Innovation & Collaboration - Key factors that will determine the success or failure of airlines
Aviation is a heavily regulated industry where transformative changes are seldom and slow. However, recently the industry is witnessing powerful winds of change that have shaken its foundations - but most importantly helped the industry realise the degree of power that lies in the hands of customers.
Customers now have 'any time- any where' access to Information & Technology tools that allow them to not only make informed decisions but also give them the opportunity to express their changing needs. Given the variety of airline choices available to the customer, not addressing customer needs translates to an empty seat!
The mantra for growth and sustainable profits is in-depth understanding of your customer needs and incorporating the same in your business.
Professor Nawal Taneja: The passenger will dictate the product
According to Professor Nawal Taneja, airline business strategist and author of numerous leading airline strategy books - and one of the Thought Leaders at the upcoming Airlines in Transition event in Dublin in April - three key factors are coming together to drive change:
- Expansion of airline business,
- Liberalisation of government policies and
- Information technology.
As he says, "Customers are now going to be in charge, they are going to dictate what they buy, how they buy, when they buy and what price they buy and therefore, airlines or sellers from any other industries need to adapt to these changes in which the customer is demanding".
Collaboration is Survival #101 for the aviation industry
Membership in Global Alliances has steadily grown, many new style bilateral and multilateral partnerships have been signed and even JVs and M&As are on the rise. The industry has not only welcomed the idea of joining forces, it is becoming the only route to sustainable business.
Innovation, the other side of the coin called success, has however not been greeted with the same enthusiasm. There are always exceptions; some airlines have changed the foundation of their business to reap benefits of innovation. They have built stronger and better CRM processes, gained customer loyalty and earned profits. But most airlines lag behind in the race for innovation.
If an airline wants to grow in the current customer-centric market, it needs to adopt a business model that is based on "precise customer segmentation", says Professor Taneja. This can be achieved through optimum utilisation of information technology tools - data analytics, social media, and the like. As he says, "It is the collective working relationship that is going to allow us to not only understand customer behaviour but provide services to each and every customer on a personalised, customised basis to satisfy their needs and make profits on sustainable basis."
Professor Taneja will lead a high level panel on 'Lighting Candles: Innovating to make profits: Big Data, Advanced Analytics, Merchandising/Ancillaries, Social Media' at CAPA's second annual Airlines in Transition conference to be held in Dublin on 11/12 April. The event brings together many CEOs and other leaders from the aviation and IT industry and serves as a platform to discuss strategies that best address the changing customer behaviour and travel industry.
Speakers and Executive Guests at the Summit include:
- Aer Lingus, Christoph Mueller, CEO
- Air Canada, Montie Brewer, Former CEO
- bmi Regional, Cathal O'Connell, CEO
- Brussels Airlines, Bernard Gustin, CEO
- easyJet, Cath Lynn, Group Commercial Director
- DAA, Kevin Toland CEO
- Datalex, Aiden Brogan CEO
- Ethiopian Airlines, Tewolde Gebremariam, CEO
- European Commission, Matthew Baldwin, Director Air Transport
- FareLogix, James Davidson, CEO
- Hamburg Airport, Michael Eggenschwiler, CEO
- HNA/Hainan Airlines, Wang Yingming, President
- IAG, Willie Walsh, CEO
- Iberia Express, Luis Gallego, CEO
- Irelandia Investments, Tony Davis, Partner
- Jazeera Airways, Stephan Pichler, CEO
- Jazz Aviation, Jolene Mahody, COO
- JetBlue, Dave Barger, CEO
- Lufthansa, Dr Christoph Klingenberg, SVP & CIO Information Management
- Monarch Airlines, Jochen Schnadt, Commercial Director
- Sabre Airline Solutions, President, Hugh Jones
- SATA, Antonio Menezes, CEO
- SITA, Jim Peters, CTO
- Travelport, TBA
- Vueling, Alex Cruz, CEO
- Wow Air, Skuli Morgensen, CEO
- Thought Leaders:
- CNN, Richard Quest, International Business Correspondent
- IATA, Jeffrey Shane, General Counsel
- Gillian Gibson, Airline Distribution Expert
- Nawal Taneja, Published Author and Aviation Business Strategist
- Rigas Doganis, Non-executive Director, easyJet
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Transcript: Professor Nawal Taneja: The passenger will dictate the product
"Change is hardly new to the global airline industry, nor even the rate at which change is taking place.
What is new with respect to the last few years is the depth of the forces, the confluence of the forces that are coming together to bring about changes that now dictate transformative changes in airline strategies to be able to deal with what's going on.
Examples of it include the expansion of and the change in the direction of airline businesses with LCCs, such as AirAsia, Jetstar, Spring Airlines, Virgin Australia. The other factor taking place is the liberalisation of governmental policies, exemplified by the opening of the regulatory environment within Japan.
And the third part of it is Information Technology that are coming together to really and truly empower customers.
These customers are now going to be in charge, they are going to dictate what they buy, how they buy, when they buy and what price they buy and therefore, the airlines or sellers from any industry need to adapt to these changes in which the customer is demanding.
And taking advantage of these changes requires not only greater mode of innovation within the airline industry but it requires a change in culture, a change in organisational structure. And the innovation that is required comes form utilising IT, particularly analytics and new data sources, such as social media, to be able to develop business models - that are based on precise customer segmentation. That are based on learning not about the transactional aspects of the business between the buyer and the seller, but the behaviour.
This behaviour changes by individual, in fact by the situation in which that individual is going through. It is very much real time basis and it is the use of the data analytics, social media, new information types, as well as working together with other members within the travel chain (airlines/ airports/govt authorities/ travel agencies/intermediaries/technology companies).
It is the collective working relationship that is going to allow us to not only understand the behaviour but to provide the services to each and every customer on a personalised, customised basis to satisfy their needs and what not, also make profits on sustainable basis.
These are just some examples of the topics that will be addressed in CAPA's 2nd AIT Conf to be held in Dublin. Based on the agenda, the event promises to be an excellent opportunity to discuss some of these innovative ideas that I mentioned earlier.
We really need not only to put the leadership minds at the stage of bringing about this change, but organising around the concept so that people at all levels within the airline can gather up and deploy the resources to bring about successful implementation of the innovative aspects that are being discussed."