomous parking robots at the airport.
The robots, which are about the size of a small car, will park in designated spots and then shuttle passengers to and from the terminal. This will free up space near the terminal for other vehicles and should help reduce congestion.
6. The green future of Airport parking
Airport parking is a major source of emissions. In order to reduce its environmental impact, many airports are turning to green solutions such as electric vehicle charging stations and solar panels.
Electric vehicles are becoming increasingly popular, and as a result, more and more airports are installing charging stations. This is the opportunity for off-airport parking to convert to electric shuttles to reduce carbon emission as well.
Solar panels are another way that airports are reducing their emissions. By harnessing the power of the sun, solar panels can provide a clean and renewable source of energy.
In conclusion, airport parking is an important aspect of the travel industry that will continue to grow and change. Many of the changes will be driven by new technology and sustainability. The key to success, as in any industry, will be the ability to adapt. The travel industry is constantly changing, and airport parking is a big part of the travelling experience. Airport managers must take advantage of new technologies to improve their businesses and serve their customers better by looking at comparing platforms as allies, in the pursuit of achieving a greater level of satisfaction in their parking experiences.
5 reasons why LCCs are best placed for advanced retailing
For many organizations and industries, the word ‘change’ often carries with it a negative emotional reaction: fear, anxiety, resistance. We understand that Low-Cost Carriers are often the exception that proves the rule – embracing change and turning it to their advantage.
LCCs accept and embrace the idea that change is inevitable – it’s a case of ‘when’ and not ‘if’. We’ve witnessed firsthand the way they’ve proven time and again their ability not only to adapt and evolve to the world around them, but to actively drive innovation and disruption within the airline industry.
This desire for progression and growth has driven LCCs to push the envelope and they’ve already set off on the journey to a retail-powered future of offers and orders. But we believe that even greater opportunities lie ahead. Opportunities to continue to think differently and build on existing capabilities.
What do those opportunities look like for LCCs?
In the future, we see huge possibilities for LCCs to more easily and economically extend indirect distribution, as well as broaden the types of ancillaries that are being retailed today. In addition, access to advanced data analytics such as AI/ML will enable LCCs to create and retail more personalized and contextualized offers, improving conversion and boosting revenue opportunities.
At Sabre, we’re committed to accelerating and leading industry change – in partnership with our customers – with a scalable yet modular solution. We’re enabling airlines to build the solutions that best meet their needs, at a pace that matches their transformation ambitions.
Here are 5 reasons why we believe Low-Cost Carriers are ideally placed for advanced retailing that would see them grow market share and revenue:
1. It’s in their DNA
Challenging the status quo is what LCCs were built to do and disruption has been key to their success.
2. LCCs know how to exploit an opportunity
Blazing their own trail in search of progress is how they first identified a better way of operating an airline business.
3. LCCs are the masters of upselling
A strong focus on selling air ancillaries that boost margin and add choice/value to travelers makes advanced retailing a logical extension of what LCCs are already doing today.
4. LCCs are tech savvy
By already utilizing more modern technology than most FSCs, they’re primed for growth and can implement change quickly and effectively.
5. LCCs are agile
Adaptability and a ‘test and learn’ mentality makes them ideally suited to a future world of advanced ML (Machine Learning) and experimentation
Of course, we recognize things won’t change overnight, but we believe that for LCCs the prospect of a rapid transition to more scalable technology should instill a sense of opportunity; a clear chance to gain competitive advantage against those less willing or less able to embrace change so readily.
If LCCs bring their air ancillary ‘upsell’ mentality into the future – a future with greater possibilities to forge new partnerships, retail a broader variety of ancillaries from third parties and create more personalized and compelling offers – there’s the potential to really shake things up within the industry.
At Sabre, we’re innovating to power the future of our industry. We’re here as your trusted and reliable resource for solutions that enable you to take advantage of a future open with possibilities. Learn more at sabre.com/open
Airlines Face Challenges of Service Disruption with Digital Staff Optimization a Key Opportunity for Improvement
As the airline industry recovers from the downturn of the Covid-19 pandemic, the negative headlines of cancelled flights take the sheen out of the summer season. The impact of staffing shortages at airports and airlines, with the loss of personnel in the aviation industry resulting from the extended shutdown, is a growing concern.
Policy hasn’t helped, particularly in Europe, where what the International Air Transport Association (IATA) has dubbed the “premature return of 80/20 slot rules” force airlines to schedule more flights than airports are perhaps ready to handle due to a ground crew shortage and staffing shortages at border control check-points.
It’s a lose-lose proposition for all involved. No one in the aviation industry, landside or airside, wants to be in the news for failing to deliver service to the passengers who rely on them.
But there are long-term systemic issues that we also need to face, including the attractiveness of the industry to new hires, particularly digital-native (Gen Z) recruits, and our ability to retain talent in a demanding marketplace. Long before the COVID-19 pandemic, IATA, Boeing and others were already warning of a considerable staffing shortage across the board, ranging from a pilot shortage to cabin crew, ground staff, skilled maintenance and more. Proposed solutions then included a greater adoption of platforms for training and staff management.
Imagine a Platform Designed for People Who Love Aviation Enough to Dedicate Their Lives to It.
Those predicted aviation staffing shortages have only become more immediate and more severe. And emerging decentralized business models, like platforms, remain the best option to address the gap between the supply and demand of skilled personnel.
“The industry is expected to increase employment further this year, continuing to rebuild the workforce following the significant decline observed in 2020,” IATA writes in its June 2022 Airline Economic Performance Report. “Total employment is nevertheless expected to remain below the pre-pandemic level for some time. The time taken to recruit, train, and undertake the necessary security checks and other requirements before staff are ‘job-ready’ is presenting a challenge for the industry in 2022. In some cases, employment delays may act as a constraint on an airline’s ability to meet passenger demand. In countries where the economic recovery from the pandemic has been swift (V-shaped) and the unemployment rate is low, tight labor markets and skill shortages are likely to contribute to upwards pressure on wages.”
Collaboration for The Future of Flight: The Benefits of Platforms
While the aviation industry works on a defined framework of rules and procedures, the nature of work is evolving in the world around us. The way in which we work must keep up, without sacrificing safety practices. It may sound like a tall order, but platforms make it possible.
Just looking at the IATA Labor report alone, we can see that the industry is already maximizing labor capacity under the current aviation working model, with productivity recovering, despite a reduced labor force, and the costs of labor remaining low.
But is that the best we can do for ourselves and for the people who work in aviation today? Will it be enough for the people we’d like to have working in aviation tomorrow?
The simple answer is: no. The metrics of productivity illustrated in this helpful chart from IATA are based on work performed with legacy systems, with communication and collaboration still happening by telephone, fax, notes, and memos distributed on paper, and of course, the record-keeping required by regulators.
Communication and collaboration in many corners of aviation are far from optimal. Imagine how much more productive the people of aviation would be if they were collaborating with modern tools. Platforms optimize knowledge management, providing a shared brain, a central point where the organization can review issues in context and collaborate to resolve them, at the same time sharing know-how.
Ensuring a free flow of information, across time zones, across functional areas, and across generations would boost the productivity of aviation significantly— we estimate at least 20%—and bring the aviation workspace into a modern era. This is not only essential for organizational efficiency. It will also make the aviation workplace more attractive to a fresh generation of GenZ working professionals who may have other expectations rather than using printers, fax machines, or emails, and who will think of telex communication as an urban legend.
From Recruiting to Upskilling and Beyond: The benefits of digitalization
The International Air Transport Association (IATA) has published recommended measures to prevent greater loss of staff and to recruit new staff. The Association has recognized that digital tools can play an important role in staff optimization and training.
While the most recent statement addresses the ground handling shortage the principles apply to recruiting and retention for all key operational functions of the industry. They are, in essence, an extension of human resource and training priorities IATA has previously stated for other operation-critical functions.
Speeding-up the training processes through competency-based training, assessments and online training formats
Increasing the efficiency of staff utilization
Digitalization and Modernization
Digitalization of aircraft turn around
Modernization of equipment and processes
“Harnessing data to improve safety and efficiency is crucial,” said Monika Mejstrikova, IATA’s Director of Ground Operations, speaking at the 33rd IATA Ground Handling Conference (IGHC), in Prague at the end of 2021. “The overall aim is to be able to make data-based operational decisions that will cut costs, improve performance and contribute to the industry’s net zero commitment.”
The sphere of aviation maintenance has similar needs. The highly-skilled individuals who keep planes operating safely are also in high demand, and face pressure to accomplish more. Technology must empower them, improve knowledge exchange and communications resulting in better collaboration to boost efficiency. With empowered maintenance professionals and data driven insights suggest: the invisible can be made visible, the aviation industry can minimize downline effects or avoid the disruptions of grounded aircraft, and gain a more effective life-cycle management of the global aviation fleet.
There is an opportunity for a new era of empowered apprenticeship in aviation, one in which recruiting is simplified and new hires have the confidence that senior-most experts will have an open platform to advise them, even if they work in different hangars and in different countries.
As a team who deeply understands and respects the experience, resourcefulness and know-how of our industry, we’ve committed ourselves to offering aviation the platform to keep flying.
Phygital: How Cognitive Technology Drives Smart Airline Operations
Global air traffic is set to grow to nearly 10 billion travelers per year by 2050, according to the Waypoint 2050 report of the Air Transport Action Group. While the forecast from the current count of nearly four billion travelers is extremely encouraging as we recover from the pandemic, it is a troubling foreshadowing of likely congestion at airports, leading to delay or cancellation of flights. The airline industry should take the opportunity now to augment physical facilities with digital technology to chart a sustainable growth trajectory, in an effort to mitigate growing pains of the future.
Artificial Intelligence (AI) and cognitive technologies provide tailwinds to flight operations and workflow management by extracting value from unstructured data; detecting motion, anomalies, and patterns in video images; and enabling autonomous capabilities. While conversational assistance in natural language is a widely adopted AI use case in travel and hospitality, it now embodies technical and business processes.
Cameras equipped with computer vision, IoT sensors, biometrics technology, and self-service applications provide a rich repository of visual, textual, and contextual data. These datasets provide insights into passenger demographics, behavior, intent, and purchase patterns, as well as diverse operational activities. Airlines can now utilize cloud-hosted, AI-driven analytical solutions that leverage data for seamless convergence of physical and digital systems. A converged ecosystem can improve landside and airside operations, covering both above and below the wing services, as well as ancillary and ground support services.
Automates landside operations
Since June 2018, IATA Resolution 753 has mandated tracking of each baggage item at four critical points during the customer journey: (1) passenger handover to airline, (2) loading to the aircraft, (3) delivery to the transfer area, and (4) return to the passenger – and such tracking data should be shared with interline partners as well. AI-powered luggage handling systems automate tracking and communication. These systems share real-time baggage status with stakeholders, including passengers. In addition, computer vision-powered smart cameras detect unsafe and prohibited baggage items accurately, which enhances the efficiency of baggage inspection.
Smooth flow of baggage and passengers is the barometer of terminal operations. Face- and iris recognition technology allows airlines and ground handling agents to deploy self-boarding gates. Biometrics enable contactless identification of passengers at airport touchpoints and automate scrutiny at security checkpoints. The immutable identity authentication accelerates passenger screening, passport verification and immigration clearance. In 2018, Miami International Airport implemented facial recognition screening for inbound travelers, which facilitated screening of ~10 passengers per minute, and significantly decongesting overcrowded arrivals facilities.
AI systems with visual sensors are the ‘eyes on the ground’ – monitoring everything from passengers and employees to cargo and concourses. Smart surveillance from the drop-off curb to the aircraft provides critical operational inputs, such as the volume of originating and terminating travelers, and dwell time at screening stations. Real-time data empowers managers to take timely decisions related to addressing curbside requirements, managing passenger throughput, and transforming the experience for passengers as well as airline crew and airport staff. This also enables airport operators to identify chokepoints in the passenger terminal flow and quickly work to remove them.
Tracking of the volume and movement of travelers optimizes queue management and boosts productivity of resources. However, AI-driven efficiency transcends seamless flow during peak travel season. Airlines using self-service solutions and automated kiosks to streamline traveler facilitation services and baggage handling can integrate the data with core service databases and airport management systems to reduce overheads and optimize arrival / departure operations. Further, machine learning models and analytical solutions draw on IoT sensor data and video footage to predict peak footfall and issues during the period, which can be used to enhance self-service processes, contactless mechanisms and in-flight interfaces.
Streamlines airside services
AI platforms enhance the in-flight experience by mitigating technical and logistical issues that disrupt travel. Algorithms synthesize real-time data for clockwork accuracy in coordination of services, such as in-flight catering, ground support equipment handling, handling passengers with disabilities, water supply, and air conditioning. Cloud portals assimilate sensor data spanning diverse parameters – from air quality in the cabin to food supplies, which helps accelerate aircraft turnaround times and improve safety.
Analytical solutions correlate real-time data feeds with aircraft-specific standardized metrics and historical data to detect issues and notify anomalies, including safety issues and delay in ground servicing activities. Further, AI systems augment technical support by providing recommendations that enable maintenance and engineering teams to troubleshoot and diagnose events for managing incidents proactively and refining emergency planning.
Unplanned maintenance causes flight delays and cancellations, which increases overheads, including compensation to travelers. Carriers deploy predictive maintenance applications to significantly reduce equipment failure. Real-time data from IoT-enabled aircraft machinery and onboard health monitoring sensors offer insights into the current technical condition, pinpoint malfunction, and flag potential failure. It empowers maintenance crew and field technicians to undertake physical inspections faster and more effectively. Notably, predictive maintenance improves aircraft reliability. Delta Air Lines, for example, previously partnered with Airbus to implement a predictive fleet maintenance program that reduced maintenance-related flight cancelations from ~ 5,600 to only 55 within an eight-year period.
The scheduling teams within an airline are responsible for seamless operations of thousands of daily domestic and international flights, and should factor in independent, dependent, and mutually exclusive variables for routing and scheduling purposes. For instance, the experience of pilots and flight attendants could be mapped with the flight route and aircraft model – as some airports in Central America require additional airport-specific training qualifications in order for pilots to perform landings. As expected, all crew schedules must adhere to complex labor (union) agreements and government regulations – which vary between workgroups.
This summer has been a very challenging one for airlines everywhere, as they struggle to operate with limited staff of their own and operate at major airports where local staff are also severely limited which cause further costly disruptions to airlines.
AI models optimize crew and schedule management by taking into account operational constraints, regulations, resource availability, maintenance schedules, and costs. Significantly, machine intelligence addresses qualitative issues such as jetlag and fatigue. Smart models help mitigate health risks due to long-haul flights or change in time zones and integrates datapoints into the rostering system. Most important, AI systems optimize aviation fuel consumption for route planning. Maximizing fuel efficiency is a business imperative as well as an ethical practice.
Cognitive systems provide a smart interface between the aircraft, airfield and landside operations. Advanced data science enhances operations, while providing a superior experience for travelers and operators.
Infosys is an associate sponsor at the World Aviation Festival 2022 on 5-6 Oct at RAI Amsterdam, where we will have our booth #12.562 showcasing innovative solutions that solves today’s business problems powering technology and moderate a rich roundtable with top CXOs on ‘‘The convergence of Phygital mechanism to optimize operations above and below the wings, landside and airside. – via usage of camera, sensors , AI etc.’
This is our last article before the World Aviation Festival in Amsterdam in a couple of weeks. We will end the series of articles with a reflection on airline payments, like a shopping experience usually ends with a payment transaction. Bref.
Should airline payments come as an after-thought of a retailing strategy, as a cost of doing business? What is the strategic dimension of payment for travel suppliers? As payment costs have grown bigger now than distribution costs for airlines, is there any new capability that could both enhance the customer experience and reduce costs?
The airline payment topic is closely related to the customer confidence topic and to the retailing topic which we discussed earlier. We also highlighted payments in our White Paper in proposal #6 (vouchers & e-money) and in proposal #16 (customer accounts). So what will digital airline payments look like?
A world of credit cards
Credit cards are still the ubiquitous method of payments for travel purchases, both in the leisure and corporate worlds. Notable exceptions, such as payment apps like WeChatPay and AliPay in China, or e-wallets like PayPal in the US or Lydia in France, show what the future of digital will look like.
The concept of linking a bank account to a 16-digit number was revolutionary when it was invented about a century ago… by airlines. Credit cards have improved a lot, for example in the physical card experience with the contactless payment, which became the norm during the pandemic. Mobile wallets, like Apple Pay, add an authentication layer on top of the card and enable contactless payment… without entering a PIN.
In the online world, paying with a credit card stored on a website is relatively seamless (as long as the real-time check on the card mobile app works smoothly). The issue remains when dealing with a new website, entering all the card payment details. The entire payment process, including the authorization, may still result in poor conversation rates.
If credit cards still work well, why change? It is a mix of convenience for customers and cost reduction for merchants (estimated at $20.3bn or 2% of the $1trn sales by McKinsey), with an evolution of technology.
The combined effects of Uber, Fintech and the pandemic
In the past few years, the perception of airline payments evolved from tactical considerations (credit cards work well, why bother?) to strategic thinking (payment options are a key differentiating factor for a travel business).
The Uber “seamless payment” experience, whereby the customer does not need to worry about paying a cab driver, was a catalyst in the change of perception. It became even more relevant and obvious for e-scooters, because users would not enter their credit card details for each ride, as there is no card reader on the e-scooter.
The Hopper “peace of mind” proposal, where customers don’t need worry about finding the cheapest fare or making changes to their bookings, extended the payment discussion to financial services. Indeed airlines imposed those constraints (non modifiable tickets, non refundable tickets, 10x price variation on one route…) with their revenue management practices, and it took the likes of Hopper’s fintech to compensate for the constraints and restore the confidence.
The Covid pandemic added uncertainty to travel planning and to health, with the effect of boosting travel insurance for changes and health. Insurances and other financial services have complemented the simple payment transaction, which would otherwise be definitive and risky from a customer perspective.
A customer-focused roadmap
The last decade has seen consumers opting for a variety of forms of payment (FOP) beyond credit cards. Airlines have faced at least three options: 1) adopt as many FOP as possible 2) steer customers to use cheaper FOP 3) promote their own FOP.
The proliferation of new FOP makes the payment market more fragmented. Airlines willing to reach more customers in every market need to support these FOP, without bearing the cost and complexity. Payment gateways enable airlines to reach customers in all markets.
Payment is not limited to the ticket purchase. It covers all the transactions during the booking process and the journey. What if a passenger could enter a lounge or go through a security fast track like they enter the subway (In London, not Paris)? The FOP should be convenient for customers’ online use as well as for a physical use, like access control.
If some FOP are cheaper for airlines to accept, it should be up to them to incentivize customers in using them. Indeed customers tend to have their preferred methods of payment (e.g. a bank credit card, a neobank card, a mobile app) which come with perks, and the perks are funded in part by merchant fees. Airlines have perks too (e.g. seat selection, priority boarding, loyalty points) which may be attractive to customers.
Promoting the airline’s own FOP may sound ambitious. Retailers like Amazon do it with Amazon Pay, or Alibaba with AliPay. In a corporate sale environment, the adoption of the FOP can be part of the airline’s contract negotiation. However in a leisure world, FOPs are ubiquitous and used by consumers daily, not only for air travel. Unless the airline can propose the same value as online retailers, they won’t be customers’ preferred option.
The future of digital airline payment
Air Asia is a pioneer in building a lifestyle brand, not only an airline. Many airline brands are household names, offering co-branded credit cards and loyalty programs, with the potential of becoming a “wallet”. The airline wallet can be used as a payment method for any type of physical and online purchases, while giving access to airline perks and other special offers.
Going one step further, airlines may reach out to communities that have moved beyond credit cards. For example Web3 communities in the metaverse may use crypto-currencies within their own environment and for the payment of physical goods and services.
While credit cards will continue to serve the airline industry for the coming years, digital payment alternatives pave the way to a more convenient and integrated experience for customers, and to more cost effective and flexible solutions for airlines.
3 Growth Zones for Airlines: How to Use Technology to Empower the Industry
The global crunch in air transportation is already sending shockwaves through the industry. The protracted pandemic and economic crisis triggered problems that are now widely on display. Whether the shock is generated by a staff shortage or increased peak demand, the core question is the same: do airline systems have the capacity and tools to mitigate the impact and go beyond? To answer this question, Mike King (DataArt Strategic Relationships Director) and Apurva Mathur (DataArt VP Strategic Accounts) shared their thoughts on how technology can fuel growth for 3 strategic zones of opportunity.
Growth Zone 1: Post-Covid Wanderlust and Peak Demands
Due to the lifting of Covid restrictions and significant industry resource shortage, this summer’s travellers have faced airport chaos, cancelled flights, lost luggage and hours-long queues. Although overall passenger numbers are still below 2019 levels, traffic has become more concentrated during peak periods. June 2022 international RPKs reached 65.0% of June 2019 levels.
For example, Heathrow managed to grow the passenger service team and provide more space for passengers, after starting recruitment in late 2021. However, increased departing passenger numbers and a large number of flight cancellations resulted in a significant reduction in the level of service at the airport.
Additionally, overall passenger satisfaction dropped across nearly all measures (down more than 20 points from a year ago). Research from IATA found that 80% of passengers were not ready to wait more than 3 minutes to register their baggage, which created additional pressure on airlines.
Solution: Data Management to improve customer experience
The good news is that cross-industry Data Management can help address some of those issues and help build a more complete experience for travellers. Airlines have already invested in new data consolidation and processing tools, informing travellers of any flight issues and delays in real-time. Increased AI/ML adoption during all stages of the journey could distinctly improve the traveller’s experience. Large-scale legacy systems transformations that involve various data types and sources can be complex, but can enable significant benefits including:
Predicting disruptions: When data from air traffic control, airlines, pilots and airports is collected into a single data system in real-time, machine learning algorithms can predict disruptions. These predictions will enhance the customer experience by providing advance notification of potential flight delays and allowing stakeholders to adjust their processes and adapt accordingly.
Optimizing flight paths and flight operation patterns: Receiving real-time weather and traffic data enables pilots to make more justified decisions about their flight paths for efficiency and passenger comfort. Whereas, updating stakeholders’ systems to share reliable data enables machine learning algorithms to spot patterns.
Solution: Advanced Cloud Usage for Innovation and Resilience
Cloud-based mobile computing enables off-site check-in for travellers. This translates to shorter waiting times, less crowded airports, and a more seamless flying experience. Moving data to the cloud is the most effective way to ensure data is reliable and quickly delivered to necessary second parties. A well-executed cloud migration results in innovative processes, bringing products to market faster, and constructing a resilient supply chain. Even small and mid-sized airlines can now afford to build redundancies for their IT infrastructure, as cloud technology offers more flexibility at a lower cost.
Growth Zone 2: Enabling Synchronization Between Traveller’s Touchpoints
The airline industry currently places emphasis on gathering comprehensive customer information to customize product offering and offer tailored information. Today, airlines can be more holistic with the help of APIs (Application Programming Interfaces) in how they sell existing products, stretching into the lifestyle realm of commuting, shopping and dining.
Solution: Omnichannel Management and Event-driven API Integrations to Gather Real-Time Information
Airlines can benefit by adopting omnichannel management, enabling consistent management of content and user experience across all sales and service channels. They can benefit from event-driven APIs by gathering real-time data and time-sensitive data on passengers’ behavior and preferences from multiple sources and enable better decision-making for resource planning. Efficient event-based API utilization allows for new and flexible commercial models between airlines, sellers, servicers and consumers in real time, as the event-driven architecture enables the data to be pushed to downline apps and consumers in timely manner.
Growth Zone 3: Enabling Robust Payment Solutions
Airlines need flexible, fully integrated payment systems and processes to enable protection against fraud and cyber threats, and to comply with stringent industry regulations. Fragmented airline payment solutions can negatively affect customer experience with additional data entries. Utilizing universal, easy-to-use payment services can transform the traveller’s journey.
The move from batch payments to real-time, one-to-one payments presents a significant opportunity for airlines, but necessitates the large, complex challenge of the move itself. Pinpoint accuracy with integration of fast payments enables meta-data identification of the transaction partner and type of item invoiced, leading to automatic reconciliation and expense categorization. Finally, fast payments can be used for instant refunds in direct channels, improving the consumer’s experience.
Solution: Blockchain for B2B
Using the blockchain, airlines could easily establish and automate distribution rules and travel agent payments including incentives, methods of payment (e.g. early payment discounts), and foreign exchange conditions. Blockchain for loyalty could enable travellers to convert miles into digital on-board shopping. Singapore Airlines and airBaltic have demonstrated how airlines can go beyond standard loyalty programs using blockchain.
As demand continues to rebound, airlines cannot wait until new staff are fully proficient and must act swiftly to offer innovative and cost-effective tech services to address the constantly shifting environment. Having the right combination of AI/ML based data management, event driven APIs, and real time data solutions will help airlines keep travellers informed and minimize the impact of inconveniences encountered throughout their journey. The perfect combination is possible with a comprehensive approach to technological transformation. Involving a technology service provider with deep airline system domain knowledge can offer expert-level input to help airlines transform their business and get the most out of cutting-edge technologies.
Closing the PX Gap: From Dots to Big Picture Insight
Understanding passenger flow throughout the airport terminal forms the basis for many operational decisions. Most airports are not equipped to do this. Measuring queues is only part of the story.
It’s time airports also considered the entire Kerb-to-Flight journey, to close the gap between how airports see passengers today and their true airport experience.
Most travellers are unaware that their behaviour (whether they like to shop, get to the airport early, wait for their flight at the gate or in a restaurant) has a significant impact on operations and profitability. For the airport, however, understanding how people move and dwell is key to transforming travel experiences and boosting efficiency. This is more critical now than ever before.
In and between spaces
Today, many airports rely on cameras and related dots on a screen to visualise passenger movement and queue habits. These dots can show bottlenecks, crowding and wait times with great precision but typically only in a specific process or area. Also, cameras alone have certain limitations – they cannot see around corners, nor measure seamlessly how people move across the airport.
But why is it so crucial for operators to know how passengers move between areas and processes? Because seeing people as dots moving in a single location is very different from how travellers see their journey around the airport. It creates what’s known as the Passenger eXperience (PX) gap – the difference between what airports see and the actual travel experience.
As we rethink the new travel future, it’s time to stop viewing queues and processes in insolation. Measuring and reacting to a single bottleneck does not explain why it is happening, or the consequences of those decisions on the entire airport experience. Instead, the real questions operators need to answer are how guests move through the airport and what preferences they have on that journey.
It is only by measuring each traveller’s behaviour and linking it to a destination, based on their departure gate, that airports can gain a truly holistic view of the airport experience, and close the PX gap.
The path to achieving better PX and performance outcomes is not just about measuring flow between zones. More specifically, it’s about measuring categories of passengers as they move throughout the terminal.
Analysing movement behaviours – filtering by segment, flight, time of day, class of travel and destination – can produce some exciting and unexpected data, which several airports are harnessing to their advantage.
At one large Europe hub, they found that a large percentage of passengers passing through one of the security processes were bypassing the centralised duty-free shopping area. They were then able to adjust the flow to increase retail exposure and spend.
Another major airport discovered that travellers on some flights would typically arrive at the gate sixty minutes before boarding, spending little time in concessions. As a result, the airport extended food and beverage services at specific gate piers.
One US airport used kerb-to-flight insight differently. With the ability to anonymously link guests to the wider multi-modal transport and the road traffic environment, they could tell what form of transport people were using to get to the airport – taxi, transit or car – and segment it by flight and service class (economy, business or first).
Grasping the future
One of the most significant benefits in understanding how people have behaved in the past is predicting how people will behave in the future.
Yes, airports already use show-up and occupancy forecasts to create staffing rosters or lane opening plans. However, these tend to rely on historical aggregated data – such as how many people were in a line this time last week, or last month. But, in our currently volatile world, operational planning based on previous year’s, let alone last month´s approach, won’t help to flex to today’s challenges – or those of tomorrow.
Naturally, this data cannot offer the same granularity of insight compared to a per-flight forecast, like knowing the composition of each line or how transit passengers’ behaviour is different. Boarding pass scan data can offer some historical insight but tends to only provide timestamps at one or two processing points. Predicting behaviour around lounges, concessions and piers is almost impossible, as is gaining any insight into the movement patterns of arriving travellers.
By building a forecast using both per-flight and behavioural profiles, then continuously re-evaluating those profiles based on the live situation, operators can answer questions like:
What is the impact of changes to the flight load on my security show-up profile?
Is my occupancy threshold likely to be affected by an upstream process, such as a faster-than-predicted check-in process?
What is the impact of early arrival or a gate change on immigration?
Real data, smarter decisions
With a forecast that is regularly updated to reflect the situation, airports can make much smarter, more dynamic resourcing decisions.
Take baggage carousel allocations as an example. By basing actions off real passenger behaviour and the live schedule, airports can line up when the bags arrive on the belt with when people are likely to be there, rather than using some form of fixed priority.
By forecasting kiosk and counter check-in usage by flight, airports can create a more demand-driven check-in allocation for airline customers, lowering costs and improving the experience for all.
Rather than having idle staff handling empty security or border control lanes, capacity plans can be updated to stay closer to target wait time KPIs and save thousands of dollars a day. Airports can alter call-to-gate times to proactively prevent pier crowding, or adjust the pressure on restrooms. Concessionaires can alter shift breaks for retail staff to match demand.
Some innovative airports are now looking at how they influence the sequence of passengers arriving to pinch points, in a way that improves flow while using the same resources. For example, they may decide to allocate a stand for a flight that’s further away from baggage claim, to alter the timing of arrivals at immigration. Or, time the exact moment when doors are opened on an aircraft.
With airport-wide passenger flow management that maps real movement and not just dots per process or area, operators can now truly walk in their customers’ shoes from arrival to departure. What insights are uncovered along the way can only lead to better, smoother experiences for travellers in the years to come.
Article written by by Siobhan Boyle, Marketing Manager at Veovo
The commercial airline world has for decades revolved around one vital artefact – the ticket. As a traveller, the ticket has always served as something tangible to hold on to as an entitlement to travel (until this was replaced by the electronic ticket, at least!). However, as the world has become more digital, airline passengers have become accustomed to electronic tickets, and of course there are many “ticketless” airlines now, using receipts as confirmation of the entitlement to travel. Behind the scenes, however, many of these “ticketless” transactions are not really this at all, with tickets still being issued in the airline’s reservation system. Even with transactions using NDC messaging to facilitate the purchase, many airlines still choose to issue tickets, whether the traveller really needs one or not, because internal airline processes are often still heavily dependent on ticket numbers and the fare and fare construction information stored in the ticket, as well as the processes which transfer this ticket information to revenue accounting. At the same time, payment processes are evolving, with new alternative payment methods becoming increasingly in demand. Travellers’ expectations are also increasing – they expect to be able to change flights, add on optional services, and even rebook their entire travel plans with the same ease they can change their TV subscriptions. However, the complexity in the background that many airlines manage to hide from their customers gets in the way – an e-ticket is not in the status expected, or there is a mismatch between the ticket and the booking due to a schedule change, for example. Eliminating this complexity is an enormous undertaking, and currently many airlines are struggling to resolve this conundrum.
The shift towards orders may be helping airlines to think (and act) more like retailers. But this has not yet taken away any of the legacy complexity behind the scenes. There is a catch-22 situation for most airlines: tickets cannot be eliminated due to the many dependencies on them still in legacy systems, however the legacy dependencies cannot be eliminated while tickets are still so prevalent. But what are the drivers behind this complexity and the associated dependencies? Well, the ticket contains a few key items of information that are of extreme interest for many different entities within an airline. The fare basis code, for example, is used not only in accounting but in billing and settlement process, route profitability analysis and forecasting, revenue management and countless reporting processes. The flow of this information from the originating system (the PSS) into a plethora of downstream consumers is very difficult to disentangle. The transition from PNRs and tickets to orders would appear to give the ideal vehicle to redefine this flow of data, however the integration points between the various components tend to be very old, complex and are often unstructured or proprietary. Such a transformation is, therefore, costly, and laden with risks – things all airlines want to avoid.
Nevertheless, there is some hope in the form of NDC and, more importantly, ONE Order. The use of orders to augment (and eventually replace) the PNR and e-ticket brings a set of possibilities that airlines can use to address some of the transformation challenges mentioned earlier. The exact same information needed by the airline’s numerous reporting systems, accounting processes and forecasting tools is available in the order, however in a more structured and standardised format. The standards are also in place to facilitate the exchange of such information between users of the data – the ONE Order standards are simple, efficient and already implemented by most of the leading Order Management Systems (OMS) and accounting system providers. Along with NDC and ONE Order, a new IATA standard process known as “Settlement with Orders” (SwO) aims to address another common concern of airlines that has also maybe been holding back the transformation to orders. In indirect channels, where payment is often taken by the retailer (e.g. travel agency, corporate booking platform etc.), the ticket has been the sole basis for ensuring the flow of money from the retailer of the service to the supplier (the airline). As a result of this, tickets are still extremely widespread within indirect distribution, even where these may have been facilitated by NDC messaging. The same applies for interline distribution, where the use of NDC is not very common, or rather, almost non-existent.
While standard settlement processors such as BSP and ARC have adapted to support NDC, the SwO standard serves to provide “a framework for the settlement of orders between partners”. This differs from the previous approaches in that it introduces a new process and modernised set of messages, rather than trying to adapt an existing process to meet the needs of the future. As with NDC and ONE Order, the process does not mandate the use of tickets and EMDs as value documents and is expected to cover not only retailer-supplier settlement, but also interline and even intermodal cases. Will this bring any significant shift away from the dependency on tickets that many airlines still have? Well, as with NDC and ONE Order before, the SwO standard is not likely to solve all challenges and airline may have around settlement, reporting and accounting, data analytics and so on. Still, it does strive to ease another impasse in the existing legacy processes. First NDC gave an alternative approach to the creation of offers, providing the opportunity to get away from concepts such as booking designators, filed fares and other traditional fare and pricing concepts. Then, ONE Order took this a step further, allowing products to be managed more as Stock Keeping Units (SKUs) like in retail rather than airline inventory, independent of the need for tickets and EMDs. However, due to some of the key dependencies mentioned earlier, the majority of airlines have not been able to truly embrace these retailing concepts. And as with the earlier initiatives around “enhanced and simplified distribution”, SwO will not provide an overnight remedy to eliminate the legacy baggage most airlines still carry, it does provide a way forward for re-thinking the integration with downstream applications. Ironically, the interactions between airlines and those selling its products are some of the most disjointed. With SwO, along with NDC and ONE Order, these interactions can become richer conversations between partners. In turn, this may enable airlines truly to begin eliminating some of the legacy concepts that have been hanging around, slowing down the overall progress in the modernisation of airline distribution.
For decades, passengers and airlines alike have been suffering from the inconvenience of the manual processes surrounding physical travel document verification.
Slow boarding processes, longer lines, tedious counter transactions, and higher ground handling costs have all negatively impacted the travel industry and the overall experience of an airline traveler. Whether it is surge hiring due to sky-high talent shortages or widespread flight delays, it has become clear that the effects of these manual processes are unnecessary, outdated, and costly for airlines.
Why Go Digital?
When you think of all the physical travel documents that airlines need to verify and process—ESTAs, visas, and passports, just to name a few—it’s quite a long list. Digital verification, done in advance of travel, is the way to go: a simplified checklist enables a more user-friendly experience for passengers, giving them sufficient time to obtain any missing visa or health pass and to renew expired documents.
The time it requires for passengers to visit a check-in desk or interact with an agent can be reduced, if not eliminated, eventually, with the digitization of document verification. Airlines who have already implemented these measures are boosting online check-in rates, increasing on-time departures, and improving their customer experience for passengers—many of whom are keenly interested in moving to an entirely digital, self-service travel process as soon as possible.
The desire for seamless, contactless travel didn’t just start with the COVID-19 pandemic. Nearly all the behavioral shifts in airline passengers today have merely been accentuated and accelerated by the pandemic.
In fact, Tom Grissen, CEO of Daon—the company behind VeriFLY, the world’s most popular travel app for health credentials and travel documents—knew that these trends would soon demand the biggest innovations in travel. In a recent travel magazine interview, Tom stated: “We created VeriFLY to solve a much broader problem than COVID—how to remove the total burden of physical travel documents.”
For the foreseeable future, checking for vaccinations, up-to-date boosters, and other health credentials will most likely remain an intermittent obligation for airlines.
As an industry, travel is still only scratching the surface of what’s possible through digital transformation. Artificial intelligence (AI) and machine learning (ML) capabilities, which have already proven to significantly drive down costs and spur operational efficiencies, will be of great benefit in removing the burden of errors and misinterpretation that takes place during the manual handling and verification of physical travel documents.
There is a critical need to continue to move away from siloed document verification systems so that passengers can share and receive data across their entire journey—and not just at one or two stops along the way.
Airline and travel industry leaders are now tasked with imagining, designing, and delivering innovations for the faster, smarter, and more seamless travel experiences of tomorrow.
Daon has been the most trusted name in biometric identity verification and authentication for over two decades, chosen to secure over one billion identities around the globe, and trusted by many top brands in the financial, telco, healthcare, travel, and public sectors. VeriFLY®, Daon’s purpose-built solution for seamless travel, is the world’s most popular travel app for health credentials and travel documents, including visas and passports. Developed alongside travel operators, VeriFLY has helped more than 10 million travelers, reduced staffing requirements by up to 30%, increased processing times by up to 45%, and is used by many brands including American Airlines, British Airways, Carnival, and Hyatt. Learn more at Daon.com/verifly.
Passengers Volumes are Recovering. Opportunity or Disaster?
After almost two years of pandemic precautions and concern with the future of airline travel, nowadays seems to be the most resourceful time to adopt innovative concepts to increase revenues, provide operational excellence, and at the same time enhance PAX experience.
In 2022, PAXs air travel demand is significantly increased, as well as the enthusiasm to further adopt digital, mobile, and touchless technologies that will make the journey as convenient and seamless as possible.
Indeed, the sudden increase in PAX traffic creates new opportunities to regain revenues that have been diminished over the last two years. At the same time, the huge demand introduces several operational complexities, which in turn generate additional managing costs, whilst decreasing PAXs experience and service levels.
The forecasting figures for the next years illustrate that this air traffic demand will remain high, which makes it essential for airlines and airports to combine digital technologies that will:
Demonstrate operational excellence
Reduce operational costs
Increase income per PAX
Enhance PAX experience
Innovative and Digital Solutions are the Key Factors
As many research studies show, greater technology adoption correlates with more positive emotions at several travel phases, especially on Booking, at dwell time, and on-board. MPASS Ltd provides and customises to your enterprise needs a wealth of innovative technology solutions that allow you to think out of the box. Providing flexible and scalable platforms of secure cloud-enabled technology, airlines and airports can profit in several business aspects.
We’ve never had to adapt so quickly in such a dramatically changing environment, but we’ve also been enough prepared to tackle the new high-demand reality. For instance, virtual assistants (chatbots) are there to provide immediate, generic or personalized information to PAXs. They provide a win-win case for airlines and airports by giving customers a quick way to seek support through a communication medium they are already invested in, such as instant messaging or social media, while driving down service costs. They operate 24/7, they serve unlimited number of requests per hour, and they can switch to human operation when there is a need to handle special cases.
Additionally, transforming customer feedback captured from surveys offered via multiple digital touchpoints into actionable insights and implementing a voice of the customer program is necessary to achieve operational excellence.
Furthermore, info kiosks that are installed on the main terminals could provide valuable information to PAXs, and they can also present aggregated content from many sources of information. Adding Augmented Reality (AR) features to assist on the navigation process to the departure gate improves PAX experience and also minimises flight delay risks. Finally, instant messaging tools can provide real time info to PAX about flights status, leading PAXs to departure gates on time.
The aforementioned services are included in the MPASS Ltd portfolio offered to airlines and airports to help achieve operational excellence, improve the service levels, minimize operational risks such as departure delays, and also reduce operational managing costs.
On the other hand, PAXs expect added value when they are engaged with airlines and airports. Our detailed solutions help airlines and airports to understand their travellers’ needs and creates personalised rewards and extra benefits, promote any new digital services available, and stimulate PAXs purchasing behaviour. Through our digital Engagement platform, travellers are invited through call-to-action tests, quizzes, tasks and games to complete “missions” and goals. In this way, they will collect points and badges which will be redeemed through the platform for discount services and offers. The new upgraded experience is available via mobile phones, a web application, and also from interactive info kiosks. The MPASS innovative digital Engagement platform uniquely combines physical, digital, and virtual actions for PAXs that ideally are combined to address marketing and commercial goals.
MPASS Ltd is providing innovative services in the broad digital transformation space for airlines and airports since 2009, aiming in customers’ long-lasting engagement and loyalty, therefore in increased revenue and profits for our clients. We have extended commercial experience so to identify market trends and needs and we also have in-depth technical know-how that enables us to in-house develop our solutions based on our own sophisticated and innovative platforms.
Article written by: Chrysa Mineta, Account Manager at MPASS
As the impact of climate change becomes more apparent with each passing day, the airline industry, which accounts for about 3% of global carbon emissions, has made it a strategic priority to tackle sustainability challenges. In October 2021, the International Air Transport Association (IATA) approved a resolution to achieve net zero carbon emissions by 2050, aligning itself with the Paris Agreement. As per IATA’s estimations, with approximately 10 billion people expected to fly in 2050, it may be challenging for the industry to achieve net zero emissions by the mid of this century.
While IATA has a concrete plan in place to achieve this target with Sustainable Aviation Fuel and more efficient airframe and propulsion technologies set to do the heavy lifting, for the airlines to be truly net zero, it is essential to look beyond these two factors. The need of the hour is to adopt a holistic approach across the entire aviation ecosystem. Airlines must create a comprehensive view of their emissions and start taking initiatives across the value chain for their reduction. They must understand their carbon footprint across Scope 1, Scope 2, and Scope 3 criteria as laid down under the GHG protocol and then establish a plan of action to achieve net zero.
Figure1: Comprehensive view of Airline Scope 1, Scope 2, and Scope 3 emissions as per GHG guidelines
The above diagram illustrates the emissions across the airline value chain. There are several initiatives to reduce Scope 1 emissions (such as through the use of combustion jet fuel) and Scope 2 emissions (by opting for the use of renewable energy sources). Reducing Scope 3 emissions is still a grey area for airlines. Areas such as waste management and staff travel are vital areas contributing to Scope 3 emissions, but today, airlines are struggling to account for these factors.
Going all-in to achieve the net zero goal
With each passing day, climate changes are becoming scarier and also, more and more eco-conscious passengers are demanding to travel sustainably. Airlines today need to make bolder moves to achieve net zero, and we have defined a 3-pillar approach to help them:
Get control of your carbon footprint
The first fundamental principle to achieving net zero is for airlines to control the carbon footprint across their value chain. From direct to indirect sources and from owned/operated to supplier governed, airlines need to start tracking the carbon emissions generated across different operations and processes. This makes it crucial for airlines to track the lifecycle of carbon footprint generated across airline operations to understand the distribution, trends, and effectiveness of the measures taken to reach the net zero goal. We believe that the comprehensive process of understanding the Carbon Footprint life cycle will have the following steps:
Emission source identification: Identify and list down all the emissions sources across the airline value chain (Scope 1, Scope 2, and Scope 3). Create a mapping of the emission factor used to calculate the carbon footprint for the respective emissions source.
Data collection: Track and collect resource utilization data, create energy use records as per fuel type, and model the carbon footprint records by converting energy uses into emissions.
Data validation: Check for data accuracy, connect with different stakeholders to understand the process flow, and ensure that no detail is missed.
Data gap filling: Identify the missing energy use records and fill in the gaps from actuals or through statistical computations.
Carbon offsets and renewable energy allocation: Identify and record the offsets such as tree plantation initiatives, sustainable aviation fuel, renewable energy sources, and purchase of carbon credits.
Forecasting: Forecast emissions and waste generation for the remaining part of the year based on historical data and industrial assumptions. This is basically a comparison of the targets set and the actual emissions/presumptions happening for the year. Makes it easy to visualize the targets and work accordingly
Airlines can now set sustainability goals and measure their progress with this complete understanding. The data can be used to create dashboards to generate actionable insights for organizations to define their net zero initiatives. Going a step further, it will even ensure successful and faster carbon audits and help publish reports to raise awareness about efforts towards sustainability.
Figure 2: Carbon footprint lifecycle management for airlines
Transform operations and supply chain
After airlines gain control of their carbon footprint by understanding the carbon lifecycle across operations, the next step is to decarbonize their operations and supply chain. There is considerable room to take up sustainability initiatives across the value chain, creating environmental impact and driving operational efficiency and cost benefits for airlines. Emerging technologies such as AI/ML, RPA and the metaverse provide the necessary fuel for airlines to transform their operations and supply chain.
While it is impossible to reduce carbon emissions across some of the operational processes, there are some areas where airlines can start acting immediately.
Blending digital workforce personas across business functions
Creating digital personas for the crew, ramp agents, etc., to digitalize some of their operational tasks would help airlines achieve operational efficiency and add to their sustainability goals.To explain how that is possible, let’s take the example of crew members. One of their tasks is to share feedback on cleaning services, an activity that is still being done through paper checklists. Automating the process would help make an environmental contribution by reducing paper usage and help in a faster turnaround. Now, let’s take the second example of the ramp agent responsible for marshaling aircraft. Connecting the ramp agent and providing all the details with just one click can significantly impact the taxiing time for aircraft, thereby saving precious fuel.
Managing cabin waste
Cabin waste essentially comprises two different types of waste—cleaning waste, which includes the leftover from the items given to passengers, such as towels, magazines, blankets, and catering (galley) waste, which consists of leftover food and drinks, packaging, etc. As per a study conducted by IATA, 23% of the total waste generated per passenger for a flight consists of untouched food and drink. This is another low-hanging fruit airlines can immediately pick that will help them reduce their carbon footprint and costs. For instance, a vision analytics-based solution could help airlines analyze the food consumption across the routes and then correspondingly optimize their food menu.
Incorporating predictive approaches across the value chain
Airlines are sitting on a data mine that is yet to be fully explored, and airlines need to start tapping into it to achieve net zero. By predictive modeling, airlines could estimate their wastes, better organize aircraft maintenance, and optimize their operations. For instance, airlines could reduce fuel wastage by predicting when an aircraft would be due for maintenance activities. Further on, airlines can even simulate the impact of maintenance activity on aircraft performance.These are just some of the examples of the use cases from the vast universe of innovative approaches possible today by leveraging emerging technologies. By identifying and implementing them, airlines can create an environmental impact and take steps toward lean operations and supply chain.
Seek differentiation with eco-conscious passengers
Today, there is a new segment in the market—eco-conscious travelers. Undoubtedly, the first-mover advantage to capture the considerable market share for this segment would be applicable here as well. So, airlines’ measures to reduce their carbon footprint can directly correlate with their revenue. It allows differentiating themselves from competitors and establishing an emotional connection with the passengers, further translating into loyal promoters for airlines. This helps raise the brand value for the airline and enables it to capture the market share at a premium price.
There is always the question of how premium pricing will be perceived in a price-sensitive market where airlines are competing for each penny. Well, to answer that, we can always take the inspiration from other industries, such as retail, where you will find fair trade products (where customers don’t mind paying up to 15% premium) occupying more and more shelf space and eco-clothing options selling at a higher price for all brands.
According to a recent Ocado research, 64% of their customers say that it is important to include fair trade products in their shop and 22% reveal that they buy a fair trade product weekly, indicating a high intentional purchase of fair trade products in the UK market.
Suppose airlines incorporate an appropriate marketing strategy powered by the right tools such as CRM enabling segmentation and right targeting at the right time and across the right channel. In that case, we believe the first movers in this area have a strong chance to capture this budding market segment.
By Ashish Sapra
Nagarro bring in much-needed technological and domain capabilities to help airlines embrace the challenge of sustainability. To know more about how they can support you in your net zero journey, contact their experts at email@example.com.