From major FSCs to small LCCs, digitalization provides the most effective, low-cost path to new levels of operational efficiency and revenue recovery to all airlines. Kian Gould, Chairman of digital revenue innovators Omnevo, explains 5 reasons why.
Let’s start on the bottom line: any airline – including everything from flagship FSCs to small regional LCCs – can now cost-effectively digitalize their attack on the recovering market and seize the digital route to recovery. Let me explain why.
Omnevo, created from the merger of AOE’s multi-award-winning aviation e-commerce solutions and supply-chain and in-flight expert SHIFTEO, was born out of crisis and was specifically created to give all airlines a viable, low entry cost, digital end-to-end solution for revenue recovery in F&B, Retail and Experiences, including omnichannel commerce, buy-on-board and supply-chain management. We spent most of 2020 merging our two operations into one company remotely to provide a new model for operators to respond as the recovery takes shape.The crisis changed everything and made traditional aviation revenue models even more unstable, so we’ve had to think differently, work differently, become more agile and adaptable in creating solutions that reach the pain points that the aviation sector is facing.
Some airlines, such as premium FSCs, might look to adopt a fully comprehensive omnichannel model but, for most airlines, the key is the flexibility to tailor a digital model to their needs, starting small and scaling fast. They can digitalize their priority issues first and have the future-proofed control option to expand where and when they wish.
Of course, the harsh reality is that many airlines feel in no position to invest right now, so we’ve also developed a unique subscription and revenue-share based approach that enables them to develop their digital path with minimized risk – a low cost solution to a high cost problem. On the bottom line, the investment cost is no longer a barrier to airlines increasing their ancillary revenue streams and becoming digital revenue leaders.
The crisis has changed many things but not Rule No.1; listen to your customer. They increasingly expect a high quality, reliable digital experience. Any operator ignoring that will face an even tougher recovery challenge. The crisis accelerated digital living by a decade in less than a year, creating powerful shifts in what passengers will expect from their travel experience. They expect hugely expanded choice within seamless, sophisticated, personalized digital experiences in everything from grocery orders to configuring their new car – and these experiences are no longer exceptional, they are embedded in daily life.
Airlines must understand that they’re competing with those digital experiences in getting the customer’s attention and persuading them to spend time and money; they’re certainly not a captive audience. Consumers are actually surprised when an operator or brand fails to provide a coherent digital experience. Pioneering airlines and airports – such as Singapore Airlines and Frankfurt and Heathrow airports – have already digitalized and have proven to deliver far-greater engagement, stronger loyalty and much higher revenue, and that pattern continued even in the midst of the crisis. They’ve radically extended the window of opportunity (customers don’t even need to fly) and strengthened their visibility and power as brands, enhancing their long-term revenue potential.
Traditional revenue models are already suffering the burden of declining conversion, low spend and back-end inefficiencies and simply do not have the capacity to adapt to the customer’s needs. They cannot deliver core elements such as extensive, relevant product and brand choices, personalization, 24/7 access, pre-order selection, and delivery and collection services etc. and this will be a heavy burden on airline performance in the recovery phase.
As travelers return, the contrast in their online experiences versus their travel experience might well feel abruptly different, provoking frustration, confusion, and drive them even further away from the offer. Also, don’t forget, this is all on top of the impact of the already disruptive COVID-driven changes in the passenger journey, affecting both passenger mindset and the capacity for airlines to operate their inflight offers.
Although many airline managers are aware of the capacity of digitalization to create that quality of customer experience they’re often surprised by its potential for new efficiencies and cost saving – including lower overheads, better forecasting, less waste and less weight - while actually selling much more. FSCs can adopt a digital path that includes luxury offerings, premium positioning and brand perception while LCCs and small airlines can focus on selling more and more efficiently; and both gain significant operational efficiencies.
The on-demand consumption model means you’re loading onboard only items that will actually be consumed. Transporting tons of unsold or unused products as your most ‘frequent flyers’ cannot be part of any credible sustainability or ESG strategy! On one LCC airline partner, for example, our pre-order F&B solution enabled a 30-minutes improvement in crew time; that’s a huge opportunity for crew to enhance the passenger experience and sell more on-board.
Our team contains extensive experience within airline operations and logistics, so we truly understand the challenges faced right now but it’s crucial that airlines shift their focus above survival and look ahead. In the challenge to revolutionize the passenger experience and drive revenue, pre-order is the single most critical element; whether it’s luxury goods on-board an FSC or sandwiches on an LCC, give them new options and choices designed around their needs and they will spend so much more. Spend per head can soar well ahead of the pace of traffic recovery. It’s readily implemented. All our solutions are modular, fully-integrated, work out-of-the-box and are adjustable to any existing software regardless of whether we serve e-commerce, ePoS, or logistics and operations.
Already encountering the most turbulent phase in its history and the prospect of fierce competition in the recovery phase, the aviation sector has the added pressure of seismic shifts in customer behavior. It’s a perfect storm, but there is a safe revenue path through it. The customer is increasingly living in a digital world – the world’s airlines urgently need to join them.
Aviation & Travel
“Are you crazy? Joining a start-up in the travel space in the middle of the worst global pandemic for over a century?!” That was just one of the concerned comments made to me when I left my previous job role after seven years and joined Omnevo in May 2021, with most of the aviation world at a standstill. in fact, it was Omnevo’s confidence and ambition in launching during the pandemic that told me this was something special. In the aviation industry’s chaos, they saw an opportunity. Exactly one year later, I know I made the right decision. While Omnevo is a relatively new brand to the market, we’re backed by AOE – one of the most experienced players in the market – and we’ve assembled a team of highly experienced people who have worked across airline operations, retail, F&B operations, logistics and technology for many years. This experience, combined with an incredibly skilled technical team, means that we can make impactful changes to an airline’s performance; and that’s exactly how Omnevo saw the opportunity, even while most of the world’s fleets were grounded.
Aviation & Travel
In this third blog in a series focused on airline adoption of a revenue digitalization strategy, I want to zoom-in from the broader focus shared in the first two blogs and their emphasis on front-end issues and, instead, focus on how the digital solution is embedded across the airline’s day-to-day operations in F&B/Retail – driving new performance levels in every area it touches, for both LCCs and FSCs.
Aviation & Travel
To be honest, I thought at first that it was an April Fool joke - but researchers at UC Berkeley have genuinely managed to convert airline food waste into aircraft fuel! Thankfully, this process doesn’t mean that flight crew must gather the leftovers to power the aircraft – or that the guy in Row 7 can’t have a dessert because the plane’s low on fuel - but it illustrates how there are always ways to find new solutions to old problems.