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UNPRECEDENTED TURBULENCE - CREATES OPPORTUNITIES FOR AIRLINES POST COVID-19

April 17, 2020

AIRLINES WILL NEED TO SEIZE THE MOMENT IF THEY WANT TO SURVIVE

The following is my personal point of view of an opportunity for airlines.

A NEW WORLD ORDER

COVID-19 literally changes everything. It has shaken the airline industry and its travellers. This in itself creates a time for forced and much needed change. Change to better prepare a critical industry for any future or similar shock of this magnitude.

It’s not a matter of if, but when. The airline industry will recover and stabilise, albeit in a very different mood and state. Airlines will have to change the traveller experience and their relationship with their travellers.

As tragic as COVID-19 is to humanity and business, on the flip side airlines, as the glue in most people’s travel needs, have the opportunity to dramatically improve their distribution and marginal business models.

WHAT’S CHANGED

For Travellers, their behaviour partially forced by new rules (governments, heath authorities…) and through their own experiences (hygiene, social distancing…), and needs to be safe.

For Airlines the need to win back the direct relationship with their travellers and ensure a safe travel experience.

THE OPPORTUNITY FOR AIRLINES

  • Build a direct relationship with travellers to keep them informed,
  • Help them navigate through health, safety and security issues,
  • Make their end-to-end booking and travel experience seamless,
  • Generate value by delivering against travellers intent,
  • Allow travellers to help shape the airlines direction and future,
  • Have the ability to reward all of their travellers not just frequent flyers, and
  • Link rewards to best practices and behaviours of both parties.

THE ISSUES FOR AIRLINES

Airlines are missing out on influencing, rewarding and building valuable long-term relationships with the majority of their travellers, and have had to predominantly compete on price. This is a consequence of legacy systems, fragmented distribution and lack of data intelligence about their travellers end-to-end needs. This should now be irrelevant in a connected world.

Airlines effectively compete against intermediary distributors (for example, online travel agents and market aggregators) that survive on hefty commissions – adding costs to the supply chain (absorbed by airlines, partner suppliers and travellers) and diminishing overall product quality and value.

Prior to COVID-19 figures from IATA put net profits for airlines at USD $6.12 per departing passenger. Airlines operate in a competitive, price-driven retail environment that provides limited opportunity to differentiate and effectively merchandise non-air products and services to meet their travellers end-to-end travel needs.

As the glue in the travel experience airlines ‘technically and arguably own the traveller’ but they don’t – many of the other players in the supply chain are likely to know more about the traveller and their valuable data. Consequently, airlines are unable to add value and have little or no option but to compete on price.

Airlines are not alone. Many other industries have also experienced costly dislocation from their customers as highlighted in ‘Are we seeing the end of Platform business models…’ by Nick Ayton – a deep technology advisor and speaker.

THE ISSUES FOR TRAVELLERS

Their booking and travel experience is fragmented and lacklustre, at best. Travellers do not have a simple, streamlined solution for planning and booking their end-to-end travel needs. In particular, one that can respond to individual travel requirements, and recognise them for their business throughout the process. Travellers are not in control or able to generate value from their own needs, identity and data.

In my experience, booking through third parties can in many cases be more expensive, and in most cases if something goes wrong, it is hard to easily access quick support and resolution.

THE EMERGING OPPORTUNITY FOR AIRLINES

Imagine a booking experience where you, as the traveller, own your identity and data – share this with whom you wish and what for (your travel intent) and allow airlines and their partner suppliers to generate value offers in return or participate in a dynamic digital marketplace where you, as the traveller, have helped shape that marketplace to better meet your future travel needs.

As the glue in the traveller experience, airlines have a wonderful opportunity to engage directly and reward travellers at many touch points in the digital travellers experience. Airlines have an opportunity to better know their travellers’ broader needs and to deliver to these needs. This will drive greater traveller engagement, loyalty and profits.

Traveller behaviours have changed, legislation and health restrictions will apply, airlines have the opportunity to be big, bold and positive to deliver in this new traveller world order.

At East2 Technologies this is what we aim to solve for airlines and their travellers, and to provide some protection against any future severe and unexpected clear air turbulence.

I have had the good fortune throughout my life to travel extensively around the world that started as a seven year old unaccompanied minor flying from Mexico City to London on Qantas Airways and BOAC (British Airways) 707’s. Fast forward a few years, I joined Qantas Airways in Melbourne, Australia in their cadet traineeship programme. That started a near two decade wonderful career with both Qantas and British Airways in Asia/Pacifc and Europe, and a lifelong industry experience.

In my mind there is no better educator than travel itself – its experiences enrich people’s views on life, culture, business and the beauty of our planet. In so many ways airline travel is the global glue to nations, businesses, societies, governments and people.

Stephen Bartlett-Bragg
Co-founder East2 & Executive Director Commercial