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Airline strategy expert and author Nawal Taneja urged carriers to transform their business to a digital model – taking the lead from sports giant Nike.
Taneja was talking at a panel session on airline merchandising at the CAPA Aviation Summit in Antwerp.
He said the Nike training shoes fitted with sensors and transmitters linked to smartphone apps presented “real-time geo-tracking results” to customers, and the brand offered further “intelligent options” such as advice from professional coaches.
“This is a good example of transforming your processes to a digital model,” he said.
Airlines needed a change of mindset to make these changes, said Taneja, from from being operations-orientated to customer-centric. This means focusing on “the totality of the customer profile, learning about behaviour and expectations, leveraging communications technology to enable dynamic retailing.”
Travelport’s head of global supplier strategy, Ian Heywood (pictured), said that while airlines can dynamically sell through their own websites, they need to distribute to “all points of sale” so that customers have choice. This means selling though APIs (application programming interface). “We have proven results with the LCCs [low-cost carriers] who are successfully doing customer-centric selling through us today,” said Heywood.
But he said it is more difficult for traditional carriers to move from a “40-year-old” system to using API-based technology. “It can’t be done overnight,” he said. “It’s one hell of a step. We need to talk as an industry about how we get there.”
Taneja said that the key to airlines’ future success is moving from focusing on revenue per seat to revenue per customer.
Travelport’s Heywood said that to achieve this, airlines need to expand on their current expertise in “fare buckets” revenue management to a fluid, dynamic model. This involves traditional “silo” departments within an airline – such as revenue management and marketing – working together to interact with customers, he said.
Heywood suggested that to mitigate risk, airlines could trial this new model of customer-centric selling with certain groups: for example, a particular agency; corporate customers; or certain short-haul routes where they could benchmark competitiveness against LCCs.
“You need bold leaders in a sector that has not moved at the pace that technology has allowed it to,” said Heyward.
The panel agreed that a key driver of ‘revenue-per-customer’ selling is ancillaries – this was an important topic during several panel sessions at the CAPA summit, in the light of recent projections that global airline ancillary revenue for 2014 will be nearly $50 billion.