Blockchain, AI, and IoT will transform the airline industry

By | 5 minute read | May 14, 2018

Passenger demand will double in the next 20 years. Airports can't grow much, so airlines must harness technology to better serve customers.

Over the course of 50 years in the airline industry, Nawal Taneja has seen it all. He’s served as the president of an airline. He’s led a research organization that provided consulting services to airlines. He’s advised government agencies on the aviation and tourism sectors. Taneja has also channeled his experience as an airline business strategist to write 10 books for practitioners about the industry, which are available from Routledge Books.

Today, Taneja is an Executive-in-Residence at The Ohio State University’s Fisher College of Business, and a distinguished fellow at the University’s College of Engineering. Keeping an eye on developments in both business and engineering affords him a comprehensive understanding of the industry as it evolves. In this interview with IBM, Taneja discusses the unique challenges facing the industry today, and the role technology is playing to address them. 

What are the major forces shaping the airline industry today?

Customer expectations and behaviors are changing, and the industry is becoming increasingly complex. But at the same time there are emerging technologies that can help airlines cater to the needs of the changing customer base and manage the complexities of the business to make operations and services more seamless.

The International Air Transport Association is forecasting the doubling of traffic in the next 20 years. The big airports are already constrained; they can’t expand that much. So where is this expansion going to come from? Again, we’re talking about technology. Biometerics, roving self-service check-in kiosks, roving intelligent robots that label bags and transport them to the correct loading points, and self-driving cars are just a few examples of such technologies.

What’s the opportunity, in your view, presented by AI?

In the commercial airline business, they call operations regular or irregular. When I started my career, there were irregular operations once a week or month. Now, irregular operations are regular. They’re happening all the time. Customer engagement in real time and at all touch points, to provide meaningful recommendations, is important for regular operations—when everything is going fine—but it’s even more important during irregular operations.

If I’m sitting on a plane, I’m more concerned about whether my bag got loaded and if I am going to make my connection than whether the flight attendant knows my favorite drink. Various aspects of AI will play an essential role in that engagement. On the operational side, AI is beginning to add much value in aircraft maintenance planning by increasing the speed of human decision making and reducing human error, when looking for anomalies, for instance.

How can blockchain improve the industry?

Blockchain technology will help to reduce costs, increase revenues, and improve customer service and experience. An example on the commercial side of the business is the potential impact blockchain will have on distribution. It will change fundamentally the role of, and charges related to, intermediaries.

Airlines having direct access to customers will not only reduce distribution costs, but also provide better ways to engage with customers. Airlines can, for example, present more personalized content. On the operations side, blockchain will bring about step changes in tracking assets, physical and human. Physical assets can be entire aircraft, individual parts, maintenance equipment, baggage, catering trucks, and so forth. Human assets can be the location of flight attendants, gate agents, ramp agents, mechanics, etc.

The bottom line is substantial reduction in costs (operating and investment) and an increase in the revenue generating capability of assets, not to mention the higher value relating to customer experience. Blockchain can also help in all these areas when it comes to flight planning.

We often talk about how technology can improve the airline customer experience. What about the employee experience?

On the commercial side, we ask, “What if you could make the right offer to the right customer at the right price through the right channel?” On the operations side, we can ask, “What if we could get the right part for the right airplane at the right gate with the right mechanic with the right tools?” Technologies that can help are data, mobile communications, AI, and IoT.

Take an airplane engine, for example. An airplane engine now has sensors that can tell you all sorts of things about how it’s working. But what are you going to do with that data? How will you store and analyze it to look for patterns, and use it to predict that one particular component, for instance, is going to fail in the next 20 hours? And beyond that, how are you going to use that data to know when and where exactly to replace that part?

Prescriptive analytics is going to change the operating costs of the airplane. It’s going to change the investment cost, it’s going to increase revenue generation capability, and it’s going to contribute to an improvement in on-time performance and, in turn, customer satisfaction.

There’s a lot of frustration directed at airlines these days. What’s the cure for that?

The frustration relates to friction at almost every touch point—from shopping to baggage collection. Consider the complexity associated with navigating an airline’s website— the lack of transparency with some fares, and the uncertainty involving the best time to make a booking in light of the dynamic pricing aspect of the airline business.

Consider next the hassles relating to the processing at airports— not so much the length of time but the uncertainty as to the amount of time needed. Airlines are making progress, for example, now with the capability of passengers to track their own bags. Besides making booking flights a lot less complex, technology will enable airlines to get the right information to the right customer and the right employee at the right time.

What’s holding airlines back from making some of these changes?

It’s not that executives at airlines don’t know what to do. They know what to do but they’ve been constrained, at least, in four ways. First, they have not had access to the right data. Airlines do have lot of data but the data is siloed and is transactional data not behavioral data, and it’s structured data not unstructured.

Second, they are reluctant to share the data, for example, with airports.

Third, they haven’t had access to analytics. There are at least four kinds of analytics you need to have—descriptive, diagnostic, predictive and prescriptive. Airlines have used descriptive and perhaps diagnostic analytics, but not predictive and prescriptive analytics.

The final barrier is that they have been working with legacy technology systems. Those are all being changed but they’re being changed slowly.