The future of air travel retailing
Travel is a personal experience, whether you are traveling for leisure, business, or a combination of both. When people travel, they dream about exotic places, the opportunity to meet new people, make connections, create partnerships, or drive new business. There are thousands of travel technology topics I could write about, but with the IATA Airline Industry Retailing Symposium kicking off Oct 29 in Bangkok, I wanted to take a moment to suggest what may be in store for the future of air travel retailing.
To start a conversation about the future of air travel retailing we have to start with the customer. Customers are no longer looking to get on a plane just to get somewhere; they are looking to get an experience. As such, airlines should move away from selling “a seat” or a “destination” to selling an experience tailored to the customer’s needs. And that experience should be shown via the channel their customers most like to engage, at the time, and place, they are most comfortable doing so.
The air travel landscape
There is a thriving ecosystem in travel, both for travel suppliers and travel sellers. There are established companies that have been in this space for long time, like Qantas that is almost 100 years old, or Sabre that is more than 50 years old, and there are startups popping up every day.
No matter how long a company’s been around, technology is playing a huge role. For example, 100 year old airlines like Qantas wants to increase customer intimacy and create a real-time platform for customer insights for their crew. While 20 years old travel sellers like Expedia wants to delight their customers when they come to their site by providing relevant, timely, and accurate information.
It has never been easier to experiment and try out new ideas: with 13+ years of experience, AWS provides a platform of over 175 services that out-of-the-box customers can experiment at scale, create innovative solutions, and only pay for what they consume.
At AWS, no matter what stage you are in of your digital journey, be it a 100 year old company with complex and legacy infrastructure, or a couple of guys in a garage with the next big idea, we can help achieve your business objectives. We have stories with customers like Qantas, EasyJet, Ryanair, Dohop, Traveloka, MakeMyTrip, Skyscanner, Expedia that are innovating every day in AWS. Our vision is to help unlock all the potential that this vertical has to offer.
The role of travel sellers in a retail environment
The line between travel sellers and travel suppliers is getting blurred. Before the digital age, there were mostly traditional players, like travel agencies, at the airport or at the street corner. Now, you have digital counterparts like Expedia, Skyscanner, and others. Airlines are also getting better at understanding their customers, providing tailored products, and becoming effective travel sellers. You also have new channels, like chatbots, that make travel products more accessible than ever. Everybody is now reachable via their phones and watches anytime and anywhere.
“I think the personal touch, the connection between traveler and the travel seller, that experienced travel agents gave in the pre-internet days, is being missed.”
Technology enables this proliferation of sales channels, accelerated creation of new ones, and innovation on existing ones. However, I think the personal touch, the connection between traveler and the travel seller, that experienced travel agents gave in the pre-internet days, is being missed. We went from a relevant, high touch and tailored service, to a dry, self-serve, and see-it-all service, where we are constantly flooded with products, promotions, and information.
The airlines understand this, and they are making great strides with their website and digital assets to better understand their customers not only on their purchasing habits (the when and where) but also on the past travel experiences. This allows them to offer fewer, but more relevant — products and services – the ones that are right for you.
With an aim of improving the customer experience, we’re seeing an uptick of interest in Amazon Connect (call center), Amazon Lex (chatbot), development of ML/AI models via Amazon SageMaker. We also see more travel customers using new services like Amazon Personalize (personalization engine), Amazon Forecast (forecasting engine), and voice via devices like Amazon Alexa. Rather than airlines trying to build these solutions themselves, they can use the collective experience and technology of AWS to make it possible and iterate from there. We are only at the beginning, but this will accelerate further.
What our customers are realizing, is that retailing is not only selling different products or rich content, but also providing the right offer to the right person, at the right time, via the right channel. They also realize the need to continue the customer experience in whatever channel their customers were engaging, so you can have a continuous and seamless experience throughout every channel. For example, picture a situation in which you see a package on your smartphone while on the subway, then, when at home you ask Alexa to buy that package. Alexa completes the purchase but machine learning alerts the airline to the fact that you may have made a mistake when booking because you accidentally booked your return trip to a city to which you’ve never flown. So an agent calls you on the phone to confirm and correct the details and you proceed to purchase it with your credit card number via Amazon Pay. This automatically triggers a confirmation directly to your email. Pretty cool, I would say.
Airlines vs other retailing industries
Retailers of any kind want to better know their customers and have a seamless experience regardless of if the customer is shopping online, in the store, or on the phone. And most retailers work with low margins, care about the brand, and try to differentiate themselves. As such, there are similarities between airlines and traditional retailers. But while retailers have inventory to manage and distribute, and warehouses to store unsold products, airlines have the additional challenges of (a) safety and security, (b) big expensive assets (planes) to buy, track, and manage, (c) shelf life of the product, and (d) lack of variety of the product to sell.
Whereas a retailer can store unsold products, ask for more when inventory is low, change prices to push foot traffic, shift location or rebrand it, airlines simply can’t. Their core product at the end of the day is a seat. As soon as the plane takes off, the value of the unsold seat and everything you can tailor your package around that seat, is gone. As such, airlines need to come out with “more” products around the seat, and move from a “seat–based” to “experience-based” transaction. Engage the customer when he is dreaming about traveling, and also after he reaches destination or when he is back home.
On the bright side, although airlines customer purchase frequency and habits vary (from once a year to many times a year), airlines know a lot about their customer both in terms of what/when they shop as well as when they “use” the product. Retailers, on the other hand, have limited capabilities to collect this information, given that when the customers go to a store, rarely they give their name, date of birth, passport information and/or emergency contacts an let alone be right there when they “use” their product. And it’s even less often that a retailer actually hears back from their customers on or after they use/wear/play with their product. With the right tools, airlines can use this information advantage to their benefit to enhance the customer experience.
Think about if the airline/travel seller can get a marketplace where third parties can “post” additional services to bundle with the airline “seat.” That is transforming the “seat,” into a “package,” and then into an “experience.” It may help to partner with someone who can help you create the experience. For example, a third party can offer the “experience” at the airport like a massage while you wait, a book to read, translation/interpreter services when you go to a foreign location, buying flowers you forgot to buy for your loved one on your way back home, and anything in between.
At AWS, we have technology that enables all of these ideas. Whether you’re a retail customer or an airline we offer the same technology used by Amazon, the largest online retailers in the US, that is inspiring millions every day. In the end, you can have the customer data in a data lake, the Amazon Personalize engine for personalization, all the analytics you need, the marketplace building blocks, and the messaging system that retailers like Amazon are using today.
The Airline booking experience in 2025
I believe in five years’ time, we will go back to a “travel agent” experience, where a new digital travel assistant helps you quickly choose the right product because it understands what you need.
It will be a voice interface, like Alexa, and it can be powered by any travel seller, like an airline or OTA. There will be multiple “Alexa” personas, with different voices and personalities. For instance, you can have “Antonio,” the Alitalia travel agent. You can call “Antonio” (or “Tony”) with your Alexa device, “Hey Alexa, can you call Tony from Alitalia?” Then, a helpful, courteous, and charming voice in an Italian accent will greet you: “Hello, how can I help? Are you trying to go back to Venice for Christmas?”
Using Amazon Machine Learning and the vast amount of data that “Tony” has available, like your MilleMiglia account, the date/time you are searching, the knowledge of your shopping patterns and preferences, and your past trips, it can recommend the 3 “packages” that are right for you. We will go from a “self-serve” situation like today where we shop through hundreds of products, to only the “packaged” that are relevant for you.
AWS will be happy to enable this and many more innovations, and help all the travel companies out there achieve their vision for 2025 no matter how old they are or where they are in their cloud journey.