Right Here, Right Now: How Airlines are Responding to the On-Demand Economy

Panasonic Avionics< Panasonic Avionics
08/21/19 4 MIN READ

On-demand technology is transforming air travel.

In general, the convenience, choice, and ease of payment that mobile apps offer is unlike anything we’ve ever experienced before, and people are loving it. With just a few taps, we can have food delivered to our door, schedule a ride to the airport, and even hire a plumber to fix a leaky faucet—all within the span of five minutes!

The technology is huge, and it’s making many airlines think about all the novel ways they can integrate on-demand features into the customer experience. Around the world, airlines are using mobile-first interfaces to more thoughtfully orchestrate key elements of the passenger experience, from inflight meal ordering to ground transportation, to duty-free shopping.

Market Considerations

One noteworthy challenge in creating a successful on-demand service is that it actually has to answer real, existing customer demands.

“What passengers expect is often quite different from what airlines actually offer,” observes Shashank Nigam, CEO of airline consultancy firm SimpliFlying.

Nigam—who has extensive experience helping airlines to tailor their apps, services, and IFE systems—says many companies too often fail to put themselves in the shoes of the passenger. For example, passengers may be reluctant to use a proprietary airline app to accomplish some of the same tasks, and access some of the same services, that their existing apps already address.

Using a proprietary app to connect people to Netflix, Uber, or other services can be seen as duplicating everyone’s efforts. The goal, Nigam says, is to use airline apps to give travelers unique values and incentives. He points to Singapore Airlines’ Book the Cook feature, which allows Business class passengers on certain routes to pre-order high-caliber meals before they travel. An Economy class version of the service also exists, giving all passengers the option to personally curate their inflight meals through the app.

Food and Retail Are a Good Place to Start

As the Singapore Airlines’ example illustrates, food is an easy way to adopt and operationalize this kind of technology. Other airlines are following suit.

Nigam points to KLM, which is driving increased ancillary revenue by allowing Economy passengers to pre-book Business-class meals. “A three-course meal for around 20 Euros is a great value for many long-haul economy passengers, [and] it also helps KLM monetize their excess Business class meal inventory,” says Nigam.

On the low-cost carrier end, Nigam says AirAsia has gone all-in with on-demand to contain cost and maximize profit. “Since almost every meal needs to be pre-booked online or using the AirAsia app, they only take food on-board which has already been paid for. They’ve basically eliminated all costs associated with excess inflight meals,” Nigam continues.

Retail is another area of focus for airlines, Nigam continues. “What if you could eliminate the need for passengers to physically stop to purchase duty-free merchandise, for example?” He points to Air New Zealand, which offers duty-free gift vouchers to passengers with layovers in certain airports. Passengers can use the Inflight Entertainment (IFE) to browse catalogs of the shops at their arrival airport. If they choose to buy anything, their purchases will be available for pick-up when they land.

Whatever the approach airlines take, Nigam recommends two key metrics to focus on: revenue and app usage. “Revenue is obviously the main measure of success, but if airlines drive more users to their apps via on-demand services then that will also boost ancillary revenue over the long run,” he advises.

“Offering additional services, perks, and app functions isn’t just about making passengers’ lives easier and more convenient. On-demand technologies can bring a positive impact on revenue and loyalty—if implemented correctly.”

Loyalty Programs Extend Airline Offerings

Offering additional services, perks, and app functions isn’t just about making passengers’ lives easier and more convenient. On-demand technologies can bring a positive impact on revenue and loyalty—if implemented correctly. Many are seeking the help of trusted partners to help them get it right the first time, and they’re especially interested in capitalizing on frequent flyer programs.

“Airline brands are looking at what IFEC platforms like Panasonic’s NEXT can do in terms of using on-demand services and partnerships to re-imagine their loyalty programs,” explains Gaston Sandoval, Vice President of Product Management and Global Head of Marketing at Panasonic Avionics.

Applying the technology to loyalty programs will be the next frontier for airlines, Nigam predicts.

“Delta has a new partnership with Lyft, where any rides passengers book via the Delta app earn them frequent flyer miles. And it doesn’t even have to be a ride to or from a Delta flight,” explains Nigam.

He thinks that airlines can take a page from hotel brands that are collaborating with new players. Marriott, for instance, linked up with Hostmaker, a hospitality management company serving hosts on Airbnb and other similar providers. The relationship enables passengers to book pre-vetted homestays via the Marriott app and earn Marriott Points while doing so.

Airlines could look at similar strategic relationships to help further monetize their mobile apps and IFEs. However, they should first consider these offerings from the customer’s perspective. Nigam says passengers won’t automatically be wowed by being able to order a meal from an app. To build the value of the service up in people’s minds, airlines should form compelling narratives about these new services and functionalities.

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