" If you want to be a millionaire, start with a billion dollars and launch a new airline. "
- Richard Branson, Founder, Virgin Group
Who can sum up the inherently
challenging nature of the airline
business better than the maverick
founder of Virgin Atlantic?
However, in the last few years,
airlines seem to have reined in
the challenges to some extent.
They continue to expand their top-line and bottom-line at a healthy
pace, by overcoming the barriers
posed by growing competition,
rising fuel prices, changing
regulatory norms and rapidly
evolving passenger expectations.
The International Air Transport Association (IATA)1 forecasts the
sector's net profit to rise to
USD 38.4 Billion in 2018 making
this the fourth consecutive year
of sustainable profits. As airlines
pursue wider market share,
and adopt new technologies
to re-imagine their offerings
and operations, here are six
technology trends that will have a significant impact on their
business outcomes.
Trend 1: Enabling
Frictionless Travel With Biometrics
The adoption of biometrics is
still at a nascent stage in the
industry. But a few airlines have
already begun investing in
fingerprint and facial recognition
technology. Currently, the
technology is being tested in areas
such as check-in, security, lounge
access and boarding.
Long queues for security check
or at the baggage carousel
continue to be the foremost pain
point for passengers. Also, having
to constantly show their passports,
identity cards or boarding passes
for verification add to their
frustrations. Airlines are
increasingly experimenting with biometrics to address
these issues and make the
journey as frictionless as
possible for passengers.
In the long run, paper and mobile
boarding passes will become
obsolete as airlines use facial,
iris or fingerprint scans to
identify passengers. A European
airline has already piloted
facial-recognition programs to
reduce check-in and boarding time.
The U.S. Transportation Security
Administration (TSA) has unveiled
an initiative across 30 domestic
airports to use passengers'
fingerprints for identification and
issuing boarding passes.
If the associated privacy concerns
around data are addressed by
airlines, biometrics will deliver
multiple benefits including shorter
waiting time for passengers.
Trend 2: Humanizing the Experience Through Artificial Intelligence
Globally, the market for Artificial
Intelligence (AI) in airlines is
expected to touch USD 2.2 Billion by 2025.2 Different use cases for
AI adoption across the industry are
gradually taking shape. The most
common one, of course, are
chatbots that are becoming
increasingly sophisticated in
resolving passenger queries.
Some airlines are looking beyond
chatbots to leverage the true
potential of AI. For example, a
leading Asian airline is using AI to
estimate the average lifespan of the
parts on its planes. The airline has
been able to quicken inspections,
optimize the inventory for parts and
improve operational efficiency. Airlines are also using AI and
predictive analytics to create
personalized promotional
campaigns to improve upsell / cross-sell opportunities. Airline
revenue management is another
area where AI and machine
learning are expected to drive
transformation in the long term.
Trend 3: Robotic
Revolution and Automation
Over the next decade, the global
robotics and automation market
is expected to touch USD 1.2 Trillion.3 The airline industry
is expected to make up a
significant chunk of this rapidly
growing market. Automation of
workflows has been a major focus area for the industry in
recent years. And, this focus
is only accelerating with the
early-stage adoption of robots.
For instance, a Korean airport
has tied up with a leading
electronics company to test two
prototype robots that will deliver
boarding information and
directions to passengers.
A global IT company that offers
services to the air transport
industry has designed an intelligent check-in kiosk that
can autonomously move to
congested areas of the airport
to reduce the waiting time for passengers.4 Robots at a
Japanese airport, meanwhile,
are automating several tasks
including flagging security risks
and transporting luggage.
Trend 4: Seamless Data Sharing
Via Blockchain
The airline industry is
characterized by data sharing
among multiple players across the
entire value chain. At every
touchpoint of the passengers'
journeys, complex data
reconciliations happen in the
background. However, given
airlines' siloed systems for storing
data, this data exchange is rarely
seamless. This is one area where
blockchain — often referred to as
the 'Internet of Trust' — can enable
airlines to conduct smoother data
sharing and eliminate multiple
transaction costs.
Often, in the event of flight delays,
passengers get inaccurate status
updates. Blockchain's inherent
ability to provide a single source
of truth can help airlines provide
accurate flight updates in real
time across multiple channels
during delays.
A prominent German airline has
formed an alliance with many
companies to explore blockchain-centric distribution, while other
airlines are figuring out use cases
for retail, distribution and baggage
handling. A leading South Asian
airline has launched a blockchain-based
loyalty wallet that allows
members to redeem airline miles
at point-of-sale.
Trend 5: Traveling in Augmented / Virtual Reality
The excitement around Augmented
Reality (AR) and Virtual Reality (VR)
cuts across industries — market
research firm IDC pegs the
worldwide revenue from AR / VR at USD 162 Billion by 2020.5 Airlines
are also exploring different
implementation scenarios for AR
and VR ranging from airport
wayfinding to remote airport
operational control centers to
immersive in-flight entertainment.
Gatwick airport in the U.K., for
instance, has launched a
beacon-based AR wayfinding tool that shows direction to passengers
through their mobile phone cameras.6 The AR tool makes it
easier for passengers to navigate
within the terminal and locate
check-in desks, departure gates
and baggage carousels.
Passengers aboard Airbus
A380 flights are using the AR-led iOS app iflyA3807 to take
360-degree virtual tours of the
cabin, have a closer look inside
the cockpit or to know more about
landmarks they are flying over.
At New York's JFK airport,
passengers waiting for budget
flights are given VR headsets by
a European airline to 'show' them
its competing offerings for
upselling opportunities.
With increasing adoption, airline
mechanics will most likely use AR
to carry out quick, accurate repairs
and maintenance that can be signed off remotely by supervisors.
This improvement in efficiency and
accuracy will translate into faster
repairs, minimal equipment
breakdowns and fewer delayed
flights for airlines.
Trend 6: Passenger Experience and the
Internet of Things
Though airlines are still struggling
to bring their legacy systems
up-to-speed, many have rolled
out Internet of Things (IoT)
initiatives to re-define the
passenger experience. Airlines
are looking at leveraging IoT
for operational areas ranging
from baggage management to
in-flight entertainment.
A leading U.S. airline has invested
millions of dollars for the
deployment of IoT to track baggage in real time thereby improving
both reliability and transparency.
Airlines are also offering
personalized navigation at
airports by integrating their
native mobile apps with airports'
beacons. As passengers move
across terminals, their locations
can be used to guide them toward
departure gates, push customized
offers, or direct them to lounges
at discounted rates.
IoT combined with advanced
analytics can also open up
several upsell / cross-sell
opportunities for airlines.
Historical data around passengers'
preferences can be used to make
personalized in-flight offers such
as upgrades. Curated
entertainment content can also be
made available with all charges
seamlessly debited from digital
payment accounts.
Looking Ahead
As digital technologies continue
to transform the industry and
re-shape consumer expectations,
airlines will have to regularly
re-visit their core operating assumptions to stay relevant.
They will have to re-imagine key
operations and functions to deliver
compelling and differentiated
passenger experience. With the
'consumerization' wave
transforming many service sectors
including media, transportation and retail, airlines too will have to
harness cutting-edge technologies
in a 'smart' way. They will have to
aggressively experiment with
different use cases to address
pressing passenger pain points and
use the learnings to continuously
refine their approach.
Click here to view the infographic
References:
1. http://www.iata.org/pressroom/pr/Pages/2017-12-05-01.aspx
2. https://www.prnewswire.com/news-releases/
3. https://www.prnewswire.com/news-releases/the-rise-of-the-robot-investing-in-disruptive-automation-682534451.html
4. https://www.tnooz.com/article/SITA-Labs-introduces-moveable-robotic-check-in-kiosks/
5. https://www2.deloitte.com/insights/us/en/focus/signals-for-strategists/augmented-and-virtual-reality-enterprise-applications.html
6. https://www.independent.co.uk/travel/news-and-advice/future-travel-airport-technology-hi-tech-chatbots-robots-augmented-reality-ai-a7961171.html
7. http://www.airbus.com/newsroom/press-releases/en/2018/01/airbus-launches-iflya380-augmented-reality-ios-app-taking-passen.html