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Technology - Inventive Thinking

Innovation can go from competitive advantage to industry standard and still benefit the originator

When US Civil War veteran John Pemberton invented Coca-Cola in 1886 as a remedy for all manner of ills, he couldn’t have imagined the number of imitators his drink would spawn. But, despite, the supermarket shelves stacked with cola brands, Coca-Cola is still the top seller in its sector—capturing 17% of the market in 2010, far ahead of its nearest rivals.

In aviation, innovators rarely enjoy such prolonged advantage. Being a fast follower is the default strategy of many airlines—and with good reason. This approach does not require costly resources to be allocated to research and development (R&D), and it guarantees the product is ready for implementation. Crucially, that product will already have been shown to answer a market need. For companies with a natural tendency to be risk averse, it is an obvious approach.

“Most airlines are looking for solutions that are proven, are easily configurable to any scale of airline, and address their present business issues,” says Darren Rickey, Vice President for Solutions Management at Sabre.

Survival of the quickest

Nonetheless, the spirit of innovation runs deep in the industry. In some cases, necessity is the mother of invention. Consider KLM and Lufthansa, both carriers with a number of ‘firsts’ to their name. Their hubs—Amsterdam Schiphol and Frankfurt respectively—are already very busy, and further development will be hard fought. With real estate limited, maximizing the usage of every square foot becomes vital.

Maintaining and improving the levels of service their customers have come to expect necessitates continuing innovation.

Commercial advantage also inspires innovation. Paul Behan, IATA’s Head of Passenger Experience, says pioneering airlines generally enjoy a year or two of being ahead of the market. “Look at Alaska Airlines and the self-service kiosk,” he suggests. “It took a while for other airlines to catch on and they certainly were hailed as being ahead of the crowd.”

Ahead they may have been but other airlines did catch on. As the idea gained critical mass, self-service kiosks became an industry norm. At that point, IATA was able to step in to ensure industry standards through the Simplifying the Business program, allowing airlines to reap the full benefits of the idea.

Behan insists innovation doesn’t have to be a solitary pastime. Creativity can benefit an entire industry and still provide payback for the creator. A cola drink essentially became an industry standard—and even now, according to the figures, nobody can do it better than Coca-Cola. Intel constantly redefines standards—for its own products as well as the industry. Microsoft and Apple similarly continue to raise the bar. The experience and knowledge gained from the widespread adoption of a new product is fed back into the organization, creating a virtuous circle.

In aviation terms, e-tickets were around a decade before airlines reached 100% adoption in 2008. As it developed, the e-ticket became part of the infrastructure. The real advantage of the idea lay in making it a global standard. For all airlines, including the front runners, that’s when the true cost advantage and improvement to customer service were realized.

This will be particularly true for airlines as they move forward. The emphasis on providing the customer with greater service and more choice inevitably involves all stakeholders. Innovation on an industry scale is essential in an aviation customer-centric philosophy.

All for one

“Innovation in isolation is a risky business,” confirms Behan. “We’re seeing a lot of development for the mobile platform, for example. It’s important all stakeholders—and all innovators—collaborate to appreciate the full value of an idea.”

When Air New Zealand heavily promoted its self-service strategy, especially at its Auckland hub, it soon saw the possibility of further benefits. Aside from customer satisfaction, more productive use of terminal space was on offer, as were better efficiencies in resource allocation and planning, and greater engagement by airport staff. Overall, there was a positive effect on the airline’s brand.

Airlines do not operate alone. They may be part of an alliance or codeshare agreement, or need to align processes with airport partners and other suppliers. Such reasoning underpins IATA’s Simplifying the Business and Fast Travel projects, and essentially provides the rationale for the association to innovate on behalf of the industry.

“Sharing ideas makes it less of a gamble, too,” Behan continues. “For example, with Fast Travel we identify a gap in the market and build a solid business case before we look for airline partners willing to invest in the project. Then there are extensive tests and trials to ensure the product is ready for market before the final rollout.”'

Industry-scale innovation is an efficient use of resources too. In a tough economic climate, it is unrealistic to assume that airlines will simply feed money into the R&D pipeline in the expectation that something useful will emerge at the other end. Development has to answer a particular need.

What lies ahead?

Innovation is a keystone of aviation. And as customer convenience comes to the fore, it will make increasing sense to adapt ideas to an industry scale. So, what new thinking is out there that may one day develop into global norms? In the never-ending battle to contain costs and establish a robust, sustainable architecture, advances that could step up to be de-facto standards include new check-in processes and the latest in wireless technology.

For example, Air New Zealand’s domestic check-in/boarding process allows passengers with bags to arrive and check in at a kiosk just 10 minutes prior to departure. They then attach a baggage tag and drop the bag at the appropriate belt themselves. If a traveler doesn’t have checked bags, they can head straight to the departure gate and board without paperwork using a downloadable application on a mobile phone.

Near-Field Communication (NFC) is another area ripe for extrapolation to industry standard. Early adopter SAS has introduced its Smart Pass, which effectively acts as a wireless transmitter, providing the bearer with access at kiosks, security, the lounge, and departure gate. “We see the Smart Pass as the first step of something new,” says Lena Rökaas, Vice President, Product and Customer Service, SAS.

“It’s a lite version of what’s coming in the future. If anything, we might be a little early introducing NFC, but we want to be ready for the revolution.”

And there is little doubt that a revolution is coming. Steve  Clampett, Sabre President of Airline Products and Solutions, suggests customer segmentation is another important topic. Planning solutions—integrating with partners and reacting quickly to market conditions—is also an area ready for exploration.
He notes other industries could provide a spark of inspiration too. “As airlines are beginning to mimic retailers, the question that needs to be asked is, ‘are retailers doing anything innovative today?’” he says. “This is an area we are specifically focused on relative to passenger self-service strategy at airports, for example.”

Retailers too are in a fierce competitive environment, fighting for customer spend. Over the years, they have introduced trolleys to enable more shopping and new cash registers to speed up money collection. More recently, they have developed schemes to understand and reward their customers. The parallels with aviation are obvious.

There is an old adage that says it is possible to light a second candle without dimming the first. It is sharing ideas that makes creativity work better and faster. The computer and telephone were adapted to give the world the Internet.

Clearly, there are some areas where individuality still holds sway. The meal service of a particular airline is not an industry concern but the ways and means of supplying that meal could be. Efficiency and safety are common to all carriers.

“I think most airlines subscribe to this view,” says Behan. “It takes an entire industry to reap the full potential of some ideas.” Innovation is not necessarily just for the few.

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