24-Apr-2018 5:24 PM

Ryanair talks "Amazon of Travel" at CAPA's Dublin Summit, 17/18-May

Analysis

Ryanair, Europe's biggest airline by passenger numbers and most profitable by operating margin, has always focused on low fares and low costs. But that alone is not enough to keep it at the top in a highly competitive industry. Ryanair aims to be the 'Amazon of Travel'. This involves building on its annual customer base of 130 million passengers, most of whom buy directly from the airline's website and mobile app, to sell a much wider range of travel-related services.

Ryanair has made great strides with its digital strategy since relaunching it in 2014, but it is determined to remain at the forefront. This focus by one of the world's most successful airlines, at a time when the airline sector has been experiencing a period of historically high profit margins, points the way for others to follow. Successful customer engagement, through harnessing the IT revolution, is a major challenge for an industry that has often been slow to embrace innovation and change.

At CAPA's Airline Leader Summit in Dublin on 17/18-May-2018 Kenny Jacobs, Ryanair Chief Marketing Officer, and Bobby Healy, CarTrawler Chief Technology Officer, will jointly present their views and experience of this challenge in a keynote talk entitled 'Special Vision 2030 - What will the Travel Digital Ecosystem look like; and the opportunities it presents'.

Summary

CAPA's "Airline Leader Summit 2018" currently has 13 airline CEOs confirmed to attend and/or speak at Dublin's Powerscourt, 17/18-May-2018, with more expected to join.
Kenny Jacobs, Ryanair's Chief Marketing Officer, identifies four big pillars in travel: flights, accommodation, transfers and activities.
China leads the way in 'conversational commerce' and artificial intelligence.
Travel payment is changing rapidly. Other areas of change include augmented/virtual reality, NDC, blockchain and disruptors such as Uber.

'Special Vision 2030 - What will the Travel Digital Ecosystem look like; and the opportunities it presents'.

Four big pillars in travel: flights, accommodation, transfers and activities

Kenny Jacobs, Ryanair's Chief Marketing Officer, identifies four big pillars in travel: flights, accommodation, transfers and activities.

Ryanair is already very good at selling flights.

Ryanair launched a new accommodation service, Ryanair Rooms, in 2016 (although it had long sold hotel rooms on its website) and recently added a further twist to this service.

Customers booking hotels, apartments, hostels or B&Bs through its service are credited with Travel Credit, worth 10% of the accommodation booking, to be used for Ryanair flights.

It also offers holidays, with all elements packaged together.

Ryanair launched a flight-connecting service at Rome Fiumicino in May-2017 and has since extended it to Milan Bergamo and Porto. It also sells long haul trans-Atlantic flights operated from Madrid by Air Europa. In addition, through its partner CarTrawler, Ryanair offers a range of ground transport transfers.

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As part of its strategy of offering customers opportunities to buy activities at their destinations, Ryanair's website sells tickets to events such as theatre shows in London.

Ryanair views such initiatives as a way to inspire people to travel, thereby creating opportunities to sell its products and services. Its 'Try Somewhere New' feature, together with its 'Fare Finder', is aimed at helping customers to discover new destinations at a price that suits them.

'My Ryanair' has 40 million members

Underpinning and facilitating this range of offers are Ryanair's website, its mobile app and its customer relationship management scheme: 'My Ryanair'. The airline expected to have 40 million members of My Ryanair by Mar-2018 (from only 5.5 million in Sep-2015).

These help the airline to understand its customers' buying behaviour and preferences and to tailor its offer to them. They also allow it to receive feedback through satisfaction surveys, further increasing the ability to focus the offer.

Ryanair develops and operates its digital strategy through a dedicated department, Ryanair Labs, whose staff view themselves as an IT company with an airline attached.

Based in Dublin, but separate from the main Ryanair head office, Ryanair Labs was set up in 2014 to foster innovation with an entrepreneurial spirit, while also being part of a large organisation. At that time, Ryanair's traffic growth was slowing, and its margins were declining.

The success of Ryanair's 'Always Getting Better' programme and the development of its digital strategy can be seen in its load factor improvement from an already very respectable 82% in FY2014 to an almost unbelievable 96% in FY2018. Traffic growth has accelerated and margins have widened.

China leads the way in 'conversational commerce' and AI

For all Ryanair's success, it cannot be complacent and must always strive to stay ahead of digital transformations. Bobby Healy, Chief Technology Officer of CarTrawler, believes that China is far ahead of the West in this field, particularly in the technologies enabling 'conversational commerce'.

More broadly, he says that the EU has been overtaken by Asia on mobile technology.

Mr Healy has a track record of urging the airline industry to acquire better digital skills.

For the CarTrawler CTO, artificial intelligence is a crucial topic for the travel industry. Airlines and other travel companies, including Ryanair, are developing the means to respond to customer enquiries through the use of bots, which can learn from each interaction.

If properly applied, this technology can not only yield significant cost efficiencies, but can also lead to a much better result for customers. Developments in input technology that are leading to significant improvements in speech recognition and text to speech are also key in the field of AI.

Travel payment is changing rapidly

Developments in the world of travel payment are moving with increasing pace, with new methods such as Apple Pay and bitcoin following the mobile technology revolution that has already transformed this area of activity.

In addition, further change will be sparked by new EU regulations in 2018, which will likely increase competition in payments, while also adding to the regulatory burden.

Cash is becoming increasingly rare as cashless payments dominate, and plastic (physical credit and debit cards) is starting to be replaced by virtual cards.

Don't forget augmented/virtual reality, NDC, blockchain, Uber

Other developments in the future of travel technology may include the harnessing of augmented and virtual reality to allow customers a preview of the travel experience, including the airport, aircraft, hotel, hire car and destination.

The session is also likely to touch on IATA's New Distribution Capability, the potential for blockchain technology in the aviation industry, and the ambitions of disruptors such as Uber in the airline sector.

Ryanair and CarTrawler's experiences should provide insights

Well-judged use of willingly given customer data, in interactions facilitated by the right technology in the most relevant channels, can attract more customers to buy more of an airline's core product and a wider range of other products and services.

If based on a relationship of trust, this can foster greater loyalty. The trust angle makes business sense, but the European Union's General Data Protection Regulation, which comes into force on 25-May-2018, increases the incentive to do this right.

Ryanair's experience serves as a case study of an airline's successful digital transformation. CarTrawler's experience as a leading B2B travel technology company gives it insights into developments at the leading edge of the travel digital ecosystem.

Delegates at CAPA's Airline Leader Summit in Dublin on 17-18-May-2018 will be able to judge for themselves whether or not the experience of these two organisations is relevant to their own businesses.