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Ey Digital Airlines For Connected Customers
Ey Digital Airlines For Connected Customers
Ey Digital Airlines For Connected Customers
connect with
the connected
customer?
Digital wings are imperative for airlines to
have a long and sustainable flight.
July 2019
2 How do you connect with the connected customer?
Executive summary
43%
As millennials establish themselves In line with the rising demand for
as primary spenders and smartphone end-to-end traveler-centric offerings,
usage becomes more pervasive, the such as additional products and
use of desktop computers to book services (e.g., hotel, insurance and
travel is decreasing substantially. car rental) along with the flight Share of passengers preferring
Mobile technology is becoming an bookings, customers are seeking to use a travel agency, travel
indispensable part of the travel tailored interactions — for instance, management company or corporate
experience as it shrinks the travel demographic-based flight offers travel department to book their
marketplace to a one-stop platform and feasible travel time — at every flights in 20182
by offering a convenient and omni- touchpoint. Consumer data and the
channel experience. Airlines should ability to convert it into meaningful
accept mobile technology as a core insights will be a key source of product
travel essential — rather than a differentiation. Competing distribution
supplementary device — critical to channels, including online travel
customer experience. agencies (OTAs), have long cemented
their position in the distribution
network by providing transparency and
Customer behavior regular interactions. Airlines should
prioritize analytics and data-driven
73%
insights to offer bespoke services
through their direct booking channel.
Additionally, airlines should leverage
OTA channels through the development
The share of passengers who prefer and support of new distribution
to receive real-time information about capabilities (NDC) to expand ancillary
baggage and other travel elements via product offerings.
mobile device in 20181
1
“ Passengers Want More Information, Automation, Control & Privacy but Human Touch Still Important,” International Air Transport Association, 2018,
© 2018 International Air Transport Association.
2
“ Passengers Want More Information, Automation, Control & Privacy but Human Touch Still Important,” International Air Transport Association, 2018,
© 2018 International Air Transport Association.
4 How do you connect with the connected customer?
Customer behavior
Technology-driven Shared economy and new
customer engagement modes of mobility
65%
In a fiercely competitive environment, New entrants have already created
ensuring superior customer a significant disruption in several
engagement has become an imperative industries — particularly in hospitality
for maintaining business sustainability. and transportation — by using new
Passengers willing to share Today, customers prefer high-quality delivery platforms that allow for
additional personal data for digital interactions at every touchpoint, consumption of underutilized capacity.
seamless journey in 20183 and engagement is not limited to the In order to compete in this “sharing
time between take-off and landing, economy,” airlines should consider
but should also include pre- and post- reorganizing or expanding their digital
trip touchpoints. Technologies, such offerings. They can also explore
as robotics and automation, virtual investments in autonomous solutions
reality (VR), blockchain, and cognitive for efficient last mile delivery for
intelligence, could revolutionize their customers.
customer engagement and offer
prompt services and real-time data.
Industry forecast
US$42b
Potential value addition from
aircraft sharing4
3
lobal Passenger Survey 2018,” International Air Transport Association, 2018, © 2018 International Air
G
Transport Association.
4
“ Digital Transformation Initiative Aviation, Travel and Tourism Industry,” World Economic Forum, January
2017, © 2017 World Economic Forum.
2
How do you connect with the connected customer? 5
Personalize passenger To build this relationship and improve to reinforce brand image and loyalty.
customer loyalty, airlines should Redemption opportunities should
experience to consider the following: be accessible through smartphones
cultivate loyalty • Seamless interaction across device
and tablets.
Customers are increasingly platforms and unobstructed end-to- • Robust grievance redressal is
demonstrating low tolerance to travel end travel experiences are critical for essential in the service industry.
barriers, yet airlines face the obvious customer satisfaction. Airlines should Airlines can leverage existing
challenge that different customers provide a convenient user interface insights on customer behavior —
have different priorities. Data will help to undertake direct bookings and both online and offline — to improve
identify and promote the best offerings maximize the customer’s ability to service quality.
for each type of customers — from use their smartphone and tablet for
those who prioritize low pricing above all travel needs.
all else to those who are willing to pay
for individualized service. In light of • Limited rewards earning and
these heightened expectations, airlines redemption opportunities are pain
should find new ways to provide smart points for frequent fliers. Airlines
customer experiences in order to should consider providing more
build deeper relationships with their multichannel opportunities for
passengers. earning and redeeming loyalty points
8%
Passengers using mobile phones for airline
46%
Loyalty program members of North American airlines
booking compared to 77% booking via having program’s mobile app on their phone or tablet as of
web portal in 20185 May 20186
5
“2019 Passenger IT insights,” Society International Telecommunication For Aeronautics (SITA), 2019, © 2019 SITA.
6
“ Confusing Airline Loyalty Programs Have Fewer Satisfied Customers, J.D. Power Finds,” J.D. Power, 2018, © 2018 J.D. Power, jdpower.com/business/
press-releases/2018-airline-loyalty-program-satisfaction-study.
6 How do you connect with the connected customer?
Utilize touchpoints Airlines can consider the following to • How airlines use the volume of
leverage passenger data: customer data they collect is key to
to maximize ancillary decoding the lifetime value of their
• Over the course of their journeys,
revenue streams passengers will have multiple
passengers. Carriers can monetize
For a long time, airlines have been advanced passenger information
instances of sharing their data with
privy to a repository of passenger by sharing it with complementary
their carriers. Airlines can analyze
data without capitalizing on the full industries, such as shared mobility
these demographic and transactional
potential of its use. With increased data and hospitality providers, for
data for behavioral insights, enabling
analytical capabilities, carriers can extending their offerings to include,
them to proactively send customized
group clusters of customer data and for instance, co-branded travel.
offers on ancillary services, such
develop market intelligence to augment as seat upgrades, extra baggage
its top line. allowances, more food and beverage
options, and in-flight retail.
1,000gb
Average data generated by a transatlantic flight7
US$92.9b
Projected revenue from airlines ancillary service in 2018,
312% increase from US$22.6b in 20108
7
“Camilla Hodgson and Patti Waldmeir, “How airlines aim to use big data to boost profits,” The Financial Times, 8 May 2018, © 2018 The Financial Times Limited.
8
“ Ancillary revenues expected to hit $92.9bn,” International Air Transport Association, 2018, © 2018 CarTrawler and IdeaWorksCompany,
airlines.iata.org/news/ancillary-revenues-expected-to-hit-929.
3
How do you connect with the connected customer? 7
Airlines have long been delivering overall experiences to customers with little focus on pre- and post-trip
relationships. Digitization will help the industry prioritize the delivery of customer-centric services.
Start of a customer’s journey
Applications for shorter user sessions, with personalized pricing offers based on
insights from behavior-tracking and purchase history
Track-and-trace solutions, such as radio frequency Blockchain for loyalty points redemption across multiple
identification, for real-time baggage tracking platforms and tokenization of points as virtual currency
*“Couch-to-gate” encompasses elements of customer journey including check-in, bag drop, lounge access, boarding and border processing.
4
8 How do you connect with the connected customer?
To break away from just “doing digital,” airlines will have to shift from stand-alone
innovation hubs to an integrated business transformation, with digitization as the
engine of its end-to-end process.
Traditionally, carriers had their primary To succeed in this turbulent brand promise to their customers. It
focus on cost controls and fees to marketplace, airlines need to adopt will help them transform transactional
maintain profitability; focusing on a core digital foundation providing associations with their passengers into
understanding their customers should smart experiences based on three a long-term relationship development
come next. Now, they are faced with key attributes — personalization, and customer engagement channel,
a new generation of digital-savvy predictive and adaptive — and offering resulting in increased revenue and a
travelers who demand consistent heightened expectations, atomized long sustainable future.
personalized experiences. experiences, value exchange and
Illustrating transformation of the online booking process from a sales function into
a value-creation channel
Sales function
Big-data and analytics Real-time and VR technology and Mobile wallets and
for proactive interactive shop- 360 degree feature for virtual currency for
and customised to-book assistance in-person experiential active distribution and
pricing offers with conversational booking frictionless payment
application
programming interface
chatbots
5
How do you connect with the connected customer? 9
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Contacts
Randall Miller Kevin Custis
EY Global Advanced Manufacturing EY Global Transportation Leader
and Mobility Leader Email: kevin.custis@ey.com
Email: randall.miller@ey.com
Nehal Khetan
Senior Analyst, EY Knowledge
Email: nehal.khetan@gds.ey.com
EY | Assurance | Tax | Transactions | Advisory
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