By Eric Leopold, Director, Financial and Distribution Systems Transformation, The International Air Transport Association (IATA)
When airlines were at the forefront
Long before the development of the Internet and Artificial Intelligence (AI), the airline industry was arguably at the forefront of technology and innovation. As far back as the 1970s, airlines managed to connect travel agents to their mainframes to access seat inventory in real-time, and to connect with airports around the world to access passenger information. Before AI, aircraft could take-off, fly around the world and land safely on autopilot. Airlines were leaders in loyalty programs and yield management, using the latest technologies of the times.
Digital customers raising expectations
Fast forward a few decades, the technology that enabled the air travel industry (airlines, travel agents, airports) to be a global, interconnected business, has become a legacy preventing it from embracing the change needed to meet the new customers’ expectations. Indeed, new companies have emerged, leveraging new technologies, setting the bar in terms of customer experience. Several companies have taken an edge in the digital world, Google-Amazon-Facebook-Apple in one part of the world, and Baidu-Alibaba-Tencent in another part of the world.
Digital customers, who have daily interactions with GAFA-BAT, are expecting a seamless, frictionless, mobile experience. They require instant information and answers to their questions. They think they deserve personalized, customized, proactive offers and messages. They believe in choice, transparency, and speed. When confronted with the air travel experience, customers may not always get the outstanding digital experience that they desired.
Becoming a digital retailer
In 2018, working with our members, the International Air Transport Association (IATA) introduced a vision of the Digital Airline, representing what an airline could look like in 2025, once it has completely redesigned its processes to meet the expectations of digital customers.
When confronted with the air travel experience, customers may not always get the outstanding digital experience that they desired
Since the early 2000s, the air travel industry has transformed itself. E-tickets have replaced paper tickets. Boarding passes have gone mobile. Real-time baggage tracking is becoming a reality. Differentiation of airline products and ancillaries is happening across all channels, including travel agents. Payment is moving from credit cards to mobile. Unfortunately, some areas don’t evolve at the same speed. The experience at the security checkpoint has been enhanced but still follows the process established decades ago, with metal detection and x-ray scanners but without leveraging data.
IATA’s Digital Airline vision includes some provocative statements about what the customer experience will look like in 2025. One element is payment. Today the norm for online payment in the Western world is the credit card. But in China, which is expected to surpass the US to become the world’s largest air travel market in the next 5-to-7 years, it is normal to pay with a mobile wallet, either Alipay or WeChat Pay. The experience is more user friendly than using a card (no number to share), it is also safer (no risk the card number will be stolen). It’s also cheaper for the merchant (a QR code replaces the card reader). Does this mean that the “new normal” in 2025 will be a customer experience of frictionless payment without card?
Unlearn and build together
The journey to the Digital Airline includes drivers and challenges. One driver is the ability to meet digital customer expectations. It’s also the fear of missing out the transition to a new world. One challenge of transformation is to have the right mindset and the right skills. Many changes are impacting processes that existed for decades, making it difficult for people to think different, to imagine a different future, and to take the risk of changing something that works.
The solution we propose is to unlearn the way we do things. Not because it does not work. It works, it enables moving people from A to B safely at 800 km per hour. But what made this industry successful for the past decades will not necessarily guarantee its future for the next decade. We need to unlearn how we distribute airline products and how we interact with customers. Once our mind is fresh, we can rebuild together.