Low Cost & Regional

Opportunity rising: How the airline industry is monetising data

Airline industry, data monetisation
photo_camera Das Rechenzentrum der Lufthansa Systems ist mit modernster Hard-und Software ausgestattetPhoto: Lufthansa Systems / Lufthansa-Bildarchiv 1999DU 21-42-2

The airline industry is examining all options when it comes to monetising the vast data they generate from their operations. Keith Mwanalushi speaks to experts about the possible revenue opportunities.

Over the last couple of years, the subject of data monetisation has been a hot topic in the airline industry. It’s now well known that passenger data carries value and what air carriers do with that data is now in focus.

European LCC easyJet has been using data for several years after applying a data-driven approach to its revenue management system. In August, the carrier launched a recruitment drive for 28 data scientists to join in the airline’s drive towards data.

This initiative follows the creation of a new position at the airline for a chief data officer, the post, being awarded to Luca Zuccoli also in August.

Airline industry: data monetisation
Data-driven solutions are being expanded across airlines

EasyJet creates billions of data points each year, from billions of website searches every year to the millions of hours its aircraft fly, Zuccoli and his team of data scientists will lead and coordinate the management of data across the airline.

“EasyJet is already digitally advanced in both its contact with customers and across its operations,” Johan Lundgren, CEO of easyJet said in an August press statement.

“Since our launch more than two decades ago we have always looked to cutting-edge technology to continually improve the airline and our customers’ experience of it from reducing fares to improving schedules and making sure they can eat what they want on board.”

The airline said areas of focus for the data scientists will range from improving the flight schedule to ensure it best meets passenger demand, driving customer loyalty, and using the vast number of searches each year from the website to better understand and provide for customer demand.

“Luca and his team will give even greater focus and weight to the airline’s use of this data to create insights which will improve the customer proposition, drive revenue and reduce cost so that we can truly be the most data-driven airline in the world,” added Lundgren.

Airline industry: data monetisation, easyJet
Zuccoli will lead easyJet’s data drive

Data monetisation is growing rapidly across all industries, observes Harald Eisenaecher, chief commercial officer at Infare – a data and technology partner for the aviation industry. “The airline sector, specifically within the low-cost market, has always been at the forefront of that trend and still is.”

He reckons the revenue management and pricing strategy work at play in the low-cost industry is an impressive example of how to turn big data into competitive leverage and financial gain.

“Every day, airlines and their suppliers are transforming an incredible amount of data into actionable information and the rate of data consumption and processing capability is growing exponentially.”

Commercially speaking, this is fed by a distribution landscape that is constantly changing and increasing in complexity, whether it be in terms of sales channels, pricing behaviour, customer interaction or distribution methodology, Eisenaecher tells.

Interestingly, at Infare, not only do they see data monetisation spreading across organisations as its benefit continues to be shown, but also up and down the organisational ladder, supporting everything from corporate-level decision making to reviewing customer behaviour and operational performance.

Retail inMotion, the specialists in the ever-growing onboard retail business, have partnered with several LCCs and regional operators. Jan Blanchard, chief commercial officer at Retail inMotion says the airline industry has certainly made some great strides over the past several years when it comes to data monetisation.

“We see that airlines are taking steps to understand the data that they have and how they can use it more effectively. This isn’t necessarily a unique feature for the low cost sector of the industry, although it is perhaps more responsive to the data they’re collecting, but almost without exception airlines are paying more attention to passenger behaviour,” notes Blanchard.

When airlines partner with Retail inMotion, as he attests, they can take steps in effectively utilising their data. “We build transparency into each module of our digital retail platform so that our customers can make data-driven decisions.”

Airline industry, data monetisation
Blanchard – We see that airlines are taking steps to understand the data

Fully integrating data can be a long-term journey for an airline. Cian Ó’Cuinneagáin, the chief information officer at Retail inMotion says a good place to start is to take a good look at the aggregated operational and sales data that airlines have available.

Ó’Cuinneagáin says this isn’t the ‘sexy’, ultra-personalised data collection that one might initially think of from large e-commerce and social media platforms. However, helping an airline shift their business ethos to encompass a strong value for data-driven decisions can have a huge impact on the success of their onboard retail programme.

“After all, a better service and retail offering for passengers will directly translate into increased sales and an elevated passenger experience. There is still a lot of work to be done in making the inflight experience a truly personalised one and we are making a lot of progress with our customers in this area,” Ó’Cuinneagáin reports.

As Eisenaecher from Infare affirms, “data only holds value if it is actionable.”

He says for airlines to generate revenue from customer data, the information firstly needs to come from a cross-section of homogeneous, transparent and structured high-quality data sources. Secondly, the data needs to be analysed through advanced aggregation and processing tools.

“This will allow airlines to turn data into not only operationally superior tools for revenue management and pricing strategy, but also for opportunities for better executive management reporting and decision support,” Eisenaecher speaks.

Additionally, airlines can use customer data to benchmark their own offering against competitors, make pricing decisions and identify profitable routes that could be implemented in their business growth strategies.

So what sort of data should airlines be looking at to seize the opportunities in a data-driven market?

Eisenaecher feels airlines should consider several data sources, such as airfare data, competitor data, passenger stream data, global people movement data, intermodal modelling data and information on passenger behaviour in relation to airline interaction and end-to-end journeys.

Airline industry
The airline industry provides unique challenges and opportunities, says O’Cuinneagain

“By carefully prioritising these sources, airlines can transform data into actionable information, without it being costly or requiring a disproportionate level of effort,” he advises.

Blanchard also concurs saying airlines should be using different types of data for different purposes – and using it as often as possible. “Operational and sales data can help airlines optimise product mixes and smoothen their supply chains.”

Demographic-based data, like that collected from social media sites, can help companies like Retail inMotion select onboard retail products that are most likely to appeal to passenger segments.

“We are also looking at how we can include other external data, like predictive information on how holidays and seasonal travel will affect loads and quantities,” says Blanchard.

As lucrative as monetising data seems to be, it’s not without challenges: “There are some more obvious challenges and some less obvious ones, and the airline industry also provides unique challenges and opportunities of its own,“ notes Ó’Cuinneagáin.

Traditionally, the industry has had a controlled pace of innovation adoption – and for good reason – which can make airlines more resistance to becoming early and rapid adopters of major technological innovation. “However, in recent times we see a marked shift in that and an opening up of it now,” Ó’Cuinneagáin adds.

Certainly, we are surrounded by an almost indefinite amount of data from an infinite number of sources. The difficulty lies in knowing how to manage the level of data to only include those that are actionable and will support the airline, without spending excessive time or money on obtaining data for its own sake. “I call this smart data,” Eisenaecher remarks.

Another restraint Eisenaecher mentions is not having access to homogeneous, transparent and comparable data sources, and not having the data processing and visualisation technology available to turn numbers into useful, actionable results.

At Infare, the company is all about utilising airfare data to create actionable pricing intelligence. “As a company, we have spent more than 18 years perfecting the methodology and capability behind our airfare data intelligence suite.”

Airline industry, data monetisation, passenger data
Data from passenger spending habits is vital information

Eisenaecher is confident the tools developed by Infare support airlines with anything from benchmarking performance against competitors, to identifying opportunities for business development and revenue management by using price to steer decision making.

In 2017, Infare acquired the air data business of QL2 Software LLC (QL2) to enhance its offer in airfare data and analysis tools focused entirely on serving the needs of airlines and airports.

In July, Retail inMotion renewed its partnership with one of its first technology partners, Stobart Air –the regional franchise operator in Europe.

Retail inMotion has supported Stobart Air through a period of growth for the airline and now provides them with more than forty devices for processing payments on board their flights.

Additionally, Stobart Air uses Retail inMotion’s vPack module to help manage effective operations for the airline’s onboard services, master control modules to maintain and monitor back-office functions, and vRec to reconcile sales and inventory.

“We have designed our digital retail platform in such a way that each module provides good, quality data to our customers,” Blanchard indicates. He says for the company, it’s about getting the right, actionable insights to the right people at the right time – whether that’s crew, back-office managers or logistics staff.

Vector is a data-driven platform, Blanchard declares. “We consider data insights not to be an end-point, but to be the starting point for improved decisions.”

The future of data in aviation and for Retail inMotion is providing meaningful insight at every step of the onboard retail process. Blanchard affirms that it’s all about creating programmes that are custom-tailored to passengers’ needs, reacting to changes in the marketplace and proactively making decisions based on aggregate passenger preferences.

“We want to empower our customers with the data they need to make informed decisions for their onboard retail programmes.”

Clearly, there is money in big data. What counts is putting it to good use.

Editor’s Note: The post was originally published in October 2018.

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