However, technology advances, travelers’ rising expectations and airlines’ own requirements to boost profits will drive them to deliver a more personalized customer experience to passengers over the next few years, experts predicted at Partnering for Personalized Travel, an Airlines International/IATA executive briefing, in London on 28 October, held in association with KPMG.
At the same time, third-party partners such as airports and travel agents also are stepping up the type and variety of services they offer air travelers to build their own shares of passenger spend, attendees heard at the event.
But how far will it all go? What do air travelers really want? What problem do they want solved? And who will ultimately ‘own’ the air passenger – airlines or third parties such as airports?
With IATA figures forecasting the doubling of air travel over the next 20 years, and many markets doubling in size every 10 to 15 years, the ability to deliver capacity is a key concern for airlines. But in the face of heated competition from diverse players for air travelers’ money, the nature and quality of passenger experience will be a determining success factor in how airlines ultimately grow their profitability.
Setting the scene at the briefing was James Stamp, KPMG’s Global Chair – Aviation, who noted that passenger experience has been “creeping up on the CEOs’ agenda” over the past 18 to 24 months, prompting far-reaching questions over core business and financial models.
For chief financial officers, “translating customer experience into pounds and pence is difficult,” Stamp said, but then falls into the “traditional problem” for CFOS of “How do I prioritize?”
One hotly-debated topic is the future of loyalty programs, in terms of both their value to passengers and the meaning of ‘loyalty’ to airlines, Stamp said. In considering loyalty, key points to be weighed are the price of air travel to passengers, the degree to which airlines effectively empathize with their passengers and airlines’ ability to differentiate themselves throughout the customer journey without incurring high expense.
The role played by disruption to air travel is also an integral consideration to the passenger experience, and solutions must be examined through “different lenses”, Stamp said. “We have to think about how we deal with disruption in a constructive way.” For instance, if London Heathrow [LHR] is fog-bound, he offered as an example, “which flights do you cancel?”
Also, disruption will occur as airports expand to grow their air traffic capacity, and airlines must recognize that they will effectively be operating through a “construction network,” he said.
Major airlines must test what people want and then look at making fundamental changes to their business models by creating more alliances and more profit-sharing agreements, Stamp said.
Ultimately, he said, the question that must be asked of passengers is, “What problem do you want solved?” Once it is answered, finding a solution is “quite easy,” he said.
However, a further challenge to identifying customers’ experiential desires was flagged up by Airlines International Editor Graham Newton, who put himself in the shoes of other regular air passengers. “What would make me ‘loyal’ is probably delivering those things I don’t even know I want, something I wasn’t expecting or anticipating,” he said.
“Can an airline be all things to different people?” Newton asked.
He added, “Different generations will look at personalization and loyalty in different ways.”
For instance, under-24s recently identified inflight Wi-Fi as the one aspect that would improve their travel experience in research conducted by IATA in connection with its Fast Travel Program. People aged 25 to 44 said that receiving timely e-notifications would improve the travel experience for them, while respondents aged 45+ identified attentive cabin crew as the most critical.
For airlines to offer the Fast Travel Program, which aims to ensure 80% of global passengers will be offered a complete suite of self-service options by 2020, they must implement three mandatory projects around document checking, self-boarding and bags recovery plus one optional project. The three from which airlines can choose focus on check-in, ‘bags ready-to-go’ and flight re-booking.
If it will improve and streamline their journey, research has found that a heavy majority of all passengers—85%—are happy to provide additional personal data, Anne Carnall, Global Implementation Manager for Fast Travel, told the audience. “Passengers don’t really understand why they have to show their passports three different times,” she acknowledged. Implementing biometric identity verification is the solution to multiple passport checks, Carnall said. “It’s more about getting three different stakeholders to collaborate,” she added.
Referring back to KPMG’s Stamp’s concerns about air travel disruption, Carnall opined that disruptions such as delays or cancellations “don’t have to be dreadful.” The greatest responsibility to passengers in such circumstances, she went on to say, is to know where they actually are in order to ease any difficulties they may encounter as a result.
Another measure IATA has put in place to improve the customer experience is the New Distribution Capability (NDC) which is intended to give travel agents the same capabilities as airline web sites to help air travelers select their seats, for instance, and encourage collaboration in personalizing the customer journey. “We want to open up airlines to more innovation,” said David Rutnam, Manager, NDC Regional Implementation.
An example of airline innovation that could benefit more passengers through increased collaboration is an Air New Zealand’s skycouch. “That’s hard to offer through travel agents,” Rutnam said.
He went on to say, “It’s about pushing appropriate offers at the appropriate time.”
Speaking from a third-party point of view, Martin Herbert, KPMG’s Global Customer Experience Lead, reinforced the need for getting the balance right for customer and business alike in addressing travelers’ experiences. Herbert, who recently worked with London Heathrow to improve the customer journey, told the audience, “It’s about transforming the customer experience in a way that doesn’t require over-investment.”
In the extensive research forming the LHR project, 1,800 ‘pain points’ in the customer journey at the airport were identified along with 700 improvement projects throughout 20 key improvement themes.
“The next battleground for airports is in the provision of services,” Herbert said.
Liverpool John Lennon Airport is already addressing that challenge—and daring to compete with airlines—by offering future travelers the opportunity to book flights on its site, pointed out speaker David Bryon, former Managing Director of bmibaby. “They’re going for that land grab. ‘We want to book your flight through us, and then we own you.’”
There is probably no way to future-proof options for improving the customer experience to the extent that airlines can be confident of retaining all passenger spend, the panellists concurred. “I’m not sure you can predict anything beyond five years; you have to future-proof for the short term,” said KPMG’s Herbert.
While the options for airlines to personalize their service are many, IATA’s Rutnam summed up the situation succinctly toward the briefing’s end. “Choosing a bad option is one thing. Doing nothing is not an option.”