Guest Editorial: The Future of Airline Retail


Guest Editorial by Ornagh Hoban, VP Strategy & Marketing, Datalex

In the eyes of the consumer, e-commerce and retail are now one. Airlines need to address this reality as the new battleground for a sustainable and competitive business. The millennial generation, already the core of the trillion dollar digital travel demographic, will in a few years surpass baby boomers in travel spend. They face ever-increasing pressure on their time, hence their desire for a compelling digital travel marketplace that delivers a seamless experience.

Already using 10.4 sources of online information before buying, 83% of millennials sleep with their smartphone by the bed and 57% update social media every day while traveling. The window of opportunity to connect, serve, and manage their needs is closing fast.

A certain digital future

We are entering a period of the most rapid technology transformation ever. Social, mobility, application, cloud; big data and the Internet of things will forever change how we view, measure and serve products, assets, and people.

Our digital future is certain. We will continue to see rapid innovation in predictive and prescriptive analytics based on decision-enabling data. This will mean we will become increasingly selective and loyal to brands, authorities, and groups that we can trust with our data and time. Our digital ecosystem will be the epicentre of our lives as we are increasingly empowered to be the smartest in our decisions.

Amazon, Google, and eBay are playing the long game, ploughing billions of dollars to deliver the next wave in customer experience for all. Yet the best travel retail innovations can still come from the airline world if they can match the pace, investment and innovation required.

Datalex recently conducted a survey with Atmosphere Research of global airline marketing, distribution, and merchandizing professionals. The results recognize that airlines are not moving at the pace required to succeed. Over 97% view competition for the consumer as very competitive, with more than 73% admitting they cannot rely on brand loyalty and 67% admitting to being extremely or somewhat ineffective at targeting or personalizing the retail offer.

Data is just data unless…

The business and technology components are there and some innovative airlines are investing heavily to unify retail infrastructures, experimenting in new revenue optimization models, and monetizing large volumes of behavioural data, which can result in profitable value based offers and a differentiated guest experience.

But omni-channel engagement and a 360 degree view of the customer remains out of reach for many airline retailers with competing and siloed transactional and data technology platforms. Big data is just data unless it can deliver one single point of truth, unless it’s synchronized, omni-present and actionable.

This will be the true retail challenge and will require a much larger price/revenue optimization framework, one that dynamically predicts customer choice, demand, and value to control offers optimized for market conditions, channel, and device/media. It will also require a much deeper understanding of the digital customer experience.

Major digital marketplaces will deepen the retail ecosystem, driving captive demand. We will continue to see a levelling of the travel retail playing field. Commitment to the supplier model may become more prominent, if we consider Google’s recent step up in efforts to serve captive demand to travel suppliers or TripAdvisor’s move to become an extension of the travel brand. It would take little to imagine Amazon or other major digital marketplaces as a core digital ecosystem for travel suppliers.

Yet with the speed of innovation in the digital space accelerating daily, the risk of misalignment in customer engagement increases exponentially. There is no silver bullet and the airline as a business must engender a culture of innovation and experimentation to continuously test and learn in the pursuit of measurable value in this certain digital future.

Our pace will dictate our survival. If, however, our emphasis is to incrementally improve the efficiency of an existing business model, we can only expect to accelerate our demise.

The Datalex team participated in Airline Information's Mega Event 2014 held in New Orleans in November, 2014.