3 airline industry trends – and how you can capitalize
The airline industry is a relatable industry – everybody has stories to tell about their latest trip. Some good, some bad. Because of this, there are many opinions about what the industry must do in order to innovate. A thriving ecosystem of startups has sprung up that aim at “transforming” the travel experience, mostly coming from their founder thinking of a “better way” to solve problems.
Some of the innovations created by these startups have already transformed the industry, but innovation is not just limited to startups. Airlines, which have expensive assets like planes, and important functions like helping people travel for work and pleasure, want to take advantage of technology, and innovate at scale. They find it paramount to easily test new ideas, see if they work, and scale them into production. They want to be more agile, make decisions quickly, and go to market with updated products. They want to optimize their yield, optimize their asset utilization, and ultimately double down on what differentiates their business without worrying about “running data centers.”
Whether it’s a startup or a large enterprise — technology is key to their differentiation. All companies want to “own” the customer experience and understand their customers better. But how? Three key trends, enabled by technology, are emerging to help companies achieve their goals: (a) sellers becoming retailers, (b) constant customer engagement, and (c) driving operational efficiency.
Sellers becoming retailers
The first trend, sellers becoming retailers, is the ability to leverage the data that companies have available on their customers such as where, when, and what they are searching for in order to serve them better by offering tailored products. It’s no longer just enough to list your inventory or to show the same inventory all customers. Airlines particularly are looking at the Amazon selling experience, and take it as a model.
Today, airlines and startups alike, can use new services like Amazon Personalize, which uses the same algorithm used by Amazon to personalize products and services, marketing campaigns and push notifications. A recent implementation of Amazon Personalize with Domino’s indicated an increase of sales by simply targeting the right customer, in the right place, with the right message.
Constant customer engagement
The second trend, constant customer engagement, is about constantly communicating with the customer before and after they shop. This can include when they go to the airport, during the flight itself and even while they are at their destination. The messages they receive vary, can be reactive or proactive, and are delivered in various forms such as a tailored marketing campaigns, chatbots, text, or email. This is driven by the customer expecting a seamless, connected end-to-end travel experience.
AWS offers services like Amazon Pinpoint that can programmatically control the push messages depending on customer profile, the time of day, the channel the customer want to engage, or other conditions (e.g. weather and location).
Driving operational efficiency
The last trend is all about the need to drive operational efficiency. Airlines want to be able to identify how to get more value out of current assets such as planes, personnel, and gates. For example, we have airlines that are monitoring the onboarding and deboarding process from the plane to understand optimal turnaround time, and factors that can cause delay. With video analytics, they can monitor, predict, and preempt delays. For example, the USAF is using IoT to predict repairs and increase fleet availability, reducing the cost of preventive maintenance.
Putting it into practice
None of these solutions are perfect with the first attempt. The secret of innovation is to experiment, and experiment a lot. As soon as you have an idea, try it out and see how it works. If it is a winning idea, you want to scale it up as soon as possible. If the idea does not work, you want to experiment on something else. To enable this, you need a mechanism that reduces the cost of failure. In fact, the lower the cost of failure, the lower the risk for the organization. The AWS Cloud allows you to do this because (a) it offers 165+ off-the-shelf services you can play with, (b) you pay for only what you use, and (c) you can instantly scale with a click of a button.
Companies also must enable their workforce to take advantage of this mechanism. You must change the culture so that it promotes innovation and rewards those who produce something valuable. This is a shift in philosophy and way of operating. It is like transforming your organization into a startup: you must communicate clearly that this is a major business priority and empower your employees to innovate. This is accomplished by providing training, creating career paths that bolster training and development, and rewarding employees by giving them “ownership” of the innovation process. Finally, you need to create a culture in which it is OK to fail.
At Amazon, this is what we do every day. We have a culture of innovation, where everything is driven by key tenets that promote ownership, diving deep, and curiosity. We not only hire builders, but also we provide them the mechanisms and the right incentives to build.
I believe the airline industry is going to disrupt itself from the inside out. For many years, airlines have been afraid of disruption but now, they have the ability to innovate at scale and deploy the know-how of the business to differentiate themselves. Businesses that can leverage technology to capitalize on the three trends discussed will come out ahead.
I am expecting travel leaders like Cathay Pacific, Qantas, Ryanair, and EasyJet to create the disruptive models that the industry has always been looking for. Some of which they are already doing, and at AWS we are happy to provide the technology and innovation required to make it happen.
Learn more at aws.amazon.com/travel.