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Embracing airline digital transformation: Amadeus report

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A new report published by Amadeus, ‘Embracing airline digital transformation: a spotlight on what travellers value’, sheds light on what travellers value when shopping for a flight. According to the report, today retailers from a multitude of sectors have reinvented the customer experience. However, the challenge often lies in working out what customers truly value when they make that all-important purchase. Looking specifically at the airline industry, this report explores new methods to aggregate customer data, accompanied by behavioural economic approaches, artificial intelligence and ‘contextual commerce’, in order to better answer this question. These developments can offer significant opportunities for those airlines that embrace this change, the report asserted.

The report discusses a model of product vs service vs convenience, in order for airlines to be able to market intuitively each upsell opportunity, but this isn’t a one-size-fits-all approach. For each traveller, the balance between these three elements will shift, affecting the overall price that they are willing to pay for a flight. In a survey conducted for the report, 56 per cent of travellers said that the total package was most important to them, while only 24 per cent valued the lowest price the most. For instance, a new mother travelling with a baby is likely to be focused on the service experience. However, the same mother travelling alone for business or leisure will have different priorities.

Commissioned by Amadeus and Connections, a global networking and events organiser, the study is based on interviews with airlines, travel agency and technology experts. In addition, the report contains an independent survey of travellers focused on what they most value when booking a flight.

The report charted out a range of changes taking place as digital is becoming a driving force in the airline industry:

  • Economy class is evolving: Competition has changed economy class travel. Airlines are responding by using data to better upsell products with the base fare. American Airlines recently introduced its ‘basic economy fare’ and British Airways moved to Marks & Spencer food on short routes
  • The promise of AI: Chatbots powered by artificial intelligence will drastically change the industry. AI advice will deliver more personalised experiences for travellers when they request it
  • Reinventing loyalty: An increase in digital offers is challenging brand loyalty. The industry is now securing loyalty with spend-based schemes, retail partnerships and pooling of loyalty points. Travellers can now redeem loyalty points more easily as a result

“Identifying upsell opportunities has long been the holy grail of the airline industry. Now there are new approaches to truly understand and define what people actually value when they travel. The ability of new technologies to aggregate customer data, combined with the application of behavioural economics, will help airlines to present their offer in a way that secures revenue and loyalty. In the digital age, it’s more important than ever for airlines to make an emotional connection with their travellers,” said Elena Avila, head of airlines strategy, Amadeus IT Group.