Airlines in the region are having to adapt to growing competition and high customer expectations.
By Nada Atieh
Air connectivity in the region has grown dramatically over recent years, with the number of city pairs rising from nearly 200 in 1990 to more than 700 in 2016, according to the Airbus Global Market Forecast. Airports are taking advantage of the region’s geographical position and offering connections to destinations around the globe, transforming the region into a hub which connects East to West.
The Middle East’s aviation market is forecast to grow 5 percent annually until 2036 and witness an extra 322 million passengers en route to, from, and within the region, according to the International Air Transport Association (IATA), the trade association for the world’s airlines. Growth of world air travel has averaged about 5 percent a year over the past 30 years as lower airfares, higher living standards, and a growing middle class emerged in markets, driving up the growth of tourism and travel around the world.
Customer experience and Aviation
According to Bikram Pattanaik, a management consultant with MasterCard, consumer spending on retail transactions in the region has increased in the last year but the average transaction size has decreased by 8 percent. There is fierce competition and pressure on the margins of airlines to cater to customer preferences and build airline loyalty, Pattanaik said at the Arab Aviation Summit in Dubai last month.
Airlines are in a highly transformative period and are migrating from a more operationally driven model to one far more customer-focused, according to Sabre, a global technology company that serves airlines and airports. Throughout the Middle East, low-cost carriers like Sharjah-based Air Arabia, Kuwait-based Jazeera Airways, Turkey’s Pegasus Airlines, Saudi Arabia’s Flynas, Dubai’s Fly Dubai and Egypt’s Air Cairo serve the growing demand for intra-regional air travel. Airlines must be prepared to define their strategy, empower their teams, evolve their culture and adopt best practices for customer-centric retailing to lead the market.
Customer experience across airlines has dipped in 2017 as brands struggle to keep pace with soaring customer expectations, according to research from KPMG Nunwood. The airline sector saw its customer experience score drop from 7.41 to 7.14, reflecting the overall trend cross-sector that saw its score dropping from 7.33 to 7.08.
The annual analysis of over 10,000 consumers, which measures satisfaction with brands from various sectors including aviation, found that Emirates leads the way on customer experience in the UK airline sector, ranking sixth out of a list of 295 brands, followed by Virgin Atlantic (overall ranking 18), and KLM (overall ranking 46) who moved up by 83 places in last year’s analysis.
Commenting on the results, John Luke, UK Head of Aviation at KPMG UK, said there has been intense competition around customer experience amongst airliners in the past few years.
“The ‘traditional’ low cost airlines are now having to address customer experience, as a growing number of overseas companies are replicating the low-cost business model, shifting the focus to customer experience as the differentiator,” said Luke. “This, in turn, has impelled the premium airlines to push forward on experience and to select where they compete. Our research shows that Emirates and Virgin Atlantic are showing the way, intentionally engineering memorable experiences for their customers in their own unique style.”
Forces Shaping the Future of Travel
Pattanaik said the airlines that will dominate travel in the future will offer solutions that are more encompassing, with customer data as the foundation to produce insights to enhance the traveler experience throughout their trip. “The expectations from consumers is changing; consumers are being impacted by other industries and it is shaping what they want, which is personalization,” he added.
With the rise of online bookings, customer expectations, in terms of how passengers want to be serviced by airlines, are also rising. This is in turn is creating a myriad of opportunities for airlines to engage and empower customers. Beginning with a consumer-centered booking process, airlines can utilize artificial intelligence, an upcoming field, and find ways to revolutionize the customer experience after the immediate sale happens, he explained.
“The travel leaders of the future will actively seek out the people above all others. If you’re an airline company, it’s not sufficient for you to provide airline services or just a program. It’s important to develop a brand that people will associate with and emotionally connect to. The service throughout the journey will provide the loyalty,” he said.
According to the Harvard Business Review, personalization can deliver five to eight times the return on investment on marketing spend, and can lift sales by 10 percent or more. More than that, utilizing AI and predictive analytics, and offering personal attention tailored around the individual can go a long way in developing brand loyalty.
It’s not about the airline loyalty programs, Pattanaik explained, it’s the service and engagement that builds brand loyalty and that’s where AI can become increasingly helpful. AI should be used to personalize emails, ads, social channels and mobile apps to help airlines engage with diverse customer types and ensure the material they receive is relevant to them. It can also be utilized to improve services and the customer experience through instantaneously opening up a line of communication in real-time between the airline and passenger if issues arise.
For example, if luggage is lost in transit, an alert could be provided to the airline prompting the airline to notify the passenger of the situation and let them know it is being handled through a chat box. Customers could be compensated through this way and the speed at which the situation is handled could greatly minimize the impact it has on the passenger’s relationship with the airline.
Most airlines have not capitalized enough on after-sale opportunities to further cement the customer relationship, said Pattanaik, and online travel agents like Expedia, TripAdvisor, and booking.com are stepping in to fill the gap. Booking sites are using chat boxes to answer questions and engage with travelers by asking them what they would like to do and what they need assistance with. Future travel leaders will do the same; communicate with the traveler throughout their journey using personalized messages and similar tools of engagement. After all, smart and consistent interactions can essentially make or break the customer relationship.
And the relationship is on rocky ground in some areas. According to Pattanaik, consumers have become frustrated with the level of service they are getting. Fifty-nine percent want improvements to the removal of shoes, belts and jackets at security checks. Almost three-quarters of travelers want processes that require only having to pass through security once through transit.
“With all this happening, the traditional way of running an airline doesn’t work,” said Adel Ali, CEO of Air Arabia. “People travel very quickly and make their decisions absolutely in the last minute from home. They are intelligent and they’re telling us give us the option, don’t put things down our throats, we will decide.”
People are subscribing to multiple loyalty programs to receive the best offers and not actually out of loyalty to the brand. An airline’s use of AI and partnerships with other transport providers that capitalize on the trip lifecycle from the airport, in-flight and post-flight journey, and increase customer engagement will determine which airlines will propel forward into the future.