Airlines’ retail revolution: Where’s the love?

At a recent travel industry conference, I heard a ubiquitous complaint: “Our legacy technology is keeping us from delivering a customer-centric experience.” The moan fest about legacy technology is not unique to travel—but other industries are doing something about it.

Consider grocery. Ten years ago, legacy grocery was hamstrung by legacy technology like everyone else, but industry leaders recognize that transformation was the only way to appeal to customer demands and stay afloat in an increasingly crowded marketplace.

For instance, Sainsbury’s—a grocer that opened its first store in 1869—transformed itself from a catalog-led business to a digitally-led business. By transforming mobile, web and tablet digital channels, the company has recovered sales with operating profits in the most recent financial year increasing by over 10%. Currently, £4.7 billion of Sainsbury’s sales start online (Sainsbury's, 2019) ¹. The company also made changes, like supporting causes, that gave employees newfound pride and purpose in their jobs.

Argos realized that the notion of being channel-agnostic is really important to customers. By creating a seamless omnichannel experience, now 60% of their sales happen either starting or finishing online, with 80% of those occurring on a mobile device. Customers have flexibility. They can start online and finish in the store, or vice versa, depending on their own preferences.

Businesses like Argos and Sainsbury’s understand that if you don’t change, customers may not stick around. This is becoming increasingly important for airlines as customer demands are sky high while many airlines haven’t gotten any transformation plans off the ground.

Recent tweets from influencers paint the picture:

“I just don’t get how Google Flights can scan & price in real time millions of flights and airlines…but [airline] is literally unable after 15 mins to tell me the change fee for a flight and have to send it to ‘pricing for a few days.”  (@tomfgoodwin)

Room for improvement
Grocers learned that we need to understand the customer journey from start to end—where things can go wrong, and where you can make them better.

Just like shoppers, travelers care about the experience, and airlines can make changes to begin to make it easier to do business. Take it from legacy retailers, who started their own journey toward a modern, digital experience about a decade ago, and have many lessons along the way. 

Here are some ways to apply what retailers already know: 

• Rip out the seams. The customer shopping experience should not be siloed, whether they're shopping online from a desktop, mobile device or by telephone. Keep channels consistent in terms of experience, but make sure customers can jump across channels.
  
  Improvement can be as simple as changing the way you present information. For instance, online travel agencies present flight time and cost most prominently, along with the airline brand names. Customers are increasingly looking for services and experiences. Travel disruptors are starting to respond by bundling services to create a comprehensive and differentiated package, working with ecosystem partners as needed. Scarily, brands may not be a factor. And pricing may not win business.
  
  Data is the golden key to understanding customer preferences and determining the package that would appeal to them most. Data airlines have on customers reveals hidden preferences. In fact, there are at least 900 data points on customers in current systems that airlines aren’t using to serve them better.
  
  Use data to package the right offer for the right audience. Offer faster boarding to the business traveler... or the tight connecting traveler. Give the overwhelmed mom with small children seats with extra leg space or the offer of priority screening and boarding.
  
  Removing friction and packaging information in the way customers want to receive it will help airlines to move from “flight providers” to holistic travel brands.
  
  
• Understand the cost of things. We’re not good at this in airlines. We know the cost of a flight, but most don’t know the profitability of the journey and few track profitability of customers.
  
  Airlines need to do all of this as we extend the value chain. It was hard in retail, and it’s even harder in aviation.  
  
  
• Change the way you do business. That is difficult, right? Well, it is going to happen either to you or with you. Perhaps the airline has been working in the same way for decades. It’s not a unique problem. The good news is the business is changing to more retail-driven standards that will come as One Order gains traction.
  
  Start by looking at business processes. What can be simplified? Complexity will naturally come as the business evolves, so simplify along the way.
  
  
• Take off with a partner. Companies in the travel ecosystem must work together to create hyper-relevant offerings that elevate customers’ end-to-end travel experiences. Interestingly, 64 percent of the travel executives we surveyed identified their major source of industry disruption as changes in the way customers are serviced.^[2] It’s no surprise given that customers across industries will drop a brand in a flash if a competitor can deliver a better experience.

Whether traveling for business or leisure, customers expect the same personalization and convenience that they are experiencing in industries such as retail and other transportation services (like Uber). Airlines can learn from these leaders and begin to adapt their strategies to foster brand affinity, giving the competitive edge needed today.

Airlines won’t have what it takes to compete and grow as fast as they need to unless they transform. It is a major opportunity. Customers already trust you with their lives. Make sure they enjoy the experience along that journey.

Is your airline the one airline in your market that maintains the cost leadership position at reasonable service levels? If not, it’s time to move from flight provider to travel brand. Your customers will go with you.

¹ Sainsbury’s, “Preliminary Results for the 52 weeks to 9th March 2019” 

² Accenture, “Travel’s Winning Ticket”