FEEDBACK: Is the airline industry becoming like retail?

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London
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This story is sourced from Airline Business
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SITA chairman Paul Coby examines an increasing convergence between the airline and retail industries as customers become ever more connected and the way in which technology developments will shape both their futures

A popular theme for airline industry conferences and discussions is how the sector is becoming increasingly like retail.

This is perhaps a bit unfair since, in my view, retail itself is in many ways catching up with the air transport industry. In the UK and the USA many retailers are now going through the "between 20% and 30% of revenues online" barrier - in other words, the point when online moves from an interesting additional channel to market to the mainstream.

This is a stage which most airlines reached mid last decade. Nothing surprising here, given the different nature of the product that airlines and retailers sell - one which is simply a permission to fly and the other a physical product in a shop, or ordered online and delivered from the warehouse.

These industries - and arguably most others too - are converging, however. Travellers and shoppers are the same customers, after all. Everyone is connected all the time everywhere these days, through iPads, smartphones or laptops. These devices are increasingly used not just for personal or business use, but for both. Both retailers and airlines understand that a website is not enough. Customers expect the companies they buy from - and interact with - to be present not just online but in the mobile world of tablets and smartphones, and - of course - out there on Twitter and Facebook.

Just as we in 2012 present ourselves seamlessly in multiple channels as individuals, so we expect our preferred airline or shop to be there too. We expect them to communicate with us appropriately, we expect our business relationships to be just as channel-savvy as our personal relationships. So, for a complex transaction like a round-the-world holiday or a complete house redecoration, we expect human interaction and advice in person.

For an update message that our flight is cancelled because of fog or our online order is ready for collection at the store, we expect a message on our mobile device. And, in between, we may be interested in staying in touch with these businesses through Twitter and Facebook, and in looking at their newest products or their newly launched advert on YouTube.

For airlines or retailers that aspire to be brand-leaders, however, even transacting seamlessly across the channels is not going to be enough. You need to be able to engage customers in your product and get them to associate with your brand and its values. No longer is this just about TV advertising - or indeed paying Google to promote your products in its search listings. It is about creating an experience that reinforces customer loyalty and provides your best customers with benefits and privileges they really value.

Some of this will be delivered in-store - or in the lounge, or on board - but increasingly it will be about connecting with them in the periods between shopping or flying.

Airlines - because of the connectivity limitations and long-standing concerns over interference - have been the one place on or above Earth where you could not be connected. In the last few years this has come to an end, and we are seeing wi-fi on board and mobile and internet connectivity increasingly provided or planned. In the same way, we are now starting to see wi-fi provided for free in-store by retailers, with tailored landing pages. This is also being extended into how airlines connect with their customers before and after they fly, such as the Malaysian Facebook for groups application.

Intriguingly, airlines are now looking to retailers for inspiration - John Lewis in London and Tesco in Korea have used matrix barcodes, known as quick response codes, in public places or other stores to sell their online assortment of products. The customer scans the code and then checks out.

These have appeared at several airline retail conferences, presumably because of the potential read-across to airlines which could use onboard connectivity and the entertainment screen to facilitate customers ordering ancillary ranges of products online.

On their websites, airlines and retailers are using the same methods to encourage up-selling and cross-selling across their product ranges. In conclusion, this is what technology has done for business. Increasingly, all businesses - whether selling flights or sofas - are becoming more similar, as customers buy and interact seamlessly with them and each other in the omni-channel world.