IATA hosted its Offers and Orders Forum in Geneva in May as part of its modern airline retailing initiative, highlighting the sometimes-overlooked fact that airline passengers are consumers and airlines are consumer-facing businesses. While many airlines have made great strides in digitizing their operations to better serve passengers’ needs, the pace of change has been slow. Far too slow.
The good news is that this is changing. More airlines are recognizing the power of personalization, creating connected journeys for passengers, managing distribution channels to reach the right customers at the right time, and giving passengers more control over their experiences. They’re investing in the digital transformation necessary to achieve those goals and taking advantage of new industrywide platforms and protocols that make them possible. Progress toward customer centricity in the airline industry is finally accelerating.
Airlines’ quest to understand the customer
Treating passengers as consumers like retailers do requires airlines to better understand customers first. Like other consumer-facing businesses, airlines have access to many tools that can help them recognize passenger needs, preferences and purchasing patterns.
Passenger records and itineraries are inherently data-rich, and frequent flier programs are direct conduits to customer insights. But unlike Amazon or Google, many airlines lack the fundamental digitalization infrastructure to connect this rich intelligence to their products and services.
Connecting the dots to create a connected experience
Airfares aren’t the only product or service that airlines can offer their passengers. Ancillary revenues are a central aspect of every airline’s operating strategy, but there are few natural communications channels to connect ancillary suppliers to the airfare when booking, often creating a fragmented experience for the passenger.
With a platform that leverages automation, facilitates communications, and can manage a variety of suppliers, airlines can create a more connected experience. But such a platform goes beyond ensuring that a passenger can buy a seat, Wi-Fi access on that flight and travel insurance in the same booking flow – though that’s critical and much less commonplace than many consumers would expect. It can also lay the groundwork for airlines to achieve true personalization.
A modern approach to personalization
Airlines have a wealth of consumer data at their fingertips yet utilizing that “big” data to fuel a more customer-centric business model remains limited by the relative digital immaturity across the industry. Even as old-economy companies like Brinks and Home Depot leverage big data to create personalized, seamless omnichannel experiences for their customers, airlines struggle to deliver on consumer expectations created by digitally native companies.
To give passengers more control over their travel experiences and create the type of personalization they’ve come to expect, airlines must move on from outdated protocols like text messaging and embrace more modern and dynamic application programing interface (API)-driven approaches that seamlessly integrate data and information. Those approaches include working with both traditional global distribution systems as well as new distribution capability (NDC) to optimize inventory distribution and fares, as well as selecting the right channel to reach their desired customer base. Striving to match each product and price to the optimal customer is a strategy many digitally native businesses have pursued and one that airlines should adopt.
Creating an environment for a customer-centric model
To achieve true customer centricity, airlines must first have a comprehensive understanding of the various tools at their disposal. This includes leveraging their insights into customer behavior obtained through frequent flyer programs and direct booking channels and the diverse range of options available from their supplier partners. By creating structures that enable them to make the most of these assets, airlines can create a unified, streamlined distribution strategy that maximizes personalization and optimization opportunities.
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Exploring systems and processes that prioritize flexibility, greater responsiveness to demand and aren’t hampered by extended implementation times and change processes are all critical for airlines’ future success. Embracing existing legacy systems (GDS) and forward-looking, digitized vectors and tools (NDC, big data, artificial intelligence) will help carriers achieve their goals - but only if they have the proper infrastructure to use them all effectively.
Despite the reputation of the airline sector as one that has historically lagged other consumer-facing industries in terms of customer-centricity, the landscape is rapidly evolving. Airlines like South Africa’s Lift that are quick to adapt to this changing environment and prioritize customer needs by deploying cutting-edge tools and infrastructure are poised to drive long-term growth and profitability. To achieve this, airlines must take a holistic approach to customer engagement, embracing innovative technologies like big data, AI, and NDC to offer a more personalized and responsive experience. Implementing flexible and adaptable systems and processes allows airlines to remain agile and responsive to the ever-evolving needs of their passengers. By establishing a culture of innovation and investing in the proper infrastructure, those airlines can position themselves as industry leaders and rightfully earn the loyalty of their customers.