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Airlines Race Toward Next Digital Transformation

By | April 1, 2019
Lufthansa Boeing 747

A Boeing 747-8 Photo: Boeing

Airlines must move faster in the digital world if they are to be successful, according to speakers at the Passenger Experience Conference in Hamburg. The success of airlines is critical for satellite operators and service providers, given how many hope that selling bandwidth for connected transportation will be a driver for future revenue growth. Christian Langer, Chief Digital Officer (CDO), Lufthansa Group says the airline industry can learn a lot from the automotive sector when it comes to innovation.

“Today, our industry has a unique position of fixing people to a seat for 10 hours,” said Langer. “The car industry will be similar in the future. The innovation cycle of the automotive industry is much, much quicker. Our customers will compare experiences from the car. We have to speed up innovation cycles.”

Langer pointed out that $47 billion in venture capital was invested in the aerospace industry last year, significantly higher than in previous years. These start-ups could be key in driving a more progressive future for airlines. Langer admits Lufthansa can learn from these companies. “We try to keep up the pace. How can we speed up internal processes to keep speed with a start-up? Speed is the thing we have to learn as a traditional company.”

Lufthansa recently announced that it had have entered into a research alliance with Hopper focused on the subject of Artificial Intelligence (AI). The German airline has made three technology-related investments within a year, following investments in the startups Fleet Logistics and Cargo.one. Hopper operates one an innovative travel booking app. By leveraging powerful machine learning and AI, Hopper’s proprietary technology accurately predicts flight and hotel prices and offers its users personalized recommendations at the optimal booking time, as well as alternative travel offers.

Langer also spoke about how airlines may have to change loyalty programs, as young people may no longer be interested in collecting miles and points in the same way. He spoke of things like carsharing, scooter rental perhaps having a broader appeal to young travellers.

Johanna A Bergi, Chief Executive Officer (CEO) of Atlantic Airways, an airline that serves the residents of the Faroe Islands and flies to 10 different countries, said that his company is working to provide connectivity services via Iridium’s Low Earth Orbit (LEO) constellation. It is working with AirFi, a provider of flexible In-Flight Entertainment (IFE systems to provide these connectivity services. It is one of the first airlines to go down this route. “We were a launch customer for AirFi LEO. Technology is helping us. We are cherry picking the best technology. We want everyone to have the same experience,” said Bergi.

Airlines are placing more pressure on manufacturers such as Boeing and Airbus to come up with the aircraft of the future that power new layers of connectivity services. Anais Marzo da Costa, head of aircraft interiors marketing, Airbus said there is a “mobile revolution” taking place with the number of smartphone users set to double from three to six billion over the next few years. In terms of connected aircraft, growth will also be pretty pronounced going from 7,300 aircraft connected in 2017, to over 23,000 by 2025. This would clearly have huge implications for the satellite industry if we were to see this level of growth in the number of connected aircraft.

“Things are moving quite fast. Smartphones are the number one travellers companion,” said Da Costa. “There are more multiscreen environments. We are in a transition phase. Already 57 airlines were offering wireless IFE streaming in 2018. Airlines are developing personalized offers by mobile connectivity, data analytics. According to research, 27 percent of passengers would be happy to share personal data, if it leads to a better customer experience.”

There are some grey areas when it comes to deciding whether airlines or the customers themselves own consumer data. This issue will become more prevalent as airlines become more and more connected. However, it seems the over-riding message is that airlines are going to move with more speed in terms of their digital strategies and undoubtedly consume more bandwidth to enable its customer experience strategies.