AIRLINES that are looking ahead and putting in place the right capabilities for a post-Covid world that will require a touchless journey, more personalised and dynamic information, and quick disruption recovery process, will have a good chance of coming out of this crisis strong.
In an interview with WiT about future-proofing airlines, Amadeus’ vice president, airline solutions & IT sales, Asia Pacific Jonathan Tong offered a view of what airlines should invest in right now, considering what travel will likely entail, post-Covid.
“We can definitely expect reshaping of airlines. In our conversations with the C-suites at airlines, most believe they will not be the same, post-Covid, some commenting that they will not be the same size at least in the short to mid term,” said Tong (pictured left).
He said some airlines have already started focusing and working on a few areas that may have been in their plans but are now being accelerated. One of these is merchandising.
“This is a topic that we have been talking about for the last five years. In Asia, the pick-up has been a bit slower but now, this is quickly becoming an area of focus, as there is a lot of research to validate merchandising as being very effective in driving new revenue. And this, of course, has become very critical for airlines as new revenue streams and cash are very important right now,” said Tong.
Amadeus’ own research has shown that about 85% of travellers are willing to pay more for a better experience. “Airlines that have adopted some of our merchandising tools have seen ancillary sales double. Post-Covid, airlines will be focusing on campaigns and promotions and merchandising techniques like alerts, promo codes, dynamic pricing adjustments. Capitalising on advancements in predictive capabilities and data-driven machine learning, contextualized offers and personalisation is another area that is gathering attention from the airlines.”
According to Tong, Amadeus’ survey results indicate that up to 64% of travellers are willing to trade personal information for personalised offers and services. He said in the post-Covid world, the ability to give the customer the right information at the right time is going to be key in restoring travel confidence. Travellers also say they would like to be able to access the information on their mobile so they can access real time information about localised outbreaks, government regulations on border restrictions that can change quickly.
Further concerns of travellers and what they expect technology to help alleviate are queues and congestions in public space, face-to-face physical contact with others, exposure of financial data and personal information especially with contact tracing and data collection becoming a necessity, inaccuracies in all the national testing tracking and trace programmes.
On the airline operations side of things, what will become critically important to have in place are efficient processes to initiate quick recovery from disruption.
The new travel environment could potentially place a lot of new operational requirements on airlines such as health screening at airports pre-check in, disinfecting planes, and social distancing on planes.
Tong said airports also need to start thinking about how to redirect passenger traffic to avoid crowds building up at airport check-in counters or at boarding gates. More mobile and flexible options should be available – roaming check-in agents with mobile devices for example.
“We now cannot afford to have large crowds stuck at airports. Traditionally, when there is a disruption, airlines are manually re-accommodating passengers who might have missed their connections. But now, with machine-learning and data-driven tools, you can optimise all this across the network very quickly.
“Even before the passengers make their way to the airport, or before landing or taking off on their first flight segment, they should be presented options to select new bookings and all their plans can then be quickly recovered. We have started implementing some of these and have successfully reduced time taken for passenger recovery from eight hours in the past to literally just a few hours, and the number of disrupted passengers actually showing up at the airport with no flight options down to less than 10 percent,” said Tong.
“Looking at costs and complexities for airlines from an operational standpoint, these are things that airlines need to think about and start putting them in place right now, so that when the borders open, they are ready to take passengers,” said Tong.
Network planning and revenue management will also have to evolve quickly. Tong said the adoption of technologies like AI and data-driven solutions will be important. With borders opening but potentially closing again due to an unexpected wave, airlines will have difficulty keeping a schedule.
“In the past, you would optimise a current schedule but with drastic changes (like closing of borders) possible, it is almost like starting with a clean sheet each time. Network planning tools therefore need to be flexible enough to ingest new data sets in real time,” he added.
Revenue management will be on quite an evolutionary path henceforth, said Tong. Revenue management is based on demand forecasting and practice traditionally relies on historical data amongst other things. Now, that’s not necessarily relevant.
Which airlines are more likely to succeed in future-proofing?
“The flagship carriers are more likely to do better in this regard as they would likely receive some support from governments when compared to the fully private ones. The second segment of airlines are those from big airline groups, and that’s because they have different brands with different models and so have the ability to add more synergies to optimise the network, optimise the operations, and even ability to invest in some of these new capabilities we have discussed because the investment can be quite heavy.
“The third group we expect to do all right is the low-cost carriers, not that they are impacted any less, but the low-cost carriers do mostly point-to-point traffic, and mostly operate domestic and regional routes as the bulk of their business and these are the exact segments that are actually recovering quicker. Those operating in that space should already see some revenues coming in,” said Tong.
“Those airlines that operate in countries that have strong domestic markets – Japan, Korea Australia, Europe and US just to name a few – are still flying the domestic routes even though their international routes are impacted,” added Tong.
Tong stressed that through all these changes and improvements, standardisation will be important.
“If governments have different practices and regulations, it can put a lot of stress on the airlines from a process point and that would lead to higher costs. For the benefit of the airline and passenger, some standardisation needs to happen.”
Featured image credit: Getty Images
