Airline bosses have stressed the “crucial” importance of digital strategy for the health of their businesses.
The chiefs of Emirates, IAG and Easyjet were speaking at the Global Aviation Festival in London.
Easyjet CEO Carolyn McCall said that when thinking about digital strategy, “we don’t see ourselves as an airline, but as an e-commerce platform.”
“The fact that we have half a billion visits to our digital channels gives us an enormous amount of data and contacts.” She said it is important to avoid using customer data in “a haphazard or irritating way”. Instead, key to success is being clear on strategy objectives; in Easyjet’s case making the platform as easy to use as possible for passengers, whether changing tickets, buying extras or booking other elements such as hotels or car hire.
Emirates president Tim Clark said his ‘digital disruption group’ had spent several months examining every company process in “very granular detail”, and is now looking to redesign processes on new platforms, which could “streamline 50 per cent of what we do.” He said: “This has implications for workspace, for workforce. Essentially it will take cost out of the business, it will allow us to be more efficient back and front of house.”
Emirates has recently appointed former Malaysia Airlines CEO Christoph Mueller as chief digital and innovation officer. As well as heading up the digital disruption project, Clark said Mueller will be “looking at how, as an industry, we are constrained by the legacy distribution systems. I am not satisfied that the GDS systems are fit for purpose in the next five to ten years, particularly in light of what’s going on in the digital world.”
Clark predicted Emirates would move to a new “open architecture” platform in the next five years, which he believes will be driven by ‘Blockchain technology’ – the ‘distributed database’ technology that underpins and records all Bitcoin transactions.
This technology offers more instant, ‘realtime’ access to data, allowing the airline to “do many things a more rapid, meaningful, focused fashion, to get the value that you need – whether that's consumer or supplier interaction.”
Clark added that Emirates has been working with the Oxford University mathematics faculty to test its yield management algorithms – “to make sure the distribution, use of inventory and pricing is optimising the yield” – as well as with other centres of expertise such as ‘Silicon roundabout’ companies and Carnegie Mellon University in Pennsylvania. He added: “Digital disruption, whether it be in the airline business or any other business, is staring us in the face – ignore it at your peril.”
IAG boss Willie Walsh said that like Emirates, the airline group has created an internal digital disruption team. “The way we looked at this was there are people out there looking to disrupt our business, so we should look to disrupt our own business, for our own benefit,” he said. “We've given the team a lot of freedom. We believe digital will give us opportunities to enhance performance in many ways – we want to see innovation that's going to benefit our customers and our profitability.”
Feeder traffic
Both Easyjet’s McCall and IAG’s Walsh anticipate development in ‘feeder’ traffic arrangements between low-cost carriers (LCCS) and legacy airlines, driven by customer demand. And both highlighted that “complexity and costs” need to be avoided for successful partnerships.
“IAG has publicly stated that we are willing to work with Ryanair feeding into Aer Lingus's transatlantic network,” he said. “We have no principled objections to working with Ryanair or anyone else, because it’s the customer who will decide.”
“If we can facilitate that in ways that makes sense, and it doesn't increase our costs and complexity, we're going to do it. Digital can make legacy IT issues easier for the customer connecting from feeder flights.”
McCall said: “From our point of view, we fly to all the airports legacy carriers are operating in, so it would make sense. But we have to consider carefully and make sure it doesn’t contaminate our model – any added complexity or cost would be negative. It’s about systems and very clear principles. But I think it’s inevitable there will be many more alliances and partnerships where low-cost feed makes sense.”
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