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How airlines are gearing up for the digital shift
Asian carriers are counting on personalised services, blockchain-enabled loyalty programmes, automation and predictive maintenance to lower costs and improve passenger experience
With air traffic expected to increase at a compound annual growth rate of 3.7% over the next two decades, full-service airlines have been under pressure to boost service standards and drive down costs in a bid to better compete with low-cost carriers.
Across the Asia-Pacific (APAC) region, the primary driver of global passenger demand, national carriers from Australia’s Qantas Airways to Singapore Airlines have been pulling all stops to improve their customer experience in efforts to build customer loyalty.
Qantas, for example, has worked with IT services giant Tata Consultancy Services (TCS) to build a “customer value engine” that enables it to be proactive in solving customer-related issues, such as offering to put a passenger who is stuck in traffic on a later flight, according to Girish Ramachandran, president and head of TCS in Asia-Pacific.
By getting contextual knowledge about a passenger, Ramachandran said airlines can improve the customer experience for all their customers, not just for those travelling in premium cabins. “Qantas has done a phenomenal job of turning around the airline, and they’re very keen to looking at serving the needs of all their frequent flyers,” he said.
With Singapore Airlines, which is facing stiff competition from Qantas on the so-called kangaroo routes between the UK and Australia, TCS has built an application – with intellectual property shared with the carrier – that digitises the work processes of cabin crew and delivers contextual information on passengers.
“For example, if I’m a frequent flyer to Sydney, the cabin crew will know my tastes and preferences, so they can tailor their conversations with me,” he said, adding that TCS is now selling the application to other airlines.
Airlines have also been extending their service touchpoints, such as partnering retailers to offer discounts to passengers in destination cities. Those same travellers could even obtain loyalty points from credit card loyalty schemes or friends in the same frequent flyer programme – if TCS gets its way.
Ramachandran revealed that TCS is testing a blockchain-based loyalty management application in Singapore that will let airlines do just that. “So if I am at a Singapore Airlines counter and I only have 9,000 points, is there a way I can reach out to my friend for an additional 1,000 points to upgrade my seat?”
Singapore Airlines has been experimenting with blockchain through a blockchain-based airline loyalty digital wallet app that will unlock the value of miles accumulated by customers in its KrisFlyer frequent flyer programme.
When ready, the digital wallet, which has been tested in a proof-of-concept exercise with KPMG and Microsoft, would enable KrisFlyer members to spend their miles at participating merchants. The app will ride on a Singapore Airlines-owned private blockchain involving only merchants and partners.
Hailing the digital wallet as ground-breaking, Singapore Airlines’ CEO Goh Choon Phong said the initiative is a “demonstration of the investment we are making to significantly enhance the digital side of our business for the benefit of our customers”.
Improving efficiency and reducing disruptions
As with many enterprises, airlines are also looking to the cloud to reduce IT costs. In October 2017, Malaysia Airlines embarked on a massive project with TCS to migrate its core datacentre infrastructure and applications to a hybrid-cloud model, with 80% of its assets hosted on Microsoft Azure and 20% on a private cloud.
“They wanted to get out of mainframes, and they didn’t need datacentres,” Ramachandran said, adding that the airline’s global distribution system (GDS) used to manage ticketing and reservations was also migrated to a new platform. “Once their cost of operations comes down, they can use the money to improve customer experience,” he added.
On the tarmac, airlines are turning to the internet of things and data analytics to improve operational efficiency and reduce equipment downtime so that flight disruptions are minimised.
According to a report from T2RL and Amadeus, the estimated cost of flight disruption to airlines is 8% of airline revenue or $60bn worldwide, with mechanical and technical problems being one of the top causes of disruption.
In February 2018, Singapore Airlines Group, which includes regional carrier SilkAir and low-cost carrier Scoot, said it would work with Honeywell to reduce operational risk, improve efficiencies and control costs by implementing connected aircraft technologies.
For example, Honeywell will deploy its GoDirect connected maintenance services for SilkAir, which will be able to predict when mechanical parts, such as an auxiliary power unit, need to be fixed or replaced. This will help to reduce unscheduled downtime and improve reliability of its fleets, according to Honeywell.
Digital airlines need digital airports
But an airline’s customer experience and operational efficiency are only as good as the airports it operates from. To Tony Fernandes, the founder and group CEO of Asian low-cost carrier AirAsia, airports can hold back a carrier’s ability to digitalise.
Noting that airports often do not consult airlines on infrastructure improvements, Fernandes had called for airport operators to treat carriers as partners, such as what Singapore’s Changi Airport Group (CAG) has done.
Praising CAG’s new Terminal 4, where passengers go through an automated process from check-in to boarding facilitated by facial recognition technology, Fernandes dubbed the new terminal as the “model airport of the future” for low-cost carriers.
“Moving to Terminal 4 is another step in our journey to become a digital airline,” Fernandes said. “We have already embarked on a series of measures to make our pre-flight, inflight and post-flight experiences better and more enjoyable for our guests.”
In addition, Fernandes said the carrier also plans to develop a secure entry system for trusted travellers to speed up immigration at airports within ASEAN through collaboration with airports and government agencies, as well as improve operational, safety and commercial processes by integrating data from multiple sources.
“Now, working with CAG, we are moving on to the digitalisation of our airport experience,” he said, noting that the improved savings and efficiencies from Terminal 4’s automation capabilities align with the AirAsia’s quest to maintain its low cost structure as well as its vision of seamless travel.
Read more about IT in air travel
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