From Transaction to Trust – what actually drives airline customer behaviour today

Transcript

Peter Smith:Good afternoon, everybody. I appreciate that I am the only thing standing between you and your lunch, so I have a 15-minute slot, but I'll try to keep it to around 10, so you all get a few minutes back. I would ask for something in return though. And please humor me on this. Everybody close your eyes. Everybody in this room, please just humor me, all close your eyes. Take a deep breath, keep your eyes closed, and think about the The last time you were genuinely excited about a trip that you were due to go on. Not the flight, the trip itself. Maybe it was somewhere you'd never been before. Maybe it was your honeymoon. Perhaps your child's first trip to Disneyland. Maybe you were seeing somebody you hadn't seen for a very long time. Now keep your eyes closed and think for a moment about how that made you feel. Judging by some of the smiles around the room, it's a nice feeling. It brings back emotions, right? You can open your eyes. Thank you. Now think about something else that you Bought, purchased that same year for roughly the same amount of money as you spent on that trip? Chances are you can't even remember what that thing was. And that tells us something really important about the business that we're all in, in this room. They touched on it in the last presentation in the panel there. Travel is different. We don't just spend money on travel, we invest our emotions in it. And that, for each person in this room, is an extraordinary opportunity. But it also creates an expectation. Because the more that I care about an experience, The more I care about knowing that somebody has my back if things go wrong. Trust is built in the moment that things go wrong. For decades, we've all obsessed about optimizing the transaction, about making the transaction seamless. What if the next big opportunity Is making the customer feel protected, understood, and really valued throughout their journey. What if the next frontier in airline retailing isn't another transaction at all, but trust? For the best part of the last 15 years, consumers have been steadily shifting their spend Away from things and towards experiences. And then this little thing you might remember called COVID happened, and that trend broke. There was a blip for a space of time. We reversed the trend completely. We started buying things again. We stayed at home. We bought exercise bikes. Big, massive TVs. Coffee makers. I was one of those. Probably far too many things from Amazon. But look what happened when the world— forgive me, I've skipped forward a slide. Look what happened when the world reopened again. We didn't just go back to experiences. We came back with a vengeance. We see it spike. We all went traveling again. We booked restaurants, concerts. Events. Experience spending took on a completely new trajectory. And for me, the really interesting thing isn't simply that people are spending more on experiences, it's that they really care about how they spend their money. So a new TV goes wrong or breaks, and that's— yeah, it's a bit of an upset, it's an inconvenience. But the trip of a lifetime falls apart, and you never ever forget that moment. Not only that, you will never forgive the brand that let you down. And that creates again an enormous opportunity for this industry, because the— as the value of the experience grows, So does the value of protecting that experience. Which is what this chart is really about. It's not about insurance, it's actually about behaviour. Because nobody, believe it or not, wakes up excited to buy insurance. What they actually want is certainty, and they'll pay To take the worry away. You can see it by the numbers here. This market was around $70 billion in 2020. It's heading past a trillion dollars by 2030. That's more than a tenfold increase in a decade. And this is not just about insurance all of a sudden becoming popular. It's about people like you. wanting to feel safe. But there's a huge contradiction. We surveyed almost 1,400 travellers. 86% of those told us they think about risk when they book their trip. So the awareness is clearly there, and yet only 30% actually bought any protection at all. 86% of people were worried, but only 30% actually decided to cover themselves. And that's the gap. This gap fascinated us. Customers clearly care, so why don't they buy? Think about the last time an airline offered you cover. Or, I hazard to say this, the last time you as an airline offered cover to your customers? Is it buried in the checkout? Tiny print perhaps? Maybe a pop-up that you just clicked straight past? Because that's not an offer, that's an obstacle. So this isn't a demand problem. Customers don't reject protection. They reject friction, complexity, products that are added on at the final second. More than half of this market is still untapped. The demand is there. What's missing, of course, is the right offer at the right moment in the right way. So how do we close that gap? Now there's a myriad of different answers to this question. I'll just focus on one today: personalization. Now please, I look around the room and I can see people grimace when they hear this word because it's one of the most overused words in our industry. But we're getting much, much better at this. 2 bookings, one family, books a ski trip to Colorado. It costs them $5,000. And then another family books a $500 city break. One of them is terrified that a blizzard's going to completely blow out their trip of a lifetime. The other just wants something cheap and easy. Yet what do we do? We offer the same thing. The same offer, the same wording, the exact same pricing logic. And then we wonder why nobody converts. Because customers don't reject protection, they reject irrelevant protection. And real personalization is more than just recommending a product. It's 5 things. Where you place the offer. The product itself— what does it include? What does it exclude? Sometimes more importantly. The pitch— how you talk about it. Is it in simple language? Is it transparent? Does it enable easy decision-making? And then how you present that offer within the book flow or on the page. And of course price, all tuned to that particular customer in that moment. Because here's the key: the very same policy can be a reassuring safety net for one traveler, but a smart upgrade for another. Sometimes the same product, but a completely different story. Because customers, of course, we don't all want the exact same thing. And we saw that most clearly when we took that data and we broke it down by generation. Across every single trip, trip cancellation cover came out smack bang on top. But underneath the surface, underneath that headline, Motivations split. Younger travelers are protecting the experience itself, the trip, whereas boomers, for example, for them it's emergency medical cover. Their health comes first. And that alone tells us something important. People aren't buying products, they're buying reassurance about whatever they are most afraid Let's take just a little deeper dive into this data. Let's start with Gen Z. 73% love contextual trip-specific offers. For them, recommendations are completely normal, almost expected. Think TikTok, Spotify, Netflix. It's just what they're used to. And A good suggestion to Gen Z doesn't feel intrusive at all. It just feels useful. Millennials, they're even higher. 77% want contextual offers, which makes sense, right? They're at a slightly later stage in their life, bigger lives, higher stakes, and as the stakes go up, relevance matters even more. For them, a good recommendation doesn't feel like you're selling them something. It feels like help. And then my generation, Gen X— God, I, I lose track of all these generations, honestly— we dropped to 62%. It's still positive, of course, but we're a little bit more guarded now. We start asking, hang on a second, how do you know that about me? Then we move on to boomers. Just 39%. It drops right down. Now the easy conclusion here is that boomers just hate personalization, which many of you will know is simply not true. They want relevance. But without feeling surveilled, like you're watching them, like you're tracking them. So for example, if we say you're traveling in hurricane season, you might want cover, that's helpful. But if we say something like, based on everything we know about you, that feels just a little bit creepy. The exact same data, but a completely different feeling. So the playbook splits in 2. For younger travelers, really lean in because it converts. Use the destination, the trip value, their travel plans, and make the offer feel truly connected to the trip that they're actually taking. For older travelers, stay relevant But ease right off the intrusion. And notice this isn't about less personalization, it's about being much more transparent in terms of how you personalize. Because the line at the end of the day, it isn't technology, it isn't data. The line is building trust. Because ultimately the transaction Price gets you the booking, but trust gets you the customer. Thank you very much.

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