Airlines and digital strategies: a long road, but the benefits vast
Digital strategy is a popular catch phrase across all global businesses, and the travel industry is no different. There's no shortage of discussion about how airlines should craft a digital strategy, and what the elements are that are necessary for successful execution.
Airlines worldwide are at different phases in developing and implementing their digital frameworks, but it is safe to assume that buy-in from senior management across all business models is a given. There is also a consensus that airlines transforming their business to a digital platform need to ensure that transformation entails all entities of the business, ranging from customer service and personalisation to operations.
Given that complexity, the digital journey for airlines is far from over.
- Real-time data offers opportunities for customer personalization, but caution is necessary in using instant data in a digital strategy.
- Airlines need to adapt to the digital platforms that their customers use the most to be successful in their digital journey.
- Operations play a key role in an airline's digital transformation, with data sharing among all functions being crucial.
- Being where customers are, such as using chatbots and branded storefronts, is essential for a successful digital strategy.
- Ownership of customer data remains a delicate issue as airlines attempt to insert themselves fully into the travel ecosystem.
- Digitization has the potential to bring billions of dollars in benefits to the aviation industry, but creating a digital strategy is a complex undertaking.
Summary
- Real-time information holds great promise, but there are checks and balances in using instant data in an overall digital strategy.
- As airlines continue on their digital journeys, they need to adapt to the digital platforms that their customers use the most.
- Operations will play a key role in an airline's digital transformation.
Real-time data offers numerous opportunities; but a level of caution is necessary
Consultancy Accenture has concluded there are many opportunities for customer personalisation based on real-time insights. "The use of real-time analytics and other digital solutions can empower airlines to continually adapt the customer dialogue, making for an experience that is consistently relevant and highly personal."
There is room for expansion in using that real-time information to elevate the customer experience. Some airlines are making inroads in using customer data proactively to create a favourable customer experience and quickly resolve hassles stemming from cancelled flights and lost luggage.
According to the Chicago Tribune, United, Delta and Southwest are arming gate agents and flight attendants with more customer data to encourage higher levels of personalised service. But there are trade-offs in the use of that data, including increased workload for flight attendants and crossing a privacy line that could make some customers uncomfortable. Many publications have used the example of wishing a customer a happy birthday, but not all travellers desire that type of personalisation.
The real opportunity appears to be product upsales in transit, offering lounge access to a customer at the airport, or a seat upgrade via mobile device before boarding. Accenture's canvassing of airlines executives who were most enthusiastic about new technologies cited numerous benefits, including opportunities to use mobile geolocation technology to send digital vouchers to airport restaurants when flights are delayed, or creating an app to allow customers to provide real-time ratings on the flight, crew, entertainment and food while on board.
Being where customers are is key to a successful digital strategy
Another factor airlines need to consider when crafting a digital experience is essentially being where customers are. The travel aggregator Skyscanner has said that it is handling millions of transactions per month through voice and chatbots, and the conclusion of the technology provider Caravelo is that chatbots are instrumental for Millennial travellers. Those customers spend most of their time on messaging platforms, and smart airlines need to take steps forward and to "be where there customers are", Caravelo has reasoned.
See related report: Chatbots and Millennials. Airline distribution in transition
Volaris, which launched its chatbot Vale more than a year ago, has declared: "Chatbot technology, underpinned with AI, will revolutionise the way airlines engage with their customers. We are firm in the technology and will continue to evolve Vale to be a full time personal assistant for our travellers."
Airlines also need to acknowledge that passengers continue to use other outlets besides branded airline sites for browsing and booking air travel.
Skyscanner has calculated that 97% of Chinese consumers use the business-to-consumer retail site Tmall, and that is what "the world airlines need to be thinking about". The company believes airlines need to develop branded storefronts, rather than being fixated on driving customers to their respective websites or apps.
"Airlines need to be where the customers are", in Accenture's view. "This includes connecting with online travel agencies (OTAs), high-impact brands like Google and Apple, and special interest communities."
But delicate issues remain as airlines attempt to insert themselves fully into the travel ecosystem.
According to Accenture, even among airline executives who say they favour third-party partnerships the biggest issue is ownership of customer data. The company determined that some airlines were opening up APIs to third parties, and according to one airline executive, OTAs are responsible for 10% to 15% of the company's total sales, and those sales are growing rapidly.
Data sharing across all airline functions is a major pillar of digitisation
Data has always been a mainstay of airline operations, and operations will play a significant role as airlines continue journeys through digital transformation.
The faster that airline crews can gain information in flight regarding operational disruptions, solutions and rebookings, the better: turning a potentially negative experience and rant on social media into a positive outcome.
Data sharing among all airline functions is crucial for a successful airline digital transformation. As Lufthansa Consulting has pointed out, tablets enable faster information sharing, speed up operational processes and result in paperless operations that create positive impacts on fuel consumption. But other business functions including marketing, sales and accounting are treated in isolation, and part of a digital transformation entails breaking down those silos.
"Creating a technology map makes internal data sharing opportunities transparent, helps to identify consolidation potentials and allows better alignment of functional areas within the airline and of touch points across the customer journey", Lufthansa Consulting has stated.
Airlines could reap billions in benefits from digitisation
PhocusWright has cited a World Economic Forum report that calculates that a movement toward data mining and greater digitisation of the customer journey will create USD700 billion in benefits for aviation, travel and tourism customers between 2017 and 2025, with USD305 billion in increased profitability.
Although airlines may be late to the digitisation revolution, there is no shortage of optimism about the benefits of creating a strategy to maximise the value of data mining to improve customer service, capitalise on personalisation and drive more efficient operations.
There is a long road ahead to reaping the benefits of digitisation, and creating a digital strategy is a huge undertaking. But airlines understand if they don't embrace digitisation in all aspects of their operations, they will end up at a competitive disadvantage that is significant.