Digital is playing a leading role across every part of the journey, says Publicis Sapient director Simon Cox
On Friday 29 June 2018, the Swedish flight monitoring service FlightRadar24 tracked 202,157 aircraft in the skies across the world. It was the first time the figure had exceeded 200,000 in a single day. It’s a staggering figure – over 19,000 flights were in the air at one time – symbolic of the growth in air travel, with an estimated 4.6 billion passengers taking to the air in 2019, a 130% increase over the last 15 years. By 2037, China alone will account for an extra 1 billion air travellers.
Whilst the exponential growth in passenger numbers represents a huge commercial opportunity for the aviation industry, it will undoubtedly bring with it increased competition across the entire value chain, alongside a shift in passenger expectations, as an increasingly tech-savvy audience will expect digital to play a leading role in the passenger experience across every part of the journey.
The question is whether a capital-intensive industry can build its way to success – against the backdrop of huge economic and political costs of building physical infrastructure – or is there a different way? Are there a new set of imperatives, built around the passenger, that will increase capacity, and more importantly, help unlock the next generation passenger experience?
Globally, 39.9% or airport revenues come from non-aeronautical sources – retail and car parking representing the biggest contributors. Whilst ancillary purchases now account for 10.7% of total airline revenue. With increasing competition, unlocking non-aeronautical and ancillary revenue is commercially critical. It’s why when you consult with airports and airlines you will often come up against the businesses desire ‘to own the customer journey’.
Owning the customer journey represents the ambition to stay ever-present across the research, booking and travelling parts of the passenger journey, in the hope of finding unmet needs which will increase the opportunity for additional revenue. Flip from the business view to the passenger view however, and you quickly realise ‘owning the passenger journey’ is the wrong frame.
For many passengers, travel is complex and often stressful. Today’s disintermediated landscape puts the job of navigating multiple relationships across a wide range of needs and interactions on the individual passenger. Research from Google shows there are 419 digital moments, 34 searches, 5 videos and 380 web page visits in the end-to-end passenger journey, taking place over 2 months, with 87% of the activity on a mobile device.
No single player can ‘own’ all this activity. But brands can play a more active role, building a customer experience that reduces complexity, and adds value for both the passenger and their own business. And the characteristics of aeronautical businesses makes them perfectly suited to become the orchestrator of this wider value – as they sit between large value pools and growing consumer bases.
Take Dubai Airports as an example. One the one hand they play a role in a huge value pool – tourist spending in 2017 was $21.04bn, of which the airport will see ~5-7%. On the other hand, they are interfacing with a large and growing passenger base – 89.1m in 2018, making Dubai airport that largest international airport in the world. By playing an orchestration role between the value pool (producers of products and services targeted at passengers) and the 89.1m passenger base (the consumers of these products and services), Dubai airport can reduce complexity for the passenger and increase non-aeronautical revenue for the business.
Let’s look at how this could play out in the customer experience. A passenger is flying from Dubai to Heathrow for the first time and needs to book onward travel into London. Dubai could take the Heathrow Express API into their app and make the service available to their passengers, using the airports own data to target passengers flying to London before they take-off, and taking a small revenue share of tickets sold. They could take the same approach with Ticketmaster for concert tickets, or OpenTable for restaurant bookings. All examples of making the passenger experience less complex, and orchestrating value as the interface between the producer and the consumer.
Realising this opportunity will require a shift from the traditional linear way in which aeronautical business typically create value. A shift from owning to orchestration of the passenger experience, from competition to coopetition with other suppliers in the value chain; a move from maximising value to volume as leveraging the scale of the customer base becomes and imperative, and finally from building closed to open API driven digital ecosystem that can access a long tail of producers of products and services.
Management guru Peter Drucker famously stated that the purpose of business is “to create a customer”. And by becoming the orchestrator of positive interactions across the passenger journey aeronautical businesses will radically improve the customer experience by removing complexity, and create new segments of customers who have additional money to spend, but today can’t see a reason to spend it with airlines and airports.