COMMENTARY: Why Airlines Should Embrace Customer-Centric Technology

Credit: Accelya

At the IATA Digital, Data and Retailing Symposium in Madrid, the same concept kept appearing in many of the sessions: customer-centricity. There was a lot of talk about making it the number one priority. While that sounds great, what does it mean in practice?

The consensus was that a customer-centric approach is about giving customers what they really want and not what you think they want (or worse, what you want them to want). It sounds easy, but is it possible?

At one time, airlines were miles ahead of other industries in customer-centricity. We all happily recall the golden age of travel where luxury was simply expected.

But that all changed with deregulation. Gone were the days of government-approved fares based on costs, and competition drove massive investments in mainframe systems that still form the backbone of the industry today. And since the time of those foundational IT investments, no burning platform rose to the forefront to demand modernization.

Then in the mid-to-late ’90s, the first airline websites came on the scene, and investment shifted to building customer-facing technology on top of reliable passenger service systems rather than reinventing the core.

But times and customer expectations change. Not everyone wants a luxurious travel experience today, and some aren’t happy with the cheapest experience either, especially when you throw business travel into the mix. For many road warriors, comfort and convenience are king.

Plus, customers are now long since used to getting what they need online and at the click of a button. Legacy technology and message standards make tailored offers and intuitive shopping experiences extremely difficult to deliver. But thankfully, that is changing.

Take, for example, dynamic offers. That’s when systems can adjust an offer based on data insights—on what is known or can be inferred about a customer. Our research found that interest in creating dynamic product offers has doubled, and we are seeing many airlines making technology investments to bring this capability to life. One example of this is Lufthansa’s continuous pricing program, one of the single largest innovation projects launched during the COVID-19 pandemic.

Some also refer to this capability as continuous pricing. It allows airlines to create an offer that is the exact price that they’re willing to accept to carry a customer on a particular flight at that moment in time. This approach means that the big jumps in prices as buckets close are smoothed out. It also gives the ability to dynamically price ancillaries.

This is all well and good, but those entrenched systems and standards I mentioned earlier, often along with commercial restraints, combine to limit an airline’s freedom to manufacture things like continuous pricing content and distribute it the way they want to.

In other words, as airlines drive customer centricity, they must strike the right technology and commercial balance to control content across all channels.

It is clear to me that the industry is well down the path to modernization and there is a strong appetite to embrace what’s next on the horizon, which is the transformation to IATA’s ONE Order.

Finnair’s announcement that it will sunset EDIFACT by the end of 2025 and the statement by Lufthansa Group project manager Jost Daft that they are amid a request for information for ONE Order are clear indicators that the next few years will be laser-focused on transformation.

ONE Order will allow the industry to sunset legacy concepts, such as the venerable PNR and travel documents like the eTicket and EMD. The chains that make bringing new products to market so difficult, costly and time-consuming will finally be removed.

Every customer would benefit from this. Once in an industry-standard format, trip information will be able to move freely across a retailing platform from offer to settlement. This will remove the most important blocker to all this innovation: friction.

Senior airline executives in Madrid spoke in thoughtful detail about their company’s New Distribution Capability (NDC) journeys and plans for the future.

Sadly, it wasn’t that long ago that NDC was still an unknown term in the executive offices of many airlines worldwide. Thanks to IATA and the work undertaken by players around the industry, NDC is no longer a mystery. It has become a central figure in many airlines’ distribution strategies.

As we begin to tackle ONE Order in earnest, it will take strong support from executive leadership teams to keep investment dollars and focus on removing the barriers to true digital retailing.

I know that this necessary transformation can seem like an impossible hurdle, but the path to retailing freedom is easier than you think. Every airline’s transformation is unique, and freedom means charting your own course.

It doesn’t have to be a large-scale innovation project that requires deep pockets to make an impact. Benefits can be incremental, and each airline can modernize at its own pace. But we must begin now. The time is right for the whole industry to focus on putting the customer at the heart of everything. It’s going to be a hell of a ride!

Tye Radcliffe is VP product strategy, Order Group, at air transport technology provider Accelya.