Solving major challenges confronting airlines and travel retail by implementing an Omnichannel business model

by | Sep 4, 2020 | News, Retailing

Author: Kian Gould, Founder and CEO – AOE

Most airlines with an inflight retail business have also had E-Commerce websites for some time now; their main objective has been to capture pre-orders – effectively extending the “inflight shopping” window outside of the actual flight. But how effective can such sites be when flights are mostly cancelled and there are so few travelers actually flying?

And even though the number of passenger flights (and travelers) will eventually recover, the challenges will remain the same. Travelers do not think about airlines when they need to shop; travelers do not fly in order to shop. Shoppers’ behavior has also accelerated to digital, even more so than pre-COVID, when they were essentially “trained” by global E-Commerce players over the years. Then, throw in price comparison, extensive “marketplace”-type assortments, intuitive (mobile-ready) user interfaces and the speed and convenience of home delivery – and suddenly the scale of the challenge for airline retail E-Commerce becomes quite apparent.

The analog inflight retail model will not work anymore – enter the digital opportunity

The same travelers who ignore inflight offers are eager to travel further and more often with the airlines and many absolutely love to shop – but the traditional model of products in a cart being pushed down the aircraft aisle is not exciting enough for them. Nor do these travelers have any reason to really look for, or visit, the airline’s retail E-Commerce website, particularly after they have booked their tickets.

However, arguably, airlines still have a unique opportunity presented by this acceleration to digital. This opportunity can be realized through a new Omnichannel model; a digital solution designed around the modern customer’s needs. Everything the customer wants is placed on a single, integrated digital platform; from services such as parking, baggage, upgrades, food pre-order, car hire and hotels to products from luxury brands and other retailers as well. Everything is optimized for easy discovery, and high engagement, with the aim of providing the customer with a seamless and personalized retail experience, right up to the point of instant payment and customized fulfillment options.

Just as they have become used to from all the global E-Commerce players (such as Amazon).

For airlines, the digital opportunity potentially opens new doors and avenues to cost management on the back-end, as well as new ancillary revenue growth and stronger passenger engagement. Imagine the benefits of a vendor-agnostic integrated retail management platform that joins up front-end retailing with back-end supply chain management. It allows airlines to start leveraging the (traditionally) strong brand equity many have in their home markets and to move beyond simply being transporters of people from A to B.

Omnichannel as key to a cohesive and comprehensive customer experience

This Omnichannel model that radically enhances the user experience and supports the creation of a stronger relationship across all points of contact is already being practiced by a handful of pioneering airlines, including Singapore Airlines, AirAsia and Lufthansa. These airlines are ahead of the curve and have taken inflight retail into the digital age.

With this broader, digital, view on ancillary revenue, Singapore Airlines, for example, has redesigned its traditional “KrisShop” offering into a powerful, new platform offering real-time, personalized content with branded and integrated sales and marketing campaigns. Instantly, the revenue opportunity is transformed because of the prolonged window of opportunity for customer engagement, offering significantly enhanced convenience and experience overall for shoppers, regardless of whether they travel or not.

Integrating a wide range of features and services from front- to back-end, KrisShop engages passengers with a flexible, easily accessible point-of-entry to a personalized online shopping world via a powerful, reliable and scalable solution that supports all processes across the entire value chain in real time, back into product and supply chain management as well.

By focusing away from retailing only during the inflight phase of a customer’s journey with them, Singapore Airlines has intelligently taken their customer relationships into many new promising domains. The expanded opportunities for contact and engagement with customers offer exciting new ancillary revenue opportunities for the airline, far beyond traditional inflight retail “from the carts”. Over time, these shopping and engagement behaviors start to become second-nature to travelers; this is precisely where the airline starts to establish itself more as a “lifestyle” provider than merely a transportation option.

Three key recommendations for airlines

There wouldn’t be much point for airlines to plan for a digital transformation of their retail programs in 2021 if we were going back to the way things were in 2019.

Some of the most debilitating issues in airline travel retail arose in the past due to issues such as the lack of use of data in decision-making, the inability of airlines to truly retain long-term control of the experience delivered to their customers and the inability to implement “joined-up” thinking across their offline (inflight) and online (on-ground) business units.

We at AOE therefore offer three key recommendations for 2021, based on our deep understanding of the industry and experience in implementing E-Commerce platforms that outperform:

  1. Airlines and travel retail stakeholders must rethink their fundamental business strategies, working across silos to deliver intentionally superior retail experiences to their customers. This can only be powered by a fully-integrated, end-to-end platform driving travelers to transactions seamlessly on the front-end, and allowing for sustainable, cost-efficient supply chain management on the back-end, delivering the necessary data for critical decision-making.
  2. This integrated platform needs to allow for easy scaling and onboarding of multiple service providers and vendors in a way that gives control back to the airline (as opposed to tying them down to specific suppliers and partners).
  3. While enabling a retail culture and philosophy of “anything, anytime, anywhere” for customers, the platform also needs to be easily deployable, on a “low-Capex” basis, by airlines. This can only happen with a modular solution that is easily customized to the challenges at hand.

Why not get in touch with us to see how we can help you? We are working with some of the most progressive travel retailers, airlines and airports in the world, empowering their future business with our digital solutions. We would love to talk with you.

About AOE

AOE is the world’s leading provider of technology solutions and consulting for digitalizing the entire travel retail passenger journey for airports and airlines alike. Its suite of solutions comprises pre-order, pre-select, onboard-sales, POS, E-Commerce, personalization, logistics, and fulfillment. Numerous global airports and airlines are already using AOE technologies to grow their ancillary revenues including Heathrow, Frankfurt Airport, Singapore Airlines and Avianca. With its headquarters in Frankfurt and with offices in Miami, Zürich, Dubai and Hong Kong, AOE and its global team of more than 250 people in six countries has the ability to work and act globally for the entire travel retail ecosystem.