Significant improvements to the passenger travel experience are already under way
A new wave of innovation is heralding the rise of the “always connected” traveler. Smartphones are becoming ubiquitous and, although their use in travel processes is just beginning, the trend is likely to accelerate.
Vueling CEO Alex Cruz has announced that it’s likely the airline will reduce spending on its recently revamped website in 2013, pumping the money into mobile services instead. The real time capabilities of the technology, Cruz suggests, provide great potential for customer service and revenue generation.
Airlines are moving quickly as passenger expectations are high, with mobile boarding passes and a number of other travel-related apps already a reality. But rolling out the many other possibilities—from near-field communication to guiding a customer to their rental car—is no easy task.
It is a case of how to deploy mobile services rather than whether to deploy them. The latest IATA Global Passenger Survey shows that airline customers are interested in using a smartphone across a number of areas. Of those who have smartphones capable of near-field communication (see panel overleaf), 86% would use it for their boarding pass, 65% would use it to receive promotional coupons, and 45% would use it to pay for additional airline services.
Airlines do understand the urgency. Mobile services are a top investment priority for 93% of airlines, according to the SITA/Airline Business IT Trends Survey, with 58% of airlines earmarking that investment as a “major program”.
Even so, the investment required is a challenge. That same survey reports that more than half of airlines feel the cost of supporting a variety of platforms could be prohibitive. Smartphones aren’t standardized. Operating systems, from Android to Apple and Blackberry, have no commonality. That means that when airlines develop apps covering anything from last-minute booking to bag tracking, they must create a separate version for each platform.
Most experts estimate that a sophisticated app, such as one that allows a user to book flights, could cost as much as $1 million to develop. Seen in the context of the economic downturn, when airlines are coming under massive pressure to cut IT spending, the investment has to be thoroughly scrutinized.
Making it pay
Clearly, a quantifiable return on investment would help. It is estimated that 7% of airline sales will be through mobile channels by 2015. Half of all passengers would pay airfares using a mobile phone, according to a WorldPay study of 4,500 consumers. The study also found that 6% had already used mobile payments to purchase a flight.
“Consumers are increasingly embracing technology such as smartphones and tablets to purchase goods and services online, and this report shows that there is a demand among customers to be able to purchase airline tickets using mobile technology,” says Phil McGriskin, Chief Product Officer for WorldPay. “Currently only a small percentage of airlines offer mobile payments to their customers, but a high percentage of customers would like the option to be made available.”
Again though, there are challenges. The WorldPay report highlights a need for transparency in selling, which means any surcharges involved should be clearly identified. The channel is also likely to be most appropriate to a limited segment of the journey, with last minute purchase at the airport being the obvious candidate. For some, this is seen as a strength, catching new revenue opportunities that wouldn’t have been available from a desktop computer. For others, it means revenue generation is limited, making the return on investment a slow process.
It will be vital for airlines and airports to partner in this exciting new prospect. If they cooperate the customer will be able to act on targeted retail offers as she moves through the airport. But get it wrong, and customer confidence could be destroyed by competing apps and services. Ensuring consumers adopt the new technology is always a difficult process that shouldn’t have additional obstacles put in its way.
The IATA-led Simplifying the Business (StB) Think Tank report calls for “cooperation across the whole value chain.” It says real time and contextualized communication will transform the passenger experience, building loyalty and bringing benefits for all.
IATA will launch a number of new StB programs, two of which will look at real time interaction. The first will develop standards that will help to establish how and when the different partners should pass on information. The second will look at creating easy Wi-Fi access at airports for all passengers so that the industry and customers can interact effectively.
Underpinning the cooperative efforts will be new programs centered on Application Programming Interfaces (APIs) and an Airline Industry Data Model. A standard interface across the value chain brings enormous opportunities to improve customer service. A late flight, for example, would trigger messages to other travel partners who will be able to adapt their product or service and inform the passenger. If the data flowing from a variety of sources is linked, there is potential to personalize the journey at each touchpoint. It is not only the aviation chain that will be affected by these improvements but also rail providers, hotels, rental car companies, and cruise lines.
It’s not only partners that need to work together, though. To begin with, airlines must be able to integrate their systems so that mobile apps have access to the right data. Services that could be commonplace in the near future—such as flight search, flight status notification, baggage management, and customer complaint handling—will depend on system compatibility.
Airlines need to work fast to avoid forever playing catch-up with the technology. The sheer pace of development can be an issue. “Changing the processes to really drive savings and customer satisfaction is the most difficult part of any mobile implementation,” says Tom Knierim, Analyst, Airline IT Trends. “We’ve spoken to airlines that wanted to go digital and capture passenger information on a tablet, but contemplated emailing it to a specific address and then printing it. This was because they wanted to fit into their existing paper-based process. Getting the processes and people updated to a mobile way of working is by far the most difficult part, but brings the largest rewards.”
For more information, please visit StB.
Near Field Communication
Implementation of near-field communication (NFC) will give rise to even greater mobile functionality. According to the IATA Global Passenger Survey, 15% of Europeans consider NFC a must-have for their next mobile phone, rising to 32% of Africans. NFC works through sensor technology, allowing a mobile device to be swiped across a scanner. Industry standards will be essential but once developed, lounge access or the various authentication procedures can be simplified, promising a more efficient and user-friendly travel experience. It will even provide a passenger with the ability to load airline specific applications triggered by NFC tags.
Renaud Irminger, Director of SITA Lab, says NFC would help to improve mobile take-up by delivering mobile boarding passes more easily and in a less costly manner to passengers as there’s no need for data roaming. It will also reduce passenger anxiety. “The passenger does not need to take any action to retrieve the boarding pass as there’s no need to start an application, to unlock the screen, or look for an email or an SMS,” says Irminger.