“In a world of increasingly demanding consumers, cost-cutting (in airport selection) is not necessarily the most effective way to achieving long-term profitability.”
Experience: That’s the Big Thing for Air Travel in 2019
Reading Time: 6:30 minutes
By Iain Macpherson — VP, Travel and Transportation Industries, SAP APJ at SAP
Yes, there’s disruption. Yes, we need innovation.
In every sector, the race is on. Race to be ahead. Race to innovate. Adapt and transform, we hear – or risk becoming irrelevant. Forever.
This is no different in the air travel industry. Faced with the push of the digital revolution and changing consumer demand, airlines and airports are looking for ways to makes their businesses more intelligent in order to deliver memorable experiences
Technology is harnessed to drive such innovation in many cases. After all, “it’s the digital era”, “ you need to act now”, and “benefit from being an early adopter”, we hear. Yet, while many technological initiatives are delivering great outcomes, the approach ought to be re-examined in others.
The fact is, air travel players need to ask these critical questions when faced with the next new shiny digital capability: How quickly do we really need to be moving regarding Trend X or Trend Y to stay competitive? How will it affect my core business? And how does it affect my customer’s experience?
But what’s more critical is this: Adoption
Indeed, in an industry where end-user experience is one of the biggest determinants of success – and more so when fueled by the viral effects of social networks – long-term profitability is not just about automating to cut costs or demonstrating first-mover superiority.
What’s more critical is this: Adoption.
What do I mean by that? Let me provide an example.
Electronic boarding passes are becoming commonplace. It seems to make sense. Passenger Jim makes an electronic booking and, receives an e-ticket. It allows him to check-in on mobile, select his seat, and ensure other flight details are accurate, before he then receives an electronic boarding pass with a QR code on his mobile device
Then Jim goes to the airport. At the immigration checkpoint, he unlocks his phone, locates that QR-code, and shows it to the immigration officer. Then he moves on. That is, until Jim comes to the baggage security checkpoint prior to the gate entrance. He’s got to fumble for his mobile phone, unlock the phone, locate that QR code again, and show the image to the security officer at this checkpoint.
Then the airline’s ground crew check the boarding pass again before he gains access to the waiting area so he as to go through the whole process again.
So that’s it hopefully. But some airlines require you to show the boarding pass upon boarding.
Many Jim’s will be thinking at this point that the airline should have just given him the option of printing a paper ticket, perhaps on a self-service kiosk in the departure hall. It would have been much more convenient for him to whip it out together with his passport any time when required. For those who prefer the assurance that their tickets are always safely in the mobile phone that’s always in their hands, they have that option…so long as it’s always charged.
Now, the issue here isn’t whether paper or paperless is better. Neither is it about whether we should automate. The key issue is adoption. When implementing a new process or feature, how do we adopt it in such a way that it still delivers the best customer experience?
Forget the digital transformation frenzy: In 2019, focus on making it work
Too often, when faced with the next new technology that promises to be a gamechanger, the air travel industry can get sucked into the frenzy “because our competitors have started doing it”. To an extent, this is understandable because the air travel industry is extremely competitive. Yet, what will make it or break it really boils down to making it work.
Being pressured into adopting something companies are not ready for can be expensive. This is not just in terms of the financial investment of the technology. There are also the costs of training, resources spent in overcoming resistance and cascading initiatives organization-wide, plus the downside when an airline’s or airport’s image is affected.
So, my key message is this: The biggest issue for the air travel industry in 2019 and beyond? Relook the fundamentals. See how technology and digital innovations can iron out the kinks you’ve always wanted to resolve or redefine your business models and processes to transform your value to customers.
Example: How enhancing adoption efforts can drive profitability
Let me give another illustration on this.
User experience is now driving loyalty and that trend will continue. Airports have one queue for immigration and another for security. I have certainly yet to see any different. Sometimes they are directly one after the other, and sometimes they are in completely separate places and stages in the customer journey and airport experience. .
Now, at each of these there are often long queues. And ask any passenger: It is often in these queues that frustration starts to mount. So much so that when it comes to the nice part – a bit of shopping in Duty-Free, a tad of pampering in the First-Class lounge, a glass of champagne in Business Class, or a meal at one of the F&B outlets – the mood for enjoyment is gone, as is the revenue earning opportunity for the airport and it’s vendors . This is worse when flights are full.
Efforts that airport retailers and airlines have painstakingly put in to attract the customer, deliver a ‘wow’ experience, or maintain customer loyalty have turned to vain.
But that’s the retailer’s or airline’s issue, right? Not the airport’s? You could say that for airports who are concerned about maintaining status quo. But look at the space for innovation for airports that want to drive profitability and generate new value.
This is an excellent opportunity to look at how two traditionally separate processes run by different service providers can be amalgamated using technology and process innovation. From my observations it takes around the same time to go through most ‘manual’ immigration checks as it does to go through a security check. So imagine if those could be combined into a single process. By the time I’ve had my passport stamped, my bags have been scanned and checked, and I can be on my way. Better still, when we see more use of biometric scanning technology and data and analytics to fully automate the immigration process, one of the hurdles all but goes away. When facilities providers (airports) deliver a better end-user experience for ‘their’ passengers, to help retailers, airlines and other service providers increase their revenue, it gives airports greater control in managing airport fees and commercial revenue.
It doesn’t have to boil down to keeping charges low to attract airlines or retailers. An alternative could be “99.9% of passengers who pass through airport A are delighted” or “over 95% of passengers who pass through airport A makes a purchase surpassing X dollar value”. The starting conversation is similar: In a world of increasingly demanding consumers, cost-cutting (in airport selection) is not necessarily the most effective way to achieving long-term profitability.
Relooking fundamentals in 2019: Work with know-how
In the new year, rather than focus on “what’s new and how do we innovate based on them”? Look at the fundamentals and think about where innovation is long overdue.
If radically changing what appear to be core processes is a little daunting, work with people or partners who have the know-how. Develop the strategy. Harness intelligent technologies and innovations. Set the direction. And go.
That’s probably much more of a trendsetter (than the adopting the next trend to come along).
. . . .
Iain is passionate about helping the Travel and Transportation sectors transform in the digital age. He firmly believes the simplifying business models and processes, while leveraging intelligent technologies – all with customer-centricity at the heart of it – is the crux of success.
He’s always open for discussion. Drop him a line!