- October 17, 2016
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Improving customer service is a key business driver for 69% of the world’s leading airlines. And over the last few years, digital has been critically evolving both on-ground and in-flight services. Managing experience for connected passengers and crew both, in-flight, is one of the last frontiers for airlines. As more and more airlines look to improve profits by front lining efficiency, ancillary revenue, as well as improving passenger experience, technology and devices continues to play a big role.
The industry outlook is positive, as the airline OBR (On-board Retail) is growing in terms of sales, passengers and flights. It brought in over $5.0B in 2014, with an average annual growth of 12.9% since 2012. But in-flight sales system hasn’t evolved much with the “push trolley” still functioning as a primary in-flight revenue driver. Complexities like inventory management, experience and payments, further add to the limitations of the solo cart runs, making in-flight sales that much harder to efficiently manage. But the game is changing. More and more airlines are leaning towards sustainable revenue streams, incorporating technologies to improve crew efficiencies, payments, and increase passenger spending. While 60% airlines work with paper, around 75% of airlines have budgeted for crew devices and inflight retail applications by 2018.
The Maturing In-Flight board POSMarket
There are two key stakeholders with regard to POS – crew and passenger. If we take a look at the current airline industry, it earns an average is $8.27 profit per passenger, but in case of traditional sales, SITA finds that about 5-7% of onboard sales is fraudulent, meaning there is an accuracy gap on the crew side and opportunity on the customer side. Smart on-board, point-of-sale systems can help improve this by personalizing sales and digitizing crew functions. Some airlines bring duty free shopping to their passenger in-flight on their in-flight entertainment device or their own tablet or smartphone. For example, Cathay Pacific and Dragonair passengers can browse TripAdvisor and book hotels while in the air. Such experiences can lead to increased customer satisfaction and additional revenue for carriers.
During a flight leg, the average crew member often finds siloed information and manual processes, such as inputting each invoice, tracking the inventory and managing personalized interaction, which eats into their time and productivity. Therefore the top priority for airlines is building a streamlined system so it is better aligned with the customer and crew efficiencies.
As airlines plan the departure from the tired trolley push POS which has been part of the in-flight experience, 3rd party IT providers help make the leap for in-flight POS frameworks. Technology-enabled POS devices seamlessly activates data management, inventory and electronic payments letting cabin crew focus on other critical functions of passenger service and cabin safety. Leading airlines like Alaska Airlines, American Airlines, have converted their 25-35lb. flight manuals into paperless devices and cabin crews utilize these devices to access passenger manifests, along with traveler information, in real time.
Alaska Airlines, an early mover in this category, estimates it saves some 2.4 million pieces of paper while AA has found that all-digital cockpits help save approx. $1.2 million in fuel costs annually. Use of in-flight device enables:
- faster better customer service
- productivity gains
- real-time F&B inventory management
- better operating costs
Smart Analytics: Let’s look at the passenger angle of airline ancillary services. On an average trip, an airline captures about 30 percent of a passenger’s total travel budget. The remaining 70 percent is spent on the ground. The third stage of ancillary revenue is to capture more via onboard POS solutions. To do this, data plays a big role regarding travelers’ spending habits. Smart analytics can provide targeted sales opportunities tailored to passengers driving to a satisfying purchasing experience.
Building a differentiated in-flight service
Airlines align with 3rd party IT providers in determining the future of ancillary revenue. The efficiency that airlines are investing in with smart devices and technology isn’t limited to offering the customer choice. It’s also a way to cut costs and become more productive such as introducing paperless receipting was a priority that could have a direct impact on cost saving. Further, providing single POS and leveraging new sales channels such as pre-order, loyalty offers, duty-free, and packaging it personalized to passengers, airlines can enhance on-board sales. IGT’s In-Flight POS Framework is an automated framework for managing all on-board F&B, merchandise and duty-free sales. It automates the process of inventory management enabling quicker order processing and provides crew with real-time inventory and passenger updates.
Differentiated Service: Precision, prediction and personalization will be the key to a differentiated and seamless service. By connecting and automating the combination of real-time data, navigation and processes will empower crew to provide sophisticated customization choices for passengers, loyalty program and profiles. In enabling on-demand services airlines will be go the extra mile.
Improved Productivity: The connected crew will be able to know more about their customers onboard and have a better management of real-time issues. Smarter sensors will create new functions that further personalization and in-flight experience.
Instant Feedback: Feedback is crucial in service-based industry. Instant feedback can help crews create interactive and responsive engagement to manage issues that may arise on a journey and further share them with on-ground crew for a timely assistance. Furthermore, a build of the data, can help shape future travel with the same passengers. Today over one third airlines plan to invest in new payment models and devices. Additionally, there is a greater understanding that flexible EPOS and intelligent CRM will become key to making greater sales.
As passenger demand for personalized services grows in an industry that is extremely competitive, planning efficient infrastructure for on-board experiences and personalized sales will yield higher revenues.