Artificial Intelligence (AI) is revolutionizing entire industries, and the airline sector is no exception.
For an industry that operates on a less than 2% profit margin, no industry is in need of AI like the airline industry. Customer demand for a seamless traveler experience has been growing at a rapid rate with over half of Americans willing to travel if the experience was better. Combined with the current economic climate, consumers are also hyper-focused on value – and delivering on this combination can only be done with modern technology.
While we’ve entered a recent AI hype-cycle, with generative AI tools like ChatGPT spouting off instructions for DIY projects, cooking recipes, and creative writing projects, AI has been around for quite some time. Consumer-focused brands like Amazon, Netflix, and Uber are no strangers to using AI but now we’re starting to see the travel industry catch up with new companies like Roam Around entering the chat (no pun intended).
According to a recent study conducted by SKIFT and FLYR, 90% of travel and transportation decision-makers agree that AI solutions will be an important enabler for commercial operations in the next 5 years. And, in the same study, 71% said that they believe that at least half of their products and services will have an embedded AI solution within the next 5 years.
Here are three ways airlines can step into the now and future with the help of AI.
Ditch legacy technology
Legacy technology has become a massive burden on the airline industry, it is expensive, inflexible, hard to integrate, creates siloed data – and it is not compatible with cutting-edge AI demands. While transitioning from this type of mainframe-dependent technology to modern cloud-based technology can be time-consuming and expensive, it pays huge dividends in the long term. Even more, travelers today expect more, making the time ripe for change.
According to Deloitte, Airlines face constant pressure to meet elevated customer expectations, increasing regulatory requirements, and their own ambitious growth plans while continuing to work on outdated legacy systems.
Modern, modular solutions that are designed to work alongside legacy tech do exist today to enable gradual transitions – and a fast, easy, and cost-efficient transformation. These cloud-based solutions can scale, and collect a lot more data for data-hungry AI algorithms to immediately unlock new revenue and better travel experiences.
Take a consumer-centric approach
As mentioned earlier, companies like Amazon, Netflix, and Uber have been benefiting from AI for a while now and there’s no reason airlines can’t tap into these benefits too. The most important reason to embrace AI is that consumers have come to expect the benefits and tailored experience it provides. When consumers buy something on Amazon, they are immediately presented with other suggested products, bundles, and discounts based on their shopping habits. But when those same consumers travel, they don’t get that kind of seamless, personalized shopping experience from airlines.
That’s because airlines are process-centric. Their primary focus is getting passengers safely from point A to point B, as it should be. In an industry with a less than 2% profit margin, customer experience has always been a challenge. Now, with AI, it can be brought to the forefront in a cost-effective way, allowing airlines to get an intimate understanding of individual travelers’ behaviors and provide them with the most relevant offers.
That level of personalization doesn’t have to end at the airline. By aggregating content from various providers, airlines can extend the customer experience to hotels, airport experience, and even other airlines. Imagine having a rough travel day, and then receiving a message like this: “We are sorry that your flight was canceled. Here is a new boarding pass with a different airline – you will still earn your loyalty points with us. Also, we have informed your hotel. They will not be charging you for the first night and will have a room ready at your new arrival time. We have also arranged for a pick-up at your destination, your bags have been re-tagged, and while you wait for your next flight here is a lounge pass.”
These are the kind of frictionless experiences people have become accustomed to in other areas of retailing, and they are powered by AI. They go a long way in reducing travelers’ stress and anxiety and, most importantly for airlines, increase customer loyalty.
Work smarter through automation
The airline industry is plagued by manual tasks for consumers and employees, leaving a massive opportunity for automation powered by AI.
This is true for the end-user experience – think common travel tasks like booking, checking in for flights, and accessing travel information – but also the employee and business experience.
By leveraging AI technology that can help automate things like fraud detection, compliance, seating, and re-accommodating, airlines are able to streamline business processes and increase operational efficiency, reliability, and cost savings. Moreover, automation helps teams reduce time-consuming, repetitive tasks, freeing them up to focus on more strategic decision-making – like flight and route planning – enhancing their ability to make better decisions and drive business performance.
A win-win for airlines and travelers
AI is already starting to revolutionize the airline industry by unleashing the power of airlines’ data to make predictions that address some of the industry’s biggest challenges, including boosting airline profitability and addressing customer sentiment. In fact, the market opportunity for AI in aviation is expected to balloon in the next few years, growing from $713 million to more than $12 billion by 2031.
With AI, airlines can better understand customer behavior, market trends, and operational performance to fuel growth and innovation, identify new business opportunities, and differentiate themselves in meaningful ways.
Airlines may not be able to control the weather, but they can grow their business while delivering a modern customer experience.
Article by Kartik Yellepeddi, VP of Product, Offer and Order, FLYR
