Michael Hanke is founder of Los Angeles-based airline e-commerce consultancy SkaiBlu. This article is extracted from his forthcoming book - Airline E-commerce: Log on. Take off
The airline marketplace has been transformed forever by e-commerce as an increasing number of travellers use internet-based products and services to manage various aspects of their travel life cycle.
Importantly, travellers today look much beyond the basic task of being able to purchase a ticket online and obtain low prices. They seek out airline digital brands offering superior quality, trust, service, and innovation. An airline’s performance in these areas largely determines its digital competitiveness and ultimately its success in the online marketplace.
Airlines that have achieved an advanced e-commerce stage – defined as the widespread adoption and competitive use of the internet and digital applications to market and sell products, deliver customer service, and share/exchange information – realise important benefits. These include improved economic performance and stronger brand attraction.
To assess how advanced an airline is in cyberspace, two key factors must be considered: the adoption, and the use of, e-commerce. Examples of these include user-friendly digital properties – websites that are fast, intuitive and click-efficient in navigation, rich in features, and optimised for mobile commerce. Other examples include superior digital data privacy practices; a wide range of digital media use for online advertising and promotion; competitive e-sales and distribution policies; and top-quality web customer service via exceptional self- and assisted-service tools, and quick responsiveness to customer queries. A carrier aiming for success in cyberspace needs to manage these multiple factors not only well but also concurrently.
Moving to an advanced e-commerce stage does not happen by accident. Senior airline managers have a crucial stake in this process. In their approach, they need to shift their attention to airline e-commerce adoption and use. Specifically, this means de-emphasising single popular metrics such as an airline’s online revenue share. Instead, they should focus on capturing and systematically tracking the company’s e-commerce activities in a wide range of areas. This approach implies e-commerce is a prioritised topic on an airline’s corporate strategy agenda and recognised as a key driver in the company’s future.
Our Digital Airline Score (DAS) tool allows the e-commerce competitiveness of an airline to be assessed by measuring seven attributes and 28 proxy indicators to ascertain how it is positioned in cyberspace.
A sample of 35 carriers from different geographies and with different business models was used to illustrate the DAS (see chart). Assessment of the e-commerce advancement for these carriers shows four distinctive groups (with DAS ranges):
- Constrained: 40-79
- Emerging: 80-99
- Transitional: 100-119
- Advanced: 120-160
Constrained airlines have not begun to engage with e-commerce on a larg scale. Adoption and use are limited and below par. Lack of customer readiness may be one of the external reasons although several internal aspects – including lack of overall corporate vision for e-commerce, small talent base, and insufficient resources – often play a role.
Emerging e-commerce carriers are those that have made significant progress in embracing e-commerce. However, its adoption and use are still sub-optimal due to number of internal factors.
Transitional e-commerce carriers have a solid and experienced handle on e-commerce, where its adoption and use are above average and constantly expanding.
Airlines in the advanced group are most mature in their “digitalness”. They are at the forefront of deploying new digital applications and related managerial practices. Their talent base is strong and e-commerce is a key priority for corporate strategy.
To advance their e-commerce level, airlines need to have a good understanding of where their digital strengths and weaknesses lie. Depending on how high their DAS is, decision-makers should focus on a few imperatives:
Elevation of e-commerce onto the corporate agenda
Introduction of better e-commerce governance/organisational structures
Adoption of an ecosystem (ie platform-agnostic) perspective on e-commerce
Stimulation of e-commerce demand (digital data privacy, web customer service and website accessibility for disabled customers)
To become more effective in cyberspace, low-performing e-commerce carriers such as TAAG Angola and Philippine Airlines should seek involvement and oversight at a senior management level. If leaders at these airlines do not take ownership of e-commerce, it will continue being managed as a by-product with non-aligned stakeholders who pursue their own e-commerce agenda for the company. Also, e-commerce has to be viewed as an opportunity that creates benefits for the company.
The lack of a localised web presence in different countries can hinder progress. At Air India, for example, its website only links to three sites outside India (in Australia, the UK and the USA) while Air India managers in some other countries have created local websites using different branding that have no apparent connection to the official site.
Irregular promotion of online fare specials, insufficient engagement with social media platforms, and below-par search engine marketing are other examples of poor e-commerce organisational structures.
Saudia’s relatively poor web strategy highlights the issue. Beyond its local website in Saudi Arabia, the airline does not promote single-fare specials on any of its 29 country portals. Also, the carrier averages only two posts per week on Facebook when 5-10 posts is ideal, and JetBlue sets the high water mark with 14.
The Saudi flag carrier also appears to have undertaken limited, if any, sponsored search-engine marketing for key search terms. Generic searches including “flight to Jeddah” and “fares to Riyadh” return Emirates, Etihad, and Lufthansa on Google’s first result page (over 90% of Google search traffic comes from page one).
Other issues highlighting the need for better e-commerce governance include inconsistent/insufficient monitoring of website download speeds; no, or limited, deployment of programmatic advertising or partnering with major meta-travel search engines; a lack of responsive web design principles, no, or limited, direct-connect sales and distribution relationships; poor digital brand protection due to a lack of relevant domain name registrations; limited ancillary offerings and poor responsiveness to customer queries through email or social media.
It is evident there is plenty of room for improvement in airline e-commerce. There is not one single way to achieve this because carriers have different objectives. However many carriers are not well positioned to compete effectively in cyberspace, nor do they fully benefit from the rewards e-commerce offers.
This may serve as a wake-up call. Constrained and emerging e-commerce airlines should initiate an immediate analysis of their situation to determine what is going on and what needs to be done. This is the underpinning of a sound e-commerce strategy. The sooner this is done the better, because the gap to leading rivals is otherwise increasingly difficult to bridge.
At the same time, airlines that have scored high with DAS can be pleased. They are doing a lot of things better than the rest. However the question is for how long?
We need to remember today’s empowered consumers are often much more proficient – and demanding – in cyberspace than airlines. Even the leading airline e-commerce practitioners will always be in catch-up mode as the periods of relative market stability are constantly shrinking. Therefore, a true breakout strategy, for example via personalisation, might be elusive even for the best of e-commerce airlines.
Nevertheless, the key is to be best prepared for the transitions ahead. Improving “digitalness” is a corporate imperative for any airline, while regularly conducting internal audits to assess its core competencies in this area. An annual DAS-based approach, as introduced in this article offers one way of assessing an airline’s e-commerce competitiveness and those of its rivals.
Strategic directions can then be adjusted as necessary. No one will get it completely right but at least a start is made to fully recognise the importance of this activity and to put in place the necessary structures for best practice – and eventually to apply it.
Michael Hanke is founder of Los Angeles-based airline e-commerce consultancy SkaiBlu. This article is extracted from his forthcoming book Airline E-commerce: Log on. Take off
Source: Airline Business
