Aligning With Today’s Digital Customers
Technology To Build A Digital Airline Business
If an airline wants to operate in a digital world, it must become a digital company. Becoming a digital company, however, requires new strategies built around new types of innovation and creativity, new processes to support the new strategies, and a keen focus on the digital customer and the overall customer experience.
Most aspects of human society have become digital, and businesses that haven’t already made the digital transformation to keep up with their competition and please their customers should follow suit.
What Is Digital Transformation?
Digital transformation is the realignment of, or new investment in, technology, business models and processes to drive new value for customers and employees and more effectively compete in an ever-changing digital economy.
One of the initial barriers preventing airlines, or any organization, from undertaking a digital transformation is agreement among leadership as to what digital is and what it means to their specific business.
Digital is not the new name for e-commerce. Nor is it modern marketing practices that leverage marketing automation tools and social media. It is not a self-service mobile channel that interacts with customers. It is not about using the latest technologies. It is not solely about improving the customer experience, although that is vitally important.
None of these items are, at least individually, transformational in terms of customer orientation, modern strategies, new processes, innovative technology and robust operating models.
Digital transformation is a course of profound and radical change that points a company in a new direction and takes it to an entirely different level of effectiveness. In most cases, it will comprise a new strategy inclusive of new business and operating models enabled by progressive technology.
The Business Problem
To date, airlines have an array of technology necessary to run their businesses, such as passenger services, e-commerce, pricing, revenue-management, aircraft-movement, operations-management and airport-management systems. These much-needed technologies have sustained the airline industry for decades.
However, we live in a digital age, and airlines need to be able to bring together disparate data sets from these technologies so they can identify events across their entire organization in real-time and quickly respond to market needs, customer demand, irregular operations and so on.
Because many of these systems don’t currently have the intelligence and/or ability to communicate with each other, an airline can’t access the right information at the right time and in the right places to achieve maximum profitability or provide an exceptional customer experience.
Customer Centricity Is Vital
If there is one thing that can be learned from digital organizations, it’s that they are customer-centric. They don’t just pay lip service to the customer, they truly place the customer at the center of every decision they make and every action they take. They relentlessly obsess about their customers.
Digital leaders such as Amazon, Zappos, Uber and Apple share this customer-centric trait. The late Apple co-founder, Steve Jobs, once stated that, “You’ve got to start with the customer experience and work back toward the technology - not the other way around.”
Additionally, Amazon’s Jeff Bezos made a strong point when saying, “The best customer service is if the customer doesn’t need to call you, doesn’t need to talk to you. It just works.”
It’s not surprising then that McKinsey found “organizations able to understand and skillfully act on complete customer journeys can reap enormous rewards: increasing customer satisfaction by up to 20 percent and revenue growth by 10 percent to 15 percent, and lowering the cost to serve by 15 percent to 20 percent.”
This is accomplished by optimally utilizing the behavioral information, or data, that is offered by your customers to the airline. If that information is brought together and analyzed, the airline’s current business processes can be adapted to uniquely fit that customer or segment of customer’s preferences and expectations.
Becoming customer-centric enables airlines to achieve the ultimate levels in customer satisfaction, higher revenues and lower costs, dispelling the myth that an airline needs to increase costs to achieve higher customer satisfaction. Rather, they need to catch up to the digital world so they can give their customers the level of service they have come accustomed to in most other facets of life.
The Technology Needed For Digital Transformation
Advances in technology play a key role in digital transformation. Technology enables organizations to simplify and enrich customer experiences, break down organizational silos and automate business processes. One of the biggest technological advances enabling digital transformation is data analytics.
“Data analytics that helps airlines learn about travelers and what they want will produce winners and losers among airlines,” said Cathay Pacific Airways Chairman John Slosar. “There are network effects; the guys that get there first will have an advantage.”
There are several actions that need to happen for an airline to gain that advantage. Among the top three, they need:
- Large quantities of robust real-time or near real-time data across the organization to meet the demands of digital customers and compete with digital rivals.
- More sophisticated rules, automated workflows, and data integration and orchestration to garner greater automation of processes and achieve a seamless customer experience across many, if not all, customer touchpoints and channels.
- A flexible, real-time, data-integration platform to rapidly innovate and meet the growing challenge of turning customer data into increased revenue and decreased costs while delivering a truly personalized experience to air travelers.
Sabre Intelligence Exchange, the open-enterprise agility platform that is used by more than 15 of the world’s largest, most diverse, thought-leading airlines, enables carriers to gather, analyze and take action on disparate data from across their entire enterprise.
The agility platform facilitates the creation of custom applications, analytics and reports, as well as integration of down-line systems and digital surfaces, to work off a centralized database of insights from both customer and operational data.
By bringing together data from across their enterprises, such as booking, ticketing, check-in, operations, customer profile, sales and others, Intelligence Exchange enables airlines to proactively offer differentiated services that:
- Enhance the traveler experience across the entire journey,
- Increase incremental revenue by up to 3 percent,
- Reduce IT and operational costs by up to 2.5 percent,
- Automate business processes to align with business strategies,
- Enable unique use cases that deliver tangible business value.
Intelligence Exchange does much more than provide data integration across disparate departments and systems across an airline. It enables airlines to quickly make accurate business decisions. It is also completely agile, meaning airlines can quickly develop business apps and stay ahead of the competition.
In addition, the agility platform, which is the only one of its kind in the industry, enables systems to talk to each other as opposed to simply pushing information from one system to another that can’t then respond to or provide additional notification once actions are taken.
For example, during irregular operations, Intelligence Exchange enables all systems across the airline to speak to each other so every department knows immediately which aircraft, routes, slots and passengers are affected. As each department begins taking action based on the real-time data it has received, all systems are in the communications loop so each area can quickly devise plans and make educated decisions about how to get the schedule back on track and seamlessly reaccommodate customers, taking into account the airline’s most valuable customers as well.
This level of intelligence, cross-functional communication, integration and agility is new to the airline industry, and it’s the way forward for those wanting to become truly digital businesses.
Alaska Airlines Excels With Intelligence Exchange
Alaska Airlines was seeking a seamless upgrade experience for its elite customers so they could be automatically upgraded to first class or to the new premium-class cabin upon request. In addition, the airline wanted to manage all the logic of upgrading elite members with flexible rules around multiple flight, value and profile attributes while continuously evaluating new bookings across the same criteria.
To achieve these objectives, the airline implemented Intelligence Exchange in 2016 and partnered with Sabre to develop an elite-seat upgrade app. The app enables the airline to quickly upgrade an elite customer upon request when inventory is available. At the same time, it then communicates with the inventory system, alerting that the customer’s original seat is now open for sale and the first-class seat is no longer available because the elite customer now occupies it. This clearly helps reduce spoilage while enhancing the customer experience.
“Sabre Intelligence Exchange will continue to support engagement with our customers and drive performance for our business,” said Shane Tackett, vice president of revenue and e-commerce for Alaska Airlines.
As a result, Alaska Airlines is known for having a flexible, user-friendly elite upgrade process in North America.
Taking it a step further, airlines can use Intelligence Exchange to set up rules so, for instance, if John has requested an upgrade on his last three trips but hasn’t yet requested an upgrade on his fourth trip, an offer for upgrade can be automatically pushed to him, again, heightening the customer experience and validating his positive perception of the airline.
These are simple examples; however, the capabilities of Intelligence Exchange are game changing to airlines and their quest to become digital players.
Executing A Digital-Transformation Strategy
Clearly, a company can’t continue working the same way and expect different or better results. There are disruptors in the industry that are challenging airlines, and they need to be addressed head on.
“The way we looked at this was there are people out there looking to disrupt our business, so we should look to disrupt our own business, for our own benefit,” said International Airlines Group CEO Willie Walsh.
This is why airlines such as the International Airlines Group and Emirates have created internal digital-disruption teams. Accordingly, international research firm International Data Corp. predicts by the end of 2017, more than 70 percent of the global 500 companies will have dedicated digital-transformation and innovation teams.
These types of teams are typically cross-functional and are made up of representatives from each area that contributes to an end-to-end customer process. They may follow agile or lean practices; however, they focus on the various customer experiences across the entire journey so they can make any necessary modifications to continually enhance the customer experience.
Emirates’ digital-disruption group is looking to streamline 50 percent of what it does.
“This has implications for workspace, for workforce,” said Emirates President Tim Clark. “Essentially, it will take cost out of the business, it will allow us to be more efficient back and front of house.”
Again, digital transformation is not just about improving the end-to-end customer experience. It is equally important to improve internal back-office processes, as well as those of customer-facing employees.
“For us, it’s not just about putting some lipstick on a pig and trying to portray a nice portal to the customer,” said SAS CEO Rickard Gustafson. “You need to have efficient tools. You need to connect to your customers. But the key for us is also how do you automate and digitize the inside of SAS?”
Moving Into The Digital Future
A survey of senior executives within the airline industry found there was general agreement that the airline industry was late to the digital revolution and lags behind many other industries. Some airlines are now busy putting the proper building blocks in place for digital transformation while many more have yet to begin their journey into the digital future.
Regardless of where an airline is with its digital-transformation maturity, employing agility-platform technology helps carriers continue to achieve digital transformation by:
- Using more real-time, accurate data across the entire organization;
- Applying more sophisticated rules, automated workflows, and data integration and orchestration;
- Leveraging customer data to offer a truly personalized customer experience.
In short, compiling the right data across the entire customer journey (inclusive of the passenger-service, customer-relationship-management, loyalty, operations and various other systems), deriving insight and taking action is the key to becoming a digital native organization. More specifically, airlines need to deliver insights to frontline employees to engage with customer or down-line software applications, as well as decision-makers, so they can take action at scale with the right information to make the right decisions.
“Every single industry on this globe will be affected and impacted by digitalization and automation, and aviation is definitely part of that change,” said Gustafson. “There’s no excuse. They need to do their own efforts in this particular space.”
As Clark echoes, “Digital disruption, whether it be in the airline business or any other business, is staring us in the face – ignore it at your peril.”