The damage COVID-19 wrought upon the travel and tourism sector is unprecedented, with airlines particularly losing USD 327 billion and USD 324 billion in revenues during 2020 and 2021, respectively. Worse, the trend isn’t done.
The outlook for the rest of 2022, while optimistic compared to previous years’ losses, is still estimated to result in at most USD 191 billion in revenue losses. Indeed, during the third quarter of2020, over 40 airline brands around the world had already filed for bankruptcy.
Now that the worldwide travel and tourism industry is on the road to recovery, airlines have a chance to bounce back and regain seemingly unrecoverable losses, but the question is, how?
Not every airline is like SingaporeAirlines, whose stakeholder support had not only bailed it out of potential disaster but also bolstered it to regional dominance. Yet a key consideration why SingaporeAirlines’ stakeholders were never going to let it die is what the brand signified.
Singapore Airlines had always been an internationally renowned travel brand, actually winning the Airline of the Year award in 2018, and consistently ranking among the top three contenders over the past ten years.The brand had become synonymous with globally recognizable, premium customer experiences. Singapore Airlines wasn’t just another airline falling victim tot he pandemic — it was a beloved brand on the brink of destruction.
Business travel might take a bit more time to get back up to speed, but consumers the world over are itching for leisure travel. Previous catastrophes like the 9/11 attacks and the 2008 global financial crises saw rebound trends where leisure travel led the charge towards recovery. The same is expected, and indeed unfolding, in the present.
So, the play for cash-strapped airlines in dire need of marketing strategies for travel and tourism is quite counter-intuitive: invest even more money in customer experience (CX).
Piggybacking on the leisure travel rebound, airlines are encouraged to execute brand reputation management by spending on technologies and innovations that maximize experiences for their leisure travelers.
Other technical options such as ticket pricing and leaning towards air freight are still on the table. Keep exploring those, especially ticket price adjustments. Leisure-hungry consumers are willing to wait a bit more and pay a bit more to finally rid themselves of the travel shackles imposed by the pandemic.
But the priority should be investments inCX.
There are technological and digital improvements already proving effective for some airlines today. In the examples below, you’ll see how customers of some airlines are already reaping the benefits.
There are also cutting-edge technologies being incorporated in innovative ways to mine more value out of IT investments.Airline brands, understandably limited by practical financial restrictions, are unfortunately also being turned away from possible innovation and daring.
Yet now might just be the best time to bring up that adage about how “he who dares, wins.”
Even before the pandemic, airlines around the world were developing improved travel experiences through digitization. There are definitely a few options to look into that other airlines have already tried.
Virtual queuing, for instance, is advocating contactless travel and tourism that touches on two important considerations for customers: public health and safety, and more convenient travel logistics. That’s killing two pain points with one solution.
In the US, Seattle-Tacoma InternationalAirport (SEA) uses its version of virtual queuing, called SEASpot Saver, to reduce wait times and facilitate better social distancing. After a trial run, SEA noted that the juvenile system exceeded expectations and reduced wait times by an average of ten minutes.
As a fortunate side effect, the reduced wait times led to passengers using the extra time to visit retail and dining facilities in airports.
Speaking of retail establishments, e-commerce apps are also a potentially lucrative CX investment.
Just take a look at AirAsia, which uses a three-pronged approach of travel, e-commerce, and FinTech in its commercial strategy. The brand aims to generate half of its revenue from a unified “super app” e-commerce platform by2024. Singapore Airlines again proves ahead of the curve in this aspect as well, with its e-commerce subsidiary Pelago, and its travel marketing strategy of being an “experience platform.”
For airlines that can reach a bit deeper into their pockets, cutting-edge Augmented Reality (AR) technology can potentially add tremendous value to CX.
One such example is the AR-powered Digital Twin (DT) technology, which creates a digitized replica of physical-world assets. Industries like manufacturing, engineering, and architecture are already making use of DT to overlay digital simulations over physical assets.
Commercial airlines, with the right ideas for innovation, are being eyed as next in line. In fact, Hong KongInternational Airport has already taken the plunge, using a DT to collect real-time data from deployed Internet of Things devices to be used along with predictive analytics in order to provide, among other examples, enhanced airport community alerts.
Airbus, Boeing, and JetBlue, among many others, are working on electric commercial planes and eco-innovation projects are everywhere. Sustainability is proving to be a must, supported both by scientific community consensus and consumer purchasing power. As one of many airline marketing strategies to consider, however, this one requires a bit more than an investment in new or improved technologies.
Consider, for instance, that the global air transport industry during the International Air Transport Association (IATA) 77th Annual General Meeting had committed to the endeavor of net zero carbon emissions come 2050. This is the scale of this particular brand strategy. It’s a complete commitment to sustainability as a genuine brand value. Anything less is bound to backfire.
Still, it’s a good time for airlines to strongly consider a pivot if they aren’t already going in that direction.Various airline brands, tech companies, and other organizations are banding together to begin initiatives tackling the CO2 emission challenge, and as consumers increasingly support brands who can hold themselves to a higher standard through their actions, focusing on technology and projects at least aligned with sustainability in mind is not the worst investment option.
Each and every one of these options discussed above is a huge ask for any airline teetering on the edge of filing for bankruptcy. CX investments take time to bear fruit. Sometimes longer than it takes to repay lifelines like government loans or run out of feasible state-aid programs.
Yet investments in CX are some of the only viable long-term solutions. Much of everything else on the table are short-term band-aid fixes.
Indeed, investing in IT and digitization now in an effort to improve CX can lead to a progression of investments that are increasingly profitable in returns. For example, airlines can invest in e-commerce technology that allows them to own direct sales in order to respond to quicker recoveries of short-haul and domestic flights.
One step further from that is digitization solutions like virtual queuing to make check-ins and boarding smoother for improved CX, which also gives them time to engage more with airline retail and dining establishments.
Another step further is improved support services, such as accounting and invoicing, which directly increase operational efficiency.
Pre-pandemic, airlines spent 4.84% of revenue on IT, which is lower than the industry average spending on IT investments of around 8.2%. The retail and finance sectors, in comparison, spend 6.2% and 10%on IT on average, respectively.
It’s time to change levels. StrengtheningIT and digitization investments that can bolster operational efficiency and CX may seem like a strategy feasible only during times of plenty, but there may be no better opportunity to seamlessly incorporate such long-term solutions than during a time when airlines are genuinely expecting to recover.
Better yet, in the long run, once early investments have borne fruit, the next stages of technological investments can focus on analytics and data to help the entire brand make better decisions, significantly snowballing long-term payoffs.
Travel bans have finally given way toon-demand leisure travel. Is it time for airlines to just hold on, or aim even higher? The leading brands will show the way, but you probably already know what the answer is.