It was a pleasure to attend the WTCE in Hamburg last week. Not only to finally meet people face to face but also to get the latest on the aviation industry developments since the pandemic.
Airlines were obviously one of the most affected industries during the pandemic, losing up to 80-90% of revenue and facing a forecast of 3 -5 years before full recovery for most.
Despite those scary numbers, the energy at WTCE was positive and optimistic, and many businesses were keen to learn about the technologies and products that could accelerate their recovery. Sustainability was a hot topic, with companies announcing a range of initiatives on reducing food waste, more environmentally friendly packaging and materials, and digital platforms helping enhance an eco-friendlier industry.
I’d like to share some of my key takeaways from the event two weeks ago:
Omnevo CEO Michael Raasch participated in a roundtable alongside four industry colleagues at the Passenger Experience Conference, discussing how airlines can be moving beyond entertainment and onboard duty free to create more profitable revenue streams.
Vivian Lo, from Cathay Pacific, General Manager Customer Experience & Design, highlighted that whereas Duty Free in the past had always been a place to get a good deal and bring a physical souvenir home to loved ones, surging competitors in the e-commerce industry, such as Amazon, make this less attractive in today’s market. Cathay Pacific’s focus is on creating a lifestyle brand to drive a unique experience and retain loyal customers at multiple touchpoints rather than sticking to a singular commerce experience.
Michael Raasch emphasized the need for a lifestyle brand by suggesting that “when passengers don’t want to buy onboard during the flight, this doesn’t mean the sale opportunity is lost; it just means airlines need to optimize their touchpoints with the passengers beyond the tube.” That strategy can easily be achieved with a digital marketplace that allows the airline to reach the passenger both before and after their flight. It also incorporates a powerful range of features to enhance the seamless customer experience, such as enabling passengers to pay with loyalty points.
Vivian Lo added to this point, suggesting that passengers are “desensitized to onboard duty free and crew selling”. When passengers aren’t in the mood to buy, crew members - who often earn commission for every sale made on board - have exhausted creative selling ideas and become complacent. This calls for a re-evaluation of the entire process, from crew incentives to passenger needs.
Jonas von Kruechten, Head of Strategy and Business Development from AERQ further developed this theme by commenting on the need for the cabin to be connected to enable airlines to utilize passenger data to better personalize the passenger experience and put airlines in control of more ancillary revenue streams. As we move into a time when third-party cookies are being stopped or limited, first-hand passenger data will be of huge value to airlines and open- up another route to monetization.
Despite the panel making some positive points regarding the onboard marketplace model, the subsequent audience poll suggests the industry is still divided in terms of the possibilities of onboard digital activity due to less optimized customer experience than on the ground; 37% do not see the need for an onboard marketplace now or in the foreseeable future, 30% are considering or investigating it, and the remaining 33% believe that it is a must-have to drive ancillary revenue.
It will be interesting to see how that perception will change in the coming years as we know airlines are investigating pre-order and pre-selection technologies to improve the passenger experience and operational efficiency not only in the cabin but across the entire passenger journey. From when a passenger books their ticket, to the moment they step on the tarmac and board their flight. In fact, Michael claims that around 90% of airlines are actively asking for these features to drive ancillary revenues.
Meanwhile, the passenger is traveling ever-deeper into the digital world - but the discussion at WTCE suggests that not everyone in the industry seems ready to join them there just yet.
Time, and revenue, will tell us who makes the right call.
The general consensus in the industry is that Elon Musk’s Starlink technology will conquer the inflight connectivity space. However, the reality now is how much budget an airline wants to invest in the technology as an early adopter and, crucially, is it wanted by the passenger?
In an audience poll, it was suggested that 50% of customers would be resistant to inflight connectivity as they see it as the only forced downtime they really can relax and switch off. Another concern was that, if the passenger was fully connected, would this distract them from airline revenue opportunities as they would be consumed by their usual day-to-day habits?
Others suggest that the power should be in the passenger’s hands; if they choose to enjoy downtime they can; if not, they don’t have to.
Passengers in control vs. airlines deciding what passengers have access to is a challenging problem; what are your thoughts on this?
It’s no surprise that the most favorable sustainability topic at a global catering event would be around waste management and packaging but the extent to which this topic was being discussed was eye-opening. From the Taste of Travel theater talks on pre-ordering and waste management to sustainability workshops where sustainable designs and products were being presented. The aviation industry are finally taking sustainability seriously and it was great to see so many examples at WTCE.
Christian Grou, Co-founder of Neutral Digital, explained their projects in creating metaverse and VR experiences for airlines to present to their passengers. Use cases could be an airline offering a VR experience to an economy passenger to entice them to upgrade their tickets or purchase a particular product using their accumulated miles for the return journey - a type of virtual ‘try before you buy’.
Neutral Digital was not the only one to bring the metaverse and AR into WTCE. LSG group was also showcasing virtual reality food and beverage concepts to enhance the airline’s concept development phase, from existing products to prototypes that don’t yet exist. In response, the consensus was that these things are “nice to have” but not a necessity at this point in the market.
From my conference seat, the key takeaway was that the industry is ready for recovery and building to become more resilient than ever. Airlines are becoming increasingly perceptive to digital solutions, and many are realizing that putting their digital revenue plans on hold until the recovery is fully established may not be the most effective strategy.
Lastly, whatever shape their digital platform is to take, the airlines also realize that their digital journey needs expert support. Omnevo has unique experience implementing e-commerce platforms and we support that journey through a team that blends in-depth experience across airline operations, logistics and catering with unrivaled technology and the best IT professionals from parent company AOE. Regardless of size or business model, every airline can tailor the scale, focus and timescale of its digital journey. WTCE showed that many are eager to take their next digital step.
Contact us to find out more - and we hope to see you at future industry events: https://www.omnevo.net/company/events.html