The future of air travel

T H E F U T U R E O F A I R T R AV E L :
IMPROVED PERSONALISATION AND PROFITS THROUGH
THE INTEGRATED USE OF CUSTOMER DATA

WHITEPAPER

Published by Sabre Airline Solutions® and written by The Economist Intelligence Unit.


[THE FUTURE OF AIR TRAVEL

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CONTENTS

Introduction2
Poor customer experiences erode loyalty3
Improving the customer experience: Available and cost-effective solutions 5


Solution 1: Using existing technologies to personalise travel
5


Solution 2: Building on best practices from other industries



Solution 3: Wielding the wealth of data that travellers provide8

Addressing the pain points in the traveller’s journey

6

11


Improving booking11

Improving the airport experience13

Improving the in-flight experience16
Capturing more of the value chain20


Full-trip customer care and the power to address externalities

20


The competitive landscape24
Conclusion28


About the research: An Economist Intelligence Unit (EIU)
customer and executive survey
To gain greater insight into changes and innovations that
could usher in this new era for travellers, The EIU conducted
parallel surveys of 100 airline executives and 810 air travel
customers in August and September of 2013. Half of the
executives hold C-level positions, with the rest being SVPs,

VPs or directors. The regions of North America, Asia-Pacific
and Europe are equally represented with 30% each, while
Latin America, the Middle East and Africa make up the
remaining 10% of responses.
About one-third of the companies represented in the survey
report US$1bn or less in annual global revenue, while 29%
boast revenue of US$5bn or more. Participants in the
consumer survey were screened to include only individuals
over 20 years of age who had travelled by air in the
previous 12 months; the gender balance was near-equal
(53% male and 47% female), with respondents spread
across 18 different countries.
In an effort to better understand the issues facing airlines today,
The EIU also conducted in-depth interviews with 16 industry
leaders and observers. We’d like to take this opportunity to
thank all those who shared their time and insights.


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Introduction
In the coming decade, airlines will have the opportunity
to transform themselves from commoditised providers
of transportation to full-trip coordinators that interact in
an integral, more profitable way with travellers during
every step of their journeys.

Existing technologies such as in-flight Wi-Fi, mobile

devices and social media can help the industry improve
the customer experience at a manageable cost. Moreover, by adapting customer information management
strategies from other industries, airlines can empower
passengers by personalising air travel, making it pleasurable once again. By exchanging information with their
customers in a more consistent and intuitive manner,
airlines will be able to understand and actively respond
to their customers’ needs and desires.

To do so, airlines will have to improve the customer
experience, revive brand loyalty and undo the effects
of years of cost-cutting. By adapting best practices
developed by or refined in other industries and making
the best use of existing technologies and the wealth of
data travellers provide, airlines will be able to improve
their return on investment (ROI), reduce costs and give
customers more of what they expect of the total experience.

As airlines master these approaches, they will also be
positioning themselves to vie for the role of full-trip coordinator — taking passengers from the booking process
to and through the airport experience, on to the flight
itself and beyond. Online travel agencies (OTAs) and
the hospitality industry, as well as Big Data companies,
such as Google, are already displaying an interest in this
potentially lucrative role.

The Economist Intelligence Unit surveyed more than
100 airline executives and 800 passengers, as well as
conducted in-depth interviews with 16 industry leaders
and observers, in an effort to better understand the
issues. Research has confirmed that customers want a

more personalised and satisfying experience and that
airline executives want more sustainable profit margins.
Fortunately, these goals can be attained together.

As this contest intensifies, the winners will be able to
substantially improve the travellers’ experience — and
be paid for it. Airlines slow to adapt risk being reduced
to commodity suppliers and, therefore, to be mere links
in a chain over which they have little control. The strategies outlined in this paper will help the airline industry
respond to the heightened competition for domination
of the travel value chain.

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Poor customer experiences
erode loyalty
Airlines currently operate under fierce cost pressures. Deregulation removed a variety of supports and protections
for the traditional network carriers, and several waves of
nimble, clean-slate, low-cost airlines — unburdened by
retiree pension obligations, older equipment or outdated
systems — have changed the industry’s operating standards. Additionally, airlines are hit regularly, but unpredictably, by a variety of disruptions — in the weather, in
energy markets, in political or security situations — thus

making planning difficult or impossible.

Most critically, brand loyalty has declined. Passengers
used to clearly understand the differences between and
nuances among airlines and often preferred flying with
one over another. However, cost-cutting has made air
travel and what amenities remain feel generic, if not austere or virtually nonexistent.
Travellers have issues with every segment of the experience: booking flights, getting to and from airports and
traversing the airports, as well as the actual experience
of flying. When customers are asked what improvements in their overall air travel experience they would
most like to see, spending less time in the airport (78%)
topped the list, followed by having a more enjoyable
experience in the airport and improving on-time performance (both at 74%) [Exhibit 1].

Unable to control many variables, airlines have focused
on not merely holding down costs, but on paring back as
many costs as possible. Cost-cutting — which used to be
a discrete, periodic process of reviewing and optimising
systems — has become a continuous process that, in the
short term, has proven effective: costs have come down.
The unintended consequences have included a reduced
focus on issues that passengers care about and that cause
concern when left unaddressed.

2%

Less time in airport

Exhibit 1
Preferred

improvements
in air travel
experience
over the next
10 years

53%

25%

17%

1%

More enjoyable experience
in flight

38%

36%

20%

5%

Improved on-time
performance

37%

37%

21%

4%

Improved baggage
handling

36%

32%

23%

6%

23%

5%

Streamlined search and
booking systems that
operate industrywide

1%

3%

1%

1%
1%
2%
1%
2%

36%

32%
0%

10%

20%

30%

40%

50%

60%

70%

80%

Very strong preference

Somewhat strong preference

Moderate preference

Somewhat weak preference

Very weak preference

Don’t know

90%

2%

100%

Note: Asked of consumers.

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For airline executives surveyed, however, the customer
experience comes in third on their priority list (40%), behind building customer loyalty (49%), while cost reduction remains on top (57%) by a wide margin [Exhibit 2].

Reducing operating costs

Exhibit 2
Top strategic
priorities
over the
next 10
years

57%

Building customer loyalty

49%

Improving the customer
experience
Increasing passenger revenue
per seat-mile/kilometre
(PRASM/K)
Developing/strengthen
partnership strategies
Gaining market share

This is good news for the flying public: for some carriers,
the focus may now be shifting from costs to customer
experience. It can be good news for the industry as well.
Having been broadly successful in reducing costs, airlines
can now turn to rebuilding one of their most important,
if recently neglected, assets: a core of loyal customers.

40%

Three broad areas offer a wealth of underleveraged
tools to achieve this goal:

34%

34%
33%

Note: Asked of airline executives. Respondents were asked to select up to three.

Surprisingly, the goal of increasing revenues comes in
fourth place at 34%, indicating that airlines have reduced
their focus on this priority by adopting the low-cost
carriers’ pay-for-what-you-use approach to maximise
passenger revenue per seat mile.

•


•



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4

Technologies that are already available can be used
to better personalise air travel, from before
customers book through post-trip feedback.
Best practices in hospitality, logistics and gaming
offer powerful road maps for improving the
customer experience, thus boosting loyalty and
increasing repeat business
The abundance of data available to airlines — about
both their own operations and about their customers
— can be used to provide travellers with more
information on which to base decisions, while also
allowing airlines to better understand and, thus,
offer more of what customers want

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Improving the customer experience:
Available and cost-effective solutions
Solution 1
Using existing technologies to personalise travel

Technology can yield unexpected savings

Carriers are understandably reluctant to invest money
and resources in unproven technologies. Adopting (and
possibly adapting) a new technology and testing it can be
arduous, complicated, costly and time-consuming.

Making in-flight Web access a standard feature instead of a frill often provides demonstrable operational
savings. Such access can also open up new onboard
revenue-generation opportunities — from premiums
for special content to profit sharing across e-commerce
partnerships.

Airlines can sidestep these problems by turning to technologies that have already been tested, refined and accepted. As airlines welcome Wi-Fi, notebooks, tablet computers and other mobile devices on-board, air travellers
are no longer in-flight Internet exiles. Moreover, keeping
current with how customers communicate — Web, text,
Facebook, Twitter, etc. — allows carriers to stay connected to them from booking through their arrival home.

“We firmly believe that giving people access to in-flight
entertainment when they’re captive for an hour or two
will make us a fortune,” says Michael O’Leary, Ryanair’s
chief executive officer. “But we don’t want to spend a
fortune to make a fortune.”
As a European airline, Ryanair pays higher access costs
than US or other international carriers and will take longer to see a return on its investment.

The biggest game changer is Wi-Fi — a crucial gateway.
People assume they will always have Web access to
modify and personalise their environments; thus, making

in-flight access the norm instead of the exception opens
up tremendous possibilities for both productivity and
entertainment. After the initial investment, Wi-Fi can be
provided at a relatively low ongoing cost.

Newer technologies, tablets, for example, can add revenue in unexpected ways and even help airlines save on
fuel. In 2012, Qantas began distributing iPads to passengers to enable streaming of on-demand content on
its older Boeing 767 fleet; this was less expensive than
rewiring the cabin. Once Qantas had all the obsolete
wiring and racking removed, the airline saw a measurable drop in fuel consumption, according to Alison
Webster, executive manager of international customer
experience for Qantas.

Putting communications, entertainment and productivity
devices literally back in the customer’s hands is one of the
most powerful and efficient ways to personalise a trip.

China Airlines’ Hsiao-Hsing Tung, vice president for
corporate development, points to the “dual-use benefits” of making Web-connected tablet computers standard equipment for cabin crew. Tablets can help cabin
crew recognise most-valued customers and pay special
attention to them. The crew can also use them to reduce
repair time on the tarmac by requesting spare parts for a
broken seat, for example, during a flight.

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“Twitter is here today. But what about
WhatsApp? BBM? We have to go where
the customer is.”
– Glenn Morgan, head of service transformation at British Airways  

Joachim Schneider, Lufthansa’s vice president of product
management, explains how his airline uses social media
to respond quickly to passenger problems: should a customer post to Facebook from a taxi, warning that he will
be late, Lufthansa will proactively rebook his flight. The
airline thus becomes the solution rather than the problem.

Leveraging social media
Airlines can make additional gains by making better use
of another proven technology — social media — before,
during and after flights. Social media can improve customer
service by serving as a fast workaround for overwhelmed
phone lines or gate agents. They can also provide a richer
exchange of information with customers in both directions,
giving carriers an opportunity to listen, learn and respond.

Solution2
Building on best practices from other industries

The airline industry can learn a lot from its would-be
competitors and others. The hospitality, logistics and
gaming industries offer well-honed best-practice templates, systems and approaches that could substantially

improve the air traveller’s experience. Some of those
best practices even have their roots in innovations originated by airlines — loyalty programmes, for example.

“Different platforms lend themselves to different functions,” notes David Cush, Virgin America’s president and
chief executive officer. The 144-character limit for Twitter is
effective for marketing time-sensitive promotions and for
resolving customer service queries. “By virtue of its format,
you have to be very clear, very direct and very brief,” he
says. “Facebook allows Virgin America to connect with the
consumer on a deeper level.”

Customising, pushing and pulling data

Glenn Morgan, head of service transformation at British
Airways, predicts that customer engagement will continue
to shift to the Web, but warns that platforms fall in and out
of favour — airlines have to be sufficiently attentive and
sufficiently nimble to keep up with change. “Twitter is here
today,” Morgan points out. “But what about WhatsApp?
BBM?” he asks. “We have to go where the customer is.”

Collecting, exchanging and analysing data are the key to
these approaches. Sector leaders in the hospitality, logistics
and gaming industries constantly collect detailed information. Among other metrics, they study how and how much
their services are used, monitor operational efficiency and
analyse customer responses. The hospitality industry, a
competitor with airlines for ownership of the full travel value
chain, merits particular attention.

Airlines may find it difficult to allocate resources to these

constantly changing media channels, but that attention is
now mandatory. “You cannot hide” from the social media
space, says Thierry Antinori, Emirates’ executive vice president and chief commercial officer. “You’re either completely
out, and you have a lot of missed opportunities. Or you are
in, and you have to be good. So we chose to be in.”

Hospitality companies routinely collect and analyse data to
make their operations more efficient. If a hotel has clear
data about the types of food eaten more often on specific
days of the week, it can order more accurately and cut down
on waste. Such information can also help the same company

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An investment, not a gamble
Harrah’s Entertainment, a resort and casino company (now
Caesars Entertainment), started to develop and refine the
collection and analysis of customer information back in
1998 on a level not seen before in that industry, according
to a Harvard Business School case study. Using a loyalty
programme introduced the previous year and expanding
the use of its patented swipe-card system, Harrah’s tracked
every customer transaction it could. Data gathered included

not just choices for bet-by-bet gambling, but food, lodging
and other forms of entertainment as well. Every Harrah’s
property across the country was included.

give its customers more of what they want, in ever-more
fine-grained detail. If a hotel knows the guest in Room 268
favours a Black Angus rib-eye steak cooked rare with hot
sauce on the side, that guest is more likely to rebook at that
hotel. The finer the distinctions, the more personal and compelling the customer experience and service.

Improving efficiency and personalisation can create powerful
synergies: cost savings married to personalised service can
lead to greater customer loyalty and higher profits.
Logistics companies do something similar. Many have expanded the package delivery options they offer in response
to customer demand; they then track systems efficiency
from package pick-up to package delivery, assessing and adjusting their services in response to customer behavior. What
a stay-at-home parent earning an income by selling goods
on eBay needs differs from what a family business that
mostly ships between the US and the Indian subcontinent
needs, for example. Logistics companies track these trends
and tailor their services, defining them with greater precision
and specificity: time to destination; time, place and circumstances of delivery; level of security; packaging used, etc.

As noted in the case study, this information did not simply
track how customers behaved in the past. It created information-rich customer profiles that enabled prediction of how
they might behave in the future and what kinds of incentives and interventions would either encourage or discourage more visits to Harrah’s.
Expanding the scope and sophistication of its rewards programme allowed Harrah’s to run on-the-ground experiments
to test different marketing strategies. Having defined a specific cohort of interest — perhaps women between 55 and
75 who live within 10 miles of a casino — it could divide the
group in half, provide different incentives to each, then track

the resulting purchasing behavior to see which works better.

Hospitality and logistics companies track data in two different
ways. Systems that monitor packages, customers, guests and
transactions automatically “pull” that data and report them
on demand. Thus, these companies can know immediately
how many packages were late today because of snow in
Cleveland, Ohio, or how many room-service orders included
hamburger versus steak. When data need to be interrogated
or analysed further, these systems will “push” for an answer.
The businesses might need to know, for example, how many
people hold the logistics company responsible for the snow
delay or how much the hamburger vs steak decision was influenced by price. Increasingly, data analytics and correlation
algorithms are automating that process.

Airlines face legitimate and serious questions about using
new technologies. Indeed, they can be expensive: the design and implementation of Harrah’s upgraded Total Rewards
Program was done at a cost reported by The Wall Street
Journal in the US$100m range. It bears underlining that this
was 15 years ago: the technology has since been vetted,
improved and come down in price. But Harrah’s ROI was just
as impressive: in 1999, Harrah’s revenue increased over the
previous year by 50%, according to the Journal. The company’s stock price and profits doubled.

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Solution 3
Wielding the wealth of data that travellers provide
Airlines already collect much of the data that would
allow them to make best use of the approaches of the
hospitality, logistics and gaming industries. Airlines were
an early entrant in the modern data collection business
when they pioneered computerised reservations systems. But the industry now lags other sectors in how it
uses its data.

Similarly, airlines need to leverage the data they already
collect to make trips as smooth and efficient as possible,
to make flyers feel not only welcome but at home onboard and to understand the combination of factors that
will engender repeat business and brand loyalty.
Customisation as a norm

Logistics

Consumers have come to expect their daily life to be as
customisable as their online experiences. Web browsers,
for example, now incorporate a slew of functionalities that
— whether customers are consciously aware of it or not —
make navigating online more efficient and more personal.
Software, in effect, predicts future behavior based on an
analysis of previous patterns, anticipating and, therefore,
preparing for what will likely be desired next.

A top-tier logistics company can do more than simply
move a package from a suburban porch in Belgium to an
office in Hong Kong on the agreed schedule. It can also
pinpoint the package’s location at any time and, with sufficient awareness of the larger transportation network,
reroute that package on the fly to save time or money or
to skirt difficulties.

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Hotel
A high-end hotel also knows, ahead of a guest’s arrival,
that she prefers turn-down service to be done when she
is at dinner, that CNN should be the default channel on
her television and that she is happier if sugar is removed
from the coffee supplies in her room.

Gaming
A resort casino with a well-tuned predictive analytics
programme can note the interval since Mr Tanaka’s last

visit and foresee that an appearance by a famous Italian
tenor and the offer of a US$25 dinner discount may tip
him towards visiting on the upcoming weekend.

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Cloud-stored profiles serve as a personalised desk
top wherever a customer logs in: bookmarks,
favourites and auto-fill information to facilitate filling
out forms.
Predictive analytics allow browsers to cache images
or information customers use more frequently;
invisibly, this reduces the frustration and irritation of
lags and wait times.
E-mails and online calendars are mined by profiling
algorithms that then produce context-appropriate
advertising: mention scuba diving in an e-mail, start
seeing ads for swim fins.

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This ongoing analysis is inherently low cost. It takes data
already in the system and uses them in more sophisticated ways.
Airlines already have a huge amount of information about

their customers: where they go, how often they travel
and with whom, how much they spend, where they sit
and what they eat. To the degree that customers book
package deals offered on airline websites, airlines also
have information about car rentals, hotel choices and even
destination activities.

People thinking versus packages thinking
Airlines have succeeded in making flying safe — passengers are safer in the air than on the road. And, within the
constraints of weather and other externalities over which
airlines have no control, the industry runs on a pretty
tight schedule. Analysing operational data has helped
airlines make great progress in improving revenue per
passenger mile.

Airlines also have the technical means to make the most of
such information. Airlines and airports are intensive users
of operational data and communications technologies. They
also use data to improve the efficiency of sub-systems such
as catering, cleaning, maintenance and fuelling. Data also
facilitate better coordination between different systems.

But airlines have not done as well using data to customise the passenger experience. Travellers get where
they’re going, but they could have a much better experience and, as a consequence, feel better about the trip
and about the airline. Using information to provide more
personalised service can improve customer satisfaction
as well as ROI.

Today, customer options at the booking stage are confined to
a handful of fairly crude categories: first class, business class

or coach; vegetarian, halal or kosher food; non-stop or layover. Asking customers for more information, and providing
more information and options to them in return, would allow
airlines and passengers to customise the travel experience to
their mutual benefit.

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With the right planning and investment, and by making
better use of information already available, air travel
a decade from now could give both the industry and
travellers more of what they want. The passenger gets
more options for personalising a trip, a smoother passage through the airport itself and a more pleasurable
in-flight experience, while the airline gains loyal customers who will provide repeat business, along with a more
efficient, and thus profitable, process overall.

When Lufthansa uses information from Facebook to
rebook the flight of a passenger stuck in freeway
traffic, it provides a direct personal benefit to that
passenger. The airline also gains more time to sell the
seat to a standby traveller. An airline that knows that
a passenger’s daughter has a peanut allergy and acts
to safeguard her reassures the parent in a way likely to
engender brand loyalty. It also reduces the likelihood

of an in-flight emergency that could have a cascading
effect on the schedules of multiple flights.

Executives are well aware that a key part of implementing this vision will depend on establishing industry-wide
data and interoperability standards. Almost two-thirds
of the executives surveyed (65%) see this being accomplished within the next 10 years; however, exactly half
of them also worry, that competitive forces may stymie
movement in this direction [Exhibit 3].

Similarly, a business flyer who can access her company’s email system in-flight is being given back time
that she might have lost. She is more likely to favour an
airline that connects her, rather than one that virtually
isolates her.

Likelihood of adopting following technologies for customer-facing functions over the next 10 years

Exhibit 3
Likely to adopt
within 10 years
Likely to adopt
beyond 10 years
Unlikely to ever
adopt
Don’t know

Industry-wide data and interoperability
standards

65%

23%

Near-field communications

54%

28%

Satellite-to-aircraft personal communications

46%

43%

Biometrics

43%

35%

11%

10%

Radio-frequency identification (RFID)

38%

40%

8%

14%

Facial recognition

30%

42%

23%

8%
6%

4%
12%

8%

3%

5%

Note: Asked of airline executives.

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Addressing the pain points in the
traveller’s journey
This corresponds to our survey results that show that
customers place a higher value on contextual information during booking than do airline executives (by
nearly 20%) [Exhibit 4]. When it comes to technology
to improve the customer experience at the booking
stage, 28% of executives stressed predictive analytics, while 37% emphasised large-capacity, high-speed
data storage and retrieval.

Improving booking
Customers are dissatisfied with the process of booking air
travel, with the relatively paltry range of choices they have
to personalise their flights and with both the quantity and
the quality of information available to them as they plan
and book trips. Many have turned to websites like FlightAware, AirportZoom and SeatGuru to get richer descriptions
of flights, amenities and equipment, as well as more comprehensive information about destinations and airports.

Airline executive priorities vs customer preferences for booking flights

51%

Integrated booking and schedule information across the
travel industry, including inter-modal

Exhibit 4
Airline executives
Consumers

31%
24%

Individualised travel options presented to every customer
based on predictive analytics

19%

Seat selection based on matching of traveller profiles and
preferences

14%
22%
5%

Virtual travel agents
3%
Opportunities for contextual advice

2%
20%
Note: Respondents were asked to select up to three.

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Starting a trip on the right vector
Airlines face genuine technical problems in aggregating the information passengers are looking for across
multiple systems with different protocols and standards.
Synthesising and delivering the information to an ever-evolving variety of platforms — from desktop PCs to
smartphones to tablets — is a serious added complication. This is, however, exactly what the independent
websites are doing — sometimes with information that
comes directly from airlines.

100 times in a row, and you turn it down 100 times in a
row,” he says. “That’s not good for you, and it’s not good
for the business.” An expanded array of service offerings and combinations, he explains, will mean that two
passengers sitting next to each other can have markedly
different experiences.
Mr. Foland sees the creation of more diverse “bundles”
— an entertainment bundle or a kids’ bundle — as a way
for airlines to market and deliver what flyers want with
greater precision. “Cabin classes are already bundles of
sorts,” he notes. “But there will be much more choice.”
For example, customers will be further empowered by
selecting their meal times or registering a preference not
to be disturbed.

Airlines need to respond. As Tony Tyler, the International

Air Transport Association’s (IATA) chief executive officer,
points out, if the booking experience is unsatisfactory,
the whole trip starts off on the wrong vector. A “richer
presentation of the full range of the product offering”,
he says, is part of the implementation of the recently
approved New Distribution Capability (NDC), IATA’s favoured approach to allowing travel agent sales channels
to offer the same rich content that is available on airline
websites. This XML computer language-based standard
will enhance communications between airlines and travel
agents, “boosting transparency and choice”.

Passengers can now book flights 24/7, with mobile options making PC-based approaches increasingly obsolete.
While the industry is already good at allowing passengers to manage their bookings on the run, according to
Virgin America’s David Cush, he concedes that there is
room for further improvement.

Jeff Foland, United Airlines’ executive vice president
of marketing, technology and strategy, has an expansive vision of a more fine-grained and comprehensive
information exchange at the booking stage. “Today,
you might get offered the exact same product feature

Individual passengers have different ideas about the
information they want from airlines, the information
they might want to withhold and the way information is
presented.

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Improving the airport experience
“For those customers who prefer to take advantage of
self-service options, your first person-to-person interaction with the airline will be when you’re sitting in the
plane,” IATA’s Mr. Tyler says, projecting a future in which
the trip from airport door to aircraft cabin is streamlined. The airport experience has proved to be the most
frustrating segment to passengers. By 2020, IATA wants
80% of passengers to have the option of total self-service at the airport. Executives agree with consumers
that boarding without human interaction would yield the
greatest improvement in the customer experience (62%
and 58%, respectively) [Exhibit 5].

In the future, airlines will provide virtual assistants able
to help travellers with all aspects of their journeys —
from inquiries to bookings to choosing in-flight amenities. The websites of Alaska Airlines and United Airlines
already feature virtual agents — “Jenn” and “Alex”, respectively — that respond to everyday travel questions.
How travellers might respond to these sorts of options
and how they might interact with airlines requires further
and more careful study, with particular attention paid to
issues of age and culture. Technologies that feel alien or
awkward to older flyers may be exactly what younger
flyers demand. Meanwhile, the fastest-growing markets
for air travel are in East Asia and South Asia; airlines
that are culturally aware and responsive to the different needs of different people will also more easily earn
customer loyalty.

Top priorities for improving boarding and in-flight experience over the next 10 years

Boarding without manual intervention using electronic
data exchange

Exhibit 5
Airline executives
Consumers

62%
58%

Traveller identification using facial recognition
or biometrics

43%
41%

Real-time flight progress information using virtual
reality displays

45%
31%
52%

Turbulence prediction systems to ensure a
smooth flight

26%
23%

In-flight videoconference capabilities
9%

Note: Respondents were asked to select up to three.

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Airports with fewer hurdles
The unimpeded curb-to-cabin stroll through the terminal
would eliminate the current series of lines, stops and
starts. They would be replaced by a single biometric ID —
perhaps embedded in a mobile device — that would allow certified passengers to walk past weapons screening
devices that are invisible to the public. Boarding authorisation could be embedded in the same ID; permanent
RFID luggage tags could allow baggage to be dropped off
quickly and easily. Proposals have been made to facilitate
this kind of system at hotels or railway stations in addition to airports so luggage could be tracked at all times.

Achieving that dream is quite feasible with currently
available technology. The ability to drop off luggage,
keep carry-ons and board without the need for any other
interactions or obstructions is already being tested in the

United States and elsewhere.
Biometric IDs are a key component in making it happen.
Current US and EU passports include radio-frequency
identification (RFID) chips with data storage: they can
contain the same basic information as a paper document and have space as well for digitised fingerprints or
retinal scans. These biometric components would make
these documents secure and tie them with a high degree
of reliability to the bearer. The IDs can work in concert
with pre-screening programmes; instead of having
security agents make day-of-travel threat assessments,
pre-screening allows authorities to conduct deeper,
more comprehensive investigations, resulting in a kind of
“traveller certification”.

While the technology to enable these changes is available, full-scale implementation and integration face a
number of hurdles. Streamlining the path through the
airport would reduce labour costs and save airlines and
airports money. Infrastructure investments to build the
systems, however, would be significant. A disparate
group of competitive stakeholders in the private and
public sectors would have to buy in and agree on standards. The programmes would also have to overcome
passenger concerns about data privacy.

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Airport commerce as opportunity or obstruction
Virtual-shopping venues could provide additional revenue streams for the industry and an expanded range of
options — with a smaller physical footprint — for travellers.
Germany’s Frankfurt Airport already features a virtual-reality wall that sells duty-free goods. Passengers point their
smartphones at a product’s QR code, adding it to a virtual
shopping cart, then pick up the merchandise at a collection point 15 minutes later. Some executives (13%) would
like to see these options expanded [Exhibit 7].

Airline executives and customers agree that streamlining the airport experience would reduce both costs and
frustration. They do not agree, however, about how to
use these newly open spaces.
As long as they don’t put additional clutter in travellers’
paths, many executives surveyed (44%) would like
to use some of the space freed up to increase airport
shopping options, along with providing opportunities for
ordering restaurant food or duty-free goods for onboard
delivery. Only 21% of potential customers, however,
were interested in those options [Exhibit 6].

Top priorities for improving day-of-travel experience over the next 10 years

Single biometric ID accepted at every security point
along the journey

Exhibit 6
Airline executives
Consumers

63%
54%

Permanent baggage tags linked to customer profile,
offering real-time baggage tracking across the journey

65%
54%

Seamless real-time trip information streamed to mobile
devices from every provider on the journey

46%
33%
44%

Ability to order meals from airport restaurants or
duty-free purchases for delivery aboard aircraft

21%
29%

Augmented reality devices (such as Google Glass) to
guide travellers through airports

16%
Note: Respondents were asked to select up to three.

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Exhibit 7
Top ways
industry
players can
use technology
to collectively
enhance the
traveller
experience

Single electronic ID for security, check-in and boarding

63%

Data sharing to integrate updates of flight status,
security delays and inter-carrier transfers

63%
43%

Mobile apps providing end-to-end travel information from

multiple providers
Permanent baggage tags common to all airlines (eg, RFID)

32%

On-board meals ordered from local in-terminal restaurants

25%

Data sharing to establish airports as inter-modal hubs

24%

Duty-free purchases from a virtual retail wall

13%
Note: Asked of airline executives. Respondents were asked to select up to three.

mproving the in-flight experience
PJ Wilcynski, payloads chief architect at Boeing Commercial Airplanes, cites research on the company’s new 787
Dreamliner to argue that perception can trump physical
realities. “We found that passengers on the same airline,
same routes, same seats, same seating configuration and
same meal service thought their seats were wider and
the food service better in the new interior,” he relates.
All-LED lighting, brighter colours, increased humidity,
overhead pivot bins and larger windows created a sense
of space and comfort that transferred to aspects of the
environment that had not been changed, Mr Wilcynski
suggests.

A personalised experience results from personal decisions. Air travel, of necessity, revokes most adult privileges and choices. Passengers sit in their assigned seats,
sitting up straight when prompted; they eat when it’s
snack time and only what’s available; they can even be
refused bathroom privileges. Legitimate concerns about
costs, revenues and ROI have led to a far more Spartan
flying experience with more seats, less legroom and
flights often at full capacity. Heightened security concerns have also inserted intrusive and time-consuming
hurdles between the traveller and the departure gate.
Airlines are constrained in responding to these issues by
space limitations, by regulations and by costs. Nevertheless, airlines can make significant improvements to the
travel experience by making affordable adjustments to
elements of the onboard environment, for example, lights,
colours and air quality, and by expanding virtual options.

Technology is also permitting more of the customised
options that passengers both desire and value. Some will
require infrastructure upgrades, but others are relatively
low cost or even offer potential revenue streams.

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Toward the horizon
Current barriers, along with cost concerns, limit
the degree of change most of our executive
survey respondents can envision. A minority,
however, take a more expansive view, projecting
an unbounded future for air travel.

Henry Harteveldt, founder and travel industry
analyst at Atmosphere Research Group, is skeptical about the rebirth of supersonic travel. “Unless
the cost of fuel—traditional oil-based or alternative
fuel—comes down, and the environmental impact
can be managed appropriately,” he says, “I don’t
think you will see supersonic flights happening
over large masses of land, certainly not densely

Supersonic travel:
Supersonic travel has not been a reality for the
travelling public since 2003, when the last Concorde was retired from service. Despite dramatically reducing flying times, only 23% of surveyed
executives believe that such jets would improve
customer service—the Concorde was infamous
for its cramped, unglamorous cabins.

populated areas. We may see transoceanic supersonic travel emerge, but it would have to be
commercially and environmentally viable.”
Prospects for hypersonic travel—generally above
Mach 5, or 3,850 mph—are more distant. Lockheed
Martin expects to have a scaled-down model of its
SR-72, a pilotless, hypersonic military drone, in the
air by 2023. The company is working toward a 2030
launch of the operations-ready version, with both

offensive and intelligence-gathering capabilities.

Among the major players, however, Boeing
is reportedly working on an aircraft that flies
120 passengers at more than 1,000 miles an
hour. And NASA has been investigating ways
of reducing the sonic booms associated with
supersonic aircraft, while private firms are also
working on making them more efficient.

On the civilian side, Airbus Group’s Zero Emission
Hypersonic Transport (ZEHST) concept plane, using
currently available technologies, would carry 100
passengers at Mach 4, burn carbon-neutral algal
fuel until it got to altitude, then switch to a mix of
oxygen and hydrogen, emitting only water as exhaust. But Airbus does not see such transport being
available before 2050.

In the realm of business jets, several companies
are accepting orders for planes that generally
seat between 6 and 20 passengers, cruise at
better than 1,000 mph—above Mach 1, but below Mach 2—and retail for somewhere between
US$60m and US$80m. Spike Aerospace hopes
to bring its S-512 to market in December 2018;
Aerion is aiming for 2021 with its SBJ; while
HyperMach is a bit of an outlier—its SonicStar is
intended to have room for up to 32 passengers,
a cruising speed of around 3,000 mph, just below Mach 4, and an entry date of 2024.

Pilotless aircraft:

A majority of commercial jets already have most
of the technology necessary to fly without a pilot.
Researchers are developing drone technology to
operate cargo flights—even through wildfires and
other hazardous conditions.

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Some 29% of executives surveyed can see pilotless
aircraft entering their fleets, their comfort with the
idea likely based on knowledge of current airline
practices: pilots take control during take-off and
landing, with most of the flight time usually spent
monitoring decisions made by the autopilot. Pilotless take-offs and landings are not too far away.

Letting passengers make themselves virtually at home
Passengers are the best judge of what type of access
would help make them feel at home. For many travellers, losing time is even worse than losing autonomy.
So much of modern life — work, play, commerce and
communication — depends on Web access that to be cut
off for several hours feels to many like the time has been
rendered unusable. Provide Web access and that time is

recaptured.

Travellers are far more leery: only 2% express
interest.
Mr Harteveldt is skeptical because of the economics and potential liability. “The insurance companies, frankly, won’t let [pilotless aircraft] happen,”
he says. “Accidents occur. You need to have
well-trained pilots on the flight deck in case the
technology isn’t working as it’s designed to work.”

By allowing more comprehensive information exchange
during booking, airlines can make a more personalised
flight a reality. Parents could be allowed to lock out certain content at a child’s seat during the booking process.
And, even though customers with open Web access
could retrieve whatever they wanted on their own,
they might also be offered an additional menu of profile-based personalised options as an important welcoming touch.

Helium airships:
Models are now on the drawing board for helium
airships that could carry as much as 500 tonnes. A
niche market exists for craft that would enable cargo delivery— sometimes referred to as “road-less
trucking”—in areas inaccessible to airplanes.
Helium, however, is a non-renewable resource.
With global demand outstripping supply, prices
have more than doubled in a decade. The shortage has been sufficiently severe to force the US
military to scale back in-theatre use of airships.
High-tech applications that require helium—MRI
scanners and superconductors, for example—use
more than four times as much as is consumed by
“lift” applications. Given market realities, the odds
don’t favour use for passenger travel.

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This personalisation could be achieved at virtually no
marginal cost. An airline that consistently makes its
customers feel surrounded by the comforts and options
of home is far more likely to encourage loyalty, maintain
connection and get repeat business.

Improving the flying experience is essential to the rebuilding of customer loyalty that airlines need to shore
up their businesses. The critical calculation of ROI should
include:
• Synergies of combining upgrades for passenger
services with necessary data and communications
upgrades on the operations side;
• Comprehensive analysis of potential efficiencies
across the full range of systems — from savings in
labor, time and weight, for example;
• Revenue enhancements enabled by these upgrades,
from premium service up-selling to e-commerce,
both direct and with partners;
• The value of additional, more timely and richer infor

mation about customer preferences, desires and
complaints.

And, as in the gaming industry, airlines can apply the
information gleaned about which options are utilised and
which are not to improve their customer profiles.
Costs, benefits and ROI
Making Internet access a standard part of the flying
experience will require significant investment. Air-toground data transmission and upgrading onboard systems will prove expensive. But improvements in technology will bring transmission costs and weight down, and
installing systems as a standard part of aircraft assembly
will be much less expensive than retrofitting.


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Capturing more
of the value chain

The limits of hardware, the elasticity of
data processing
Trains today travel about six times faster than they did
in the mid-19th century—a rate of speed first achieved

50 years ago.

Many factors outside of airlines’ control nonetheless
affect how passengers respond to them. Economics,
politics and, of course, the weather play roles beyond
anything a carrier can manage. Airports, while an intrinsic
part of the aviation system, involve even more uncontrollable variables, including security and transportation
issues..

Planes fly about 10 times faster than they did in 1914;
passengers first reached today’s average air speed for
commercial travel, roughly 500 mph, in 1952.
If we consider electronic data transmission to have
started with telegraphy and Morse code and that the
initial rollout of Google Fiber represents the current
high-water mark, then, between 1844 and 2012, the
speed of data transmission increased by a factor of
256,000,000.

Full-trip customer care and the power to address
externalities
Airlines may be reluctant to take on the additional complexities of coordinating their operations with a bigger,
more complicated and less integrated travel industry. But
what was once defensible prudence has become problematic hesitation and resistance. Circumstances have
changed, and technology has matured.

The rationale for focusing on data throughput as a way
to improve both the economics and the experience of
air travel derives from that stunning set of numbers.
While land and air speeds have not increased recently,

data speed has attained escape velocity—with corresponding increases in processing power and storage
capacity. At the same time, costs for computing equipment and services—and the communications and sensing technologies that use data as a platform—continue
to plummet.

A single Web search involves more data processing than
was used by NASA’s Apollo programme over all the years
of its existence and the multiple flights it launched. Technology is no longer a barrier — inertia is. If the industry
does not involve itself in a larger piece — arguably the
entirety — of the travel value chain, another industry will
do so to the peril of airlines.

These technological gains and economic efficiencies
are the airline industry’s greatest unleveraged asset.
Compared with hardware and physical infrastructure,
moreover, changing and expanding the use of technologies in the digital sphere is much more under the
unimpeded control of the industry.

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Maximising efficiencies over the long term

Airline and hospitality websites, along with online travel

agents, are aiming to take on the coordinator role — but
their offerings are still more aggregation than coordination. They provide access but not enough intelligence.
Travel packages are not so much personalised as divided
into silos — business, leisure, adventure, etc. In many
cases, they can offer bargains, but not the personalisation and coordination passengers seek.

A key measure of efficiency is being able to match capacity and demand. Flying empty seats, heating empty
hotel rooms or leaving rental cars in their stalls — all are
underused assets and represent lost revenue across the
travel chain. Individual service providers do what they
can to combat this: if the flight from New York, New
York, to Denver, Colorado, is only half-booked, the airline
cuts the price of the remaining tickets.

Information and communication are key

For customers, however, the value of that discount has
to be weighed against all of the other pieces of a trip
they are left to cobble together on their own. An entity that offers to handle all the resulting changes as a
complete package — taking customer preferences into
account, making best use of facilities across the full chain
and delivering all at a good price — would transform its
role from vendor to coordinator — a powerful and more
profitable position.

An excellent in-flight experience is less likely to be remembered as such when sandwiched between a traffic
jam on the way to the airport on one end and missing
the shuttle to an unsatisfactory hotel room on the other.
While those are outside the scope of the airlines’ responsibility, travel segments blur together: a bad day is
remembered as a bad day and the airline is included in

that memory.
Full-trip coordination addresses these issues in a manner
similar to a combined on-call travel agent and an unobtrusive personal assistant. A clear path through traffic
jams cannot be blazed, but technology now provides
a range of ways to keep abreast of kinks in the travel

A full-trip coordinator is able to efficiently deliver a more
consistent customer experience across the complete journey because it has a detailed and complete picture of the
customer’s preferences, needs and desires, as well as how
all the parts of the trip connect. Its customers will experience a more coordinated and personalised trip than even
the traditional personal travel agent could provide.

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chain, to communicate with customers in a timely fashion and to offer solutions that either help work around
problems or quickly address fallout if the problems are
insoluble.

imposed. That kind of problem-solving and path-smoothing could make travellers more loyal to the coordinator
than to any individual vendor.
An airline able to step into the role of efficiently solving
problems can also use information in softer, more proactive ways, like making sure that a hotel greets arrivals

from a late flight by providing them with information on
restaurants in the vicinity that are open late and serve
their favoured cuisine, for example, or offering expedited room service. This kind of personalisation makes for
a tangibly better experience and makes travellers feel
cared for as well. It builds loyalty.

Particularly valuable is the ability to identify and adjust to
problem cascades, for example, those caused by missed
or cancelled flights. Years of cost-cutting have meant
that a flight cancellation can result in hours of waiting
to speak to a representative on jammed airline customer-service phone lines to rebook that single part of the
trip — after which other time-dependent reservations
and plans also must be adjusted. Passengers are frustrated, angry and out time if not money.

Providing customer care at this level requires the meshing of several different kinds of information. The trip
coordinator needs to know the customer, see the full
trip and remain aware of the traveller’s evolving circumstances. This level of care combines the customising
approach of the logistics and hospitality industries with
the predictive analytics of the gaming industry.

A full-trip coordinator would be able to see how, and
therefore address, problems can ripple across the full
trip; the coordinator could, perhaps, even have the power
to bargain down or pay whatever change fees might be

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Both customers and executives favour this trend towards
integration, but executive interest (51%) is significantly higher than that of customers (31%) [Exhibit 8]. If
customers don’t demand a feature, it’s hard to get an
industry to invest in providing it. The problem may be
that customers don’t yet see all the benefits of full-trip
coordination. On the other hand, executives, who have
their full-trip travel arrangements made for them (usually
still by human assistants), are keenly aware of the value
of this service.

Customers want a faster transit through the airport.
They can see the path, and technology can deliver that
experience. Technology can also facilitate the delivery
of a much more integrated, cohesive and personalised
experience across the full trip. That path is not yet clear
to customers.
Travellers want a faster transit through the airport. They
can see the path and technology can deliver that experience. Technology can also facilitate the delivery of a
much more integrated, cohesive and personalised experience across the full trip. Travellers do not yet clearly see
that path.

Top priorities for improving the booking experience over the next 10 years

Integrated booking and schedule information across the
travel industry, including different modes of travel

Exhibit 8
Airline executives
Consumers

51%
31%

Seat selection based on matching of taveller profiles
and preferences

Opportunities for advice based on the specifics of travellers’
bookings (eg, advice that a traveller can secure a lower
fare by driving to an alternative airport)

14%
22%
2%
20%
24%

Individual travel options based on past purchases
and preferences

19%

Note: Respondents were asked to select up to three.

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