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.

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

Consumer Data Informs Brand Strategy as Airline Marketing Teams Adjust to New Normal

Consumer Data Informs Brand Strategy as Airline Marketing Teams Adjust to New Normal

Consumer Data Informs Brand Strategy as Airline Marketing Teams Adjust to New Normal

The COVID-19 pandemic has re-shaped consumer behaviour. Airlines discussed adaptive marketing and brand strategies to ensure growth and recovery at the Aviation Festival, London. The panel discussion, led by Ross Sleight, CSO, Somo, included insights from Annabelle Cordelli, Vice President of Marketing, Virgin Atlantic Airways, Jayne O’Brien, Head of Marketing and Loyalty, JetBlue Airways Corp., and Tyri Squyres, VP Marketing, Frontier Airlines, as well as Seth Cassel, President, Everymundo, and Perri Maxwell Chaikof, Director of Product Marketing, Ada.

“I think one thing that we’ve all learned both personally and professionally is you question everything that you used to know—rethink it”

Of the impact of the pandemic on consumers, Tyri Squyres, VP Marketing, Frontier Airlines, said: “I think one thing that we’ve all learned both personally and professionally is you question everything that you used to know—rethink it. Anything that I thought was a steadfast marketing role, you question it. If you had your systems, how you’re advertised, how you thought about your customer, you would rethink it. You retry things that maybe didn’t work before. We found a lot of success in testing things we had done before, and maybe we didn’t get the success [we hoped for]. And we would find that all of a sudden now it was something that would work and was really affecting customers. Customers have changed mindsets. Technology has changed. People have been in their own houses a lot more, so customer sensibilities have changed as well. You need to constantly test and try new things and listen to what customers are saying to make that beneficial. For me, that was the biggest thing that I am looking forward to in 2022—our whole testing plan—the things that we’re going to experiment with, and not be afraid to do some different things and think about things.”

Annabelle Cordelli, Vice President of Marketing, Virgin Atlantic Airways, shared what she learned to prioritize during the pandemic. “I think it’s bought people into sharp focus—in the broadest sense—that’s the customers who are trusting and buying a brand, but also our people delivering that service,” she said. “With everything up in the air—our lives were thrown into disarray—deeply understanding and listening to what people want and being able to adapt to that [is important]. I’ve certainly learned that things are possible, things that you never thought were possible before. I think if you’ve got that combination of really deeply understanding what customers want, what they’re dreaming about, what’s keeping

them awake, their fears at night, and getting under the skin, you can look within and work out how you’re going to try some different things. What are you going to do to challenge yourself, create [offers] that fuel the dreams and address the worries? I think it’s the combination of those two things for me.”

“We’re all living change. We’re all living in uncertainty. We’re constantly evolving.

Jayne O’Brien, Head of Marketing and Loyalty, JetBlue Airways Corp, agreed with her counterparts, saying:

“We’re all living change. We’re all living in uncertainty. We’re constantly evolving. Well, we think that we’re just back to knowing what’s going to happen and something else happens. One of the key learnings for us is the need to be flexible all the time. And the need to be listening to our customers, our marketplace, and our crew members. It’s terribly important, I think. During the earlier days of 2020, information flexibility, helping customers and helping crew members, was probably at the forefront of what we were concerned with. It was less about making sure your price or product information is out there but just making sure that people understood the different requirements of travel and what we were doing to keep people safe and secure. That was for our crew members as well as our customers. The first [priority] is just supporting customers and crew members. In terms of how we go to market, what we’re talking about has evolved for all of us. We need to keep our eye on what matters most to our customers. What do they want to know? How can we make the experience easier? How can we give them the information they need to make that trip? [Customers are] worrying about all the different regulations in different places. Early on, it was about how are the aircraft cleaned? What are the touchless features? What’s the touchless experience? Do I have to wear a face mask? Then it evolved to what type of COVID test do I need to go? And the different laws—they’re all different when we fly to different places, not just the UK. If you look particularly at the Caribbean or South America, each location has slightly different requirements. So the need for customers to understand [those requirements] easily became a priority for us. You’re giving them that information straight up… That is our primary focus, and you have many ways of doing it. We rely very heavily on our channels, our website, obviously comms or emails. You can target customers specifically, looking at where they’re going and what information they need. Using data was there already, but it’s coming back much more to the foreground.”

What is the reality of the behaviour today? Where are things headed? So you are optimizing today but also trying to keep an eye on tomorrow and creating new propositions

Cordelli of Virgin Atlantic Airways said of the airline’s use of data to inform marketing strategy: “I would say fusing lots of different data, depending on what question you [are trying to answer]. It depends on whether you’re trying to optimize today or you’re trying to create tomorrow. We’re using everything from our voice of the customer data. We ask how people want to travel and [their] concerns [about travel]. [We’re] looking at trend data mixed with search data—you get that long and short term. What is the reality of the behaviour today? Where are things headed? So you are optimizing today but also trying to keep an eye on tomorrow and creating new propositions. I think then linked to that big believer when you get some ideas and back to try things is get a concept and then put it out in front of people. So we’re doing a lot around quick turnaround reach. Agile research methodologies to get what people think about that—and how you adjust. Just be focused on deep listening, and then be flexible around adjusting to make it better, and you probably don’t have to change it again.”

Seth Cassel, President, Everymundo, said consumer behaviour data also informs their marketing strategy. “We’re looking at search data, for example, and understanding what our users are looking for, whether that’s searching on-site or searching in Google,” he said. “What we see, especially on Google, is there’s a lot more activity. You can take away from that the demand is there. There’s demand for certain markets. You can segment that data—it’s not all data, it is aggregated data, but it’s very insightful to understand what people are looking for. The fact that they’re actively looking and searching in a non-brand way searching, a flight from A to B. What we see is not necessarily a commensurate rise in brand search, which suggests a dissipation of some brand loyalty. So as you start to plan your marketing initiatives, you recognize that maybe an investment to rebuild some of that loyalty is critical to get back to where it once was. Or maybe it’s a new world, and you can’t necessarily expect the same level of loyalty that you saw before.”

“…Another way to listen to customers is to go to the airports, fly, and talk to customers”

Squyres of Frontier Airlines suggested that rebuilding loyalty requires more effective, personal messaging.

“We were cautious, in the beginning, about tone. It was a tricky place to be, where you’re trying to get attention but have the appropriate tone. In hindsight, we probably [wavered],” Squyres said. “We have a playful, fun brand. We were probably a little too conservative in the beginning. People needed a reason to smile and think about travel again. I learned to test some of the [messaging]. We could have taken a small sample size, sent an email with a clever headline and seen how customers responded. Because, as soon as we did, we started to see a great response. People were looking for a reason to smile and think about really positive things. I think the trial and the testing is really important. Then another way to listen to customers is to go to the airports, fly, and talk to customers. Talk to the flight attendants who are working on those flights. Talk to the team members and take care of crew members. First, they love to be heard. Second, they have great insights into what customers say. Every day, you have a flying focus group sitting in the lounge before they get on the flight and then on board. I find that’s where I get my best insights—my best ideas.”

JetBlue’s O’Brien agreed with Squyres on the importance of one-to-one contact with customers and crew. “We do a lot of what we call Blue Unity Days at JetBlue. That’s about getting out there in the front line. We [met] with our crew members throughout the pandemic and listened to our customers by helping at our airports. There is nothing like sitting, working and being there in the frontline and listening…because you see firsthand what customers are experiencing and the pain points. We also make it a policy to reach out to our most valuable Mosaic customers. They’re part of our TrueBlue loyalty program—just talking to them about how’s it going. You can’t sit in the ivory tower—it’s a new world. You’ve got to go and experience it. Certainly, during the pandemic, I was flying weekly, up and down and around the US. It sounds really simple, but it’s back to basics. Listen to the customer. Listen to your crew members and just design everything around what you’re hearing.”

Perri Maxwell Chaikof, Director of Product Marketing, Ada, brought the conversation back to data and emphasized the importance of inter-departmental collaboration where marketing supports revenue management.

“Airlines own a lot of data already. The challenge is to leverage that information in the right places to get the most out of every interaction with your customers.”

“You have so much more data about your customer than the average e-commerce business. Airlines own a lot of data already. The challenge is to leverage that information in the right places to get the most out of every interaction with your customers. So I’ll use a specific example now and talk a little bit about AirAsia, one of our larger airline partners. They deployed data across all their social channels with their customers. If you want to talk to someone at AirAsia, whether you’re on WhatsApp, WeChat, their website, or in their app, your first point of contact is an interaction with Ada, which is a fully automated experience. Ada is connected to [the airline’s] back-end systems. If I’m logged in, I can speak with Ada, and it will say, hey, Perri, welcome back. Are you asking about your upcoming flight on X? Would you like to upgrade your seat? Do you want to add a meal? Do you want to pay for your baggage now? Their ability to turn a support inquiry into a revenue-oriented conversation allowed them to drive an 8x increase in their ancillary revenue. I think it’s just a great example. You have so much data at your fingertips already. There’s so much you can do with what you already have to not only the customer experience but drive business value as well.”


By Marisa Garcia

Note: Please note that quotes were edited for clarity.

Airlines Adopt New Revenue Management and Continuous Pricing Strategies to Compete Amidst COVID

Airlines Adopt New Revenue Management and Continuous Pricing Strategies to Compete Amidst COVID

What do you do when your crystal ball cracks?

 

In a panel discussion led by Sinead Finn, Founder, Affinity Ltd., Bryan Porter, Head of Commercial — EMEA, Accelya Group, Jason Coverston, Director, Office Domain, Navitaire, an Amadeus Company, Sophie Dekkers, CCO easyJet, Achim Tyler, Vice President of Global Sales, Infare Solutions, and Krassimir Tanev, Chief Commercial Officer, Blue Air each shared their views on changes in the marketplace since 2019 and the rapid adaptation required to stay ahead, particularly in revenue management systems.

“In the last 20 months or so, is it’s very much a switch towards away from looking at historical behaviour and historical data into much more forecasting and forward-looking; which is a challenge, because who knows whose crystal ball is right,” said Sophie Dekkers, CCO, easyJet. “But we are having to switch and use much many external data sources to help make sure the points that we’re looking at in terms of forecasting are correct… In terms of the revenue management system itself, it’s trained to price at certain points with certain low matter. We’re in a very different time now, with a much later booking window. We were at about 75% of our sales were coming in the last three months [before travel]. Recently that changed to around 63% now [booking] in the last three months for travel next three months. That’s still very near-term [bookings] versus what the system had learned over the last 25 years, built to look much further out.”

 

“How do you stimulate demand? Once they get to the website, the conversion is there because the prices are attractive at the moment.”

 

Customer behaviour has also shifted somewhat in terms of apprehension to book, although Dekkers said the airline had seen a marked improvement in conversions, returning to 2019 levels. “But it’s the demand traffic in the first place that isn’t coming in. Once they come in, they see the prices, and they’re converting. So, our conversion rates are the same as in 2019. But it’s the demand that’s still depressed. If we look at searches on Google for flights, generically, they’re still down about 40% of what they were from 2019. That demand is the challenge—how do you stimulate demand? Once they get to the website, the conversion is there because the prices are attractive at the moment.”

Krassimir Tanev, Chief Commercial Officer, Blue Air, explained that the company as a whole had reshaped its business model from a hybrid budget airline to a true low-cost airline, with a greater focus on ancillaries.

“We have deployed a robust commercial plan over the last 12 months, focused on three main pillars that underpin our developments. The first one was network development, or rather, network enhancements, adding more value to our customers by focusing first on primary airports. We have tried our best to expand our operations rapidly and flexibly into the gaps that full-service carriers have opened up. We’ve opened up new markets like London Heathrow, Amsterdam Schiphol, Milan, Linate, and Frankfurt, just to name a few. The second priority for us was the customer experience elevation. Here, we also made significant progress. We used this time to upgrade our products. We have added a new fleet with a state-of-the-art, cost-efficient 737 Max 8 aircraft. And on top of that, we have also enhanced our customer experience capabilities and customer notification platforms–we’ve added new chatbots. Our digital systems, we’ve improved overall. We focused on adding more value to the customer experience. And last but not least, we focused a lot on actually driving growth in ancillaries. We know that most carriers have reported weaker or softer yields throughout the pandemic. But one thing that we delivered very well was that we provided more opportunities to our customers. We increased our ancillary yields by more than 50% thanks to our new ancillary strategy, where we have unbundled our products further. We have created new product features and new product bundles for our customers. And we have deployed dynamic ancillary pricing, just to name a few of our actions. But more importantly, we have enhanced, or we have increased our exposure to the VFR (visiting friends and family) markets, which has proven to be much more resilient compared to other market segments.”

 

“We work very quickly with existing customers to start consuming new types of datasets”

 

Bryan Porter, Head of Commercial — EMEA, Accelya Group, shared some examples of how the company’s airline customers had adjusted RM when historical data proved less useful. “Norwegian started using Accelya’s airRM revenue management solution back at the end of 2019. So we implemented a solution that effectively used historical behaviour to predict future behaviour. We built in all the forecast models, and, of course, along comes COVID–none of that is effective anymore. [How we deal with that is] we work very quickly with existing customers to start consuming new types of datasets. This is taking in market insight data and competitive fare data and utilising that to optimise prices. We also started pulling in data from the look-to-book activity that we’ve seen on some of our customers’ websites and other data that allowed us to focus on price optimal optimisation on an intraday basis. So if there’s a sudden, unscheduled event or a sudden fluctuation, our customers were able to cater for that. We effectively moved midstream with Norwegian. At the same time, we had customers coming to us—Iberia being one of them—who had barely been using their traditional RM system and suddenly found that it wasn’t fit for purpose. So they started working with us, implementing some of the solutions similar to what I’ve just described for Norwegian.

“Another example is we have seen the rise of new low-cost carriers that have effectively started during the pandemic. They don’t have any huge debt burden, and the cost of entry into the market is lower than it’s ever been. So we’ve had airlines coming in, who have no historical data to optimise their prices effectively, and are looking for new tools that can suddenly get them into the market. It’s been an interesting time for us. We’ve managed to onboard 11 new customers during the pandemic—our team’s been very hard at work. We’ve effectively introduced 280 discrete additional value points to our product set. We focused on new data integration, better visualisation to allow revenue managers to identify trends and start making more active decisions, as well as to look at automation and intraday optimisation.”

 

“One of the things that we’re working on with some of our newer customers is total offer optimisation.”

 

Porter also discussed how the company’s acquisition of FareLogix has helped refine the pricing of both fares and ancillaries. “One of the things that we’re working on with some of our newer customers is total offer optimisation. Through our flex merchandising module, we’ve started revenue managing ancillaries. We can start using price optimisation across the ancillary products and start doing that with bundling as well. [We’re] working with a large European airline currently to effectively couple our airRM revenue management solution with our merchandising solution. We are introducing AI (artificial intelligence) and ML (machine learning) to enable ‘willingness to pay’ models. We’re not just looking for an entry bid price, but ultimately at what the customer is willing to pay and utilising that to optimise price.”

Achim Tyler, Vice President of Global Sales, Infare Solutions, said data supply to inform RM models has increased.

“We’re looking in the future, then looking into historical data. We don’t throw away any information we collect—it’s still available. If you want to go back to 10 years and further, if you want to look into the market, we still do that. But last year and this year was always about the future… We invented a product called Market Trends, which observed the scheduled flights versus the flown flights, how prices were changing how quickly they were changing, how [many flights were] cancelled. That was last year. This year… there’s not too much churn. We focused this year more on optimising costs for our customers in the way we source our data. We did a couple of projects regarding API access to data—NDC API projects… We have already about ten customers on NDC APIs. NDC is the most efficient way for airlines to access the information they have on their website, which is our quality aim… We also see shopping data and ancillary data as a newer trend, talking about dynamic pricing and continuous pricing. You can imagine it’s going to be much, much more data. We work together with airlines and RM vendors to make this most efficient for all of us. A lot of data needs to be collected and consumed. You have to run all the algorithms, on top of that, to get to the really good revenue results.”

 

“One of the things that we’ve found is that our crystal ball is not as good as the crystal balls that our customers have—and they each have a different one.

 

Jason Coverston, Director, Office Domain, Navitaire, an Amadeus Company, also mentioned the importance of working closely and collaboratively with airlines to collect the correct data and refine predictive models. “You’re just talking about how much data it takes to react,” he said. “One of the things that we’ve found is that our crystal ball is not as good as the crystal balls that our customers have—and they each have a different one. So we try and get out of the way of our customers. For example, [one of our] customers realised they

needed to react more quickly [to] data coming in from Infare. We have a team dedicated to helping customers operationalise the data they get. So, we came in, and we created a pipeline. They were able to implement exactly the logic and algorithms they wanted. We take a very non-structured approach to deliver value to the customer. When it came to the algorithm choosing fares and exactly how to write the logic around how to compete, that was completely up to the customer. But they needed a bit of help in operationalising that because it wasn’t part of their out of the box system. So, whether it’s [data sources like that], or maybe somebody’s got a new Google TensorFlow model that they need to get into the system. We don’t use our crystal ball to decide [for our customers what they need, such as] you need willingness to pay, you need probability, you need x, y, and z. Instead, we say, we’ve got some patterns that we’ve seen to be successful, and they’ll show you what other customers have done. But at the end of the day, you can invent entirely new steps in the process so that you can be agile as the world changes from month to month.”

 


By Marisa Garcia

 

Revenue Management and Pricing

 

RM, continuous pricing and Demand Forecasting Panel Discussion: Rebuilding and adapting forecasting models with different inputs and future strategies to ensure that we capture demand?

>> Watch on-demand on our website

NDC: Steps towards a new distribution landscape

NDC: Steps towards a new distribution landscape

From its very inception, IATA’s New Distribution Capability (NDC) has evoked heated debate. Sometimes that debate is related to the purpose of the NDC technology but mostly it’s about who will pay.

Such fundamental challenges have hampered the standard from gaining significant traction before now and while adoption is progressing, many predict there are further hurdles ahead.

Traditional airlines in Europe, such as those in the Lufthansa Group and Air France-KLM, have largely embraced the NDC technology standard and talk about it in the same breath as their modern retailing future. Other carriers, meanwhile, have taken a step back and returned to traditional distribution methods.

It might be time to accept that NDC is not a magic wand transporting the air passenger transport industry into the e-commerce world of Amazon, but a stepping stone in that evolution.

By acknowledging that NDC is a means to an end, airlines, travel intermediaries and technology partners can more easily face up to the challenges of implementing NDC, some of which might be considered challenges to their overall future survival and growth.

 

An e-retailing mindset

 

A change in mindset from all players is critical to move towards modern retailing.

At a recent airline conference, one former airline executive said airlines risk losing share of wallet to non-travel retailers such as Amazon or Google, not only because of the traditional mindset but also because of the ongoing reliance on legacy technology.

Many advocate it is not just digital transformation that is required, but complete system transformation if carriers, and other players in the distribution ecosystem, are to meet the growing expectations of consumers.

 

Evolving standards

 

Going forward, IATA’s recently announced plan to move from the NDC certification index to an Airline Retailing Maturing (ARM) index might focus minds on the end objective rather than the technical barriers to getting there.

One further challenge to NDC achieving greater traction is the various versions of the standard that airlines have used to develop solutions. This might be resolved through the launch of a new version carriers can unite around.

With so many hurdles it’s hard for airlines and intermediaries to see the real value NDC might provide let alone achieve it. But there are small steps carriers can take to unlock the potential.

 

Unlocking the value of NDC

 

Small developments such as ensuring technical specifications and documentation are easily available to developers and automating contract signing are easy wins for airlines to implement.

Making it easy for aggregators to access and sell NDC content and even incentivising travel firms for selling could also help demonstrate the value in changing to newer ways of retailing.

Finally, and requiring more of a mindset shift, is the decision by airlines to outsource their IT function so they can focus on flying planes and the passenger experience instead of trying to make legacy systems fit for the digital world.

It’s not hard to see why it still might take a few years before NDC has more of a presence but it’s important to note that steps taken in its development and implementation will not be wasted. This is progress towards the potential rewards of airline retailing which, as McKinsey and IATA estimated in a 2019 report, could be worth up to US$40 billion in additional annual value.

 


By Viktor Nekrylov, Managing Partner, DRCT

Viktor Nekrylov is managing partner at DRCT, the trusted tech partner for airlines and travel sellers. Powered by AI, DRCT’s technology integrates with existing selling platforms to solve the pain points of dated, legacy distribution systems. http://www.drct.aero/

Airlines Adopt Payment Strategies To Attract More Customers and Secure Financials Amid COVID

Airlines Adopt Payment Strategies To Attract More Customers and Secure Financials Amid COVID

During the Aviation Festival in London, an expert panel of airlines and payment services providers discussed some of the challenges of retailing and payments during the COVID pandemic. They shared their views on payment strategies to encourage more people to fly while keeping up with the industry’s financial challenges.

The experts tackled how airlines can keep up with the power shift towards customers and offer more flexibility to give consumers that “Uber experience.” In the process, they provided an overview of the current marketplace opportunities and some predictions on trends that will take hold in payments over the coming years.

“Now we’re looking forward to shaping a new way of interacting with customers at different touchpoints”

 

Thomas Lindner, Senior Director IT Distribution, Payment and Order Management, Lufthansa, said of adapting to new technology trends: “With the time to reassess what change of behaviour the customer will see, and demand from us, and especially as an airline supported by state aid, we had to make up our mind so we’ll be able to repay those billions in loans. Therefore, we came up with more creative ways to offer services to the customer. On the overall industry side, we had issues in acquirers having risk-aversion to that exposure with the airlines. We had a multi-acquirer strategy to juggle that, but that, of course, was a shift in the styles as well. Now we’re looking forward to shaping a new way of interacting with customers at different touchpoints.”

Frank Gubba, Product Manager Loyalty and Payments, Icelandair, agreed with Lindner on the challenges of keeping up payments during COVID. “The problem was suddenly that refunds were higher than transactions. You went out also to have good discussions with our acquirers, looking into things and how can we bring this to a turn-around. We had a financial restructuring, then, in the latter part of 2019. And we were getting everything involved in negotiations with all the key stakeholders. What helped us was to look more strongly into the reporting to understand the new normal for airline travel. It helped to be upfront and very transparent with our partners. For us, the risk mitigation part moving forward is very critical—having various providers in place and the recalibration of our mix for forms of payments. Not be so much dependent on credit and debit cards. Looking ahead, for us, to ensure like a frictionless journey, being close to the customer.”

“I will tell you—buy now, pay later, or whatever name you want to give that flexibility option was nowhere on our radar two years ago.”

 

Keith Wallis, Senior Director Distribution and Payments, Air Canada, suggested that many solutions were already in the marketplace though airlines were slow to adapt. “I would say the pandemic just massively accelerated everything. As being in charge of payments in Canada, I will tell you—buy now, pay later, or whatever name you want to give that flexibility option was nowhere on our radar two years ago. And it is rapidly becoming the thing that our customers are very excited about. For something like travel, which is aspirational, inspirational, and typically has a larger than average cart size, I can’t believe that buy now, pay later options weren’t already in our industry. But some vendors approach us with solutions that I don’t believe had travel on their radar two years ago.” Wallis pointed out that consumers have built a habit of online purchasing during the pandemic and have new expectations of what merchants need to offer. “I think as an industry, we need to do better. If you didn’t have one of the three major cards, you weren’t doing business with us five years ago. I’m proud to say that’s not the case now, but our customers expect even more than that. Geographically, it’s different. By customer segment, it’s different. People want flexibility and choice in a frictionless experience. We need to do much better than we’ve done historically.”

Michiel Kossen, Partnerships and Business Development in Airline, Travel & Hospitality at Adyen, said the company had helped airlines manage those high refund balances caused by the lockdown. The company is focusing on flexibility as the market reopens. “We took the opportunity to start projects that have been on the shelf for a long time. We’re expecting that there will be differences in how customers are dealing with the situation. And [we’re trying to define] how, as an ally, we can be flexible—adding new payment methods in different markets.”

Chris Fendley, Executive Vice President, Enterprise Partnerships, Mastercard, suggested the pandemic has called attention to the importance of collaboration in finding new solutions which ensure greater flexibility on payments.

“As an industry, we’re now looking and seeing real change around how passengers are dealt with, how the different partners in the industry work together, transparency of data..the whole ecosystem and managing things like access to credit, which is key”

 

“As an industry, we’re now looking and seeing real change around how passengers are dealt with, how the different partners in the industry work together, transparency of data…the whole ecosystem and managing things like access to credit, which is key. Also, things like customer service, where you need customer chargebacks, we all learn how painful it was when the whole system got shut down. There are legacy payment systems that are not fit for purpose. They need to evolve, and the industry needs to work together. At MasterCard, we have some solutions, but it needs to be done collaboratively with everybody.” Fendley offered some examples. “We’ve been on a bit of an education campaign on virtual cards for B2B flows. In the last 12 months, we’ve found that the agencies are looking for protection around the payment flows. Traditional VSP cash doesn’t provide the same level of protection for them or the consumer at the end of the day. I’m fully supportive of multiple solutions…But however this evolves, you need to have protection on both sides of the fence.”

In terms of B2B transactions, Air Canada’s Wallis said, agencies’ preferences in different regions affected their ability to deal with the shutdown’s financial impact.

“In North America, my experience is those travel agencies are very keen to pass through the customer’s card and allow the airline to be the merchant. They’re not interested in the fees. They’re not interested in the liability. They just want to pass that through and let us do the work. In Europe, we find that agencies are much more interested in owning that customer experience. They will take the customer’s card and be the merchant of record, assuming the costs and liability to own all aspects of that customer relationship, including the payment. I think the pandemic highlighted that many agencies who didn’t do that were very much at the mercy of travel suppliers and whatever policies we had on refunds. They were struggling to get a refund from 10 or 20 different suppliers. Those who had decided to own that aspect of the relationship were completely in control of what they could do for their customers. So, sure there’s a cost. But it’s an interesting discussion now around what is the value you can generate as an agent by owning everything, including the payment aspect.”

“..half of the millennials and all of Gen Zed, that segment is very different. Cards are not nearly as important to them.”

 

Wallis also pointed out that the consumer preference for credit card payments is generational. That’s true even in North America, where credit cards are widely entrenched and encouraged by points earning schemes. He advised planning for the needs of the up-and-coming consumer.

“If you look at the data in time segments—so what has happened in the last 12 months—you can see the changes in consumer segments. The bottom half of the millennials and all of Gen Zed, that segment is very different. Cards are not nearly as important to them. They pay direct when they pay online. And buy now, pay later solutions are very strong in those segments. Those are the future buyers. That’s the segment we need. I don’t need to devise new solutions for people in my age bracket—we have to understand what’s coming and be prepared for it. So it’s really about finding out not what you need to do now, what you need to start now for what [is coming up over the next five] years.”

 


By Marisa Garcia

 

Payments

Panel: How can airlines keep up with the power shift towards customers, and offer more flexibility to give that Uber experience?

Payments; World Aviation Festival

>> Watch on-demand on our website

The smarter airport – How can making intelligent decisions transform an airport’s performance and customer experience?

The smarter airport – How can making intelligent decisions transform an airport’s performance and customer experience?

Smarter airports – it’s a description we hear a lot, but it means different things to different people. So what does it mean from a Veovo perspective?

When it comes to improving airport efficiency and the passenger experience, airport operators traditionally focus on one area at a time. For example; measuring wait times at security checkpoints to adjust resourcing and smooth throughput, assigning gates and parking stands to improve on-time departures, minimise towing costs and ultimately reduce fuel burn.

Every improvement helps. But making decisions focused on one area alone does not optimise the entire airport.

Passengers and airlines view airports not as a series of discrete events but as a journey or a “flow”. A good decision that solves one pinch point but doesn’t optimise the entire flow, will only have limited impact on improving passenger experience.  Plans optimised for a “blue-sky” day, often come up short when faced with irregular or unexpected events; but building in “buffers” to make them resilient simply wastes capacity and resources.

Smarter airports look beyond single processes and static plans with buffers. How well they have embraced that approach defines where an airport is on the transition to “Smart”.

Top performing airports view the end-to-end process they need to optimise and look for the most impactful changes which deliver the most improved outcomes across the entire airport; in much the same way that major manufacturers did in the second half of the last century.

But it needs to be more than that. Airports are operating in a very dynamic environment with constantly changing priorities. So smarter airports are not just reactive, they have to be predictive. They anticipate changes before they happen and get ahead of disruption; an unexpected influx of passenger numbers at immigration, apron congestion due to a late departure, or a traffic snarl up causing late arrivals and check-ins.

Another difference is the way smarter airports continuously improve. They don’t make the same decisions because that’s what they’ve always done – they learn from past outcomes with a continuous improvement feedback loop. Smarter airports build their capabilities in much shorter cycles, allowing them to keep adjusting course and maximise “bang for buck” as priorities and challenges evolve.

So, how does an airport become smarter? Ultimately, it comes down to bringing together three things – data, prediction and decisions – to continually improve performance. Let’s break it down:

1.     Data – The fuel of smart decision making

Smarter airports think in terms of flows rather than discrete events – the movement of passengers and aircraft and how they intersect. Understanding these flows requires capturing data and making sense of journeys end to end, and not just a single event.

This means bringing together flight, passenger flow and turn-around data to create a holistic picture:

  • Flight data that includes flight schedules, live status updates from airlines and third-party aggregators and air traffic management data sets;
  • Passenger flow data that includes how and when passengers show up and move through the airport, by flight, day and time.
  • Turn-around data that captures on and off block times, taxi times and all critical events in between.

Aircraft turn-around is where most benefits emerge from joining aircraft, passenger and baggage flow data together – critically influencing turn-around efficiency and the ability of the aircraft to depart on time.

2.     Prediction – Getting ahead of change

Building a rich data pool across flows gives smarter airports better situational awareness to react quickly. But more importantly, it provides critical insight to accurately predict the future.

When airports can predict passenger flow, border control and security can dynamically adjust staffing to meet service level agreements with fewer overheads. Baggage handling and reclaim belt allocations can be done more efficiently to match passenger arrivals. The passenger experience can be improved – for example with FIDS call-to-gate times dynamically changed based on actual flight behaviours to encourage more dwell time in retail while ensuring on time performance.

When airports can predict more accurate “Off Block Times”, due to aircraft turn around, air traffic network effects or the impact of passengers, they can better use their airside assets, get more capacity out of the same resources and ultimately deliver a better service to airlines and passenger.

AI and machine learning can make a big impact in this space by performing high-volume historical data and trend analysis while using live data to predict changes in the minutes, hours and days ahead.

3.     Decisions – Understanding contextual and holistic impacts

Every airport today uses decision support frameworks – whether it be resource management systems for gate, belt and check-in allocations or staff rostering systems. These tend to rely on a single set of rules with decision outcomes measured against static Key Performance Indicators (KPIs).

And yet, static rules and KPIs don’t account for the dynamic nature of airport environments. Different passengers, different flights, different weather – one day is never quite the same as the next. Without access to real data and accurate, dependable forecasting, operators must bridge the gap with guesswork.

Our decision tools must be more dynamic, learning from real world per flight data, utilising ever improving predictions to support decisions and planning that account for this variability. This will lead to more robust planning without the artificial buffers, while also enabling far better tactical choices when things don’t go to plan.

This is also what is inspiring the team at Veovo to develop the Total Airport Score. It’s a scoring framework designed for contextual decision making, to help operators understand the real impact on the entire airport, not just one corner.

It lets operators evaluate different plans, run complex scenario simulations and generate role-specific recommendations that reflect wider airport priorities and the current operating context. Armed with this information, operators can see which decisions will have the best outcomes, enabling them to act with confidence and in the best interests of the airport as a whole.

Moreover, when the outcome of that decision on performance is measured, it can then be fed back into future planning decisions – in a continuous cycle of plan, predict and perfect.

Siloed airport operations should be a thing of the past

There is no longer any room for silos in airport operational planning and decision making today. One of the most significant changes to airport planning since COVID-19 is that plans must be ready to flex at any moment and airports must be lean and efficient. Basing decisions on live data flows, advanced forecasting and joined-up thinking is not just overdue, it has become a necessity for survival.

With new smart technology capabilities coming to market, operators that act smart will be in the best position to meet the challenges of recovery, resilience and evolving customer expectations, all at a reduced cost to serve.  More importantly, becoming a smarter airport creates far more seamless and enjoyable experiences from terminal door to take off –no matter what the world might throw at us.


James Williamson, Veovo CEO will participate in the CIO panel discussion “Going from bricks to clicks by embracing and accelerating digital strategies” at the World Aviation Festival 2021 , ExCel London on 1st and 2nd of December. James will be joined on the panel by Maurice Jenkins, IAP, C.M., Director IT, Communications at Miami International Airport, Leanne Lynch, Director for Technology and Cyber Defence at Heathrow and Gilles Leveque, CIO at Groupe ADP.

For more information on the event or to register visit https://www.terrapinn.com/conference/aviation-festival/