Phygital: How Cognitive Technology Drives Smart Airline Operations
Global air traffic is set to grow to nearly 10 billion travelers per year by 2050, according to the Waypoint 2050 report of the Air Transport Action Group. While the forecast from the current count of nearly four billion travelers is extremely encouraging as we recover from the pandemic, it is a troubling foreshadowing of likely congestion at airports, leading to delay or cancellation of flights. The airline industry should take the opportunity now to augment physical facilities with digital technology to chart a sustainable growth trajectory, in an effort to mitigate growing pains of the future.
Artificial Intelligence (AI) and cognitive technologies provide tailwinds to flight operations and workflow management by extracting value from unstructured data; detecting motion, anomalies, and patterns in video images; and enabling autonomous capabilities. While conversational assistance in natural language is a widely adopted AI use case in travel and hospitality, it now embodies technical and business processes.
Cameras equipped with computer vision, IoT sensors, biometrics technology, and self-service applications provide a rich repository of visual, textual, and contextual data. These datasets provide insights into passenger demographics, behavior, intent, and purchase patterns, as well as diverse operational activities. Airlines can now utilize cloud-hosted, AI-driven analytical solutions that leverage data for seamless convergence of physical and digital systems. A converged ecosystem can improve landside and airside operations, covering both above and below the wing services, as well as ancillary and ground support services.
Automates landside operations
Since June 2018, IATA Resolution 753 has mandated tracking of each baggage item at four critical points during the customer journey: (1) passenger handover to airline, (2) loading to the aircraft, (3) delivery to the transfer area, and (4) return to the passenger – and such tracking data should be shared with interline partners as well. AI-powered luggage handling systems automate tracking and communication. These systems share real-time baggage status with stakeholders, including passengers. In addition, computer vision-powered smart cameras detect unsafe and prohibited baggage items accurately, which enhances the efficiency of baggage inspection.
Smooth flow of baggage and passengers is the barometer of terminal operations. Face- and iris recognition technology allows airlines and ground handling agents to deploy self-boarding gates. Biometrics enable contactless identification of passengers at airport touchpoints and automate scrutiny at security checkpoints. The immutable identity authentication accelerates passenger screening, passport verification and immigration clearance. In 2018, Miami International Airport implemented facial recognition screening for inbound travelers, which facilitated screening of ~10 passengers per minute, and significantly decongesting overcrowded arrivals facilities.
AI systems with visual sensors are the ‘eyes on the ground’ – monitoring everything from passengers and employees to cargo and concourses. Smart surveillance from the drop-off curb to the aircraft provides critical operational inputs, such as the volume of originating and terminating travelers, and dwell time at screening stations. Real-time data empowers managers to take timely decisions related to addressing curbside requirements, managing passenger throughput, and transforming the experience for passengers as well as airline crew and airport staff. This also enables airport operators to identify chokepoints in the passenger terminal flow and quickly work to remove them.
Tracking of the volume and movement of travelers optimizes queue management and boosts productivity of resources. However, AI-driven efficiency transcends seamless flow during peak travel season. Airlines using self-service solutions and automated kiosks to streamline traveler facilitation services and baggage handling can integrate the data with core service databases and airport management systems to reduce overheads and optimize arrival / departure operations. Further, machine learning models and analytical solutions draw on IoT sensor data and video footage to predict peak footfall and issues during the period, which can be used to enhance self-service processes, contactless mechanisms and in-flight interfaces.
Streamlines airside services
AI platforms enhance the in-flight experience by mitigating technical and logistical issues that disrupt travel. Algorithms synthesize real-time data for clockwork accuracy in coordination of services, such as in-flight catering, ground support equipment handling, handling passengers with disabilities, water supply, and air conditioning. Cloud portals assimilate sensor data spanning diverse parameters – from air quality in the cabin to food supplies, which helps accelerate aircraft turnaround times and improve safety.
Analytical solutions correlate real-time data feeds with aircraft-specific standardized metrics and historical data to detect issues and notify anomalies, including safety issues and delay in ground servicing activities. Further, AI systems augment technical support by providing recommendations that enable maintenance and engineering teams to troubleshoot and diagnose events for managing incidents proactively and refining emergency planning.
Unplanned maintenance causes flight delays and cancellations, which increases overheads, including compensation to travelers. Carriers deploy predictive maintenance applications to significantly reduce equipment failure. Real-time data from IoT-enabled aircraft machinery and onboard health monitoring sensors offer insights into the current technical condition, pinpoint malfunction, and flag potential failure. It empowers maintenance crew and field technicians to undertake physical inspections faster and more effectively. Notably, predictive maintenance improves aircraft reliability. Delta Air Lines, for example, previously partnered with Airbus to implement a predictive fleet maintenance program that reduced maintenance-related flight cancelations from ~ 5,600 to only 55 within an eight-year period.
The scheduling teams within an airline are responsible for seamless operations of thousands of daily domestic and international flights, and should factor in independent, dependent, and mutually exclusive variables for routing and scheduling purposes. For instance, the experience of pilots and flight attendants could be mapped with the flight route and aircraft model – as some airports in Central America require additional airport-specific training qualifications in order for pilots to perform landings. As expected, all crew schedules must adhere to complex labor (union) agreements and government regulations – which vary between workgroups.
This summer has been a very challenging one for airlines everywhere, as they struggle to operate with limited staff of their own and operate at major airports where local staff are also severely limited which cause further costly disruptions to airlines.
AI models optimize crew and schedule management by taking into account operational constraints, regulations, resource availability, maintenance schedules, and costs. Significantly, machine intelligence addresses qualitative issues such as jetlag and fatigue. Smart models help mitigate health risks due to long-haul flights or change in time zones and integrates datapoints into the rostering system. Most important, AI systems optimize aviation fuel consumption for route planning. Maximizing fuel efficiency is a business imperative as well as an ethical practice.
Cognitive systems provide a smart interface between the aircraft, airfield and landside operations. Advanced data science enhances operations, while providing a superior experience for travelers and operators.
Infosys is an associate sponsor at the World Aviation Festival 2022 on 5-6 Oct at RAI Amsterdam, where we will have our booth #12.562 showcasing innovative solutions that solves today’s business problems powering technology and moderate a rich roundtable with top CXOs on ‘‘The convergence of Phygital mechanism to optimize operations above and below the wings, landside and airside. – via usage of camera, sensors , AI etc.’
This is our last article before the World Aviation Festival in Amsterdam in a couple of weeks. We will end the series of articles with a reflection on airline payments, like a shopping experience usually ends with a payment transaction. Bref.
Should airline payments come as an after-thought of a retailing strategy, as a cost of doing business? What is the strategic dimension of payment for travel suppliers? As payment costs have grown bigger now than distribution costs for airlines, is there any new capability that could both enhance the customer experience and reduce costs?
The airline payment topic is closely related to the customer confidence topic and to the retailing topic which we discussed earlier. We also highlighted payments in our White Paper in proposal #6 (vouchers & e-money) and in proposal #16 (customer accounts). So what will digital airline payments look like?
A world of credit cards
Credit cards are still the ubiquitous method of payments for travel purchases, both in the leisure and corporate worlds. Notable exceptions, such as payment apps like WeChatPay and AliPay in China, or e-wallets like PayPal in the US or Lydia in France, show what the future of digital will look like.
The concept of linking a bank account to a 16-digit number was revolutionary when it was invented about a century ago… by airlines. Credit cards have improved a lot, for example in the physical card experience with the contactless payment, which became the norm during the pandemic. Mobile wallets, like Apple Pay, add an authentication layer on top of the card and enable contactless payment… without entering a PIN.
In the online world, paying with a credit card stored on a website is relatively seamless (as long as the real-time check on the card mobile app works smoothly). The issue remains when dealing with a new website, entering all the card payment details. The entire payment process, including the authorization, may still result in poor conversation rates.
If credit cards still work well, why change? It is a mix of convenience for customers and cost reduction for merchants (estimated at $20.3bn or 2% of the $1trn sales by McKinsey), with an evolution of technology.
The combined effects of Uber, Fintech and the pandemic
In the past few years, the perception of airline payments evolved from tactical considerations (credit cards work well, why bother?) to strategic thinking (payment options are a key differentiating factor for a travel business).
The Uber “seamless payment” experience, whereby the customer does not need to worry about paying a cab driver, was a catalyst in the change of perception. It became even more relevant and obvious for e-scooters, because users would not enter their credit card details for each ride, as there is no card reader on the e-scooter.
The Hopper “peace of mind” proposal, where customers don’t need worry about finding the cheapest fare or making changes to their bookings, extended the payment discussion to financial services. Indeed airlines imposed those constraints (non modifiable tickets, non refundable tickets, 10x price variation on one route…) with their revenue management practices, and it took the likes of Hopper’s fintech to compensate for the constraints and restore the confidence.
The Covid pandemic added uncertainty to travel planning and to health, with the effect of boosting travel insurance for changes and health. Insurances and other financial services have complemented the simple payment transaction, which would otherwise be definitive and risky from a customer perspective.
A customer-focused roadmap
The last decade has seen consumers opting for a variety of forms of payment (FOP) beyond credit cards. Airlines have faced at least three options: 1) adopt as many FOP as possible 2) steer customers to use cheaper FOP 3) promote their own FOP.
The proliferation of new FOP makes the payment market more fragmented. Airlines willing to reach more customers in every market need to support these FOP, without bearing the cost and complexity. Payment gateways enable airlines to reach customers in all markets.
Payment is not limited to the ticket purchase. It covers all the transactions during the booking process and the journey. What if a passenger could enter a lounge or go through a security fast track like they enter the subway (In London, not Paris)? The FOP should be convenient for customers’ online use as well as for a physical use, like access control.
If some FOP are cheaper for airlines to accept, it should be up to them to incentivize customers in using them. Indeed customers tend to have their preferred methods of payment (e.g. a bank credit card, a neobank card, a mobile app) which come with perks, and the perks are funded in part by merchant fees. Airlines have perks too (e.g. seat selection, priority boarding, loyalty points) which may be attractive to customers.
Promoting the airline’s own FOP may sound ambitious. Retailers like Amazon do it with Amazon Pay, or Alibaba with AliPay. In a corporate sale environment, the adoption of the FOP can be part of the airline’s contract negotiation. However in a leisure world, FOPs are ubiquitous and used by consumers daily, not only for air travel. Unless the airline can propose the same value as online retailers, they won’t be customers’ preferred option.
The future of digital airline payment
Air Asia is a pioneer in building a lifestyle brand, not only an airline. Many airline brands are household names, offering co-branded credit cards and loyalty programs, with the potential of becoming a “wallet”. The airline wallet can be used as a payment method for any type of physical and online purchases, while giving access to airline perks and other special offers.
Going one step further, airlines may reach out to communities that have moved beyond credit cards. For example Web3 communities in the metaverse may use crypto-currencies within their own environment and for the payment of physical goods and services.
While credit cards will continue to serve the airline industry for the coming years, digital payment alternatives pave the way to a more convenient and integrated experience for customers, and to more cost effective and flexible solutions for airlines.
3 Growth Zones for Airlines: How to Use Technology to Empower the Industry
The global crunch in air transportation is already sending shockwaves through the industry. The protracted pandemic and economic crisis triggered problems that are now widely on display. Whether the shock is generated by a staff shortage or increased peak demand, the core question is the same: do airline systems have the capacity and tools to mitigate the impact and go beyond? To answer this question, Mike King (DataArt Strategic Relationships Director) and Apurva Mathur (DataArt VP Strategic Accounts) shared their thoughts on how technology can fuel growth for 3 strategic zones of opportunity.
Growth Zone 1: Post-Covid Wanderlust and Peak Demands
Due to the lifting of Covid restrictions and significant industry resource shortage, this summer’s travellers have faced airport chaos, cancelled flights, lost luggage and hours-long queues. Although overall passenger numbers are still below 2019 levels, traffic has become more concentrated during peak periods. June 2022 international RPKs reached 65.0% of June 2019 levels.
For example, Heathrow managed to grow the passenger service team and provide more space for passengers, after starting recruitment in late 2021. However, increased departing passenger numbers and a large number of flight cancellations resulted in a significant reduction in the level of service at the airport.
Additionally, overall passenger satisfaction dropped across nearly all measures (down more than 20 points from a year ago). Research from IATA found that 80% of passengers were not ready to wait more than 3 minutes to register their baggage, which created additional pressure on airlines.
Solution: Data Management to improve customer experience
The good news is that cross-industry Data Management can help address some of those issues and help build a more complete experience for travellers. Airlines have already invested in new data consolidation and processing tools, informing travellers of any flight issues and delays in real-time. Increased AI/ML adoption during all stages of the journey could distinctly improve the traveller’s experience. Large-scale legacy systems transformations that involve various data types and sources can be complex, but can enable significant benefits including:
Predicting disruptions: When data from air traffic control, airlines, pilots and airports is collected into a single data system in real-time, machine learning algorithms can predict disruptions. These predictions will enhance the customer experience by providing advance notification of potential flight delays and allowing stakeholders to adjust their processes and adapt accordingly.
Optimizing flight paths and flight operation patterns: Receiving real-time weather and traffic data enables pilots to make more justified decisions about their flight paths for efficiency and passenger comfort. Whereas, updating stakeholders’ systems to share reliable data enables machine learning algorithms to spot patterns.
Solution: Advanced Cloud Usage for Innovation and Resilience
Cloud-based mobile computing enables off-site check-in for travellers. This translates to shorter waiting times, less crowded airports, and a more seamless flying experience. Moving data to the cloud is the most effective way to ensure data is reliable and quickly delivered to necessary second parties. A well-executed cloud migration results in innovative processes, bringing products to market faster, and constructing a resilient supply chain. Even small and mid-sized airlines can now afford to build redundancies for their IT infrastructure, as cloud technology offers more flexibility at a lower cost.
Growth Zone 2: Enabling Synchronization Between Traveller’s Touchpoints
The airline industry currently places emphasis on gathering comprehensive customer information to customize product offering and offer tailored information. Today, airlines can be more holistic with the help of APIs (Application Programming Interfaces) in how they sell existing products, stretching into the lifestyle realm of commuting, shopping and dining.
Solution: Omnichannel Management and Event-driven API Integrations to Gather Real-Time Information
Airlines can benefit by adopting omnichannel management, enabling consistent management of content and user experience across all sales and service channels. They can benefit from event-driven APIs by gathering real-time data and time-sensitive data on passengers’ behavior and preferences from multiple sources and enable better decision-making for resource planning. Efficient event-based API utilization allows for new and flexible commercial models between airlines, sellers, servicers and consumers in real time, as the event-driven architecture enables the data to be pushed to downline apps and consumers in timely manner.
Growth Zone 3: Enabling Robust Payment Solutions
Airlines need flexible, fully integrated payment systems and processes to enable protection against fraud and cyber threats, and to comply with stringent industry regulations. Fragmented airline payment solutions can negatively affect customer experience with additional data entries. Utilizing universal, easy-to-use payment services can transform the traveller’s journey.
Solution: Transition From Batch Payments to Instant Payments
The move from batch payments to real-time, one-to-one payments presents a significant opportunity for airlines, but necessitates the large, complex challenge of the move itself. Pinpoint accuracy with integration of fast payments enables meta-data identification of the transaction partner and type of item invoiced, leading to automatic reconciliation and expense categorization. Finally, fast payments can be used for instant refunds in direct channels, improving the consumer’s experience.
Solution: Blockchain for B2B
Using the blockchain, airlines could easily establish and automate distribution rules and travel agent payments including incentives, methods of payment (e.g. early payment discounts), and foreign exchange conditions. Blockchain for loyalty could enable travellers to convert miles into digital on-board shopping. Singapore Airlines and airBaltic have demonstrated how airlines can go beyond standard loyalty programs using blockchain.
Final thoughts:
As demand continues to rebound, airlines cannot wait until new staff are fully proficient and must act swiftly to offer innovative and cost-effective tech services to address the constantly shifting environment. Having the right combination of AI/ML based data management, event driven APIs, and real time data solutions will help airlines keep travellers informed and minimize the impact of inconveniences encountered throughout their journey. The perfect combination is possible with a comprehensive approach to technological transformation. Involving a technology service provider with deep airline system domain knowledge can offer expert-level input to help airlines transform their business and get the most out of cutting-edge technologies.
DataArt delivers perfectly suited services, being a go-to technology partner both with deep travel domain experience and people’s first approach.
To learn more about DataArt, visit: https://www.dataart.com/industries/online-travel-solutions
Closing the PX Gap: From Dots to Big Picture Insight
Understanding passenger flow throughout the airport terminal forms the basis for many operational decisions. Most airports are not equipped to do this. Measuring queues is only part of the story.
It’s time airports also considered the entire Kerb-to-Flight journey, to close the gap between how airports see passengers today and their true airport experience.
Most travellers are unaware that their behaviour (whether they like to shop, get to the airport early, wait for their flight at the gate or in a restaurant) has a significant impact on operations and profitability. For the airport, however, understanding how people move and dwell is key to transforming travel experiences and boosting efficiency. This is more critical now than ever before.
In and between spaces
Today, many airports rely on cameras and related dots on a screen to visualise passenger movement and queue habits. These dots can show bottlenecks, crowding and wait times with great precision but typically only in a specific process or area. Also, cameras alone have certain limitations – they cannot see around corners, nor measure seamlessly how people move across the airport.
But why is it so crucial for operators to know how passengers move between areas and processes? Because seeing people as dots moving in a single location is very different from how travellers see their journey around the airport. It creates what’s known as the Passenger eXperience (PX) gap – the difference between what airports see and the actual travel experience.
As we rethink the new travel future, it’s time to stop viewing queues and processes in insolation. Measuring and reacting to a single bottleneck does not explain why it is happening, or the consequences of those decisions on the entire airport experience. Instead, the real questions operators need to answer are how guests move through the airport and what preferences they have on that journey.
It is only by measuring each traveller’s behaviour and linking it to a destination, based on their departure gate, that airports can gain a truly holistic view of the airport experience, and close the PX gap.
Kerb-to-flight insight
The path to achieving better PX and performance outcomes is not just about measuring flow between zones. More specifically, it’s about measuring categories of passengers as they move throughout the terminal.
Analysing movement behaviours – filtering by segment, flight, time of day, class of travel and destination – can produce some exciting and unexpected data, which several airports are harnessing to their advantage.
At one large Europe hub, they found that a large percentage of passengers passing through one of the security processes were bypassing the centralised duty-free shopping area. They were then able to adjust the flow to increase retail exposure and spend.
Another major airport discovered that travellers on some flights would typically arrive at the gate sixty minutes before boarding, spending little time in concessions. As a result, the airport extended food and beverage services at specific gate piers.
One US airport used kerb-to-flight insight differently. With the ability to anonymously link guests to the wider multi-modal transport and the road traffic environment, they could tell what form of transport people were using to get to the airport – taxi, transit or car – and segment it by flight and service class (economy, business or first).
Grasping the future
One of the most significant benefits in understanding how people have behaved in the past is predicting how people will behave in the future.
Yes, airports already use show-up and occupancy forecasts to create staffing rosters or lane opening plans. However, these tend to rely on historical aggregated data – such as how many people were in a line this time last week, or last month. But, in our currently volatile world, operational planning based on previous year’s, let alone last month´s approach, won’t help to flex to today’s challenges – or those of tomorrow.
Naturally, this data cannot offer the same granularity of insight compared to a per-flight forecast, like knowing the composition of each line or how transit passengers’ behaviour is different. Boarding pass scan data can offer some historical insight but tends to only provide timestamps at one or two processing points. Predicting behaviour around lounges, concessions and piers is almost impossible, as is gaining any insight into the movement patterns of arriving travellers.
By building a forecast using both per-flight and behavioural profiles, then continuously re-evaluating those profiles based on the live situation, operators can answer questions like:
What is the impact of changes to the flight load on my security show-up profile?
Is my occupancy threshold likely to be affected by an upstream process, such as a faster-than-predicted check-in process?
What is the impact of early arrival or a gate change on immigration?
Real data, smarter decisions
With a forecast that is regularly updated to reflect the situation, airports can make much smarter, more dynamic resourcing decisions.
Take baggage carousel allocations as an example. By basing actions off real passenger behaviour and the live schedule, airports can line up when the bags arrive on the belt with when people are likely to be there, rather than using some form of fixed priority.
By forecasting kiosk and counter check-in usage by flight, airports can create a more demand-driven check-in allocation for airline customers, lowering costs and improving the experience for all.
Rather than having idle staff handling empty security or border control lanes, capacity plans can be updated to stay closer to target wait time KPIs and save thousands of dollars a day. Airports can alter call-to-gate times to proactively prevent pier crowding, or adjust the pressure on restrooms. Concessionaires can alter shift breaks for retail staff to match demand.
Some innovative airports are now looking at how they influence the sequence of passengers arriving to pinch points, in a way that improves flow while using the same resources. For example, they may decide to allocate a stand for a flight that’s further away from baggage claim, to alter the timing of arrivals at immigration. Or, time the exact moment when doors are opened on an aircraft.
With airport-wide passenger flow management that maps real movement and not just dots per process or area, operators can now truly walk in their customers’ shoes from arrival to departure. What insights are uncovered along the way can only lead to better, smoother experiences for travellers in the years to come.
Article written by by Siobhan Boyle, Marketing Manager at Veovo
The commercial airline world has for decades revolved around one vital artefact – the ticket. As a traveller, the ticket has always served as something tangible to hold on to as an entitlement to travel (until this was replaced by the electronic ticket, at least!). However, as the world has become more digital, airline passengers have become accustomed to electronic tickets, and of course there are many “ticketless” airlines now, using receipts as confirmation of the entitlement to travel. Behind the scenes, however, many of these “ticketless” transactions are not really this at all, with tickets still being issued in the airline’s reservation system. Even with transactions using NDC messaging to facilitate the purchase, many airlines still choose to issue tickets, whether the traveller really needs one or not, because internal airline processes are often still heavily dependent on ticket numbers and the fare and fare construction information stored in the ticket, as well as the processes which transfer this ticket information to revenue accounting. At the same time, payment processes are evolving, with new alternative payment methods becoming increasingly in demand. Travellers’ expectations are also increasing – they expect to be able to change flights, add on optional services, and even rebook their entire travel plans with the same ease they can change their TV subscriptions. However, the complexity in the background that many airlines manage to hide from their customers gets in the way – an e-ticket is not in the status expected, or there is a mismatch between the ticket and the booking due to a schedule change, for example. Eliminating this complexity is an enormous undertaking, and currently many airlines are struggling to resolve this conundrum.
The shift towards orders may be helping airlines to think (and act) more like retailers. But this has not yet taken away any of the legacy complexity behind the scenes. There is a catch-22 situation for most airlines: tickets cannot be eliminated due to the many dependencies on them still in legacy systems, however the legacy dependencies cannot be eliminated while tickets are still so prevalent. But what are the drivers behind this complexity and the associated dependencies? Well, the ticket contains a few key items of information that are of extreme interest for many different entities within an airline. The fare basis code, for example, is used not only in accounting but in billing and settlement process, route profitability analysis and forecasting, revenue management and countless reporting processes. The flow of this information from the originating system (the PSS) into a plethora of downstream consumers is very difficult to disentangle. The transition from PNRs and tickets to orders would appear to give the ideal vehicle to redefine this flow of data, however the integration points between the various components tend to be very old, complex and are often unstructured or proprietary. Such a transformation is, therefore, costly, and laden with risks – things all airlines want to avoid.
Nevertheless, there is some hope in the form of NDC and, more importantly, ONE Order. The use of orders to augment (and eventually replace) the PNR and e-ticket brings a set of possibilities that airlines can use to address some of the transformation challenges mentioned earlier. The exact same information needed by the airline’s numerous reporting systems, accounting processes and forecasting tools is available in the order, however in a more structured and standardised format. The standards are also in place to facilitate the exchange of such information between users of the data – the ONE Order standards are simple, efficient and already implemented by most of the leading Order Management Systems (OMS) and accounting system providers. Along with NDC and ONE Order, a new IATA standard process known as “Settlement with Orders” (SwO) aims to address another common concern of airlines that has also maybe been holding back the transformation to orders. In indirect channels, where payment is often taken by the retailer (e.g. travel agency, corporate booking platform etc.), the ticket has been the sole basis for ensuring the flow of money from the retailer of the service to the supplier (the airline). As a result of this, tickets are still extremely widespread within indirect distribution, even where these may have been facilitated by NDC messaging. The same applies for interline distribution, where the use of NDC is not very common, or rather, almost non-existent.
While standard settlement processors such as BSP and ARC have adapted to support NDC, the SwO standard serves to provide “a framework for the settlement of orders between partners”. This differs from the previous approaches in that it introduces a new process and modernised set of messages, rather than trying to adapt an existing process to meet the needs of the future. As with NDC and ONE Order, the process does not mandate the use of tickets and EMDs as value documents and is expected to cover not only retailer-supplier settlement, but also interline and even intermodal cases. Will this bring any significant shift away from the dependency on tickets that many airlines still have? Well, as with NDC and ONE Order before, the SwO standard is not likely to solve all challenges and airline may have around settlement, reporting and accounting, data analytics and so on. Still, it does strive to ease another impasse in the existing legacy processes. First NDC gave an alternative approach to the creation of offers, providing the opportunity to get away from concepts such as booking designators, filed fares and other traditional fare and pricing concepts. Then, ONE Order took this a step further, allowing products to be managed more as Stock Keeping Units (SKUs) like in retail rather than airline inventory, independent of the need for tickets and EMDs. However, due to some of the key dependencies mentioned earlier, the majority of airlines have not been able to truly embrace these retailing concepts. And as with the earlier initiatives around “enhanced and simplified distribution”, SwO will not provide an overnight remedy to eliminate the legacy baggage most airlines still carry, it does provide a way forward for re-thinking the integration with downstream applications. Ironically, the interactions between airlines and those selling its products are some of the most disjointed. With SwO, along with NDC and ONE Order, these interactions can become richer conversations between partners. In turn, this may enable airlines truly to begin eliminating some of the legacy concepts that have been hanging around, slowing down the overall progress in the modernisation of airline distribution.
For decades, passengers and airlines alike have been suffering from the inconvenience of the manual processes surrounding physical travel document verification.
Slow boarding processes, longer lines, tedious counter transactions, and higher ground handling costs have all negatively impacted the travel industry and the overall experience of an airline traveler. Whether it is surge hiring due to sky-high talent shortages or widespread flight delays, it has become clear that the effects of these manual processes are unnecessary, outdated, and costly for airlines.
Why Go Digital?
When you think of all the physical travel documents that airlines need to verify and process—ESTAs, visas, and passports, just to name a few—it’s quite a long list. Digital verification, done in advance of travel, is the way to go: a simplified checklist enables a more user-friendly experience for passengers, giving them sufficient time to obtain any missing visa or health pass and to renew expired documents.
The time it requires for passengers to visit a check-in desk or interact with an agent can be reduced, if not eliminated, eventually, with the digitization of document verification. Airlines who have already implemented these measures are boosting online check-in rates, increasing on-time departures, and improving their customer experience for passengers—many of whom are keenly interested in moving to an entirely digital, self-service travel process as soon as possible.
Old News
The desire for seamless, contactless travel didn’t just start with the COVID-19 pandemic. Nearly all the behavioral shifts in airline passengers today have merely been accentuated and accelerated by the pandemic.
In fact, Tom Grissen, CEO of Daon—the company behind VeriFLY, the world’s most popular travel app for health credentials and travel documents—knew that these trends would soon demand the biggest innovations in travel. In a recent travel magazine interview, Tom stated: “We created VeriFLY to solve a much broader problem than COVID—how to remove the total burden of physical travel documents.”
Looking Forward
For the foreseeable future, checking for vaccinations, up-to-date boosters, and other health credentials will most likely remain an intermittent obligation for airlines.
As an industry, travel is still only scratching the surface of what’s possible through digital transformation. Artificial intelligence (AI) and machine learning (ML) capabilities, which have already proven to significantly drive down costs and spur operational efficiencies, will be of great benefit in removing the burden of errors and misinterpretation that takes place during the manual handling and verification of physical travel documents.
There is a critical need to continue to move away from siloed document verification systems so that passengers can share and receive data across their entire journey—and not just at one or two stops along the way.
Airline and travel industry leaders are now tasked with imagining, designing, and delivering innovations for the faster, smarter, and more seamless travel experiences of tomorrow.
By Daon.
Daon has been the most trusted name in biometric identity verification and authentication for over two decades, chosen to secure over one billion identities around the globe, and trusted by many top brands in the financial, telco, healthcare, travel, and public sectors. VeriFLY®, Daon’s purpose-built solution for seamless travel, is the world’s most popular travel app for health credentials and travel documents, including visas and passports. Developed alongside travel operators, VeriFLY has helped more than 10 million travelers, reduced staffing requirements by up to 30%, increased processing times by up to 45%, and is used by many brands including American Airlines, British Airways, Carnival, and Hyatt. Learn more at Daon.com/verifly.
Passengers Volumes are Recovering. Opportunity or Disaster?
After almost two years of pandemic precautions and concern with the future of airline travel, nowadays seems to be the most resourceful time to adopt innovative concepts to increase revenues, provide operational excellence, and at the same time enhance PAX experience.
In 2022, PAXs air travel demand is significantly increased, as well as the enthusiasm to further adopt digital, mobile, and touchless technologies that will make the journey as convenient and seamless as possible.
Indeed, the sudden increase in PAX traffic creates new opportunities to regain revenues that have been diminished over the last two years. At the same time, the huge demand introduces several operational complexities, which in turn generate additional managing costs, whilst decreasing PAXs experience and service levels.
The forecasting figures for the next years illustrate that this air traffic demand will remain high, which makes it essential for airlines and airports to combine digital technologies that will:
Demonstrate operational excellence
Reduce operational costs
Increase income per PAX
Enhance PAX experience
Innovative and Digital Solutions are the Key Factors
As many research studies show, greater technology adoption correlates with more positive emotions at several travel phases, especially on Booking, at dwell time, and on-board. MPASS Ltd provides and customises to your enterprise needs a wealth of innovative technology solutions that allow you to think out of the box. Providing flexible and scalable platforms of secure cloud-enabled technology, airlines and airports can profit in several business aspects.
We’ve never had to adapt so quickly in such a dramatically changing environment, but we’ve also been enough prepared to tackle the new high-demand reality. For instance, virtual assistants (chatbots) are there to provide immediate, generic or personalized information to PAXs. They provide a win-win case for airlines and airports by giving customers a quick way to seek support through a communication medium they are already invested in, such as instant messaging or social media, while driving down service costs. They operate 24/7, they serve unlimited number of requests per hour, and they can switch to human operation when there is a need to handle special cases.
Additionally, transforming customer feedback captured from surveys offered via multiple digital touchpoints into actionable insights and implementing a voice of the customer program is necessary to achieve operational excellence.
Furthermore, info kiosks that are installed on the main terminals could provide valuable information to PAXs, and they can also present aggregated content from many sources of information. Adding Augmented Reality (AR) features to assist on the navigation process to the departure gate improves PAX experience and also minimises flight delay risks. Finally, instant messaging tools can provide real time info to PAX about flights status, leading PAXs to departure gates on time.
The aforementioned services are included in the MPASS Ltd portfolio offered to airlines and airports to help achieve operational excellence, improve the service levels, minimize operational risks such as departure delays, and also reduce operational managing costs.
On the other hand, PAXs expect added value when they are engaged with airlines and airports. Our detailed solutions help airlines and airports to understand their travellers’ needs and creates personalised rewards and extra benefits, promote any new digital services available, and stimulate PAXs purchasing behaviour. Through our digital Engagement platform, travellers are invited through call-to-action tests, quizzes, tasks and games to complete “missions” and goals. In this way, they will collect points and badges which will be redeemed through the platform for discount services and offers. The new upgraded experience is available via mobile phones, a web application, and also from interactive info kiosks. The MPASS innovative digital Engagement platform uniquely combines physical, digital, and virtual actions for PAXs that ideally are combined to address marketing and commercial goals.
MPASS Ltd is providing innovative services in the broad digital transformation space for airlines and airports since 2009, aiming in customers’ long-lasting engagement and loyalty, therefore in increased revenue and profits for our clients. We have extended commercial experience so to identify market trends and needs and we also have in-depth technical know-how that enables us to in-house develop our solutions based on our own sophisticated and innovative platforms.
Article written by: Chrysa Mineta, Account Manager at MPASS
As the impact of climate change becomes more apparent with each passing day, the airline industry, which accounts for about 3% of global carbon emissions, has made it a strategic priority to tackle sustainability challenges. In October 2021, the International Air Transport Association (IATA) approved a resolution to achieve net zero carbon emissions by 2050, aligning itself with the Paris Agreement. As per IATA’s estimations, with approximately 10 billion people expected to fly in 2050, it may be challenging for the industry to achieve net zero emissions by the mid of this century.
While IATA has a concrete plan in place to achieve this target with Sustainable Aviation Fuel and more efficient airframe and propulsion technologies set to do the heavy lifting, for the airlines to be truly net zero, it is essential to look beyond these two factors. The need of the hour is to adopt a holistic approach across the entire aviation ecosystem. Airlines must create a comprehensive view of their emissions and start taking initiatives across the value chain for their reduction. They must understand their carbon footprint across Scope 1, Scope 2, and Scope 3 criteria as laid down under the GHG protocol and then establish a plan of action to achieve net zero.
Figure1: Comprehensive view of Airline Scope 1, Scope 2, and Scope 3 emissions as per GHG guidelines
The above diagram illustrates the emissions across the airline value chain. There are several initiatives to reduce Scope 1 emissions (such as through the use of combustion jet fuel) and Scope 2 emissions (by opting for the use of renewable energy sources). Reducing Scope 3 emissions is still a grey area for airlines. Areas such as waste management and staff travel are vital areas contributing to Scope 3 emissions, but today, airlines are struggling to account for these factors.
Going all-in to achieve the net zero goal
With each passing day, climate changes are becoming scarier and also, more and more eco-conscious passengers are demanding to travel sustainably. Airlines today need to make bolder moves to achieve net zero, and we have defined a 3-pillar approach to help them:
Get control of your carbon footprint
The first fundamental principle to achieving net zero is for airlines to control the carbon footprint across their value chain. From direct to indirect sources and from owned/operated to supplier governed, airlines need to start tracking the carbon emissions generated across different operations and processes. This makes it crucial for airlines to track the lifecycle of carbon footprint generated across airline operations to understand the distribution, trends, and effectiveness of the measures taken to reach the net zero goal. We believe that the comprehensive process of understanding the Carbon Footprint life cycle will have the following steps:
Emission source identification: Identify and list down all the emissions sources across the airline value chain (Scope 1, Scope 2, and Scope 3). Create a mapping of the emission factor used to calculate the carbon footprint for the respective emissions source.
Data collection: Track and collect resource utilization data, create energy use records as per fuel type, and model the carbon footprint records by converting energy uses into emissions.
Data validation: Check for data accuracy, connect with different stakeholders to understand the process flow, and ensure that no detail is missed.
Data gap filling: Identify the missing energy use records and fill in the gaps from actuals or through statistical computations.
Carbon offsets and renewable energy allocation: Identify and record the offsets such as tree plantation initiatives, sustainable aviation fuel, renewable energy sources, and purchase of carbon credits.
Forecasting: Forecast emissions and waste generation for the remaining part of the year based on historical data and industrial assumptions. This is basically a comparison of the targets set and the actual emissions/presumptions happening for the year. Makes it easy to visualize the targets and work accordingly
Airlines can now set sustainability goals and measure their progress with this complete understanding. The data can be used to create dashboards to generate actionable insights for organizations to define their net zero initiatives. Going a step further, it will even ensure successful and faster carbon audits and help publish reports to raise awareness about efforts towards sustainability.
Figure 2: Carbon footprint lifecycle management for airlines
Transform operations and supply chain
After airlines gain control of their carbon footprint by understanding the carbon lifecycle across operations, the next step is to decarbonize their operations and supply chain. There is considerable room to take up sustainability initiatives across the value chain, creating environmental impact and driving operational efficiency and cost benefits for airlines. Emerging technologies such as AI/ML, RPA and the metaverse provide the necessary fuel for airlines to transform their operations and supply chain.
While it is impossible to reduce carbon emissions across some of the operational processes, there are some areas where airlines can start acting immediately.
Blending digital workforce personas across business functions
Creating digital personas for the crew, ramp agents, etc., to digitalize some of their operational tasks would help airlines achieve operational efficiency and add to their sustainability goals.To explain how that is possible, let’s take the example of crew members. One of their tasks is to share feedback on cleaning services, an activity that is still being done through paper checklists. Automating the process would help make an environmental contribution by reducing paper usage and help in a faster turnaround. Now, let’s take the second example of the ramp agent responsible for marshaling aircraft. Connecting the ramp agent and providing all the details with just one click can significantly impact the taxiing time for aircraft, thereby saving precious fuel.
Managing cabin waste
Cabin waste essentially comprises two different types of waste—cleaning waste, which includes the leftover from the items given to passengers, such as towels, magazines, blankets, and catering (galley) waste, which consists of leftover food and drinks, packaging, etc. As per a study conducted by IATA, 23% of the total waste generated per passenger for a flight consists of untouched food and drink. This is another low-hanging fruit airlines can immediately pick that will help them reduce their carbon footprint and costs. For instance, a vision analytics-based solution could help airlines analyze the food consumption across the routes and then correspondingly optimize their food menu.
Incorporating predictive approaches across the value chain
Airlines are sitting on a data mine that is yet to be fully explored, and airlines need to start tapping into it to achieve net zero. By predictive modeling, airlines could estimate their wastes, better organize aircraft maintenance, and optimize their operations. For instance, airlines could reduce fuel wastage by predicting when an aircraft would be due for maintenance activities. Further on, airlines can even simulate the impact of maintenance activity on aircraft performance.These are just some of the examples of the use cases from the vast universe of innovative approaches possible today by leveraging emerging technologies. By identifying and implementing them, airlines can create an environmental impact and take steps toward lean operations and supply chain.
Seek differentiation with eco-conscious passengers
Today, there is a new segment in the market—eco-conscious travelers. Undoubtedly, the first-mover advantage to capture the considerable market share for this segment would be applicable here as well. So, airlines’ measures to reduce their carbon footprint can directly correlate with their revenue. It allows differentiating themselves from competitors and establishing an emotional connection with the passengers, further translating into loyal promoters for airlines. This helps raise the brand value for the airline and enables it to capture the market share at a premium price.
There is always the question of how premium pricing will be perceived in a price-sensitive market where airlines are competing for each penny. Well, to answer that, we can always take the inspiration from other industries, such as retail, where you will find fair trade products (where customers don’t mind paying up to 15% premium) occupying more and more shelf space and eco-clothing options selling at a higher price for all brands.
According to a recent Ocado research, 64% of their customers say that it is important to include fair trade products in their shop and 22% reveal that they buy a fair trade product weekly, indicating a high intentional purchase of fair trade products in the UK market.
Suppose airlines incorporate an appropriate marketing strategy powered by the right tools such as CRM enabling segmentation and right targeting at the right time and across the right channel. In that case, we believe the first movers in this area have a strong chance to capture this budding market segment.
By Ashish Sapra
Nagarro bring in much-needed technological and domain capabilities to help airlines embrace the challenge of sustainability. To know more about how they can support you in your net zero journey, contact their experts at explore.tnl@nagarro.com.
Copenhagen Airports: Architects of the Future Airport
Copenhagen Airport (CPH) has been appointed the most efficient airport in Europe fifteen times – most recently in 2019. To maintain this position, an ambitious strategy to become ‘architects of the future airport’ was presented in 2019. The strategy was conceived since a new and drastic approach to digital transformation was necessary to deliver on CPH’s ambitious growth targets through optimisation and new opportunities.
Replacing old legacy architecture
Digital innovation and development of basic airport operations were stalling due to old legacy architecture and technology implemented in the early 1980’s. The legacy system that covered many historical add-ons, was technologically outdated and hard to maintain – in effect a burning platform – leading to high maintenance costs, excessive risks and a hindrance to further development and growth.
In 2017, Netcompany was commissioned to perform a life-time extension on the existing legacy core platform, and while performing this task, the idea of AIRHART – a full-scale replacement with a self-developed platform for total airport management – was born.
Digital transformation from the bottom up
For many airports around the globe, becoming a smart airport has proven to be a tough and troublesome journey. Many have experienced failed implementation projects, broken promises and “smart” features that don’t deliver the expected business value. Often the problem is not the “smart” features themselves, but the underlying foundation, which is not geared to capture, handle and expose high-quality data needed for smart airport operations.
Trying to become smarter by adding multiple “smart” technologies to old legacy core systems will only take you part of the way. At some point, the limitations of old legacy systems will be evident and prove to be a dead-end if you want to become a truly smart airport. Digital transformation from the bottom-up implies high risks. In Copenhagen Airport a comprehensive and robust transition plan was conceived, mitigating risks on multiple levels – technical, organisational as well as commercial.
Business value – delivered
The implementation of AIRHART in CPH is impacting several of the airport’s key performance indicators. Through smarter forecasting and turnaround management, punctuality is improved and waiting time is reduced, adding to increased overall passenger satisfaction. AIRHART is also allowing for more efficient use of existing resources, enabling Copenhagen Airport to increase throughput and raise the passenger number significantly.
Additionally, the implementation of AIRHART is expected to reduce IT costs considerably, all while providing CPH with the needed agility and resilience to face future challenges and reduce time to market.
Implementation of a truly data-driven platform is allowing CPH to address and support a substantial leap in the sustainability domain. AIRHART impacts the development of smart grid, solar panels and reduction of emissions.
About Smarter Airports
In a market dominated by large players relying on monolithic legacy systems and acquisitions, Smarter Airports was founded by Netcompany and Copenhagen Airports to challenge the status quo by reinventing traditional airport systems. In the AIRHART platform, the oldest code is dated 2019. The AIRHART architecture is born to be flexible and meet the needs of a true data-driven airport of the future. AIRHART enables you to meet the requirements of tomorrow for efficient, passenger-centric, safety-compliant and sustainable airport operations.
The aviation industry connects people and countries, opening the gateway to many economic and social opportunities. Given the benefits aviation brings, the need for connectivity is growing. IATA estimates that the demand for air passenger journeys in 2050 could exceed 10 billion, and the expected carbon emissions between 2021 to 2050 will be approximately 21.2 gigatons of CO2. This vast amount of emissions will need to be mitigated! A resolution was passed by IATA member airlines committing to achieve net-zero carbon emissions by 2050.
Roadmap towards net zero
The major focus on achieving net zero carbon emissions is on using sustainable aviation fuel (SAF), investing in new aircraft technology, and carbon offsetting methodology. We believe that the 2050 objective can be accelerated by realigning the existing infrastructure & operations, which can contribute directly to reducing carbon footprints.
Figure 1: Contributors to achieving net zero carbon by 2050s (Source: IATA)
1. Fuel-saving schemes
Reduce CO2 emissions from aircraft ground movements by overcoming long taxi-in and taxi-out times.
Taxiing aircraft contribute significantly to fuel burn and emissions at airports. Taxiing delays are frequently caused by congestion and queuing, which occurs when there are last-minute changes in the departure sequences, gate allocation issues for arrival flights, delays in departing flights, etc. To overcome these challenges, airlines can deliver an on-time flight turnaround process. They can also update ATC and airport operators with accurately predicted off-block time (POBT) to plan runway and gate utilization effectively.
The single largest operational expense for airlines is fuel, which accounts for nearly 30-60% of expenditure in an average year.
Also, many airlines rely on the manual calculation of the EOBT (expected off-block time) and TOBT (targeted off-block times) for pushback timings. To overcome chances of error, airlines and airports can build a smart turnaround model that leverages technologies like computer vision and AI/ML. The model can associate each of the turnaround tasks with an object which can be visually identified from the camera stream at the airport.
Combining the real-time events with historical data and understanding of the airport, airline, and ground handlers, this model can evaluate the performance of the turnaround activities and utilize it to alert the stakeholders in case a process hasn’t started or if a delay is expected. All this while continuously predicting POBT and helping ATC and airport operators optimize runway and gate utilization.
Reduce CO2 emissions in the air by upgrading flight plans with best practices
Data analytics can enable better decision-making, reduce carbon emissions, and improve flight efficiency. Data can be used to boost the flight plan with the best practices for the operating crew. Airlines can leverage AI/ML-based algorithms that analyze billions of data records from multiple data sources, including flight data recorders (FDR), operational flight plans, ACARS messages, engineering systems, load sheets, and tech logs, and combine them with real-time environmental data and actual flight conditions to identify the best practices for fuel saving.
Post-flight, the data from the Electronic flight folder (EFF) can be extracted, and a report can be generated. This will tell the amount of fuel that was saved during the flight, giving multidimensional insights to relevant stakeholders for necessary actions.
Reduce flight turnaround process time by digitalizing the refueling process
Today, if the cockpit crew makes a small change in refueling figures, it takes a long time to pass on the message to the refueling agent. Airlines still use a combination of paper-based transactions and outdated systems to manage their operations, which often adds extra minutes to the flight turnaround process. Digitizing this process can improve efficiency and increase transparency in many ways, leading to increased sustainability and reduced carbon footprint, with the bonus of saving time and money.
2. Air Quality Index improvement schemes
Reduce APU utilization at apron
APUs are small engines located in the aircraft tail and are used to power electrical systems onboard when the main engine is turned off. It can power cleaning equipment, run air conditioning systems, and even start main engines before or during pushback. The problem? APUs run on jet fuel with higher carbon emissions.
Aircrafts should transition to ground power units (GPUs) for their ground operations whenever possible. Airports and airlines can work on identifying the aircrafts that continue running on APUs at the gates, even when GPUs are available. Microphones positioned at gates can act as IoT sensors that pick up the sound of the APU running. This data can then be cross-referenced against schedules and other data to determine whether an aircraft is running its APU instead of using the power grid. Relevant stakeholders can then be informed, so necessary actions can be taken to improve air quality and reduce carbon emissions.
At the same time, airlines can also track the APU utilization from APU logs available in the cockpit, which provides data on-time units, cycle run, and even the average produced by APU engines. This information can further be mapped with respective flights, routes, and operating crews to understand when APU was overutilized. This solution on blockchain technology can help airlines build the APU lifecycle which can accurately report the carbon emission per APU.
Even today, airlines’ staff rely on paper-based transactions and manual tasks, which are often time-consuming and error-prone. Some of them, like flight dispatch documents and operating manuals, cannot be avoided as regulatory authorities lay them down. But there is a lot of scope among the other operating areas which can be digitalized.
Airlines must develop a new approach to amplify human potential with a blended workforce where human skills are complemented with digital skills. Depending upon the operational scale and workforce distribution, airlines can curate personas for specific roles that play a major role in the operation. Airlines can easily target roles like cabin crew, ramp agents, and engineering staff to start their journey. They depend on paperwork. You can empower them with a mobility solution that caters to all their needs starting from managing their roster in the morning to getting a cab and performing all their mundane tasks while also connected with all other airline systems. This solution will holistically cover their work lifecycle.
Overcome thermal bag tag and asset reconciliation challenges
During the pandemic, airlines and the airport accelerated their contactless journey by onboarding self-bag drop kiosks and home-printed bag tags. But, even then, more than 95% of baggage operations across the world depend on thermally printed bag tags which are extremely dangerous to the environment. When you consider the thermal paper’s chemical composition, it contains Bisphenol A (BPA) and other phenolic chemicals that pose many risks to the environment and can’t be easily recycled. The easy solution is to use digital bag tags, which can be reused by the passenger every time they travel. Digital bag tags are easy to reconcile and deliver a complete baggage journey view across various scan points.
Similarly, assets reconciliation challenges across various other functional areas like GSE, engineering, catering, and even aircraft safety equipment could be solved by using IoT technology. For instance, today, the reconciliation of lifesaving jackets installed under the aircraft seats is done manually by the security staff on paper. This can easily be transitioned to a one-click reconciliation using IoT.
4. Cabin waste management schemes
Airlines must focus on minimizing their cabin waste by reducing, reusing, and recycling to minimize their environmental footprint. Cabin waste comes from 2 main streams—cleaning waste and catering waste.
As per a study by IATA, 23% of the total waste generated per passenger consists of ‘untouched food and drink’.
To overcome this challenge, airlines can leverage technologies like computer vision along with AI/ML for understanding travelers’ likes and dislikes of a particular food item across different sectors and booking classes and on various routes. This data can help caterers understand the food consumption patterns, and revise the menus accordingly.
5. Facility usage optimization schemes
Another big challenge adding to airlines’ carbon footprint comes from their facilities like back offices, training institutes, corporate offices, and even self-operated terminals.
Airlines can optimize their buildings’ energy consumption by deploying IoT sensors on various assets in their facilities, including lighting, cooling systems, doors, and toilets, to track their energy utilization and automatically shut them down when not in use. Data from all these sensors can be brought together to create dashboards, delivering actionable insights that can help facility managers optimize energy consumption. This data can be further used to build predictive analysis to identify and replace dysfunctional equipment without creating bottlenecks and downtime at the facility.
While the airlines are doing the heavy lifting by bringing SAF and investing in new aircraft technologies, a lot can be done within the existing operational setup and reduce their carbon footprint.
By Vinay Yadav
Nagarro bring in the much-needed technological and domain capabilities to help airlines implement green schemes and embrace the challenge of sustainability. To know more about how they can support you in your net zero journey, contact their experts at explore.tnl@nagarro.com.
For aviation to be successful, many complex airport operational tasks must be accomplished efficiently and on time. Given today’s staff shortages, this is even more critical. Equally important are sustainable airport operations to achieve overall aviation sustainability.
The sheer number of tasks and inherent market volatility make this goal extremely challenging. The right resources must be in the right place at the right time. Real-time operational decision-making is paramount when there are unexpected disruptions. The most advanced technologies are needed to make the right decisions while concurrently addressing “what-if” scenarios.
Today, ubiquitous airport systems, the Internet of Things (IoT) and much-increased computing power enable airport processes to be digitalized in detail. Going forward, even more data will become available for analysis and utilization. According to Moore’s law, computing power will continue to increase exponentially over the coming years, while computing costs will decrease significantly.
From an Operations Research (OR) standpoint, this facilitates the simultaneous use of two algorithmic principles, each highly efficient when applied alone. This powerful parallel approach is called “hybrid AI”. It combines the benefits of “data-driven” (AI) and Machine Learning (ML) with “know-how-driven” algorithms such as Mathematical Optimization and Fuzzy Logic.
Hybrid AI supports airline, airport and ground handling operations across broad areas, above and below the wing, for example, in aircraft maintenance or cargo. Hybrid AI allows for better resource management of staff, ground support equipment, bays, and terminal resources, from strategic planning to the day of operations. Furthermore, Hybrid AI provides powerful decision support for managing disruptions.
Optimizing scenario planning and predictive disruption management
The past few years have been game-changing for aviation. We have seen the accelerated adoption of technology. The pandemic also provided a valuable learning lesson. Planning for the unexpected in aviation is more crucial than ever. Balancing “typical” day of operation needs with the ad-hoc resource demand created by unexpected disruptions requires sophisticated planning and decision-making. Gut feelings and repeating “yesterday’s” decisions are no longer suffice.
By applying data-driven AI and the underlying predictive modelling, planners use real-world data to forecast the right staff and ground support equipment demand. They correctly predict expected volumes, passengers, PRM, baggage, or cargo. Furthermore, disruption probabilities are considered.
This data enables them to effectively prioritize staff and equipment resources and physical assets to mitigate disruption impacts. Long-term, mid-term and short-term resource planning scenarios can be developed to enable more stability regarding potential operational changes using what-if analyses. All airport operations benefit from this optimized planning.
For example, if a weather-related disruption, fog, or ice storm occurs, hybrid AI-driven software will support effective staff scheduling by automatically learning from the past and considering previous, similar scenarios. Additionally, rule-based specifications (i.e., qualifications, preferences, SLAs) are applied. IoT helps by providing the real-time context, for example, in monitoring ground support equipment locations. The result is heightened situational awareness and automatic prioritization of tasks and resources. In this way, sophisticated decision-making support tools help planners minimize the effects of such disruptions and mitigate their impacts on flight schedules, operational costs, and passenger experience.
Optimizing cargo operations
The same predictive modelling is also applicable to cargo airline operations, addressing supply chain disruptions and facilitating the best decisions. With optimization software, integrating data from multiple sources (i.e., flight, truck, cargo, staff, GSE locations) and applying Hybrid AI, cargo airlines can identify the best plans and real-time tactics to maximize efficiency, customers’ SLAs, and sustainability simultaneously.
Optimizing workforce management
Successfully managing the workforce must consider such criteria as demand requirements, workplace regulatory mandates, individuals’ qualifications and preferences, and schedules. Integrating digitalization into workforce management, facilitated by optimization software incorporating sophisticated technologies, enables planners to better align demand fluctuations and operational needs with staff capabilities, scheduling preferences, and increased productivity goals.
Optimizing line maintenance
Leveraging aircraft data, hybrid AI and the IoT is helping airlines achieve enhanced line maintenance operations. Historical data and Machine Learning algorithms enable sound preventive line maintenance decisions, informing a LM Technician or Engineer proactively where to replace parts or make preventive checks to deter malfunctions. Additionally, hybrid AI helps to forecast the duration of various checks and replacements in LM for better resource schedules. In turn, this reduces flight delays, costs associated with unplanned overtime, expedited shipping costs for parts, and potentially stressful, rushed and, subsequently, inferior quality.
Optimizing sustainability
New aviation sustainability goals and requirements regularly occur within the industry and across regional governments. While sustainable airline fuels are not yet available in sufficient quantities, airport operations can significantly reduce an airport’s carbon emissions. For example, today, mixed GSE fleets are already in use. The numbers of electric and hydrogen GSE are rapidly increasing. Using advanced AI and predictive analytics, airlines, airports and ground handlers can optimize their planning of such mixed GS fleets to reduce fuel consumption and related CO2 emissions, while guaranteeing operational stability simultaneously. Reducing emissions by better planning applies to driver-based vehicles similarly as autonomous GSE.
The questions to ask today
The aviation industry is at a critical crossroads. Business as usual won’t suffice. We all learned this during the crisis. Software solutions must provide advanced technologies and a mature aviation model. They are crucial to supporting optimum aviation operations. The industry must adopt new solutions that help companies become more proactive in addressing the wide range of situations that disrupt static plans, moving away from pure reactive handling of such cases.
It is more urgent than ever that aviation companies find answers to critical questions such as:
How can we fully optimize, increase productivity and plan resources to meet our operational promises?
How can we build greater employee satisfaction?
What will be the keys in 2023 to driving maximum efficiencies and cost reductions?
What measures should we take to protect our earth now and in the future?
Advanced technologies will be central in answering all these questions and will be the essential building blocks to the aviation industry’s successful go-forward strategy.
Flexible pricing is the way of the future, says ACI – and Veovo
Airport charges, a much-debated topic between airport and airline industry bodies, have again come to the forefront as the industry rebuilds from the upheaval of the last few years.
Airport Council International (ACI) strongly advocates the shift from heavy-handed regulation, arguing that cost-based pricing should be supplemented by responding to market signals and the competitive landscape. In other words, charges that reflect passenger and airline needs while addressing environmental impacts, such as noise and pollution. And we agree.
As a company that supports airports globally with operations and revenue management, we’ve seen first-hand the issues that can arise from a strictly cost-recovery-based approach. One of the key problems is that it does not reflect recent significant changes in the industry, such as the commercialisation and privatisation of airlines and airports, new customer segments, and the resulting need for varied airport services.
While the airport body continues to push for a modern policy framework on charges, there’s still plenty that operators can do today to get more from their aeronautical pricing and revenue management practices. And many already are.
Here are some examples of airports already reaping the benefits of creative pricing and incentives as a lever to improve their competitiveness, encourage more efficient use of capacity and reduce environmental impacts.
Incentivising for growth performance
As operators look to restart routes and recover traffic, they must find new ways to attract carriers. The primary way airports can do this is by innovating aeronautical charges with new schemes and differentiated tariff structures. Some standouts in tariff creativity include:
Dublin Airport. Following the global financial crisis, Dublin’s operator DAA created a selection of long and short-haul growth incentives to revive traffic and build a healthy transatlantic network. The schemes provided rebates based on overall traffic and transfer passenger growth and additional capacity on existing routes or new route growth. By 2018, Dublin was one of the fastest-growing airports in Europe; connectivity had increased by 59%, carrier numbers had doubled, and passenger numbers had risen by 45% to over 31 million.
Brisbane Airport. One of the fastest-growing in Australia in the last decade, leaned heavily on aero charge rebates and discounts to pursue Asian low-cost carriers. Within three years, its pre-pandemic Asian seat capacity expanded by more than 40%, and the number of airline partners more than doubled.
Differentiating for services
Increasingly, infrastructure charges are being separated from terminal charges to allow airports to offer a range of services such as buses, airbridges, electricity or preconditioned air to attract both full service and low-cost airlines. For instance:
Hong Kong Airport. The world’s eighth busiest airport pre-pandemic consolidated its multiple billing systems onto one platform, allowing it to deliver granular charging such as hand baggage limitations, parking utilities and overnight charging discounts.
Powering capacity optimisation
Beyond short to medium-term recovery, likely to be centred on peak periods, airports also need to ensure they can adapt to maximise the use of their current infrastructure. One way is by using behavioural incentive schemes. For example:
Dublin Airport. As a result of the rapid growth outlined above, operator DAA was experiencing bottlenecks at peak times. The charge structures were then keyed to encourage airlines to free up capacity in congested facilities, such as with discounts weighted on the significance of the capacity released. Other programs include significant runway charge discounts for long-haul morning arrivals using a remote stand, surcharges, and incremental time-based charge increases for long stayers or delayed stand departures.
Keflavik Airport. The airport operator Isavia frequently uses incentive schemes to smooth peaks and relieve congestion, both during the day and across winter/ summer.
Encouraging more sustainability
Many airports are now encouraging airline customers to use new, quieter, more environmentally friendly aircraft by adjusting charges to airlines based on environmental criteria. A study commissioned by the European Commission found that although 61% of European airports have already applied some charging levels for noise, currently, only 20% do so for emissions.
Swedavia. Swedish airport operator Swedavia is introducing a CO2 and NOx emission charge, following a government requirement that airport charges be differentiated for environmental purposes. Aircraft which emit more than average pay a penalty which finances a bonus for cleaner aircraft, with an overall airport revenue-neutral effect.
London Luton. Luton Airport has some of the most stringent noise control measures of any UK airport, building noise levels into its fees to dissuade carriers from using older, noisier aircraft.
A revenue management reset
Mastering the complex art of charge management within a regulatory cost framework – and invoicing accurately – isn’t always easy.
Some airports can fall into the black box trap – when commercial teams don’t have complete visibility into the impact of their schemes nor understand the back-office billing consequences.
For others, it’s the slow-to-cash malaise. Invoicing is delayed due to high-touch billing data preparation needs. Unbilled charges pile up through a lack of integrated operational data or overcomplex billing data preparation. Inaccurately applied discounts, particularly where multiple schemes are in play or multiple threshold criteria are required, leads to high levels of adjustments and credits.
To make sure that they can get the most from pricing signals and optimise their financial outcomes, airport operators need to ask themselves:
Does our commercial team have a clear picture of projected revenue and any operational impact of changes to the charge regime?
Are the native capabilities of aeronautical billing systems transparent enough that commercial teams can draw up winning schemes that are easy to implement in-house? Are there out-of-the-box capabilities to support standardised emissions-based charging, for example?
How much of the billing cycle can we automate to streamline the movement to the cash cycle and accelerate time to revenue?
Sharpening focus on flexibility and responsiveness
Airports that are the most flexible in using price signals are in the strongest position to encourage emissions reduction, optimise capacity and grow traffic. They are also the most able to adapt if regulation, commercial priorities or market dynamics change quickly.
Veovo fully supports ACI’s call to reconsider the use of strictly cost-based airport charges and heavy-handed regulation. In the meantime, airports must act quickly and decisively now. Where airports can pull levers to support their commercial and infrastructure needs, specialised aeronautical revenue tools can help airports inject flexibility into pricing models while remaining within regulatory boundaries.
Airlines have concerns and incorrect assumptions about the role of AI in powering the future of pricing. In this blog, we share insights from airline questions to Datalex regarding the role of AI in transforming airline pricing for the better, and for better revenues.
True AI-powered pricing, that eliminates rules and automated tasks, is a relatively new concept and is not fully understood industry-wide. Conor O’Sullivan, Chief Product Officer at Datalex and Navin Gupta, Product Manager for Pricing AI were on hand to answer burning questions, demystify some of the myths and addressing concerns that airlines have about AI-powered pricing.
Myth #1 – AI-powered pricing will replace my revenue management team
While some industry providers claim they will replace revenue management functions entirely, Datalex knows this is not what the industry needs. With Datalex Pricing AI, instead of replacing, we work collaboratively with airline revenue management teams to enhance what they do today, except in real-time and at scale.
Myth #2 – The airline will lose all control of its pricing strategy
We know from Datalex’s own research with airline executives that 93% of airlines say it is important to retain an element of control with AI-powered pricing so that the pricing strategy supports strategic objectives such as those to enter new markets, remain competitive, ensure customer loyalty, gain new customers, and maintain brand reputation. It’s important that an AI-pricing product is transparent the airline is satisfied that a degree of control is retained through supervising and monitoring techniques that give airlines peace of mind that they are very much still in control of their pricing strategy.
Myth #3 – Our airline will run into privacy / consumer rights issues with personalised pricing
This is a common misconception with AI-powered pricing and this concern is assuaged by the fact that we do not incorporate customer willingness to pay in order to sell the same product at different prices. The aim should be not be ‘personalised pricing’ in the strictest meaning of this; this aim should be ‘optimal pricing’ for optimal conversion dependent on demand and other inputs. This is the approach we have taken with Datalex Pricing AI, which is based on the concept of efficiency, in that the customer benefits from the optimal price based on market conditions at any given moment and this is beneficial to the airline because it is the most efficient price. For this reason, instead of mistakenly believing that AI-powered pricing is a customer-specific endeavour, it should be thought of as customer-centric as it is the most efficient price for any customer at any given moment. AI-powered pricing should be customer-centric, not customer specific.
Myth #4 – Our airline can make the best pricing decisions quick enough because we know our business and our customers
What your airline does today is most likely a limiting price decision-making process that tracks demand and does not take real-time competitor pricing and customer segmentation into account. Once revenue management teams consider and deal with each input and constraint, they must immediately start all over again. Thus, creating a trade-off between accuracy and speed which is a vicious circle with current revenue management processes, and a significant hindrance to an airline’s ability to react. A revenue management team cannot process all relevant demand factors, competitive insights and suggest the most optimal price at every given moment. Some products, like Datalex’s Pricing AI product, can process all inputs at any moment – within 200 to 500 milliseconds to be exact.
Myth #5 – Our airline data is exposed, we will be exposing our data to other airlines
It’s a common misconception that AI is a generic tool used across customers, but powerful, intelligent AI tools are uniquely trained and completely bespoke to each airline because it leverages an airline’s proprietary data and no other.
Myth #6 – We don’t have the internal resources needed to integrate with our revenue management system / We don’t know or have the right AI expertise
Internal resources and a lack of AI expertise are cited by airlines as obstacles to overcome in implementing AI-powered pricing. What is different about AI is that it is built on scalable, easy-to-integrate technology that is a huge change from existing legacy systems. Despite the technology being SaaS based, AI-powered pricing products still integrate seamlessly with existing legacy systems and an airline’s existing Revenue Management tools and processes.
AI education and awareness must not be underestimated. It’s important for airlines to trust technology and experienced technology providers like Datalex to fully embrace the potential of AI and lean on AI experts in the process to bring them along on this journey.
Myth #7 – Our revenue management team will not learn anything if they hand all the data over
It is important for Revenue Management to feel close to and involved in the AI process. To this end, we at Datalex work closely an airline’s revenue management team directly when models are trained initially. Decisions made by models which are reviewed with Revenue Management teams to assure them that it works as expected. We do not take a “big bang” approach and we always advise deploying the product initially into a small number of markets. AI adoption is a journey.
Summary
Beyond the obvious revenue tailwind that AI-powered pricing represents (which has been proven to increase revenue by 2% – 3.82% in Datalex production trials), there are many more opportunities for airlines to stay competitive in-market.
With demand patterns ebbing and flowing, customer confidence changing like the wind, geo-political issues and staff shortages – all industry-wide problems – airlines must have a dynamic, fast acting product that they trust is ready to react at any given moment to such a an ever-changing travel landscape. environment.
Many airlines are keen to start their AI-powered pricing initiatives, but it must be seen as a journey that is taken in steps, with existing revenue management teams in control every step of the way.
Conor O’Sullivan, Chief Product Officer at Datalex Navin Gupta, Product Manager for Pricing AI
The one last errand before you rush to the airport. Making sure rides are arranged for the kids’ activities while you are away. A few fretting moments as the shuttle bus takes too long to get you to the gate.
And then…just as you get in the security line…you learn your flight has been cancelled. It takes the wind right out of your travel sails, no matter who you are, where you are going, and whatever the reason is for your trip.
Some form or fashion of this is happening to thousands of passengers, every day, all around the world.
After unprecedented pandemic-driven slashing of load factors and balance sheets, our industry finally has the passengers back filling planes. And yet, for reasons well covered in media, we’re stepping on the passenger experience at the exact time when so many look forward to resuming their traveling lifestyle.
Airline Schedule Disruption & the Quick Cascade of Personalized Negative Ramifications
All the complications rush to one’s mind. Will I make my connection? Will I miss my meeting? Can my cousin still pick me up if my flight lands really late? What if the fix takes so long that we don’t fly till tomorrow? And does that mean I now have to find a hotel near the airport tonight? Does this airport have taxis available at this hour?
Regardless if the passenger sits in the plush comfort of seat 2B up front, or is snug in the middle seat of aisle 44 in the back, every single one is processing some form of the above queries when a disruption takes place. Anxiety cuts across every price point. Moreover, irrespective of the reason for the delay – be it weather, a mechanical or some other factor – many passengers instinctively hold the airline accountable for all the cascading challenges of an interrupted journey.
All Signs Point to Service Challenges This Summer for Airlines
The mainstream media stories on airline service issues are seemingly recurring weekly. In mid-June, a story on challenges facing European carriers was even published over the water by the New York Times. Over the recent Memorial Day holiday weekend in the USA, more than 2,500 flights were cancelled. Worldwide, more than 7,000 flights were cancelled that same weekend. During the weekend of June 17-19, FlightAware reported more than 10,000 flight delays or cancellations in the USA alone. Extrapolate that figure to the number of impacted passengers, and one can quickly grasp the downstream problems for airline service leaders.
The confluence of factors impacting airlines this summer are well known to airline executives across all departments – operations, finance, scheduling, customer experience teams, to name just a few.
Airlines, handlers and airports remain short-staffed, even as both business and leisure volume surges back
Last-minute flight cancellations cause havoc for crew needing to get to the right destination…and/or needing to quickly find lodging near the airport
Global warming is driving unseasonal weather events
Stubborn variants of COVID are resulting in an unsustainable number of short-notice absences for industry employees globally
From a service and branding perspective, social media only exacerbates the challenges of airline disruption. Passengers waiting on hold or not getting the right fix to their unique issue are often quick to lash out. Monitoring and responding to these electronic broadsides across multiple platforms takes time and resource for already-stressed service departments.
Digitized Services – Driven by Data – Can Mitigate, Surprise and Delight
The scope of these challenges have led some trailblazing airlines to trial modern solutions that are tailored to the expectations of today’s connected travelers. Simply stated, passengers are people who are experiencing new, fast technologies in all facets of their life. Yet when it comes to traveling, far too many sigh when they hear the frustrated voice of a pilot or gate agent announcing a delay or cancellation, as they mentally lurch to the analog mindset of legacy service expectations.
Thankfully, proven digital services are increasingly in use today to address issues raised by disruption. These communication technologies promptly provide relevant information to passengers right as flights are delayed and cancelled. Passengers get pre-arranged personalized options for refreshments, lodging and transfers delivered directly into their mobile devices.
The moment of frustration is instantly mitigated, with passengers empowered to choose from options that solve these immediate problems. The seamless, digital nature of this solution – no standing in line, no waiting on hold – elevates the formerly taxing experience into one of surprising efficiency and delight.
Better yet, the overall benefits to airlines in initial rollouts are real and tangible:
Automation drives less frustration, prevents long queues and dramatically reduces passenger friction
92 percent of disrupted travelers using technology have their issues addressed on-the-go via digital communication
Airport ground staff are recording time savings of 80 percent
Data compilation and tracking gives leaders greater insight and the ability to plan ahead
Quick implementation – as fast as two weeks – expedites use of these solutions
Finally, the delivery of services in this manner creates goodwill with the passenger. Highlights include a greater loyalty to the airline, as well as the warm hue that comes from word-of-mouth storytelling – especially crucial today as business travelers get back to the office and share tales from the road.
With the problems of this unique summer travel season already apparent, the time for action is now. Full-time reactive mode will not suffice as the airline industry comes back to life. Airlines that are truly committed to customer service excellence are investing into digitized solutions across the spectrum of their operations.
Leaders taking in this article should not risk getting left behind.
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.
There has been a lot of talk about customer segmentation and personalisation in the past few years. However, there is little evidence that airlines are actually applying any sophisticated level of either – personalisation or segmentation. We may receive marketing emails from airlines with very basic “Dear Mr. Friedli” salutations as an attempt at recognition, however the content of the mail is the same as the next and usually has nothing to do with my travel patterns or signalled intent. While some airlines are better than others in content marketing based on segmentation, most are far from the level which retailers are at. And the furthest extent of segmentation is typically in marketing mails.
During the offer creation process, the airlines’ lack of maturity is even more visible, be it on an airline’s website or app, or via new channels such as the API-driven NDC-channel. In the best case, there may be some differentiation based on the classification as a business traveller or a leisure customer. However, often I may be both, and here things fail.
The purchase process on the website, in most cases, is standardised in terms of process flow and content. Rarely do airlines apply a level of segmentation based on user data or ongoing input from the consumer. Even the promise of new distribution methods enabling “better personalisation and targeted offers” has rarely been fulfilled.
This article focuses on segmentation – or the lack thereof – during the offer creation process.
Why segmentation?
Traditionally, airlines would use very basic indicators to apply customer segmentation during the offer creation process. Segmentation was mainly limited to two segments: business and leisure travellers. This was controlled through characteristics such as weekend stays, duration and other, rather simplistic fare rules and parameters. Today, customers expect tailored content. As a matter of fact, 80% of customers expect a personalised brand experience according to research by Epslion.
The advantage of the basic, fare parameter-based segmentation method is that it will work through traditional channels such as legacy GDS distribution with ATPCO-based fare filing. The disadvantage? It is not a very fine-grained segmentation, nor does it reflect the changed travel behaviours, changed willingness to pay behaviour and changed airline fare products nor the new and enhanced airline and third-party ancillary products.
Applying fine-grained customer segmentation can increase airlines’ revenue, both by increasing conversion and by upselling products to the customer, thus getting just that little bit more of the customer’s wallet share. In consumer retail, estimates and past research show that revenues can be increased by up to 3% to 5% using segmentation and creating tailored offers. Additionally, it is safe to assume that applying smart segmentation can improve customer satisfaction by showing the customer more relevant content.
As distribution is shifting to more direct distribution for many airlines, and a shift towards NDC-based direct-connect distribution on the indirect side, there is growing value in segmentation as it can be applied to a larger customer segment.
What is holding the airlines back?
A combination of a lack of focus or strategy for segmentation, technology challenges, a lack of resources with the knowledge and experience and the inability to analyse customer behaviour, purchasing data and other data-related deficiencies seem to be the reason why airlines have not spent more time on this topic. It could be that airlines are just not convinced that better and more refined segmentation leads to additional revenue and customer experience. Let’s discuss these factors individually.
Strategy and focus
As segmentation has typically been the realm of the marketing and loyalty department, this is not an area which has been in the focus of the product and pricing teams in the past, except to the extent where it was required for basic segmentation. Furthermore, there is often a silo-challenge, whereby the eCommerce team is not in close communication with the revenue management and ancillary team, and the distribution team focusing on NDC and newer offer solutions such as an OMS are different yet again. However, the segmentation strategy for offer creation should, in our opinion, be anchored at the highest level with the overarching distribution strategy, and encompass all channels, segments and products.
Technology
There are a few angles of the technology aspect, and these differ considerably between airlines, depending on the organisation, the solutions in place and the organisation’s digital maturity. However, technology is available to enable an airline to do refined segmentation during offer creation. Optimally, an airline would have a central offer creation solution, or OMS. This would not only feed the airline’s own digital channels, but also the direct-connect channels such as NDC. Within or supporting the OMS, the airline would have a segmentation solution allowing it to determine, based upon each request, a customer segment and in many cases, the context or intent of the request and thus the customer.
Widely available are solutions for the website and mobile app today already and airlines are urged to grasp at the low-hanging fruit of segmentation in the digital channels, as these can be implemented relatively quickly and even managed by third parties, should an airline not have the resources. At the same time, these solutions are often quite advanced and allow for in-depth A/B testing of the success of your segmentation approach.
Resources and skills
Perhaps one of the greatest challenges is within an airline’s organisation. Many airlines continue to have the traditional organisational structure which has been prevalent for decades. Very few have adapted their organisations to align to modern retailers. These typically have a structure which is very much optimised and focused on sales (or channels), products, customer experience and finally, technology enablement. This type of setup could be well aligned to a commercial organisation within an airline.
The second challenge is having the skillsets which understand retail, digital and (new, digital) customer experience. Typically, these will need to come from outside the industry, meaning that they will lack any understanding of the fundamentals of the industry. However, an airline needs to ensure that the complexity of the business is understood, as there are elements of our industry which do not relate in the digital banking, insurance, or retail world. The airline industry is still governed by many standards and interaction protocols, we have regulatory bodies which allow us to interact with other airlines and, for example, governments. Thus, while the outside-in approach is a great way to bring new talent and knowledge, there is a need for bi-directional training within the organisations.
Should an airline be lacking the skills or resources, these can often be acquired as a service.
Product and offer optimisation capability
While we touched on the technology and skillset above, we now need to bring these together. Based on the segmentation strategy outlined previously, using the technology and the know-how we now have, it is time to execute the plan.
There are a number of tasks to be undertaken:
Define the actual segments or demand spaces, and create all required sub-segments based on, for example, geography, point of sale, demographics, and channels.
Define which ancillaries or fare products are relevant to which segments or demand spaces
Define how pricing can be optimised to each segment’s willingness to pay, focusing on increasing conversion
Creating bundles of products and services likely to be purchased by the segments
Implementing the logic, business rules or algorithms within the offer engine or digital channels to analyse the request and the context or intent, select the right set of applicable products and create a number of tailored offers
Implement A/B testing to measure the success and confirm any hypotheses made, especially in the initial phases, However, there is a need to continuously measure and test, as the optimisation is a never-ending process.
Data
For airlines, there is rarely a lack of data. It is available in abundance, however, perhaps not structured or easily accessible. Data is essential, however, to create an initial set of customer segments as well as an initial definition of tailored products and services per segment. Typically, this can be defined based on past purchase data.
Further, data from each request, as well as data from customer history or your customer data management (CDM) solution (e.g., the loyalty system) can be used to create the “on-the-fly” offer. There is a lot of valuable information in requests made through digital channels or the API channel which can be used. This includes obvious elements such as the cities travelled from and to, the number and types of passengers and the date of travel. However, other elements can be used as indicators as well, such as the amount of time a search is done before travel, the duration and days, the season in combination with the destination and many others.
Can an airline take baby steps to improve?
While the five groups of activities outlined above may seem a lot to deal with, this does not all have to be done at once. And, while there can be compelling events which offer the opportunity to consider the overall strategy and execution thereof as part of the process (such as when redefining your distribution strategy or implementing an OMS or upgrading your eCommerce platform), bits and pieces of all the above steps can already lead in the right direction.
An isolated micro-segmentation strategy can be a great first step, based on existing booking data and analytics from the website. Alternatively, implementing software on your website which helps with targeted offers and segmentation can be done in a matter of weeks, with initial results seen in a few months. This can be procured as a service, allowing the airline to focus on other topics at hand. Categorising the existing ancillaries and fare products to a basic and simple demand space structure, and creating some static bundles aligned to these can typically be implemented relatively quickly.
In any case, if you go big or small, take a giant leap or a baby step, it is strongly encouraged to seize the opportunity and not to wait with segmentation. As we work with airlines around the globe, this has become one of the key topics of interest and development, and will help airlines take one more step towards becoming retailers within the travel industry.
As air passenger volumes recover from the impact of the COVID-19 pandemic, airports will focus on three key aspects:
Reducing costs by sweating existing assets while improving safety and security
Restructuring operations to drive down costs and to use assets for maximum ROI
Rebuilding the workforce with new skills so that more can be achieved without adding to headcount
The key to doing this is to build connected airports. Airports that connect internal systems, partners and passengers, and can consolidate and share data. This makes it possible to put the power of analytics, Artificial Intelligence (AI), Internet of Things (IoT), Virtual Reality (VR) and mobile applications into the hands of airport operators.
The goal of these advanced technologies is twofold. On the passenger side, the goal is to engineer great experience and safety, reduce queues and improve boarding processes. On the operations side, it is to provide better on ground support, drive sustainable energy practices and create a future-ready workforce.
Reducing costs and enabling safety at every step: Airports have traditionally relied on video surveillance to deal with safety threats and to enforce regulations. Every service provider – from customs to law enforcement, fire personnel to medics and airline operators to ground handling – makes use of video technology. However, they fall short due to the siloed use of the technology. The existing cameras can be connected to deliver extraordinary insights. Their video feeds can be integrated with an analytics platform to:
Count people and provide real-time footfall in any zone of the airport
Adjust air-conditioning, the availability of security personnel, or the provisioning of extra security lanes based on passenger density
Apply rules to monitor people movement and detect proximity violations
Capture and scan images to identify passengers and airport personnel not wearing PPEs or masks (video analytics has become smart – for example, it can identify the subtle difference between a PPE and a thawb or the long tunic traditionally worn in Arab countries – making the technology highly usable).
Analyze images for a variety of tasks from flagging suspicious behavior to detecting left objects, luggage, fires, or creating alerts for passenger-related incidents such as a medical issue or an altercation
To implement this new level of video analytics, airports need not begin from scratch. Airports need platforms that aggregate, anonymize, standardize and analyze live feeds for real-time insights using prebuilt AI and ML computer vision algorithms and visualizations to manage large indoor spaces automatically based on rules and alerts. Airports can use these platforms for several use cases to support automated real-time management and post-event investigations.
Restructuring operations to enable sustainable, safer and more efficient operations: Airports are complex operations that rely on multiple service providers. On the aviation side, these include luggage loaders, fueling systems, technical inspections of aircraft, and airside equipment. On the non-aviation side, they include car parking, customs, catering, retail, security, F&B, and HVAC management. Each provider and airport system has its own IT infrastructure and data standards. These disparate systems need to be connected to generate intelligence that improves airport operations. The first step to doing this is by IoTize assets followed by standardizing and integrating the data. Such a connected airport ecosystem can transform operations through:
Real-time performance visibility into critical assets
• Early failure detection and avoidance of unplanned downtime
Reduction of airside congestion resulting in minimized safety and security violations
Reduction in aircraft turnaround time, leading to improved capacity
Enhanced airside efficiency through automated scheduling and optimized deployment of connected Ground Support Equipment (GSE)
Smart building energy management with real-time alerts to support sustainable practices
Rebuilding the workforce to be future-ready and productive: With the COVID-19 pandemic, the workforce of every organization has been reduced. It is no different for airports. When passenger volumes go up, airports will have to manage their operations with a smaller workforce. This means training and multi-skilling existing employees and achieving the training objectives at scale.
Many of the ideas and use cases mentioned are industry-changing. They have the capacity to alter airport operations forever, and depend on connected systems, equipment, and workforce, so that data can be shared and analyzed for intelligence.
Every industry, from manufacturing to retail, is investing in creating connected ecosystems that demonstrate the characteristics of robust and resilient networks. It is time for airports to catch up.
Disruption is the new normal for businesses in every industry. In the travel and transportation space, airlines are applying new levels of technology in order to deliver value on faster cycle times. Meanwhile, they are experiencing an increasing churn of talent, plus added restrictions and industry mandates. To survive in today’s volatile environment, airlines must enable real-time situational awareness to combat operational threats. Managing their cargo below the wing as they revenue manage their seats and ancillaries above the wing will help them achieve their goals.
According to the International Air Trade Association (IATA), worldwide demand for export and import orders continues to fluctuate, while cargo capacity restraints tighten. IATA reported that both cargo demand and capacity were down in April 2022 compared to the previous year, with global demand down 11.2% and demand for international operations down 10.6%. Global cargo capacity was reportedly down 2% versus April 2021 (although international operations were up 1.2%), and both were down slightly from March of this year.
IATA also reported that total demand for air travel was up 78.7% year-over-year in April 2021 and up 2.7% over March 2022, with several international routes trending above pre-pandemic levels. So while it appears that wildly fluctuating cargo capacity and demand are here for the long haul, air travel for commercial passengers continues to increase, despite fuel costs, political challenges, and pandemic complications.
Meanwhile, airlines struggle to effectively price cargo capacity in an increasingly dynamic environment. In a time when year-over-year and historical data leave gaps in future demand and pricing, traditional methods are unable to help airlines convert their unique offering into long-term revenue. Beyond that, cargo revenue management isn’t typically considered in legacy revenue management systems. Instead, carriers rely only on ad-hoc processes, infrequent heuristics, and effort spent exclusively on managing near departures. In a nutshell, airline analysts rely on guesswork to make cargo revenue management-related decisions. This is not the best way to maximize the usage and profitability of airlines’ most profit-turning assets.
FLYR Labs utilizes artificial intelligence, deep learning, and neural networks to solve the industry’s cargo model complexities. The Revenue Operating System® harnesses this cutting edge form of AI technology to provide the context behind airline data, helping analysts make better informed decisions.
The Revenue Operating System does not rely on outdated predictive equations, but rather infers complex relationships in high-dimensional space. The deep learning models provide meaningful, organization-wide applicable outputs – driving capacity planning, B2B negotiation, and automated request evaluations to support sustainable cargo revenue. For airlines, The Revenue Operating System also informs the price of passenger fares and ancillary products like neighbor-free seat offerings for true total flight revenue optimization.
For cargo revenue management analysts, this means they can now focus their attention on strategic activities – deepening their understanding of the network, evaluating complex opportunities alongside customers, and leading the cargo organization as a true commercial center. This is enabled through The Revenue Operating System’s outputs removing the need for manual oversight of standard requests, dynamically reacting to changing market conditions, and identifying where human attention is required. Models and frameworks that have been price-focused since day one ensure that carriers will no longer have to resort to rigid pricing and simplified frameworks while enabling increased organization, agility, and speed of collaboration with customers.
The result is a robust, sustainable, unified cargo management plan that minimizes waste, maximizes revenue, and streamlines operations across the entire airline.
Learn more about how airlines can unlock cargo’s revenue potential using The Revenue Operating System in Air Cargo Magazine’s April issue (Page 16), or visit https://flyrlabs.com/product/.
The beginning of 2020 brought with it the hopes for a new decade. The year which started with bright smiles, successful project launches, and travel plans, has now become a long haul waiting for life to get back to normal. The change meant so much more to the people who spent their days within the airport. It didn’t seem like the projections for the travel industry would be achievable.
Looking back a few months now, we hadn’t anticipated this drastic change. Nobody ever thought that we would see a day where not a single plane would fly in the air, that there would be a global lockdown, or that crude oil would be so cheap! The COVID-19 pandemic has shown us a new world. While we are still trying to grasp the lifestyle changes we need to make, organizations and companies are trying to deal with lost sales and loss of revenues. The new challenge has also driven the need for organizations to re-think their approach and restructure. The trust with their customers can be built now only by ensuring that safety and sanitization are maintained, which is possible only by understanding the customer’s perspective. The challenge will be to revisit processes and abide by government-issued health guidelines.
At Pittsburgh International Airport, high-traffic floor areas are being cleaned and disinfected via robots using UV-C rays. JetBlue is cleaning airport terminals using a hospital-grade disinfectant and has also increased the cleaning frequency. T.S.A. officers need to change their gloves after each pat-down or on customer’s request. Delta is using a mist-based disinfectant via an “electrostatic sprayer.” While United Airlines has introduced their ‘all in one’ economy snack bag that contains a sanitizer wipe along with bottled water and snacks, other airlines are asking customers to eat food before traveling.
The pandemic has also brought attention to facts that were ignored. The retail experience within stores at the airport isn’t the same as the retail experience on the high street. Retailers at airports are yet to catch-up with the innovations that are happening outside of their world. With COVID-19, the need to invest in the digital transformation has strengthened. The challenge to maintain the same experience of a product/brand inside the airport and outside remains and is solidified.
The following innovations need to be adopted by organizations and the travel industry in general to ensure the continuation of their businesses. COVID-19 has definitely pre-empted innovation, which was inevitable due to the ‘more online interaction and less physical’ preference of the millennials:
1) Digital transformation: The key strategies for digital transformation are driving customer experiences with customer data platforms and personalization. Tracking customer interaction at every touchpoint within the airport, with the brands and their products enables better segmentation and predictive analytics.
2) Gamification / Virtual Reality: With COVID-19, hygiene and social distancing have become the norm. Gone are the days when customers tested sample products before purchasing. The panic of the pandemic is prevalent and here to stay as a part of our life. Companies will need to think out of the box. To avoid physical contact and still ensure customer tries the product before purchasing, several tools are available in the market today. Brands have their own ‘Virtual Try-on’ tools and quizzes to recommend products to consumers.
3) Contactless payment options: COVID-19 has emphasized the need for increased hygiene and sanitization. In stores, making cash payments is the riskiest transaction. The heightened sense of sanitization will make customers avoid such transactions. To enhance customer experience and their safety, contactless payments at retail outlets will be the new norm. Technologies like NFC can help brands to enable this.
4) Loyalty: Technology can be used to enhance loyalty for travelers by firstly integrating loyalty services commonly across all stores of the brand. Secondly, via an initiative to tightly couple loyalty programs of the brand with travel service providers (like airlines and airports). This way, consumers can see the added advantage of remaining loyal to a brand, and also enjoy enhanced loyalty since the services are integrated. Customers prefer value to price, and a tightly coupled loyalty program can enable it.
5) Super apps: Especially with most consumers using multiple devices and multiple channels for varied needs – booking tickets, tracking status, tracking loyalty points for the airline, buying products, etc. If all these different apps used by the customer can be clubbed into one super app, the benefits will be immense. The customer can use the same app to book their ticket, check status (of flights or product deliveries), make a purchase of a product from the brand, and use the same app to track loyalty points (for the airline and the product purchase). This connected app will enable the customer to have everything required under one umbrella. This again requires a well-integrated system of companies/brands with airports and travel service providers.
Conclusion
In summary, the above innovations need to become essential in organizations’ standard operating procedures to ensure that they can survive the new normal post-COVID-19. This is the opportunity for every organization to stop, assess their current set-up, and measure up for future innovations. The call for a well-connected integrated world is undying and will be here to stay, just as we tackle our new normal with the COVID-19, which is also here to stay.
It is possible that in the near future, a customer journey is well-connected and integrated – to ensure a seamless and safe experience.
While there has been much talk and debate since IATA published their vision of a world of offers and orders, the Passenger Service System (PSS) is a critical piece of the airline ecosystem that will not simply vanish overnight. Here’s a preview of a future state in which reliance on the PSS is reduced in favor of new practices that allow airlines to sell more, across more channels, all while streamlining legacy processes.
Delivering the industry vision for personalized travel retailing will be achieved through an API-based product ecosystem.
From an offer perspective, the end-state will include intelligent retailing via a retail platform and offer management system through which all product and customer attributes will be analyzed to create personalized offers. This retail platform will use an NDC-enabled offer and order APIs to communicate the offers to all partners and channels. For orders, the traditional PSS will ultimately be replaced by a new order management system which fulfills the offer, settles payment and creates orders as new centralized records for customer and trip data throughout a journey.
The order model will reduce operational complexity by eliminating passenger name records (PNRs), electronic miscellaneous documents (EMDs) and special service requests (SSRs). Since an order will serve as the single trip record, trip changes, bundling content across different supplier types, and servicing customized offers and orders will be easier than it is today.
The offer and order model is underpinned by a new foundation for data and analytics that supplies rich customer and operational data to the offer and order management systems as needed – and includes Artificial Intelligence and Machine Learning (AI/ML) based services to further optimize customer touchpoints.
The illustration below uses a modern grocery store analogy – with a wide choice of products, bundled offers, flexible shopping and payment options – to show a view on the core building blocks of an end-state offer and order solution.
The transition to offers and orders, while gradual, will see a paradigm shift in terms of technology and operations to support content and commercial model innovation.
The industry will move from a world of static information filings, and multiple piece parts required to fulfill and service bookings, to one that is more dynamic, intelligent, and flexible. IATA set an aspirational goal for the airline industry to transition to offer and order-based retailing by 2030. As a result, travel suppliers and sellers will need to manage hybrid processes associated with ATPCO/EDIFACT content and offers and orders for some time. This reimagining of travel technology will benefit all parties, with travelers being offered a wider choice of personalized content, and travel suppliers and sellers benefitting from improved efficiency and enhanced revenue opportunities.
New to offer and order management? Explore our glossary:
Offer management – The process through which travel suppliers define their product catalog and pricing (retail) to create offers, place the offers across all points of sale (distribute), and differentiate their brand experience (personalize).
Schedule optimization – Strategic analysis and tactical management of how every route can contribute to the airline’s overall profitability
Revenue optimization – Development of the product catalog (all air and ancillary inventory, fares and third-party content) that optimizes total revenue by considering market dynamics, competitor positions, and customer data
Retailing partners – Partner connectivity will provide all background information and data needed to facilitate the sale of any third-party content via the retail platform.
Offer store – Storage of all elements of an offer selected by the traveler until such time as the offer has expired or the customer has proceeded to purchase and the offer converts into an order.
Offer definition and catalog – The inventory free of booking classes that reflects what is available for sale. This includes any conditions attached to offers, such as change and refund policies.
Dynamic pricing and bundling – Revenue optimization, the pricing engine and the offer catalog come together to construct an offer that is intelligently personalized and available for sale according to the offer rules.
Personalization – The application of data science to customer relationship management (CRM) data, trip context details and market trends to generate intelligent offers that are tailored based on customer credentials and known/inferred preferences.
Order management – The process through which an offer is converted into an order (fulfillment). This includes the management of payments/settlement, travel bookings, inventory control and order fulfillment at the airport – all while accounting for total revenue.
Order store – Storage and management of the order throughout its lifecycle, including a record of all changes made by either the traveler or travel supplier, especially in case of reaccommodation.
Payments – Integration of all acquiring banks and payment providers supporting the forms of payment accepted.
Servicing and reaccommodation – Orchestration of the changes required for each voluntary or involuntary change scenario. This business system ensures closed-loop communication with the customer and reconciliation of inventory with any external partners or suppliers.
Departure control – A simplified workflow of order processing tasks needed on the day of departure, most likely to focus on exception handling and change management in the future.
Financial accounting – A future workflow where real-time revenue value from a flight ready to depart is available. This will be achieved by moving many activities currently in Revenue Accounting into the Offer and Order workflows, including revenue integrity protections.
Supplying partners – Partner connectivity will provide all background information and data needed to facilitate interlining, codesharing and the management of third-party services.
Omni-channel management – The consistent management of content and user experience across owned and third-party sales channels, including their sales performance. NDC-enabled capabilities will expand distribution reach by enhancing the consistency of what offers can be distributed across channels, as well as how those offers will be displayed.
Connectivity and APIs – Efficient API access and modularization will allow for new and flexible commercial models between travel suppliers and sellers. It will allow partners to embrace channel differentiation and sell existing and new offers.
Tech foundations, data & analytics, AI/ML – Cloud-based data and analytics will support the retail platform and offer and order management systems. Real-time, two-way communication between the data fabric and the business systems will allow for “in the moment” personalization of the full product catalog. AI and ML-based microservices support the business systems by further optimizing recommendations in the point of sale and service.
By Sabre.To learn more about how Sabre is helping to open the door to a future that means more flexible, modern retailing visit www.sabre.com/open.
Global Airport Mobility – comprising journeys taken to and from the airport by consumers – is a $60-70 billion opportunity for the travel industry that is largely untapped, according to a recent report by CarTrawler.
The survey, which looked at the consumer behaviour of over 11,500 people in five markets, was undertaken to understand exactly how consumers get to and from the airport beyond car rental, and uncovered many insights on consumer wants and needs, how the pandemic has impacted consumer behaviour, the scope of the opportunity for the travel industry, and how to optimise for it.
While there is already comprehensive data on the existing car rental landscape, the broader airport mobility opportunity has been largely overlooked, so a global survey of this nature was essential to both understand the existing situation and provide insight into how the travel industry can optimise it now and into the future.
What is the Airport Mobility opportunity?
The ‘Broader Airport Transfer’ mobility opportunity – which includes taxi, shuttle, private transfer and ride-hailing (or ‘on-demand’)- is comparable in worth to car rental at $19-23 billion but the shape of the opportunity is very different, with broader airport transfer offering seven times higher booking volumes. Whereas on-airport car rental accounts for 65-80 million journeys, broader airport transfer accounts for 460-555 million journeys – which offsets the lower average booking values.
Differing markets have different needs
While the volume of booking journeys in North America and Europe are similar at ~1 billion in each geography, there are significant differences in the breakdown of transport methods. In North America, where a car-centric culture is more prevalent, 46% of airport journeys are made by private car, compared to 31% in Europe. The most significant difference between the two is the amount of bus and rail journeys – which comprise 20% in Europe, but only 8% in North America.
Consumer needs and behaviour – and pent-up demand
The report shows that there is significant pent-up consumer demand to book airport transfer with their flight or travel vendor, but that either the vendor doesn’t provide the offering, or they don’t make the consumer aware that it’s available.
Where flight vendors offer airport mobility, the customer journey tends to be longer than that of car rental, with more touchpoints and opportunities for the travel vendor to make the consumer aware of their offering. The customer journey to purchasing airport mobility is also omnichannel and with desktop, mobile web, mobile app and offline methods of booking all popular.
By CarTrawler
To read the full report and find out much more detail about consumer journeys and behaviour, the key blockers that prevent consumers from booking airport transfers, and how flight vendors can optimise the customer journey to seize the opportunity, read CarTrawler’s Airport Mobility Opportunity here.
Additionally, overall passenger satisfaction dropped across nearly all measures (down more than 20 points from a year ago). 
