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Once again we’ve crossed into a new year, and as we think about all the things we want to achieve in the next 12 months, it is important to also look back and take stock of the year that was. For the Asia Pacific airline industry, 2015 saw a shift back to basics, with a greater focus on the customer than ever before.
Full-service Asian airlines have always made their name on exceptional customer service, especially within the domain of the aircraft cabin. Most, if not all, continue to invest heavily in creating experiences that travellers want – an example of which is the revival of the premium economy offering – and this focus is now also expanding into the merchandising space.
Travellers today are more informed, more individualistic, more powerful, and with more choice, they are in the driver’s seat. As such, we are seeing a greater emphasis on creating positive ‘purchasing experiences’ that cater to individual needs.
After all, for many travellers, price is no longer the only factor influencing purchasing decisions. Many will pay more for specific service offerings that meet their needs – extra leg room and ticket flexibility for example. So airlines are rushing to adapt to provide a more flexible product offering that can be better tailored to traveller needs. We’ve seen sales of ancillaries through Amadeus rise by 85%, generating average incremental revenues of 10-15% per booking for airlines that have implemented Amadeus Ancillary Services. And more than 30 airlines have signed up for Amadeus Fare Families – launched just last year – to differentiate their offers by packaging booking classes, fares and services into branded products.
LCCs too are redefining the experiences they deliver to travellers.LCCs have in the past thrived on targeting the budget-conscious leisure traveller – often creating new demand from segments of the population that could not previously afford to fly. As a result, over the past 5 years, we’ve seen point to point short haul traffic in Asia Pacific move rapidly to the low cost carriers. But today – as the market growth from first-time travellers slows, and LCCs grapple with overcapacity in the region, many are moving away from the traditional “cheap and simple” product model towards a wider and more complex range of offerings that target sophisticated, higher-value travellers.
Cebu Pacific and Nok Scoot are entering the long-haul sector, and AirAsia markets connecting flights through its hub in Kuala Lumpur. Frequent flyer programmes from LCCs are also increasingly common, and Jetstar today offers products that are targeted at the corporate travel market.
Even in India, one of the most price-sensitive markets in the world, LCCs are moving towards a greater focus on customer experience. Many have begun to offer services their customers want to buy like hand baggage only fares, fast boarding and lounge access.
In a nutshell, 2015 has seen a major shift for airlines towards creating products and experiences that are more attuned to the wants and needs of travellers. Some come at it from a low cost model, and add perks that new traveller segments may want. Others come at it from an all-inclusive upmarket model, and unbundle part of the offer to give customers the flexibility to pay only for what they need.
What will we see in 2016? I expect a sustained push in the same direction, with personalised servicing and personalised merchandising becoming front and centre for airlines. They will need to think about how to respond to emerging traveller behaviours, to build a more rewarding and connected journey, from ‘inspiring to arriving’. Data will become the most important resource available to airlines – delivering the competitive advantage.
With our vision of personalisation in the global travel ecosystem , Amadeus can help airlines reach every customer, while delivering a premium, branded, experience throughout the entire travel lifecycle, seamlessly and consistently across all touch points they interact with.
Truly, the airlines that will come out on top are those that can create a more rewarding, connected, and seamless traveller journey.