For years the airline business has been highly commoditised but as travellers demand more that is changing. Japan Airlines shares insights with Pamela Whitby
Back in 2014, Korean Air hired a catering truck and set out to serve up its award-winning inflight meals to business people at certain city venues in Houston. Twice winner of the prestigious Mercury Award for inflight meals, the airline’s aim was to promote non-stop flights between the US’s most populous southern city and Seoul by showcasing some of the country’s delicious cuisine. Among the well-known dishes the airline served up on solid ground were bibimbap, a freshly cooked mixed rice dish and bulgogi, its barbequed, marinated beef.
Another example of an airline trying to do things differently is SAS, Scandinavia’s flag carrier. Instead of opening more airport lounges, in 2016 SAS took the decision to trial a new kind of premier city lounge in Stockholm’s central business district. The unique selling point was to offer loyal business travellers free Wifi, open work spaces, telephone rooms, a reception and concierge service as well complimentary tea and coffee, and not just in the airport!
These moves are exactly the sort of “out of the box thinking,” that Akira Mitsumasu, Vice President, Products & Services at Japan Airlines, believes airlines will need to differentiate in an industry, which like many others, is witnessing a huge paradigm shift. “Today it’s less about product and more about providing a platform that truly meets the individual needs of every customer,” he says.
Today it’s less about product and more about providing a platform that truly meets the individual needs of every customer
For every airline, in every market, how they go about this will differ, but Mitsumasu’s personal view is that it can simply no longer be about transporting people from A-B. In the past travel used to be fairly clearly defined along the lines of business and leisure, and a flight was one way to get there. But today travel has become very purpose driven. Leisure travellers aren’t always, for example, just going on holiday to have fun, they are trying to make sense of their life. And business travellers may well combine a work trip with leisure.
For this reason, Mitsumasu, who will be speaking at the EyeforTravel Summit in San Francisco, believes that airlines can no longer afford “to provide a set menu of irrelevant services”.
Airlines can no longer afford to provide a set menu of irrelevant services
Instead, airlines need to transform themselves into retailers that goes beyond personalisation to really customise the traveller experience; an art they have yet to master!
With the help of technology, the industry has certainly come a long way to harness data that helps them to understand who the customer is, when they last booked, that they usually choose an aisle seat, and even their preferred method of communication. What they can’t do yet, says Mitsumasu, is provide a full repertoire of goods and services, which give customers true choice, and where airlines can even begin to make customised recommendations in the way that Netflix and Amazon have done.
For example, the ability for airlines to recommend films based on previous viewing history or a much-loved taxi service in a busy Asian airport, where the choice is often overwhelming and hugely overpriced.
Although airlines are well positioned to become profitable aggregators of the entire value chain, there are, of course many challenges. Many airlines are huge organisations and are constrained by legacy systems and business units that still operate in silos. Mitsumasu admits: “Airlines are slightly behind the curve but we are well aware of the situation and how the ecosystem is moving and changing”.
Industry bodies like IATA also acknowledge the rapidly shifting landscape; from its New Distribution Capability to understanding the possibilities for blockchain technology in easing supply change management, it is eagerly exploring ways to support the industry.
Going forward then it is clear to Mitsumasu that partnerships are going to be “absolutely crucial”. And not just those based on common interests and a desire to make a profit, but rather partnerships with the goal of building a valued ecosystem.
Instead of using data and historical facts to monetise in the best possible way, Mitsumasu says companies today need to look three to five years down the line and work back from there. Among the questions carriers need to ask are: what capabilities do we lack; who possesses those capabilities; and how can we work with those providers together to build something truly unique.
The speed of change will depend on many factors such as how airlines view new technology and how comfortable they are with working with new start-ups. In the case of Singapore Airlines, or Lufthansa (which is backing the initial coin offering of the Winding Tree blockchain this week), if the strategy is to be at the forefront of experimenting with new ideas, then change may happen faster.
If an airline is seen as innovative, then the airline may have more liberty to try and test new ideas and release new products
Of course, with this comes risk. “The down side could be that customers may feel a little confused when offerings appear and disappear,” says Mitsumasu, adding that this will also depend on customer expectation towards the airline. “If an airline is seen as innovative, then the airline may have more liberty to try and test new ideas and release new products.”
So where then does Japan Airlines want to be?
“At JAL, partly because of the Japanese market demand, we are more conservative when it comes to trade-offs between consistency and testing new things,” Mitsumasu explains.
Even so, they are “toying with many different ideas”. One exploratory project involves combining data and the Internet of Things (IoT) to develop timely physical world services. The idea is that when a customer joins an airport security queue, they will automatically be told, for example, that the line to the left has the shortest waiting time. Then, once through security, another alert could timeously inform the customer that his/her lounge is just around the corner, and there is no need to rush – more time for spending in the airport!
With advances in satellite technology, he expects fast broadband to become available in-flight. From e-commerce shopping to live streaming video, customers will be able to do everything they can on the ground, possibly even for free.
Virtual reality and augmented reality are also being explored as ways to inspire and spark interest in a destination even before somebody has thought about booking a flight.
Going forward, Mitsumasu will, in particular, be closely watching which airlines are cleverly using data, “the new currency” to make what would have been impossible a few years ago, a reality. He acknowledges, however, the need for extra precautions when it comes to data protection and data security, especially as IoT solutions become mainstream.
In short, there are “no shortcuts. We have to do our homework".
Akira Mitsumasu, Vice President, Products & Services be speaking about some of the tech initiatives underway at EyeforTravel's San Francisco Summit (April 9-10)
April 2018, San Francisco