Solving the Airline Industry’s Most Pressing Business Problems
Nowadays air travel is the safest form of travel. Airlines have also invested a lot in making air travel more efficacious and user-oriented and the overall revenue is pending to increase from last year by 6.5%. However, some issues the aerospace field has been grappling with haven’t disappeared. Truth be told, given the worldwide idea of the business, it is extremely defenseless against a large number of problems going from industry issues to political turmoil. While such issues are past the extent of this article, we will investigate probably the most problems that need to be addressed confronting the carrier business and how innovative solutions may change the game.
Offering a Hassle-Free Shopping Experience
Just like with any website, customers are looking to get answers to specific questions and if they can not find the answers they will simply leave without hesitating. In order to reduce visitor bounce rates, shopping cart abandonment and other negative metrics, there needs to be some kind of smart self-service available. In fact, 73% of customers would prefer to resolve their product or service questions on their own. Therefore, if you can offer a hassle-free customer experience where people can find answers quickly, they will be more motivated to browse through your site and ultimately make a purchase.
The Norwegian Air Shuttle company shows a good example of an intuitive and user-friendly portal. Due to fast growth, it had to have the capacity to serve thousands of simultaneous passengers shopping on their website for 270 destinations. Since the Norwegian Air has won prestigious industry awards such as European Passengers’ Choice Awards 2019 and as the Best Long Distance Low-Cost Airline, they needed to match their outstanding flying experience with a smooth and convenient shopping experience. They needed a customer portal that could retrieve all kinds of information and provide customers with answers according to the requests.
The new, upgraded customer portal that Softwarium created for the Norwegian Air Shuttle allows all sorts of functionalities. Not only would the customers be able to review the prices for their specific flights, but they could also review seating availability, search through the flight calendar and apply reward points to the cost of the flight. This really expedited the entire purchasing process and alleviated all of the headaches. The system could even account for more complex operations such as a third party splitting the cost of the airfare. For example, customers who live on the Spanish Isles would get part of their airfare discounted, courtesy of the Spanish government. Customers who shop for air tickets inside the client portal must be able to see what the cost of the ticket will be and how much they will end up paying after all of the discounts.
As you can imagine, by enabling customers to easily shop for tickets and including all of the nuances associated with discounts and reward travel made it simple for customers to buy the tickets they were looking for. It eliminated the need to call the customer service department and ask them questions about how many miles they have, flight schedules and ticket prices. This saved the Norwegian Air Shuttle a lot of time and resources and gave them the chance to provide great service to 10,000 customers simultaneously.
There are many ways business intelligence (BI) can be useful for airlines. One of such ways is integrating different data sets, such as weather reports, in order to make predictions about flight delays and cancellations. Since the data can come in many forms and can be of use in many different ways as far as business intelligence is concerned, airlines need to have an aerospace software in place that can handle the deluge of data quickly and efficiently. If you have a standard method of recording and storing the information you will be able to integrate all of the data into a single pool that can be queried in order to identify problems, notice patterns and extrapolate outcomes. Your BI tools must be kept up to date with fresh data and must contain enough data in order to extract actionable business intelligence.
Large data pools can be refined into granular data points to get a more realistic picture of what is happening. Such information will be useful in order to find ways to improve your performance such as highlighting new business opportunities and cutting costs. Companies that accumulate large volumes of data have two options of extracting the information they need in order to produce actionable insights:
Data processing via general purpose business BI systems
Data processing via industry specific BI systems
The general purpose BI systems tend to have the advantage of being more advanced, having functionalities that will make them very useful for analyzing data quickly, with user friendly interfaces for presenting and analyzing the results. These sorts of BI systems are the most flexible on the market and their functionalities are designed to suit a wide array of companies.
The specialized BI systems will be designed around the airlines unique necessities and will include functionalities that will be geared towards finding answers to specific problems.
Airlines have a lot of information about their customers, but only recently they started to use new technologies to process all of the data and make sense of it. If they can manage to extract some actionable insights out of it they can provide users with more customized experiences. New technologies such as New Distribution Capability (NDC), Rich Content and Dynamic Pricing are now starting to be used. While these technologies are facilitating personalization efforts, the airlines themselves will have to put in the effort to implement them and establish the necessary processes.
NDC does a good job of recognizing the needs of the travelers and presents them with more individualized content. The NDC strategy allows airlines to offer their products through as many channels as possible and highlight some of the features that help them stand out from the competition. A great example of this strategy in action is American Airlines. They leveraged NDC to sell some of their ancillary products such as their Main Cabin Extra and Preferred Seats.
Another way airlines offer more personalized experiences to their customers is by reaching them on their mobile devices. Mobile app development has allowed airlines to help alleviate some of the stress that comes with air travel from navigating through airports all the way to ground transportation from the airport. For example, United Airlines has partnered with Uber, Jet Blue with Lyft and many other airlines are trying to follow suit. Customers do not use the mobile app to simply book tickets. Instead, they are looking to get some additional perks that will improve their travel experience.
Even though airlines have made great progress in terms of implementing the latest aerospace software there is still a lot of work left to do in order to benefit from the mobile app opportunity. The aviation companies that are the quickest to adjust and propose customers’ experiences that are tailored to their needs will increase fulfilled clients and brand advocates. It is a key for airlines to distinguish themselves from the crowded playing field which is absolutely critical in today’s experience economy.
Incorporating the Enterprise Data Warehouse
We talked about all of the data the airline companies accumulate and how they can use it to enhance the customer experience. However, the key to truly unlocking the value of this unique asset is using an enterprise data warehouse (EDW). A lot of airline companies have multiple siloed versions of their data which makes it difficult to extract any insights. The EDW would allow them to have a single version of the data which can be accessed by all departments and can be actively used to create business opportunities and obtain a competitive edge.
For example, all airlines are dealing with the problem of flight delays. It has a negative impact on customer satisfaction and retention, reduces revenue and creates chaos as far as schedules are concerned. If the airlines could go beyond the expensive and time consuming approaches that their legacy IT infrastructure offers, they could analyze the data to understand what causes the delays and mitigate them before they become a real problem. With the EDW, the airlines will be able to create many canvases, compare all kinds of datasets, choose different graph types add trend lines and many other things to show the connection between flights and delays within the specified timeframe.
Furthermore, they will be able to create visualizations like delays by state, airport, custom flight counts and many other comparisons. All the figures that were once limited to an Excel spreadsheet may be transformed into a presentation to allow executives to make smarter decisions.
One interesting trend we can notice in the aerospace industry right now is companies use the EDW to manage and reduce operational costs. The noteworthy approach to accomplish this goal is the utilization of predictive analytics. The data obtained can be used to improve Maintenance, Repair and Overhaul (also known as MRO) and the overall health observing of the airship. Up until now, this has predominantly been performed by the Original Equipment Manufacturers, but carriers and MROs might require to have progressively demonstrated track records in the technical processes.
The fundamental objective of predictive maintenance is to foresee when a component failure may occur and really keep this from happening by providing the necessary maintenance. The benefits of using such an aircraft maintenance management system would include better inventory forecasting and management of resources. To the extent the expenses are concerned, the carriers will be able to minimize the time necessary to maintain the equipment, decrease the production hours that are lost due to maintenance and lower the costs of spare parts and supplies.
High Cost of Fuel
The fuel involved in air transportation is one of the most volatile yet important operational costs. The amount of fuel the aircraft consumes will have a direct impact on cargo and passenger demand via pricing. The airlines are well aware of the consequences of inefficient fuel consumption which include price increases and market loss. From an operational point of view, the stages from engine start, taxi, takeoff, straight flight, approach, landing, taxi and engine stops are a cycle in which a plane consumes fuel during operation. The fuel consumed during these stages can be optimized with an appropriate operation planning and strategy.
The way companies try to lower costs is through fuel hedging. It works when fuel is being bought by airlines with a fixed price for a preconceived time period. Ordinarily, the carriers will hedge just a part of their full fuel necessities with different covering contracts since the hedging understandings lapse over the long haul. A great example of this strategy is what Southwest Airlines have been able to do, which is save around $4 billion from 1999 to 2008. Nonetheless, Southwest also faced another side of the coin, when it hedged 70% of its fuel in 2008 at $51 a barrel. After the prices declined from their peak of $125 a barrel, Southwest airlines company informed about almost $120 mln loss since the fuel price was now lower than they hedged it for. The EDW can help airlines improve their fuel hedging initiatives to better manage the risks and decide whether or not it is beneficial to continue such a strategy in the future.
Something else the airline companies need to figure out is how to optimize the cost of refueling. This means that they will have to reevaluate the effectiveness of carrying additional fuel and the price fluctuation from one airport to another. Since the route and fuel consumption will change with every trip, it can be possible to plan the stopovers ahead of time in order to find the best places to refuel.
Even though air travel has had a positive economic and social impact, many people are concerned about the environmental toll that it is causing. According to the Intergovernmental Panel on Climate Change (IPCC) air transportation contributes 4.9% of the human-caused climate change. Airlines such as KLM and Lufthansa have gotten out in front of this issue by using aircraft that fly on electrical engines and other sustainable technologies. Given that social responsibility is on the rise, airlines will continue to try to find more renewable and sustainable solutions for aviation.
It all starts with tracking, since you can not manage what you do not measure. It includes emissions, emission intensity, fuel consumption, efficiency. Also, you need to set your next location at the exact point in time. The IATA has set its goals for both the long and short term. They want a cap on net aviation CO2 emissions from 2020 and a 50% reduction in net CO2 emissions by 2050. The airlines will also have to set ambitious yet realistic goals for themselves. They can leverage centralized reporting tools to keep an eye on the overall trends and conduct sustainability audits to make sure that they comply with all laws and regulations. If they can not obtain the needed insights from the data that they collected, then they will have to use more powerful aerospace software and create databases to help them make sense of all the data they have.
The final step would be to share the results. This increases transparency and builds trust with the public at large. More importantly, it shows everybody that you take sustainability seriously and you are accountable as a company. The environmental sustainability reports will also allow you to solidify your plans and goals with both internal employees and customers, so they can understand the full scope of your strategy. The goal is to get as many people on board as possible. The sustainability will not only require executive buy-in, but everybody down the line will have to do their fair share in order to implement the strategy.
Planning for the Future Must Begin Today
Airlines are under constant pressure to adapt to ever-evolving market changes and embrace new technologies to improve the customers’ experience and enhance operations. The regulations placed on the airline companies further complicate the designs of the solutions, which are usually designed by slow bureaucratic IT departments. The newer airlines have not been slowed down by legacy infrastructure and processes and, as a result, are able to adapt and employ new technologies. Legacy airlines will have to take a look at such new technologies and create the right business cases to justify making such investments.