Category: Hospitality

Posted on

Why Airlines Need Digital Transformation

When the Wright brothers flew their first plane they never imagined that after 100 years this industry will be one of the biggest and most complex. Initially Airlines were a part of luxury transportation but nowadays it is a necessity for most. Every day thousands of airplanes are flying and millions of passengers are reaching their destination.

To streamline the whole process, all departments of airlines should work synchronously and efficiently. There are a lot of variables involved to execute one task efficiently with a very little margin for error. The airline industry is the best example of machines and humans working together in harmony, which allows tasks to be completed quickly and accurately without any errors. The Airline’s biggest challenge is finding ways to reduce costs while still providing quality service.

Airline industries need to put forward the best process in place in order to remain competitive and profitable. All processes, including, operational structure, route network, fleet size, and pricing strategy need to be digitized and transparent to compete against their competitors and continue to be cost-effective.

Successful Adoption of Digital Transformation is the key to success to Airlines business.

Digital transformation allows Airlines to enable data efficiently and securely. It also helps in reducing the cost of operation and increases the efficiency.

Here are few area where Digital Transformation is helping Airlines to work efficiently and cost-effective .

Market & Partner Data – The Covid pandemic was a big disruption for the Airline market. Tracking and monitoring real-time Covid data after the pandemic is very important in managing your operation efficiently. Airlines work with their partner to get Market Data, Events, Weather, Traveler In-Flux, Reviews, and External Traveler Information for their operation. Integration with partner data is very important to get contextual insights for airlines.

Travel  Data – To run the airline industry efficiently their passenger System of Record needs to integrate efficiently. Those system are not limited to  Passenger service system (PSS),Computer reservation system ( CRS), Global distribution system (GDS), Enterprise Resource Planning (ERP), Traveler Profile, Fare, Schedule, Availability, Preferences, Assets, and Distribution with Offers & Orders (NDC).

Intent & Sentiment Data – Social Media Platform is one of the invaluable tools for airlines to stay ahead of their competitors. By leveraging Sentiment & Intent Behavior analysis on social media platforms, airlines can better understand passenger preferences and tailor services accordingly. This helps the Airlines build customer loyalty and increase profits over time.

Customer & Services Data – Managing historical customer and service data help airlines to get their customer sentiment and preference. These data includes Demographic and Identity Data, Profile, Cases Contact Center History, and Service Interactions data. This data helps airlines to understand passenger preference and provide better service. 

Marketing & Loyalty – Digital Transformation combining predictive analytics and human-centric design to create a more personalized experience to drive growth in loyalty, satisfaction and incremental revenue. It also helps in marketing to track Campaign Metrics, Digital Footprint, Experiential Targeting, Audience Segmentation, Digital Marketplace. 

Devices & Location Data – Airlines operation depends on IoT Sensor Data, Telemetry, Mobile, Voice, Geolocation, Location-Based data. This Intelligence based data is revolutionizing procurement through real time decision making. Allow the operational team to know the exact location of goods at any given time.

These are the big impact of digital transformation in airlines industries

  • Quicker time to market
  • Smooth Transitioning
  • Enhanced Business Agility
  • Reduce cost
  • Innovate and drive operational excellence   
Posted on

AIR India Deal: Catalyst for Aviation Industries

The COVID-19 pandemic caused total disruption in the airline industry. The aviation sector struggled to survive, with 80 percent of flights canceled during the pandemic. Whole travel & hospitality industries were struggling with pandemic slowdown. Before the revival from pandemic Russia-Ukraine war affected the aviation industries. Oil and maintenance price increased which reduced profit margin for aviation sector. So many routes got canceled or restructured airline routing. On top of that, Airlines canceled thousands of flights as a massive winter storm and bitter cold swept the U.S., which directly impacted airlines revenue. Remote work is also impacting aviation industries. Most company travel related work reduces tremendously and it is directly impacting aviation industries.

This disruption directly impacted airlines manufacturers and supporting industries. Aviation Modernization getting impacted with these aviation disruption. Budget cuts are also slowing down digital transformation of airlines industries. Aviation industry leaders were expecting recovery would be very long and it would change forever.

But in the economic slowdown and pandemic affected aviation industries, Air India deal with Boeing and Airbus came with new hope for aviation industries. This deal will help to re-energize and rejuvenate whole aviation industries. This deal is going to impact at least 3 continents and will generate millions of job opportunities. This will help to stop the economic slowdown and restart the economic engine. Air India is going to buy 460 aircraft from two main aircraft manufacturers. This is the 2nd largest aircraft order in the history of global aviation. It is called the mother of all deals in aircraft industries. Total list price for these deals are approx. 80 billion dollars. These deals are splitted between two aircraft manufacturers, Boeing and Airbus. Boeing is providing a total 220 aircraft and Airbus will deliver 240 aircrafts. This mega deal is so huge that it is elevating India’s image and putting India as a bright spot in the whole world economy.

Now lets see how this deal is going to affect the Aircraft Manufacturer, Airlines and Airport sector.

Aircraft Manufacturer
  1. Parts traceability for Airbus and Boeing – Boeing Aircraft parts manufacturers spread across approx. 3 North America countries and 44 US states. Similarly Airbus parts manufacturers are  spread across  approximately 10 European countries. This will lead to generating millions of jobs in these places but the big challenge is to manage part traceability and assembly of these parts. Materials management team picks and packs parts into kits to be delivered to the parts assembly working area in the aircraft factory. Create a robust system for real-time visibility of these parts for quick collaboration and decisions.
  1. Certification Compliances traceability  – Each small aircraft part is a very critical item for aircraft assembly. All these parts need to be certified with the external Federal Aviation Administration (FAA) for US and European Union Aviation Safety Agency (EASA) for European countries. Tracing and management of these certifications is one of the most important  activities for Aircraft industries. This system should be highly visible and audited for aircraft safety.
  1.  Cross Team Visibility and Collaboration –  A lot of people, both external and internal are working for one aircraft. It also involves a number of systems and processes to deliver one aircraft. People, systems and processes need to come together to deliver and maintain aircraft. This whole collaboration needs to be highly transparent and visible to deliver aircraft efficiently.
  1. Delivery and Service – Safety and documentation is a very important activity for any aircraft delivery. All steps and processes need to be properly documented and executed through respective teams. Any of these missing steps/processes  lead to delayed aircraft delivery. 
Airlines

This mega deal will generate all kinds of  job opportunities within India and across the world wherever Air India will fly. This deal will also impact the Air India system and process.  

  1. Airlines Route management – More aircraft for airlines, more robust and transparent route management system. Any of these systems delay airline operation. You also need to collaborate with your partner airlines route for high profit margin. These systems and processes need more people across the world wherever Air India airlines will fly. Digital transformation will also help to transparent the whole system and increase operational efficiency.
  1. Aircraft Maintenance and parts management –  Aircraft maintenance and part management is a big challenge for airlines. Like Air India buying more aircraft it will need a more transparent maintenance  system/tracking, people and airlines hubs. Airlines also need large hangers to maintain their aircraft. 
  1. Employee management and experience – More aircraft, more routes and more employees to manage the whole airline system. This includes more corporate employees, In flight crews and ground maintenance associates  recruitment, onboarding & retention. 
Airport 

An airport is a massive business and has many verticals on its own. An airport as not just the spaces you see, such as departure, arrivals hall, duty free, security, etc. but an airport is a complex organization with many parties coming and going, the airport, retailers, service providers on the airside, the airlines, the cargo & warehousing spaces, aircraft MRO, fueling, as well as day authorities such as air traffic control, customs for people & Cargo, security, fire & emergency services, etc.

Since Air India is increasing its fleet , It will also impact airport operation and process. It will bring more opportunities to the airport.

  1. Efficient passenger process – Airport customer service, passport control, boarding/arrival, airport gate management comes in this category. It will be heavily impacted with more flights from Air India.
  2. Airport Safety, Security and health management – With this deal, more travelers will arrive and depart from the airport. To keep airports safe and secure, airports need more resources and their system transparent. They need to enable touchless solution to create perceived security around COVID-19
  3. Baggage operation – Baggage operation and management  is also a very important process for airports. This process will also get heavily impacted with this new  Aircraft purchase.
Posted on

Recession: Industry Impact

Recession prospect is certainly very scary. World over economies are contracting. The recession has had a significant impact on the global economy, leading to decreased GDP growth and an uncertain future for many industries. The IMF cut its forecast of global GDP for the year to 2.7% and for the US GDP growth forecast is 1.4% .China and India are key players for the world’s supply-chain requirement. Post COVID pandemic China is still struggling to provide supply-chain needs to the world and India is still in process to build supply-chain needs. Escalating Russia-Ukraine war and geopolitical tension is disrupting the world’s supply-chain. 

Due to all these issues,Inflation is very high across the world. The inflation rate depends on the balance between aggregate supply and aggregate demand within the economy. US inflation consumer prices rose 7% approx. in December 2022 from a year ago. Inflation driving up vendor price beyond budget expectation. The US Federal Reserve is increasing interest rates in the most aggressive way to curb this inflation. 

No industry is completely insulated from a recession, there are always opportunities within even the most impacted industries. The Impact of recession  is not equal for all kinds of industries. Most impacted industries are directly proportional to consumer sentiment, consumer basic requirement and consumer spending. Least impacted industries are not directly proportion to user sentiment and it is also supported by external system.

Here is worldwide recession industry impact index

In the above chart, most impact industries are consumer, consumer services and transportation. After COVID-19 this industry is cautiously optimistic about the return of travel and tourism. But  inflation and a volatile market are pulling these industries down. Loyalty programs are weakening between brand and customer. Recession industry impact index is average 8.5/10 approx. Hospitality and Airlines industries are trying to optimize their process to mitigate their risk. They are cutting routes, reducing flights, and, in some cases, shutting down offices to help reduce expenditures.

Retail and Manufacturing industries and also getting impacted with current inflation and escalating geopolitical tension. Clearly the industry has experienced unprecedented supply chain pressures and disruptions over the past two years; Global disruptions – such as the Russia / Ukraine war – continue to impact manufacturing supply chains, thereby increasing costs and delays. Recession industry impact index for this industry is 7.5/10 approx. Retail and Manufacturing industries are working on omni-channel commerce platforms, optimized operations, and omni-channel order orchestration and fulfillment to mitigate their risk. They are reducing overhead cost and going for digital.

The Federal/Central Government is the most recession proof industry. It needs to make ongoing investment to keep the country running. Critical infrastructure management, border, customs and immigration management are key activities the government can not ignore and reduce investment. Even in COVID-19 pandemic time influx of federal funding and ample emergency funds put state and local entities in recession-ready shape. Recession industry impact index for this industry is 1/10 approx.