Something unexpected happened on my travels in Japan last week. The train service from Tokyo to Shin-Osaka ran three minutes late. You should have seen the look of consternation on passengers’ faces and my Japanese friend said to me, “So sorry, this is very unusual.”
Where I come from, three minutes’ delay is early.
In Japan, it is a matter of pride and professionalism that trains run on time. Cleaning staff wait in line for the arrival of each train, they swoop in and remove any rubbish and they turn seats around to face the opposite direction – all done in seven minutes.
Cleaning staff all ready to do their work with a seven-minute turnaround time
Slowly but surely too, trains in Japan are getting more user-friendly for foreigners. Tickets are now in English, and you can pretty much figure out your way around. Watch what the locals do – most buy packed lunches, some of these Bento boxes are too pretty to eat. There’s even a bento box that heats up the food when you pull a string – you literally see the box sizzle and steam before your eyes.
Indeed, there’s much to learn from Japan and on the six-hour journey I had to take from Karuizawa to Kansai – three train rides in all – I had plenty of time to reflect on this second instalment of learnings from WIT Japan & North Asia 2017.
- Choo-choo train coming down the tracks
Cameron Jones: Japan’s rail market at $8b is equal in size to the whole of Western Europe, which is why SilverRail has set its sights on Asia.
Since we are on the subject of rail, I will stay on the same track. Japan’s rail market at $80b is equal in size to all of Western Europe, that we learnt from Cameron Jones, chief commercial officer, SilverRail Technologies. Rail is a $300b global market, so Japan and Western Europe make up the bulk of that.
The mission of SilverRail is to build an online marketplace for rail. Jones said that the company’s sights are now trained on Asia where the big rail markets are – China ($30b), India ($20b), Korea ($4b) and “Asia Other” ($10b). In contrast, US is worth $2b and Canada $1b.
It clearly has a long way to go. In Kansai, I went on a harbour cruise and met two senior executives of Nankei Electric Railway, a privately-held company that runs trains from Kansai to Namba. They’d never heard of SilverRail but were eager to learn more. The big player in Japan is of course Japan Railways (known as JR to Japanese), which operates under seven operating companies, and reportedly commands up to 70% of the rail market.
Jones pointed out the pain points of rail in Japan – limited foreign language, no international point to point and no digital ticketing. In China, the issues are limited foreign language, only bookable inside 30 days and no digital ticketing.
The recent acquisition of SilverRail by Expedia is being seen as the coming of age of rail and just as low cost airlines transformed flying and brought millions of customers online, rail will be the next frontier as countries across Asia put in place more rail infrastructure.
- AirAsia’s China and digital moves
There’s no denying the spectacular growth of AirAsia since its setup. It now comprises nine airlines, 22 hubs, flies 60m passengers a year and to date, has flown 450m passengers. Clearly its next frontier for growth is North Asia and China is core to that strategy. The group now operates 53 routes into China and 38% (or 20 routes) are unique routes unserved by others, said Kathleen Tan, president of China.
Kathleen Tan:38% or 20 of AirAsia’s routes to China are unique routes unserved by others.
That’s how the airline has differentiated itself in a hyper-competitive market and where slots into China are fought over as hard as mining rights for gold.
Tan, who spent nine years building up China for AirAsia in its early years, said the things that are happening in China today are mind-blowing – from the innovation she’s seen from companies like Huawei and Alibaba, to new airports in third tier cities, to the appetite of Chinese consumers for travel.
“The innovation in mobile is incredible,” she said, which is why AirAsia has hired a Chinese developer team to develop its app for China. “We are learning from them, not the other way round.”
The big news of course is the AirAsia joint venture with Everbright to set up AirAsia China but Tan said it was too early to share further details.
She pointed to China’s recently-announced “One Belt, One Road” programme which has to be watched for its impact on the global economy – it potentially covers 65% of the world’s population, about one-third of the world’s GDP, and about a quarter of all the goods and services the world moves, according to this report from McKinsey.
Tan said that while AirAsia had always been at the forefront of using digital to sell its services, it is today embracing digital in everyway. It’s the first South-east Asian airline to use Facebook Workplace for its 20,000 employees. It has a culture department and a chief storyteller to ensure sustained and meaningful engagement.
It is using chatbots and AI to enhance its Ask AirAsia customer service. It is using digital to improve its ancillary revenues – now at 25% of revenues. “We want to go from $43 per passenger to $63,” she said, and videos such as the one featuring Bruno Mars and promoting “Santan”, its new nasi lemak meals, are part of the airline’s way to differentiate itself from competitors.
With low cost airlines at more than 60% of capacity in South-east Asia, competition is certainly on the rise and AirAsia’s advantage is its “One AirAsia” network. “The fact that we have three low cost long haul airlines, when many said in the past this model wouldn’t work, is proof of our network effect – they do well because we have strong feeder traffic from our 22 hubs. Building a hub is different from just flying a route, it takes tremendous commitment and investment,” she said.
And the book that changed her life? Dale Carnegie’s How to Win Friends & Influence People. “The lessons in that book are still relevant, perhaps even more so today.”
- AI means Augmenting, not Artificial
Masaya Higuchi: AI making huge inroads into healthcare and fintech. His advice to travel companies, specialise so you can focus on a niche set of customers and data.
With all the attention on AI and what it could mean to jobs and the human race, Masaya Higuchi, business unit executive of Watson Customer Engagement of IBM Japan, was at pains to explain that in IBM’s world, AI meant “augmenting intelligence”, and would not replace humans but complement them.
He quoted IBM president and CEO Ginni Romerty, who said, “Our goal is augmenting intelligence. It is man and machine. This is all about extending your expertise.”
Having said that, there’s no denying that machines are better at some things – like chess or Go, the 2,500-year-old Chinese boardgame. Higuchi reminded the audience that IBM Deep Blue defeated the world’s best chess player 20 years ahead of Google’s AlphaGo defeating the world’s best player of Go this May,
“The number of patterns in chess is 10^120 whereas Go is 10^360, which means 10^240 times difference,” he said, which means machines have made huge progress in learning in the last two decades.
He admitted that robots like Pepper had yet to become mainstream, jesting that for instance they were too heavy still to deploy on flights to serve as cabin crew. However robots are being used on the ground in hotels.
He said one area that AI was making huge inroads into was healthcare and told a story of a patient with a very rare cancer disorder. When everyone had given up on her, Watson was able to sift through countless reams of medical records and studies to find the one treatment that could possible save her, and it did.
Another area in which AI is being deployed is insurance and in fintech. Where there’s necessity to sift through reams of data, machines can perform better than man, he said, but you still need humans to collect, clean and analyse the data.
Which is why he said travel companies must start hiring data analysts as the first step. But will that solve the problem though – given what Steve Hafner, co-founder of KAYAK, said on the WIT stage last October in Singapore, “The rise of AI is the top thing that happened and that mattered in 2016. (And) it’s getting even tougher to be a travel startup or to afford innovation. You simply need too many developers, with access to too much data, to make a difference.”
Higuchi’s advice to that challenge, “Specialise. Focus on a niche set of customers and data.”
