ANALYSIS: Why airlines need to think more digital

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Airlines are increasingly turning to big data and business intelligence algorithms to help shift seats at the last minute and mitigate the impact of delays.

For example Pascal Clement, head of Amadeus’s travel intelligence unit, says a newly developed engine can pull data from multiple sources to provide a more insightful overview of an airline’s business.

“We’re looking at tracking passengers in real time,” he says. “If the airline knows someone is stuck in a taxi close to departure they can sell the seat, rebook the late passenger on the next flight, and send a message to tell them not to worry and that everything has been taken care of.”

Clement says the algorithms would also allow airlines to evaluate sales history and booking patterns to make decisions on how to sell last-minute seats.

“There may be two seats left on the aircraft only 24h before departure, and your data tells you that those seats are seldom sold. So using your passenger data, you send a special offer to someone who flies regularly on the route.”

This same technology and data processes should revolutionise ground operations, saving airlines millions and enhancing the passenger experience.

“Big airlines have huge operations on and off the airfield,” says Clement. “Sources of data from air traffic control, fuel management, crew, maintenance, catering, cleaning and connecting passengers need to be co-ordinated. A flight only has to suffer a 15min delay and everything is knocked out of sync.”

Clement says technology was automating these challenging manual processes. “You can now press a button and reorganise the whole day’s schedule. The algorithms are programmed to make sure loss is minimised.”

Airlines are failing to devise adequate online hotel sales strategies. That’s the view of Daniel Hest, a senior director at Orbitz Worldwide, who says many carriers were still using basic white label systems and not maximising a potentially lucrative channel.

“A small group do an effective job selling high margin hotels,” he says. “There is a lot for others to consider in terms of trends and best practice.”

Hest says data and big data meant airlines should better understand consumer behaviour and be able to target more relevant offers.

“You need a relationship so you understand what they like and how to entice them back.”

He advised airlines to focus on optimising their “website real estate” and underpin their online channel with a call centre operation.

“It is important to know when to make the option to buy a hotel room available in the booking process or when to market direct email offers post-air fare purchase,” he says.

Research findings published by Amadeus reveal that 79% of global travellers would prefer to buy extra travel services, such as hotels, directly from airlines, as opposed to via online and offline travel agencies.

Amadeus believes that airlines could make €35 ($48) extra per passenger by better personalising offers, according to a new study. Its research found that 26% of travellers were more likely to respond to messages tailored to their personal interests.

The study – entitled Thinking Like a Retailer: Airline Merchandising – also found that 22% would respond to location-specific promotions, such as receiving a text message at the gate offering an upgrade.

Julia Sattel, senior vice-president of airline IT for Amadeus, says: “To compete in the highly competitive and fragmented travel sector, airlines have to act more like retailers and adopt an effective approach to merchandising, in which personalisation takes centre stage.”

Lawrence Lundy, strategic consultant for research company Frost & Sullivan, says the concept of retailing would be increasingly important as airlines evolve from being providers of one core product – flights – to travel experience businesses.

“Understanding where, when and how to merchandise products and services to the traveller is vital to retailing effectively, and this study aims to cast light on precisely these elements of a merchandising strategy.”

Among the report’s other key findings, a quarter of travellers want to be targeted with offers soon after arriving home from a trip.

Lundy says airlines would require a change of mindset in order to recognise that the customer relationship continues after the flight lands.

The research was compiled after interviews with senior airline executives and more than 300 business and leisure travellers from the UK, Germany, Brazil, Singapore and the USA.