30 Sep Rethink, Rebuild, Recover – Digitally
It’s exciting to look ahead to the WAF Expo, not only for the thrill of actually being at a physical event (remember those?!) but also because, right now, at Omnevo we’re seeing a surge in airline interest in digitalization as the fastest, most effective, low-cost route to recovery for airlines of any size.
I’ve been preaching the digitalization cause for over a decade and I’m now seeing a rising awareness that – rather than hunkering down to supposedly ‘see out’ what seems an increasingly prolonged crisis – airlines should prioritize their digital capabilities to improve the passenger experience and drive operational efficiencies. In recovery and beyond, digitalization will be the key performance factor; and it might surprise you to know that this
applies equally to FSCs and LCCs.
Any airline can go digital
Right now, we’ve supported one of our LCC partners in developing their on-board program as a hybrid model, enabling passengers to bundle and pre-select meal options with their ticket purchase. We’ve driven higher sales while managing to further reduce the on-board waste through predictive loading and forecasting – creating a further waste reduction of 20-30% on the remaining buy-on-board program. With this model the pre-order level has surged to 70%, reflecting our firm belief that purchases will increasingly be made much more on planned
decisions than on impulse buying.
New operational efficiencies have enabled a 30-minutes improvement in on-board crew time; that’s a huge opportunity for crew to utilize that time in enhancing the passenger experience – and time to sell far more, including upgrades, tickets etc. And don’t forget that the on-board gains are in addition to the new back-end efficiencies that digitalization delivers. The icing on the cake is that it also provides major gains in sustainability, saving millions in waste, weight and costs.
And, of course, we are also seeing FSCs accelerate their digital strategies too. Virgin recently became our latest FSC customer and has the ultimate ambition to become the first FSC to adopt the Omnevo solution across the entire retailing chain – with the future-proof flexibility to cover everything from pre-order to buy-on-board with our ePOS solution as well as home delivery for retail, F&B and experiences.
There’s a continuing misconception that digitalization is confined to FSCs, that it’s expensive to initiate and operate etc. There’s a grain of historic truth in that but, under today’s new market conditions, the reality is that digitalization is now a cost-effective opportunity open to all airlines, any type, size, or location.
The crisis has demanded change across the aviation sector and at Omnevo we had to react. We’ve responded by evolving our digital platforms and our pricing models, offering airlines a spectrum of digital solutions with low entry cost and subscription options. We can create the ultimate E-Commerce platform or the standard option to create the best buy on board solution, for example, perfectly tailored to each airline’s needs, budget and digital timescale.
This gives airlines the confidence that they can start small and scale up when needed and we’ll guide them through their digital transformation of their ancillary revenue programs.
Responding to the new market
Through our expanded flexibility on platforms and pricing models we’re now working with a greater variety of airlines than ever before. With our partners, we’re creating digital roll-outs to numerous airlines, ranging in scale from full omnichannel, E-Commerce solutions for leading FSCs to selected BoB and ePOS systems for LCCs and small regional airlines. Look, for example, at SkyExpress in Greece, with just 15 planes – yet it is able to exploit new
digital efficiencies that provide it with competitive advantages just as effectively as any FSC taking the full premium omnichannel route.
Despite growing successes, the airline sector risks falling dangerously behind the digital curve. Airline investment in digitalization has always lagged well below that of other industries (such as Retail and Finance) but one silver lining from airlines’ crisis-reduced teams is that it led them into finding smarter, more agile ways to work across their
organization, removing many of the old silos but also highlighting how urgently they need a far more cohesive view of the customer – which digitalization provides. The days of Marketing teams holding ‘their’ info while the IT team hold ‘their’ data must end.
Digitalization gives them shared data-driven thinking and decision-making that removes user friction, creating major new operational efficiencies and ultimately enabling a far stronger customer experience.
Blend this new agility with digitalization – and recovery could be amazing
Even more importantly, look at it from the customer’s perspective.
Firstly, don’t forget that the old, pre-crisis problems haven’t disappeared. Interest in the inflight offer has been declining for over a decade or more as poor choice, few leading brands, limited service, no innovation, no excitement leads to no interest. When the recovery finally takes-off, what will passengers expect of their inflight experience?
Most passengers actually have their mobiles in their hands as they board, bringing with them their digital experiences with Amazon, Disney, Starbuck, Nike, Sephora, JustEat, Netflix, Uber etc. How will the inflight experience compare? Ten minutes before boarding, the passenger in seat 4D – who has just been told “Sorry, the panini is all we have left” – had tapped an order into his phone for groceries to collect at the airport, re-scheduled his Uber pick-up, made a food delivery order for that evening, configured his dream car etc…
Digital daily life
The relative lack of airline digitalization inflicts a huge disconnect between the customer’s daily experiences and their airline experience. In everything from home working to dating, from groceries to health checks, the crisis has transformed the way we live through a virtualization of human interaction. And don’t make the mistake that ‘digital’ mean ‘nonhuman’ – far from it. Consumers increasingly crave experiential over transactional encounters; they definitely want to feel a connection, a relationship, they like to feel part of something. Look how cleverly the top consumer brands deliver exactly that digitally.
While some old consumer habits may return, the general shift to digital is not temporary. It will significantly influence and define consumer behavior in the next decade – and airlines are not immunized from its impact.
By the way, I’m not suggesting that every airline needs to match the world’s top premium brands; I’m saying that you need to evolve your inflight model to match the shifting needs and expectations of your customer. Whether that means a Chanel limited edition handbag in your Retail offer or simply the option to pre-order a choice of panini – give your customer what they want.
Ironically, airlines have often been global leaders in adopting digitalization to support safety, security, passenger processing – and the crisis has provoked some fantastic digital projects on those issues – yet, for most, the passenger experience remains almost unchanged in 50 years. Left unchanged, the already creaking traditional models – with limited customer choice, declining conversion, low spend, back-end inefficiencies etc. – will be a significant burden on airline performance in the recovery phase.
FSC or LCC – digital works
Not all airlines have stood still, of course. The first aviation digital wave has been led by pioneers such as Singapore Airlines and its KrisShop concept, which has been stunningly successful in transforming into a highly credible, premium brand totally focused on the customer experience – even maintaining revenue performance and expanding the brand throughout the pandemic. But remember, digitalization is for everyone. It enables a far stronger customer experience, tailored precisely to passengers’ needs – whether it’s a fast and cheap offer on-board LCCs and small regional carriers or luxury experiences with FSCs.
Simultaneously, it also delivers what all airlines urgently need right now; savings in costs and efficiency, especially by moving to an on-demand consumption model that enables loading onboard only items that will actually be consumed by the passengers. Our plug-and-play solutions cover everything from E-Commerce and in-flight sales to catering management, supply chain integration and analytics and are tailored to the needs – and budget – of each
airline and works on any size fleet. The potential for cost saving, with lower overheads, less waste and less weight while actually selling more delivers a huge advantage in recovery competitiveness for any airline.
The versatility of digital platforms means that FSCs can adopt a digital path that includes luxury offerings, premium positioning and brand perception while LCCs and small airlines can focus on selling more and more efficiently alongside better forecasting, less waste, and greater crew efficiencies.
A fully integrated modular solution tailored to any airline – FSC or LCC
The digital tide is rising…
Currently, we’re seeing a rush of interest from airlines that grasp the need to get out of crisis mode and think ahead, not only to recovery but well beyond. Some are preparing for full omnichannel platforms while many are establishing a base digital foundation with specific digital elements. With markets not anticipated to return to long term patterns until at least 2023, it is critical that, whatever the stage or scale of their digital adoption, airlines step out
on their digital path. This second wave of airline digitalization is open to all.
Ultimately, the starting point to recovery is that no-one can stand still. As digital innovators at Omnevo we are under just as much pressure as our airline partners to adjust to this unprecedented market climate. We must all evolve with the market and I’m delighted that, despite the pressures to wait out the crisis, the digital message has clearly resonated with so many airline managers this year. The digital path to recovery is there to be taken, and I look
forward to sharing more of the industry’s successful digital steps with you at December’s WAF event.