“Excel in operations. Innovate in marketing.”* These are two principles that still echo from IATA’s first retailing symposium this past fall. Next-generation commercial airlines must have both in their DNA if they want to succeed in the era of digital retail.
In the next decade we should expect the disruption of the airline industry to continue to accelerate; however, it is the digital-first carriers that will lead the market. These airlines will be proficient in their daily operations, optimizing all functions to fly passengers safer, faster and better, while providing a great flight experience. But they will be retailers who fly airplanes. They will know their passengers well. And they will build strong brands through coordinated, relevant communication across all touchpoints by leveraging AI and the latest technology.
For both operational excellence and marketing innovation, the common denominator is transforming into a customer-centric organization. Here are some of the changes that innovative airlines will embrace to deliver progress and to succeed in the evolution toward airline retailing.
- Ubiquitous complexity? Instead, keep it simple.
Two main forces are driving retailing innovation: customers and new technology. This should be the focus of all your eCommerce initiatives. The airline business is about air travelers – they are at the heart of your transformation. Make innovation about them and how you want them to easily find, use and love your brand. Technology is there to help you deliver on this. Don’t allow the complexity and limitations of legacy technology slow you down; rather, discover the new digital models you need in place and find out how to bridge the gap with traditional systems. Technology is there to help you get your airline where you want it to be.
- Data, records…? It is all about the offer.
From airlines to providers, everyone has a strong focus on data and records. Whether it’s schedule data, fares data, inventory, PNRs, ancillaries and EMDs, data exists in many places. This makes it difficult to have that single view of the offer and the passenger, so you can be flexible with sales and marketing strategies. But if you marry your current complex infrastructure with the digital UX your travelers seek, you can gain agility and quickly pivot to new market opportunities. In the digital economy, offer management is the moneymaker: data-driven, customer-oriented and highly configurable offer creation and distribution.
- Decades of costly transformation? Start with Offer Optimization.
It took the industry quite some time to move to the e-ticket. But the pace of digital change and growth in passenger numbers is forcing both airlines and providers to change quickly. Your airline cannot afford to lose years in transformation for the next digital program. Neither can a technology partner spend years developing a platform without real-world testing. Start small, grow big when you’re ready, and deliver value at each step on the way to the vision of tomorrow. Gain speed to market by testing, experimenting and evaluating. You can be modular in your approach and start with the areas that bring the greatest value for your airline’s sustainability. It could be about optimizing distribution across direct and NDC channels; improving forecast accuracy across markets; or enhancing flexibility to create offers across the seat, fares and ancillaries while leveraging dynamic pricing. Wherever you start, you can build your own path to full offer optimization with a next-generation revenue management that considers both market demand and passengers’ willingness-to-pay. This is a path that IATA refers to as “dynamic offer creation.”
- Data suffocates your analysts? Revolutionize with artificial intelligence.
From searching for flights to booking across a single airline, customers generate an overwhelming volume of data. But technology today makes it possible to collect and store this data and to take advantage of the real-time insights it provides. Thanks to artificial intelligence, you can automate all the heavy lifting and gain precision and value from the processed data with meaningful insights and prescriptive guidance infused into your airline’s commercial systems. Soon, it would not be surprising to see data scientists become essential members of the revenue and pricing team, to accelerate AI-driven growth across an airline’s eCommerce and RM initiatives.
- Transition legacy to digital and NDC? Unlearn and build.
Moving into a retailing frame of mind is undoubtedly a significant technological challenge for all airline commercial systems. We’ve seen some recent traction around a GDS aiming to accelerate its lagging pace in innovation and catch up on NDC by acquiring a rival competitor. Even the biggest industry players acknowledge they can no longer hold off the market dynamics; they must accept and adopt the inevitable changes. However, breaking free from the limitations of legacy technology and process also has a lot to do with a shift in mindset. Change management and training people across the organization to understand and embrace the changes is just as important as integrating products and solutions. To succeed in the digital era, it will be important to introduce fresh digital natives to your teams, unlearn outdated and inefficient processes, and start building the ecosystem for the digital economy, bridging the gap with yesterday. Excel and innovate.
* Quote from Nawal Taneja, Ohio State University Aviation Professor, IATA AIR Symposium, Oct 2018
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