The document discusses how airlines can improve customer loyalty through personalization. It explains that advances in technology now allow airlines to collect and analyze large amounts of customer data to provide more individualized services. However, most airlines still offer generic services. The document argues that airlines should take lessons from other industries that have used customer data and analytics to better understand customers and provide personalized experiences. This could help airlines maintain loyalty and position themselves as end-to-end service providers.

1. Expanding personalisation to rebuild customer loyalty
To gain greater insight into changes and innovations that could usher in
a new era for travellers, the Economist Intelligence Unit (EIU) conducted
parallel surveys of 100 airline executives and 810 air-travel customers in
August and September of 2013. Augmented by interviews with 16 industry
leaders and in-depth analysis, research into this topic culminated with the
whitepaper, The Future of Air Travel: Improved Personalisation and Profits
through the Integrated Use of Customer Data. This is one of a series of five
articles elaborating on some of the most salient points that emerged from
the findings.

2. Airlines are now able to provide more individualised attention to a broader range of customers than ever before. That’s because the amount of information that can be quickly collected, transmitted, analysed and stored is increasing, while the associated costs have been reduced in the wake of advances in digital technologies.
Airlines that take advantage of data, customer analytics and mobile digital devices to maintain efficiency and deliver a more personalised, fine-tuned experience are poised to enjoy a distinct advantage over those offering a more generic service. Airlines can learn from trailblazers in the retailing and hospitality industries that have invested in data-related technologies and techniques to better understand and support their customers, helping maintain customer loyalty, while positioning themselves as end-to-end service providers.
Personalising the experience
Leaders in the retail industry are marketing experiences rather than products. Apple, for example, commands a premium across its product line, from computing to communication to entertainment. Its prices are justified, in part, by function and engineering quality, but also by the personal connection that customers feel to their products and the brand. Apple stores were specifically designed as destinations — not as retail outlets — fun environments where people would feel at home. (For more on lessons from Apple, please see the affiliated article, “The future of air travel: Justifying the return on investment (ROI) of technology upgrades”).
Architect Tim Kobe was a key player in bringing Apple stores to fruition and has applied this approach to airlines. His firm, Eight Inc., designed the Virgin Atlantic Airways Clubhouse at San Francisco International Airport. Like other lounges, it provides a place to rest, work, meet and eat, but it does so in a unique space — one designed to facilitate more personal experiences.
Personalisation was a key design consideration, according to Mr Kobe, grounded in a keen understanding of the needs and desires of Virgin Atlantic’s business and leisure travel customers. The lounge feels more like a boutique hotel than a generic airport space. Section-to-section differentiation is sharp, from décor to materials to furnishings to use of light, both natural and artificial. A broad range of services are located in different zones for different activities to accommodate personal styles and preferences.
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3. For the business traveller, for example: working spaces featuring “multi-tasking” armchairs like those found on luxury airlines in which you are able to sit up and work with support—or lie back and relax in comfort. Those travelling for leisure will likely make their way to the viewing area or bar or the dining section for a made-to- order meal. Virgin Atlantic’s even-larger London Clubhouse offers a den for billiards, video games or movie watching, with lounging rooms designed to appeal to a variety of tastes and aesthetic preferences—from après- ski to poolside.
When speaking about his work on Virgin’s San Francisco Clubhouse, Mr Kobe explains that the goal was not to create a lounge that was generically great, but to provide a unique and “customisable” experience meant to be personally compelling to Virgin’s customer base.
“Our work with Virgin helped separate the brand in a crowded field,” Mr Kobe says, creating “a distinct experience for Virgin customers . . . and a relatively loyal [customer base] . . . who share the Virgin brand values.”
Reading the data, reaping the revenue
Airlines can take pointers from the hospitality industry, which has learned to sculpt increasingly personalised experiences using ever-more-granular data about customer needs and desires. Higher-end hotels, for example, often provide pillow menus. But, with the unbundling of fares, many airlines have gone in the opposite direction: only one kind of pillow is offered; should you want one, there’s a cost involved.
Not only does the latter approach limit options instead of expanding them, it also minimises opportunities to gather data about those options from the customer. So far, hotels are ahead of airlines in using this sort of information to learn each customer’s preferences to either proactively tailor guest experiences based on that data or offer intelligent options based on customers’ past behaviours.
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4. While the Hotel Preston, in Nashville, Tennessee, offers a choice of pillows, it also provides a menu of more idiosyncratic options: lava lamps, a live goldfish in a bowl and — for children of all ages — bathtub rubber duckies, something that makes an indelible impression on the hotel’s guests. A generic room is a commodity; a room one can personalise with whimsy is an experience—one that the hotel will be able to re-create whenever you visit without your having to ask.
Provenance Hotels — owner and operator of a dozen or so properties, the Preston included — touts its ability to “gracefully walk the high wire between seamless efficiency and palpable human connection”. Airlines would do well to follow suit, especially given the rising tide of more-demanding customers and the acknowledged stress of airline travel.
Appealing to a wave of new customers
“There’s an emerging Millennial trend,” says Max Rayner, a partner at travel and technology consulting firm Hudson Crossing, of customers who are coming into prime travelling age who “don’t want a chain or a package or two hundred other people getting the exact same thing.” Netflix and Amazon have taught these consumers to expect providers will learn their preferences and take them into account.
Millennials as a group tend to insist on 24/7 access to data, want to be able to change and re-configure plans on the fly, and value unique, off-the-beaten-path experiences. Of course, on an individual basis within that group, like any other, tastes and habits will vary. The hospitality industry has shown it understands that the more options it can draw into the mix, the better it will be able to target the right options to the right person.
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5. Priceline, for instance, recently bought Buuteeq, a Software- as-a-Service website design and services provider for smaller hotels that don’t yet have sophisticated digital capabilities to reach online customers. Google Travel is also trying to court this same target audience, enriching search options to include smaller venues. They’re aiming, says Mr Rayner, to provide ever-greater details on harder- to-find places, “showing you, for example, attractive, five-room, Mom-and-Pop lodgings, in southern Spain”.
Airlines are also working to offer customers more personalised options. Some, for example, are providing activity packs or backpacks for children and families who fly with them. And, while space limitations are a clear constraint on what can be offered in the sky, technology is expanding virtual space: re-creating how passengers work and play. Such options will become easier for airlines to offer as in-flight bandwidth goes up and costs come down.
Ensuring a sound technical foundation
Strategic investments in information technology are a crucial underpinning for personalisation. In his previous position as chief technology officer of Travelzoo, Mr Rayner was responsible for the user interface and the back-end technology on which the site ran. Now, as a partner at Hudson Crossing, a strategic advisory firm specialising in the travel, tourism and hospitality industries, he stresses that airlines need a “holistic systems view” of upgrades and all other upsell opportunities. The incremental revenue from selling more personalisation relies on and is enabled by strategic investment in IT infrastructure, on both the operations and customer sides.
Too many airlines, warns Mr Rayner, fail to see this. “All those things that might look like they’re just a matter of the user interface? They’re really not. You must have the IT infrastructure to back it.” Delta got it right, he notes. Its phone app and website are well-designed from both the user perspective and the company’s — the IT systems solidly integrated — offering multiple opportunities for trip personalisation and revenue-producing upsells.
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6. Retailers have also been refining their systems integration online. A genuinely personalised experience requires multiple data streams from different parts of a company to be integrated and harmonised almost instantaneously. When a customer begins to browse an online site, her historical profile has to be matched with click-by-click behaviour and locational information to extrapolate what she might want and why she might want it. This kind of data analysis and integration can lay the foundation for travel providers to offer an equally bespoke level of personalisation.
Does the technology know too much?
As advances in technology and data analytics allow service providers to move from data-based profiling to day- to-day reading of a specific traveller’s variable intent, mood and state of mind, customers may find themselves walking a difficult line: between wanting technology to understand them, and therefore help them personalise experiences in ways they will enjoy, and recoiling from guesses so accurate that they might be experienced as intrusive.
Clearly, these distinctions and lines of demarcation can and will change over time. In the 1980s, some people found answering machines uncomfortable and refused to talk to them. Today, consumers converse with Siri, which learns your voice, and take search advice from Google, which gets to know your habits. While the mathematics underlying all this technology may strike some as overly analytical, it’s what will allow the airline industry — like the hospitality and retail industries before it — to refine the tools to help make the customer experience more warmly and humanly personal.
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7. Please contact our nearest
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