Smiling woman using smartphone in business class salon

12 questions for every airline in 2023


For solutions to delays, bottlenecks, efficiency and fleet issues, airlines can turn to technology.


    In brief

    • Post-pandemic return to travel has further stretched airline fleets, staff and customer service.
    • Technology can help airlines address key issues like bottlenecks, flight delays, excessive overbooking and fleet agility.
    • Failure to implement useful technology will exacerbate problems and lower customer sentiment.

    Airports are crowded once again with people returning from a travel hiatus. Many airlines that cut personnel and grounded planes to survive the pandemic have struggled to meet the resurging demand even more than a year after the initial COVID-19 rebound. Business and leisure travel eclipsed 2019 levels in 2022, according to a recent MasterCard report.¹In response to this increased demand, airlines hired over 17,000 employees² between January and April of 2022 alone — a mere 4% of the estimated 400,000 stateside jobs lost during the pandemic, according to industry estimates³ — and substantially expanded fleets to meet a meteoric rise in demand.

     

    Fortunately, with modern technology and approaches, airlines can take the opportunity to make lasting improvements to limit the impact of such supply and demand shocks and build greater resilience.

     

    Many airlines have made significant strides in recent years to upgrade systems, adding convenient features to consumer apps, incorporating self-service technology for increased ease of use, and automating processes previously performed by staff. Despite capability upgrades in some areas, it is clear that some airlines and supporting infrastructure continue to muddle along with hybrid technology solutions and manual pain points that only become intensified in risk and impact by irregular operations. Issues many carriers are currently facing — as well as our experience working with clients — indicate that much more can be done to improve operational and financial efficiency and extend customer experience.

     

    Below, we outline some interesting scenarios, tools and approaches that could be relevant for airlines to consider.

     

    At a high level, they address:

    • Advancing customer service: deploy emerging technologies that help improve customer experiences and operations management.
    • New operational challenges: adopt operational enhancements to address and integrate new structural industry changes.

     

    Customer service — shortening the runway and boosting thrust

     

    What can airlines do to increase convenience and relieve bottlenecks?

     

    Technologies like social media-based customer service, interactive voice recording and chatbots, augmented reality (AR) and airline-specific smartphone apps should continue to be expanded to help airlines develop a robust digital footprint to increase customer satisfaction. The extension of these channels will give passengers further options to manage their own bookings while reducing the burden on customer call centers.

     

    For example, a chatbot with machine learning that is “trained” by experienced call center operators could have informative, actionable answers to passengers’ most frequently asked questions, complete with links to appropriate webpages and call center numbers for further assistance. An airline’s app may be used with near field communication to scan a passenger’s ticket inside an airport, allowing for faster check-in or luggage handover. Calibration of the individual customer’s value proposition could bridge an extension of ancillary revenue opportunities.

     

    In partnership with airports, technologies are also being rolled out to streamline passenger security screening without the need to remove outerwear or laptops from bags. Secondary screening could be automated, and self-boarding gate turnstiles help passengers move through gates faster by reducing interactions with staff and bottlenecks at necessary security checkpoints.

     

    To determine your need for emerging technology to increase customer satisfaction, consider the following:

     

    1. What additional use cases can be automated with new technologies to proactively and reactively address customer needs?
    2. Are airport personnel serially processing passengers, or supporting customers as needed?
    3. Are we best equipped with the right tools to support airport operations and back-office operations staff in significant irregular operations events?

     

    In the short term, airlines overbooked during the post-pandemic travel recovery. Overselling occurs when more passengers have been promised seats (confirmed) for a given flight than are available. Deliberately overselling flights remains a necessary practice for airlines to help ensure profitability under thin margins. Changing customer behavior seems to be leading to an overly ambitious view of passengers “no-showing” for flights in revenue management models. Across both Q4 2020 to 2021 and Q1 2020 to 2022, involuntarily denied boardings per 10,000 passengers have skyrocketed over their prior year equivalents (Figure 1)⁴.Advanced analytics can help airlines make sound decisions that safeguard both long-term value and customer satisfaction.i

    Figure 1: Involuntarily denied boardings per 10,000 passengers

    While many airlines have integrated some forms of analytics to model or predict passenger behavior, many rules continue to be “cookie cutter” with universal approaches to customer resolutions. For example, airlines could analyze accepted offers and customer research to broaden incentives beyond cash or vouchers (and still model for meeting regulatory requirements). Analytics decision tooling can help offer a variety of approaches for airlines to model behavior. Strategic integration of decision inputs could produce customized outcomes that are more like a customer investment vs. a recovery cost.

    With better insights into changing customer behavior, airlines could handle challenging operational events in more dynamic ways. 

    For some airlines, passenger re-accommodations for early schedule changes, or day of operation disruptions are still, in many respects, manual. Finding new solutions can be challenging and expensive, compounded in difficulty by accounting for loyalty status, other system disruption events, fare rules, and regulatory requirements.

    For more technologically advanced airlines, they could leverage their existing social media footprints, with new combinations of data and machine learning to take customized tactics to improve specific customer satisfaction and reduce costs. For example, several airlines today offer “bid price” solutions to managing overbookings prior to departure by allowing customers to bid their price to voluntarily take a new itinerary. By performing advanced analytics with prior booking and bid price data, sentiment data from social media posts, and machine learning, airlines can learn to adjust recovery responses dynamically based on a series of conditions that maximize revenue, preserve cash, and better upkeep customer relationships in inevitable journey disruptions. One such example could include a loyalty miles deposit for just enough miles to complete a searched but unbooked trip with a friend rather than a travel voucher.

    Recently, the EY Quantitative Strategies & Solutions team has performed work in applying natural language processing (NLP) to social media accounts to explore data mining and sentiment analysis to solve similar challenges related to passenger experience for airports and airlines.

    When evaluating your current analytics and automation ecosystem, consider:

    4. Are forecasting processes and tools still optimized for post-COVID-19 demand and behavior changes?
    5. Are overbooking policies and customer incentive frameworks adapting to feedback and optimization?
    6. Are staffing automations prepared with the right technologies and extended use cases?

    New operational challenges — new dimensions of networks

    While jet fuel costs have reached an all-time high⁵ (Figure 2), new conversations about reducing carbon footprint and usage of sustainable aviation fuel (SAF) have taken center stage. With cost of SAF today a premium to traditional jet fuel, SAF investments by carriers are investments in a lower impact future. In some cases, and if structured properly, these are forward-looking strategies to build competitive advantages and establish network effects that could control supply and future costs. Allocating capital to the right strategic partnerships, forecasting new supply mixes, and managing the supply chains of new sources of fuel are emerging logistics challenges for airlines to solve. Beyond the strategic and corporate development questions, new supply solutions will need the tools to be integrated into the decision support frameworks to manage new processes, procedures and partners.

    Figure 2: Jet fuel prices in dollars per gallon, not seasonally adjusted

    Manufacturers and consumers alike are looking for a zero-emission approach to aircraft power and new forms of transport within heavily populated areas. With the rise of Advanced Air Mobility (AAM) and Electric Vertical Takeoff and Landing (eVTOL) technologies, offerings from emerging startups have shown that this goal is within reach. Further, several airlines have signed order commitments to help accelerate the evolution and integration of these new types of aircraft. As leaders emerge and the industry matures, consolidation could be inevitable. While the operations frameworks have been put in place, more challenges continue to be solved for as airlines look to integrate some of these new short haul solutions and destinations into the network.

    The EY-Parthenon team has leading practices for commercial due diligences and integration roadmaps, data-driven growth strategies, and industry-leading analytics solutions to keep companies competitive. EY Sustainability advisory also supports clients with the complex data ecosystem of sustainability footprints and reporting.

    The EY MobilityIO tool allows us to advise airlines to develop AAM/eVTOL strategy and planning (including infrastructure and operations) but could also apply to managing costs (e.g., reducing turnaround time) and identifying new sources of revenue in current operations. The tool helps generate data-backed/data-driven insights for airline clients into how they can optimize their strategy and/or operations against key factors such as demand, willingness to pay, regulatory restrictions, and environmental considerations.

    When building an operational strategy with the future in mind, consider the following:

    7. Are we preparing the tools to appropriately manage the networks of the future?
    8. Is our capital allocation strategy prepared for useful emerging technology?
    9 What is our portfolio strategy, and could partnerships or outside investments strategically future proof our competitive advantage?

    While airlines have always been data-centric, modern data approaches to airlines’ operations management have helped relieve airport operations, harmonize insights across previously siloed data, and improved the customer experience. However, they also present new big data problems:

    • Dynamic staffing tools have been improved not only to forecast resources needs, but also to increase the efficiency of airport operations through pooling resources and assigning tasks “just in time.” Further, crew management tools continue to gain attention for the complexity of their optimization rules and architectures, and their needs to be more modernized to meet today’s complexity and stakeholder expectations.
    • Tracking analytics, where keystrokes are monitored for insights on software usage for passengers and staff alike, can be an invaluable resource as airlines start to modernize their existing systems. While many airlines use sophisticated approaches to analyzing shopping and booking, the full visibility of customer behavior data can still be masked by global distribution systems. Internet of things technology, such as motion sensors that count people, can likewise play an important role for boarding operations. Departure countdown clocks, integrations with security checkpoints and baggage tracking have all aided in improving customer experience — from deciding to hold planes for connecting passengers to giving peace of mind that your baggage is on your flight. However, the complexity of storing, integrating and smoothing these data from various sources into usable insights and tools can be a difficult patchwork of systems and processes.
    • Airside Autonomous Ground Vehicles (AGVs) can greatly reduce risk and costs for busy airport ground operations. Airside AGVs have multiple use cases, helping humans with the most hazardous operations on the ground, such as fueling and loading baggage, and improving ground-staff efficiency. Integrating airside AGVs into the ground ecosystem, airlines have complexity of their own among labor, regulations and data; however, they could immediately realize benefits, including:
      • Fewer ground delays (as ground controllers will be able to focus on communicating with ramp crews)
      • Decreased risk of worker injury
      • Decreased error (such applied examples include excess fuel and lost baggage)

    When considering technology to meet the needs of your staff, ask:

    10. Does the current tech stack alleviate delays and bottlenecks, or does it contribute to them?
    11. Are we using the full extent of the data being collected to improve operations and customer experience? How will that change?
    12. How does our staff use current technology? What is it missing?

    Conclusion

    Technology can help airlines manage operations, empower staff, and strengthen relationships with passengers, all while saving money and ensuring long-term value for stakeholders. We challenge airline executives to consider:

    • Increased investment in data and analytics can better calibrate customer experience improvements, while reducing operational costs.
    • Data and analytics will impact next-generation operational challenges and create new competitive advantages.
    J.P. Madarasz of Ernst & Young LLP contributed to this article.

    Summary

    Airports are crowded once again with people returning from a three-year coronavirus travel hiatus. Airlines, which cut personnel and planes to survive during the pandemic, are struggling to meet the resurging demand. The result has been a public image nightmare, with delays even causing some frustrated travelers to quit the airport chaos for rental cars or trains.

    Fortunately, with modern technology and approaches, airlines can make lasting improvements to limit the impact of such supply and demand shocks and build greater resilience for inevitable future fluctuations.



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