Asian airlines en route to digital transformation

Cyril Tetaz

Executive Vice President, Airlines, Asia Pacific, Amadeus

This content is only available in this language.

For one of the most unpredictable industries in the world, airlines have had a spell of good weather. 2017 was the third consecutive year the air transport industry generated a rate of return that exceeded its cost of capital, and the International Air Transport Association (IATA) expects 2018 to mark the fourth.

asian airlines

In Asia Pacific, the growth story continues on an upward trajectory. Asia Pacific airlines are expected to generatea net profit of $9 billion in 2018, up from US $8.3 billion in 2017. Home to three of the top five fastest growing passenger markets in the world –China, India and Indonesia– this is truly the region to be in. But the good times are not without some dark clouds. Infrastructure constraints could hinder growth if not addressed by all stakeholders, competition continues to put downward pressure on profit, and rising fuel prices will be watched closely.

On the flip side, I see a deep hunger for innovation in this region. Indeed, I would argue that the impetus to achieve that is greater here, as the Asian market expects and demands the high service levels that Asian airlines have come to be known for.

But it will take reinvention, transformation and a greater focus on customers than before.

Finding the sweet spot

In our recent report, ‘Embracing airline digital transformation’, we introduced the ‘product vs service vs convenience’ axis. We found that more than price alone, the value for each traveler lies in the sweet spot where they feel that the balance between product (“It’s a long flight – I want as much legroom as possible”), service (“I want to feel like my holiday has started as soon as I step on the plane”) and convenience (“I need a direct flight; I don’t have time for a stopover”) is achieved.

For airlines, identifying that sweet spot for each individual traveler every time they make a booking, and being ready to respond with relevant offers that will deliver something of value to them, then and there, will be critical to winning the customer over. To deliver this the airline will need a range of building blocks in place:

  • A strong omni-channel digital marketing strategy
  • Vast amounts of data enabling them to understand the individual traveler
  • Merchandising strategies designed for core customer segments and personas
  • A clear understanding of their brand and brand proposition.

Airlines need to rethink their businesses from the ground up

We have entered the ‘Fourth Industrial Revolution’ – the era of datafication, constant connectivity and digital workforces. The reality for airlines today is that they are not competing with each other, nor are they competing with what existed before.

Harnessing the potential of the Fourth Industrial Revolution requires Digital Transformation – not an end in itself, nor a means to modernize isolated functions, but a journey that will challenge airlines to rethink their business from the ground up.

In fact, many airlines already have a clear vision and design for the customer experience of the future – what they may not have is the technology, processes or the right skill sets to implement it. Cultural resistance, legacy technologies and operation silos are real barriers. Yet change must happen. And this must start at the top, with leadership showing real commitment to drive real change.


Asia Pacific