Airline tech in the Americas; AI, biometrics, blockchain and more

CAPA's 2018 Americas Aviation Summit in Houston, 16/17 April will review developments in the airline tech area

Agenda Item: Embracing digital disruption in airline distribution

Most airlines appreciate that technology is radically changing marketing and distribution models, yet the structure of airlines remains focused on the business of flying metal. How should airlines prepare for this brave new world in which ambitious technology upstarts and intermediaries - constantly interrupted by the informed consumer - retain their (sometimes limited) control over distribution?

Airline management teams will need to undergo the requisite paradigm shift and innovate their marketing and distribution strategies to position their companies as retailers in the digital realm.

• Data is power - why airlines should start behaving like tech companies
• With the harnessing of big data, how important are online consumer channels like Amazon, Facebook, Alibaba, Airbnb becoming?
• What kinds of low cost automated distribution channels should airlines invest in?
• What's the future role for the GDSs?

Panel:

• Caravelo, Commercial Director, Jonathan Newman
• IATA, Regional Director, Financial & Distribution Services, The Americas, Alicia Lines
• Skyscanner, Senior Director, Global Strategic Partnerships, Hugh Aitken
• Travelport, Director, Air Commerce, Toby Kubis

Summary

• Airlines in the Americas are increasingly embracing the potential of emerging technologies on a path to digital disruption.
• JetBlue has taken the biggest leap, setting up a subsidiary to invest in, and partner with, start-ups leveraging new technology.
• Delta Air Lines believes it can learn lessons from companies such as Starbucks and Amazon to improve its retailing capabilities.

American and Air Canada embrace the potential of technological disruption

During the past couple of years, airlines in the Americas have stressed the value that they place on emerging technologies, and several are at various stages of adopting new technologies.

American recently declared its goal of embracing technological change, and the "explosion in new technologies that allow us to basically take some shortcuts and get things done more quickly than we were previously able to do", American chief information officer Maya Leibman recently explained.

Cloud technology allows American to circumvent the hosting process, while machine learning and AI provide the airline with opportunities to create smarter algorithms "that are smarter and that learn as the context around them changes", Ms Leibman explained. Using those technologies, American can streamline its costs while improving the customer experience, she said.

American has targeted USD3.9 billion in revenue and cost benefits by 2021, and company CEO Doug Parker recently stressed: "We can't get there without the IT group helping us get through this, and what they're doing is really helping us get through it quicker and figuring out ways to bring things in the market quicker on both the revenue and the cost side".

Air Canada has recently declared that data is the new oil and, "We are in deep planning in exploring, drilling and commercialising our very customer and process-rich data over the coming years in a meaningful fashion". Air Canada has also worked with Persado, which helps its clients identify AI-generated language to create higher levels of resonance among customers.

In Sep-2017 Air Canada explained that it was using AI-powered models to deploy new customer fare sales, and upgrade emails, that were "40% more engaging than traditional offers".

The airline believes there are further opportunities to exploit AI to improve revenue management. "It's machine driven, and it gives us the data to be able to do pricing in a more compelling fashion...", said company CFO Michael Rousseau.

See related report: Air Canada cited huge potential from AI and data mining to drive revenue growth

JetBlue invests in new technology through an incubator start-up

Most airlines in the Americas have been slow to follow their European counterparts and invest in technology incubators, with the exception of JetBlue. The airline launched a new subsidiary JetBlue Technology Ventures in 2016 to invest in, and partner with, start-ups at the intersection of technology, travel and hospitality.

JetBlue Technology Ventures is based in Silicon Valley, and is currently involved with 12 technology start-ups ranging from weather prediction to regional electronic aircraft.

One of the company's investors recently penned a blog examining blockchain's future in the travel industry. The piece highlighted blockchain's role in the future of distribution, noting the technology's capability to disrupt the space.

Some early experimenters using blockchain to change distribution dynamics include the start-up Winding Tree, a company creating a b2b block blockchain-based platform for air travel, and Lockchain, which is developing a blockchain-based hotel distribution platform.

Blockchain also has potential to improve loyalty programme management, according to the blog. Citing a recent report by Deloitte, the author noted that one fifth of loyalty programme members never redeem their rewards, which sit as liabilities on loyalty providers' balance sheets. Both the author and the travel technology provider Amadeus have singled out Loyyal, a San Francisco-based start-up attempting to leverage blockchain to improve current loyalty systems. Amadeus has said that unspent loyalty points can hamper capital raising and investment.

According to Amadeus, some of the challenges Loyyal aims to address include leveraging Blockchain to simplify the process of transferring miles between airlines in the same alliance, and helping travellers access loyalty points in real time. Amadeus also pointed out that any points issued via Loyyal technology are unique, are registered on the blockchain, and can therefore be tracked. The result is that loyalty scheme providers can collect much more powerful data on how travellers spend points to create more personalised customer offers.

Given the complexities of the relationships between airlines and GDS providers, blockchain's potential for overhauling loyalty programmes could evolve at a faster pace.

Delta studies popular tech companies to improve its retailing simplicity

As airlines continue to evaluate various emerging technology, they are unrelenting in their quest to strengthen their retailing capabilities. Delta recently touted its membership on Forbes' list of top 15 most relevant brands, joining the ranks of Amazon, Apple, Starbucks and Facebook.

But the airline also believes there are lessons to learn from those companies to improve several facets of its business. The airline has cited Apple's intuitive and simplistic designs, Starbucks' personalisation, customer segmentation and use of rewards, and Amazon's simplicity of one-click check-out.

"When we do the amount of business we do directly over Delta.com and on our mobile app, that same simplicity has got to be present", the company has declared.

A long road ahead; airlines need to choose their new technologies

There is obviously a lot of runway ahead in technologies such as AI and Blockchain becoming a mainstay in the travel business. But airlines have definitely turned the corner in embracing those technologies; now the challenge is to become innovative leaders for an industry that has historically been slow to embrace disruption.