More than 60% of airline executives say digital transformation today is more important than before the pandemic.
If you joined any of the travel events this year, the recurring theme was the industry’s recovery. What really stood out is that amidst the pandemic, the investment in digital is even more important than it was before, making digitization the critical path to not only recover revenue but also boost competitiveness when demand starts picking up again.
During World Aviation Festival I listened to AirAsia’s CEO Karen Chan explain how the pandemic accelerated their transformation efforts to solidify their digital platform. As a result, the low-cost carrier is focusing on leveraging all digital touchpoints with the consumer to restore confidence and provide more flexibility and convenience to travelers. Air New Zealand’s CDO Jennifer Sepull shared the carrier’s five-year plan “Survive, Revive and Thrive,” focused on digital technology as the enabler to optimize how the airline connects with customers. Lufthansa Group has seen their distribution channel mix move to more digital – direct or through APIs, and has recently launched continuous pricing (a.k.a. dynamic pricing) across their direct channels. American Airlines has also seen similar increase in their digital channel too, due to the decreased average age of their travelers and the increase in their leisure segment due to the pandemic.
At PROS Outperform 2020, industry experts like Henry Harteveldt and Iztok Franko also brought forward the importance of digital retailing and innovation for restoring airline revenue. In his presentation “The Case for Innovation During Disruption,” Henry highlighted that to survive the pandemic the industry needs to keep innovating and introduce small changes with significant impact. Iztok presented real-life examples of airlines moving closer to OTAs and digital retailing platforms, including Eurowings Digital, AirAsia, and Volaris (see presentation here).
We, at PROS, surveyed some of our airline customers and partners to evaluate how the pandemic has impacted their digital transformation efforts. The findings show that:
- Compared to this report on the state of airline digitization (read the whitepaper here), customer service and cost optimization are still top priorities on airlines’ agenda.
- Digital transformation today is more important than before the pandemic.
- 4 key areas are expected to drive demand and revenues post-crises: ancillaries and merchandising, revenue optimization, pricing optimization (dynamic pricing), and digital web/mobile experience.