Whether you look at these 2016 predictions from the perspective of a consumer or the perspective of an airline, they are beneficial aims. They are also tall orders. We don’t think airlines can accomplish all of these goals in 2016, but they should make progress. Or they had better get busy starting.
In-flight retailing and technology firms GuestLogix and OpenJaw have each released their respective predictions of top trends in air travel technology for 2016.
But which of them are really ready to fly and which need more time in the hangar before they can take off?
OpenJaw’s Six for 2016
1. New Distribution Capability Will Remove Barriers and Create Travel Retailing Opportunities
NDC will help airlines boost the sale of ancillaries, and by facilitating personalization it can make the bookings process far more attractive. But while IATA is pushing for NDC adoption, it won’t remove all barriers by December. Its success relies on a number of organizational, systems, marketing, and merchandising improvements that even airlines say will take more time.
IATA reported in December that 10 airlines had deployed components of the NDC standard “on a small scale” and 20 more airlines had “plans to go live in the next one to two years.” It also reported that 15 of the top 20 airline groups had “either deployed components of the NDC standard or plan to do so by 2016/2017.”
As IATA states, “NDC can only take off and realize its full potential if the value chain works together.”
Progress, yes. Eliminating all barriers? No.
2. On-Point Personalization With Predictive Analytics and Machine Learning
Personalization will help build consumer loyalty to airlines in ways we believe that mileage programs no longer can. Predictive analytics and machine learning are very promising, but effectively applying all of these technologies will take a few more years.
As the Vueling’s CEO, Alex Cruz, said last year, “If we get it wrong, you never fly with us again. If I give you a suggestion that is absolutely irrelevant, but very specific, I’m actually going to show you that I don’t know anything about you. So we have to be very careful with the process, and we’re spending a little bit of time getting it right.”
3. Travel Retailers Will Take Advantage of Omnichannel Retailing and the Single Customer View
We expect airlines will do a better job with omnichannel retailing, but the implementation process is complex and airlines are only getting started.
4. Customers Will Leverage Mobile for Control and Information
Customers have already leveraged mobile. Airlines’ mobile platforms haven’t kept up.
Many airline apps don’t offer trip searches and booking, offer on-the-go ancillary purchases, or address travel disruptions with alternate travel arrangements.
Bring Your Own Device (BYOD) in-flight entertainment and onboard services trend will continue to grow as Connectivity and wIFE (wireless in-flight entertainment) suppliers expand their platforms this year.
It’s important to watch Google in this space offering consumers more comprehensive (and comprehensible) smart searches.
5. Airlines Will Invest in NextGen Ancillary Merchandising Strategies
For their own sake, we certainly hope so. But this prediction relies on the effective application of NDC, and on airlines overcoming consumer reaction to up-selling.
Airlines are fighting a battle of perception. Strategic marketing and technology investments will help, but airlines cannot expect to lift consumer mood by the end of 2016.
6. Loyalty Will Play a Larger Role in Personalized Travel Retailing and Offers
This prediction is a bit backwards, in our opinion. It’s more accurate to say that personalization will play a leading role by inspiring ‘natural’ loyalty.
But OpenJaw is right to say the two are closely linked and become even more intertwined over this year.
“It’s quite possible that passengers will not be aware at first of the impact and implications of the industry’s NDC initiative as it rolls out in 2016. Nevertheless, the changes are intended to be profound, so that the airline industry and all related travel partners can take advantage of data, information, emerging technologies and business-building opportunities that materialize across the travel spectrum,” Open Jaw states in its conclusion.
GuestLogix Six for 2016
1. Connectivity Will Improve: Passenger Productivity and Inflight Purchases Will Increase Exponentially
We already see this happening. However, during a recent interview, Jamie Perry vice president brand and product development,JetBlue, mentioned a key a challenge to the growth of in-flight retail via wIFE channels.
When we asked Perry whether the airline’s new fully connected seats would help boost ancillary sales, to include features like on-board seat upgrade purchases, he said the real issue is preventing fraud through reliable real-time payment solutions.
“We’ve always held back on selling items that have a higher value, until we can do real-time payments,” he said. “With Apple Pay and [crew equipped with connected iPads] we can start to get a bit creative on what we can sell onboard.”
2. Smart Selling Will Improve: Check In, Buckle Up, Start Shopping
Airlines are investing in systems to better capture and apply passenger data and making efforts to convert that data for better ancillary up-selling and personalization.
3. Passenger Self-Service: Pre-Ordered Items Will Be Delivered Directly to the Seat
Virgin America offers in-flight meals ordering through its seat-back RED In-Flight Entertainment (IFE) system. Singapore Airlines’ Book-the-Cook service offers customers the option to pre-select in-flight meals at the time of booking, changeable up to 24 hours before departure. Finnair lets passengers buy upgrades onboard to seats offering more legroom, and allows pre-ordering of duty free items for delivery on the return flight. These are only some examples. This retailing flexibility helps airlines further boost growing ancillary sales revenue. We expect airlines to introduce more of these types of services this year and beyond.
4. Put Away the Leather Wallet: Mobile Payments Will Make Everything Easier
Mobile payments could simplify many things—again Perry said as much for JetBlue—but they’re not without technical complications—not the least of which is knowing what mobile payment standard will come out ahead, or how to accommodate different payment methods.
5. Airlines Will Embrace Destination Merchandising: Would You Like Theme Park Passes with that Airline Ticket?
Some airlines sell destination activities, and have for a while, but they can do much more in this space. Watch for airlines building the right foundations through compelling destination marketing.
6. Airlines Will Look for Efficiencies, Revenue in Business Operations
This prediction was very broad in scope. It effectively translates to: airlines will want to make money. So, yes.
“Able to operate as better retailers, airlines will look for innovative ways to update their warehousing, catering, supplier networks and delivery services to make sure that the right products get to the right plane at the right me – a logistical feat that will require an overhaul of existing procedures and real-time data sharing,” GuestLogix states.
But we must disagree with this statement in GuestLogix’s conclusion:
“Flying from Point A to Point B will be much different in 2016, for passengers, crew and airlines alike. Passengers will notice less friction and smoother transitions between various legs of their trips. Airline employees will have new tools, equipment and technologies to learn and use on the job. And airlines will be able to stake a claim in the fully mobile, Internet-connected, customer-focused marketplace.”
Are we still talking 2016 or 2026?
Airlines are equipping themselves and making progress on personalization and technology. But, as anyone who flies will tell you, we’re still far from eliminating the frictions of air travel.
Good news: as airlines introduce the technologies driving these twelve trends, they will help eliminate some of the pain points of travel during 2016. Cross fingers.
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Tags: airlines, guestlogix, in-flight, paxex, personalization
Photo credit: The TopSeries family of in-flight systems (IFS) bring innovation right to the passenger's seat, through integrated entertainment and communication solutions and connectivity with personal electronic devices. Thales