2023 will be the year of AI. To realize its full potential, travel companies need to rethink their entire philosophies around data, analytics, and decision-making.
Discover the top trends that will define the travel industry for the coming year.
This sponsored content was created in collaboration with a Skift partner.
Artificial intelligence isn’t a new concept. However, it’s matured considerably as a practical business technology over the past several years, and the travel industry is starting to leverage AI applications across organizational functions — including revenue management, operations and maintenance, back-office processes, and customer personalization.
The capabilities and opportunities for AI in travel are expanding rapidly, and they’re evolving very quickly. But technologies this transformative require more than software purchases and IT system upgrades. To realize the full potential of AI, organizations need to rethink their entire philosophies around data, analytics, and decision-making.
SkiftX spoke with Alex Mans, founder and CEO of FLYR Labs, to discuss why 2023 will be the year of AI across the business landscape, how it has evolved into a mission-critical technology for the travel industry, and what companies can do to reprioritize and reorganize their core business strategies to capture its potential.
SkiftX: Why is 2023 such an important inflection point for artificial intelligence? How do you think that the perception of AI has changed in the past year?
Alex Mans: 2023 is the year when AI will become clearly valuable to any executive across any industry, and when needing or deploying AI in your organization will become inevitably necessary.
The perception of AI has changed in the past year for several reasons. As one example, the cost of training and operating AI has dramatically come down. In addition, as executives of companies are seeing DALL-E image generation or ChatGPT chatbot intelligence, there is a much more concrete understanding of the power behind this technology.
And finally, many people have pushed AI aside as a black box. The reality is that’s no longer true. The explainability of AI and understanding of the factors that drive certain decisions are very much possible today.
SkiftX: Why is this such an important moment for AI in travel?
Mans: It’s very clear that beyond Covid and the pandemic, we’re in a more dynamic environment than ever before. Airlines have learned how to move into new markets at an incredible pace and how to move their equipment around to meet demand. Customer behavior has evolved where it is much less predictable year over year and more informed by ad hoc decision-making.
The second thing, which is tied to the dynamic environment, is that the legacy methods informing how airlines and travel companies forecast revenue, demand, and other factors don’t drive the desired accuracy to make decisions. It doesn’t work anymore.
As a result, they’re now running into a situation where there is too much information and too many variables for a human analyst to be responsible for. So all those factors are driving an immediate need for AI as a key component to commercial decision-making or decision-making in general.
SkiftX: What does the opportunity for AI mean for individual companies and how they structure their technology investments and operations?
Mans: At a high level, there are three key areas to structure around: Technology needs to be a main investment focus; the way you operate with technology companies is important; and then the commercial incentives need to support that bet or transition into new technologies or operating modes.
Ninety-six or 97 percent of the headcount at most travel companies — and airlines in particular — is focused on “managing the metal,” the operation, and the cost side of it. A very small percentage is focused on commercial and technology. It’s important that airlines and travel companies realize the importance of investing in that small area in terms of headcount to stay ahead.
SkiftX: How can travel companies start to prepare their organizations for these changes now?
Mans: Strong data infrastructure is important, but that doesn’t simply end with picking a database. As an example, we often see companies invest in great technologies to build their data strategy around, but then they are not well equipped to build the data engineering teams to implement and maintain those systems.
Airlines and travel companies also need to continue investing in moving their software workload to the cloud. It’s much easier to pull and integrate with data that sits in the cloud than data that sits in a self-hosted environment.
There’s also a lot that travel companies can do to start exposing their end users to AI so that by the time they introduce it, there is an understanding of what it can do. As for long-term impact, it’s going to improve adaptability, improve user productivity, grow revenue, and reduce costs.
SkiftX: Where do people fit into the equation as travel companies overhaul their technology systems and analytical processes?
Mans: You still need humans to bridge between humans. Even if AI helps inform decisions in revenue management, marketing, leadership, network planning, cargo, and every commercial function in the airline, you still need humans to help link those functions.
Eventually, you’re going to see the role of an analyst effectively span multiple commercial functions. You can drive demand by lowering prices, but you can also do it by being smart about where you spend your marketing dollars or by moving your capacity up or down. There are different levers leading to a good outcome, and today those are very siloed. AI and good interfaces can help bring them together, but the human factor will still have to drive collaboration.
SkiftX: What are some ways that key stakeholders and technology leaders can make the benefits of AI more transparent within their organizations?
Mans: At the end of the day, success with AI comes down to measuring the right things to practically develop confidence. Only try to forecast things you can measure. Look at how humans impact it. Run A/B tests. And look for explainability to know how it made the decision. All of these things are key to driving confidence and showing the benefits of AI.
For more information about FLYR and its commercial intelligence and optimization platform that leverages AI and deep learning, visit www.flyrlabs.com.