Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members


How can airlines leverage data and analytics to thrive in the “Next Normal”?

In 2019, analytics represented the aviation industry an opportunity worth up to $40 billion, states a McKinsey article. But then Covid-19 crisis changed the industry reality. The significance of analytics, however, still remains unchanged and it has in fact, helped the industry to react faster and manage commercial functions and networks with unprecedented agility.

The initial phase of data adoption in the airlines industry was driven by adrenaline. To cope with the “New Normal” and outperform competition in the long term, companies must be thoughtful and strategic in exploring and embracing new data to fuel decisions. They must change the earlier approach and imbibe new ways of working in their commercial functions.

Crisis response

Data suggests air travel has gone down by 45% as of September 2020 and is largely confined to domestic routes. The aviation industry is expected to lose about $400 billion in revenue due to the pandemic in 2020 and in certain cases return to pre-Covid levels might take until 2023.

Consumer need and demands have been changed by the crisis and airline companies need to enhance their demand forecasting precision. To do that they must look beyond traditional data sources and focus on new and unconventional data sources like:

Travel shopping data

  • App and web analytics
  • Flight search data from metasearch engines and GDS
  • Accommodation searches
  • Financial analytics

Macro Data

  • Travel restrictions
  • Web searches
  • Consumer sentiment content
  • Mobility trends

To leverage the insights garnered from the new data, airlines must upgrade their tech stacks and add analytics capabilities. New systems calibrated with the right analytical tools can take advantage of new opportunities by factoring constant changes in consumer demand. Such systems should update older models of consumer choice and upgrade market share models to factor in current developments.

Using analytics to forecast demand and engineer targeted response

Updating forecast models is a key priority for airlines today. Many companies are developing new infrastructure that enables rapid and large-scale data upload and data cleaning and also accommodate integration of complex and large data sets that can be refreshed regularly. Several airlines have appointed business intelligence teams for this important task. It is essential for airlines to build systems that can identify and respond to demand signals automatically. It helps airlines to improve target marketing and increase revenue while bringing down costs.

Leveraging the power of analytics

The crisis has increased the value of analytics, although the approach has changed. The focus has shifted to regional markets and the indicators of demand have changed. The analytics models must be adjusted to the new dynamics to forecast demand swiftly and respond with the right offers quickly. For instance, airlines can use analytics to identify business fliers and opportunistic flyers and create two distinct offers for each customer to optimize revenue and increase bookings.

Developing a robust data-platform

To be able to use analytics optimally, airlines need to develop robust data platforms that can process large data sets, engineer apt data pipelines and most importantly automate data cleaning. In order to create a usable demand dashboard, airlines need an expansive data-platform strategy, that has a data integration layer.

The platform must be robust enough to process traditional and new data sources to predict demand in a dynamic ecosystem. In the aftermath of the pandemic many airlines focused on speed to market, now is the time to emphasize scalability and develop a data platform that is well-integrated and flexible, backed by a skilled team.

Change ways of working

To ensure best performance in the “Next Normal” airlines must emphasize transparency and build teams that can comprehend changing realities. Teams that adapt to changing circumstances by changing their ways of working do better by following a few practices:

Eliminate silos: Interdepartmental alignment must be worked upon. Different teams must collaborate routinely to exchange views and draw up comprehensive plans and commercial strategies.

Don’t cling to the past: Making changes in the old legacy system is not going to work in the long term. Companies must embrace a new approach whole heartedly and move fast.

Enhance transparency around algorithms: This will help get buy-in from the team and make goal achievement a lot easier.

Create strategic data partnerships: Individual airlines can never have access to adequate data. It is thus essential that strategic partnerships are formed within and across industries and apt service providers are onboarded to help companies navigate the quickly transforming data landscape.

Paying heed to these insights can help aviation players reboot their success story in the Next Normal and beyond.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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