Customer as a data packet

Airlines are not so very different from the logistics industry — both must be able to coordinate the location and movement of equipment, staff and resources with tremendous precision. The logistics industry accomplishes its mission by treating all of these elements as “data packets.” Based on the research, carriers whose aim is to be something other than the lowest bidder will need to do much the same to optimise and customise the travel experience for their customers. Viewing travellers as data packets is not as cold as it may first seem; such perspective would actually allow airlines to minimise inefficiencies and maximise personalisation. This makes for happier customers who arrive at their destinations on time — much as packages do today.

When it comes to handling data, airlines can also learn a great deal from other industries. Analysing the information that consumers continually generate allows hotels, casinos, supermarkets and global companies such as Netflix and Amazon to personalise the customer experience with greater precision. And, thanks to mobile phones, GPS and locational tracking of Internet use, among other technologies, customers become datapoints, transiting virtual networks in parallel with their physical movements. As tracking and data analytics become ever-more precise and granular, some systems are even able to vary offers made to supermarket customers, for example, based on personal profiling and the specific aisle where the shopper is located.

Better and more sophisticated use of information — across the full trip, from the moment travellers begin researching flights to their post-trip feedback — can help airlines achieve greater efficiencies and deliver a more personalised experience. How data are collected, used and transmitted can even bring to business class and coach some of the features of first class. Making sure that they have the most complete data packet possible is the first step for airlines if they want to deliver a seamless yet balanced interaction, that is, trips that are coolly efficient, but warmly personal.

Henry Harteveldt, Travel Industry Analyst at Atmosphere Research Group:Viewing the customer as a “data packet”

Getting it right, making it personal

The information airlines now offer and collect is relatively sparse, as are the corresponding options available to personalise flights: first class or coach; window, aisle or centre seat; vegetarian, kosher or halal food. Better information exchange and analysis, a more unified and complete data packet, can open up more options — much as it does for the hospitality industry — from comfort levels to entertainment possibilities to pre- and post-flight activities.

For example, business travellers, vacationing families and “adventure” travellers value different services. Providing more opportunities at the booking stage for customers to self-identify — or using predictive analytics to extrapolate their category and needs with greater precision — would allow airlines to offer more relevant personalisation options.

Airline loyalty programmes that have more comprehensive customer profiles — the product of data gathered across multiple flights — should also be able to read trip purpose and context and respond accordingly. Dr Wong might be offered business-bundle options when travelling alone but family-bundle options when travelling with spouse and child, for example.

“In the next 10 years, technology, and information technology in particular, will be what matters most” in improving industry service and efficiency, says Henry Harteveldt, a travel industry analyst and the founder of Atmosphere Research Group, a boutique research and advisory firm focused on the global travel industry. The amount of investment necessary to reap the benefits of this technology is relatively insubstantial, he argues. “The average airline spends about 2% of its revenues on technology, compared to about 30% each on fuel and staffing,” he says. “Even increasing investment in technology to around 5% of revenues could have enormous benefits.”

Data packets move and change

The more information an airline has about the full trip — beyond the flight segment — the more it can do to personalise and tailor the flight segment to mesh smoothly with the other parts. A full-itinerary data map facilitates this when everything works properly. Real-time data mapping — following the data packet the way logistics companies follow packages — is of even greater value when a trip doesn’t go as planned.

For an airline, stranded passengers can be thought of as data packets to be re-routed through the air-travel network. Such real-time mapping would extend the reach of the airline to cover more of the trip, so that an airline that compiled particularly rich passenger data packets could offer more personalised care far beyond the flight. When airport traffic threatens to make a business traveller miss a flight, for instance, she might prefer the time savings of a van to the comfort of a limousine. A family with a young child, forced to change reservations at the last minute, might value a hotel with child-friendly facilities over one with in-house business services like meeting rooms and computer and printer access.

The fragmented data packet

As in other sectors, fragmented information remains a challenge. Fragmentation can be seen across the travel industry, even though the mutual interests of the transport, lodging, dining and entertainment sectors are served by sharing data to create the most accurate and comprehensive data packet possible. Such sharing would make for greater efficiency and reduce duplication and its costs. A data packet so rich in detail would be useful both to providers and to travellers.

“Customer demand really argues for interoperability,” says Valyn Perini, former senior vice president at Kalibri Labs, which conducts revenue-performance analysis in the hospitality industry, and previously chief executive officer of the Open Travel Alliance, which works towards information distribution standards. With technology getting so much less expensive and more software developers devising better solutions, “the reasons not to support interoperability are becoming less and less compelling”, she adds. Still, she concedes, the fear of working with your competitor is real.

Internal conflicts

In-house customer data can be siloed in different systems that not only do not share information, but can present compatibility problems. Software development that advances interoperability will play a great role in minimising this, as well, notes Ms Perini.

The split between marketing and customer service, however, is another way in which the conflict between siloed divisions within a company can come into play. Reading a data packet fine-tuned for marketing purposes, for example, might logically lead to providing fewer incentives to the most loyal customers. Since they’ve already demonstrated their commitment to the brand, given limited resources, every dollar spent on incentives for loyal customers is a dollar not available to woo new customers or to forge a closer connection with less-loyal customers.

While that sort of conclusion is a logical one, it is based on an incomplete understanding of the passenger as data packet — as if one were to separate out a single line of computer code in a program that runs a full page. The virtue of assembling a more fleshed-out, balanced data packet is the resulting “full-page view,” allowing the airline to understand and design solutions that will benefit all its passengers as well as its own bottom line.

We have the technology

Viewing the customer as a data packet, whether explicitly labelled as such or not, has been the practice in a number of industries for some time now. As the cost of information gathering, storage and analysis continues to fall, airlines can genuinely begin to play catch-up, Mr Harteveldt says.

Reservation information, loyalty programmes and connections to other travel providers give airlines a solid base on which to build a richer and more comprehensive customer data packet. As with other companies, they can also purchase access to additional databases. Acquiring the technology and the mindset to harmonise information across the full range of sources will allow airlines to create a richer, more accurate and holistic view of their passengers. This is positive for both airlines and their customers.