How will passenger demand come back after the coronavirus? Will travelers be booking flights the same way they did before, purchasing the same ancillaries, and how much will they be willing to pay? Could we expect to see carriers adopt a different approach to digital retailing and introduce new business models across eCommerce?
These are some of the questions that Mike Slone (PROS Principal Travel Retail) and Iztok Franko (founder of Diggintravel) were looking to answer for attendees of their webinar “Rebooting Airline Digital Retailing”. They also talked a lot about the go-to-market approach for new products and services by adopting testing and experimentation as the way to do it.
In this blog post, I want to go over some key takeaways from this webinar and hopefully provide some food for thought for airline digital retailing professionals.
The New Normal: Do More with Less
While it might be too early to tell what the new breed of passengers will look like, one thing is for sure – airlines would have to do more with less. The airline space has traditionally been marked by lower margins. In times of cash deficiencies, efficiency would be critical for all efforts across the digital channel (website) and distribution. Customer behavior will be very different across markets, passenger types, age groups, you name it. Mike pointed out that an essential component of making the smartest decision on what products to introduce, what website changes to launch, and how to target different markets, would be understanding the customer by engaging in user research. Building hypotheses for various traveler segments and testing them is going to bring in data to back up decisions across eCommerce. As Iztok quoted Stefan Thomke (author of Experimentation Works, Harvard Business School), “Experiments allow you to be more innovative. Experimentation gives you the courage in your innovation because it gives you the evidence to back it up.”
Research, Test, Optimize. Repeat.
But how to engage in experimentation? The main takeaway was related to mindset and speed. Mindset is about rejecting the “one-size-fits-all” approach to airline digital retailing. Relevance in airlines’ messaging and communication in emails, on the website or the app, is a first step that carriers have started doing in the context of the Covid-19 outbreak, as the next step would be going deeper using data and science to personalize the digital product offering. Iztok presented only a few of the many examples across the airline industry, but also across travel in general, to have taken that first step, and highlighted the importance of using data to evaluate what resonates with travelers and what doesn’t. And as for speed, Mike explained that moving quickly has also been the approach at IATA AIR Think Tank, where the focus shifted from long-term “shaping the future of airline retailing” to short-term recovery ideas for revenue protection and rebound in only 3 weeks. Here is how he summarized the process of continuous optimization through experimentation.
New Business Models for Airline eCommerce
“There is no playbook for the situation we see,” to quote Iztok. One thing we can probably confidently say is that customer behavior has changed dramatically. Which means that new business models for airline eCommerce are welcome to emerge and could be easier to adopt. From prepaid vouchers, unlimited flight passes, to airline premium memberships and health-related ancillaries – during the webinar Mike explored various digital product ideas that could become the new normal. You can read more details about these ideas for airline digital commerce in his blog series Hitting Reset on Airline Retailing or check out the infographic on new revenue models for airlines.
Q: Out of these options, which do you feel is the most likely choice for you to consider?
If you want to continue the conversation on rebooting the industry, follow Mike and Iztok on LinkedIn. They tried to answer many of the questions we had during the webinar. The ones we did not have time to address you can find in this Q&A document.
Stay safe and stay tuned for more Special Edition Covid-19 content from PROS.