A recent study on airline digital transformation shows that core changes to the airline tech stack include introducing BI & Analytics, and this is an investment for 2/3 of airlines; ~60% of carriers state that they are starting to implement or in the process of implementing AI across operations & sales. The main drivers for these changes are improving CX, better performance and staying competitive.
With digital transformation taking off across all industries, I’m sure you can’t wait to hear where on the scale of 1 to 10 airlines rank when talking about innovation. Join us for the next 30 minutes to learn tips about where to start when building the business case for innovation projects and how to accelerate and grow across the organization. To discuss these topics, we spoke with Serdar Gurbuz from Turkish Airlines.
In This Episode
[04:10]: Where airlines are in terms of innovation
[07:05]: Opportunities to take advantage of data
[08:27]: Gaps in terms of airline data
[11:08]: Shifts around organizational restructuring
[15:36]: Introducing innovation at Turkish Airlines
[20:07]: Deciding what to prioritize and/or where to invest
[24:21]: How to deliver large-scale deployment
[27:41]: How do AI and machine learning change the airline business?
[32:01]: Measuring success of innovation
Aditi Mehta: Hello, and welcome to the PROS Travel podcast, The View From 30,000 Feet: a podcast series featuring airline industry experts tackling the real issues around airline digital transformation. This is our second season. I highly recommend listening to the last season if you haven't yet, and we're focused on big and small changes around travel IT, data, products, and retailing. Now sit back, relax, and enjoy the flight....
Stanislava Yordanova: Hi everyone, and welcome to the second season of the travel podcast, The View From 30,000 Feet. My name is Stanislava Yordanova, and in this episode we'll dive into the exciting topic of innovation in the airline space. I'm thrilled to be joined by Serdar Gürbüz, who leads the Innovation and Analytics team at Turkish Airlines. With digital transformation taking off across all industries, I'm sure you can't wait to hear where on the scale from one to 10 airlines rank when talking about innovation. Join us for the next 30 minutes to learn tips where to start when building the business case for innovation projects, and how to accelerate and grow scale across the organization. With no further ado, let's meet Serdar.
Stanislava Yordanova: Hello everyone, and welcome to season two of the podcast, The View From 30,000 Feet. This is a very interesting episode today because I'm joined by the SVP of Digital Innovation and Analytics Solutions at Turkish Airlines. So I'm excited to hear what he has to share with us. So Serdar, welcome. Thank you for joining us today.
Serdar Gürbüz: Thank you. Thank you.
Stanislava Yordanova: Before we start, can you please do a brief introduction of yourself, of your current role and experience in digital transformation and innovation projects?
Serdar Gürbüz: Of course. Actually, I'm currently leading Turkish Airlines digital innovation and data analytics domain, and within this domain, within the digital domain, I have more than 12 years of experience in technology field and I have been with Turkish Airlines since 2010. And it's nearly about 10 years that I've been with Turkish Airlines. And in Turkish Airlines, I mostly work in technology and digital domains. I worked in website, mobile application projects before. [inaudible 00:02:40] applications and then I lead the digital innovation efforts. We seek to find new technologies, we seek to find new partnerships with startups in terms of emerging technologies.
Serdar Gürbüz: And I also worked for one of Turkey's largest GSM company for about three years and also an FMCG company in Turkey again. And I have some experience in different sectors like telecom and FMCG, that way, and I'm now blending my experience, in airline experience into technology and trying to improve the airlines vision of technology, using the data, using the new technologies for customer experience for decreasing cost and increasing sales.
Stanislava Yordanova: That's a very solid background in the area of innovation and just digital. So if we look at the airline industry, on the scale of one to 10 where do you think airlines are in terms of innovation? Do you think they have the resources, whether it's financial, human or organizational to innovate? And is there a difference in your perspective depending on the carrier size or their business model or I don't know, maybe their geography?
Serdar Gürbüz: Actually apart from the airline sector, I actually experienced in finance companies, telecom companies and FMCG companies as I explained before and I can easily compare with them the airline sector and those sectors. Banking and telecom are actually, I think one step ahead of airlines. Because they have realized the digital transformation and how this digital area can disrupt their business models and they act beforehand. And I believe airlines are also ahead of the FMCG sector. So not so good and not so bad in terms of positioning, the airline sector's digital transformation of airlines. And depending on the brand, I think airlines are between from six to eight, when you scale one to 10.
Stanislava Yordanova: That's not bad.
Serdar Gürbüz: Yeah, that's not bad, I also believe. And Turkish Airlines is also good at this I believe. And the hardest thing, I think for the airlines is the cultural change and the transformation and innovation. And these two items are very well connected with the culture. And regarding this, younger airlines are more innovative than the older ones I think. And as I see, or local airlines also again are more innovative when compared to network carriers and traditional airlines. But we can also see that network carriers and traditional carriers are more powerful in terms of financial and organizational resources. That's why that's a huge opportunity for them. But all they need is a mindset shift to digital to technology and more customer-centric organizations.
Stanislava Yordanova: Yeah, that's a hard step. We also hear it with a lot of our customers when we discuss these same topics. So one of the aspects of your role is data. The airline business traditionally has had pretty good amounts of data in terms of bookings and forecasts. Where do you think today are the gaps when it comes to managing this volume of data? And what are the opportunities ahead for airlines to really take advantage of having good data and making the most of it as insights?
Serdar Gürbüz: It's a very good point actually. As you mentioned, airlines have always had the data. Both operational data and customer data and many types of data. And the idea to use the data in operations, marketing, decision making, is also not new to airlines. As airlines, we have a term of overbooking for example, and how much we can overbook is determined with the data, the past flight data. But current technology and the amount of data now is enabling us to predict how much to overbook and very much better now. Because now we are not just using the past data, and now we are forecasting. Now we are using the weather data, external data like weather data, traffic data and data types like this. And now the technology is much, much better to include all these types of data and to predict better integrating and making better predictions using this data.
Stanislava Yordanova: And do you think there are any existing gaps that airlines are not looking at, at the moment when it comes to data?
Serdar Gürbüz: Yeah. For example, in terms of customer data, yes, we had the booking information and most of the airlines have loyalty programs. But most of the contact information was poor. Because most of the tickets that are being sold now by travel agencies, GDS systems. And in that channel, email information, a telephone number is not required. So we have the data, we have the customer's name, we have other data, but without contact information we cannot touch those customers. And that's an important gap. And in 2020, this is also valid for today for most of the airlines, but we are always trying to find the new ways matching existing customers or collecting data information with the passengers. And most of the airlines have necessary tools. I have seen many of them have very powerful data warehouses, business intelligence tools or CRM tools, and many other technologies are also available thanks to the cloud companies.
Serdar Gürbüz: And in summary, we have the technology, and the biggest gap I see here is the talent, the human resources. And this is the hottest topic for all the industries. It's not just for the airlines, the talent gap is valid for banking, it's valid for FMCG, telecom, and all other companies are in the same situation. We need data analysts, data engineers, data scientists, and everybody, every sector, every company needs this right now if they want to transform digitally. And that's why we need to fill this gap in an effective way, in order to compete better for our competitors.
Stanislava Yordanova: Yeah. When we talk to airlines, to our customers, they also mentioned that they're redesigning their entire organization and like you mentioned, creating entirely new roles around data analytics and so on. What other shifts have you seen around the organizational restructuring?
Serdar Gürbüz: Actually, airline sector is very unique and at the same time it's very cool, a cool business. And when we look at the percentage of people starting their career in an airline business and finishing it again in an airline business, is very huge comparing to other sectors.
Stanislava Yordanova: Yeah, I agree.
Serdar Gürbüz: And you cannot easily leave the airline sector. This is what I see. And in order to rethink, you need to look from the outside. You need to get out and in that way you can look better and you can understand better the situation. And when you are inside and it's not very easy to see which part of the organization is not working, or which part of the organization is not functioning very well. And you need to attract the talents, you need to attract the talents outside. These are most of the roles, most of the titles now we are talking is new. And we need to attract those talents.
Serdar Gürbüz: We need to attract startup companies which can contribute to, to our innovation efforts. And the only need for this type of organization is they need problems, and they need data. Whether it's from banking sector or telecom sector or anything. So, in order to keep those talents within the airline sector, actually, HR should do many incentives or should organize a good working environment for them. And as stated in their titles, they are a bit of a scientist. So they should have the ability first to hypothesize, and then test and then to validate. And they should have the flexibility to fail at the same time. And scientists, because in a traditional performance-based organization, it's not very easy to encourage failing. But in science you need to encourage failing, because it's their way of learning something. And that's why a new type of working is needed, I believe.
Stanislava Yordanova: Yeah. I agree that the industry is very risk averse, which is, I would say it's controversial to this new mindset that you're describing. So you mentioned other industries and taking talent from looking outside of the airline industry. But what other approaches can airlines adopt and take as an example from other industries?
Serdar Gürbüz: It's the agility, I believe. The first thing is our sector is so bureaucratic, it's because many of the legacy airlines was actually owned by the governments before. And they are specialized after 1980s, 1990s. And that's why I believe we are still so bureaucratic and we need the agility in order to catch these digital trends and all that other stuff. And it takes months for example, sometimes to decide something, to move on something. And I think it's the agility, yes.
Stanislava Yordanova: So let's talk a little bit more about how you introduce innovation across Turkish airlines. Can you tell some more about the open innovation system at the carrier?
Serdar Gürbüz: Yeah. And before talking about this, I need to clarify that first, I'm not dealing with all types of innovation in Turkish Airlines. I'm only focusing technologies related digital innovation. Innovation is a continuous thing, and like Peter Drucker said, "Enterprise have two basic functions. One of them is marketing, and the other one is innovation." And most of the innovation now happens around the technology and that's why we are mostly focusing on digital innovation. But within the company there are other divisions, other business units are also trying to innovate themselves, trying to innovate their business models or products as well. We have started this digital innovation initiative at Turkish Airlines in 2016, and at that time it was a very new title, digital innovation. And when talking with somebody else, whether in airline business or other sectors, you need to explain what is digital innovation title doing within the airline, it's not a familiar thing.
Serdar Gürbüz: What we have done actually, we first designed a team of startup mind people and provide them agility as I mentioned. And most importantly, we tell them they can fail. They can fail, but they should fail fast and they should fail small. So, we built a bridge between the business students and startups. In that way, startups can reach to the business units very easily. Because again, I said, in our sector, for example, a purchasing process, when you're trying to buy a new software program or system, it takes six months to one year to finish the purchasing process. But when you work with a startup, one year is a very long period. And in that amount of time, a startup can fail, can exit, can [inaudible 00:18:07] their business model. That's why we design a program which provides the startups the speed, working and collaborating with Turkish Airlines.
Serdar Gürbüz: And our business units, the mindset. And the business units understand that if you work with those startups, we can do our business very fast and we can catch the trends, we can catch the technology trends. And in that way we should shouldn't be just followers of the innovation of the new technology stuff, we can be pioneers. They get the idea of being pioneer in those domains. And everybody embraced it, because startups are changing the world with the new business models. That's why now, many of the people in corporate companies and big enterprises, things that in a timeframe, our business model can be disrupted, so we need to act before we disrupt.
Stanislava Yordanova: Yeah. Acceleration is very important for keeping ahead on the market. We've seen that with many industries, not only the airline one. And internally, how do you decide which projects or which technologies to prioritize and invest in? I think the very important for our listeners is how to build the business case when talking to their C-suite and really defend that project.
Serdar Gürbüz: Yeah, it's a process. It's a funnel process, actually. The first stage of this funnel is we are continuously looking for the new technologies. It ranges from IOT to augmented reality, virtual reality. And we are periodically meeting with the business units so we can get their problems. And two of the main ingredients of an innovation, digital innovation project, is the first one is problem. There needs to be a business problem or the bigger opportunity, which they are not aware of it. And there needs to be a technology to solve that problem. And the importance of the problem is much bigger than the technology, because when you catch the problem you can solve it by using a technology or without using a technology. If you change the process of the business, maybe the problem can also be solved.
Serdar Gürbüz: And for example, now we are working on a use case. For turnaround operations, we want to detect from the security cameras, we want to detect the turnaround events automatically by using image processing. And the problem in that use case actually, is predicting the delays and detecting the timeframe of the events when the staff is doing the turnaround operations. So in order to solve this problem, we can use the security cameras and we can use the image processing, the AI stuff. And we can also use the IOT, for example. We can put IOT sensors to the necessary places and then get the information. And these are two different ways of working that problem, with both innovative and emerging technologies. But when deciding the technology or the model or the business model, we first develop the MVP, Minimum Viable Product.
Serdar Gürbüz: And if we have the correct resources to build the MVP, we are building in-house. And if we don't have that resources, we can work with a partner or we can work with a startup. And then if we prove our hypothesis and if we validate the business idea, if you validate the technology and the business model and then, it's very easy for us to get the buy-in from the C-suites or to get the buy-in from the business suites. So that's why I'm repeating again, we want to start small but we want to validate faster and we want to validate the idea within two months, for example, with a working prototype. So after we build the prototype, the MVP, it's very easy for us to get the buy-in from the decision makers.
Stanislava Yordanova: Yeah. That's very interesting because I agree that in the industry, some processes and decision making can take up to years, which obviously is not very fast compared to the speed at which the market moves. So, that's very interesting to hear. Thank you for sharing that. And another question I have is around how do you scale that? Okay, once you have the MVP in place and you've seen that it has results and delivers or exceeds your expectations, how do you go to large scale deployment and disrupt how the organization functions?
Serdar Gürbüz: It's not very easy. It's not easy. The first thing is again, is to get the necessary talent on the board. Because, we have a team of software developers, heart-based developers and startup minded people. There are some talented people, they can build something very useful. They can build an MVP in a very short timeframe, but when you go broader and when you want to take it to a large scale project, you need more of these type of resources. So that's why the first thing you should do is to get the necessary talent on the board. And the second thing is, many times the business rules are built upon our legacy systems. And in order to change that, you cannot just pull them out easily. The legacy systems and the business rules, you may need to change the organization itself.
Serdar Gürbüz: And when it comes to organization, the HR should be involved in this process. And in that situation, it's not just an IT project, it's not just a technology project, it's an HR project. Consisting of both changing the systems and both changing the organization. And lastly, many of the people are now today, talking as a term of MVP, Minimum Viable Product. But it's not just a term actually, when you build an MVP, it should really be an MVP. Since it's a new word, people are using it for many things, for the demo, for the pilot part, and for the prototypes.
Serdar Gürbüz: But MVP is something you should deliver your value proposition and build your solution upon it. And with MVP, actually you should know that you should maximize learning while minimizing the cost. So it's not just a term, it's a mindset. MVP's a mindset. That's why, when you do all the stuff, from beginning from MVP to the transition period, in some projects you can see some obstacles in terms of organization and in terms of technology stack. But when you go step by step, it's not very hard to move from small scale to large scale.
Stanislava Yordanova: So really build the roadmap behind the project to get there. Can you give some examples of AI-driven innovations that you're working on? And where do you see AI and machine learning really fundamentally changed the airline business? Or any other new technology that you're working with at the moment?
Serdar Gürbüz: Sure. For AI, actually we started for about three years ago to build a chat bot. Today everybody's aware of the chat bot, and in those days it was a very new thing. And we have started again as an MVP, a Minimum Viable Product, and till this date, we built it two times. At first, it was a booking companion and you can search, you can book flights within the chat bot. But we have realized that it's not very a good experience using chat bots to book your airline tickets. That's why we built it as being a travel assistant. Now it works like a travel assistant, and before your flight it notifies you the necessary stuff for your travel and it reminds you all the stuff you need to remind before the flight. And it's not finished yet. It's still in beta phase.
Serdar Gürbüz: But we are on teams to improving the NLP part of it. And besides that, as I explained, we are currently working on image processing. It's an ongoing project, again. This a very interesting project because we are using AI image processing to detect the events in our plan area as I mentioned. And then we will predict the possible delays with the data we will have from that image processing solution.
Serdar Gürbüz: So in that project, the output of an AI project will feed another AI project and then we will get a business output from it. And in terms of AI, actually we have also others technology projects around in augmented reality, IOT and other stuff. But AI is hot topic today. I'm not sure whether AI will fundamental change airline business, but I believe it will allow us to do our business with more and more insights. AI will provide us many insights and this will help us in terms of how we operate, in terms of how we plan and decide the business decisions and how we communicate with the customers.
Stanislava Yordanova: Do you see optimization when it comes to, for example, cost or just operational efficiency?
Serdar Gürbüz: Actually there's a misunderstanding again in that part. As airlines and when you are in the airline business, you see we are optimizing all the processes for more than decades. We are optimizing our fuels, we are optimizing our operations. And today, how AI will change these optimizations, is I think, now we can add more data into our predictions, into optimization algorithms. And yesterday for example, maybe we are optimizing 90% of a process, now with the AI and now with more data, maybe it can up to 95%. And most of the stuff currently people talking as AI, but most of them are not AI, just advanced analytics and better analytics with better data.
Stanislava Yordanova: Yeah. So you mentioned using percentages to measure the success and the value of certain technologies. What are some of the others KPIs to measure the success of innovation?
Serdar Gürbüz: Yeah, it's really hard to measure the innovation. It's the problem of all similar organizations. Since we are trying to explore new stuff, one of the hardest things is to measure. For some projects, you can measure very easily. And for example, this turnaround operation project. In that project the success is easily calculated because at the end of the project, if you predict the delays better and if you optimize the turnaround timing, it's a very valid KPI. But for example, providing customers an interactive airport map, is also a digital innovation, but it's not something you can easily measure the effect of this. But how we can do our job, within Turkish Airlines is, we measure the success ratio of stuff we have tracked.
Serdar Gürbüz: For example, let's say last year we have tried 10 things and succeeded in one, and then for the next year, actually we are aiming to increase the success ratio of our innovation efforts. So in that term we are used to encouraging people to try. If they try more and we believe they will succeed more.
Stanislava Yordanova: Really thank you for these great insights. I had some really great takeaways from our conversation, so I want to end it with a fun question about sharing your maybe most memorable travel experience.
Serdar Gürbüz: Yeah. Actually, it's because we are in airline businesses, we have seen so many funny travel experiences. And what I will tell is, it was a return from a family vacation from Maldives. And we went to vacation with my wife and child. And as you may know, people in the airline business have discounted air tickets. But those air tickets are not [inaudible 00:34:27].
Serdar Gürbüz: If the flight is fully booked, then we should wait for the next flight. And when returning from the vacation, I was confused to checking the flight's load status, all the day there was available seats, and I was happy. But when we get into the boat to go to the airport, I checked again from my mobile phone and saw that the flight is full and there was nothing I can do. We were on the boat, and the boat is heading to the airport. And it was a one-hour trip, and there was another flight the next day. And I looked for the places to stay near the airport, and I tried to reschedule all the stuff, and it was a very stressful journey for me. But when we arrived at the airport, I had noticed that I was checking the wrong flight.
Stanislava Yordanova: That must've been a relief.
Serdar Gürbüz: Yeah. I'll never forget that relaxation.
Stanislava Yordanova: Oh yeah, I'm sure. Yeah. Okay. Well, thank you again for this conversation. It was a pleasure to hear all the exciting stuff around innovation at Turkish Airlines.
Serdar Gürbüz: Thank you. The questions are very nice, and thank you again for the very nice conversation with you.
Stanislava Yordanova: We look forward to seeing you again across the industry.
Serdar Gürbüz: Yeah, I hope so. Thank you.
Stanislava Yordanova: Thank you.
Aditi Mehta: Thanks for listening to the PROS Travel Podcast, the View From 30,000 Feet. Special thanks to our guests and our producer, Genevieve Todd. We hope you've enjoyed this episode. If you have any feedback, a burning idea, or know of an industry expert we should feature, shoot us an email at Amehta@pros.com. That's A-M-E-H-T-A @pros.com. You're now free to move about the cabin.