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Perspectives

Reshaping Air Travel

2018-02-15


Digital is bringing radical changes to the airline and travel industry. We examine the issues and how your organization can prepare.

Passengers aren’t the only ones wondering about the best routes to their destinations. 

With digital transformation disrupting the industry, many travel providers also question which path is the right one for their organization. 

Our new report, “The Future of Air Travel: Eight Disruptive Waves of Change” explains why the waves should be on the agenda of every travel industry CEO, and how leaders can position their organization to ride the waves of change to profit.

A New Macroeconomic Order

Factors beyond the industry’s control affect its ability to thrive. While travel organizations can’t prevent macroeconomic shocks, they can be prepared for them. Encouraging cross-border movements, addressing security concerns, and focusing on sustainability and climate change are ways to begin. So is finding ways to personalize the customer experience during operational disruptions. The long-term keys to managing macroeconomic shocks? Agility, resilience and scalability.

The Coming Tsunami of Travel Distribution

New entrants are poised to expand their services — and threaten traditional intermediaries. Gaining primacy are online travel booking and platforms such as Expedia and Facebook, as well as sharing-economy stars AirBnB and Uber. To compete with them, GDS companies need to explore ways of creating new business value, including customer data hubs that go beyond travel-only details. 

Flight and Beyond: New Business Models

Will linking new technologies to emerging market needs help create value more cost effectively? Look for innovative models such as flight-sharing and subscription-based aviation to help airlines monetize spare capacity. Airlines will make major moves to own the whole travel journey — from booking tickets to hotels and destinations — as component-based travel purchase is replaced by packages that bundle air and surface travel, lodging, and food services.

Alternative Modes of Transport

Upstart competitors are poised to shake up the transport system. How should travel companies monitor the advent of rivals in the innovative forms of Hyperloop, supersonic flight and ultra-long haul aircrafts? Key decisions include whether to compete or partner with alternate modes of transports, and whether to implement new hub-and-spoke strategies and network optimization. 

The Age of Frictionless Travel 

Hassle-free airport experiences come closer to reality with networks of IoT devices, cloud-based biometrics, and risk-based screening. The Internet of Things catapults every object, consumer and activity into the digital realm. Already 38% of travelers and 70% of frequent business travelers own wearable devices, according to our 2016 travel study. How do travel organizations lay the foundation? Joint investments by airlines and airports are an important step. Another is creating platforms that allow all airport players to plug in, share and consume data to provide superior customer experiences.

Next-Generation Travel Customers

Zeroing in on regional markets and youthful travelers will require concise, spot-on initiatives. At the efforts’ heart? Agility and scale. The first step for travel providers is to fine-tune their customer-segmentation strategies. 

Figure 1

Immersive Experiences

Upending the way we plan and purchase travel will be virtual reality (VR) and augmented reality (AR). (To learn more, read our latest white paper: “Disrupting Reality: Taking Augmented Reality & Virtual Reality to the Enterprise.”) We expect physical travel outlets to shift from points of sale to VR-enabled “experience centers.” Travel companies are experimenting with AR apps that act as digital travel guides. Getting organizations ready for immersive experiences will challenge established operating models, requiring companies to build out their physical infrastructure and become adept at small-scale pilots.

Hyper-Personalization 

Digital personal assistants will transition travel planning from multiple websites and apps to a single point of contact. Powered by advances in AI, the assistants will conceptualize, create, and execute everything from inspiration marketing and trip planning to post-purchase interactions. The best of them will be able to construct customers’ travel experiences with minimal customer input. Yet hyper-personalization raises broad questions of data privacy, monetization and ownership. 

To learn more, read the full report “The Future of Air Travel: Eight Disruptive Waves of Change,” or visit the travel and hospitality section of our website.

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Reshaping Air Travel