| Issue 2: November 2005 - January 2006
by: Klaus Heeder, Airline IT Consultant
Click here to: Jump to Conclusions: Decision criteria for deploying self-service in today’s environment
Quo Vadis: Self Service in the Airline Industry
Self service in our industry is:
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A cost saver?
An improvement to the passenger experience?
An improvement to travel security?
A valuable implementation of biometric technology? |
As the first point, we need to define what self service is. Self-service is “the serving of oneself (as in a restaurant or service station) with goods or services to be paid for at a cashier's desk or by means of a coin-operated mechanism” Merriam-Webster
Noun: the practice of serving yourself (as in a grocery or cafeteria) WordNet ® 2.0, © 2003 Princeton University
This white paper will focus on the aspects of self service in the air passenger process prior to boarding the plane. The possibilities of self service implementation in the plane and at arrival will not be examined. This paper will also look at the current development state of self service in the airline industry and point towards important developments.
The first part of this paper will cover the self service steps: Select destination and Collect information on destination; Book trip; and Prepare for journey. At the end of this article, we will examine the important decision criteria for deploying self service and critical factors for its success. Future editions of E-Newsline will cover the self service steps: Arrive at Airport; Proceed to check-in; Passenger and Document Verification; Baggage control & Check-In of Baggage; Receive Boarding Pass; Proceed to Security/Border Control; Arrive at Boarding Gate; and Passenger and Document Re-Verification as the Passenger boards plane.
The passenger process
Select Destination |
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Collect Information on Destination |
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Book Trip |
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Prepare for Journey |
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Travel to Airport |
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Arrive at Airport |
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Proceed to Check-in |
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Passenger and Document Verification |
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Baggage Control |
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Check-in Baggage |
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Hand over baggage
to logistics
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Receive Boarding Pass |
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Proceed to Security/Border Control |
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Arrive at Boarding Gate |
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Passenger and Document Verification |
Passenger and Baggage
Reconciliation |
Load Baggage to Aircraft |
Passenger Boards Aircraft |
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It starts when the potential customer plans a journey, collects information and selects the destination. This step is focused on information gathering, and if the trip is for business, information on what to do besides business is well received. Selecting the destination is more important to the leisure traveler than the business traveler, as the driving factor for the latter is by definition business, rather than the beauty or interest points of the destination. However, if the business traveler stays for some days, it is of value if there is a service to find out what could be undertaken in spare time. Today this step is mainly served by tourist offices, travel agents and travel concentrator websites.
Only very view traditional airlines offer integrated information services in this phase other than airport maps, the possibility to book an airport related hotel and links to car rental companies. A good example of using location information to support later bookings is Emirates, as the disadvantage of a stop over in its hub of Dubai is turned into an advantage by offering one day relax, shopping or event stay-on packages, thereby turning the stop over into a value-added service.
The provisioning of information is more and more used to sell to the interested traveler additional services through the direct self service booking websites. This is in the airline industry is most developed by the low cost carriers. Very prominent services to combine with airline ticket bookings are rental car offers and hotels. This is only a basic starting point. Using our imagination, would it not be of value if you search for a hotel, in for example, Cairo, and while you search, you get an offer for a performance in front of the pyramids, as well as an offer to pre-reserve a cab at the airport- all of this right at the time the hotel is booked and you are subsequently informed that this information will all be stored at the hotel you have just chosen?
After the traveler has selected where to travel to and when to travel, the passenger enters into the booking phase. In this phase the potential customer plans to buy a ticket and has a choice to go to a travel agent, an airline office - the serviced way – or to use a consolidating website or the airline website. The average self servicing traveler looks at more than one website and is always concerned to get the best price.
For an airline, it is important to offer self service booking possibilities, as the cost for a travel agent aided booking is 11% - 15% compared to 3% - 7% (Airline Distribution Cost in the US Solomon Smith Barney 2000) for an airline Website booking. One of the main success factors of such an offering is presence- the knowledge of potential passengers of the direct booking possibility combined with the promise that there is no better offer for the same time / date / class flight through another website or channel.
The majority of today’s customers are still using the services of travel agents, but the self-service usage is growing rapidly and especially in areas where the general belief is that there are too many obstacles to self booking. For example, LAN Airlines, which operates from Chile, a country with 25% internet penetration and fairly low credit card usage compared to the number of inhabitants, has a very high percentage of internet bookings.
Today it is more or less a must to offer an online booking possibility. It is expected by the frequent traveler and offers an enhancement in convenience to him. The functionality of today’s shopping web sites do fulfil the online ticket sales function. Only very few sites offer active last minute upgrading – moving passengers to a premium class – and generating additional revenue from the same passenger journey. The “enhance and add” functionality is not developed on the web booking offers.
The possibility to book tickets via a mobile device has been tried in the very early phases of the mobile service (WAP enabled), but did not show any notable adaptation at this time. With the introduction of more intelligent mobile devices (Smartphone’s) the author believes that this access channel will see a revival in the next years, especially with frequent flyers and push email service users (like Blackberry) as this passengers are used to operating their phone for more than making calls. The mobile device could very well be used to sell last minute upgrades to the business traveler who is interested to treat him or herself well on the trip and is willing to spend on private account for the upgrade. This would add revenue for premium seats, which are in some cases used for status or courtesy upgrades.
After the passenger has purchased a ticket and his journey is to begin within the next 72 hours, he can choose to start his journey’s paper procedures. With some airlines he has the option to pre-reserve a seat via the web or via phone and in some cases he can even check-in online and print his boarding pass himself (home printed boarding pass). For routes where required, the customer can enter additional data like APIS information over the web to save the time at the airport and avoid any unpleasant surprises- like not knowing the exact postal address of the hotel at the time of departure.
These options today depend on the departing country / airport, the destination country / airport and the service availability by the chosen airline. The customer also has the option to do nothing and proceed to the airport when he is scheduled to depart.
For an airline, the pre check-in of the passengers has advantages and challenges. The challenges are that the passengers needs to get acquainted with the process and that the baggage process needs to be organized in every airport where pre-boarding is offered. An additional challenge is that the airline has, in many cases, the duty to verify that the passenger at the gate is the one on the boarding pass, even if it is a national flight and no border control is necessary. This verification process then happens at the time of boarding at the gate. However, at this point in time it is too late for correction and an airline could have an unhappy customer who checked-in his ID or forgot it, leading to unpleasant discussions at the gate.
The advantages are that you reduce your no-shows, as the passengers check-in online and do a self-printed boarding pass. In addition, the complete process cost for checking-in and printing the boarding pass is transferred to the passenger, as he is doing it at his home or office.
The use of self service in this area has taken off very quickly and is getting more widely adapted. It is a clear value to the passenger, since he saves time at the airport and he has the possibility to pre-select a seat of his choice. The advantages to an airline are numerous. Firstly, the cost for the check-in is transferred to the passenger, if the check-in is done at home and the boarding pass is home printed. Secondly, the airline has advance knowledge of these passengers and therefore a reduced no-show risk and thirdly, it provides a unique opportunity to ask if the passenger is interested in an upgrade or needs something else for his journey. The area of last minute add-on sales is not addressed at the present time in the ATI.
The cost saving is dependent on a minimum volume of users per location to justify organisational changes, i.e. reduction in the number of counters. The big concern topic is that one of the personal contact points “check-in counter” is replaced by a machine interface and therefore this interface has to be well designed and functional as it is a replacement for the contact point “Check-in desk”.
If your airline is planning to deploy self service capabilities, you first of all have to define what you are planning to achieve by deploying self service. Good examples are general goals like increase customer satisfaction by X% and gain 10% / 20% / 30% direct booking in years 1 /2 /3 or, realize cost savings of X per direct booking. Another target could be to achieve a cross selling rate of 1.2 / 1.3, meaning 20 % / 30 % of generated revenue is not from tickets. We could go on forever on this point as this is very important to define at the beginning what the desired outcome should be and then keep it in mind during the purchasing/building phase and in the initial operation phase until targets are reached. Then, one has to restart the cycle. For home/online check-in, the target would be different like have 5 /10 origins available for internet check-in and reach 10 / 20 % of possible passengers to use it. The numbers may vary a great deal depending on passenger / ticket mix as well as on the fact if it is short or long haul.
The next step is to define what is currently used and what interfaces are necessary to existing systems. As the first three described systems are centralised systems with decentralized customer access, it is one purchase for all locations. After the target definition and the inventory of the necessary interfaces have been completed, the system design, purchase or a combination thereof has to be made. For this, the author would in general recommend to do a RFI (request for information) from various suppliers to get a clear picture on the market capabilities and if the available solutions would provide a cost effective solution with low initial cost and pass to transfer to low per unit cost in time (low risk approach). During the RFI phase, one would normally start to initiate discussions with the defined (targets) airports if you plan for Internet check-in.
After the RFI responses, the internal cost evaluation and the establishment of a marketing plan, you should be equipped to make your decision. It is recommended to plan for spending, as usage increases with a low initial for marketing, promotion and advertising. High initial spending will not, in most cases, lead to a sustained increase in usage. The points to be discussed in the next edition are mainly decentralized services and require a different approach to reach the best decision.
One of the most important points in the initial phase is proper planning before you spend and because the discussed services represent touch points to the customer, it is recommended to build a statistical sample of customers ( i.e. focus groups) and test the planned approach before the spending. It is vital that the consumer’s perceived value and the consumer experience is constantly evaluated. Many consumers are open to try once, but if the experience is not to their expectation, it is difficult and costly to get them to try again.
The second big human factor for success is your staff, which you need to get to buy-in to the self service option through information and training. There is one more final point on technology and on market intelligence. Plan so that the technology pieces integrate with each other. Look at the self service market inside and outside the airline industry. It is important to see and understand (try it) what the other market participants are doing, but look outside the airline industry, as well. Many things have been tried before (self service banking as an example) and many companies are willing to share, especially if you are not a competitor.
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