*NEW* How Qantas used digital transformation to redefine its internal operating models to allow it to “punch above its weight” on customer and product experience
Increasingly sophisticated and with numerous options available to them through the digital transformation of commerce itself, today’s travellers expect stellar service and personalised experiences, tailored just for them. As new technologies make data storage cheaper and easier, airlines have a greater opportunity to store and analyse vast amounts of customer information, using the insights gained to create customised offers, and to personalise the customer journey.
Many airlines still look upon "Digital" as an end in itself, usually as a means of modernising isolated business functions. But true digital transformation is a process that can fundamentally change how airlines operate - one that enables new levels of collaboration across all airline functions collectively. It’s a process that uses information as the basis for connecting people, processes, technology, and culture, to deliver a more seamless customer experience.
In a recent study by Frost & Sullivan on digital transformation in the airline industry, the world’s third oldest airline and the safest airline in the world - Qantas - was also revealed to be the world’s most digitally ready airline. As we’ll see, Qantas has been using digital transformation to redefine its internal operating models, allowing the organisation to “punch above its weight” on customer and product experience.
Digital Transformation And The Customer Experience Are Key
In a highly competitive market, both traditional and low-cost carriers require new strategies to differentiate themselves from their competitors. Over the past decade, the growth of the Internet, eCommerce, and the development of multiple digital channels have had a profound effect on the travel industry. Digital transformation and data-driven business models have emerged as key enablers, in allowing players to distinguish themselves from others in the pack.
Airlines in particular have traditionally had access to huge reserves of transactional data about their consumers. Digital customer interactions now provide new data points about customer behaviour, which airlines can combine with insights gleaned both from internal sources such as reservation systems, and external sources like social media.
Information and technology now empower consumers more than ever before. Prospective travellers once had to rely on professional consultants, to find and compare all of the best airfares, schedules, and travel itineraries. But with the resources now available through online platforms and mobile apps, travellers can be their own travel agent.
At the top of any list of priorities for the intending passenger is a safe, smooth journey, which begins and ends on time. Any efforts on the part of the airline to personalise the process or enhance the customer experience will of course be welcome - but it’s fundamentally important to first get the basics right. So in digitally transforming, airlines must not neglect the operational aspect, which is the foundation for guaranteeing customer satisfaction. Airlines should also recognise the potential for improved efficiency that digital technology can bring.
Benefits Of Digital Transformation For The Airline Industry
Increased efficiency and streamlining of operations are just two of the benefits that digital transformation has to offer to the airline. Transformation is typically a multi-faceted initiative which, if successfully implemented, can increase revenue per customer, improve services, reduce costs, and produce other favourable outcomes.
A recent survey of 100 airline executives conducted by Sabre and Forbes revealed that 61% of those surveyed consider customer experience to be their primary brand promise. Personalisation and the custom-tailored travel experience are key elements in delivering on this promise.
Digital transformation provides a medium for delivery, by enabling multi-channel analytics on behavioural data. Such personalisation can extend beyond outreach and marketing channels, to include processes like the check-in at an airport kiosk, to create an integrated experience for the traveller at all touch points.
At the heart of any digital transformation initiative is a reserve of available data. The information typically on hand for airlines provides a pool of instantly available market intelligence, which may be used to increase ancillary sales. Data stores and insights from analytics can also enable airlines to enhance their revenue streams by identifying new opportunities for cross-selling and up-selling.
IATA reckons that globally, the number of air travel passengers is set to double from its level in 2016, to around 7.2 billion flyers by 2035. Any investment that an airline makes in digital transformation today will lay the foundation for building the data repository and analytics capability required to meet the demands of tomorrow’s market.
In terms of customer lifetime value, airlines can use the insights gleaned from digital transformation to generate new ways of segmenting their customers, and interacting with them. By analysing the lifetime value of passengers, airlines are also empowered to make more strategic marketing decisions, and customised support plans.
Using multiple data sources and the real-time processing of customer information, digital transformation enables airlines to create smarter, more meaningful segmentations and communications. This in turn allows them to establish and sustain more personalised, one-to-one conversations with consumers. For example, automated processes can give passengers notifications and updates which are directly relevant to their current destination, flight history, and previous interactions with the airline.
Automating service excellence
Automated response mechanisms and communications can also improve customer service, while reducing the burden on an airline’s human front-line staff when there is a disruption. For instance, configuring rule-based responses on an agile software platform can power automated responses to flight delays or cancellations.
The way in which these automated responses are crafted and delivered also gives airlines an opportunity to establish and communicate their unique brand personality. So for instance, an organisation might choose to emphasise certain kinds of notification to their passengers such as flight status, baggage status, waiting times for baggage delivery, or waiting times at security / border control.
The shift to a digital medium enables airlines to take advantage of commonly available resources such as the application programming interface or API, which can be used to create software solutions to an enormous range of issues. Digital transformation can give airlines real-time access to multiple customer and flight databases, and to the APIs used by other organisations. This in turn can provide opportunities for the airlines to expand their range of product and service offerings.
The digital ecosystem also enables airlines to present travellers with simple and accessible flight options across different service routes, when booking multiple flights to get to their destination – without the need for establishing formal partnerships between the various carriers.
Data and analytics lie at the heart of most digital transformation endeavours. With predictive analytics, customer insights can enable an airline to predict the likelihood of sales at an individual level, and to project likely income at a corporate level. Multi-channel analytics allow organisations to track customers through their entire experience via multiple touch points, including call centres, corporate websites, mobile apps, and value chain partners.
Other types of analysis can yield benefits for airlines at the operational level. For example, weather analytics can provide real-time insights that allow carriers to alter their flight paths in response to varying conditions. Big data analytics can enable airlines to predict potential traffic, and the revenue from new routes.
With online platforms and third-party apps offering instant price comparisons or bundling flights into a total travelling experience for passengers, travellers can afford to pay little attention to a particular airline’s brand, and treat it as a simple commodity. Projects like IATA’s NDC initiative can empower airlines to seize back some of the control and relevance of their brand. Digitally transformed airlines can also use social channels, integrated data sources, and analytics to help promote their brand more effectively to customers, and to encourage repeat business.
More generally, a report by Accenture estimates that digital transformation in aviation will create an additional $305 billion of value for the industry, over the next decade. Benefits to consumers are valued at $700 billion. In addition, digital initiatives will play a role in reducing the environmental impact of travel and improving safety, security, and cost.