Today’s airlines offer an impressive range of digital capabilities, from online bookings to enhanced data analytics. But the number of digital innovations continues to rise — in 2018 alone, venture capital organizations invested $47 billion in aerospace initiatives. If these investments continue, we should expect a new wave of digital transformations to sweep through airlines in the near future. Here are a few possible forms these transformations might take, given recent airline marketing trends:
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WiFi and smartphone support
A few short years ago, simply being allowed to use cell phones during flights was a novelty. Today, airlines are rushing to design entire suites of WiFi connectivity services. “Things are moving quite fast,” said Anais Marzo da Costa, the head of aircraft interiors marketing at Airbus.“Smartphones are the number one travelers companion … We are in a transition phase. Already 57 airlines were offering wireless IFE streaming in 2018. Airlines are developing personalized offers by mobile connectivity [and] data analytics.”
Current projections suggest the number of actively connected aircraft will reach 23,000 by 2025. Atlantic Airways is already developing new connectivity features through its partnership with Iridium, a company that manages a Low Earth Orbit satellite constellation. Boeing and Airbus are also developing new aircraft that will support layered connectivity services.
These connectivity services aren’t just convenient for customers, they’re also an immensely lucrative airline investment. One study from the London School of Economics and Political Science predicted that in-flight WiFi will become a $130 billion market by 2035 thanks to revenue generation from the following channels:
- Broadband access
- On-board e-commerce
- Premium on-demand content
These services mean airlines can go well beyond basic WiFi access, earning higher profits in the process. If these services are released alongside branded apps that enable in-flight content, airlines might gain additional channels for increasing customer retention. The WiFi connectivity market is already growing rapidly, so expect new developments to emerge in the immediate future.
Airline loyalty programs are a traditional method of boosting retention by offering travelers frequent flyer points. In recent years however, the travel habits of new customers have necessitated changes to these programs. While the number of overall airline travelers is increasing, Millennial and Generation Z customers are rarely interested in loyalty programs since they don’t travel frequently enough to redeem rewards.
Since infrequent travel habits undercut the purpose of loyalty programs, airlines have started expanding their scope. Frequent flyer points can be redeemed for digital services or off-flight amenities, including:
- Spending points on in-flight amenities like extra baggage, food & drinks, or other items
- Redeeming points for digital magazine subscriptions or physical merchandise
- Spending points on other travel experiences like sports games, car-sharing programs, or hotel rooms
What’s more, airlines are finding opportunities by distributing points through online businesses. Recent estimates suggest that points collected annually through non-airline partners is anywhere from $15 to $18 billion in the United States alone. Since the majority of these points are unlikely to be spent within the airline, e-commerce partners can provide opportunities to redeem them digitally within the flyer points ecosystem.
Finally, new digital tools let airlines enhance their standard services with loyalty program data. One recent example includes fast check-ins, which retrieve personal information from loyalty profiles and past flights to enable a smoother arrival experience at the airport. Even when travelers fly less, these conveniences have value that could help airlines retain customers over the long term.
AI is a major transformative driver for countless industries, and travel marketing is no exception. Airlines already use a wide range of digital tools to improve every aspect of a customer’s experience, but machine learning can optimize these tools at a far more personal scale.
Take Hopper, a German airline that recently announced a comprehensive series of tech-related investments. Hopper currently hopes to apply machine learning software to its travel booking app to predict the most ideal travel options. Everything from flight connections, hotel pricing, and even booking times would be tailored to match individual customer needs.
These machine learning platforms can also aggregate usage data to optimize the overall booking experience. Airlines Reporting Corp. does exactly that with IBM’s Watson Customer Experience Analytics system by tracking customer activity across its marketing channels. These data points are then analyzed to determine potential pain points and suggest necessary improvements. ARC has already used this system to update its interfaces for mobile customers, a lead other organizations will certainly follow.
As other industries have learned, digital transformations are not one-time investments — they are overlapping initiatives that refine existing services and define new brand opportunities. Airlines have already begun their digital transformation, but it will take decades for the full scope of these changes to be realized.
Yet even in these early stages, one thing is clear: the airlines which emphasize customer service today will become digital success stories tomorrow. By developing new AI initiatives, varied loyalty programs, and comprehensive WiFi connectivity, travel brands can reap the benefits of the digital transformation and thrive in the years ahead.