COVID19 crisis : where airlines should focus to manage the restart ?

By Hélène Dubos | Trends & Innovation

Jul 09

PART 2
In the first part of our paper published on June 18, about "where Airlines should focus to restart after COVID19 crisis?", we identified 4 focus airlines will tackle  in their recovery phase. Let's take a closer look on each one. 

    > Relaunch the demand: restore the trust and keep the contact with the travelers

    > Continue to comply and adapt to the new sanitary rules , a brand-new topic - which highly contribute to the the first point above.

    > Develop the use of Data and Analytics that will help to manage the restart

    > Accelerate digitization and automation projects that generate cost-savings

 Relaunch the demand: restore the trust by keeping the contact with the travelers

Airline focus #1 for restart.

This is one of the main concerns: “ Besides the travel restrictions, will this crisis change the appeal for travelling for this summer and following months ?”

Most of our interviewees were worried about saving the touristic period to limit the loss. In Europe, leisure travel is concentrated on 4 months around the summer and last studies demonstrate that people do not have the same willingness to travel as before the outbreak. 

To reassure their passengers and be fully transparent, most airlines have communicated through their website the safety precautions they  have implemented regarding the COVID19 and the passenger obligations. 

And creative initiatives appeared to stay on the top of minds. Here are some examples of marketing actions airlines have done to stay in touch with their customers : 

  • Qatar airline offers vouchers  to travelers booked on future flights. The vouchers can be spent from the date of the travel and after. The objective is to avoid their travelers to cancel by fear or anticipation.
  • Some airlines have launched marketing content based on their people, publishing series on Instagram such as “Virgin Atlantic Flight School” or Youtube language lessons videos as Etihad did, showcasing its multi-language cabin crew in its “Learn Basic [language] with our Cabin Crew” series

 

Continue to comply and adapt to the new health and safety rules.

Airline focus #2 for restart.  A brand-new topic for all industries but with heavy impacts in air travel business.

 Airlines have put a lot of effort on adapting to health & safety rules and those efforts will be maintained as long as the virus circulates. They have to follow the guidance from health ministries and authorities (read an interesting page on IATA website gathering the restrictions by countries) ... but they also need to find solutions with a minimum impacts on their margins. Empty middle seat procedure is not financially sustainable on the long term !

All those measures impact the traveler experience, airlines have to understand what is acceptable or not for the travelers and what will contribute to restore the confidence. The answer is probably a fragile balance between enough sanitary measures with a minimum impact of the comfort and experience.

In order to help airlines handle this evolving and tricky topic, the main industry associations such IATA, ACI, ICAO have issued guidelines and advocate for reasonable and consistent rules toward authorities.

In recent hackathons such as TravelScrum’s one, we have seen a strong focus on solutions able to apply the rules properly while minimizing the negative impacts on revenues and/or customer experience such as touchless procedures (discussed below in the digitation section) or seat allocation optimization ensuring correct social distancing but maximising the flight loading and preserving the passenger experience (keeping family or groups together). 

Will it prompt  airlines & airports for better collaboration ? Will they be able to put in common their assets and be more effective? The future will tell us.
For the moment, there is still no standard procedures  among airports in the world.

Develop the Use of Data and Analytics to manage the restart of Airlines

Airline focus #3 for restart.

Data and analytics are important elements to closely pilot the activities for restart and further 

Airlines need more than ever to closely follow their finance and be able to manage the treasury on a daily basis. They have to redefine the way they track revenue to adapt it to the new context and get a clear forward view of their performances on a daily basis. 

3 specific indicators have to be integrated in the analytics to cope with today’s situation : 

  • Revenue from tickets issued and paid with a classical “form of payment” (credit cards, cash). Those represents an effective cash increase. 
  • Revenue from tickets paid with vouchers which should be considered as debt clearance rather than revenue. The stock of issued vouchers is in fact a debt essential to monitor as it triggers operations cost without generating cash. 
  • Revenue expected from tickets not yet issued, for which the risk of a cancellation/non-payment is higher and payment might be done with a voucher. 

We have developed a specific product to fulfill those needs ,  get the offer description here. It is proposed free of charge for the first months. 

Data & analytics is key to understand your customer behavior 

The traffic slowly restarts in a fragmented way :  by geographic zones and depending on States' decisions. The ability to follow the behavior of its own market and customers, to measure its own level of recovery and understand what will be demand is therefore fundamental. From this knowledge, airlines will be able to adapt their offers, set the right price and target the right segment of their customers base. They will also better appreciate the customer behavior’s evolution compared to before the crisis. 

To do so, airlines should analyse their data on the customer perspective,  compare what they see with the previous behaviors and try to understand what are the main changes and new habits. They have to dig into their customer data. Due to the complexity of the air industry IT systems, achieving such tasks is not easy if the airline has not already engage  heavy efforts along the past years and reach a certain level of maturity in term of customer data analytics. The IT department must already have integrated customer data processing in their routines (meaning customer data gathering from PSS and DCS system, data reconciliation and analytics interface to produce outputs).  

Nevertheless, tools exists to help airlines in this heavy task. Air industry IT providers propose platforms that can fulfil the needs around customer data analytics, with turnkey solutions - such as Conztanz travel data platform agnostic to any PSS - or partial ones  such as Sabre Intelligence Xchange or the Amadeus Airline Platform. Get information about our platform here. 

Main CRM providers (Salesforce, Zendesk) also linked partnerships with air travel system's specialists to propose, into their marketplace, apps that can collect and enrich travelers data and therefore provide the analytics behind

Data & analytics is  fundamental to gain in agility and swap mindset

McKinsey has exposed in a recent publication the lessons learned during the crisis about the different operating models, concluding that agile organizations better performed during the crisis than non-agile ones. The characteristic of agile organisations is to be  fast, resilient, and adaptable.They pilot their decisions based on metrics and facts using  performance-tracking systems deployed enterprise-wide. Those indicators provide daily transparency on their performance to cross-functional teams. The philosophy behind providing indicators transparently to everyone is to swap old mindset into an agile model.  

According to BCG - and lots of actors agree on this - the next step for airlines is to resize and restructure their operating model and organization with an objective of simplification. 

Story sharing
agility & performance metrics from other industries by MCkinsey 

An agile leader of a telco operator described knowing exactly what the impact was going to be in product delays if it was shifting people around, since everything was so transparent on a priority level. Similarly, companies that didn’t implement an enterprise-wide performance-tracking system highlighted that as a missed opportunity.
The transformation lead of a European bank mentioned that it was almost blind about performance during the pandemic. Automated dashboards, the lead said, would have helped the bank identify the key issues and focus on what mattered most during the crisis.”

Here again Analytics must be used to provide the relevant insights to perform this complex task.

Accelerate the digitization and automation that generate cost-savings

Airline focus #4 for restart.

Airlines definitely continue to search for savings. They will pursue the projects initiated during the resistance phase and prioritize the digitization projects and processes automation that allow to save costs. 

A lot of energies are currently spent to transform actual airport processes into contactless processes : touchless check-in counters, touchless boarding. To achieve these objectives, digitization of the processes and development of self-service solutions are required. Those initiatives allow a double objective: human resources savings while contributing to  safety. 

In the Customer Service domain, considerably overwhelmed since the beginning of the crisis, airlines have put a strong emphasis on chatbot projects turning towards players such as ADA Support or Mindsay (to only quote those with significant experience in aviation). 

Chatbots provide the ability automate of the answer of frequently asked questions. On average, 70-90% of the requests are resolved by the bot, reducing drastically the number requests that fall back to an agent. Those solutions demonstrate important cost-savings and an enhancement of customer satisfaction. 

To give some figures sourced from APEX-AERO post : “during the peak of the COVID-19 crisis,  Iberia chatbot, IBot, was handling 45,000 requests per day on WhatsApp. It handled 450,000 messages in March, an amount 300% above February levels, and successfully resolved 72% of queries. IBot handled a further 250,000 messages on other platforms in March with an 88% success rate. The top queries IBot handled involved voucher requests, flight status inquiries and booking management”.

But those chatbots show limits. Without further development and integration, a chatbot can not automate tasks processed at PSS level  - such as booking modification. 

In the current context, those types of demand have exploded and airlines wish to automate those time consuming tasks. So the next step is to develop the automation of those and integrate them within the existing chatbot or the CRM solution. 

Usefulness of automation tools and digitization was boosted by the COVID-19 crisis. Projects were accelerated. We can bet that airlines will pursue the configurations of those tools  to leverage them as revenue generator. Enrich them with smart cross-selling scenarios based on the traveler profile and moment of travel, that can be modulated by the occurence of specific events (delay, cancelation, travelling in group etc) could be the following priority.

Airlines have already engaged their recovery 

From what we observed, these are 4 main focus to help Airlines to restart after the COVID19 crisis. Achieving the implementation of those topics requires steady efforts for the IT team and full support of the management to transform the staff mindset and habits to leverage it. Many Airlines have already begun some initiatives, they now need to accelerate. Conztanz can help accelerate contact us.