Airlines bring data scientists to tears with the amount of data they have access to, but they must figure out how to use it.
According to EasyJet chief executive officer Johan Lundgren, billions of data points can be found within every part of an airline, but the trick is “capturing and using it to solve specific problems.”
He cites three areas within the airline as opportunities where data could be used: to reduce cost and increase efficiency, to enhance revenue and to engage with customers in a different way.
Describing data as a “game-changer” in the industry, Lundgren says one of his first jobs when he took over the role late last year was to appoint a chief data officer.
“When we did the recruitment process for the CDO and I was talking to the most advanced people in the world, they got tears in their eyes thinking about the data we have because it’s unconstrained.”
The sentiment is echoed by JetBlue chief Robin Hayes, who says “high-street retailers would kill for the amount of data airlines have on their customers.”
“It’s about how we take that, in an appropriate way, because I do think it has to be authentic, because if you just serve stuff up they can just feel you’re spying on them, and it can have the opposite effect. A lot of our customers only fly us once a year, so how can we make JetBlue relevant to them between their annual trip?”
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Both airline bosses were speaking at the Aviation Festival in London this week and said data could, for example, help boost EasyJet’s yield system capability by providing that data that already exists on competitor capacity and pricing.
Providing a concrete example, he says an algorithm had been created in three days to tackle fresh food wastage on flights. Using the algorithm to study demand for food on different routes and at different times of day, the airline reduced wastage by 25%, or “800,000 less wasted food items per year.”
“That’s millions of pounds apart from the fact of knowing what items to sock up on that are in demand. That was three days of work, and the next stage is to work out hundreds of samples where you can use data which will essentially be beneficial to the customer.”
The Amazon model
Touching on companies that the airline looks to when it comes to good use of data, the EasyJet CEO says Amazon is a good example.
Lundgren adds that the companies that are most advanced are those that “constantly use data to test and monitor and drive performance from that.”
He says that the industry has much to learn from companies like Amazon when it comes to ancillary revenue. Airlines have traditionally offered customers insurance, car hire and hotels before they’ve completed the flight transaction.
“It takes quite a few steps to finish the transaction. When you look at Amazon, the key priority is to finish the transaction, and then they start offering you things and it’s based on your history," he says.
"That we should offer a hotel to everyone that visits a destination is probably not a good idea. Those are the types of things this industry is not very advanced in at all.”
Going forward, data will also be at the heart of one of EasyJet’s strategic initiatives - a loyalty program that recognizes and rewards customers effectively.
“It’s about finding ways that are effective, it should not bring complexity and must be easy to use and of benefit to the customer.”