Introduction
Global demand for air travel is increasing 10% year-on-year, according to the IATA. In the UK specifically, more people are flying than ever, with a CAA survey revealing 62% of consumers have flown in the last 12 months – the highest figure since that survey began.
This all sounds like incredibly positive news for the airline industry. And it is. Airlines like easyJet and Jet2 are currently planning ambitious growth of around 8% in carrier capacity.
“Placeholder for quote from Dan.”
– Daniel Ryan, Product Owner, Easyjet Holidays
But as they expand to cope with this surging demand – and incur the significant associated costs – airlines need to be sure they can fill those extra seats to remain profitable. What’s more, they need to maximise revenues by selling directly to travellers, rather than through third-parties. This is challenging when the one-stop-shop convenience of online travel agencies (OTAs) is so appealing to travellers.
The ability of airlines to stand out in a competitive market, and attract and retain customers, will depend very much on whether they can cater to the changing needs and expectations of today’s travellers. And that means first understanding those needs.
Passenger expectations are evolving
The way people choose to travel is changing, with new and diverse trends emerging all the time. Just a handful of the trends identified in The Great British Holiday Audit from easyJet are:
- AI-tinerary planning: Using new AI tools to research travel and create highly personalised itineraries.
- Country ticking: Ticking off new countries and gaining passport stamps, inspired by apps like ‘been’.
- Holiday hopping: Flying into one city and out of another to explore multiple destinations within a region.
- Self-Care Journeys: Travelling for relaxation and escaping the everyday, with activities like hiking, forest bathing, or spa retreats.
- Jetflix and Chill: Seeking thematic, TV and film-related travel, inspired by everything from true crime to foodie shows.
Air passenger demographics are also changing. They’re skewing younger, with 73% of those aged 18-34 saying they’ve flown in the last 12 months compared with just 53% of those aged 55+. These younger travellers are often more likely to use technology – perhaps AI, biometrics, or digital wallets – to improve their travel experience. In fact passengers under 25 would rather use a digital payment option than a credit card to pay for air travel, according to the IATA.
Traveller expectations of airlines are evolving alongside these continuous changes. Today’s passengers want seamless, relevant communication and engagement across all devices and touchpoints. They expect airlines to understand their unique needs or preferences and deliver personalised recommendations, offers, and experiences. At the same time, they expect airlines to demonstrate full transparency in data collection and use.
Airlines are well aware of the need to adapt their services to shifting customer needs and expectations, and there are countless examples of them doing just that:
But despite these efforts, the ability of airlines to understand their customers, and then engage those customers with targeted, personalised experiences, is still limited.
Our industry research, Last Call for a CX Upgrade in Travel and Hospitality, reveals travel brands see tailored products, personalised customer service, and data-driven recommendations as the three most important tactics for delivering best-in-class customer experiences. Yet less than 40% of the brands we surveyed are actually employing these tactics. These figures are even lower for airlines, with just 25% saying they make data-driven recommendations compared with 43% of OTAs.
Airlines are often being held back in their personalisation endeavours by an inability to connect data across siloed systems and activate that data across channels.
Connecting siloed data is a challenge
Much like other travel and hospitality organizations, airlines struggle to join up data from disparate channels that’s siloed in different systems. Our research reveals limited data integration between systems is one of the top two challenges preventing travel brands from delivering seamless customer experiences, second only to a lack of internal expertise.
Airlines can’t connect the numerous sources of data they have access to, such as website visitor data, mobile app data, Passenger Name Record (PNR) data, loyalty card data, social data, and offline data. This means they don’t know that the passenger checking in right now is the same person who browsed their website six months ago and ultimately booked via an OTA. Or that the person visiting their website using a laptop interacted with the brand on social channels just a few days ago using their smartphone.
The inability to unify data and build a full picture of the individual’s behaviours and preferences is a big problem. It prevents airlines from making the most of emerging data analytics and automation technologies – particularly those powered by AI – and limits the impact of their digital marketing and personalisation strategies. It reduces their ability to activate data efficiently across channels, resulting in media activities that are both more expensive and less effective than they should be.
“Knowing our customer is the key to unlocking the power of personalised messaging and dynamic performance media. Today’s cutting-edge machine learning algorithms can only deliver their full potential when fuelled by a deep understanding of customer needs and behaviours.”
— Asu Erayda Akyüz, Head of Performance Marketing & Marketing Automation, SunExpress
Loyalty programs are transforming
Airline loyalty programs have traditionally played a key role in customer engagement and retention, and they provide valuable data relating to passenger behaviours. But loyalty models are in the midst of a transformation, and airlines need to be careful not to confuse or alienate their customers.
A report on the UK loyalty programs market reveals two key airline trends:
- Spend-based models: Airlines in the UK are restructuring their loyalty programs to reward the amount of money spent, rather than the miles travelled, to align rewards with profitability. British Airways, for example, has shifted its loyalty offering along these lines, rewarding members with one Tier Point for every £1 of eligible spend.
- Coalition loyalty programs: Coalition loyalty programs, where multiple businesses collaborate to offer more versatile and valuable rewards, are gaining popularity. As an example, Loganair recently became the seventh airline to join the global Avios network, with the aim of enhancing customer benefits and reinforcing its strong partnerships with other airlines.
To make sure their loyalty programs are actually doing what they’re designed to do, airlines need to use customer insights to ensure their incentives and rewards are personalised to the individual. For our latest CX trends report we asked over 2,000 consumers what loyalty benefits would make them more likely to consider a brand, and the top two results were:
- Discounts or rewards that are not available to all customers
- Offers or rewards that are tailored to individual preferences
What’s more, if airlines are entering into partnerships with other brands, they need to make sure these are the right partnerships. They need to set up mutually beneficial data collaborations that keep their customer’s data safe while providing valuable insight.
Six steps to success
To put their data to work, and ensure they can reach the right people, in the right channel, with the right message, airlines can follow these six steps:
1. Strengthen first-party data strategies
The first step is for airlines to unify their own first-party data, from all sources, using a data management solution like a customer data platform (CDP). Acxiom helps airlines create a single place where they can host, curate, and act on customer intelligence using data management best-practices.
2. Implement a central identity framework
To support a first-party data strategy, airlines need a central identity framework. An enterprise identity solution, that supports both deterministic and probabilistic matching, can manage continually evolving identity information and provide a privacy-safe, 360º view of the customer across channels and journeys. Acxiom Real ID™ forms a permanent identity backbone so airlines can recognise customers at every interaction, no matter what device or channel they use.
3. Enrich first-party data with trusted sources
While an airline’s first-party data is incredibly valuable, it only gives a snapshot of the passenger. By enriching first-party data with additional high-quality, demographic, lifestyle, and predictive behavioural information, carriers can better understand passenger needs to deliver relevant experiences. Acxiom’s InfoBase provides access to ethically sourced and rigorously validated data, with full coverage of all UK addresses. In addition, InfoBase Purchase Transactions merges the transactional spend data from over 10 million UK cardholders to deliver a layer of unique, market-specific insights.
4. Activate data across paid and owned media
With a solid foundation of data and identity, airlines can deliver hyper-personalised omni-channel campaigns across email, SMS, app, web, and offline. They can make use of audience activation and media optimisation tools to make sure their messages reach the right people, stand out for all the right reasons, and drive direct bookings. They can also use media suppression techniques to ensure they aren’t paying to target those who should be excluded, resulting in significant cost savings. Acxiom offers pre-built audiences that are accessible and can be activated across all key channels and platforms.
5. Revisit loyalty strategies
Armed with in-depth data, airlines can ensure their loyalty programs are tailored to today’s travellers. They can build tiered programs that offer personalised offers and incentives based on what individual travellers are motivated by. And first-party data from these loyalty programs can feed right back into step one. Acxiom offers loyalty analytics services to enable smarter rewards strategies and tiering, as well as churn modelling solutions to trigger predictive retention journeys.
6. Form collaborative partnerships
By working with partner brands, such as retailers, hotel chains, car rental companies, or even other carriers that offer connecting flights, airlines can reach new audiences, unearth valuable insights, and generate unique marketing opportunities. Acxiom offers data collaboration services, including clean room solutions, that enable safe, secure, and privacy-compliant data sharing between airlines and their partners.
