The State of Airline Digitization: Expectations Meet Reality

by | Nov 20, 2019 | Airlines, Digital Transformation, News

Pressure To Transform

It’s easier to have confidence in your business strategy when your team has deep industry experience. But how can you ensure that your airline understands the urgency of responding to rapidly changing customer expectations?

This paper offers a research-validated perspective on the state of the airline industry as it pertains to digitization initiatives, so airlines can create more accurate benchmarks for their digital transformation journeys and understand what to prioritize next.

Through a survey of nearly 400 managers, directors, and executives working across the full spectrum of departmental responsibilities, PROS and Hanover Research have identified key gaps between airlines of different sizes and business models related to:

  • Prioritization of digital transformation initiatives
  • Perceived progress made across key digital transformation efforts
  • Expectation of how technology improvements affect revenue

Through the adoption of technology for service- and system-related pricing optimization and sales, airlines have made it clear they are maintaining a steady focus on improving two key areas: customer experience and operational efficiency. What is less clear is how to measure the effectiveness of these new initiatives and how to tie customer experience to revenue.

More than 90 percent of airlines are seeking multiple changes to their tech stack

Beyond revenue generation, are airlines on track to meet the demands of today’s technologically savvy consumers? Industry data tells us the answer is closer to “no” than “yes.” Consider that a 2019 report from J.D. Power indicates that travel industry apps lag substantially behind credit card and banking apps when it comes to meeting consumer expectations.

So, what factors motivate today’s airlines to implement significant technological change? The research shows us that improving customer experience and staying competitive are the primary motivators for airlines to pursue digital transformation.

We also see that network airlines are more likely to prioritize operational efficiency, while low-cost carriers are more likely to apply digital transformation to sales.

Beyond their differing priorities, airlines have varying levels of confidence in their ability to execute on digital transformation efforts. Perhaps unsurprisingly, low-cost carriers report less confidence than network carriers in their ability to realize digital transformation. This disparity helps explain the wide gap we see in implementation reporting: 64% of network carriers have already implemented a digital transformation initiative compared with only 29% of low-cost carriers.

The research uncovered interesting data points about airline digitization, including:

  • Two-thirds of airlines create new roles as part of their digital transformation initiatives
  • Airlines are typically very confident in their abilities to implement digital transformation initiatives, especially enhancements to the mobile experience
  • Airlines rate approximately two-thirds of digital initiatives as successful.

These are just a few of the points we’ll review as we explore the state of digital transformation in the airline industry.

Download the full report from PROS here