The Air Transformation Lab set out to uncover the DNA of a profitable future for airline commerce and to include your airline voice at the center of the new thinking and technology to make it happen. A milestone of the Air Transformation Lab activity is the ‘Airlines: A Path Back to Profitability’ report, that you can download now. Read on to learn more.
In 2020, IATA estimated the industry lost more than $118 billion, with losses expected to continue in 2021. Equipped with resilience, persistence, creativity, and determination, we’ve found your industry colleagues resolved to develop and execute strategies to manage the crisis and return to profitability. So, just how are airline executives, like you, using this crisis as a catalyst for positive change? What are you doing to get your airline back to profitability?
Accelya´s Air Transformation Lab commissioned independent travel industry consultants, Atmosphere Research, to understand this very topic and find answers to these questions.
Following months of quantitative and qualitative research, Atmosphere has developed an extensive, fact-based report to understand the current state of airline commerce and gain insight into the journey toward long-term financial success. The report—Airlines: A Path Back to Profitability—includes insights from over 60 survey responses and executive interviews with your fellow airline commercial, financial and technology professionals worldwide.
What will you learn from the report? Here are three takeaways to whet your appetite before you dive right in.
The Stage is Set for Transformation
Covid dealt a brutal blow to the airline industry. However, it also highlighted airlines' critical need to adapt.
Before the pandemic, almost half of airline executives cited unaligned goals between departments as an impediment to innovation. Emerging from the crisis, we see leaner, less siloed organizations that are better placed to innovate, with almost all survey participants (96%) believing the crisis has created opportunities for positive transformation.
"Partnerships between our departments are more important than ever before. Normally, this transition would have taken three years, but because of Covid, it took three months. We're building a new culture."
As many aspects of the commercial environment have fundamentally changed, airlines will need to continue to adapt. So, flatter, more nimble organizational structures will be an asset for long-term growth.
Digital and Dynamic
The customer is arguably the most significant example of lasting change.
"We see more people willing to book the premium cabin, especially when the flight time exceeds three hours. They're almost all leisure travelers; they're paying for this, not their employers. We have many flights with higher load factors in premium cabins than in economy."
Months of lockdown have also produced a new breed of ‘digital ninjas’ who demand better online shopping experiences - and greater flexibility. As such, dynamic retailing, offer personalization, and digital delivery are central to efforts to return to the black.
Our research shows that by 2023, airlines’ direct channels (digital and offline) will account for 56% of bookings – a 12% increase in just three years. The importance of innovation in offer personalization has nearly tripled between pre-Covid and business recovery. In addition, twice as many executives expect innovation to be 'extremely important' in merchandising/retailing and process simplification during recovery, compared to pre-Covid times.
But, for airlines to delight the new customer, they need to know them and directly meet their needs. So, the challenge is on for airline executives to assume control.
Airlines Take Control
Greater control promises to unleash commercial efficiencies and drive revenue gains. And when thinking of airline-control, it would be remiss to ignore NDC, the IATA standard that allows airlines to control and distribute the airline offer.
Today, 68% of airlines use or are intending to use NDC as part of their retailing and distribution strategies. These airlines view NDC as an enabling tool to help them become more effective retailers across their direct and indirect channels. A critical mass of airlines (31%) that plan to use NDC have already negotiated agreements with some or all of their GDS partners to sell NDC content (flights and ancillary offers).
“NDC gave us the push to show how we could enable a lot of revenue. Every dime counts. We took advantage of the pandemic to get NDC up and running.”
“Being in the airline industry has never been easy, but it is now more challenging than ever. Success requires us to collectively bring fresh ideas, approaches, and innovations to the table. The flexibility to adapt to an increasingly dynamic landscape is also critical to growth,” said James Fernandez, Chief Commercial Officer at Accelya. “Now more than ever before, airlines need independent partners that understand the challenges they face and how to overcome them – with a laser focus on delivering value.”