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Innovations in the Aviation
Industry: Trend and
Developments
Dr Narudh Cheramakara
Sep 2017
Agenda
• Innovation: Introduction
• Aircraft Manufacturing Sector
• Airline Sector
• Airport Sector
• Q & A
Innovation: Business Context
• The process of translating an idea or invention into a good or service
that creates value or for which customers will pay.
• Customer-centric !!!
• Evolutionary innovations (continuous or dynamic evolutionary
innovation) that are brought about by many incremental advances in
technology or processes and
• Revolutionary innovations (also called discontinuous innovations)
which are often disruptive and new.
Innovations: the benefits
• Cost
• Competitive Advantage
• Customer Experience
• Branding
• Marketing  4 Ps (Product, Price, Place//Distribution channel, Promotion)
• Customer Loyalty
• Regulatory compliance (Voluntary or Compulsory)
• Customer’s willingness to pay
=> Improving financial performance
What else?
Airline Customer Journey: Touch Points
Watkinson’s 10 principles of customer experience
1. Great customer experiences strongly reflect the
customer’s identity – self value brand level
2. Satisfy your higher objs, product or service level
3. Leave nothing to chance, interaction level
4. Set and meet expectation
5. Effortless
6. Stress free
7. Indulging the sense
8. Socially engaging
9. Put customer in control
10. Consider the emotions
2. Product life cycle
3. Product Innovation
For a successful product innovation E.M. Rogers suggests the following
points of consideration
3.1 Relative Advantage
• new products must be substantially better value-for-money than
those they are replacing, in order for consumers to accept the risks of
using them
3. Product Innovation
• 3.2 Compatibility
• An innovation is unlikely to be successful if it is a very radical
departure from the existing ways in which business is done in the
market sector in
- This could be wrong for inflight product (e.g. flatbed on BA, Etihad
Suite)
- But could be right for standing seats
- How about charging for cabin luggage? (like Spirit and Wizzair)
3. Product Innovation
• 3.3 Complexity
• Some innovations fail because they are perceived as being extremely
difficult to use, requiring purchasers to invest a great deal of time and
effort
• Nok Air has a policy of not collecting irrelevant passengers’ data
(DOB, passport no, etc.)  This is a double-edged sword for CRM
Analysis.
3. Product Innovation
• 3.4 4. Divisibility
• It is often easier to persuade consumers to take a series of short
steps, rather than one very large and risky one.
• The principle of Divisibility is very well illustrated by the growing
popularity of so-called Fractional Ownership schemes for business
jets. (In which the manufacturer expect the fractional owners will buy
the plane outright at the later stage
3. Product Innovation
• 3.5 Communicability
• Customers are unlikely to be persuaded to buy a product if the
benefits this product will bring cannot be communicated to them
persuasively.
• Miscommunication and the so called ‘internet drama’ is very difficult
to handle by airlines
Innovations: in Aircraft Manufacturing Factors
• Stagnation in Technology
• Duopolistic market  Market power A v B / Particularly pronounced in the
regional aircraft segment.
• No willpower to produce radicalised design
- NO Longer about speed
- Fuel Efficiency  Only focus since 1970
- Engine
- ETOPs
- Material
- Manufacturing Process
DevelopmentFirst Flight: 1903
Oldest airline with continuing ops (95 years)
Progress:
WW I -> Air Mail
Colonial powers: The golden age of flying boat
WWII -> Long range passenger planes
Fast-paced development in technology
https://www.youtube.com/watch?v=S4s2spL0O0Q&list=PLDF12C831C4
1E1B44&index=4
History: The Flying Public (60s-80s)• Safe and reliable
• The Jet Age
• Sexual Appeal
• The Jumbo jets – Unit cost
• The deregulation – Free competition
• Oil crisis – cartel
• The rise and fall of Concorde – Govt spending
• The fall of British jets – Govt intervention
• The charters – unit cost
https://www.youtube.com/watch?v=v9bVFkDhGPE
4. Product Life Cycle in the
Aviation Industry: Boeing
4. Product Life Cycle in the
Aviation Industry: Airbus
- ETOPS
revolution
- Engine
Change
Sonic Cruiser  7E7  Dreamliner
Regional Aircraft: Lack of replacement
The Future: Green and Efficiency
Problem with Airport
configuration!
Practicality
Economic questions
Passenger Acceptance
The Harsh Reality
Key Take Away
• Stagnation
• Airline has no market power
• Where next?
Innovation In Airline Industry
• Following Touch Points: Pain Points!
• Remember Innovations cover all marketing aspects!
• Digitisation
• Personalisation
• Seamless Experience
• Automation
• Underlying Points: Driven by Costs // Profit Maximisation  Through
marketing
Innovation: Distribution
• Lesser-developed markets appears to be much more innovative than
developed ones.
• Primarily led by the growth of LCC sectors (Thailand is a prominent
example
• PAYMENT CHANNEL: Absolutely Vital
• E-commerce
• Online Travel Agency
Online Innovation: Chatbot
Online Innovation: Chatbot
Online Innovation: One transaction takes time
Speech Recognition: Useful in the US
Farelock
Social Listening // CRM or spamming?
Mobile web/App: fastest growing
• Thais are particularly addicted to mobile phone
• Nok Air has 21% from mobile  we have dedicted mobile
department – Most are from app than m.web
Payment Channel
Innovation: Check-in
• Telephone Check-in
• LCC – Compulsory auto check-in
• Ticket / Boarding pass (single
fleet)
• IT is the key stumbling block
Early/Overnight Check-in
City Check-in
Train Station Check-in
Gate/Lounge Checkin (mostly disappeared
after 9-11)
Automation Pro and cons?
Labour Issue
Cost
Implementation
Airport Operator Approval
Passenger Acceptant!
E Tag: Self-printed, E-ink, GPS, RFID
Boarding:
: IFE
- Audio
- Feature film
- Personal Screen
- AVOD
- Larger screens
- Touch Screen
- What’s next?
BYO // Connectivity // Power Outlets //
Personalisation
Panasonic Waterfront Concept
Seats
- Lounge Chair
- Flat Bed
- Aisle Access
777 Cabin: JAL v Philippine
Airlines
Economy
Light and Slim
Pocket
IPAD Holder
Seat Recline
Innovation: Making Money out of thin air
Air New Zealand: Innovation for sale
Premium Economy Led by EVA Air
Fill the market gap
Business Class:
Highly innovative
Business Class Development
• Hardshell
• Privacy
• Aisle Access
• Connectivity
• Power Port
• Working/Resting
First Class: Increasingly matched by Business
class
In-flight lounge
Business Concept Innovation
Service Innovation
Jetblue: Mint Service
Compared with US Airways
Narrow-bodied Transatlantic
Openskies  FFP as advantage
BA Sleeper (No-cost Innovation)/A318
- Shuttle Service (Go-show) on important airbridges
Lounge
SAS City/Gate Lounge
7. Airline Product
Fly and Ride, Fly and Ferry
Premium Seat: No-cost innovation
Ancillary Revenue Innovation
TUI: Using BYOD to order meals
Customised buy on board meal: Air Baltic
VR for Premium Economy Upgrade
Inflight Payment: MTR // Applepay
Airport
Airport Nature
• Physical Constraints
• Largely monopolistic – low incentive to improve efficiencies // Partly
or wholely government owned
• Non-Aeronautical revenues
Airport Innovation: Airport Access
Transportation to and from the
airport is important
Think about UTP
Pre Clearance
Amenities
Airport Innovation: Air Traffic Management
Airport Innovation: London City Airport
Virtual
Control
Tower
compared
with SVB?
Airport Innovation: AMS/SIN
Innovation: Heathrow
Airport Innovation: Environment
Airline Innovation Sources:
Air Shows
• Farnborough
• Paris Air Salon
• Singapore Airshow : Next February