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Five Crucial Airline Industry Trends

Five trends in the airline industry — social media, online and offline channels, analytics, alternate means of generating revenue, and regulations and standardization — present a focal point for the prosperous airline.

The trajectory of the global airline industry is similar to that of an aircraft. At times it takes off for the high skies and at times, it dips to ground levels. In between these highs and lows lies the story of the industry — of its survival, of the new and emerging trends that fuel its growth. What are five trends that are driving and will continue to drive the airline industry’s story in the future?

Trend 1: Social Presence

There is a new breed of passengers out there. Therefore, airlines will need to build “social” pace to create brand equity.

A number of leading global airlines have taken off on their “social” flight, and some are indulging in novel ways to engage with customers to build lasting relationships with them. Yes, it does mean stepping out of the corporate comfort zone and engaging in real time with customers; however, that’s a feat airlines will have to achieve if they want to enhance brand equity and get a mind share of today’s customer.

While some airlines have taken a lead in engaging with customers on social media and social media management, others are still wetting their feet. Among the recent innovative airline social media campaigns and initiatives are:

  • Virgin Atlantic’s “Looking for Linda,” an interactive contest that got customers hooked with its unique concept;
  • KLM’s “Meet & Seat” service where flyers can select seats alongside fellow passengers based on mutual interests in their social media profiles;
  • British Airways’ Facebook application called “Perfect Days” that encourages travelers to share a travel wish list and itinerary via Facebook.

As social media takes precedence in the overall customer-relationship-management pie, airlines will need to look at building a large and robust resource pool that can respond to customer queries, complaints, posts and tweets, around the clock.

It will, thus, make strategic sense for airlines to partner with providers that offer a readymade resource pool of social-media experts and technology platforms that help enhance brand equity on social media.

Social Media Resources and Technology

Social media has become a predominant aspect of customer relationship management. As such, airlines should incorporate a solid social-media strategy that involves partnering with providers that offer a team of social-media experts and technology platforms designed to enhance brand equity on social media.

Trend 2: Online And Offline

The customer’s world is online and offline — maneuvering between both holds the key to success.

The online medium — the Internet, represented by online travel agencies and websites in the airline business — is a powerful revenue generator for airlines. As indicated by market research data, almost 75 percent of air tickets today are bought online. E-commerce and automation of business processes such as Web check-in have largely enhanced the convenience of air travel. Added to that is the increasing popularity of the smartphone, which is expected to play an active role in customer relationship management and revenue generation in the time to come.

No matter how strong the online channel becomes, the offline channel, or the airline-customer-service-contact center, will continue to be a critical touchpoint between airlines and their passengers, thanks to the personal touch it brings. For many service-related complaints and challenges, passengers still prefer to speak with a customer-service agent.

In many instances, customers often drop off from making an online purchase of air tickets or travel packages because of technical errors, slow website speed or during the billing process using debit/credit cards. Such customers can be retained by the intelligent convergence of both online and offline channels, either by the smart placement of the customer-service-contact-center number or by activating a click-to-call feature either on the airline’s website or the travel agencies’ websites. Where the online channel fails, the offline channel can take over smoothly to solve customer queries or problems.

Trend 3: Analytics

Analytics is a true “altimeter” for the airline business. (An altimeter measures the height of an aircraft above sea level — a crucial piece of information for the aircraft to remain aloft.)

With the proliferation of channels, the data generated in each channel is multiplying by the minute. This enormous amount of data is a gold mine that contains crucial information about passenger profiles, choices and preferences that can be leveraged by airlines to:

  • Develop product offerings,
  • Strike away product/service offerings that do not appeal to customers,
  • Monitor challenges faced by customers and provide customized solutions,
  • Predict customer needs and preferences by the analysis of historical data,
  • Effectively cross- and/or up-sell additional products or services.

All this and much more in terms of sales, marketing and customer service can be achieved through analytics. With its ability to extract crucial information from a huge volume of data that helps businesses make sound decisions, analytics is emerging as a strategic enabler for airlines. For the airline industry, analytics assumes importance in the form of social media analytics, contact-center and speech analytics, and revenue-model analytics (particularly in the proration process).

Analytics equips an airline with crucial insights. In that sense, analytics is emerging as an altimeter that will help the airline business stay aloft.

Offline Channel Still Critical

Despite the ever-growing online channel, the offline channel will continue to be a vital touchpoint between airlines and their customers. The offline channel presents a personal touch that many customers still prefer, but that cannot be achieved through the online channel.

Trend 4: Changing The Course In Revenue Generation

Constantly volatile fuel prices, dull economic conditions and increasing competition are realities that are biting into the revenue-generating potential of today’s global airline business. Therefore, airlines are exploring new ways of changing the course in revenue generation.

Some of these strategies include tapping alternate revenue-generating streams such as selling ancillary products and services across the value chain or stopping revenue leakage via the total-revenue-integrity route.

The ancillary route is an important revenue generator for airlines today. Services that are emerging as hot favorites in the ancillary services menu include paying for checked baggage, booking a preferred seat and WiFi connectivity. Most airlines are faced with the problem of revenue leakage at various levels of the business and are now actively looking at reining in this challenge by initiating a total revenue integrity program. Airlines must look at a total revenue integrity program that cuts across multiple processes including ticketing processes, e-ticketing, departure control and customer-relationship management.

Trend 5: Increased Focus On Regulations And Standardization

Regulations and directives on standardization will continue to dominate the airline industry now and in the future. Most regulations are related to finance and accounting, the environment, and consumer rights. For instance, while airlines in the European Union are penalized for emissions above the limit specified by regulatory authorities, United States-based airlines are adapting to the new pricing rules set by the U.S. Department of Transportation, wherein airlines will have to include all taxes and fees while advertising fares for their flights.

While regulation envisions increased safety of passengers and improved sustainability of the business, compliance adds to the total cost of operations. It is a cost that airlines must bear on their own, without passing it on to passengers. Since new regulations are a given for the global airline industry, airlines must engage in a compliance program that can optimize business processes and transform operations.

In a bid to ease the effect of various environmental factors on the revenue of global airlines, the International Air Transport Association (IATA) has introduced a directive: the Simplified Interline Settlement (SIS) that aims to standardize and speed up interline billing and settlement in the industry. Here again, as airlines take the plunge toward standardization of the interline billing and settlement process, they will need to carefully look for a partner and a program that will be cost effective and help process optimization.

The airline industry, like any other industry, is clearly driven by trends ... many trends. Some of them go as quickly as they came, while others are here to stay. The five aforementioned trends are among those likely to be around for decades to come, and the airlines that pay close attention to these trends, and act accordingly, will likely be around for decades, as well.