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Flying High With Technology - The Airline’s Road to Recovery

By Bhushan Navare

In 2020, the airline industry's revenue totaled $328 billion, a mere 40 percent of the year before. The sector is projected to remain small for the foreseeable future with traffic not returning to 2019 levels before the end of 2023. With borders and airports slowly opening up, airlines finally have a reason to rejoice. However, the impact of COVID is more profound. Unlike the 'purely economic' 2008 financial crisis, COVID-19 hasn't simply weakened spending power, it has changed the consumer behavior irrevocably.

As a result, the most critical questions facing the travel industry are— do consumers have different traveling priorities now? And are we ready to address them? For the airlines, this means a major technology-induced reorganization is due.

The need of this hour is exploring ways to not only understand the COVID-era demand patterns but also to shape them going forward. Businesses in travel space can start the process by outlining the leading indicators of recovery for airlines and finding solutions to marry third party data with those indicators. To prepare for what this near-future holds, businesses will have to lean on new-age technology to ensure a complete recovery. It is not a very far-fetched aspiration to have. What needs to be seen, however, is how technology will help accelerate the recovery.

A Slow, Steady, & Data-fueled Recovery for Travel & Hospitality

Business travel is predicted to take longer for recovery. Even then, it will likely recover to only around 80 percent of the industry's pre-pandemic levels after 2023. With remote work and other flexible working arrangements staying post-pandemic, consumers will take fewer corporate trips. Airlines need to re-evaluate the economics of their processes, especially longhaul flights. This smaller percentage of business traffic could necessitate a different pricing logic.

“We have billions of availability requests that come through our availability processing engine, and we have been working hard to provide leading indicators based on that to our customers to see how their business is moving and looking going forward.” - Surain Adyanthaya, Principal and SVP, PROS

Businesses are also in dire need of additional data from sources to analyze countries that they should focus on and airports that are open. They also need data to know route demands and routes to fly to be better prepared for the future. The best approach for this would be to invest time, effort, and resources in technological solutions.

Becoming better will necessitate more investment. Even though many airlines are in financial straits, it will be beneficial to invest more in digitalization, not less. Before the pandemic, airlines spent approximately 5 percent of their revenue on digital solutions. This is relatively low when compared with other sectors; for reference, the retail industry was spending around 6 percent, and financial services around 10 percent of their revenue. However, using data to enhance decision-making will require some investment now and will likely yield a significant payoff down the line.

Using NDC to Offer Better Customer Experiences

New Distribution Capability (NDC) has opened up new channels in the aviation industry to facilitate distribution and transparent shopping experiences. With the current scenario, there is a definite acceleration in NDC adaptation to lower the distribution costs using direct selling.

"NDC providers can help accelerate a few of the newer technologies. Reducing some of that friction, overall, is important." -Jeff Mathew, SVP- Operations, FareLogix.

Robust retailing and merchandising can help businesses deliver the right offer at the right time to the right customer. Airlines have to invest in and adopt retailing technologies to achieve growth in the coming years.

These recent times have taught us that the industry needs to have the ability to quickly tailor its current products and services to the evolving demands. And in this case, embracing retailing and merchandising through new NDC channels and approaches could be the key to survival.

Data Science, AI, ML, & Chatbots: Bring the Promise of Growth

Now, travelers are more dedicated to conducting research before booking. They are looking to opt for services with greater ‘refund-ability’ and the ability to reschedule flights without penalty. For airlines, this has meant an increase in labor-intensive processes, driving them to look more closely at automation solutions.

Airlines could consider stepping up their automation investment now. They can respond to the quicker recovery of domestic flights by investing in direct sales and encouraging improved customer relationships. Businesses can also invest in the customer experience—by making check-in and boarding more seamless—and personalized support services—from accounting to invoicing—to drive next-level efficiency. The next horizon is analytics to help use data in smarter ways to enhance decision-making.

Integrated, touchless solutions are set to become vital drivers for efficient performance and time-effective operations throughout the industry. Customer care is the most significant part of the travel & hospitality industry and Chatbots are the perfect way for businesses to provide fullfledged & consistent 24-hour customer support.

“We believe that our policy of analyzing the markets all the time, using technology to help us assess, is going to be valuable.” - Donal Granaghan, CTO, API

Machine Learning and Artificial Intelligence help deliver instant answers any time during the day or night without any added load on the staff. Many airlines have also started using AI & ML to assess the markets and work on their costs sales smartly. With the backing of analytics, businesses are already attempting to tap into data to understand andthe customer journey and offer relevant solutions.

Soon, AI will present businesses with ways for identifying demand influences during holidays and, in an automated fashion, recommend actions that should be taken. Artificial Intelligence will also offer the hospitality industry many avenues for learning and adapting to improve customer experiences.

Post-COVID Travel & Hospitality: The Overview

  • NDC providers can accelerate some newer technologies to reduce this friction being created to lower distribution costs.
  • Looking at the current situation, it is evident that airline retailing has allowed airlines to sell products in innovative ways.
  • With proper pre-programming, chatbots can empower a business to manage customer relationships in a friendlier, more personalized manner.
  • Companies are now relying increasingly on adaptive forecasting algorithms for identifying influences during holidays to personalize customer experiences.
  • Travel & Hospitality is a resilient industry. Human nature and our need for connection, community, and exploration will ensure the sector bounces back better than before. Continued observation of trends and adaptive changes from the industry is sure to bring in steady growth.

While travel may have begun to recover in summer 2021, it might be the fall of 2021 or even 2022 before they travel industry recovers worldwide. - Forbes

The impact of this global crisis is far from over. With vaccinations having begun, there is some relief to be found in some parts of the world, but the route to recovery for air traffic will take several years. For the post-COVID-19 airline sector, longer-running trends such as digitization and the phasing out of less-efficient processes will have to be accelerated. Taking these steps now will help travel & hospitality businesses thrive in the transformed domain.

Further Readings -

Tags: Digital Transformation, Future technologies, Machine Learning, Technological Advancement, Travel and Hospitality, Airline Technology, New Distribution Capability