The way people buy airline tickets has changed dramatically over the past 5 years. Due to rapidly evolving competitive landscape of digital economy, the airline product has been unbundled such that travellers are offered everything from basic seat selection to upgraded seats as extras over and beyond the basic fare.
From the moment a passenger completes the initial purchase of the ticket they are inundated with offers for upgrades and promotions. Notices such as, “Upgrade to business class,” is displayed at every single interaction – whether buying tickets, checking in or arriving at the airport gate. However, these recommendations to travelers aren’t always relevant, seamless or even integrated.
It is easy to see why airlines are getting competitive with advertising when it comes to promoting these upgrades. Ancillary services, such as baggage fees and on-board food and services, generates over $67 billion annually for global airlines. These services offer customers richer, more engaging digital flight shopping experiences, while generating more revenue and profit for the airlines.
With 40 percent of all travel bookings being made on mobile devices, airlines need a solution to accelerate a digital strategy to capture these new revenue streams across all the touch points throughout the traveller’s journey. Most airlines have plenty of well-trained, friendly and empowered staff on hand to support travelers.
Unfortunately, the tools available to staff may not have the capabilities to truly understand what specific passengers need, or have the capability to provide relevant targeted offers.
Travelers are less pleased by their multi-channel digital experiences, which are delivered by way of airline websites, mobile apps and a host of social channels, as they tend to provide generic offers to all passengers regardless of circumstances. A digital commerce engine that can provide dynamic air and ancillary pricing provides the airlines with an opportunity for revenue expansion through optimized offers across all channels and touch points.
By adopting a digital strategy that embraces mobile, analytics and cognitive solutions, airlines will have channels that are better coordinated, operate in real-time and can be personalized to the travelers liking.
For instance, travelers could set their profile to ensure they are getting all the components that are relevant and of interest to them, such as, seat selection, meal choices, access to lounge or in-flight entertainment. This information can then be accessed from virtually anywhere – a mobile device, an airport kiosk, onboard the plane, from the call center, as well as by agency partners.
Airlines will also be able to connect to the customer directly to sell added services like hotels, car rentals and excursions, an offering that has traditionally been owned by travel intermediaries. This expanded business model will result in increased revenue and margins as airlines will be able to increase the share of the spend on the entire trip. Additional services such as hotel, car rental and excursions typically have higher margins than the base airfare.
To better support e-commerce in the aviation industry, IBM recently partnered with Datalex an industry leading supplier of Digital Commerce Platform for airlines to transform how airlines understand passenger behaviors to develop extremely relevant offers and promotions. With IBM’s capabilities in cognitive systems, cloud services for airline commerce tools, and supporting data and analytics, coupled with Datalex’s digital commerce platform, the companies can deliver a solution that enables personalized travel retailing to drive new revenue for the airlines.
The industry continues to operate on legacy static rule-based methods for computation of offers and prices. As the volume of variably priced offers continues to expand across an increasing volume of channels, the industry can no longer rely on static rules based methods. we believe the combination of these best in breed commerce and cognitive technologies will revolutionize the airline retailing capabilities.
The IBM Airline Summit 2017, now in its 12th year, is taking place this week in Rome. The Summit aims to bring together senior leaders from our airline clients to explore this year’s theme, “Aviation in the Cognitive Era: new routes to improved customer experience and operations.” Both, IBM and Datalex will be speaking to the transformational efforts underway to improve an airlines bottom line and ultimately enhance their core relationships with targeted customers.
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