New research from Datalex finds airlines are
prioritizing investments and strategies that enable modernized retailing,
including moving away from legacy technology, increased use of artificial
intelligence and using NDC to have greater control over distribution.
The research, conducted in November includes
insights from more than 150 senior airline executives, about half from full-service
carriers and half from low-cost and startup airlines.
The report, The
Digital Airline 2023, also incorporates input from 10,000 travelers in 10
countries including the United States, the United Kingdom, Singapore, Brazil,
Germany and more. Those travelers also signal increased desire modernized booking
and servicing options, including transparent pricing, new payment methods,
better product bundling and sustainability-focused ancillaries.
One key finding with broad implications is
a disparity between how travelers view airlines on the topic of innovation
versus how airline executives assess their companies.
Just 11% of the travelers surveyed say airlines
are ahead of other e-commerce websites like fashion, Amazon, etc. in terms of
modern online retail strategies. Yet 24% of the executives surveyed believe
their companies are ahead of other sites and 17% believe they are on par.
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“These findings indicate that airline executives are hugely underestimating
the reality of the perception gap that exists between airlines and their
customers,” says Datalex chief technology officer Brian Lewis.
“Unwittingly, perhaps one of the
factors that contributed to the travel industry’s delay in catching up to other
e-commerce sites, is the oxymoron of those who ‘know too much.’ The travel industry
is full with experts and industry stalwarts who know the business inside out,
and because of this there hasn’t been much input on learnings from other
industries, giving credibility to the saying that ‘knowledge equals inertia.’”
The survey finds that a priority for
airline executives is moving away from a traditional passenger service system
(PSS), with 92% saying their PSS is “significantly or somewhat hampering the simplification
of order management and ease of booking.”
Sixty percent of airlines say they intend to
move to a One Order-enabled technology platform in the next one to two years
and 35% give a timeline of three to five years.
“A modular ecosystem, that is not restricted by
archaic processes, means that airlines can be more in control of their own
technology, their own retailing and their own ‘distribution destiny,’” Lewis
Artificial intelligence is also gaining adoption,
with 69% of airline executives saying it has or should have a role in revenue
strength of NDC and direct sales is undoubtedly in the ability to dynamically
price and yield manage. It’s clear however that with the amount of traffic
predicted, systems will struggle to return real-time pricing at scale,” Lewis
The travel industry is full with experts and industry stalwarts who know the business inside out, and because of this there hasn’t been much input on learnings from other industries, giving credibility to the saying that ‘knowledge equals inertia.’
Brian Lewis - Datalex
“A dynamic cache powered by AI has
the ability to circumvent volume concerns and deliver the optimal price at
The report states that when asked about NDC
investments, airline executives “revealed a definite strong intention for a
stark ratio flip between NDC and GDS with some airline executives even stating
an ambition to allocate in the region of 80% of their distribution into NDC…”
And payment innovation is also top of mind
for this year. Travelers surveyed indicate a desire for more ways to pay for
their air travel, and one of the most popular options is using loyalty points
Airline executives also recognize the
opportunity, with 49% saying loyalty points redemption is the payment option
that provides the most sizeable revenue opportunity for their airlines.
Among other payment options considered, 53%
of travelers say they would use “buy now pay later,” 48% say they would use Apple
Pay and 34% says they would use cryptocurrency.
Travelers expect airlines to provide carbon offset ancillaries, with 42%
saying they are willing to pay more for a flight with an airline with better
clear that 2023 represents a unique inflection point for the airline industry,
as it is purported to be the first ‘normal’ year post COVID. Within this
renewed opportunity and environment, airlines can move from survival mode to
now focusing on travel retailing optimizations,” says Bryan Porter, chief revenue
officer at Datalex.
“Our research clearly signals the need and urgency for increased digital investment, demonstrates a more progressive airline mindset poised for innovation and a traveler profile eagerly awaiting the retail modernization coming down the line.”