Yes! We are in 2017, Millennials will turn 18 next year and digitalization is happening.
In every industry, there is a flurry of good news (or bad news, depending on the situation). Look at Fintech, the sector is booming, harvesting billions of dollars from investors to recruit talent and design the future of financial services, disrupting well established banks and, as studies show, impacting negatively on almost 30% of current jobs (1).
Furthermore, we could extend this pattern of opportunities and threats to MedTech, SmartCities… Digital is penetrating our economy.
In our Travel industry, travellers adopted digital behaviors at an early stage and are today; setting the pace ! Where does that leave us today?
From an outside point of view, Travel tech looks ok, investment is forthcoming
and innovations are happening (2), the sector is leading ecommerce business
But these changes are not obvious to the passengers they reach the airport, Despite significant effortand investment (Self / web check-in, eBag Tags, eBorders…) by airlines and airports to tackle problems, the same frustrations are recurring: queues, delays, lost bags, lack of information…
Airlines face the lowest level of brand loyalty in the economy! How is this possible?
In my opinion, there is no real vision of the complete value chain!
First, the industry hides behind the marketing buzz, a huge noise generated by few players pushing dreamy situations on social media (just look at #PaxEx on twitter) (3)
Second, despite the huge amount of analysis and reports on the Passenger journey (4), it looks like the aviation sector compulsively focuses on the upper stream: distribution. Planes need to be full! Whatever the price, whatever the cost!
Imagine the scenario: you proudly have 100% of your seats sold on your flight but can’t manage communication relating to a delayed flight. There’s a strong chance that all your passengers will be unhappy and will not travel with you anymore! Good luck in winning them back. It’ll involve a lot of hard work, it’s a vicious circle!
Beyond distribution, digitalization isn’t happening in operations, transformation can not be limited to the automation of some points in the passenger journey.
Operations are a complex value chain with huge number of stakeholders (sometimes 30 across the Passenger journey).
Despite some early adopters (Norwegian, Transavia or Copenhagen Airport to name a few), at the end of the day, compared to other sectors, the travel sector suffers most Digital ruptures (New entrants, global competition, low retention, decreasing price, Employment pressure…) but still marginally leveraged its benefits!
When I talk to my peers about Digital Transformation and the incapacity to move forward, a lot whine about weak margins impeding them to drive change. This is indeed true in many cases but a lot can be done to improve operational efficiency (and therefore margins, customer satisfaction…).
In my opinion the main problem is the complexity of streamlining the value chain across the stakeholders.
Let’s focus on IT, an actionable lever to save costs and support digital change.
Indeed, despite decent investment (3% of total revenues) the IT maturity is really low… and it is 2 fold subject:
First, legacy communication platforms present strong entry barriers from a Digital perspective (not cloud, not mobile, not plug and play…) and this, de facto situation, makes it difficult for early adopters to embrace the digital pace of evolution.(5)
Second, the huge maturity gap between stakeholders:
Gaps when large airlines have full control of operations on their own turf but are blind (and mute…) in some outstations. As a passenger, you are truly unsatisfied if your flight arrived on time but you spent one hour clearing customs, waiting for bags and exiting the terminal…
Gaps when major airlines have OCCs with all latest tech embedded and their partners on the ramp are living in a low tech world.
Let's face it, the daily routine of operations managers at airports can be portrayed as:
- Receive Telex in the morning (by thousands…)
- Print pax list on dot matrix printers
- Communicate with stornos to teams
- Feed turnaround milestones with pen and paper running from gate to gate all day
- Rush back to the office to report on excel (when not on good old mainframes) and on the top of that, there are as many operational reporting requirements/formats as are there airlines to deal with.
Automation of back office tasks? None. Collaboration? Hardly any. Efficiency? Improvements possible…
The weak points are not in stakeholders’ core operations… but in the necessary communication between all of them.
The root causes of delays are well known: something went wrong during the 30’ turnaround process, with 7 to 8 teams working around the aircraft and passengers. The odds In having mishandled tasks and having made mistakes is huge.
A chain is no stronger than its weakest link…
I believe this situation is no longer acceptable, our industry is at breaking point.
As in any time of change, the top priority is to change the mindset and accept disruption, embrace transformation and get rid of the barriers!
Three basic components relate to the digital mindset:
- Think change in days not years: launch initiatives, assess, correct, relaunch…
- Think of ecosystems: Design the value created for the Pax with all stakeholders, join the dots across the chain
- Think opportunities, you can do it too! So can your teams…
Most importantly, consider your Digital Transformation like a global program (6), not an isolated list of digital initiatives. Structure your program in collaboration with your partners to keep the full Passenger Journey in mind and assess the impact of these Digital transformation levers:
- Mobility, can I save time and improve precision with real time information at my fingertips?
- Data, what information can I access / share with my teams / partners to increase value?
- Cloud, which IT components can I move to cloud (costs, criticality, scalability…)
- Automation, which tools / processes can I implement to achieve added-value resource allocation
- Last but not least, collaboration: Which situations can be enhanced with better communication? How can my decisions have a wider impact?
At the end of the day, you should put your money, lead your teams and focus your efforts towards the future and not in preserving the past. Embracing digital innovation is not only beneficial to your business, mutatis mutandis it will benefit to all the industry!
Gilles Tuet, Founder & Chief Evangelist, Deolan
Arnold Aumasson, CMO & Business Development, Deolan
3- Great introduction of PaxEx at Winding tree blog
Clip is a cloud-based data platform providing collaboration tools, real time dashboards and analytics to all aviation stakeholders. With our clients (Airports, Airlines, Handlers) and partners (data providers, IT vendors), we digitalize every step from distribution to operations to design a better Passenger Experience. You can visit us at Deolan.com and sign up for a free demo of our solution