Study Objectives
Digital readiness for
customer experience
in the airline industry
Overview
Study Objectives
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| Identify top business and customer experience challenges in the airline industry, and the extent to which digital technology is an issue. |
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| Evaluate airlines' organizational readiness to use digital technology to optimize customer experience, using a "digital readiness scorecard". |
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| Identify top digital technology priorities and barriers to implementation, particularly as they relate to customer experience. |
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| Gain reaction to key emerging concepts/strategies for digitally enabling customer experience. |
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| Gain an understanding of how airline executives perceive the structure and competitive frame of the industry, particularly the role of third parties. |
Findings
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Strengths for Airlines to Leverage
To improve customer relationships and reduce the power of intermediaries, airlines seek to leverage three unique strengths: (1) owning the most important piece of the travel value chain (the flight), (2) having access to richer customer insights than intermediaries do, and (3) offering more touchpoints and meaningful services than intermediaries are able to. -
Digital Sophistication for Business Advantage
Increasing their digital sophistication is another key strategy airlines are using to neutralize intermediaries and improve customer relationships. All airlines in the study are invested heavily in mobile self-service technology, and in creating and leveraging 360-degree views of the customer. Most have strong social media initiatives.
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Clear Vision, Struggle Implementing
Most airlines have a clear vision for using digital technology to optimize customer experience, but lack the implementation know-how and talent to "make it happen."
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Cultural and Technological Barriers
Top barriers to implementation are cultural resistance, technological limitations, and excessive "siloing" of both operations and technology.
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Openness to Digital Innovation
Most airlines believe the airline industry lags other industries when it comes to digital innovation. While they tend to want to look outside the industry for the best ideas, they are enthusiastic about several emerging digital concepts presented in the study, such as real-time personalization, using digital to provide seamless service and being willing to innovate business and operating models.
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Key Digital Disruption: Distribution
Customer data concerns point to what executives identify as the key disruption of digital technology on the airline industry, which is its impact on distribution and customer relationships.
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Strengthening of Intermediaries
Airline executives believe digital has strengthened intermediaries such as OTAs (online travel agencies) and Google Flights. These digital intermediaries are perceived as distancing carriers from their customers and contributing to commoditization of the airline "product."
Key Takeaways
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Digital Readiness Scorecard
"We have a wonderful customer experience design for the future. Our vision for 2020 is perfectly clear. We're just not able to implement it."
How would you rate your organization's digital readiness to optimize customer experience, in each of the following areas?
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What is your top customer experience challenge?
"Collectively, the overall customer experience challenge faced by airlines in the study is "how to make it happen" –how to navigate a variety of issues, barriers and tradeoffs."
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Some are selectively opening APIs to increase third-party interaction
"Our API (application programming interface) for OTAs is responsible for anything between 10–15% of our total sales, and that's growing quite rapidly."
–APAC Low Cost Carrier
But establishing rules of customer data ownership is a "huge issue"
"The challenge is understanding what is open and what should be closed. When Google Flights wants to know how we price our tickets, we say 'That to us is our IP.'"
–APAC Premium Carrier -
Some think newer digital intermediaries will replace GDSs
"New players like Google Flights are going to be the GDSs of the future."
–European Premium Carrier
Most would prefer that customers use direct platforms, but they see GDSs as necessary
"Our direct channels are always going to be our preference, but we do need the shelf space that GDSs provide."
–North America Premium Carrier
Conclusion
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Carriers are ready with digital technology vision but face implementation challenges.
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They are open to digital innovation, including third-party partnerships, but have significant concerns about protecting their customer data.
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They have experienced a digital disruption in distribution that may have strengthened intermediaries and diluted customer relationships.
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They believe they have unique points of leverage in the travel value chain that can be used to reduce the power of intermediaries and strengthen customer relationships.
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They are committed to increasing their digital sophistication to further improve customer experience and achieve business advantage.
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