In the last several years, many new and emerging technologies have made a major impact on airlines. Whereas an airline’s IT infrastructure was once considered a tool primarily for managing ticket reservations and supporting the financial department, today every element of an airline’s operations requires the support of top-of-the-line information technology. Far from slowing down, this trend will only accelerate in the future.
Although it is impossible to know with certainty what developments will affect the industry in the years to come, we can identify a few technologies that are already transforming the industry and are likely to change the way airlines do business in the future, including big data, advanced analytics, social media, and document digitalization.
Big Data Becomes Big Analytics
Of these trends, big data may ultimately prove to be the most disruptive. Other industries have already seen their business models altered radically, for both good and bad, by the advent of big data. Air transportation, which has always been particularly dependent on data compared, is already seeing big data applications transform the business. Big data technologies have been applied to elements of the airline industry as diverse as dynamic pricing, customer loyalty programs and business development. With more information at their fingertips than ever before, managers are able to make data-driven decisions and respond to changing conditions in real time.
Tied to big data applications are the advanced analytics that convert the mountains of data points airlines can now collect into actionable intelligence. Predictive analytics give airlines the ability to make more informed tactical and strategic decisions. Moreover, modern analytics tools are far more flexible and powerful than their predecessors. Some analytics tools, for example, are even able to handle unstructured data sets, or data sets with multiple structures. These sorts of smart analytics tools are driving increased profit margins by reducing the amount of time IT and finance departments must spend cleaning and organizing their data sets before they can be turned into useful information.
While data collection has always been an important component of the airline industry and advanced analytics is a natural evolution of that, social media is not frequently considered a crucial technology for the sector. But like every other modern business, social media is radically altering the way companies relate to and communicate with their customers. Specifically, social media is proving to be a crucial element in customer relationship management. This has both good and bad consequences for the airline industry. While platforms like Facebook and Twitter open up new channels by which companies can engage their clients and foster customer loyalty, social media has a dark side as well. Many companies, both in air transportation and in other industries, have seen their reputations suffer as the result of poorly conceived or executed social media campaigns that have backfired on them. At the same time, the complaints of a single customer with a large following can quickly spiral into public relations nightmare. Although the new world of social media represents an enormous opportunity for customer engagement that cannot be ignored, airlines must approach it with caution.
Switching to Digital
Perhaps no technological development has had more impact on air transportation than the adoption of electronic formats for key regulatory and tracking documents. The gradual switch to digital documentation has made the airline industry faster, more flexible, and more transparent. This is particularly true in the air cargo industry, where initiatives such as Cargo2000 and the move to electronic air waybills are allowing air freight to compete with other transportation modes on both cost and reliability. Airlines that are not able to navigate the transition to digital documentation effectively will find themselves on the losing side of history. Already, we are seeing airlines race to keep up with the latest developments in order to not get left behind.
Technology has evolved rapidly in the last several years, bringing enormous changes to the airline industry. But despite the important transformation the sector has already experienced, the pace of technological development is still accelerating. The greatest changes to the airline industry may still be yet to come.