As the finance function moves further into the digital era, one of the biggest questions CFOs are asking is, “Are we ready?” Advancements in technology and data proliferation have reshaped the role of the airline finance function. As airlines face increasing competition and ongoing change, they expect finance to leverage technology and turn data into insights they can use to guide strategy and support decision-making.
Today’s airlines have a wealth of data at their disposal, spanning every aspect of their business. This requires a shift in what performance insights mean for the Airline CFO. In this article, we’ll discuss some new ways CFOs should think about metrics in this changing landscape.
Bridging the Gap
Traditionally, business unit heads are responsible for monitoring and improving metrics related to running the day-to-day benchmarks focused on operational efficiency. CFOs, meanwhile, focus on metrics related to managing the financial big picture and driving strategic decision.
Today, however, analytics can give airline CFOs the ability to bridge the gap between these areas to take a more centralized role in decision-making, outside of the direct financial realm. CFOs can offer unique insights on the operational aspects of their business. Analytics also offer CFOs the ability to improve risk management and hedge against changes in the industry.
The challenge for airline CFOs, therefore, is to find the right performance insights that properly leverage the data and analytics at their disposal. This doesn’t require a complete change in prioritization, but rather a shift in thinking that ties analytics back to business challenges and goals.
How to Redefine Insights
Airline CFOs can follow the series of steps below to help them identify new performance insights to monitor and build upon.
- Identify Areas of Improvement - Airline CFOs should start by identifying areas within their oversight that can benefit from analytics insights, such as risk management and budgeting.
- Identify Areas of Competitive Advantage - While CFOs may be unfamiliar with operational metrics at first, they can help identify areas where analytics can bring competitive advantages to their airlines. Areas could include ticket pricing, customer insights, and customer journey management.
- Identify the Right Metrics - With the above knowledge, CFOs can find the right metrics to monitor areas for improvement.
- Identify the Right Analytics Solutions - CFOs can discover the best analytics solution to track chosen metrics. While your airline already likely has the necessary data, CFOs should be open to the possibility of needing additional resources (technology, qualified employees) to properly track and analyze them.
- Execute the Chosen Solution - Finally, CFOs should be responsible for executing the needed strategy with the proper tools to ensure chosen metrics are properly tracked and reported.
Fortunately, today’s CFOs don’t have to start from scratch to identify areas of improvement and competitive advantage. Leaders across various industries have taken initiatives to improve their company’s operations and profitability. Some of these directly relate to airlines, including:
- Customer Insights: With more customer data available, CFOs can help set up analytics tracking that links passenger characteristics and behaviors (e.g. flying frequency, type of ticket purchased) to revenue.
- Revenue: Financial leakage can cost airlines as much as 3 percent of their revenues. Reasons for leakage include agents selling tickets that exclude fees, manual errors when calculating refunds, and fraud. CFOs can use analytics to track these issues in real-time and identify when the most urgent areas for process improvement.
Beyond Analytics for Finance
Finance already relies heavily on data-driven decision making, so it only makes sense that they can benefit immensely from smart analytics. CFOs, by taking the lead in leveraging new insights, can demonstrate the power of analytics to the rest of the company.
In other words, airline CFOs are in a unique position to move their companies into the digital age. Actionable insights are the way to prove the value of data and analytics. It’s an opportunity no CFO should miss out on.