In 2019, I had the privilege of hosting a roundtable at the Global Aviation Festival in London and conducting a study on airline digitization. The topic of both revolved around digital transformation and how it is impacting the airline organization across revenue management, eCommerce, distribution and beyond? Summarized below are some of the key takeaways from these two initiatives.
Digital Transformation is about People and Process, not just IT
The common refrain is that legacy systems have historically held back airlines from transforming the way they price, distribute and sell their products. Which is true – legacy systems like the PSS, GDS and reservation systems have held back airlines from moving faster than other industries. There are real barriers within IT departments and systems that make the transfer of data difficult or limit the flexibility that an airline can employ to sell its products.
In fact, the recent study by PROS/Hanover found that 68% of airlines are upgrading software and IT infrastructure to meet the demands of digital transformation, more than organizational change, training or hiring consultants. Some of these upgrades consist of enhancing systems for digital retail and introducing AI-driven innovation.
However, a point that was brought up repeatedly during the discussion was that digital transformation isn’t just owned by the IT department. There needs to be a holistic approach in order to bring real change and return on the investment – one that involves C-level education, project buy-in and direction. For example, a project that involves multiple parts of the tech stack, multiple departments and significant investment of resources (time and financial) must have the support of the Chief Commercial Officer, Chief Information Officer and even the Chief Executive Officer. Many agreed that some airlines are lucky to have more visionary leaders at the helm that understand the importance of certain investments; however, others prioritize operations and commercial strategy over digital initiatives. To push transformation projects at these airlines, project owners spend significant time educating leadership of the return on investment, identifying quick wins and influencing long-term strategy.
With a leadership team on-board, it is much easier to then organize teams and departments that are focused on and measured by the success of digital transformation projects. These new departments or teams should be set up so they have access to data and the power to push integration between various systems and processes. Since the teams tend to work cross-functionally, there needs to be a clear directive that a team owns the process for change and has the power and resources to drive it. Many airlines are recognizing the need for dedicated teams as well as more cross-functional collaboration. PROS/Hanover research found that 58% of those interviewed say there are four or more departments involved and that 30-40% of budgets are devoted to digital transformation. In addition, entirely new departments and new roles are created to support the digital transformation process.
Successful Ways to Speed Up Digital Transformation
There were several airlines seated at our roundtable that brought up what has been working for them. Several of them were contingent on the size of the airline and their operational model. It’s clear that airlines often have very unique environments and strategies that they must consider. However, here are some ideas that could serve as food for thought:
- Separate eCommerce from larger departments like IT. When eCommerce teams are looped into the IT group, innovation and digital initiatives can quickly be overshadowed by operational projects or handcuffed to legacy systems.
- Bring eCommerce and traditional sales (everything that is not online) under one roof to drive consistency across all channels. An airline needs to have control of its product and brand from start to finish regardless of the distribution channel. This way you are holistically looking at digitally transforming the customer experience rather than a siloed approach.
- Adopt an agile approach with interdisciplinary teams dedicated to solving specific problems. When the airline can first identify the problem(s) it wants to tackle and then create teams with the right members from across the airline, they are more likely to be successful. This is key for digital transformation initiatives, which sometimes can be seen as large, lofty goals rather than achievable projects with real ROI.
It’s OK, Airlines are Going to Get There
Though many representatives at the roundtable were frustrated or anxious at the speed of digital transformation at their respective airlines, it’s clear that the industry is overall optimistic. According to PROS/Hanover research, 90% of respondents reported confidence that their organization has the technological capability to build and manage the necessary end-to-end eCommerce systems. Other areas of high confidence included IT upgrades, digital retailing and personalization efforts.
From the attendees at the Global Aviation Festival, I saw more chief digital officers and heads of digital strategy than ever before. Airlines showcased results of implementations of chatbots, improved apps and websites. With only 8% of airlines reporting more than 3 years of engagement in digital transformation efforts, it seems that the industry is just ramping up the number of innovation and success stories. I for one am excited to see what’s next.
For more stats on the state of digital transformation in the airline industry, check out the infographic.
About the AuthorMore Content by Aditi Mehta