‘There are new players coming… that will disrupt your world’, how ‘the next best customer is one you already have’ and loyalty programmes evolving into a ‘lifestyle partner’ – more insights from CAPA Airline Leader Summit

The CAPA – Centre for Aviation Airline Leader Summit 2018 took place in Dublin, Republic of Ireland last week bringing together some of the biggest names in aviation to discuss the latest developments in the global industry.

It’s hardly a secret that the airline industry is facing myriad challenges, notably in the marketing and distribution areas, as companies with personalised data, and the analytics and artificial intelligence to go with it, become greater threats to the stability of the traditional airline model. As such, the main summit focus this year was “Airlines making money: a vision of the future”, with the underlying theme of disruption and change.

Here’s some further  insights and observations from delegates during the event at the Powerscourt Resort & Spa in County Wicklow…

AG CEO: Scrutiny of ownership and control laws ‘risks triggering a global crisis’
IAG CEO Willie Walsh said ownership and control regulations being revisited under more stringent Brexit laws “risks triggering a global crisis’. Mr Walsh said if someone were to challenge the ownership structure of IAG, “I’m going to start challenging others”. Mr Walsh does not “seriously believe” that a country would inhibit a carrier from operating between the UK and EU based on ownership and control. He cited Cathay Pacific as an example, noting the Hong Kong based airline has a range of investors including in the UK, Qatar and Hong Kong. “We have turned a blind eye to these issues for years”, he said.

CarTrawler CTO: Conversational commerce making its way to Europe
CarTrawler CTO Bobby Healy said in a 10 year scenario for airlines, customers “won’t be typing to you – they’ll be talking”. Mr Healy said airlines must decide to either “operationally pivot” to facilitate this or to outsource it to another company. He reasserted conversational commerce is already “huge” in Asia, “massive” in China and is “coming to Europe”.

CityJet CEO wants to encourage customers to ‘stay loyal’
CityJet CEO Patrick Byrne said: “The next best customer is the one I already have”. Mr Byrne stated he wants to reward loyalty and encourage customers to “stay loyal”. As a figurative example, he added: “I want everyone in the cabin to know [a person] has flown 17 times this year”. He believes the travel industry is “ignoring… a massive amount of data that is waiting to be mined,” and believes the tools and technologies “are there” but they “aren’t sexy”.

Aer Lingus has top ROIC for IAG
IAG CEO Willie Walsh said full service carriers establishing LCC subsidiaries “tend to fail”. Mr Walsh said LCCs in IAG are able to operate because IAG itself is not an airline, meaning the group is impartial to where success comes from and wants all group airlines to be efficient. Mr Walsh stated Aer Lingus is the most “financially successful” of IAG with a 26% return on invested capital (ROIC) on average. He reported British Airways’ ROIC at 16%.

Mezi expecting websites to eventually become irrelevant
Mezi VP travel strategy and partnerships Johnny Thorsen said in the future, customers will be less inclined to view web pages for information. Mr Thorsen expects to eventually “move into a phase where a website will be irrelevant”, with customers instead seeking to use tailored offers and conversation based AI technology for information.

Finnair CCO: Loyalty schemes to evolve into a ‘lifestyle partner’
Finnair CCO Juha Jarvinen said he expects loyalty programmes to evolve into more of a “lifestyle partner”. Mr Jarvinen stated for airline frequent flyer programmes (FFPs) to achieve this and be relevant in more day to day services for consumers, more partnerships are required. He cited retail partners as a potential avenue, adding there is a need to “increase relevance at least in home markets” for FFPs. Additionally, he added that every airline’s board “has to realise how important the data is”.

VietJet Air: Data is ‘our asset’, airlines should share data with airports at their own discretion
VietJet Air director Cuong Chu noted Vietnamese airports are usually state owned. He said data is “our asset” and airlines should be able to share data with airports, however at their own discretion. Mr Chu asserted the need to control what data is shared, stating the circumstances change based on state owned and private operators. “Today in principle we are happy to cooperate with airports in Vietnam”, he said.

Belfast City Airport CEO: The passenger experience ‘is not that complicated’
Belfast City Airport CEO Brian Ambrose said the passenger experience is “not that complicated” and airports and airlines “should be making it easier and less painful to get through the airport”. Mr Ambrose said passengers are “only relaxed when they’re airside”, and that’s when Belfast City Airport offers the most spending opportunities.

ForwardKeys CEO: Data is valued when shown to make the right decisions
ForwardKeys CEO Olivier Jager said the reason data is valued is because “we’re are assuming there are cases… to make the right decisions”. Mr Jager however said for airlines and airports to collaborate, they need to adapt and realise what information is meaningful for collaboration. He asserted airlines and airports usually have data sets “that just don’t speak the same language”, meaning it becomes more important for the entities to know what kind of data they need. He concluded there is a “mutation” on the airport side with the non aeronautical side of data becoming more prominent.

Lufthansa Group: Blockchain technology should be deployed where it would add most value
Lufthansa Group head of distribution Xavier Lagardere said the focus around deploying blockchain technology should be where it would add the most value. Mr Lagardere said use cases like ancillary sales are a good starting point. Following more development of the technology, Mr Lagadere expects use cases to evolve, citing potential in using blockchain for “virtual interlining” agreements.

Mezi to legacy FFPs: ‘There are new players coming’, will ‘disrupt your world’
Mezi VP travel strategy and partnerships Johnny Thorsen warned against legacy frequent flyer programmes, stating: “There are new players coming… that will disrupt your world”. Mr Thorsen specifically referred to the disruptive capabilities of blockchain.

CAPA – Centre for Aviation members were able to see live updates from the CAPA Airline Leader Summit and have access to over 100 briefs from the event. Find out more about how a CAPA membership provides a front row seat to global aviation news, analysis and data as it happens, with access to a comprehensive suite of tools that can be customised to your needs. 

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