Earlier this month the CAPA – Centre for Aviation Asia Aviation Summit in Singapore brought together industry experts to discuss the latest emerging developments in the local market.
Here, in part two of our video review of the event, we highlight the remainder of the panel sessions…
The Future Is Here: Leveraging AI And New Technologies For Greater Customer Service
The digital economy has transformed consumer expectations around the way they research, purchase and experience the airline product. As a result airlines need to work hard to differentiate their product offering and deliver a personalised and seamless experience for customers throughout the entire travel process.
This involves a shift in mindset, where airlines need to think of themselves as digital companies rather than just transportation companies enabling passengers to get from A to B. Whether it’s using data to create tailored ancillary offers, implementing enhanced merchandising capability that allows for more cross selling and upselling or introducing virtual assistants to answer simple customer queries, airlines and airports that invest in digital technologies stand to gain from a more engaged and loyal customer base, unlocking top line revenue opportunities and improving efficiencies in the process.
Distribution gamechangers: NDC – adapt or perish?
Legacy distribution systems have for decades presented airlines with the twin problems of high costs and product commoditisation. In efforts to address these issues, a handful of carriers in Europe, and now Asia Pacific, have invested heavily into establishing their own API channels with agents, while the concurrent push by IATA for airlines to implement the NDC standard has encouraged the industry to adopt a retail focused approach to distribution. The GDS will also need to evolve in order to remain relevant and to compete effectively against other intermediaries and aggregators such as metasearch companies (some of which now have direct booking capabilities), as well as digital behemoths such as Amazon, Google, and Facebook – to gain a slice of the pie.
But as airlines work on enhancing their retail offering and improving their merchandising capability via both direct and indirect channels, a resounding message from industry players is that airlines need to consider the importance of mobile and messaging platforms, which are slowly replacing the desktop as the preferred interface for researching and booking travel.
Ownership And Control, The ASEAN Community Carrier And Cross Border JVs
The establishment and rapid expansion of cross-border JVs have transformed aviation in Southeast Asia over the last 15 years. There are now 11 cross-border JVs operating in six Southeast Asian countries. Several new JVs are planned or are under consideration.
However, it is questionable whether more JVs are needed. The six main ASEAN markets that have JVs are relatively saturated and the remaining four markets are relatively small. The introduction of ASEAN open skies, which has opened up the regional international market to any Southeast Asian airline regardless of domicile, also provides potential expansion opportunities for airline groups in Southeast Asia without having to set new cross-border affiliates.
The cross-border JV model enabled ambitious airline groups to circumvent airline ownership regulations and expand rapidly throughout Southeast Asia prior to open skies. The model remains necessary for accessing new domestic markets. But domestic competition is already intense and at times irrational, since Southeast Asian airlines have historically prioritised strategic expansion and market share over profitability.
Why Do Airlines Fail?
Since 2001, some 300 airlines have failed around the world. There are many reasons, ranging from a poor business plan/value proposition, through to management execution, competitive responses and difficult economic conditions, including high fuel prices.