On the road to digital transformation – how technology will enable airlines to think and act differently

27 November, 2018

In a world of digital transformation, it is a firm belief that airlines are now in position to differentiate themselves by becoming world-class retailers. Creativity is key in the ability to capture revenue and increase their audience. Fortunately, emerging technologies are paving the way for new opportunities, leading to growth while positively impacting customer experience.

Travel technology specialist, Sabre, a long-time trusted partner of the industry shares the vision for true digital transformation and has identified current barriers and new solutions for achieving it. Today's airline commercial departments are fragmented, trying to address major changes and dynamics in silos with conflicting objectives. The issues don't stop at commercial planning, and across sales and service functions, airlines must have a consistent flow of real-time, accurate data as well. "Departments have no visibility into key decision-making data, preventing significant opportunities to meet customer needs," says Pramod Jain, Sabre vice president of product management, AirVision.

Today, it is estimated that as many as 70 individual systems are required for airlines to operate every day - that's not only a lot of data, but it's "a lot of opportunity for data to become out of sync and inaccurate," highlights Rodrigo Celis, Sabre vice president of product management, SabreSonic. Airlines need integrated technology platforms that eliminate silos, leverage the wealth of existing data and seamlessly action it to truly maximize revenue and enhance the customer experience.

There is no doubt that we've come a long way from booking reservations through phone calls and punch cards, but as technology progresses and airlines become less itinerary-centric and more customer-centric, it is clear that platforms must also become smarter to adapt to changing business needs. "Airlines will benefit by finding technology partners that can build open technology, enabling them to think - and act - differently. These partners must be creative in how they deliver options to airlines' customers," says Mr Celis, who highlights microservices as one area that is ripe for development.

While microservices is not a new concept, it is becoming more and more relevant in the airline industry. "Open solutions allow airlines to enable speed to market and control over distribution across all channels," explains Mr Celis. Microservices is after all somewhat a 'hot topic' right now in the technology industry with companies such as Amazon, Netflix, Uber and eBay are all embracing microservices.

Sabre says that through technology, airlines can get ahead of the competition, differentiate their products and services, and provide personalised offers customers are demanding. "Airlines that invest in open, intelligent and flexible technology today will be the industry leaders tomorrow," it adds. But, Sabre notes, this isn't just a journey for airlines to become retailers, they need to become intelligent retailers, which requires every facet of an organisation to be customer focused.

"Retailing becomes intelligent when airlines can seamlessly provide a unique customer experience," explains Mr Jain. "Intelligent technology creates opportunities for airlines to identify, understand and predict customer behaviours without having to ask them. Through machine-learning algorithms and OR models, airlines can predict what customers want through more proactive tools and mindsets."

During the last decade, there has been a significant shift in the airline market. The LCC business model has grown around the world as airlines look to maximise revenue and differentiate through ancillary sales. But this income is not enough to offset the continuous decline in seat revenue. To close the revenue gap and drive more volume, the need for fast and rapid expansion is becoming necessary through enhanced price optimisation and more efficient revenue management.

For Sabre, one of the clearest examples of how airlines can achieve this goal is through dynamic pricing. Dynamic pricing is powered by a set of intelligent pricing and revenue-management tools that empower analysts to improve decision-making and maximise revenue in real time. It considers both demand and competition and dynamically responds to the conditions at hand to give an airline the best position possible.

With a comprehensive, end-to-end dynamic pricing approach, Sabre leaders say airlines can leverage shopping and booking behaviour, utilise modern user-interfaces and workflow and better consider market dynamics and competition.

"Once an airline views a customer on the individual level and has the intelligent technology in place to learn from the individual's behaviours, every single product must be considered and intelligently priced, packaged and distributed," says Mr Celis. "Moving forward, an airline should not only understand how much an individual customer is willing to pay for the seat, it should know the combination of products the customer wants and their willingness to pay for ancillaries."

The technology enabling intelligent retailing is already here, and many empowered customers are starting to shape the way successful companies conduct business. Airlines leveraging technology that enables intelligent solutions will be the catalyst in achieving revenue maximisation and providing differentiated experiences for their customers.