The aviation industry’s commitment to achieving net zero carbon emissions by 2050 is an ambitious yet crucial endeavour in the fight against climate change. While this monumental shift requires comprehensive efforts across the board, how will the integration of IT innovations drive force in helping airlines make this commitment a reality?
Dynamic Ret[AI]l: Say Goodbye to Generic Flying
Dynamic Retail, powered by AI is reshaping the in-flight experience and has emerged as a game-changer for both airlines’ onboard services and supply-chain management. Leveraging AI, this tailors the shopping experience to individual passenger preferences, and generates retail offerings. By analysing passenger data and behaviour, Dynamic Ret[AI]l significantly reduces excess inventory, waste, and associated emissions. Airlines can now stock precisely what passengers desire, minimising onboard weight carried through bar sets, and optimising space, thereby contributing to their carbon reduction goals.
AI’s analytical capabilities extend to inventory management. Airlines can now predict passenger preferences and consumption patterns, allowing for more accurate stocking decisions. This results in reduced excess inventory, lower fuel consumption due to weight savings, and less waste. As airlines prioritise sustainability, AI-driven inventory management ensures that products onboard align with both passenger desires and emissions reduction objectives.
Leveraging Data Integration for Sustainable Aviation
Data integration is the key to airlines’ pursuit of net zero carbon emissions. By combining data from diverse sources, it empowers airlines to optimise fuel usage and data-driven decision making, resulting in several key benefits that fosters efficiency, waste reduction and informed decisions for a greener aviation industry:
Integrated data identifies fuel-efficient flight routes, reducing unnecessary emissions.
Real-time fuel monitoring ensures timely maintenance and optimal flight paths.
Tracking passenger preferences and inventory levels reduces excess weight and waste, cutting emissions.
Proactive maintenance, load factor optimisation and collaborating data sharing enhance sustainability efforts.
Predictive Analytics for Sustainability: Proactive Emissions Reduction
Predictive analytics powered by AI allow airlines to anticipate trends and take proactive steps to reduce emissions. This includes predicting maintenance needs, optimising flight schedules based on weather patterns, and even predicting passenger demand for sustainability-focused products and services.
IT Innovation and AI are the key enablers in the aviation industry’s journey towards net zero carbon emissions by 2050. These technologies are not only improving operational efficiency but also transforming the passenger experience while reducing the environmental impact of air travel. As airlines continue to invest, the skies are becoming a greener place for us all.
Data Clarity are at the forefront of the IT revolution in aviation. Our solutions enable airlines to harness the power of data and AI innovation through multi-vendor product integration aligned with ClarityIFR, our own leading in-flight retail solution.
By providing comprehensive data integration and analytics tools, we empower our customers to make informed decisions for a greener tomorrow.
How are we paving the way for a greener future? By putting the passengers at the centre and actively working to make flights greener through innovative inflight products and services. Data Clarityleverages its expertise in multi-vendor product integration alongside its industry-leading In-Flight retailsolutions, delivering valuable solutions to meet those demands.
The most crucial identity industries, defined by FindBiometrics and Acuity Market Intelligence are: financial services, government services, healthcare, hospitality, and travel. These foundational sectors rely on a complex, rapidly evolving ecosystem that spans big tech, web3, authentication, identity verification, targeted biometric solutions, biometric identity platforms, core biometric technologies, and identity platforms. This ecosystem is envisioned in the Biometric Digital Identity Prism, a proprietary visualization describing the current digital identity landscape as it relates to the aforementioned industries.
The aviation industry is evolving quickly as flight volumes return to pre-pandemic levels. With over 4.1 billion travelers expected to fly in 2023, airports and airlines are being put to the test as passenger demand meets the reality of operational challenges. Digitization technologies like artificial intelligence (AI) and analytics are being looked at to ease the burden in coordination with identity automation.
Aviation is a unique sector in the context of the Prism. The needs of airports, airlines, government travel and border agencies are interrelated and cannot be served by discrete, siloed solutions. From booking to arrival at a destination, passenger identity must remain consistently trusted and secure throughout the journey, not just for the best possible customer experience, but for the sake of security and operational efficiencies. While identity platforms are well suited for this sector, companies in the Prism’s ”Big 3” segment best serve the complexity of the passenger identity lifecycle.
Passenger demands shape the future of aviation
The passenger experience is the catalyst for evolution in the aviation sector. Today’s passenger is a technology-literate traveler who expects a mobile-first experience and is not accustomed to delays. Operational struggles experienced by airlines and airports in 2022—from misplaced baggage to significant delays and cancellations—have marred the travel experience in mainstream and social media. Thankfully, enhancing the customer experience by reducing friction within the passenger journey has the effect of improving operations through streamlined throughput, automation, and enhanced security.
Following the passenger journey, one sees a map of identity transactions: booking, check-in, bag check, security, boarding, flight, customs, and baggage pickup. And that’s not including the retail and service transactions along the way. Every time a passenger interacts with an airline, agency, retailer, or other stakeholder during their travel journey, they must prove who they are. The easier that is, the less friction and stress they experience.
According to SITA—the world’s leading aviation IT services provider with deployments in over 200 countries—the most pressing pain points for passengers are the touchpoints with the most friction: health checks, security screening, and bag collection. Invasive, time-consuming, and out of the passenger’s control, these three processes are in opposition to on-demand services. Thankfully, they are also the areas seeing the highest levels of innovation, and therefore the greatest rate of improvement.
Following passenger demand, we see the evolution of aviation trending toward frictionless, identity-first gateways that leverage consumer mobile technology and robust IT infrastructure to allow for fast and reliable identity checks at every touchpoint. By the end of the decade, the travel experience will allow travelers to enroll their biometrics and identity data when they book a trip on their phone, check-in and drop-off their bag in a fully automated fashion, speed through security without invasive measures, purchase food, retail items and airport amenities with their face or their phone, and board their plane in record time without having to dig through their belongings for their physical ID.
And while that’s all great for the customer, it’s even better for the airlines and airports…
Relying on psychology to avoid cultural clash in human interactions
It isn’t uncommon to experience glitches or interruptions when you travel. Among all the touchpoints, which one is your go to one when things are going wrong?
When you are stuck i.e. you can’t move forward with your airline check-in at the airport or unable to avail a key hotel amenity like the Wi-Fi Internet access despite repeated attempts, it is likely that a human interaction is what you are looking for. You might initiate the dialogue via chat, social media, call etc. but nothing like a face-to-face frontline employee helping you out when you are in the middle of a negative experience as the brand is failing to deliver.
But what if that face-to-face interaction fails miserably?
In an era when travel supplies have considerable data about guests/ passengers, and also when algorithms can “speak the language” by counting on what it described as artificial emotional intelligence, why can’t a resolution be worked out that tilts the balance in favour of a brand?
One of the key elements is the cultural clash, which travel companies can’t ignore. In fact, in that moment when the product or service is failing and that’s precisely the reason why an interaction is taking place, the right body language, the choice of words, tone etc. by a brand representative can make or break it for the guest.
Let us go through a couple of real, indifferent experiences for a traveller from Asia interacting with brands like Marriott and JetBlue in the U. S. and evaluate them via the lens of psychology.
What to do when travel tech or key service doesn’t work
The JetBlue interaction:
Travel tech is often the biggest nemesis for airlines, something which passengers don’t understand and rightly so considering some of the smooth routine stuff they come across with other product categories. Also, when a delay happens along with the tech issue that a customer has already faced, it is a dreadful mix. Let me explain. In the case of JetBlue, there was an issue related to paying for a check-in bag after completing the web check-in. That is the decision to pay for a check-in bag online in a new session after you checked in a previous session. Attempts to pay via a credit card, including one issued in the U. S., didn’t work. And then one has to stand in the queue to check on the issue and also pay for the same (then a non-US credit card works!). The traveller pays more offline as compared to paying online. The issue was on both the legs of the New York-Orlando itinerary. And on the return journey, there was a delay of around 4-5 hours, too. More than anything else, it is the interaction with the check-in agent that tends to disappoint the most. Maybe by choice (not looking at the passenger, the tone etc.) or not understanding the cultural background of the traveller, in this case an Asian, results in not meeting the expectations of the traveller. The traveller interacts with the brand several times – the loyalty app, the self-service kiosk etc. but when the last resort is the agent and that conversation is insipid for the traveller, the brand’s perception takes a dip.
The Marriott interaction:
The brand (the property – Residence Inn Times Square NY) here suffered the most and on its own refunded the money for two nights. Issues – the AC not working in one room and the Wi-Fi connection not working for almost four days after being shifted to another room. The chat service on the Marriott Bonvoy app was used initially to complain about the Internet, but proved futile. The front desk couldn’t sort out the issue for days despite having the reference number of the Internet Support provided by the customer himself (spending more than an hour on call across multiple sessions). The Internet worked only sporadically, at times at a speed of less than 1Mbps, far from the way it should work. Eventually the supervisor took over but the face-to-face interaction with the staff left a lot to be desired. Was it a new issue or did it already exist? Why shift the guest to this room? No answer to these questions when asked. Also, the post stay follow-up email was a general one (the standard questionnaire), suffice to say the data about the customer, their in-destination stay and the systems that trigger a communication are in complete disarray. Apologies at this stage neither help the property nor the traveller.
In such cases, the staff that interacts with a troubled traveller must be prepared to address the issue not only with a product-related offering, but also taking charge of the core or essence of a conversation – listening and responding appropriately.
Avoiding cultural clash via application of psychology principles
Tech and apps can’t resolve issues all the time.
It is time to capitalise on the relevant branch of AI, be it for artificial neural networks in deep learning or unsupervised machine learning, to come up with that clue or the right sentence to appease a ruffled traveller.
Imagine, when a retail product on the shelf has no tag and the agent goes away or calls someone else for details, the shopper waits (happened at TJ Maxx). The conversation keeps going, the trained cashier knows how to go about it and the hiccup doesn’t matter. Similarly, why can’t the hotel front desk staff or airline check-in agent make the most of those few minutes. The question is how then. Sometimes a smile works. But if doesn’t something else needs to be done.
In psychology it is pointed out that our perception and memories constitute our emotions. That’s the intrinsic aspect of a human that has to be understood. Secondly and more specifically the cultural clash in interactions lies in the understanding of the “concept of self” – the western view is stated to draw sharp dichotomies between self and other (described as being individualistic), whereas people from Asia are more collectivistic, that is they stay in a state of harmonious co-existence for a longer duration. So in a real scenario, the traveller from Asia possibly can be engaged for a longer duration as opposed to seemingly an abrupt ending by the service staff seemingly hailing from the US.
Some points to ponder:
Time to go beyond automation for basic queries. Is there an algorithm that comprehends cultural nuances especially how a guest responds/ expects to be treated when having a negative experience?
What sort of customer data platform or a related system is required that can come up with a recommendation based on understanding of complex query?
How to count on the first party data and blend it with a culture-sensitive algorithm, especially when the crisis isn’t over?
How the staff can be trained better to deal with such situations?
Time to revisit the marketing technology stack (stop sending routine emails once it is known a previous issue or interaction wasn’t great and not sorted yet). What should be avoided to ensure that the hotel or airline doesn’t come across as an entity that isn’t aware of the situation after the stay or the flight? For instance, a generalised e-mail questionnaire.
A huge scope for improvement in such scenarios. Otherwise travel suppliers would continue to lose on loyalty and also forced to refund the money in order to salvage the situation.
The Future is Calling: Top value drivers to gradually kickstart your airline’s transition to Offers & Orders today
Datalex’s Chief Product Officer Conor O’Sullivan outlines the low hanging fruit that airlines can take advantage of today to be prepared for tomorrow.
At a recent industry presentation, Conor O’Sullivan cautioned airlines by stating that “the cost of doing nothing cannot be underestimated,” referring of course to the transition to Offers & Orders. The moment of truth comes when you stop investing in the past and start investing in the future. At Datalex, our products are architected deliberately for an Offers & Orders compliant future. We know however that the transition to this state will not happen overnight, but will be a gradual, piece-by-piece approach. The future is calling right now, and all an airline needs to do is to simply pick up the phone – airlines need to start somewhere.
We know that airlines can start that journey easily today and we’ll outline what value drivers are available to airlines today so that they can operate in ‘hybrid’ approach; that is ensuring business continuity today, while at the same time also readying their digital strategy for the future. We cannot emphasise enough the importance of making sound architectural and technological decisions today that will prepare an airline for a digital future at scale.
Experts at Datalex are regularly pressed by airlines for ‘the typical airline pathway to Offers & Orders,’ but we will never give a generic answer to this. The reason is that every airline is different and that is a key differentiator of Datalex in-market, as many IT providers tout their ‘airline transition pathway’ as if it could be applied to any airline. The fact of the matter is that every airline’s starting point is different, and their end state or end goal may also be different to others, and we need to account for that.
1. Getting started with Dynamic Bundling
The first value driver airlines can implement in the short term for optimisation purposes, whilst also facilitating long-term digital transformation is Dynamic Bundling. Today airlines are stuck with the same set of static bundles and fare families day-in, day-out with very little movement. Legacy processes means that airlines are stuck filing fare classes and lifting these from their fare sources, using this as their starting point for bundles.
Airlines are letting these air fare classes remain the primary source for bundled offers and perpetuating a cycle of generic and unpersonalised approaches to customer segmentation. Recent Datalex research saw 7 in 10 travellers surveyed state that they are more likely to complete a booking when several products are bundled together, meaning that the opportunity for personalisation is wide open.
With Dynamic Bundling, airlines can stretch the offer by adding ancillaries seamlessly to an air fare, leaving the air fare untouched. Bundles are dynamically created at the time of the request based on real-time data. The unlimited bundling configurations make it easy for airlines to bundle ancillary offers with the air offer at an opaque price. The reason Dynamic Bundling is so essential to the future of Offers & Orders is because by bundling ancillaries to fares dynamically, the idea is that it is no longer just adding a new product to be offered – but with the view to being serviced, ordered and everything that goes along with that. Typically, servicing of Bundles is made difficult as rebookability and refundability rules are tied to the air fare which limits your capability around true dynamic bundling.
In addition, most airline’s existing systems don’t have an order management system capable of dealing with non-air products and services. It is a crucial first step in digital transformation that within Dynamic Bundling you include the concept of “right to fly” which allows the offering, order creation and servicing of the air product and the ability to create more relevant and personalised offers through contextualisation and personalisation. Bundles are dynamically created at the time of the request based on real-time data. This can build on top of an airline’s existing systems, making it easier than ever before to bundle products right down to segment level.
2. Reassessing your pricing processes
Now that we’ve tackled bundling, what is stopping airlines from pricing effectively? The culprit is legacy technology, with RBDs restricting the true revenue that airlines could generate and unlocking unlimited numbers of price points in between each fare class. Legacy technology is preventing airlines from taking full control of their in-house pricing strategy. Airlines are restricted in their abilities to strategically price their flights at scale, make quick or real-time data and remain consistently competitive.
In a recent global survey of airline executives by Datalex, 69 per cent of airline executives believe AI-powered pricing should enhance revenue management rather than substituting it. Datalex Pricing AI works as a collaborative team member with revenue management at scale decision-making, making it smarter and in real-time. Airlines can move beyond the static price tag to a world in which pricing never sleeps and AI-powered dynamic price tags are continuously generated in real-time and scaled across the airline’s network. With this product, airlines can benefit from AI models that feed exclusively on real-time data, meaning they are completely unique to that airline. Once the suggested price is predicted, our market-leading reasoning works its magic by simulating human intuition to generate the optimal price.
Datalex Pricing AI completely circumvents the legacy system in the offer stage and then uses the legacy systems again to solve for the order side. In a PSS world Pricing AI will compare the original filed fare and to get over e-ticket stage, we’ll pass it through as an adjustment to get past that point of order management. Crucially this is completely independent of ATPCO in both a PSS world and a PSS-free world. This is because from the beginning it is not an ATPCO optimiser that has no association with the underlying filed fare. In this way it can be implemented at any phase of an airline’s Offer & Order journey as it is architected for both worlds. AI-powered pricing allows airlines to benefit from incremental revenue previously unavailable to them.
3. Speaking to Datalex
Datalex are currently in the middle of several high-profile airline activations and digital migrations and understand the pressure that airlines are under to get their digital upgrades right. Airlines are historically used to legacy technology stacks where large scale activations are dealt with in advance in anticipation of a ‘big switch,’ but digital activations must be seen as a piece-by-piece project that is gradual. Airlines however generally bite off more than they can chew, mainly because they want as little disruption as possible and do not want multiple opportunities for disruption to occur, fearing that if you change too much too quickly, this will cause the disruption of services.
A componentized approach therefore offsets this and is enabled through modular products. Our journey to Offers and Orders is baked into our DNA, through the foundational principles of our product strategy. Through our cloud native approach, agnostic offer sourcing, servicing and an independent OMS as the single source of truth we have a clear path forward that we can lead airlines on.
Datalex is committed to delivering against its Vision for Offers and Orders and has a clear transition path across all phases from initial optimisations for Modern Airline Retailing towards 100% Offers & Orders. Because our products are architected for the future, airlines can achieve a hybrid by optimising their digital retailing today, whilst also future proofing for tomorrow. What Datalex offers the market at the moment is extra capabilities that give you the potential to address downstream issues in the future. As our products are architected for the future you are already one step ahead.
Invigorating FFPs by banking on the power of partnerships
Earning miles by paying for your coffee via an airline co-brand credit card or spending the accrued loyalty currency on the same doesn’t come as a surprise today.
But the emergence of coffee, or for that matter, products related to everyday spending, in an airline’s loyalty cycle is indication of a certain shift.
Prior to March 2020 when the COVID pandemic created havoc, airlines, especially full-service carriers (FSCs), weren’t too much into such partnerships. More than how the dynamics (the commercial association with non-travel category partners) work, it was the case of being pegged back by legacy technology and also the industry being content with counting on the aspirational value of travel in the frequent flyer programme (FFP) earn and burn cycle (keeping perks and redemption options limited to travel-related options).
Assessing the same, Sebastian Huschner, Digital Product Strategy Consultant, Customer Loyalty – AerClub, Aer Lingus, said that major revenue streams linked to FFPs “dried almost overnight with the onset of the pandemic” and overall airlines were in a precarious position. As FFPs proved their worth, with airlines barely managing to survive via the much-needed liquidity resulting from the pre-selling of miles/ points, it propelled airlines to build on this.
“It stepped up the momentum to invest in technology and partnerships to strengthen their (airlines’) own internal capabilities. Progress was also seen in terms of loyalty platforms that paved for simpler integrations, rather than trying to replace the entire legacy airline architecture in place for the last 10 years, which is so difficult to do (when one thinks of agile practices),” said Sebastian.
This meant that the participation from members was salvaged, their concerns were taken care of (imagine a member being on the verge of attaining a lucrative elite tier status and how sorting of this boosted the loyalty quotient!) and added a new dimension to their engagement.
From airlines’ perspective, the shift in mindset was aptly exhibited by the likes of Air Canada, Delta Air Lines and others. In fact, when Delta and Starbucks allowed their respective loyalty programme members to link accounts of two brands, the airline stated that it is trying to pave the way for premium experiences not just on the days when one travels, but in their everyday lives as well.
Gaining more from partnerships
Airlines are now keen on such partnerships, as companies are creating value for each other’s businesses, by enabling complementary forms of member engagement. Also, the plan is to get closer to the mid-long tail customer via partnerships.
Airlines are now leaving no stone unturned to reinforce their brand, and also gain access to valuable customer insights via partnerships with non-travel partners.
As Sebastian also shared, airlines are now much smarter in terms of how they evaluate the efficacy of such initiatives, including the readiness for sharing of data.
“Commercials haven’t changed in a big way when it comes to setting up partnerships, but there is a desire for more frequent data exchange as and when you link with a partner. The onus is on the partner to provide the information, seamlessly accessible to the airline. Again, being API-centric can help accelerate this process,” said Sebastian, who also acknowledged that if an airline has refined its marketing technology (MarTech) stack with an astute customer data platform (CDP) in place, there is plenty to gain in terms of gaining a deeper understanding of the member.
Other than data analytics, the aspects of a loyalty management platform that play an integral role in managing FFPs have come a long way. Tier points and promotions management, computation for accrual and redemption, billing and other routine aspects have all been streamlined. “Airlines need to work on making data-based decisions, and act fast. This would be related to making the use of available technology and building capabilities – either in-house or through outsourcing the solution. How to work on new features and on-board partners really quickly? If you sit on legacy technology, it would remain difficult to create APIs and connect to third parties in the future. So prioritise internal tech stack and gear up for API infrastructure and move ahead with relevant integrations/ partnerships,” said Sebastian. It is time to part ways with monolithic systems and evaluate cloud-based software if not being looked at already.
Some of the key performance indicators for evaluating partnerships are:
Number of acquired members
Active in collecting points
Active in redeeming points
Average transaction value and how it differs between tiers
% age of members earning/ redeeming on air vs. non-air transactions & products
Going after every possible penny
Airlines either have to work on their ecosystem or be ready with their API strategy to target a bigger share of a consumer’s wallet.
Looking at some of the recent developments, it is clear that acquisition costs would only go up for airlines if they don’t act in an agile manner. For instance, CommBank, the largest bank in Australia, has tied up with Hopper to make it easier for the bank’s customers to book flights and other travel products. Hopper CEO Frederic Lalonde told McKinsey that the company’s B2B focus is owing to the fact its financial products “were not only generating income for us but also unlocking new customer spend”.
Those companies that are relying on modular architecture are the ones that are coming up with ways to target every possible penny that a customer spends in any category. Any industry, be it for aviation, banking or retail, is witnessing a shift towards becoming more agile organizations.
“Banking and airlines’ systems are quite comparable (both legacy),” said Huschner. “Banks, too, have been challenged by “neobanks”. There are several companies in this space that have moved ahead and capitalised on gaps in the banking infrastructure with their modular architecture and up to date technology. They (the likes of Monzo, Starling, Revolut, Monese in the UK) are able to link with a range of partners, for instance, using a neobank app that allows users to collect points on everyday spend, both online and offline, or exchange the loyalty currency for credit card spend like Barclays offers in the UK.” So airlines have to reduce the speed to market to whatever they deem fit as part of their strategy.
Areas of improvement
Sebastian recommended that airlines have to design experiences that are more intuitive, and make the member experience seamless throughout the earn and burn lifecycle, whether they use a loyalty app, card-linked offers or co-branded cards.
Sebastian said not just everyday spending but big-ticket items to an extent are already on offer in the Loyalty ecosystem. But they are being presented inconveniently to customers, even though a member already today can buy say a mobile phone from an airline’s branded eStore. “A member has to go to an airline’s eStore, which has products listed from various partner brands. You purchase a product through the eStore, and earn Loyalty points for the transaction. However, this doesn´t represent intuitive buying behaviour due to the additional steps, which is why airlines should continue to focus on automated card-linking to ensure all eligible transactions qualify for earning points. Cut down on the unnecessary steps in the purchase journey and bring points/ miles balance boost to the forefront in a seamless manner,” said Sebastian.
A greener future for airlines and passenger-centric solutions
The industry itself has long recognised the need to reduce emissions. Following the introduction of ‘Fly Net Zero by 2050’ policies according to IATA, the aviation industry is actively working to reduce carbon emissions in response to evolving consumer values and to contribute to global efforts in reducing climate change.
While the extensive research and development of sustainable aviation fuel is often considered as the number one solution to make air travel more sustainable, there are numerous avenues to enhance sustainability initiatives.
To put simply, ‘weight’ and ‘waste’ are two prominent buzzwords of inflight retail when it comes to sustainability and plays a significant role in airlines’ carbon footprint. Airlines place great emphasis on reducing weight onboard as it directly correlates with minimising fuel consumption per flight, regardless of whether sustainable fuel is used or not. From passenger seat occupancy, and everything in between, airlines are consistently striving to reduce weight and pursue a ‘Sustainable Cabin’ initiative across the inflight experience.
To identify improvement, stakeholders, including investors, have high expectations for airlines and industry players to provide improved data and concrete evidence of their genuine progress in tackling climate change. Implementing a clear and practical strategy that generates tangible results is vital to instill confidence and move beyond mere projects. Such strategy not only fosters an understanding among all stakeholders, but also enables them to stay ahead of evolving customer expectations. Why? Because continuous alignment of an airlines’ offerings and services to meet customer needs enables the industry to enhance customer satisfaction, loyalty and overall success.
Empowering airlines to anticipate and respond effectively to customer demands through inflight products and services will drive sustainable, long-term loyalty growth.
At the core of the strategy are three key pillars: Passengers, Planet, and Profit, which guide our approach and drive our actions.
Passengers are the lifeblood of aviation and empowering them with intuitive AI enabled applications to allow for Pre-Ordering, Buy on Board, and Buy-at-Seat transactions to predict further and defined preferences, and manage allergy requirements. By doing so, we can enhance the passenger inflight experience and deliver hyper-personalisation through tailored offers relevant to their journey and unlock revenue opportunities.
The Planet is of utmost importance to all of us. Recognising the significant role the aviation industry places in building a better future, it is crucial to understand effective methods of reducing fuel consumption.
The aviation industry is progressively investing in retail offerings, leading to a race among airlines to streamline the passenger-purchase journey. By introducing multiple points of sale prior, during and after flights, airlines aim to operate as high-end retailers. Tracking and measuring Profit on this revenue stream, similar to every retailer on the high street, becomes a primary objective.
To responsibly contribute to these sectors, we advocate the “Right Product, Right Flight, Right Passenger” approach. By ensuring that the products offered, flights operated, and passengers served align with sustainable practices, we can promote responsible growth and generate positive impacts on communities in the world economy.
The aim is to only fly what you only expect to sell, avoiding excessive inventory. Did you know the majority of airlines only witness conversion rates as low as 15%? By selecting products aligned with optimised supply chains, conversion rates can rapidly surpass 80%
Effectively integrating solutions that leverage AI to predict seat occupancy rates, analyse passenger profiles, and understand their product preferences on each flight departure is essential. This allows the last mile provider to dynamically respond to passenger demand, minimising unnecessary carbon emissions.
Preventing scenarios like the “Million Miles Mars Bar,” where overstocked items contribute to avoidable emissions, becomes vital. A single overstocked item can result in approximately 0.21 tonnes of carbon dioxide emissions.
Optimising conversion rates through dynamic bar-sets instead of standard bar-set algorithms empowers airlines to enhance profitability and deliver personalised passenger experiences – an approach which minimises fuel waste on unsold products, benefiting both the environment and bottom line.
How are we paving the way for a greener future? By putting the passengers at the centre and actively working to make flights greener through innovative inflight products and services. Data Clarity leverages its expertise in multi-vendor product integration alongside its industry-leading In-Flight retail solutions, delivering valuable solutions to meet those demands.
Even in normal times, the airline business is anything but easy. Competition, fuel costs, regulations and growing environmental awareness challenge the industry and make airline operations a demanding task. After the pandemic subsided, a certain recovery was felt, but the current rather diﬃcult economic environment, the war in Ukraine and high energy costs bring new risks and challenges.
Not only the operational business faces challenges in this diﬃcult environment, but also the back oﬃce of an airline. This is reason enough to take a closer look at the problems and developments in the area of payment handling for airlines. Specifically, we will take a closer look at service providers, markets and regulation.
Payment processing, credit card acquiring and controlling were carried out by the airlines themselves until the early 2000s. Growing regulation, new security standards in payment processing such as PCI and an increasing number of international and regional means of payment have led to more and more processes being outsourced to specialised and appropriately-certified service providers. In good economic times, the airlines were very attractive customers for these providers. This changed with the groundings of many airlines in the past decade, including some large and well-known carriers. For credit card acquirers in particular, aviation became a risky business as they were often the ones left out of pocket. Airline ticket sales are paid immediately but usually not used until weeks (or even months) after purchase. The total value of all tickets sold but not yet flown constitute the “unflown revenue”, and this quantifies the risk for the acquirer. In the event of a grounding, the acquirer is left with the ticket holder’s claims for reimbursement. More and more, airlines had to fulfil challenging conditions in order to get access to acquiring contracts at all, and the conclusion of such contracts is often linked to painful conditions for the airlines. These can mean providing security deposits such as rolling reserves (payments withheld by the acquirers), payment only when flown or the division of the business among several acquirers (risk splitting). For most airlines, credit cards are still the most widely-used means of payment, so these security deposits can have quite a painful impact on liquidity.
The number of external service and payment providers is also constantly increasing, which leads to higher processing costs as well. Payment service providers (PSPs), payment orchestrators, reconciliation services, fraud screeners and alternative payment methods charge fees for their services and thus make ticket sales more expensive.
Carriers operating worldwide usually have a very international clientele to which one must also adapt in the payment area. This means that the most relevant means of payment must be offered for each market. In addition, the credit card business can also be very different between individual markets due to legal regulations or regional standards. This not only generates more provider fees, but also increases the complexity of the processes. Airlines used to be able to map this complexity to their own system platforms, but today, this is no longer possible for the reasons already described. That is why PSPs were first forced to incorporate airline-specific features as “bespoke services”. Later, so-called “payment orchestrators” came onto the market, who inserted themselves as an additional application layer between the airlines and the PSPs, and from then on took over the control and routing of the payment processes.
Another topic is the change of customer needs. Payment should be secure, fast and simple all at the same time. It is possible to meet all requirements in this area of conflict, however the design of corresponding solutions is associated with great effort. Internationality and growing customer requirements create even more complexity, and this makes the development and operation of booking systems more expensive and slower.
Dealing with customer requirements and external service providers is complex in itself, but national regulators, the EU and the card schemes add to this with their regulations. Especially in the areas of security and costs, merchants (including airlines themselves) and service providers are confronted with a growing number of regulations and restrictions.
With the Payment Services Directive (PSD) 2 regulation, the EU issues regulations on fees and security. Credit card fees, for example, may not exceed a certain amount (which for once is in favour of the airlines), but so-called “surcharging” (charging the payment fees to the end customer) is severely restricted. This is a painful cut, especially for the airlines. Furthermore, a two-factor authentication process is mandated for online payments.
The credit card schemes (Visa, Mastercard, American Express etc.) have reacted to this regulation with the security standard “3-D Secure 2”. Since the policy limits revenues by capping acquiring fees, the schemes are reacting with an almost unmanageable number of new fees.
With PCI DSS (Payment Card Industry Data Security Standards), the card schemes want to prevent the theft of credit card data. Since the complexity of the corresponding requirements makes it almost impossible for merchants and service providers to implement them on their own, a market for specialised service providers for tokenising credit card data has also established itself here. Of course, these providers do not work for free either, which leads to a further increase in the cost of payment processes.
Change as an opportunity
Many of the topics described above are given – especially when it comes to service providers and sales markets – and simply have to be implemented. Here, it is advisable to work with a specialised payment orchestration service.
When it comes to regulations, on the other hand, there are a number of exceptions and intelligent solutions with which negative effects can be neutralised. For example, there are simplified checkout procedures for registered customers, payment surcharges are still allowed under certain conditions, and the regulations concerning PCI DSS can be adhered to with little expense through the integration of tokenisation services.
The facts described above could give the impression that service providers, customers and regulators have conspired together to make life diﬃcult for the airlines. However, if you take a closer look at the new regulations and restrictions, you will discover advantages for all market participants. All the policies and regulations were not invented to make life diﬃcult for the industry. By consistently adhering to the guidelines, companies can significantly reduce the risks of data theft, fraud and the resulting chargebacks.
At its core, payment process design is about getting to grips with three factors: cost, risk and conversion. Despite all the issues described above, a well-balanced payment landscape can be customer-friendly, secure and comparatively cost effective. The basis for this is a good concept and, as so often in our industry, the choice of the right partners.
Many years ago, I used to work as a TPF mainframe software developer, building applications for one of the leading global PSS providers at that time. Over the years I have had the privilege of working on some ground-breaking projects. When I first started in the mid-nineties, we were putting in place API layers for web services to power some of the first airline e-commerce platforms. In the early noughties, I was involved in the integration of one of the first origin and destination (O&D)-based revenue management systems, promising to deliver incremental revenue gains of 1-2% for airlines. This was, and still is, big money for any carrier.
Around 15 years after this project, in my role as solution architect I was responsible for integrating another airline with this same RM application. Not surprisingly, considering the pace at which the airline industry evolves, this integration was more or less identical to the initial implementation, although with a different PSS provider. Every night, a dump of booking, inventory and schedule data is pushed to the RM application which ingests this data along with numerous other files containing flown ticket data and who-knows-what else and begins running its nightly optimisation processes. Around eight hours later, new steering controls, bid prices and so on are pushed back into the reservation system and the process is complete for another day. Outside of this, ad-hoc changes may be triggered for a flight, either manually or automatically based on certain events. Essentially though, for almost all of an airline’s network, each flight goes through this process once a day.
Optimising the price of every seat on every O&D of an airline’s network is a very complex process, and back in the eighties when the first airline RM systems were implemented, this daily cycle was all that was technically possible. The enormous computing power needed was both expensive and scarce, and only available to airlines with deep pockets (we carry more computing power these days inour pockets!). Pretty much every airline RM system still works this way today: batch data is downloaded from booking systems (i.e., the PSS), optimisation processes run, and the output is uploaded into the airline’s pricing and inventory control systems (usually PSS). However, the (technology) world has moved on since then: computing power has become much more affordable, and the growth of cloud technology has made this available on demand and instantly scalable. At the same time, the volume of airline shopping transactions has increased exponentially in the last decade or two. Airline products have also become diversified and more complicated, with the advent of de-bundling components of the air ticket (seats, bags etc.). Markets have become more competitive, with demand exceeding supply in most cases. Considering all these factors, one must consider whether the RM approaches still used today are effective.
In one regard, the answer to this question is clearly yes: the RM methodologies themselves. Many clever people have dedicated their lives to perfecting the algorithms used to forecast demand based on all manner of data sources, statistical methods, and highly complex algorithms. These continue to adapt to the new ways in which airlines price and sell their products, although this is still predominantly limited to the air fare only. However, it could be argued that the manner in which these powerful algorithms and calculations are applied is somewhat outdated, considering the technological capabilities available today. Let’s consider an airline carrying 50 million passengers a year in a typical hub-and-spoke network. Using some schoolboy mathematics, this might give an average of around one booking created every second, give or take a few. For reference, Amazon gets something like 18 orders per second. Assuming the airline is using O&D-based revenue management, this potentially means that the demand on a significant portion of the network has changed – and therefore of course the price. But these incredibly dynamic changes are not ingested by the forecast algorithms until the RM machines get their batch files to churn through and deliver new demand forecasts hours later. Of course, airline pricing is much more complicated than most products sold through online retailing, where prices are (relatively) static, but does that not mean that it is even more important that airlines stay on top of pricing and adapt in real time?
What is holding us back?
So why don’t airlines do this non-stop, 24x7x365? Well, the answer is the same as for many questions in the airline world: silos. Way back before many of you were born, there was just PSS – schedules, inventory, PNRs and tickets (eek!). The RM systems were bolted on using big interface files. But today’s computing world looks different – we have real-time integrations, artificial intelligence and machine learning engines that never sleep and enough computing power to run the numbers over and over again and get the results instantly. With the advent of offer and order management systems, we are also a goldmine of offer, pricing and conversion data that is just waiting to be tapped into. Sending a dump of booking data can tell you a lot about what was sold, but nothing about what was offered or who asked. Unlocking the value in this data and understanding what it tells you is the key airline retailing – offering the right products in the right channel at the right price.
Traditionally this data has been difficult to interpret – EDIFACT messages, tickets, fare base codes, RFISCs, RBDs all in cryptic formats. NDC and ONE Order bring some standardisation to these key sources of data, but we need to work harder to break down the silos and truly start working with offers and orders (instead of just bolting them onto our legacy systems).
Indeed, this issue is not only to be found within the RM domain. Many of the initiatives in the industry at present are reliant on removing these silos in the end-to-end chain of distribution. Instead of a set of standard integration points based on interfaces from the 1990s, a dynamic and real-time exchange of key data is needed to be able to make offers that are truly relevant, targeted, and likely to lead to conversion. The flow does not simply end with the completion of a booking. Real-time delivery of sales into financial accounting can simplify settlement and revenue recognition. Real-time operational data can drive automated, proactive service recovery in case of disruptions – a task today that often requires extensive manual intervention. For far too long, as an industry, we have looked at these barriers individually – and indeed, in the execution this is the way forward. However, we must also step back and look at the flow in its entirety – offers, orders, service delivery, payments, financial accounting, RM, customer management and so on. This transformational journey will involve many steps along the way, but without seeing the big picture, the course cannot be plotted.
The Travel in Motion and Oystin teams attended Aviation Festival Asia this week. We had the opportunity to catch up with industry colleagues in warmer climates, and the opportunity to taste some fantastic local dishes too! Though there was one experience that we rarely get to trial at home in Europe: the super app.
Super apps are prominent here in Southeast Asia and China. They offer a wide range of financial instruments and online-to-offline services such as food delivery, package delivery and transportation. These super apps position themselves in their user’s daily life and create a marketplace around just about anything. The apps are typically connecting buyers with suppliers that, until now, may not have had a digital presence, for example taxi drivers, takeaway houses, and laundrettes.
The super apps have the similar measures for success: user acquisition and retention. It’s all about user activity (and accompanying revenue, of course). They prioritise having access to the right content overlaid with making a customer’s shopping, booking and fulfilment experience excellent. In doing so they increase their share of sales with the supplier, putting them in a superior distribution position. For some services they even set the price, for example with ride hailing.
Customers who find something easy to use return time and time again, often no longer giving the competitors a second look. The super apps are a snowball, the value users place in their brands are increasing and the more daily users they acquire, the easier it is to launch a successful new service.
Airlines too have capitalised on their well-known brand to become part of a user’s daily life, albeit in a different way – the loyalty programme partnership. Your wallet may contain a credit card with an airline logo, your supermarket may advertise the opportunity to earn points and whilst you top up fuel for your car, you may also be topping up your air miles account too.
Whilst airlines are striving to become better retailers, a super app is an extreme form and its value versus cost is unproven. Here are some questions to consider before going down this path:
“Is it a feasible proposition for an airline to execute on? Would it lead to positive daily experiences with its brand or lead to negative brand impact?”,
“Why would consumers choose an airline over Grab, Uber, WeChat etc…?”,
“Should an airline offer these additional services and become a more integral part of users’ daily lives?”,
“Does the current loyalty play, where airlines partner with everyday brands, already go far enough to build brand loyalty and affinity to the airline?”, and
“Would it lead to consumers valuing the airline brand so much that they don’t shop for flights elsewhere?”
Super apps are built on a deep motivation for excellent user experience, consistency, and commercial policies which promote an ease of doing business. To meet these expectations, super apps have modern, fast, and scalable systems.
One question that arises is whether super apps pose a risk to an airline’s distribution and commercial strategies, could a super app change the airline market in the same way it did for ride hailing. Very few super apps offer public transportation services today. Air Asia’s super app does sell flights and hotels. However, it is powered by an online travel agency (OTA) so the experience is limited to what the OTA can provide, which in turn is often limited by the functionality of the airline. Uber has recently launched trains and coaches on its app and has shown an intent to sell flights too. However, they obtain their content, they are likely to face the same issues as Air Asia, the experience they can provide is limited to what the airline’s capabilities are.
So, should an airline enter this space too? Are they at risk of missing out? Airlines have a lot of competing priorities to contend with, such as their own financial stability as they recover from the COVID-era. Purists may argue that airlines should focus on efficient, safe, and enjoyable transportation. Others within the airlines are focused on a diversification of income streams by leveraging the airline brand. An example of where this has been successful is the airline loyalty business units. They were able to raise funds during COVID, which for some airlines provided a significant lifeline.
Travel in Motion’s (TiM) opinion is that running a consistent experience across multiple services is not for the faint-hearted. This takes considerable focus to get it right, and that will lead to less attention on the airline’s core business. However, we do believe airlines still can learn a lot from the super app experience to guide their own digital offering. Offering relevant and personalised offers, easy-to-use booking systems and a well-designed digital experience to accompany the physical travel journey is extremely valuable to a growing segment of customers.
Airlines have already started down this path by pursuing modern offer and order management systems, a key enabler to meeting the modern customer’s expectation. Those systems could help airlines become a super app. However, we at TiM believe there are many areas airlines will choose to improve once they have a modern technology stack. In doing so they will strive to improve customer satisfaction, revenue, and de- risk being commoditised.
In the meantime, whether you are attended Aviation Festival Asia or not, consider downloading a super app and experience what your customers are experiencing on a daily basis.
AirAsia and Plusgrade Announce Partnership to Enable Bid for Upgrades and Extra Seating Space for Travelers
PRESS RELEASE: Montreal – Tuesday, February 28th, 2023
Expansive multi-year and multi-product Plusgrade and AirAsia partnership announced at Aviation Festival Asia in Singapore
AirAsia guests will soon have the opportunity to bid for upgrades and reserve empty seats beside them on flights
This is a significant partnership for Plusgrade as they continue to expand their footprint in the APAC region
Plusgrade, the leading provider of ancillary revenue solutions for the global travel industry, is proud to announce its partnership with AirAsia, Asia’s leading low-cost carrier. This extensive partnership will soon allow AirAsia customers to bid for upgrades and reserve the seat(s) beside them for extra space and comfort. The deal was unveiled today in Singapore at Aviation Festival Asia, the largest aviation tech event in Asia.
With the relaxation of the remaining travel restrictions in the Asia-Pacific region in early 2023, travel industry recovery is well underway. Ancillary services that delight customers and drive revenue will be an essential tool for airline, hotel and rail companies as travel returns to – or even exceeds – pre-pandemic levels. Today’s travellers are looking for streamlined travel experiences with a focus on comfort and innovative services to improve their journeys.
For consumers, ancillary services such as upgrades or the ability to reserve open seats beside them on their flight can make travel more enjoyable, giving them room to stretch out and relax, or enabling them to experience premium products and services that might otherwise be out of reach.
“We are thrilled to join forces with AirAsia to support them in driving meaningful ancillary revenue through incredible traveler experiences,” said Plusgrade CEO, Ken Harris. “We look forward to supporting AirAsia as they continue to innovate and develop new products and services for their customers, and to expanding our footprint in the thriving APAC region.”
Ms Karen Chan, Group Chief Commercial Officer at AirAsia added: “This collaboration will enable us to offer more passengers the chance to access our premium products and services, such as our award winning premium flatbeds or hot seats with extra legroom. We are confident that our guests will love this innovative and seamless way to enhance their travel experience.”
AirAsia is the World’s Best Low Cost Airline, flying to more than 130 destinations in the region and beyond. Founded in 2001, the airline has flown close to a billion passengers. With the resume of travel worldwide, AirAsia has gradually reinstated flights for many of its popular routes whilst launching new ones. AirAsia’s vision and mission have always been to serve the underserved. Throughout its two decades of service, the airline has connected people and places, and has largely been credited for democratising affordable air travel in the region with its now famous tagline ‘Now Everyone Can Fly’’.
Plusgrade powers the global travel industry with its portfolio of leading ancillary revenue solutions. Over 200 airline, hospitality, cruise, passenger rail, and financial services companies trust Plusgrade to create new, meaningful revenue streams through incredible customer experiences. As an ancillary revenue powerhouse, Plusgrade has generated billions of dollars in new revenue opportunities across its platform for its partners, while creating enhanced travel experiences for millions of their passengers and guests. Plusgrade was founded in 2009 with headquarters in Montreal and has offices around the world.
The future era of technology-driven smart airports
To keep pace with the ever-increasing needs and demands, airports worldwide are constantly evolving. With air travel on the rise again, airports are not just expected to facilitate passengers and cargo movement; they also need to expand their horizons to cover other crucial aspects, like:
Execution of seamless operations with low to minimal manual intervention,
Augmenting safety and health protocols,
Optimizing the use of facilities, preventing wastage, and becoming sustainable,
Scaling up scrutiny and security, and,
Boosting passenger experience.
At the same time, with the high scarcity of human resources in most of Europe and North America, the need to establish measures to utilize resources efficiently has never been as critical.
The challenges are not new; airports have been addressing them over the years by embracing technology at different stages of their growth. However, each of these challenges has evolved and needs airports to adopt state-of-the-art technologies to keep up with the changed dynamics. This evolving era of airport digitalization and digital disruption, which saw its inception decades back, constitutes what we call ”smart airports”.
Within the smart airport ecosystem
Smart airports stimulate the need for an integrated and comprehensive ecosystem that demands the airports to be not only fully functional but also intuitive, efficient, and predictive. This also requires that the manual airport processes, which are often slow and error-prone, be reduced and digitally governed to bring automation, efficiency, and accuracy to day-to-day functioning.
Smart airports are functional, intuitive, efficient, predictive, and digitally governed.
Therefore, it becomes imperative that digital technologies and solutions like cloud networks, biometrics, mobility solutions, data science and related fields, immersive technologies and IoT, and other sensors-based solutions, be leveraged increasingly to encompass the diverse areas of airport operations and processes.
Although the smart airport concept is blooming in several spheres, the following are the three regions where we think airports can drive maximum gains:
1. Achieving airport operational efficiency through data and digital engineering
Airports are structurally complex, and a single channel does not drive their smooth functioning. A deeper understanding of the intricate association and dependency of various airport departments has brought awareness that siloed operations cannot be the solution to achieving operational efficiency and resilience. Airport stakeholders need to be transparent and readily available with real-time data they can exchange to deliver consistent and exceptional performance.
With the right technology and data solutions, airport stakeholders can achieve efficiency and productivity.
To achieve this, more and more airports should start adopting networking and collaborative frameworks like AOP (Airport Operational Plan) and ACDM (Airline Airport Collaborative Decision Making). These frameworks encourage initiatives to promote data sharing and transparency within and between airports.
Data science and AI must be leveraged to derive meaningful insights from past and present data. Building such data-rich integration platforms can help airports extract immediate and real-time information from various interconnected departments. This will help smoothen communication and increase responsiveness in multiple ways. For instance:
Swift and efficient allocation of gates and counters to airlines
Smooth passenger flow management with better predictability
Better resource management
Improved runway slot adherence
Further, airports can also employ sensor-based solutions in various areas to improve efficiency. For example, using RFID-based solutions that can read data instantly from numerous items like luggage and cargo and can aid in bulk item transportation with proper tracking and tracing. Also, it simplifies the manual and time-consuming inspection of assets by instantly reading information like expiry date, next due scan date, etc., from the asset and sending it back to the data source.
Similarly, technology in the form of mobile solutions can also stand out in comparison to the usual paper-based checks. Their highly interactive and data-rich interfaces allow airport staff to send immediate updates, retrieve data, and take corrective actions.
2. Upscaling the passenger experience
Since passengers spend more than 60% of their total travel time at the airport premises, their comfort and convenience put a lot of onus on the airport’s authority. Even with many initiatives to smoothen the process, passengers invariably express their distress towards adhering to the airport’s elaborate checks and protocols. The actual journey that begins from flight take-off for passengers exhausts them beforehand due to the:
Need to reach airports hours before flights take off,
Long and unpredictable waiting times in several queues,
The exhaustive process of baggage tracking and collection,
Extensive scans and scrutiny, and,
Being unheard and feeling lost in the complex airport maze.
Understanding passengers’ needs, their interaction with various touch points across the whole journey, predicting their next move, recommending them with the right offer, and intuitively guiding them in the right way are some areas where airports can effectively act. Again, customer data plays an important role here. Keeping track of customer preferences, concerns, and historical transactions can help airports in improving those relationships and bring in a personal touch.
The long-term vision of airports for a passenger aims to shift the notion of “being stuck inside the airport” to “experiencing a world of leisure and excitement.”
With features like smart parking, virtual queues, digital identities, baggage notifications, personalized merchandizing and recommendations, smart menus and smart washrooms, virtual assistance, and an immersive feel, more and more airports can work to provide a different experience beyond the usual to the passengers.
3. Bringing in greener initiatives
Now that the aviation industry’s contribution towards global greenhouse emissions is well established (around 3% of the total emissions), airports need to pace up to achieve their target of becoming carbon neutral by 2050 or before. The path to net zero is long and challenging, and although there are measures being taken, much is yet to be done in this zone.
By embracing smart operations using data and analytics, airports can reduce their carbon emissions.
Some ways to become a green airport would involve the following:
Tracking & MitigationThe first step requires thorough analysis and regular tracking of direct and indirect sources that contribute to emissions. After that, airports need to define immediate short-term and long-term sustainability targets. To achieve this, airports must start by leveraging sustainability tracking solutions and showing progress towards net zero objectives. For example, using cloud-based sustainability platforms that offer detailed dashboards and provide periodic details on fuel consumption, offset achieved, emissions via waste, business travel, etc., and other sources and provide a clear progress report using science-based targets.
Moderating the consumptionAlthough some airports are also considering shifting towards renewable energy sources by setting up solar panels and using CNG, reducing incidents from day-to-day airport operations (wherein the consumption of resources like fuel, water, and electricity goes much beyond the need) should also be tracked. Keeping a continuous and consistent check on these expenditures would certainly go a long way in keeping up with the net zero goals.
Technologies like sensor-based IoT devices could also be harnessed to regulate the usage of electricity, water, and air conditioning as per need by sensing a human presence. Similarly, computer vision-based ML solutions could be used to build smart dustbins that identify types of waste and help in proper disposal. Leveraging AI and analytics could aid airports in measuring the food, paper, and other waste passengers generate. This can help drive eco-conscious passenger initiatives.
In the stride to become exceptionally performant, there is a continuous need for airports to explore further upcoming avenues and adapt. Also, emerging technologies and innovations play a huge role in curating specific solutions, and the coming times will see them being leveraged even more. It would be apt to say that with all these digital disruptions, the long-term vision of airports will be to bring efficiency, comfort, and luxury inside the terminals.
We haven’t mentioned Blockchain, for quite some time.
We at Travel in Motion have already published numerous blogs, white papers, and podcasts about, hopefully, relevant subjects in our industry. But until now we have only once discussed blockchain and this was quite some time, ago. Are we missing out on something? Or are we “clever” enough to know that blockchain is simply a buzzword and will disappear like many others that were once hype and are now out of sight, out of mind? I think it is a case of “neither one nor the other”. As many others, we have mixed feelings about the relevance of blockchain technology in commercial airline IT. Thus, we are simply not yet confident enough to take a definitive position.
Maybe it would be helpful to summarize what blockchain technology really is and where it makes (or could make) the difference in comparison to “traditional” systems, such as databases. For me a good, but non-scientific start to get a high-level understanding of a new topic has often been Wikipedia, which describes blockchain as:
“A distributed ledger with growing lists of records (blocks) that are securely linked together via cryptographic hashes. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (…). The timestamp proves that the transaction data existed when the block was created. Since each block contains information about the previous block, they effectively form a chain (…), with each additional block linking to the ones before it. Consequently, blockchain transactions are irreversible in that, once they are recorded, the data in any given block cannot be altered retroactively without altering all subsequent blocks.”
Comparing blockchain technology with traditional database technology shows that it delivers advantages. IBM provides an informative and easy-to-read summary on their website, which I have used for this blog:
Enhanced security: as the records are distributed over numerous entities with an end-to-end encryption, fraud-like manipulation of data and other unauthorized activities are simply not possible.
Greater transparency: as a blockchain uses a distributed ledger, all data and transactions are recorded identically in multiple locations. Thus, all participants see the same information at the same time, leading to transparency.
Instant traceability: through blockchain the provenance of data is documented and can be audited.
Increased efficiency and speed: compared to traditional paper-heavy and manual processes blockchain technology can lead to faster and more efficient execution.
Automation: through “smart contracts”, transactions are automated when pre-defined conditions are met. Smart contracts are programs stored on a blockchain that run when predetermined conditions are met.
As I am not a computer scientist, I am still not 100% sure if I understood all the above, but it has at least given me a view of where blockchain technology may provide advantages over traditional database technology. In a traditional database setup, data is stored in tables and can be modified any time. Blockchain is more secure, more or less immune to fraud, transparent and does not require a centralized third party to secure the system. Through this, blockchain as a technology creates confidentiality and trust without being managed centrally.
The probably best-known use of blockchain technology is cryptocurrencies. I must admit that the volatility of values, stored in and managed through cryptocurrencies does not impress me – it even makes me suspicious. But cryptocurrency is just an application that uses blockchain technology and it is probably the best proof point that the underlying blockchain technology really works.
So, what does this mean for commercial airline IT systems? Our ecosystem can also be characterized as an environment where participants are globally distributed, representing different interests with a need to cooperate, and where values are shifted through digitalized channels, requiring the highest security and traceability. Doesn’t this ring a bell? Aren’t these the characteristics that also describe the advantages of blockchain technology? Blockchain is exactly a technology that meets the requirements described above. The issue is only that these requirements already existed long before blockchain became available – and not only that, also these requirements have already been solved long before blockchain appeared on our radar screens. So, is blockchain a wonderful technology that addresses issues which have already been solved in our industry? I think there is an element of truth in this. Replacing legacy technology and processes for the sake of using modern technologies has always been a big challenge and an issue in our industry. Or in other words, while blockchain promises a lot and has also proven to deliver what it promises from a technological standpoint, what are the potential areas of use in our industry? What are the killer use cases for blockchain technology in commercial airline IT? In settlement process? Or distribution perhaps? Or perhaps even a combination of NDC; offer and order management together with blockchain – doesn’t this sound more like a nightmare to some of us?
But as of today, most of us still feel that blockchain is a technology that is rising and becoming more mainstream, but we do not yet know how it will be utilized and what impact it will have. Therefore, I come back to the point mentioned earlier in this blog. We at Travel in Motion are not yet confident enough to take a definitive position. This time we need your help: how do you see blockchain in commercial airline IT? Where do you see a value add? Where do you see use cases? We are looking forward to receiving your thoughts!
Breaking down the mindset barriers holding back the widespread deployment of Artificial Intelligence-driven solutions requires nurturing a high-performance team from the start. Clear communication and reassurance across IT and business teams, defining common KPIs and goals focused on agility, accuracy, and performance. Businesses need to make clear to all employees that, far from replacing the human workforce, AI is simply changing people’s jobs for the better through intelligent automation, helping teams reduce repetitive administrative tasks in favor of more strategic decision-making and enhancing their ability to make better decisions and drive business performance.
Similarly, senior business leaders must commit to ensuring the right alignment between business use cases and the latest AI techniques to unlock new levels of performance. Equally, they must understand the roles they have to play in setting a company culture in which their organization seizes new opportunities, experiments with new technologies, and is not afraid of taking risks.
AI has the power to transform airline operations, unlocking new levels of data insight that can enhance profitability and the customer experience while enabling airline industry analysts to turbocharge their effectiveness, giving commercial teams that harness it a major edge over the competition.
When it comes to realizing this potential, however, the travel industry is still on a journey.
To realize the full power of AI, early adopters across industries have already realized – and demonstrated – the significant business benefits the technology can deliver.
Businesses that have remained reliant on legacy technologies now find themselves desperately playing catch up, prompting a surge of investment into AI-based solutions. According to a September 2022 article by Simple Flying, 82% of airlines are now looking to invest in AI.
While it will take work, industry mindsets can be shifted toward digital-first practices for commercial decision making. Let’s explore the steps that will enable this to happen and the opportunities around pricing and revenue management this could offer the aviation sector.
AI barriers for business stakeholders
There are certain mindsets that exist across the travel landscape that may hold back the industry’s adoption of AI.
Fear of the unknown, or the dreaded “black box” idea, makes some hesitant to adopt technology they cannot fully understand. If the analyst or manager cannot see the calculations being run, how do they know they’re correct? A lack of trust in the science behind AI can cause hesitancy to adopt new technology.
Employees must also be reassured that AI technology is not a stepping stone to replacing their roles, while those with extensive experience with legacy systems can often be reluctant to embrace new and unfamiliar business technology solutions.
Businesses can also face challenges around the lack of usable data and support infrastructure, and accessing valuable knowledge and skills can also prove challenging.
How to realize potential
Breaking through these potential obstacles requires clear and consistent communication and buy-in across all levels of the organization. Analysts should be reassured that, rather than replacing their jobs, AI will enhance them by allowing them to automate time-consuming and repetitive tasks, freeing them up to focus on better decision making on key flights and routes. Analysts will be able to work with AI to act on information beyond the recorded data, such as upcoming schedule changes, new routes, or competitive opportunities. Technology still requires human insight to adopt and fine-tune strategies.
Senior leaders must commit to understanding how the new solutions can unlock greater optimization across the business and create a culture of experimentation and data-driven decision-making. Organizations must be willing to try AI on a small scale and gradually increase its adoption, instead of using a big-bang approach.
It’s also important for companies to redouble their efforts to gather clean data. Maximizing productivity and unlocking new insights relies heavily on having reliable, decision-influencing data readily available, and business leaders must foster this data-gathering capability in their organizations.
Aviation industry opportunities
These shifts can unlock huge opportunities for the aviation industry. The adoption of AI-driven solutions can prove critical to maximizing overall revenue, boosting commercial performance, and – perhaps most importantly of all – improving the customer experience.
The aviation sector has historically been held back by the limitations of legacy systems, which have merely enabled analysts to look for year-on-year patterns. The problem with this, especially in today’s volatile travel environment, is that there simply isn’t enough data on a specific flight at a given point in time to support accurate forecasting in a volatile environment.
AI-driven solutions overcome this problem thanks to technological advances like Deep Learning. These algorithms, trained by sifting through vast amounts of historical and contextual data – including bookings, searches, events, promotions, and competitor prices – enable forecasts which aid in truly informed decision-making. Commercial systems, powered by Deep Learning technology, allow airline teams to finally realize total revenue optimization – maximizing all sources of revenue to the airline.
FLYR is dedicated to generating win-win situations in which airlines become more profitable across fares, cargo, ancillaries, offer and order management, and retailing, while customers enjoy a superior experience. Moreover, with AI-powered commercial decision-making capabilities in The Revenue Operating System®, airlines can provide more personalization through every stage of the customer journey. Equipped with high accuracy and dynamic load and revenue forecasts, airlines are better able to direct marketing spend and energy toward higher-yielding results and adapt to the ever-increasing velocity of change to more quickly accommodate customers’ needs.
To learn more about how FLYR Labs is bringing AI to the travel industry, check us out.
Article by Christian Merkwirth, Technical Product Owner, Lead AI Scientist, FLYR
The Christmas holiday break is a testing time for all airlines, and there’s an inevitability to news of festive delays. In the last two storm-filled weeks of the year, over 15,000 Southwest flights were cancelled. Some 1.5 million customers had been affected. Yes, this is a more extreme example of recent disruption event, but are other airlines doing anything better when it comes to technology investments?
The unfortunate situation with things going spectacularly wrong for Southwest Airlines in the final days of 2022 is more common than we would like to believe. 80% of all airlines globally rely on manual or semi-manual procedures when it comes to disruption or crew management supported by outdated software long overdue. Has anyone stopped to think what a tremendous effect this has on customer loyalty?
Now the Christmas decorations are down and we’re back at work, what should airlines – big and small – take from Southwest’s experience?
When the storms hit, systems crumbled
Southwest have always prided themselves on their staff, and rightly so. It will come as no surprise that, when the storm hit and flights began to be grounded, Southwest’s struggles to cope was not the fault of its people on the ground.
Indeed it’s been reported that hundreds of Southwest’s own pilots and crew members slept in airports next to passengers. Some stuck with nowhere to go. Others in a heroic effort to keep the wheels turning. As Captain Casey Murray, the president of the Southwest Airlines Pilots Association, said to CNN, “It’s phones, it’s computers, it’s processing power, it’s the programs used to connect us to airplanes – that’s where the problem lies, and it’s systemic throughout the whole airline.”
No, while short-staffing undoubtedly played some part in Southwest’s ability to recover, Southwest’s pre- Christmas failure was caused by an IT system unable to adequately respond to the level and severity of disruption that hit the airline over those first few stormy days.
The airline is now on the verge of a major technology evolution, serving as a prime example to others to lead the modernization and overhaul of operations tech stack.
Growing complexities, growing expectations: a perfect digital storm for airlines
It is a cautionary tale for airline CIOs across the US and beyond. Moreover, while the media has no doubt been hard on Southwest, the outside world’s patience with airlines is only getting shorter.
The complexities involved with operating an airline are constantly growing. But customer expectations of what they should expect from their air-travel experience are growing faster.
In particular, post-Covid, customers are increasingly expecting a far more holistic digital experience, covering all touch points at every stage in their journey, all through their own devices.
If their journey has been disrupted, they expect to be informed and helped instantly and seamlessly. And if this doesn’t happen? Airlines live in a world where one bad experience can be beamed to millions across the airwaves through the power of social media. It’s a tough gig.
If the airline can offer an element of surprise about the quality of extra-care, offer customers a choice of an overnight stay and implement personalization, customer loyalty will only grow higher.
SaaS: the secret weapon for staying up to speed
One piece of good news for airlines, though, is that the digital technology available to them is better, and more implementable, than ever before. Crucially, airlines no longer need to develop and support their own customized software (and should be wary of IT partners insisting they do).
Instead, airlines now have the option to choose reliable SaaS products available off the shelf in the cloud.
Implementation in weeks not months
One effect of this new wave of SaaS tech for airlines is that digital upgrades are no longer projects to be feared. Implementation times have been cut from months to often between 4 to 8 weeks depending on the scale of the upgrade. While this new generation of SaaS technology is also able to offer end-to-end services, powered by automation, that overcome the gaps that inevitably emerge when legacy structures are patched up and added to.
Modern SaaS technology for airlines can automate +80% of the operations required in crew planning and allocation even during times of disruptions and offer an easy communication channel to the crew through connected super-apps. Similarly, present-day technology can help eliminate airport chaos and long queues for stranded passengers, offering self-service solutions directly on their devices. It can deliver personalized options for a hotel stay near the airport, transfer service, refreshment vouchers, and information on the re-booked flight – all in one place for passengers while delivering the highest level of data and cost transparency back to the airline.
The right time to upgrade your technology is… all the time
All this is too late to save Christmas. But new storms will come. Disruptions will happen. The summer holiday season is soon upon us with more passenger volumes than ever before. Digitalization is the single most significant investment opportunity in the immediate future of airline travel.
It’s also a journey not a destination, with Digital tech a constant upgrade in progress – something SaaS technology is making possible. The sooner airline CIOs & CXOs can work together to implement this new wave of digital technology, the safer they are from being the next bad-weather casualty.
To learn more about how digitalization is changing the airline industry for good, as well as more about what airlines need to know, download our free white paper on MAXIMIZING RECOVERY: THE FUTURE OF THE AIRLINE INDUSTRY IS DIGITAL.
Article by Luca De Angelis, CEO, HRS Crew & Passenger Solutions. As the CEO of HRS Crew & Passenger Solutions, Luca De Angelis works today with multiple airlines to enhance their service and crew management operations.
I keep reflecting on the concept of customer centricity in the context of airline passengers. For a long time, I only saw it from the perspective of an airline loyalty programme, because having a particular status meant I got extra benefits to make my trip more comfortable (sometimes). Over the years, however, I have come to realise that this has little to do with the concept of customer centricity, but rather is used as a vehicle to bind a customer to one particular airline (or group of airlines). It is a one-way street that lures the customer in with the promise of benefits and privileges that are actually becoming less and less valuable as airlines reduce the level of service in order to reduce costs. Indeed, I can often get most of the common airline loyalty benefits with a branded credit card.
As an airline, when it comes to judging the loyalty of a customer, there are many factors that need to be considered beyond the simple mechanism of miles or segments flown. Am I really only judged as “important” to an airline if I flew a lot with them within a fixed timeframe? This is a potentially flawed assessment, particularly considering that, regardless of how much I paid for those flights, I might not actually have paid for them myself if I travel a lot for business. In this case, the “customer” may be the company paying for the travel, however “customer centricity” still focuses on the individual travelling. How should lifetime value be measured and assigned between the customer and the traveller when these are not identical? What about my changing needs and behaviours as a traveller, particularly as airlines evolve their product offerings? The airfare for a journey may be optimised to generate the highest possible revenue, but total spend is often not considered. Ancillary products such as more bags and seats typically have higher margins, however loyalty is often only rewarded on the fare paid or distance flown. The view of measuring loyalty over an arbitrary time period may not be the right way for all customer segments. If I only travel a lot every other year, is my total customer lifetime value not worth anything? By stripping benefits through the loss of a status level, airlines run the risk that customers may be less inclined to remain loyal to the airline, rather than recognising that loyalty spans more than a period of 12 months and providing incentives to keep wallet share even when customers are not flying.
My reasons for travelling are usually different for each journey – even if there are similarities. However, the service I receive (as a loyal customer) is almost always the same. While airlines cannot read my mind, does it always have to be the same service I receive when my needs are constantly changing? There may be clues in my travel patterns and behaviour that can be used to give direction when trying to become more customer centric. However, picking up on these subtle hints can be difficult and actioning them even more so. Maybe, as a result of my status, I get to take a second bag on a short business trip. While I may appreciate the extra luggage if I’m travelling long-haul for two weeks, I don’t need two heavy bags when traveling alone and using public transport upon arrival at my destination.
Recognising such situations is not difficult, but usually airlines do not take time to join the dots and figure out what I might really appreciate. The needs of every traveller are unique, and my needs are different almost every time I head off on a journey. However, there are patterns that are not necessarily common to me as an individual traveller, but rather to my demographic (“segment” or “cohort” if you prefer). Through tracking decisions and actions taken (or not taken), airlines can begin to make sense of a collection of seemingly random data points. If we then apply some machine learning to this and ask the right questions of this data, perhaps things become a little less hazy. When airlines begin to action some of these findings is when I will start feeling that the airline is focussing on my needs. Then I will finally start feeling the customer centricity, and can choose the additional services according to my needs. These needs may, or probably will, be specific to each journey. I may want to forgo the lounge because I prefer a short transit time to get to my destination faster. I may want to take two carry-on bags so I don’t have to go to check-in or risk the bag not arriving. I always want the option to upgrade my flight with miles or for cash if there is space on the flight – I always ask, so why do airlines not ask me, especially if there are premium cabin seats available and I have sufficient miles? Having to wait until I get to the gate only to be told there are not enough meals loaded is neither customer centricity nor good business sense. I am not unique with having these same behavioural patterns, but if we never look for patterns, we will never find them.
Travel is a journey rather than a flight between two points, and as a traveller, I make dozens of decisions along the way. I decide how I get to the airport, how I take my luggage, how comfortable and pampered (or not) I’d like or expect to be on board, where I stay when I get to my destination, how I get there. I make decisions about what I buy and what I don’t buy. And very importantly, I decide on whether I was satisfied with what I bought or whether my needs were not met. Did the airline ask me how I found the service on board or how the booking and check-in process was?
There is a vast ocean of data available on every single airline customer which can be collected from the time of shopping for flights and throughout the customer’s journey. Many customers will be happy to share even more data with airlines if it is used for their benefit and not just for maximising revenues for the airline. This is a call-to-action for airlines to rethink their customer-centricity processes, their availability of the related data, and for the airlines to collect and use the data to improve customer service and create personalised or tailored product offerings.
While I understand that airlines constantly have to balance customer centricity with operational and financial efficiency, a lot can be done with presumably manageable effort and investment. However, unless all organisations within the airline agree on what the airline’s goal and business model is, will there ever be agreement on what customer centricity means?
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.