July 6, 2016

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Customer Experience: The new game changer for the Aviation Industry

Unraveling the next epoch – towards a transformational roadmap

The aviation industry is witnessing a boom of growth and expansion. On an average, 93,000 flights take off from 9,000 airports around the world with somewhere between 8,000 and 13,000 aircrafts in the air at any given time.

However, this meteoric movement is defined by a key integral element - much of the industry’s recent success hinges on its ability to redefine customer experience by leveraging ‘disruptive’ innovations in technology.In fact, ‘experience’ is taking the center stage of the customer engagement blueprint – even as consumers demand vibrant and revitalized services, in a bold, connected and deeply digitized landscape.

The dynamics of the carrier-passenger relationship is truly changing, at a speed that the industry is not quite used to.The question then is, ‘How do modern organizations/service providers position themselves in this era of ‘experience’?

We believe that the answer lies in understanding the massive importance of becoming a 21st Century Enterprise. Therefore, enlightened aviation companies must follow suit with these strategies in order to retain their competitive edge, propel customer loyalty, boost brand value, and increase revenues.

Consumer Experience at the pinnacle of the pyramid

With the need to deliver a seamless user experience in terms of productivity, connectivity and communication – from the garage to the airport, on to the flight and beyond, conventional industry values and practices are taking a back seat.

The focus for now is on personalizing travel experiences for customers, not as demographic groups but as individuals,  to stay ahead of the game—and technology is at the heart of this transformation. With the customer at the center of this refurbished approach, the industry is evolving from “fast travel from point A to B” to “Digital Pilot” to now “Digital Aviation”.

So, what are some of the things that passengers are demanding today? Personalization, productivity tools, access to their digital content or just staying connected. In a recent survey, 54% passengers prefer connectivity to food. They are asking for better seating, lights, interiors and even lavatories.

Future passenger experience is being discussed and designed NOT anymore in silos but in the ecosystems of airlines, OEMs, interior, IFE and SATCOM companies.

  • No wonder we are seeing traditional consumer electronics players e.g. Panasonic and now Samsung, entering the in-flight-entertainment(IFE) industry.
  • Recently, Etihad signed a contract with Teledyne and Panasonic to install complete “connected aircraft” offerings in 70 new Boeing aircraft. The airline also signed a $700M contract with IBM for cloud services.
  • We also see companies like Zodiac adopting a horizontal integration strategy to own the complete interiors (seats, galleys, lavatories, IFE etc.).
  • Established players e.g. Thales are repositioning themselves from being IFE companies to becoming an in-flight-experience companies (Thales has renamed its business unit as Thales In-FlytExperience).

On May 21st, 1927, Charles Lindbergh, after flying for 27 hours circled over a boat and yelled, “which way is Ireland”? Of course, no one replied.

On the infrastructure side, while the satellite communication costs may be high today, there is a lot of action in this space, with several companies from Iridium to Inmarsat launching satellites one after another. New players e.g. Viasat, GOGO and many others are vying to get a piece of this action as connectivity play increases inside the aircraft for consumption by the pilots as well as passengers. 

Changing value stream and service-orientation

With the changing dynamics, the aviation industry is likely to shift its value stream towards an ‘Air-Transport-as-a-Service’ business model, transforming the outmoded tiered supply chain into asset-leasing companies, the Uber equivalent for the air travel industry.

Customer experience today is a multi-layered process; truly end-to-end, refusing to stay limited to the confines of the aircraft, where traditionally the airline company was solely responsible. From booking tickets online to the in-flight experience and beyond, airlines are moving towards an expansive ecosystem of integrated platforms connecting service silos and touch points, to deliver an experience rather than just a service.

Customer experience is becoming more refined, with business models such as “power-by-the-hour” and “per-landing”. In the business jet segment, players like “XOJET” are already offering a “per-trip” pricing model to their customers as opposed to the “fractional ownership” model of companies such as Netjets.

Overall, airline companies are trying to become “living and sentient entities”as Arie de Geus describes in his book The Living Company i.e. business eco-systems that learn and continually enhance the end-user experience.

While the introduction of technology and resultant changes is good news for new-age travelers, the age-old industry certainly has to grapple with many challenges that it is not used to. Traditionally, aerospace is a laggard when it comes to technology adoption and always focused on only one thing - safety. Here are a few factors that I believe will decide the pace of this transformation:

  1. Future of communication – Satellite or ATG (Air to Ground)
  2. Cost of satellite connectivity 
  3. Cloud/IoT adoption
  4. Cyber security
  5. Digital Continuity