Airlines and technology: The ‘unfair advantage’ of LCCs

• Travellers now want something special and not mass-produced
• Big data analytics is key to personalising travel

AIR travel has come a long way since the days when meals were served with silverware and smoking was legal. Now that ‘everyone can fly,’ it is like the morning commute, with people crammed into the economy class.
 
The commoditisation of air travel has left many travellers seeking for a more personalised travel experience, according to Christian Baillet (pic above), regional director of Airline IT sales at Amadeus Asia Pacific.
 
Madrid-headquartered Amadeus IT Group SA provides technology solutions to the global travel and tourism industries.
 
“Travellers want something enjoyable, and not be one of the millions lost in an airport,” Baillet told Digital New Asia (DNA) in Singapore. “Airlines need technology and personalisation to support these needs.”
 
But this is also where the low-cost carriers (LCCs), which have a distinctly different legacy, are pulling ahead of the classic full-service carriers.
 
“People in full-service carriers come from structured programmes that have a long history and are driven by operating planes and engineering,” Baillet said.
 
“LCCs are generally new airlines, with younger teams set up by people who come from consulting or consumer goods backgrounds,” he added.
 
LCCs have an ‘unfair advantage’ over full-service carriers, in this regard.
 
“They come with a generation of knowledge in retailing, merchandising, and personalising,” Baillet said.
 
“The big challenge is for full-service carriers to catch up with that mentality – it’s a lot about corporate culture,” he added.
 
The direct distribution model that LCCs use also helps them in reaching out to their customers, making it easier for them to merchandise travel.
 
“As soon as you distribute through multiple partners, and also partner other airlines, you have to ensure everything you sell is compatible across this more complex world,” Baillet said.
 
“Full service carriers are now trying to get on board on that, but to do that, they will need to go through cultural change,” he added.
 
An example Baillet cited is a customer who has booked a seat near the emergency exit, on a flight that is later cancelled. When the airline reschedules the flight, the customer would still expect an emergency row seat.
 
Airlines would need to be able to manage these services across the chain of events, he argued.
 
The need for BDA
 
To personalise the travel experience, airlines would need data.
 
“You need to understand your travellers, you need to have data about your travellers, you need to be able to analyse that data, and find out what it means,” Baillet said.
 
“Once you find out what it means, you need to be able to leverage the data to push personalised packages to customers,” he added.
 
Big data and big data analytics (BDA) are buzzwords being thrown about quite often these days, with some labelling it vendor hype while others believe it is key to business transformation – or even just staying in the game.
 
Baillet thinks it is grounded in reality. Citing growing computing power and how software analysing data is becoming easily available, the tools are there for airlines to utilise BDA to better understand their customers.
 
Not just analytics

Beyond data analytics, airlines also need to create a merchandising platform at the centre of their operations, according to Baillet.
 
This platform will allow airlines to dynamically steer offers to customers based on the analytics gleaned from their data.
 
“Then it is about connecting all this on one side to retailing, their e-commerce site, global distribution system, and other airline partners,” Baillet said.
 
“[And] on the other side, connecting it to the airline’s operation systems and the passenger service system,” he added.
 
A global distribution system (GDS) is a network operated by a company that enables automated transactions between third parties and booking agents in order to provide travel-related services to end consumers.
 
What the future holds
 
There are two key areas which airlines have to grapple with in adapting themselves to better serve travellers, according to Baillet.
 
The first is getting their people to come to grips with technology. The second and more important one, is “the cultural aspect – it is how you gear your organisation,” he said.
 
“What you see in airlines often is when the marketing team wants to come up with an offer, and just puts it out in the market.
 
“The problem is, what do you do in the backend with the people running the operations?” he added.
 
Airlines also need to adopt a broad perspective in approaching the needs of customers, and it is no longer just about unbundling services.
 
“Now it is about creating value-added services on top of what you offer – for example, charging for emergency exit seats or limousine transfers,” Baillet said.
 
“What airlines are doing more and more are ‘fare families,’ so travellers can buy exactly what they want, not more or less,” he added.
 
Fare families are a group of fares that give customers flexibility in choosing what extras they want, within the class they want.
 
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