How Air Malta is Reinventing Their Digital Experience

How Air Malta is Reinventing Their Digital Experience

We’re hearing the church bells ringing, the waves of the Mediterranean Sea crashing into one of Europe’s most ancient forts, the smell of pasta is in the air, and the sky has not even one cloud. In case you haven’t guessed it by now, we’re in Malta, one of the smallest countries in the world, with a history that goes back thousands of years, and where new history is being made.

Exploring the island’s roads we’re taken back in time by seeing megaliths older than pyramids or the knights of Malta. But in a country full of ancient history, something really innovative is happening.

Like so many travels in the history of the Mediterranean Sea, embarking on the digital journey can be quite a challenge for many companies, and if we add a pandemic in the process it might seem like an impossible mission. Well, that was not the case for Air Malta. The determination this team has shown to make this digital dream come true was an example of how companies should face the many challenges that come in the way.

We had the pleasure to meet two of the members of this airline, Antoine Vella, Head of Digital Commerce at Air Malta, and Stephen Gauci, Head of Corporate Communications at Air Malta. Both are ready to be part of the change coming to the travel industry.

Can you tell us what this Air Malta project in terms of digital transformation entails?

We come from a legacy background where we were extremely tight down in our technology. We decided to reinvent the way we do digital, with a new website and a new e-commerce platform. We felt we needed to really move forward with our digital and leave the traditional legacy behind. The new way we’re doing things now gives us the flexibility we want from our technology to move quickly and grow faster and reduce our costs of distribution.

 

What is so special and innovative about the solution you implemented?

It’s modular so we can choose exactly what we want to take, for example just the website or just the e-commerce platform, or the mobile app. Apart from that, there’s also the personalization aspect which is very important. When you have data on your customers you can focus on creating products just for them. The engine will help us to provide the right product at the right time of the customer journey. It’s flexible, so it gives the airline people to change things as they want without having to wait for the traditional release cycle. All these aspects will help Air Malta to grow quickly and since the designs were very clear, UI was very good, it helped us in terms of conversion rate.

 

That’s amazing. Are you saying that before the digital team from the airline couldn’t just change something as part of the booking process themselves?

It was very limited. They could change some things like text or translations, but they couldn’t change big items because the previous platform was shared among airlines so it couldn’t be customized to a specific airline as much as we wanted to. So, if we wanted to introduce a new product it could take months because we had to follow a release plan and wait to see if that product would also make sense for the other airlines attached to this platform.

 

What does it mean for Air Malta’s customers? What’s different for them now?

The products are now clearly displayed, the way the customer flows from one page to another page is more user-friendly, so they see their flights first then they can move to select extras. These things are not constantly showing to customers so everything is well displayed. That improves conversion because there is no opportunity for the customer to get lost in the product offer. Everything is clearer.

 

You said you saw the results in conversion quite fast.

Yes, after two weeks. We went live in August and each month the results were better. We have more sales, better conversion rates, and more revenue.

 

I assume you compared it with the pre-covid time, so it was not just the peak season.

Yes, it was not just because of the peak season. The results were visible immediately after we launched the platform.

 

How long did it take to launch the platform?

We started working with the technology, in January 2021, and we went live in August. We’re talking about seven or eight months to implement a new website and a new booking engine. In my opinion, that’s extremely fast.

 

Yes, it’s fast. Particularly, if we consider that Air Malta faces all the complexity of connecting flights or interlining.

And we’re not just selling Air Malta-operated flights. We have to consider ancillaries like bags, seats, sports equipment, fast track. All of these were incorporated in the booking engine. We have the website operating in seven different languages so it’s quite complex. Being able to do this in just eight months is quite an achievement.

 

There must have been some problems as well. What were the problems and did you manage to solve them?

Problems were mainly related to APIs and getting the right information based on our PSS APIs. We had some issues, but with the Brachspace team, we were able to fix them quickly. Seeing the two teams working together was really important to see the results and get things working.

 

Air Malta has a big team in digital, it requires people with the right know-how and experience, right?

Definitely. In terms of the number of resources in Air Malta I would say we were a small team, but everyone was super immersed in building this project, and we had good support from the developing team and of course the Branchspace team.

 

So, collaboration is key.

Yes, collaboration was key. There was never a team trying to take over the other one so to have a clear synergy between teams is really important. The whole project was handled like a big family project so that’s nice.

 

This was more like a partnership than just a supplier-vendor deal.

It was much more. It was a big team.

 

That’s what makes this even more amazing. I understand you started this project amid covid so the team couldn’t really meet personally.

Yes, all the preparation was done online.

 

And now it was the first time that the Branchspace team could come to Malta and meet everyone personally.

To think about a project of this size, you’d think we need to meet personally, but we managed to do it successfully without any physical meeting.

 

And there must have been a lot of trust in the process.

Trust was very important. It was a very transparent project and everyone stuck to their timelines. That’s how we managed to deliver it on time.

 

Is there anything you would do differently if you had to start again?

Maybe invest in more resources for Air Malta. I think that would have allowed us to do more. And maybe the physical aspect of being able to meet would also have helped.

 

There are innovative things still coming up, some game-changing areas, what is happening?

One of the things is our mobile app. It will be the very first mobile app for the airline so it’s important for us. This will help not just with sales, but also so customers can have all the necessary information in their hands. Another thing is the loyalty program. For the first time, customers will be able to redeem points online. This can grow to other areas outside Air Malta and build a community in the country. That’s our vision.

 

That’s quite unique and that’s what customers are looking for.

We want customers to earn points not just by special travel dates or classes, we want to move away from the old manual process.

 

So this program will be applied in a much wider area, not just flying.

Exactly. We’re talking about restaurants, hotels, coffee shops, supermarkets maybe even car rentals. The more options the customer has to spend these points the better it will be for the airline.

 

It’s a lot of good customer-centric initiatives.

We’re trying to become more customer-focused in our approach. And through every channel not just digitally. Our focus should be the customer because, ultimately, we’re here to serve the customer. We need to provide a good service and the technology to serve that purpose.

 

It can make a difference to your competition. It must be great for you Stephen to be able to communicate about the project. It is a journey so over time there are so many new things happening.

Definitely. We’re having positive news and news that benefits the customers. The website has been having a great impact on the customers which ultimately will benefit the airline with loyalty and repeat visitors.

 

How did the cooperation in other areas work? There are elements linked to this project like loyalty, distribution, strategy…

It was very important from day one that there was internal alignment between all departments. Everyone knew what the end result was, so all were working in the same direction. Even though it was difficult with covid, the project brought the employees together, so it wasn’t just a digital department success, it was an Air Malta success.

 

I’ve been in contact with the chairman, David Curmi, and he said this is the beginning of your digital transformation journey. So, it’s a very important element.

It’s one of the most important parts for the airline in terms of how it should grow and how quickly. Digital is really important.

 

Looking back to January 2021 and now May 2022, in one word, what comes to your mind about the project?

Exciting. It had so many new things and it was happening so fast that sometimes we don’t even have time to process it all. So, that was very exciting.


Dario Martinho, Communication Team, Branchspace

What will air travel look like in the metaverse?

What will air travel look like in the metaverse?

In a famous interview in 1995, Bill Gates explained the Internet to Dave Letterman, the host of a TV show. Letterman argued that he could listen to the news on the radio and wasn’t sure why would someone need the Internet. Today, we can listen to the radio on the Internet.

As the metaverse is getting a lot of attention, including in a recent article by Johnny Thorsen, many are wondering if it’s another technology looking for problems to solve, if it’s going to be more successful than Second Life (the first attempt at a virtual world) and if it may have an impact on air travel (you can’t fly virtually, can you?).

Let’s understand first what the metaverse entails then let’s have a look into the current trials and a longer look into the future.

 

What is the metaverse? How does it relate to Web3?

My personal understanding of the metaverse is a term that covers computer-generated virtual worlds and the tools to navigate them. As such it is more than AR/VR tools, it is really a graphical interface layer on top of the internet, pioneered by developers of video games such as Minecraft and Fortnite.

In a related space, Web3 is the blockchain-based iteration of the Web, which was built originally on the internet. If you consider blockchain as a secured and decentralized evolution of the internet, designed to handle digital assets or tokens, your navigation layer is called Web3.

If you mix the two concepts – metaverse and Web3, you can visit a virtual world and handle digital assets in this virtual world. By digital assets I mean virtual properties, virtual currencies and other virtual goodies. Following this simplistic presentation of the new concepts, where is the link to physical travel and tourism?

 

Current air travel initiatives with the metaverse

The most recent example of current initiative is the airline Vueling that announced testing the metaverse to support customers will trip planning and to sell (real) tickets. They partnered with NextEarth, a platform in the metaverse, and Iomob, a mobility platform helping with the integration.

Another example is Qatar Airways presenting a virtual cabin crew, inspired by the avatars in the virtual world. This initiative focuses on giving the customers a taste of the inflight experience.

More airlines are exploring the technology based on their priorities: trip planning, product review, etc. Looking at the current initiatives gives us a hint to the future: the metaverse will be a new sales channel for travel and tourism, including air travel – like the internet enabled 25 years ago online sales, and 10 years later mobile phones enable mobile sales. Get ready for “meta sales”!

 

Looking into the future

The future of “meta sales” is two-fold: 1) reaching customers where they are and 2) showing the product to the customers.

As hundreds of millions of customers spend time in the virtual worlds they will come across people and brands, including travel and tourism brands.

In the case of a virtual world that represents the real world – like a digital twin of our world, think Google maps or Google Earth – the navigation in this world will lead to the digital twin of a hotel or of an airport. Airlines may want to offer a visit of their aircraft.

 

Next steps

It is difficult to predict how long it will take before we feel that it is normal to pay a virtual visit to a hotel and to an airline before making a purchase, like it is normal today to visit their website.

This exploration of the metaverse may seem to be a stretch as some airlines still need to fix the basic features of their mobile app. History shows us that new technologies don’t wait for everyone to master the old ones.

Most people and companies will probably adopt a “wait & see” attitude, while watching the pioneers who experiment and commenting from the side lines. As we’ve seen above, some players have already adopted the “test & learn” attitude. Indeed, the best way to predict the future is to build it.

Take Air Passenger Experiences to a Higher Plane with Smart Data Capture

Take Air Passenger Experiences to a Higher Plane with Smart Data Capture

The air travel industry was hit hard by pandemic lockdowns and restrictions. Among the challenges for airports and airlines to overcome were red zone restrictions, vaccine passports, social distancing, and uncertainties around passenger volume. In fact, a McKinsey report found that the Covid-19 pandemic resulted in airlines haemorrhaging $168 billion in economic losses in 2020. While the leisure air travel market is now showing signs of recovery, the once-lucrative business travel sector has been slower (for now).

As restrictions have eased across the globe, the industry is working hard to build back confidence but also meet changed customer expectations around frictionless journeys. To achieve this, revive growth and ensure continued profitability, air travel operators are looking for ways to gain a competitive advantage that captures more of the available market while also minimising their costs.

Technological innovations are at the heart of improving efficiency and productivity for customer-facing airline operations. Automating processes on smart devices can enhance customer experience at every touchpoint, while actively reducing costs.

 

Winning the hearts of passengers

After two years of disruption, a smooth, frictionless journey is highly desirable for passengers, and offering this experience differentiates an airline. When facing unpredictable passenger volumes and changing safety requirements – which, let’s be honest, might return at any point – airlines need flexible and easy-to-implement solutions.

Using smart data capture on mobile devices has multiple benefits. Unlike fixed scanners, it enables customer service agents to perform multiple tasks anywhere in the airport. Airlines can automate processes such as check-in, security queues, lounge access, and luggage management, providing a modern, sleek impression from the first moment a passenger enters the terminal.

Compared with the old approach of using rugged devices at fixed stations, smart data capture on mobile devices delivers significant customer benefits and staff efficiencies.  Airport queues have been big news recently, but with staff equipped with smart mobile devices, waiting times can be cut as they can patrol queues and scan IDs, passports and QR codes to speed passengers through check-in and deliver a more personalised experience – accessing details about a passenger’s seat preferences or dietary requirements, for example.

Customer service agents using smart mobile devices can easily manage oversized luggage presented at the gate and quickly check it into the hold. They can instantly issue vouchers to delayed or inconvenienced passengers by scanning boarding cards or codes, and provide smarter assistance when it comes to lost luggage. Giving an agent the power of mobility during check-in ensures that passengers who require assistance can be served at their seats, rather than requiring them to come to a podium.

 

Reducing operational costs with multifunctional devices

Managing the bottom line is critical, post-Covid. Replacing fixed hardware, like boarding gate readers, with scanning-enabled apps that work on mobile devices reduces the total cost of ownership by between 35% and 50%.

In the airport, efficiency is of the utmost importance. Freed from bulky hardware, agents can ensure ​​faster flight boarding avoiding costly delays. Should a flight transfer from one gate to another, it’s a quick and easy task for customer service agents to pick up their mobile devices and walk to the new gate.

Using smart data capture solutions allows air travel operators to provide passengers with cost-efficient self-service options. By integrating smart scanning into a customer app or website, passengers can check in online, confirm their COVID certification or vaccination status, check in their bags and receive flight information. This helps to reduce congestion in the airport, ensuring a seamless experience and reducing costs incurred by delays or time-consuming procedures.

Employee onboarding and training is also improved when using a single smart device. The intuitive experience from a mobile app that employees are already familiar with eases acceptance and minimises the training required.

Smart scanning also provides opportunities for more upsells and cross-sells. More passenger insights are captured from the scans, and are available instantly, while the transaction can be easily completed with mobile point of sale.

 

Predicting the unpredictable

The global COVID-19 pandemic has highlighted the importance of future-proofing air travel operations. With customers flocking to airport gates in a post-pandemic world plus the risk of sudden changes in travel rules, having a scalable, flexible and cost-effective solution is the key to managing unpredictable passenger numbers in the coming months.

Scalability and flexibility are two significant advantages of smart data capture. Every staff member with a smart device can become a mobile agent delivering passenger services, so handling fluctuating passenger numbers and new operational demands is easy. It eliminates the need to have extra bespoke and expensive equipment to cope with peaks in demand.

With passenger experiences taken to new heights, businesses benefiting from reduced costs and increased efficiencies and employees transformed into customer service superheroes, smart data capture technology is the answer for a seamless, cost-effective travel experience.


By Christian Floerkemeier, CTO at Scandit

Last Call for Customer-Centric Retailing

Last Call for Customer-Centric Retailing

From this week, face masks are not mandatory anymore on European Union flights and airports (except in Spain and Italy), more than two years since the start of the pandemic. We may all feel like the pandemic days are about to be something of the past and that things are now getting back to normal. The truth is that some things may actually be changed forever. People worldwide spent these last two years adapting to the “new normal” and, although most of us wanted our lives to get back just as they were, some changes came with interesting challenges. It’s not just about people adapting to a new world. When people start to have new habits and think in different ways, the global market has to adapt as well.

One of the most affected areas was, without a doubt, the travel industry and now, two years later, things seem to be moving forward in a new direction instead of going back to the same place. Last year, online traffic increased by 11% in the travel industry, more than any other (ContentSquare, 2021). Airlines must face the reality of a changing travel experience in a post-pandemic world and create flexible solutions to meet the needs of the “new normal customer”.

change in online traffic of selected industries worldwide

The world was already on a fast-paced journey to digital transformation and the pandemic came to accelerate the rhythm of change. Many customers who were hesitant regarding online shopping are now comfortable with that new habit, and generations Y (millennials) and Z were already shopping online not only for plane tickets but for everyday things like groceries. These times, when the world stopped for a moment, brought much uncertainty, and a strong effort to strengthen digital solutions can be quite a challenge. Fortunately, many airlines are facing this situation as an opportunity and that can only lead us to an exciting future in travel.

 

Flying Above and Beyond Expectations

Customer-centric OTAs and travel suppliers are moving to the next level. Let’s take the example of Airbnb which just launched a new way of selling travel, based on the experience that customers are looking for. Or Amazon introducing a beta in the US to sell digital travel experiences. Airlines such as Southwest which was already leading in digital experiences just introduced additional mobile self-service options to enhance and personalize the customer experience along the travel journey. Travelers will be able to add for example an upgrade for priority boarding before leaving to the airport, instead of having to queue at the airport or call the contact center. All airlines understand now that their business model and digital ecosystem needs a serious revision.

flying above and beyond expectations

Imagine someone — we all know this person — who started a new job in this post pandemic scenario. What new challenges come to mind for this consumer who now has to create a whole office in the house? The journey has shifted completely. This person will spend some time on a thorough search for the right products and maybe find out some other products or services that were unknown before. There’s the space for recommendations where the store will gain the customer’s trust and loyalty.

It’s not just about providing the right product, the expectations are already high. The companies who manage to surprise their customers by going beyond are the ones who will win this innovation race. The companies who do this properly make their customer feel they matter all the time, and right in the device we all can’t seem to leave — the smartphone. It’s Amazon that lets you know your new ergonomic chair is arriving today, it’s the fitness app that sends you a notification that you haven’t been working out for two weeks, or any food delivery service that sends you a reminder that tonight is perfect to order tacos from your favorite place. When it comes to travel it shouldn’t be any less than this.

 

The Future Customer Experience Is Now

If we agree that the customer journey has severely changed with the last pandemic then it’s imperative for airlines to invest in extensive research on user experience.

Airlines could learn a lot from retailers that are investing in this customer experience more than ever, and it all starts with how much they prioritize user research. Tesco, one of the largest supermarket chains, realized how many customers were tired of commuting to the office in the city center because they didn’t have the ideal conditions to work from home. The result is that Tesco is now creating flexible office spaces inside their supermarkets. This is a clear example of companies that listen to the customer’s needs and provide solutions beyond expectations.

the future of customer experience is now

Concepts like innovation and flexibility have never been so crucial and, in the end, it’s all about who takes off quickly to this transition. The airline industry has been able to reach a certain level of modernization since the general adoption of the internet, however, this evolution is still deeply rooted in the same concepts and flows from decades ago. Low-cost carriers, for example, have been driving digital adoption and agile commercial policies, gradually augmenting their products. Even these companies are now realizing the need to move to the next level to remain relevant. It’s urgent to implement leaner technology and processes or rather to simplify and get rid of unnecessary processes.

The latest digital retail platforms, tools, and methods are getting increasingly important for airlines if they want to become true retailers. Air Asia aims to generate 50% of its revenue with non-travel / non-aviation related revenue by 2025. The ultimate goal is that airlines become completely customer-centric in every area. It requires getting away from legacy technology fast, which was built around transactions and not around the customer. This could mean the end of booking classes or fare filing and the beginning of a simplified and flexible process. Alongside innovative platforms travel suppliers will be ready to adopt existing next-gen services and, at the same time, guarantee a first-class ticket to future trends.

People want to travel, and only a few airlines have really used the pandemic to lay the foundations for the transformation journey and move with full speed – and low risk – to ensure they have a state of the art customer proposition. With additional challenges – and opportunities – that sustainability and new mobility models present there will be a lot of new players joggling for positions and some unforeseen ones such as rail becoming stronger again. At the beginning of the next decade, in 2030, we forecast a fundamentally different travel experience. If airlines do not grab the opportunities of digital retailing they risk increasingly turning into operating units for the players who will.


By Dario Martinho, Content Creator at Branchspace

5 questions airlines should ask about their transition to Order management

5 questions airlines should ask about their transition to Order management

When low-cost carriers designed their business models to simplify their business and reduce costs, they went ticketless. But why do legacy network carriers need tickets (now e-tickets) after all? Will they still need to issue tickets to customers who accepted their NDC offers? What are the steps for airlines to move to Order management?

 

Would we invent airline tickets today?

If you ask the question “what is an airline ticket, and can airline live without tickets?” pundits may argue that it is critical to many airline processes (which is correct), and it makes no sense to get rid of tickets. But if you ask the question differently “if we invented network airlines today, would we invent tickets?”, the answer will certainly be different.

In today’s world, network carriers are selling through travel agencies and through airline partners, they are operating at shared airports, and they are doing business like retailers, making offers to customers and delivering their orders. Indeed, they don’t need to issue tickets. Being ticketless and moving to orders is a goal shared by other modes of transport, like railways.

In September 2016 IATA published a report that studied the transition to order management, meaning retiring tickets from all airline processes and replacing them by orders. The report was drafted by Travel in Motion, on behalf of IATA’s airline distribution standards team. What are the key questions for the transition?

 

1 – Cost benefit analysis

The customers benefit from order management because they can easily create their own order and modify it before or during the trip. The airlines benefit from the increase in ancillary revenue, including for interline flights, and from the reduction in costs related to customer servicing and IT systems. Of course each airline has a different mix of customers and product offering, which will influence their analysis of the costs and benefits of order management.

 

2 – Impact on stakeholders

The report explores the vast impact on stakeholders of such a transition. Within each airline, customer service will access orders, ground and inflight staff will deliver orders, revenue accounting will process and settle orders, reservations will create and modify orders, digital channels will display orders, sales teams will notice the satisfaction of customers, revenue management will create offers than can be fulfilled in orders. Outside of airlines, interline partners, travel sellers, ground handlers, and payment providers will handle orders and benefit from them.

The PNRgov message containing Advanced Passenger Information, sent by airlines to governments prior the flights, will be based on Orders instead of PNRs.

 

3 – End state Architecture

The report recommends an architecture based on an “Offer and an Order management system” that support sales channels and rely on internal delivery and accounting systems. This architecture is free from any legacy record or message, such as PNR, E-ticket and EMD.

The alternatives include the “encapsulate” option, where the legacy records and message are encapsulated into orders, and the “on-top” option, where the core functions remain in the PSS and the new management functions are built “on-top” of the PSS.

 

4 – Approaches to transition

The report recommends the “staged” approach, as opposed to the “shadow” or “big bang” approaches. Indeed the approach that takes place in phases or stages help minimize risks. The steps can be defined by channel or by product or by function, which progressively cutover from the PSS to the new Order Management System.

Each airline may start the transition with a different configuration, either a PSS and a website, or already a merchandizing platform creating offers and an NDC API distributing offers. Each airline may have a different end state architecture in mind, which generates as many possible transition paths.

 

5 – The right transition

The report argues that different profiles of airlines may choose different paths, which find the best compromise for them. At a high-level, the three airline profiles are network airline, hybrid airline or low-cost airline, and within those profiles there are innovative or follower airlines. The decision criteria include cost/benefit, architecture, transition approach, impacts and risks.

 

Conclusion

In summary, the air travel industry has moved from asking “if” to “when” to “how” the transition will take place. In the “how”, the 5 questions to ask are: What are the costs and benefits? What is the impact on stakeholders? What is the end state architecture? What are the possible transition paths? Which transition is right for my airline?

The airlines which will get this transition right will be the first to deliver a smoother travel experience to their customers.

Putting the (NDC) cart before the (distribution) horse

Putting the (NDC) cart before the (distribution) horse

Even though NDC has been around for several years, there are still many airlines either planning an implementation, just starting an implementation, or expanding a basic implementation to a higher level of functional maturity. NDC can change an airline’s distribution opportunities considerably and is much more than a technology project around API integration. It is very much about the opportunity to make relevant offers to the customers, sell more and better-suited ancillaries, potentially implement new pricing concepts in the indirect channel and controlling the offer and the order.

A common criticism, especially from travel agencies, is that NDC provides no added value and differentiation, but rather only leads to higher complexity. This criticism is fair in some cases, as a lot of airlines still barely differentiate the content distributed via NDC, providing largely the same products and services to the same conditions as in traditional GDS distribution. There are basically three reasons why that may be the case; it could be that the airline lacks a clear strategy on how to serve the NDC channel, the airline is constrained in their distribution via NDC by existing distribution contracts, or they may have a strategy, however, do not yet have the necessary systems and business process in place to execute the strategy. In many cases, it is a combination of all of them.

When an airline goes down the NDC route, its GDS contracts are often neglected, as is the overarching distribution strategy. The effects that these both have on an airline’s NDC strategy and the underlying system capabilities to fulfil the strategy is, however, critical. It is strongly recommended to not look at these in isolation, but with a holistic view on distribution, optimally combined with the direct distribution strategy as well. Often, NDC is implemented without much thought of the GDS contracts and the airline’s ecommerce strategy. This will typically not lead to a satisfying level of NDC adoption nor to happy agencies, as the content or functionality will not meet their expectations.

The challenge with all of this is that the GDS contracts are often dated, complex and difficult to understand. They are managed in a different department or have been recently renewed in a disconnect from the NDC team and cannot be changed in the short term. Often however, the GDS distribution contracts are simply not considered when creating an NDC strategy. In fact, airlines have in some cases implemented NDC with no holistic strategy at all, focusing on an initial technical implementation first with the idea to align it to distribution at a later stage.

Based on our experience working with airlines on distribution strategy and negotiation, as well as the NDC adoption engagements, we believe that it is key to view distribution as the combination of all channels, considering the constraints, opportunities, strengths, and weaknesses of each one of these channels. As a first step, the overall distribution strategy must be reviewed and potentially adapted to the new situation and capabilities that NDC has to offer. Then, it is key that the existing distribution contracts (primarily including the airline’s GDS contracts) be taken into consideration. The key elements in the contracts to be reviewed in this context are:

    • The definition of content and the differentiation between legacy or traditional content versus NDC technology or NDC content
    • The definition of channels, and potential differentiation of definition of these channels between home markets and other markets
    • The permitted freedom (or lack thereof) to vary content depending on distribution technology, distribution channel – and all of this potentially by market
    • The definition and scope of parity and non-discrimination commitments, and what this means for distribution via NDC based on the topics outlined in the bullets above
    • The contract language related to the provision of technology solutions and who is responsible for these. Additionally, if there are additional costs and responsibilities on the airline to ensure the GDS is technologically capable of a given distribution technology. In this context, it is suggested to also review the lead times for the implementation of new features and functions, and any restrictions related thereto.

In summary, it must be said that an airline’s approach to NDC, be it with a full-blown NDC strategy or merely with a plan to implement basic NDC, should always be planned with full knowledge of the airline’s obligations and freedoms in its GDS contracts, including any required changes for the next round of GDS negotiations. Optimally, the airline will carefully analyse the existing distribution contracts for any restrictions or opportunities to be exploited. For each contract, all key characteristics must be compared to each other to identify the most restrictive paragraphs in each, and the effect these will have on the NDC strategy. Just as important however, when renegotiating GDS contracts, is ensuring that NDC is an integral part of those considerations. Creating a negotiation strategy or approach for the distribution contracts can help, even if these are not yet up for renewal. Defining what the airline should and could do in the future to ensure these two distribution paths share common goals and enable the airline to meet the needs of the agencies as well as the airline’s own distribution needs.

Putting the distribution horse in front of the NDC cart will enable an airline to reach higher levels of NDC adoption, have more distribution freedom and address the travel agency, travel management company and corporate buyer needs better.


Daniel Friedli, Travel in Motion GmbH

An Uncompromising Approach to the Highest Data Security Standards

An Uncompromising Approach to the Highest Data Security Standards

Carriers should look for a software provider with a data-first, cloud-based mentality, which means putting data security front and center. Customers’ security and data privacy should be taken seriously and follow the most stringent SOC 2 cloud-based storage regulations.

Leveraging data as efficiently as possible is essential for airlines to compete in an industry with ever-tightening margins. Airlines entrust their software providers with the use of massive volumes of confidential and proprietary data, and the way that data is treated – with the highest fidelity of data security and privacy – is of utmost importance.

How data is cared for can greatly depend on the local governance rules for the region in which the data is stored. Of course, as a carrier, you want the most stringent rules – without compromise. The best method is to find an experienced provider who can hand-pick specific combinations of data storage locations per airline customer to balance the need for data protection governance against performance and reliability.

 

How should customer data be protected?

When a software provider receives data, they should maintain full encryption at all times – both in situ and in transit.

There are two aspects to this data encryption strategy. One is protecting the data from the place of origin and destination so that only authorized recipients can access the content. At the same time, recipients can also be assured that the content is created by the senders they trust. Transmission of the data over the internet must be protected with industry-standard encryption so that no one else will be able to eavesdrop on the content.

Customer data should be stored in separate domains so that data is not commingling, never leveraging one customer’s data to use on another’s. Each customer data set must be kept securely in its own protected area, and the data should never be shared with other clients without their permission. There should never be a risk that an airline could give its vendor data and have it fall accidentally into a rival’s hands, for example, through human error.

 

Managing and protecting data in transit

The other part of the encryption strategy, called data in transit, protects the data when it is being moved from one place to another. In this instance, a software provider will use encryption along the way so there cannot be any eavesdropping on the line, for example. This ensures end-to-end encryption with the data at rest and data in transit. Nobody can eavesdrop on it and then pick up what the content is until it reaches a place within the provider’s four walls. Then it is decrypted and processed internally.

But not every airline software provider follows this stringent method of data protection. Many solutions are actually held in-house – also known as on-premise solutions. They are located within the airline itself, on the airline’s servers – they don’t move data around outside the airline – so data security is focused around internal employee access control.

It all comes back to the way a provider has built their cloud solution from the ground up, putting data security front and center. Only then can the front end deliver – with accuracy and authenticity – the most advanced revenue management and commercial insight solutions for airline customers.


By Steve Luk, Senior Director, Data Platform

Every Day is Earth Day in Aviation: IATA’s Fly Net Zero Update

Every Day is Earth Day in Aviation: IATA’s Fly Net Zero Update

As we mark Earth Day this Friday, we thought to look at the airline industry’s progress on sustainability.

The International Air Transport Association (IATA) has defined a strategy to achieve net-zero emissions by 2050. Combined measures include cutting emissions at the source, switching to Sustainable Aviation Fuel (SAF), employing new propulsion technologies, adopting carbon offsetting schemes, and employing new carbon capture technologies.

IATA shows the share of each of these as contributors to the Fly Net Zero targets:

  • 65% Sustainable Aviation Fuel (SAF)
  • 13% New technology, electric and hydrogen
  • 3% Infrastructure and operational efficiencies
  • 19% Offsets and carbon capture

The latest media update on the airline industry’s Fly Net Zero initiative, by Sebastian Mikosz, IATA SVP Environment & Sustainability, brings the focus back to long-term imperatives for the industry’s 2050 Net Zero emissions deadline.

Mikosz references the volatility in prices of oil, kerosene and commodities stemming from the current crisis in Ukraine. Airlines urgently need to reduce their dependency on fossil fuels, but that requires significant investment from the public and private sectors in SAF and new technologies.

IATA projects airlines will require 450 billion litres of SAF by 2050 to reach the Net Zero goal, but government support is needed to ensure that adequate supply is available and affordable.

Mikosz writes that SAF uptake, purchase agreements, and production are rising, and investment in new energies like hydrogen or electric is increasing. Still, he warns, “The difficulties of achieving #FlyNetZero cannot be understated, but the progress we are seeing across the industry shows that this goal needs to be achieved, and progress is key, but the road ahead will be long.”

The key, Mikosz suggests, is to keep taking the small steps along the journey that lead us to the destination. He also shares updates on those critical small steps.

 

Progress on SAF (Demand)

  • In March, Airbus flew its biggest aeroplane – the A380 – on SAF: the aircraft flew from Toulouse with one of its Rolls-Royce Trent 900 engines powered by 100% sustainable fuel.
  • Ryanair aims to achieve a third of its decarbonisation target by flying its planes with sustainable aviation fuels.
  • Oneworld members are to purchase up to 200 million gallons of sustainable aviation fuel per year from Gevo.
  • Neste and DHL have announced one of the largest ever sustainable aviation fuel deals. Neste will supply DHL with approximately 320,000 tonnes (400 million litres) of SAF in the next five years.
  • Finnair signed an agreement with Aemetis to supply 17.5 million gallons of SAF over seven years.
  • British Airways took delivery of an initial batch of the first UK-produced SAF under its agreement with Phillips 66.

 

Progress on SAF (Production)

  • Honeywell and China’s Oriental Energy Company plan to build China’s first SAF production base.
  • TotalEnergies will begin producing SAF at its Normandy platform and aims to fulfil the French government’s new mandate for aircraft to use at least 1% of SAF by 1 January 2022.
  • Repsol has begun constructing Spain’s first advanced biofuels plant at its Cartagena refinery.
  • United Airlines and Oxy Low Carbon Ventures announced a collaboration with Cemvita Factory to commercialise SAF production through a new process using CO2 and synthetic microbes. ​​​​
  • Spotlight on SAF producers from Earth.org

 

Will algae take off thanks to AI?

As reported in ScienceDaily, scientists at Texas A&M AgriLife Research say artificial intelligence and machine learning might help algae overcome production hurdles to become a robust alternative energy biomass.

“Algae can be used as an alternative energy source for many industries, including biofuel and as jet fuel,” says Joshua Yuan, PhD, who leads the research project. “Algae is a good alternative fuel source for this industry. It’s an alternate feedstock for bioethanol refinery without the need for pretreatment. It’s lower cost than coal or natural gas. It also provides for a more efficient way of carbon capture and utilisation.”

While many studies over the past decade suggest algae has excellent potential as fuel biomass, algae growth limitations and high harvest costs hinder commercialisation.

“We overcome these challenges by advancing machine learning to inform the design of a semi-continuous algal cultivation (SAC) to sustain optimal cell growth and minimise mutual shading,” Yuan said.

Yuan uses an aggregation-based sedimentation strategy designed to achieve low-cost biomass harvesting and economical SAC.

 

Government support for new technology

France announced an investment plan that will allocate €1.2 billion for decarbonising aviation, between 2022 and 2030, including €800 million in R&D towards the development of a hydrogen aircraft.

Alternative fuel start-up Universal Hydrogen will open a facility in New Mexico (US) to manufacture and distribute hydrogen fuel tanks for aircraft.

Airbus will explore high-voltage battery behaviour during test flights of an electric light aircraft this year. The aircraft manufacturer hopes to apply the technology to ‘micro-hybridisation’ – using battery power in a supportive, rather than a propulsive, role for more significant aircraft types.

The U.S. Department of Energy has awarded Pratt & Whitney a project to develop highly efficient hydrogen-fuelled propulsion technology for the commercial aviation industry.

Delta and Airbus will collaborate on industry-leading research to accelerate the development of a hydrogen-powered aircraft and the ecosystem it requires.

Denmark pledged to build up to six gigawatts (GW) of electrolysis capacity to convert renewable power into green hydrogen as it weans itself off fossil fuels to boost energy security.

In India, Kochi airport became the world’s first to operate on solar power completely.

 

Everything you didn’t even think you wanted to know about SAF production

For readers interested in a deep dive into SAF production, we can recommend this 2020 in-depth study by the U.S. Department of Energy.

The authors of the report summarise SAF targets and objectives in the Abstract as follows:

“The 106-billion-gallon global (21-billion-gallon domestic) commercial jet fuel market is projected to grow to over 230 billion gallons by 2050 (U.S. EIA 2020a). Cost-competitive, environmentally sustainable aviation fuels (SAFs) are recognized as a critical part of decoupling carbon growth from market growth. Renewable and wasted carbon can provide a path to low-cost, clean-burning, and low-soot-producing jet fuel. Research shows an opportunity to produce fuel in which aromatics are initially diluted with the addition of renewable iso-alkanes, aromatics are later fully replaced with cycloalkanes, and finally high-performance molecules that provide mission-based value to jet fuel consumers are introduced. Key to this fuel pathway is sourcing the three SAF blendstocks—iso-alkanes, cycloalkanes, and high-performing molecules—from inexpensive resources. When resourced from waste carbon, there are often additional benefits, such as cleaner water when sourcing carbon from wet sludges or less waste going to landfills when sourcing the carbon from municipal solid waste or plastic waste. Jet fuel properties differ from gasoline and diesel, so research will be most successful if it begins with the end result in mind.”

 

Solar Fuel with Synhelion & SWISS

As IATA’s Mikosz highlights, another opportunity for SAF production exists with renewable electricity and solar heat. Both need synthesis gas as an intermediate, hydrogen and carbon monoxide mixture. Industrial gas-to-liquid processes could then turn this into liquid fuel.

SWISS and the Lufthansa Group are working with Synhelion to develop sun-to-liquid (StL) fuel. Synhelion has developed a unique technology that will use solar heat to drive thermochemical processes for SAF production. Solar heat is the cheapest renewable energy source available. Solar-fuel plants are self-sustaining without requiring a power-grid connection so that production capacities can scale quickly and independently.

Happy Earth Day, everyone. It’s a lovely little world. Let’s keep it.

ApronAI Case Study – Reducing Kerosene Costs

ApronAI Case Study – Reducing Kerosene Costs

ApronAI Case Study – Reducing Kerosene Costs

 

Historically it has always been labor costs representing the largest share of airline operating costs. However, in the middle of the 2000s, increasing oil prices caused the cost of fuel to overtake labor costs . IATAs1 “Fuel Fact Sheet” from October 2021 tells us that fuel costs accounts for 19% of operating costs for airlines in 2021, up from 16.2% in 2020.

There are a few reasons why costs in general, but fuel costs specifically, are a key topic for airlines today. First, airlines have suffered massive losses during the COVID pandemic. Almost all airlines have increased their debts whose interest in turn increased their cost base. So, in order to return to profitability, airlines will need to increase revenues or reduce costs even more than pre-COVID.

Second, since the October 2021 update from IATA, the world has significantly changed again. As a result of sanctions related to Russia’s invasion of Ukraine, oil prices have skyrocketed. Therefore, the cost of kerosene will be an even larger portion of airlines’ cost base in 2022 and beyond.

An additional, third, reason why fuel efficiency is important, is also because of Russia’s invasion of Ukraine. As both Ukrainian airspace and Russian airspace is closed for most airlines, routings have been heavily affected. Many profitable routes have become unprofitable because of longer flying times. Other routes are no longer possible (with given aircraft types) as a result of longer distances and limits to the
MTOW. The less fuel efficient an airline is, the higher the cost impact and the more routes are no longer possible.

At last, most recent reason for airlines to look into fuel efficiency is EASAs refined fuel-carriage rules . Carrying less extra2 (buffer) fuel makes the plane lighter and therefore saves fuel in itself. However, taking less fuel buffers on-board can only be achieved if ground operations and flights actually are more fuel efficient and the variance in fuel requirements decrease.

In this case study we will look at three ways in which real-time data and predictions can help airlines to be more fuel efficient.

 

The Problem

 

Long Taxi-In Times

In an ideal world scenario, after landing, an aircraft directly taxis to its destination gate (preferably on a single engine).
Unfortunately, real-life scenarios are often different. We often see longer than normal taxi-in times at many airports we work with.
There typically is one single reason why taxi-in times are longer than they could be: the destination gate is not available.

There can be different reasons for a gate not being available. Sometimes a gate is not available because the previous flight has a ground delay and this delay was not known and/or communicated in time to the party responsible for gate planning. If the delay had been communicated in time, a gate change might have been possible, allowing the inbound aircraft to have an as low as possible taxi-in time.

Another reason for a gate not being available is that some equipment (e.g. GSE) is blocking the gate area or one of the required pre-arrival safety checks has not been carried out. These kinds of situations either physically block the gate for the aircraft or prevent the aircraft from parking
because taxi-in clearance is not given.

All of the situations described above lead to inbound aircraft holding (or even worse, taxiing around) while they wait for the situation to be resolved. In the meantime, obviously, they are burning kerosene, emitting CO2 and other pollutants as well as causing noise pollution.

 

Long Taxi-Out Times

Like with taxi-in times, an ideal departure means that the aircraft moves in one single flow from its departure gate to the runway and into the sky. However, at many airports aircraft are queuing and holding before departure (especially during peak hours).
If we take a closer look at this phenomena, we find that unpredictability lies at the core of the problem. First, let’s establish that as long as an aircraft is waiting for departure at its departure gate, it is not using any fuel (assuming it is connected to ground power and pre-conditioned air). So, in a perfect world we would hold each aircraft at its departure gate until we know that it can have an uninterrupted taxi-out. In real-life this is difficult as many aircraft might be ready for departure around the same time.
If too many pushback clearances are given at the same time, we get congestion and queuing. If we allow for too little pushback clearances, we do not fully utilize capacity on the taxiway and runway and lower our gate capacity by artificially increasing turnaround times.

Manually created Expected- and Target-Off-Block-Times (EOBTs and TOBTs) are designed to give operational planners clarity about when aircraft are ready for pushback. Accurate EOBTs and TOBTs should theoretically enable planners to achieve perfect outbound flows. However, these human estimations are notoriously inaccurate and/or updated very late into the process. This leads to situations where capacity is either not fully used (which increases capacity demand at later times) or where too many aircraft are pushed back at the same time causing congestion.

 

Unnecessary Auxiliary Power Unit (APU) run time

After landing, pilots will turn on the aircraft’s APU in order to generate electricity for the aircraft which is also required for the air conditioner. The APU is an engine that usually sits in the tail of the aircraft. It is very fuel inefficient and also makes a lot of noise. After the aircraft has arrived at the gate, it should ideally connect to ground power and pre-conditioned air as soon as possible. Once connected, the pilot can turn off the APU.

Unfortunately, in reality we see that the connection of ground power and pre-conditioned air does sometimes take unnecessarily long or does not happen at all. This means that aircraft are running their3 APUs longer and consuming unnecessary amounts of fuel while also harming the environment.

 

The Solution

The above mentioned problems can be eased with two sets of features.

 

Predicted Off-Block Times

The POBT gives airports and airlines a continuous prediction of when aircraft are going to leave their gate. With the use of the art Machine Learning technology to process large volumes of aircraft, airline, flight, airport and other data that hold information about potential delays. In essence the POBT is an automated alternative to human estimations. The advantage is that the algorithm can process much more data, is never distracted, never forgets, has no personal preference or bias and gives continuous updates. As a result the POBT has always proven to be more accurate than human estimations thus far.

In relation to long taxi-in times and inbound holding, POBT allows operational airport planners to identify gate issues early on and make changes in order to shorten taxi-in times. Seattle Tacoma Airport has been using Assaia’s POBTs for almost a year now and as a result has achieved an almost 10% reduction in taxi-in times (up to 5 minutes, on average 49 seconds). Based on average aircraft operating costs as provided by the
FAA this reduction in taxi-in times results4 in a cost saving for the airlines of $122 per flight, or an annual total saving of more than $25 million for all flights at SEA. Furthermore, these reduced taxi times also reduce CO2 emissions by 13kg per flight or 2.6 million kgs of CO2 per year
(which equates to the CO2 absorption of 124,000 trees ) at SEA.

For the taxi-out problem, we already established that more accurate information about when flights are ready for departure has a direct relation with the ability to achieve uninterrupted taxi-out flows. The graph below shows the average error of EOBT versus POBT for delayed flights out of
one of the large US airports. We can see that at D-60 the POBT is almost 5 minutes more accurate than the EOBT. Furthermore, we can also see that the stability of the predictor (measured by the width of the confidence interval) is much narrower.
So, more accurate and stable predictions lead to better departure sequencing, more uninterrupted taxi-out flows and lower kerosene usage.

 

GPU, ACU and APU Detection

In order to maximize GPU and ACU usage and minimize APU burn times, our Turnaround Control product accurately tracks the usage of these items in real-time.
This allows airports and airlines to start managing APU burn times more e officers to directly contact the respective airline or ground handler in order to resolve the situation.

Another way to address the same problem is by analysis of historic data. GPU/ACU/APU usage reports can be created in order to be discussed with airline and/or ground handler stakeholders in order to improve adherence to most efficient usage practices.

From work that we have been doing with one of the major airports in the US we have recorded an average 4 minute reduction time in GPU/ACU connection time. This saves airlines more than $7 and more than 5 kg of CO2 emissions per flight. For a medium to large airport this equates to
$1-$1.4 million per year which is a multiple of the cost of Assaia’s TurnaroundControl!

 

Want to learn more?

If you are eager to learn more about this particular case study please contact:  Christiaan Hen, Chief Customer Officer, at ch@assaia.com.

5 points to watch for business travelers who pick rail as an alternative to air travel

5 points to watch for business travelers who pick rail as an alternative to air travel

While safety, on-time performance and cost effectiveness made air travel the preferred mode of transport for business travelers, the new priority is on sustainability and carbon emission levels, and air travel cannot compete with rail on this metric. As business travel is coming back after the pandemic, is rail ready for business travel?

If we take a simple example of a trip from Geneva to London. By plane, the journey takes 1 hour and a half, produces about 100kg CO2 and costs about EUR 100. By rail, it takes about 8 hours with 1 stop (change station in Paris), produces about 5 kg CO2 and costs about EUR 200. Let’s assume the environment-conscious business travel favors low CO2 emissions compared to time and cost. What are the other points to watch when traveling by rail?

 

The itinerary

 

Air journeys including connection use “Minimum Connecting Time (MCT)” which build a contingency when connecting between two flights. Rail journeys don’t include MCT, i.e. an itinerary may show a 3-minute time between the scheduled arrival of the train and the departure of the next one, which is barely the time to change platform. This may work with Swiss railways that operate like clockworks, but not in other countries. Railways don’t track on-time performance of trains, in the same way FlightRadar tracks flights. Railways don’t check if passengers are on board and won’t wait for connecting passengers, unlike airlines. Railways don’t provide assistance in case of missed connections like IATA airlines do. These differences mean that it is safe to add contingency in the rail itinerary compared to what a website may suggest.

Websites may not recommend the best itinerary if they don’t search the right websites. For example, I searched a solution to go from Bremen to Berlin in Germany. The Kiwi website recommended a combination of flights via Palma de Majorca on the way out and via London (7 hour self-transfer from Gatwick to Luton) on the way in, whereas the direct 3-hour train connection was available on DB website.

 

The ticket

 

Air travel has made electronic tickets and boarding passes a norm since 2010. For rail, electronic tickets exist at national levels but are not ubiquitous for international journeys. In a recent example I booked a train ride from Germany to France using the SNCF (French railways) website which required to collect the ticket for the DB (German railways) segment on a kiosk in a French train station! Not only the delivery of tickets should be completely electronic and mobile, but in case of changes the customer expectation is to receive the new document on the mobile phone.

Intermediaries such as booking sites could help by bringing transparency. Unfortunately, websites like Omio don’t make it clear whether the ticket is booked directly with the rail operator or with Omio. The Terms of Use say that it may vary. From a customer perspective it is important to know, at time of booking, who to deal with in case of changes or refunds. Especially if the change is due to the operator, the traveler needs to be notified and proposed with alternatives.

 

The travel experience

 

The longer the journey the more important is the travel experience, for the business travelers who’d like to be productive. Forward-facing seat, wifi on-board, plug for the mobile and laptop, spacious table are examples of attributes valued by a business traveler. Assuming that the train cabin is equipped, the traveler should be able to book the seat and access the attributes.

While airlines have designed products for business travelers (calling it business class), railways still operate first and second, with sometimes very little difference. In another example, the fare difference between a first and second class on SNCF is 2 euros on a 52 euro fare, or 4%. The ticket can be modified with conditions in both options, bags are included and electric sockets are available in both options.

 

The disruption management

 

The longer the journey and the larger the number of connections, the higher the chances of missing the last train and ending up in a station closed for the night. While IATA airlines accommodation for the travelers who missed their connection, railways don’t have procedures in place. This is simply due to the nature of the contract with the carrier: the airline commits to carrying a customer at a specific time to a destination, whereas the railway simply allows the customer to occupy the car.

In a recent example in Germany, after all trains to France were cancelled for the day, I ended in a German train station at night, with DB offering to sleep in a parked train. There are no alternatives by bus or no hotel accommodation. Although the cancelations are not the norm, the business traveler must know that in this case hotels will be full and the only option to stay warm for the night is the car reserved to refugees and homeless people.

 

The refund process

 

The airline refund process is not designed for simplicity and automation. The airline fare may not be refundable, but the government taxes and fees collected with the fare are not due in case of cancelled flight and should be returned to the customer. I’ve not seen yet an airline ticket which can clearly show the refund value in case of a customer decision to cancel or in case of airline decision. This would not only add transparency but also enable automation.

In the case of railways, the complication is augmented by the lack of real-time traffic information. In my example above, SNCF didn’t know that their train stopped in Germany and I received a confirmation that the train had arrived in Paris, while obviously it was blocked in Germany. In the case of DB, the refund process requires to fill an online form and send it by post. The claim request is not valid without a “confirmation of delay” which is not provided by the carrier, defeating the entire process. In this case, I eventually found a hotel room, at EUR 100 for the night, which is unlikely to be paid by DB or SNCF.

 

Conclusion

I love traveling by train and live in a country with excellent rail services, Switzerland. But rail is designed for mass local transit, not for internal business travel. This article looks at the gap between the modes of transport from a customer experience perspective, trying to use rail for business travel.

It shows that there is a clear opportunity for rail operators to capture business travel demand in a time of sustainability-consciousness, until air travel deploys massive fuel alternatives becomes competitive from a CO2 emission perspective. Adapting rail for business travel means addressing ticketing, itineraries, customer experience, disruptions and refunds.

If any rail operators have already implemented some of the changes suggested in this article, I encourage them to comment below and I will gladly feature them in a future article.

Seven Key Benefits of Aircraft Digitalisation

Seven Key Benefits of Aircraft Digitalisation

Valour Consultancy has published a new report, “The Market for Connected Digital Applications – 2022”, which offers an in-depth analysis of seven key applications for aircraft connectivity.

  1. Document management platforms
  2. Electronic flight folders (EFF)
  3. Crew tablets/cabin reporting
  4. Weather, charting and navigation
  5. Performance optimisation
  6. Point of sale solutions
  7. Telemedicine

 

Bye-bye Paper Logs

 
As Valour Consultancy explains: “Airlines want to see EFBs [electronic flight bags] (and cabin crew devices to a lesser extent) become increasingly holistic platforms which operate in an integrated system rather than as lots of standalone apps which operate in isolation; however, they also want to retain the ability to select solutions from different vendors to suit their users’ needs. Marrying these two desires is one of the major challenges facing the industry, and efforts to do so are already well underway. This trend will be one of the primary drivers of growth over the coming years.”

Airline industry veteran and Jetliner Cabins author, Jennifer Coutts Clay also covered this trend in a recent article for Inflight Magazine. As she writes, the days of paper-based flight logs and charts are at an end. “[T]he advent of apps has fundamentally changed the traditional cabin-management process.” Cabin crew can now use their airline-issued PED (Personal Electronic Device) to offer superior and more personalised passenger service. With access to live information on passenger food preferences, the status of a passengers’ flight connection, or recent complaints about the journey, cabin crew can quickly address issues and foster loyal flyers.

So what does that look like for the passenger journey? Take an example of an average digitally savvy passenger who has booked their reservation online, obtained digital documents for travel, dropped off their luggage at a digital self-drop location, helped themselves speed through the security line and boarded the aircraft using biometric ID. When they board the aircraft, they will likely want to either use the seat-embedded in-flight entertainment (IFE) or stream content to their own personal electronic device from the airline’s wireless IFE platform. A number of airlines have already made their systems compatible to link with passengers’ own electronic devices so they can queue up content ahead of boarding that will begin playing whenever they like at their seat. But more than that, passengers may want to pre-select their meal options, or order a-la-carte from the menu of snacks and beverages available onboard. Having a ‘smart’ cabin means that passengers could use either their PED or their seat-back screen to place their FAB orders. The inventory system in the ‘smart’ galley could automatically assign dishes top passengers seats, updated to crew’s PEDs so they know who gets what, and keep a running stock in real-time so that passengers can be offered alternatives either by the application or the crew when their first choice is no longer available. The data gathered from that process can help inform the airlines’ catering choices, ensuring less food waste onboard, and adequate stock of more popular items on a specific route. Less food waste is not only better for the environment, it also represents a significant boost to the airline’s bottom line.

On a connected aircraft, passengers can also be alerted on the status of their RFD-tracked baggage, and on the status of their connecting flight. Informed passengers will have fewer reasons to seek-out help from customer service representatives either on the ground at the airport or at call centres or on social. That passengers can self-serve through digital tools to be in control of the journey saves both the passengers and the airline time and money.

Valour finds the effort companies are putting into these cabin digitalisation  developments is yielding returns, even in harsh market conditions. “Despite the impact of COVID-19 on airline expenditure, many cockpit and cabin application vendors have performed resiliently in the face of extremely challenging market conditions. Indeed, some have even emerged stronger from the past couple of years. This is because applications such as performance optimisation solutions and electronic tech logs (ETLs) offer considerable cost savings to airlines by either saving on fuel or improving turnaround times,” they write. “Still, significant challenges remain. The market remains fragmented and the dual effects of integration difficulties and dependency on connectivity, which some applications require to have full functionality, means growth is hindered to a degree.”

 

The IoT of planes

 

The integration of various digitalised cabin systems is another challenge ahead, as Valour points, out. But vendors are actively working to ensure that happens.

As I reported for the Runway Girl Network last year, in an interview with Diehl about their new CANSAS [cabin area network system and services] platform, data exchange standards are in the works to support a variety of PEDs, applications, and ‘smart’ cabin systems onboard. The German manufacturer has joined other industry stakeholders, including include Jeppesen, Rolls-Royce, MTU Aero Engines, SAP, and Lufthansa on the OpsTimal Research Project, which aims to define protocols to guide the development of secure interoperable systems.

 

The Role of 5G

 
While recent headlines have drawn attention to ‘teething’ issues with 5G roll-outs near airports in the United States, the technical benefits of this new high-speed connectivity both on the ground and in the air will boost airline digitalisation, addressing some of the barriers to growth that Valour Consultancy identifies.

SITA has offered some insight on this and a promising view of what lies ahead.

“In a world where some three billion of us – and counting – have our world on our smartphones, people’s dependence on universal, ‘always-on’ mobile connectivity is set for surefire growth,” SITA writes. “And this is just as true onboard the aircraft, as on the ground. When our predecessors conducted the first inflight cellular data transmission more than a decade ago, no one would have anticipated having to adjust to life in a pandemic. But in the today and tomorrow of the post-COVID-19 flying experience, new inflight mobile services, offering expanded capacity and capabilities, will become increasingly relevant to airlines and passengers.”

SITA concludes: “While there is a famous lag in the time it takes for terrestrial trends to land in the cabin, it’s just a matter of time before inflight 5G comes onboard. And when it does, it’ll not just enable an improved and unified passenger experience. It’ll have the performance and capacity necessary to handle fast-mounting rates of mobile and connected device usage, and all the innovation potential that lies within.”

How Airline Business Travel Is Changing and Why That’s Okay

How Airline Business Travel Is Changing and Why That’s Okay

A new report by IdeaWorks and CarTrawler reveals how the COVID-19 pandemic, technology and greater awareness of the environmental impact of flying are changing airline business travel.

“It could be a year in which the airline industry recovers some of the profits lost during the pandemic. That’s the picture for leisure travel, especially in the burgeoning premium leisure sector. The recovery of business travel is complex and largely unwritten. Online meeting technology continues to march ahead, company employees are still working from home, corporations are setting carbon reductions tied to business travel, and the airline industry still struggles to find firmer footing. Innovation and resilience saved airlines during the pandemic, and these same traits will allow airlines to adapt to the changes wrought by new communication technologies and carbon emission concerns,” the report’s author, Jay Sorensen explains.

 

Business is tough, even at home

Is the work-from-home trend having a long-term impact on domestic business travel? It may not be the only factor at play, but as Sorensen points out business today is nothing like usual.

“Delta’s presentation during its 2021 Capital Markets Day reflects overall conditions in the airline industry. Domestic leisure travel is rebounding, while international travel has not recovered. Domestic business travel is off 40 percent from pre-pandemic volumes. Other carriers report similar results with United Airlines disclosing a 40 percent business travel revenue reduction and Air France a 50 percent loss of long haul corporate revenue compared to 2019. It’s a vast improvement from the depths of the pandemic when business travel ceased to exist, but still lagging,” he writes. “Commerce throughout the pandemic has largely remained strong. This has certainly not been true for the travel industry, and in particular for airlines. Business activity marched on without the benefit of salespeople, buyers, technicians, trainers, researchers, and board members traveling to factories, offices, and conferences for face-to-face meetings. This once oh-so- necessary activity was replaced with services such as Zoom, Meet, Teams, and Hangouts. Work-from-home changed from an elusive perk for the few to an expectation for the many. Travel, once a vibrant component of the corporate world, was sidelined by the swirl of all these changes. Business travel is returning but it won’t come back the same. Too much has changed during these 24 months, with the pandemic forcing companies to embrace online meeting tools. Savvy airlines will anticipate the changes and tap new areas of consumer spending for travel.”

 

It’s a new climate 

As Sorensen points out, corporate carbon budgets are leading to greater scrutiny of business travel.

“We are in an era in which corporations are actively engaged in climate change issues. CDP is a not-for-profit charity that operates a global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts. Ten years ago, 3,500+ companies disclosed data to CDP; as of 2021 the number is more than 13,000.2 The list includes top airlines in the world, which have climate change scores ranging from A- to F. Environmental concerns were not included in the 2020 assessment of business travel trends; it’s something which must be considered in 2022. Corporate attention all over the world has turned to the issue of climate change and the reduction of carbon. For some companies, airline travel represents the largest share of their carbon footprint,” Sorensen writes.

But more than a challenge, one might argue this is a marketing opportunity. The aviation industry is already committed to drastically reducing its carbon footprint, but being at the lead in the climate change challenge can lead to favourable brand differentiation.

“Companies can use a variety of methods to reduce business travel emissions. This includes choosing airlines that promise to use sustainable aviation fuels, purchasing carbon offsets, substituting rail for airline travel, sharing ground transportation, booking fuel efficient cars and green hotels, taking nonstop flights, downgrading from business class, and substituting digital for actual travel. There are many alternatives for carbon reduction that don’t involve cancelling business trips. Airlines and other travel suppliers that embrace these tools will naturally capture a larger share of the business travel market,” Sorensen writes.

 

Face-to-face still matters to the bottom line

Sorensen finds there are still some key motivators pushing companies to allow business travel.

  • 25% for purposes of sales and securing clients
  • 20% intra-company meetings
  • 20% conventions and trade-shows
  • 10% support of existing customers
  • 10% tech support — equipment and IT
  • 10% professional services — clients and research
  • 5% commuters by air

“The resulting division between customer and internal audiences is approximately 65 and 35 percent respectively. That’s a meaningful distinction, that two-thirds of business travel is customer-facing and thus difficult to replace with technology,” Sorensen writes. “This brings us back to the December 2020 report which predicted a 19 to 36 percent drop in business travel due to the effects of online meeting technology. Developments since then continue to support the prior thesis, along with a new emphasis on the carbon emissions produced by business travel. Projecting reduced levels of business travel should include another caveat. The global economy could come roaring back with a dramatic increase in overall commercial activity above the 2019 baseline. This rising tide would lift all boats, and airline travel could increase above pre-pandemic levels. Whether this increase would be enduring or temporary is yet another unknown. The most likely outcome has the global economy gradually rebounding with a three- to four-year delay before achieving net growth above 2019 levels. The continuance or escalation of war in Europe and any future Covid variant activity would reduce economic growth and business travel activity.”

More on this last point later.

 

Business purpose is less important than high-revenue seating and posting the revenue share of the cabin footprint 

With all of this in mind, it’s also well past time to think beyond the aircraft cabin as little nooks for the affluent (first), the “business person” (business class) and everyone else (coach). These cabin classes were already growing irrelevant before the crisis we face now.

In fact, I’ve been writing about the need for airlines to change this thinking for years and years and years and years. Fortunately, many airlines have changed, by adding premium economy seating and differentiating their economy class product. Growing trends over the last decade hinted at what we are experiencing now, the rise of the freelancer entrepreneur, the advent of travel and lifestyle influencers, and the cautious corporate cutbacks ‘less flash more productivity’ which began during the last recession. They all predicted what Sorensen finds happening now.

“Airlines are already making the configuration change from business class to premium economy. A recent headline in the London Sunday Times proclaimed: Airlines ditch first class but offer fliers more legroom in ‘premium economy.’,” Sorensen writes. (Just imagine the grin on my face right now.) “The largest market potential for premium economy is offered by upscale leisure travellers. Glen Hauenstein, president of Delta Air Lines, said, ‘We believe that through the pandemic, we’ve created kind of a new class of customer which is a high end consumer who wants these products.’ This is a bold statement because new types of travellers are a rare bird in an industry that’s more than a century old. Mr. Hauenstein makes the argument that the loss of business travellers during the pandemic created the opportunity for wealthy consumers to book premium seats, which were traditionally held for corporate customers at high fares. Airline executives are enthusiastic about the revenue to be gained by mining this treasure of leisure passengers. The president of Delta added more rationale for the focus on leisure, ‘Demand for premium products is actually exceeding our coach products with the business traveler out. The big epiphany for us was there’s a much broader demand for this than just business travelers.’ He closes the argument by predicting the initiative will produce attractive profits.”

 

Where were are is not great, but it’s also hardly the end

While these factors and their impact on business class today are certainly something to consider, it’s also important to keep in mind that we are not back to anything like “normalcy.” So any progress or recovery we see is doubly-remarkable for happening in the most adverse conditions. The most pessimistic of us could not possibly have dreamt up this scenario in 2019.

Airlines have been pushing for a relaxation of mask requirements onboard and the lifting of other travel restrictions, and the world wants to move on from COVID, but the pandemic is still very much with us. Add to that the impact of the Russian invasion of the Ukraine, both socially and economically, and we are still living through a prolonged combination of business shattering factors that we haven’t experienced for many generations.

I don’t believe we can compare the current combination of crises to any previous black swan events in the history of aviation. Nor can we really compare this time period to previous historical crises of the 20th century. I would argue that we are currently experiencing is the equivalent of combining two historic crises.

The plague-cycle conditions of the Middle Ages (when it was generally accepted that society would by necessity retreat and isolate, from time to time, to avoid mass contagion and then return to “city life” when the most recent scare passed) most closely resemble to me what we are go through with the COVID-19 variant waves. In other words, we are not yet able to stamp this thing out completely, but we learn to ride the waves and return to life as we would have it for however long we can, retreat again to wait out the worst, and then return again. It’s hardly ideal, but society has adapted to these cycles before, and we can do so for however long we need to. There is always a percentage of people who will venture out, and airlines still have the huge advantage of being a superior method to cross continents. No other transport system in the history of humanity can get people there and back as quickly as a plane. That is unlikely to change soon.

Regrettably, we now also face a serious political crisis in Europe which threatens world markets and which inevitably will affect airline recovery. It’s not enough to point out that the Russian incursion in Ukraine is a humanitarian crisis in Europe. It is also affecting food supplies throughout the world and affecting global energy supplies. Should the crisis continue, or God forbid escalate, a global recession may not be far off. Airlines would have to adapt again.

Both of these events happening at once might seem too much for aviation to withstand, but the human desire to live and even thrive through chaos is stronger than the chaos humans are capable of bringing about. At least, to me, that has been the lesson of history. We have been through any combination of earth-shattering, lifestyle-shifting events many times over the centuries. And yet, here we are—not behind, but far ahead. I am writing this on a device connected to the world which is a useful tool to perpetuate the momentum of business even when ordinary life has come to a grinding halt. It is nothing like meeting with you in person to give you this pep talk, but it will do for now.

Our expectation for recovery to business “as was” in aviation should be tempered. It doesn’t really matter who flies or when they fly as much as the fact that people are flying—despite all of this—because flying is an essential component of modern society. I think it’s really remarkable that Sorensen’s data shows 10% of business flying demand is produced by IT-related needs. Computers have changed our lives for the better, but they are not all of life. And they too—from development to production to distribution—rely on aviation.

What must happen is that governments should continue to recognise aviation as vital social and economic infrastructure. In other words, if things get grim, airlines should get a helping hand. After all, airlines pay lots of taxes.

And, as Sorensen says: “Ours is an industry which knows how to persevere and serve.”

Aviation tech innovation in 2022 – time for a new mindset?

Aviation tech innovation in 2022 – time for a new mindset?

 

Aviation tech innovation in 2022 – time for a new mindset?

 

As the global travel industry finally is exiting the grips of Covid after 2 long years it is worth taking a step back and evaluate the new landscape we now are living in – because there has been some dramatic change in several areas.

The first development might not be fully visible, but a significant number of airlines have experienced a substantial talent drain in their internal technology department while being faced with severe restrain on capital available for new IT projects and products. This sets the scene for a new mindset where airlines suddenly are strongly motivated to work with external startups who have are agile and nimble and capable of providing new solutions very quickly for a minimum fee as they are prepared to engage in “software as a service” projects with “pay as you consume” business models. 

The second development is more obvious, but still worth mentioning – during the last 2 years new technologies such as DLT (aka blockchain), elastic cloud infrastructure, edge computing, NFT and not least Web3 infrastructure have evolved at an incredible pace and are now ready for primetime. The combined potential of these exciting developments is substantial for the aviation industry and will likely result in completely new solutions for distribution, ticketing, payment, capacity planning, yield management, customer service and disruption management to name a few areas. 

The third development is the new operational environment with limited workforce in multiple critical areas combined with high fuel cost and shortage of products in the global supply chain combined with short notice traveler behavior change in terms of preferred destinations as well as advance booking window and price sensitivity. These changes are making it much harder for airlines to plan ahead and implement a traditional schedule and pricing forecast model and therefore require more flexible automated software to analyse the latest information and provide the right recommendations. 

The fourth and final development is the sustainability wave crashing over the global travel industry – gone are the days where airlines could focus on selling seats based on the best price, best cabin class service or on-time performance. Today’s airline customers – both corporate and leisure, are increasingly focused on the sustainability performance of the airline resulting in new demands for transparent operational data such as fuel consumption, SAF blend, carbon offsets, load factor, flight path efficiency and even on the ground tarmac movement energy efficiency. 

When the 4 developments listed above are added together it becomes very clear that airlines must implement a new strategy for deployment of and usage of technology services – and it is highly unlikely the internal IT department will be able to adjust accordingly and start delivering new services and solutions on a few months – or perhaps just a few weeks – notice. The good news is that the majority of the travel tech startup community actually has strengthened during the Covid hiatus and the startups who have survived now appear to be stronger, leaner and better equipped to help the airlines embark on a rapid innovation journey. 

 

See a few of the most interesting new solution providers

 

Obviously it is not possible to mention all the relevant startups in this article, but here are a few of the most interesting new solution providers with a short description of the service they provide. 

Pat (www.pat.ai) : Provides a AI chat based virtual agent solution designed to replace a substantial amount of the work performed in a traditional airline call center including support for complex products such as “round the world” tickets 

Vendia (www.vendia.com) : Provides a blockchain based data engine designed to enable real-time access to and usage of data located in legacy systems or in different cloud environments – all without compromising data privacy and security 

3Victors (www.3victors.com) : Provides a real-time analysis of global travel search data designed to provide airlines with instant alerts when search pattern changes in order to optimize yield management, capacity and schedule planning 

Envest Global (www.envestglobal.com) : Provides a detailed benchmark analysis of the sustainability performance of 50+ airlines designed to provide airlines with a better understanding of their own operations compared to their competitors while also providing the investment community with better insights to the carbon resilience level of each airline 

Tryp (www.tryp.com) : Provides a new type of “inspirational search engine” for leisure travel designed to generate complex package offers in seconds without asking for a fixed destination to start the search which can help an airline sell more seats on to low load factor destinations 

BlackBook (https://blackbookapp.co/) : Provides a super app designed to be a digital concierge for the traveler before, during and after the trip for both corporate and leisure travel which can help airlines provide a richer service and generate increment revenue 

Medical Travel Companions (www.medicaltravelcompanions.com) : Provides a human assistance concierge service for travelers who are unable to travel alone due to medical conditions which enables airlines to service this 100M+ global passenger segment better 

Kyte (www.gokyte.com) : Provides a modern JSON API service designed to sit on top of the legacy airline tech stack without going through the complex and time-consuming NDC development process which enable an airline to offer true digital retailing capabilities to any online travel or ecommerce solution 

Aeropaye (www.aeropaye.com) : Provides a blockchain based smart contract engine designed to automate and optimize the cancel and refund process which can reduce the overall cost of payment for airlines as well as provide a way to service travelers who don’t have credit cards and bank accounts 

Spotnana (www.spotnana.com) : Provides an open innovation platform for the travel industry designed to unite suppliers, agencies and technology providers through a single cloud-based tech stack using open API’s and unbiased content to provide personalized offers directly to the traveler 

These are just some examples of startups who have survived the Covid crisis and are well positioned to help the airlines around the world become more agile and take advantage of new solutions faster without having to develop them internally – hopefully we be able to look back at 2022 in the future and view this year as the beginning of a new chapter in the aviation tech world where airlines work closely together with startups to accelerate innovation and modernize the tech stack rapidly.


By Johnny Thorsen

The ‘AI’ Promise – A New Era of Airline Retailing. In discussion with Ryan Estes, VP Technology at Datalex.

The ‘AI’ Promise – A New Era of Airline Retailing. In discussion with Ryan Estes, VP Technology at Datalex.

As airlines emerge from the COVID-19 pandemic, what trends will outlast the recovery?

The pandemic was the single most challenging period for the airline industry, but equally it has proven to be the most opportunistic time in terms of adopting new, more modern and innovative technologies.

In particular, the pandemic highlighted the need for airlines to be prepared for periodic and unpredictable ‘demand reduction’ events and ‘demand enhancing’ events. Key to this is the need for a high degree of flexibility and agility to react in real-time. Examples include real-time dynamic pricing and offer management that reacts immediately to ‘demand impacting’ events.

Demand profiles from the two primary traveller market segments – leisure and business – have changed dramatically with business travel experiencing structural change, while conversely there is huge pent-up demand for leisure travel. While this bodes well for airlines in terms of traffic volume, leisure travellers are more price conscious and seek lower price points than more profitable business travellers. Airlines will have to maximise pricing to ensure the highest possible revenue is being generated in each ‘shopping engagement’ without impacting demand.

The pandemic also shone a light on issues associated with legacy systems underpinning airlines’ technology stack, as these systems were slow to react to rapidly changing environments.

The opportunity for significant change in airlines’ underlying technology, particularly leveraging AI, automation and SaaS is huge. And the opportunity is now.

 

You are leading AI initiatives at Datalex to transform airline retail, particularly in the area of pricing. What do you see as some of the key ‘AI’ opportunities?

We see several areas where AI could have immediate transformational impact in the travel industry.

One key area rife for disruption, leveraging AI, is pricing. The pandemic highlighted the constraints of the traditional pricing approach which is restrictive & static, limited to specific customer segments and demand scenarios, limited price points (via RBDs), that cannot adjust pricing in real-time.

With the traditional revenue management set up, airlines suffer from a trade off between ‘price accuracy’ and ‘speed to market’. For an airline to update its price predictions frequently, it must analyse less inputs and vice versa, if it wants to analyse more, it has to update predications less frequently.

AI is fundamental to overcoming this trade off by cultivating pricing strategies that adapt in real-time. RBD-less pricing, powered by AI is the future. This will allow airlines to understand and react to fluctuating market conditions, competitive landscape and other complex data which requires sophisticated data analytics and machine learning capabilities.

Customer service and end-to-end customer engagement throughout the travel lifecycle are other key areas. AI can be used across the board to enable airlines to be more reactive and engaged with travellers without the cost of implementing in-person engagement. Sophisticated, AI-enabled chatbots can be implemented to quickly resolve passenger queries, improving operational efficiency by reducing call center load and increasing customer satisfaction with real-time engagement.

Ultimately, airlines have a great opportunity to harness AI to transform how they do their business, to connect better, and with more customers and to drive new revenues
It’s an exciting time to work in this industry where real change, and at a pace never experienced before, is happening every day.

 

What do you think would be the ‘quick wins’ for airlines in their AI strategy? And what should be on their medium and longer-term ‘AI’ roadmap?

As described above, in the short terms airlines should focus on pricing and customer service.

The total cost of air travel has the most significant impact on a person’s decision to purchase an airline ticket. The likelihood of delays and cancellations, and loyalty status also play a significant part in the decision-making process. Airline customer service is crucial to support customers before, during, and after a flight. Improving customer service leads to happier customers, better travel experiences, and higher revenues. These are the areas that airlines should make a strategic priority when it comes to “quick wins” using AI.

AI-powered customer service chatbots is a quick win that delivers high impact. Chatbots provide significant customer support savings. Second, bots can also sell.

Another key opportunity that remains untapped by airlines is AI-powered dynamic pricing which has the ability to drive higher revenues for the airline and satisfy the pricing needs of the customer through smarter, reactive pricing based on actual real-time demand and customer price sensitivity.

Ultimately, capturing more customers and more opportunities in real time across the revenue cycle.

Personalised offers leveraging AI should be a medium-term focus for airlines as this will enhance the overall customer experience. Airlines can use AI to learn about the behavior of passengers and create offers that will convert better. We refer to this as product determination.

A longer-term focus should be on AI driven dynamic offers and eventually a move to ‘one order’, and those initiatives are coming down the track sooner than we think.

Furthermore, AI can hugely improve operations below the wing.

 

How else can AI powered dynamic pricing benefit airlines outside of additional revenue?

This is a great question, because this topic rarely comes up, and it’s a topic I’m really passionate about. Besides the obvious revenue uplift, AI-powered dynamic pricing also can generate significant operational efficiencies for airlines.

Revenue management’s goal is maximise their revenue across the entire network, with the “entire network” being the key phrase here. Once pricing strategies are defined and fare structures filed, revenue management will then use a combination of their RM tools to manually monitor market conditions.

There are only so many markets revenue management has the capacity to monitor and there is only so much time a human and the processes allow to react. As mentioned earlier airlines suffer from a tradeoff between ‘price accuracy’ and ‘speed to market’. AI powered Dynamic pricing can be used to offset these workloads, react more accurately in real-time and direct Revenue Management’s attention to strategically focus on the markets with the most opportunities, and other value driving tasks.

 

What other ways can AI be applied within an airline? What would you suggest are the top 5 ‘AI opportunities’ for airlines?

The adoption of airport robotics, blockchain technologies for data sharing, and VR technologies will be widely used in the future. Blockchain for data sharing was explored by Datalex in a recent hackathon.

AI is already being used to estimate the average lifespan of the parts on an aircraft. AI also has the potential to be fully integrated into the flight scheduling process to reduce offered flights during a significant demand restriction event.

During the pandemic and because of the route/gate rules airlines were frequently flying very low occupancy planes or empty planes on routes to meet requirements – these were referred to as ‘ghost flights.’ AI could be used to quickly and efficiently manage flight offerings based on demand. When a demand restriction event occurs, zero booking flights could be quickly cancelled and removed from the airline’s schedule. Low booking flights could be cancelled, and passengers automatically rebooked to other itineraries that meet their needs to consolidate more travelers on fewer flights.

What are the top 5 AI opportunities? I would say:

  1. Revenue Management
  2. Customer Service
  3. Network Planning
  4. Crew management
  5. Air Safety and Airplane Maintenance

 

What are some of the biggest challenges in applying AI in the airline industry? Are there any tips you are willing to share?

Applying AI to the aviation industry is an inevitable transformational change that is just beginning to take off. The biggest challenge faced is the lack of knowledge around AI and the true value it can add to an airline, so that educational piece is really important.

Another big challenge with AI is transparency, specifically the fact that humans should be able to form coherent explanations of the reasoning process in AI. That means providing airlines with clarity of what decisions were made by the AI technologies and why they were made. This is hugely important for airlines to understand that AI can be tailored to their business models. Transparency is important not only for trust, but also for debugging, testing and certification.

Another big challenge in applying AI, particularly in the airline industry, is the underfitting and failure to generalise Underfitting is defined as when the machine learning algorithm fails to learn enough from the training data during the training process. Failing to generalise occurs when the model successfully fits the training data, but has a high error on the validation/testing data. This is a challenge that we have successfully addressed in Datalex.

What tips am I willing to share? It requires specialist AI talent and technology partners focused on AI. When you are working with AI, you have to enjoy the process just as much as the achievement.


Kathrina Gallogly

Footnote:
Datalex’s purpose is to transform airline retail.
To learn more about key digital retail trends and AI-powered dynamic pricing opportunities, download the Datalex Research Report: The Digital Airline and Customer 2022.

Have customers regained confidence in air travel yet?

Have customers regained confidence in air travel yet?

Exactly two years ago, Switzerland, where I live, imposed a lockdown on the population, following the WHO announce of the COVID-19 pandemic. The sanitary measures and travel restrictions prevented people from traveling and damaged their confidence. Airlines introduced a series of measures and solutions dedicated to cope with the restrictions and resume flying during the pandemic, and to restore customer confidence, which I evaluated in my White Paper (see proposals #4 and #6).

Now that some countries, like Switzerland, have lifted all COVID-related travel restrictions, and although the pandemic is still going on in the world, it’s time to wonder what measures countries and airlines may keep or rescind. Let’s look at: demand forecast, information on travel restrictions, health declaration forms and travel health passes.

 

Demand forecast

The aggregation of signals of future demand have helped airlines plan for their future schedules and operations, in the absence of meaningful and relevant historical data. This kind of information will remain relevant because the uncertainty in the market is not only due to pandemics but to any shock impacting travel rights. The recent invasion of Ukraine, which caused the closure of airspaces, impacting routes and destinations, is an example of the shocks to expect.

I expect the data sources and analytics related to travel demand to remain critical indicators for airlines as long as the world – and customer confidence – remains uncertain and volatile, which seems to be the new normal. Providers like 3Victors and PredictHQ will need to keep finding new data sources and enhancing their algorithms, as airlines will need to anticipate the impact of events on demand and bookings.

 

Information on travel restrictions

The conditions of entry in a country (per nationality, vaccinations, PCR test, quarantine, etc.) and the local business conditions (availability of public transport, hotels, restaurants, etc.) have become relevant factors in the travel planning. This information will remain relevant at least until the end of the pandemic, some time in 2023, and may be updated into 2024, even if it shows completely green picture of the world.

I expect the tools collecting and displaying this information to remain effective post-COVID, as for example a local virus may break out which requires traveler warning. The tools may merge with other travel restriction information related either to immigration (visa) or to safety (political instability). Providers like Smartvel and Sherpa will need to keep updating and expanding their tools in the foreseeable future.

 

Health declaration forms

Border control authorities have augmented the list of criteria required to enter a country. The declaration forms now include questions about travel itineraries, health, residence, and other items. These forms, which used to be filled on paper on arrival, have become online, filled pre-travel, and ubiquitous during the pandemic. They represent a major source of information for countries. I don’t expect them to go away. However, they represent a significant additional burden for travelers, so I believe that tools will emerge that simplify the process for travelers, e.g. a personal travel wallet than can automatically fill any declaration form.

Providers like Travizory and SITA still have a lot of work to do to help make travel planning seamless again. Connecting their forms with traveler apps may streamline the filling process, e.g. to upload COVID certificates or passport copies. There are also synergies with the following topic, travel health passes.

 

Travel health passes

The UN had a paper certificate of vaccination for years, the yellow booklet. COVID transformed it into an electronic document and digital process, connecting testing labs with travelers’ ID and border controls. Airlines propose various passes that travelers to show a valid proof of test or vaccination on the screen of the phone. Like travel restrictions, passes will remain applicable for destinations requiring vaccines and tests but will decrease as the restrictions are progressively lifted.

While the implementation of travel health passes represented a major investment, I don’t expect the passes to remain in action, because they are designed for a use at scale. Countries requiring other vaccines (Yellow fever, etc.) may default back to the previous system of manual checks. Providers like VeriFLY and CommonPass will need to repurpose their knowhow in terms of customer ID and health verifications towards generic solutions that can be used by travelers beyond COVID.

 

Conclusion

In the coming two years, as the COVID pandemic fades away, we can expect the travel experience to evolve accordingly. Airlines will become better at anticipating travel demand and meet the needs of travelers. Airlines will provide travelers with comprehensive travel planning tools using relevant traveler data points (nationality, residence, vaccination). Declaration forms will be automated to expedite mandatory procedures and travel passes will merge into “ready-to-fly” procedure and boarding passes.

In summary, while the pandemic has added another layer of scrutiny in travel, over time this health layer will become automated and eventually seamless. Nobody wants health safety to become another travel pain point, like airport security checks after 9/11.

 

Disclaimer: the author may be an advisor but not a shareholder of any company listed in the article

 

 

Digital Consumer Retail Trends Airports and Airlines Should Keep In Mind

Digital Consumer Retail Trends Airports and Airlines Should Keep In Mind

The recently published Travel Retail Consumer report by analysts at m1nd-set, Future trends impacting travel retail, offers several insights which might inform airport and airline retail strategies.

Their report suggests that airlines and airports might want to plan their digital and social strategies around VR, AR and Social.

M1nd-set expects greater digitalisation of the shopping experience “will emerge more prominently over the next year.” That includes making further investments in CRM programmes, developing more retail and service APPs, a continued focus on making omnichannel retail seamless, and boosting the resonance of social commerce with Augmented Reality (AR), Virtual Reality (VR), and chatbots.

More than eight out of ten shoppers (83%) said digital presence and experience are as important as the in-store experience.

With travel coming to a stand-still over the past two years and non-essential retail accessible only online, consumers relied more on digital channels. They forged new shopping habits, which endure after reopening.

But it’s not just about the retail channel. This trend toward greater retail digitalisation also suggests that digital-only products will rise in popularity and demand.

What does that mean for airports and airlines?

M1nd-set suggests airport retailers “meet and service shoppers online first and attract them into stores when they next travel.” Products such as “e-books, vouchers and tickets to destination-based experiences, inflight and/or onboard services for airlines…photography and artwork or films and music” are expected to grow in the months ahead.

Airports that support online shopping with terminal pickup and airlines that offer IFE content and in-flight meal purchases through their apps will have an advantage. But airlines and airports may consider introducing digital-only items, either unique products or special discounts. These will encourage users to keep the app installed on their devices and engage with it frequently. “Many low-cost airlines have reaped the rewards of this niche for some time already,” M1nd-set points out. “Retailers in airport retail can also benefit, with the right strategy in place to meet the consumer digitally first with time, location and destination relevant communication and advertising.”

Shopping Experience Graph

Source: m1nd-set

“Brands can also meet consumer expectations and enhance the customer experience, with digital-first encounters, such as virtual distillery tours, educational programmes about the sustainable production processes that then entice the shopper to learn more and purchase a sustainably packaged or produced travel retail exclusive in-store when next travelling.”

More than half (53%) of shoppers interviewed say they prefer an omnichannel shopping experience, compared to only 37% in 2021.

M1nd-set also suggests that developing VR and AR experiences that support your retail strategy will help take the stress out of travel for returning passengers post-COVID while offering helpful edutainment content. Highlighting the sustainable origins of some featured local products, or offering bar-code activated videos that better explain the application of certain cosmetics, for example, will entertain and entice. M1nd-set believes there are ROI gains from VR and AR development.

  • More than half of shoppers globally say they value experiences more than products
  • Among Millennials, the tendency is higher still, with seven out of ten shoppers leaning towards experiences.
  • Consumers are considerably more likely to purchase products online where the shopping experience is more interactive and immersive through AR.
  • One well-known e-commerce platform reports that products displayed with AR content demonstrating use have double the conversion rate than products without AR.

M1nd-set also identifies social commerce as “a major trend that will evolve and grow significantly throughout 2022,” with growth driven primarily by Millennials and GenZ consumers.

Social Commerce Graph

Source: m1nd-set

The social commerce market grew by more than 30% in some developed markets in 2021 and is expected to more than double in market size over the next four years.

“Meeting shoppers where they are, whether on Facebook, Instagram, Twitter or Tiktok, or via live streaming services, is proving to be hugely successful to major brands who invest in social commerce and social media advertising. In China, the most commonly used platforms among consumers are Douyin, QQ, XiaoHongShu, Pinduoduo, and WeChat. Both in China and elsewhere globally, the younger generations will account for the significant majority of spend on social media platforms in 2022,” m1nd-set states.

  • Eight out of ten shoppers discovered a new product while on social media.
  • Around two-thirds of shoppers globally who use social media say they have purchased a product via a social media platform in the past year.
  • Two-thirds of those who bought something through social commerce say they purchased the product following an advert they saw on social media.
  • Facebook and Instagram are the most popular platforms for making purchases through social commerce.
  • Around a quarter of shoppers interviewed said they had used Facebook and two-fifths said they used Instagram.
  • Less than 10% said they had used other platforms such as TikTok, Twitter, Pinterest and Snapchat.
  • Of those who did bought something through social commerce, two thirds said they would do so again.

The most common categories purchased on the social commerce platforms include video gaming, toys and leisure activities, jewellery and watches, fashion & accessories and books, including e-books, m1nd-set states.

“As with other aspects of digitalisation, such as livestreaming and personalisation through sophisticated CRM, consumers will be using social commerce more and more frequently to make their purchases. Social media location tracking tools enable brands and retailers to target consumers easily when in or near an airport. The opportunities are endless, but failure to meet the consumer in a place where he or she is increasingly used to shopping will mean brands and retailers risk forfeiting considerable sales opportunities,” m1nd-set concludes.


By Marisa Garcia

Retooling revenue management for the entire organization

Retooling revenue management for the entire organization

Retooling revenue management for the entire organization

Over the past two years, uncertainty has become the new normal for airlines. This has made the lives of revenue management analysts and their commercial partners especially hard as the majority of pricing decisions and forecasts are based on historical purchasing patterns.

So how can airlines move forward and focus on driving revenue to pull themselves out of the effects of the pandemic?

The obvious answer is by pursuing anything that can restore top-line growth. One of the smartest ways for airlines to do this is by investing in their products and operations to help them be more competitive in the marketplace. Revenue management (RM) systems, such as the one developed by FLYR Labs, help airlines maximize revenue opportunities and support their business growth.

Business areas that can benefit from retooling revenue management

Network, channel sales strategy, and marketing are among the top three business areas that can also benefit from retooling revenue management.

The network planning and scheduling group builds an airline’s product. Revenue management is the gatekeeper to this network, setting the market fare for access onto flights. They are also one of the first teams to see where a network strategy is succeeding or falling apart and can relay insights back to the network team in order to make the airline’s product stronger.

This insight into forward-looking revenue trends can also be used by marketing and sales strategy teams to influence the right moments to move inventory and volume or when to hold back during times of organic demand.

Do your current RM tools need an upgrade?

Many airlines invest in revenue management as a core competency and see it as key to their success. However, the range of tools available at present depends on the resources of the airline. For example, smaller airlines tend to buy an off-the-shelf product, while larger operators build their own tools and systems. Within these tools, the Revenue Management System (RMS) creates demand forecasts and price optimizations, and the analysts interact with demand and post-processing to arrive at the optimal price for their network.

As the pandemic has shown, there are weaknesses in the majority of existing revenue management solutions. Many have been built so that operators are steering their airlines using strictly historical data. Similarly, other airline groups remain heavily dependent on historical data such as the network planning teams who typically look at last year’s profitability to create next year’s schedule. Although

helpful to look at historical bookings and pricing to predict future pricing, this methodology leads to a lack of reactivity. It only works well when the coming year looks similar to the last 12 months.

In the brave new world in which we now live, predictability is no longer the norm. There is now a growing appetite for change, spurred on by the recent volatility in the market and an eagerness to look at other possible ways to approach the revenue maximization problem.

Improving reaction speeds with the latest RM solutions

The Revenue Operating System® by FLYR applies the latest AI innovations to maximize revenue, deliver measurable results, and add clarity to revenue decisions. Importantly, it differs from traditional revenue management tools in that it delivers much-improved reactivity to the volatility found in today’s marketplace. It can capture the sparks of demand that pop up but aren’t always obvious, applying analyst-grade intuition and decision making and applying it to every flight, every day, throughout the entirety of the network.

The Cirrus platform is built to serve airlines of all sizes and operating models and does not limit startup, low-cost, or network carriers from enjoying the benefits of solution capabilities, as they currently reside with other legacy systems. In fact, The Revenue Operating System offers a configuration specifically designed for the smaller or startup segment of the airline industry.

In addition to revenue maximizing pricing strategies, Cirrus also natively produces load factor and revenue predictions (both common KPIs across commercial airline functions). These metrics can be easily and quickly understood and communicated in order to bolster collaboration and empower data-driving decision making across the organization. This is an improvement compared to most native revenue management solutions whose primary model outputs are only abstract metrics or concepts such as unconstrained demand.

In recent years there have been many buzzwords thrown around between revenue management practitioners in this industry, such as NDC, total revenue optimization, and continuous pricing. However, the market is beginning to see airlines test cases that adopt these advancements in technology. With the introduction of The Revenue Operating System, airlines not only have a solution that offers backwards compatibility into their current legacy processes, but also one that has been built to optimize future technological opportunities – a world where airlines can create more personalized, real-time offers that provide the right product and right price to each customer.

If the past two years have taught the industry anything, it is that flexibility and reacting to change is essential to returning to top-line growth. Revenue management will continue to play an important part in creating competitive advantage, and, as can be seen with Cirrus, the future of revenue management is already here.


Kyle Holden, Head of User/Flight Analytics at FLYR

For more information about FLYR Labs and how we use advanced and intuitive technology to understand context and help airlines achieve their ultimate revenue potential, contact us today

What Is the Future of Business Travel?

What Is the Future of Business Travel?

Business travel is dead. Long live business travel.

During a panel hosted by Guy Johnson, News Anchor, Journalist and Aviation Enthusiast, Bloomberg at the Aviation Festival, London, Alex Cruz, Senior Advisor and former Chairman & CEO of British Airways, Johan Lundgren, Chief Executive Officer, easyJet, Martin Gauss, Chief Executive Officer, Air Baltic, Shai Weiss, Chief Executive Offer, Virgin Atlantic Airways, and Julie Shainock, Global Managing Director, Travel and Transportation Industry, Microsoft, shared their views on the future of business travel in a changing marketplace.  

“We know that we’re going through rough periods. I think it will recover. But I don’t believe that the permanent impact on business travel will be COVID or COVID related endemic measures. It will be CSR (corporate social responsibility) sustainability measures that corporations will adopt, at least for a while,” said Alex Cruz, Senior Advisor and former Chairman & CEO of British Airways. “I still want to test what happens when you have to compete between two different suppliers and who’s going to travel, etc. But I think, yes, the COVID related business travel recovery will happen faster than it seems. But there will be some permanent impact from a sustainability perspective at a corporate level.” 

 

“The day trip to Brussels or a day trip to New York may be cut down by technology”

Shai Weiss, Virgin Atlantic, agreed with Cruz, adding, “The day trip to Brussels or a day trip to New York may be cut down by technology—you have Microsoft here—or because of CSR. But we’ve already started to see the recovery of the business traveller. I think, in the estimates, we’re saying business travel may return to prepandemic levels probably in 2023. We’re already 30% booked on business travel into the summer of next year versus where it was in 2019. And that’s not a bad indication of where it is. But the truth is the equilibrium is unclear to any one of us because every time we predict something, something comes up.” Weiss added that pandemic measures affect how executives who might otherwise travel business class choose to use their time, avoiding travel because the health requirements may add too much time to the journey. “I think they’re more sensitive to the allocation of time.”  

 

Martin Gauss, CEO of Air Baltic, said the business traveller profile is changing. “We are still 30% down on the total passengers, but in business class, compared to 2019, it’s only 15% down. So we see more proportional business class travellers. It’s not the corporates because they don’t fly business. It’s a lot of other people who now want that freedom, that privacy that you have in business class. We see business class travel coming back, but not the same people,” he said. “I think more people will look for all the things you have if you book business class…The big corporations probably will not allow shorter trips on business, but individuals, smaller companies, will go for it because of the things you have if you’re travelling businesses. That’s how we see today, and that’s how we plan our hybrid model. We have a full-service business class in the front and an ultra-low-cost cabin in the back. It works very well, especially now in the pandemic.”  

 

“The global financial crisis, there was a debate then, that business travel would never come back to the same levels, we just wouldn’t spend the money. It took, what, two years to recover?”

Johan Lundgren, CEO easyJet reminded attendees that there have always been doubts about recovery following a black swan event. Still, the demand for all travel classes returns, sometimes sooner than expected. He also sees a shift in the business travel profile. “You remember the global financial crisis, there was a debate then, that business travel would never come back to the same levels, we just wouldn’t spend the money. It took, what, two years to recover? And after 9/11 [there were predictions that] people would not fly…I think it’s difficult to see at this point, to know exactly what will happen. I think that there will be some mitigation. There will be more businesses in general, and there will be more growth from that end…The mobile and the remote work has blended. People will go on more leisure trips, I think, and take two days also to work. So that’s a type [of travel]. How do you categorize thatas business travel or as holiday travel?” 

 

“Face-to-face travel can never be replaced. That is something that will always be there”

Julie Shainock, Global Managing Director, Travel and Transportation Industry, Microsoft, spoke to whether technology would make a significant difference, in this crisis, with people opting out of travel altogether now that virtual meetings are more accessible than ever to handle remotely. “You know one of the tools—Teams or Zoom—now, Teams would be my preference. But it’s a tool that’s here to stay. But there’s one thing I will tell you hybrid events are here to stay as well. I think you’re going to see more and more hybrid events come out as we move into 2022 and 23. You might have a mainstage event here, and then you might have regional events somewhere else. But the one thing I will say is face-to-face travel can never be replaced. That is something that will always be there. I agree with everyone. You may not do that one day or one-hour short trip—although I did do one recently, I went for a three-hour meeting. But you will still have face-to-face meetings. Nothing will replace that. I recently was at some face-to-face meetings, where we got more done in four days than we did in the past four months, just by being face to face. Those are the kinds of things that will never be replaced from a business aspect. The other piece I think you’re going to see is this whole leisure/business, and the leisure/leisure aspect will play a role going forward. People will do both, just depending on where they are and what they can accomplish.” 

 

Shainock also had an optimistic prediction for future events, even as Covid-19 continues to complicate travel. “I mean, you have 250 million daily active users on Teams. That’s a big number. You’re going to continue to see Teams being used in this way. But my preference would be to travel. I think the World Aviation Festival, Terrapin, did a fantastic job of getting the PCR tests available to all of us here so that we could come to a meeting. I think that you’re just seeing some of the flexibility that the world will adjust to. I do think we’re going to adjust over time. This won’t be the last variant. There will be more variants. I think that it will eventually move from the pandemic directly to an endemic, and then it’ll be more like the flu, where we get a vaccine every year.” 

On Getting AI to Fly Right for the Evolving Marketplace

On Getting AI to Fly Right for the Evolving Marketplace

Artificial Intelligence (AI) and Machine Learning (ML) are critical tools in the modern airline competitive toolbox, but they can be clunky. They are often overwhelming projects and can sometimes initially yield underwhelming results. But the promise of AI to build more meaningful and efficient connections with staff and customers gives airlines good reason to embrace this technology, even in its awkward infancy.

When informing AI systems, the quality of the data supplied can impact the result. The models used to process that data can shape what the neural network makes of it. Computers don’t think like people because people are still figuring out how to make computers feel. Besides, people haven’t quite figured out how they process information either. That’s why it’s essential to have standards for the structure and the use of data that will inform AI applications.

That was one of the salient points made during a fascinating discussion on AI systems at the Aviation Festival, London. The panel led by Alan Talbot, CEO and Founder, Bridge Solutions, Ltd, included Ben Dias, Data Science and Analytics Director, easyJet, Justin Bundick, Senior Director, Data Science & Automation, Southwest Airlines, Oz Eliav, GM, Cockpit Innovation, ELAL, and Alex Mans, CEO, FLYR Labs.

They tackled the question: How can airlines find new data sources to create a more complete single view, operations and support real-time and agile decision making?

 

“How can airlines find new data sources to create a more complete single view, operations and support real-time and agile decision “making?

 

Justin Bundick, Senior Director, Data Science & Automation, Southwest Airlines, spoke to the importance of data set integrity, saying: “We need to be staffing and doing a lot more accuracy monitoring. A lot of companies call it ‘drift monitoring’…You have to spend a lot of time and due diligence on that. In the past, you might have been able to deploy a model and check in on it every month or every 60 or 90 days. You need to do it daily or weekly now because of the volatility. You must ensure that you have the right staff to go in and do the deep-dive analysis, and make sure that dataset ‘A’ doesn’t need to switch to data set ‘C.’”

“I think there are a lot of companies pushing very strongly in this space, both from a data and analytics perspective,” Bundick added. “Whatever company you’re in right now, you have to look at your business strategy, translate that into a digital AI strategy that then converts into a data strategy, which then converts into a tech stack strategy, to be able to host and utilize that data. And involved in that, there will also be an IoT strategy. Especially in an industry like ours, where not all the data you need is created by transactional systems, it’s interactions that you need to capture. So, all of that must be tied together. It’s multiple layers of strategy that you have to deploy across multiple different parts of the business.”

 

“Until the business strategy and data strategies align, you don’t get anywhere.”

 

Ben Dias, Data Science and Analytics Director, easyJet said: “Until the business strategy and data strategies align, you don’t get anywhere. People processes are important. Even if you have all the business strategies aligned to the data strategy and all the data in one place, if you’re asking the wrong questions of the data, you won’t get the right answers in your business roles. So you have to also train the data literacy skills across the company. You might start with the data scientists and data analysts, but you have to eventually get out to the business as well—having essential, excellent training for people.”

Dias added: “I think that there are two key priorities for me to make it happen. The first one is the literacy level across the company because even if you made the data available, if you’re not able to use it, it won’t help. And it is also creating that platform that is easy to use and available and has the data in it. That’s, that’s hard when you are looking at a company that has been here for a while. The data has built up over time, and the data sets are all over the place. Bringing them together, and making them available, is a challenge, but it’s not insurmountable. You need to bring the data and make it accessible, maybe not in one place—just making the data available and upskilling the people across the company to use it. Those are the two things, I think, that will accelerate the process.”

Oz Eliav, GM, Cockpit Innovation, ELAL spoke to the role of automation in the data gathering process. “Automation is also contributing to the accuracy and objectivity of data,” he said. “If you have the objective data, then you can probably make actionable insights actual intelligence based on this automated data with no human intervention.”

 

“It takes a lot more investment from your technology organization. It takes a lot more skillset from an overall platform and data engineering perspective. But it’s really powerful.

 

Speaking to the agile application of AI, Southwest’s Bundick suggested: “It takes a lot more investment from your technology organization. It takes a lot more skillset from an overall platform and data engineering perspective. But it’s really powerful. Because by building those types of platforms for your AI, you’re able to deploy it. But not only that, you’re able to monitor those AI that you’re deploying and be able to make adjustments to them when there’s volatility happening. You can change them out without having to bring down a system updated in the system itself.”

Alex Mans, CEO of FLYR Labs, suggested airlines have underutilized their data. “Inform yourself with the broader data you have access to…Find ways to extract signal get past the noise get past the data sparsity collect more data and focus on making maximum use of that before you look too far out,” he said. “But equally important is structuring the data so that it can be processed efficiently. “Data sources change over time….Most airlines that we work with, we build our own canonical model on top of wherever data sets they have—because it’s never perfect.

 

“Once you get that out of the way, things will move a lot faster in the future.”

 

“Most importantly, we cannot afford as an enterprise SAS company to go and custom hook-up every data source we need wherever and however it sits. We need our software to read from a predictable common format. So we always install our own canonical data model because it creates a consistent system boundary between different airline systems and our solution. That enables us as a technology vendor to move much faster on deploying new capabilities. Because every airline we work with, the data we’re looking for, regardless of the airline, is structured the same. We still go through the steps of converting the airline’s data into our respective format, just because once you get that out of the way, things will move a lot faster in the future.”

While legal compliance to data regulations is an essential requirement, the ethical use of data is also a concern, with AI systems guiding decisions that directly impact people, Justin Bundick pointed out. “At Southwest, we are starting to spend a lot of time on governance processes around the ethical use of data and having the right touchpoints in place to understand the features we are using. Do we agree with those features? Should we be using them? What policies do we put in place around that? Even more than that, as we start to monitor the efficacy of our algorithms, we also monitor how the features that we are using are influencing potential decisions made. Are those decisions driving unethical behaviour? We don’t have the magic bullet yet. I don’t know that many companies do, but it’s something that we’re very focused on. It’s one of our priorities, as we move into 2022, to establish that. We’ve got a rough framework right now; we want to make that a robust framework by the end of 2022.”

 


by Marisa Garcia

Airlines Discuss Rebuilding the Value Proposition of Loyalty for the GenZ Generation

Airlines Discuss Rebuilding the Value Proposition of Loyalty for the GenZ Generation

What price do you put on loyalty, and how do you make that currency grow in ways that go beyond transaction? This is one of the central questions airlines have had to answer since miles and points programs were first introduced to the industry in the early 80s to ensure return flyers and reinforce brand loyalty. It proved to be a brilliant scheme, which has kept airlines afloat through hard times. But does this offering resonate with younger generations? That was one of the critical discussion topics during a special panel session at Aviation Festival, London. Matthew Hall, Head of Loyalty Planning and Management, Air Canada, Sid Krishna, Director of Loyalty and Cobrand, Spirit Airlines, Anthony Woodman, Vice President Customer Journeys and Reward, Virgin Atlantic Airways, Pekka Antila, Head of Loyalty, Finnair, Grant McCarthy, Director of Loyalty CarTrawler, and Kian Gould, Founder & Chairman, Omnevo shared their views.

 

“I see a lot of complexity in loyalty and loyalty programs and a great opportunity to simplify the value proposition”

 

Pekka Antila, Head of Loyalty, Finnair, believes there is an advantage in simplifying the loyalty program transaction. “My background in leisure travel I still look at loyalty through those eyes. I see a lot of complexity in loyalty and loyalty programs and a great opportunity to simplify the value proposition. First, by simplifying the way we communicate [value]. We could be more relevant for a large number of consumers.”

One example was the airline’s partnership with ePassi, which allows consumers to use their Finnair loyalty program points as currency at retailers around Finland. “Our members can redeem their points with close to 30,000 merchants in Finland—at restaurants, gyms, yoga schools, and cultural venues… You need to encourage your members to identify themselves and connect, but it’s so easy after that. You just choose a merchant, open your app, and redeem your points for the service that you like.”

Sid Krishna, Director of Loyalty and Cobrand, Spirit Airlines, shared how the airline made loyalty points meaningful to low-frequency, highly changeable leisure flyers by embracing digital wallets and mobile payments appealing to a new generation of “mobile humans.” “What we did with the co-branded card products we have—one of the first things we focused on—was to make sure that we had the ability for those cards to be presented in the Apple Wallet and all of those different [mobile payment options]. Because we have seen, and the data have shown, that people who end up putting their card on their digital wallet have more engagement with the program in the end. I think the push will always be there to book these folks into mobile. Also—for the millennials and Gen Z—the focus area that we’re talking about today is that they are more [active] on their mobile phones than any other system that they’ve ever been on. So that’s our best way to tap in into these folks.”

Anthony Woodman, Vice President Customer Journeys and Reward, Virgin Atlantic Airways, suggested that aligning the brand value proposition is essential to loyalty as the consumer mix changes, with younger Millennials and GenZ having different expectations of the brands they transact.

 

“We’re working on the seamless experience, the overall digital journey for your customers”

 

“One of the most critical things for younger customers mixing experience, so that is a lot of the loyalty value proposition. [We’re] working on the seamless experience, the overall digital journey for your customers…That the end-to-end experience is seamless and perfect is critical for these younger customers… The question that I always come back to is, what does your business represent? More and more, we find that customers are purpose-driven and that they want to interact with companies that have a clear value proposition—a purpose statement at heart. It’s not as simple as, ‘We have a business, we sell some stuff. We want some younger customers. Can we give them some points?’ You have to say that we are a brand committed to selling value propositions to customers. And if we don’t, then actually, let’s start there before we get too involved in the micro-loyalty economics.”

Matthew Hall, Head of Loyalty Planning and Management, Air Canada, agreed with Spirit Airline’s Krishna on the importance of a mobile-first experience and emphasized that one of GenZ consumers’ expectations is to ensure the value of their data. “We’ve got to build the mobile experience first…For Gen-Z—they are the most privacy-aware folks that I’ve ever seen. It’s not so much to say privacy. It’s more that they know what their data is worth. So to get them to give up their data will take more convincing. See, it’s less about the machine or being worried about privacy, per se, as they mature [as consumers]. It’s that they say, ‘I know what it’s worth. I want to make sure I know what my data will be useful.’ So making sure that these privacy policies are very clear versus just the long-form T&C’s.”

Hall’s comments, coupled with the insights from Antila, Woodman and Krishna, suggest that GenZ expects companies to apply their data in a way that adds value. Simplifying transactions because the offers, booking flow, and transactions are informed by the data consumers have willingly supplied. Making consumers enter information they’ve already given or switch out of a payment method they have already indicated they prefer would erode the loyalty proposition, as would pushing products or services unrelated to their consumer identity and behaviour.

 

“Gen Z’s are a lot less tolerant of screw-ups from airlines when it comes to technology.”

 

Kian Gould, Founder & Chairman of, Omnevo emphasized the importance of this, saying, “Gen Z’s are a lot less tolerant of screw-ups from airlines when it comes to technology. We all have had these experiences of going through airline checkout where you have noticeably recognized that you’re interacting with four different sites because they all look different. This is something Gen Z is very intolerant of—if it doesn’t work right. They will just stop. It is much more than an error, whereas older generations will tolerate more. This has always been one of the most critical aspects when we’re doing rollouts with airlines when it comes to the payment question. You need to accommodate much more than just the standard payment options… Someone might not have enough points to pay for half of the journey, and they want to use WeChat to pay for the rest or AliPay. So you have to support that entire Payment ecosystem, from native payments and third-party payments and cash, and Miles payments. That’s one of the most complex aspects of creating these marketplaces, but it has a huge impact on conversion.”

Grant McCarthy, Director of Loyalty CarTrawler, said the personalization of loyalty program communications is also critical to loyalty building.

 

“They want to say, ‘You know my lifestyle. You know I want to travel to Orlando, and I go to Disney. You’re going to offer me a car which will meet my needs…a hotel that meets my needs as well.’”

 

“There’s a great study by McKinsey where they’re saying the same thing. The different generations would suggest ‘extra me.’ You think about loads of programs and join one, and you stay in it forever. But Gen Z are less [tolerant of] the big rubber stamp emails—[and just booking] if it’s a pretty pointless destination [to them.] They want it to be personalized to them. They want to say, ‘You know my lifestyle. You know I want to travel to Orlando, and I go to Disney. You’re going to offer me a car which will meet my needs…a hotel that meets my needs as well.’ So you want to follow-up personalization. The broad-brush approach to people, which we have taken historically, [won’t work]. This is a new generation. So if you offer a truly personalized offering, they are more inclined to convert and spend money to help you make money. If you don’t offer a personalized solution, they are more inclined just to switch off and go to another partner, another supplier. There’s no loyalty anymore to a particular brand. If you don’t deliver what they want in a personal way, they walk and go to somebody else.”

A final thought on the brand loyalty proposition from McKinsey’s ‘True Gen’: Generation Z and its implications for companies:

“Young people have always embodied the zeitgeist of their societies, profoundly influencing trends and behaviour alike. The influence of Gen Z—the first generation of true digital natives—is now radiating outward, with the search for truth at the centre of its characteristic behaviour and consumption patterns. Technology has given young people an unprecedented degree of connectivity among themselves and with the rest of the population. That makes generational shifts more important and speeds up technological trends as well. For companies, this shift will bring both challenges and equally attractive opportunities. And remember: the first step in capturing any opportunity is being open to it.”

 


bu Marisa Garcia