Why Airlines Are Struggling In The Era Of Digital Retail, And How They Can Get Back On Top

Executive and managing director at DRCT, the leading technology provider for airlines and travel companies. Expert in airline retail.

Canceled trips, postponed vacations and frustrated travelers sum up the past two years. The travel industry was hit hard when the world shut down in 2020. But how exactly has this closure affected airlines‘ technology strategy? Did they reconsider their use of outdated technology and consider transforming to evolve into customer-centric companies?

Business professionals anticipate that customer experience will be companies’ top priority for the next five years. Unfortunately, companies usually underrate how often users face poor experiences. In order to secure customer loyalty and avoid losing market share to more technically advanced companies, airline brands should follow constantly changing customer needs.

What has changed?

• Older adult customers refuse to get back to old habits. During the pandemic, older adults were forced to become more familiar with digital services. This older adult population, sometimes called Digital Seniors, will continue to grow and gain confidence online and consume more online content.

• Young customers expect more. Young people prioritize their happiness, comfort and products and services that enhance their sense of self. To improve brand perception, businesses need to create offerings that help consumers feel fulfilled and confident with their choice. Investing in technologies like artificial intelligence will increase the sophistication and personalization of a company’s offerings. Customers seeking products and services that align with their motivations and identity should stay at the core of the business strategy

• All customers are now digital, expecting fast content with no excuses. Content consumption has changed significantly in the past few years. In the U.K., people spent over six hours per day online or watching online streaming services in 2020, and there are similar statistics for other countries. Moreover, TikTok and Instagram created a new consumption pattern—content is consumed in seconds, so brands have to deliver value fast. Airlines must follow this wave of transformation to meet new digital expectations for seamless online experiences such as checking in, purchasing tickets or additional services and easy trip changes.

What can airline brands do to improve the digital client experience?

Airlines should be digitalized to correspond to passenger expectations. This requires the complete redesign of the current infrastructure. It should be done quickly, because there are new competitors who know customers as well as how to deal with data—think Google, Facebook and Amazon. Google Flights, for instance, is seeking to use its access to pricing and inventory to “dominate flight information,” according to a former British Airways CEO.

There are examples in aviation that demonstrate how digitalization can boost airline business. For instance, AirAsia is focusing on growing the online services available in its app. Rather than the limited offerings we are used to from airline apps, which focus on a single airline and its official partners, AirAsia’s “super app” offers passengers a range of benefits, including booking flights with over 700 airlines, booking hotels, a retail platform and access to Wi-Fi and entertainment during flight. This pioneering platform is an attempt to offer consumers a seamless travel experience, from the moment someone first searches for a flight to the moment they arrive at their destination.

What airlines can do to justify investments in technology:

• Get closer to customers: In the digital world, clients are present on many platforms and expect convenient communication channels with all brands they use, including airlines. Considering the growing number of questions from passengers during the pandemic, which overloaded phone lines and resulted in long wait times. I urge airline companies to provide their customer service teams with more digital tools for customer communication. This will improve the passenger experience with online help desks and reduce the workload.

This applies not only to after-sale support but also to general inquiries. Online brand communities can provide a space for travelers to ask each other questions, taking some of the burden off of customer care agents. For example, Southwest recently leveraged its brand community to redirect customer inquiries about travel to a frequently updated blog page that also included comments from users and responses from company representatives.

• Deliver instant value: In the world of ultra-fast content consumption, customers expect to get immediate results. Your current communication channels may seem satisfactory, but they may not move quickly enough to match customer needs. Current online experiences mean users are accustomed to instant results from their actions, whether that’s buying and selling goods, opening bank accounts, buying stocks, etc. When airline passengers still can’t refund and change tickets instantly, that’s a problem. Airlines should invest in process automation, especially in airports. This is what customers expect.

• Know your clients: Today, customers expect personalized experiences like they get using Netflix, TikTok or Facebook. These companies are data-driven and apply recommendation algorithms to show specific content to each user. Many airlines, in contrast, are still using Passenger Name Records (PNRs), which can store only five parameters, only two of which are about the passenger themself. In other words, airlines don’t have enough passenger data, and they don’t have the digital infrastructure to take advantage of the data they do have.

Final Thoughts

Civil aviation is a noble industry; however, it has not kept up with the new behavior patterns and needs of modern passengers. To remain profitable and outstanding in the digital world, airlines need to become data- and user-driven e-retailers.

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