‘Customers became a disruptive force for the industry because the power has shifted from airlines to customers, from providers to receivers’.
Nawal K. Taneja, Airline Business Strategist at Ohio State University
Aviation is exceptionally vulnerable to disruptions or, as they’re known in the flying business, IROPs (irregular operations). They may be caused by natural disasters, overbooking, local strikes or military actions, terrorism, technical or logistics issues, crew’s health… These factors impede and sometimes halt the work of airlines and airports. The industry-specific domino effect occurs after the very first break. The cancelation or delay of a single flight usually affects every flight connected to it for the whole day.
Disruption management is a set of measures the travel industry uses to recover schedules and remove the problem’s catalyst whenever possible. Since the beginnings of air travel, disruptions remained an unsolved challenge due to the lack of proper IT-infrastructures and overall coordination between different actors affecting every flight. Things are just starting to change as airlines and airports are acquiring new technologies. In 2017, disruption management deserves an update. So, let’s discuss what are the problems, opportunities, and how to approach them to reduce the impact of disruptions.
New industry challenges entail new disruption management approaches
According to the recent Sabre and Forbes Insights briefing paper, 79 percent of airline executives think that flight optimization and disruption management are the main factors that will enhance operational performance and eventually improve customer experience. But besides customer experience itself, there are time-dependent reasons for airlines and airports to reconsider their existing disruption management strategies. Not only do passenger streams change, but the passengers themselves are reconsidering their vision of their flight experience. Let’s talk about these new challenges.
Substantial revenue losses. According to the T2RL study, the travel industry worldwide loses about $35 billion annually due to disruptions. Just in the US, airlines and airports lost about 6 percent of their revenue — nearly $8 billion — in 2016. To estimate the cost of disruption, the industry totals “hard” and “soft” costs. Hard costs are compensations that airlines pay passengers for losing their seats on overbooked flights or lost revenues from completely canceling flights. Soft costs of disruption are the future revenue that an airline won’t get due to a decrease in customer trust and loyalty. The amount of the soft costs is calculated by comparing the flight delay duration and the level of passengers dissatisfaction. The lowest dissatisfaction level means that a passenger will leave a complaint, while the highest one is recorded when a passenger switches to another airline. Currently, the costs of delay — both hard and soft — are increasing like wildfire due to the growing number of air travel customers.
The growing number of passengers. International Civil Organization claims that nearly 3.7 billion passengers used air transport in 2016. In the early 2000’s it was only half as many and it will double by 2035. Increasingly more passengers from the Asia-Pacific region will be flying. According to IATA, this region will be the home of more than 50 percent of new passengers in the next 20 years, and the total number of air travelers will reach 7.6 billion passengers. Eighty percent of today’s mainline flight arrivals are on time, according to Flight Stats, which leaves about 20 percent of the flights delayed. As the stream of passengers and number of flights increase, the risk of disruption and its consequences will also increase.
The emerging voice of social media. The popularity of social media has shifted the public focus from airline and airport official messages to the chorus of voices of unhappy passengers. People use social media as the main channel to express feelings about inefficient and unorganized service. Both #IHateIceland when Eyjafjallajökull erupted and the scandal around United Airlines and its attitude to the passenger on an overbooked flight are examples of such reactive feedback: this event made United social media’s most discussed airline from June 11 to July 9, 2017 garnering 20.6 percent of all buzz.
These recent events revealed that the airline industry usually can’t fully handle the social media factor and often can’t leverage this channel to build responsive communication.
The public has demanded disruption management improvements since the birth of air travel. We’ve already talked about digital transformation in the travel industry and how it can make businesses more customer-focused. In 2017, the IT industry can provide a wealth of innovative tools to increase the efficiency of disruption management as well. They range from cross-platform solutions for crew communication to data-driven software helping inform, reschedule, or re-accommodate passengers.
Tools for travel disruption management
According to T2RL estimates, if IROPs around the world could magically disappear, airline profits would more than double. But bad weather doesn’t care about the plight of travel industry workers, which is why it’s vital to at least reduce disruption’s effect on both the aircrew and passenger sides. To do that, we suggest taking note of these tips.
Create the stress-reducing communication strategy with customers
All situations when passengers can’t get on a flight in time are considered disruptions. However, it’s not the delay or cancelation that frustrates passengers the most; it’s the lack of communication — with any luck at all accurate — about the situation. While the main principle of effective disruption management is communication, even the largest worldwide air carriers keep ignoring the communication aspect. What are the main tools to look at if you’re striving for better communication with passengers?
Social Media. Even today, many airlines don’t use social media beyond direct marketing messages about sales, new destinations, etc. However, social media as a communication channel can address disruption consequences by timely informing of passengers about IROPs on time and responding to negative and positive reviews in the personalized space. The main principles for building a dialog in social media are:
- use facts, not assumptions;
- speak clearly;
- communicate with empathy.
The mere existence of dialog helps passengers feel in control over the situation and, if apologies are given, passengers understand that you care about them and do everything possible to fix the situation.
A number of large airlines — like Qatar Airways or Southwest Airlines — already use Twitter and Facebook, not only for the advertising options but for interactions with their customers.
Chatbots. Many travel companies use chatbots to take communication with their customers from traditional interfaces and mobile apps to chat-driven environments like Facebook Messenger. Not only do chatbots help make reservations, they are also used to respond to common questions and requests. This way, companies can free up their customer care staff and involve these people only when a chatbot can’t handle a request.
And this opportunity is mostly overlooked by airlines and airports. While making people install branded apps is a bad strategy — due to so-called app fatigue — chatbots operate within interfaces that people already use. In terms of disruption management, chatbots can give quick updates about irregular operation handling and inform users of alternative flights to recover them from disruption’s ripple effect. Besides direct communication, a traveler with a chatbot in his or her smartphone can book or rebook tickets, find hotels, and get updates about the flight arrival, or even refund a ticket.
For example, Instalocate that works with Facebook Messenger helps users navigate through refund procedures and explains the passenger rights. Aeromexico, Lufthansa, and KLM also employ bots to answer basic questions, if these aren’t complex or uniquely passenger-specific. Inaci Uriz, CEO of Caravelo, a tech company that works with airlines, says that unusual requests from passengers can be narrowed down to 15 percent, while the rest are recurring questions that airlines already answer as a daily routine.
Another bot, Mezi, accelerates booking and provides travel recommendations based on sourced data. Its creators say that the air travel companies already have all key ingredients for training artificial intelligence: “The industry also is highly commoditized. It’s easy to parse the different attributes of flights, hotels, cars, tours, and the like because the metadata is already out there and available in a structured format that AI can easily work with”. The availability of the structured data makes chatbots an effective and comparably cheap solution for flight disruption management.
Beacons. There is a new technology for the air travel customer service — beacons, short-range location-detection devices that use the principle of proximity to detect nearby users through their phone’s Bluetooth. SITA defines them as a “gateway to the Internet of Things,” meaning that beacons most likely will be the basis for IoT infrastructures. Currently, beacons are entering the area of physical retail. A customer walks into a store and receives a push notification about promotions available only in this particular location. In the air travel industry, proximity detection allows airport software to track where passengers are and send information to navigate people around airports and find their gates faster if something changes.
How beacons work
The beacon systems are installed at Miami International Airport. Currently, they help navigate passengers and air crews. Once passengers install the airport app, they can connect to the internal beacons system in the facility and receive push notifications about their location in a defined range through Bluetooth. Not only does the app navigate passengers, it considers their location to anticipate needs and help them find restaurants, facilities, services, and gates. However, beacons adoption is slow due to cost and airport regulations. If these problems are resolved, beacons can certainly be used as another solution to inform passengers during disruptive situation.
Use recovery software to avoid the ripple effect or minimize its consequences
Software-as-a-service applications for the disruption management can be of varying technical complexity. Some operate as meta-search engines only proposing to a passenger the closest flight right after the disruption occurs. Others are more complicated and they are built with the use of APIs to run predictive analytics and support data-driven decisions.
Travel management software for agents. Travel agencies and business travel groups use management software to quickly help their clients recover from the ripple effect of disruptions. As the time is the most valued currency, software solutions for travel management strive to accelerate the re-accommodation and empower a manager’s efficiency. 4site, for instance, provides travel agents with a comprehensive dashboard to organize and plan business trips, and to search for a backup flight for a client in case of emergency. The system sources and organizes travel data surrounding the trips of their customers allowing for proactive responses to IROPs. At the same time, travelers themselves have access to the app on their mobile and immediately receive any information about changes and disruptions during their trip.
This kind of proactive management is especially critical for business travelers that usually pay the highest ticket prices and don’t book them in advance but need to get to their destinations on time.
Recommendation engines for airlines. While there’s software that helps travel agents, the Amadeus Schedule Recovery System or Sabre Flight Explorer are aimed at airlines. By unifying weather, traffic control, and landing slots data, the systems recommend to airline dispatchers available options to make rapid decisions right at the moment of disruption to mitigate its consequences. Another important feature is predictive analytics that use existing weather and traffic data to forecast the risks of disruptions, take proactive measures, and re-route flights if needed.
These types of systems usually operate within the management-by-exception model, which means that the software tracks overall performance and fires off notifications only if something deviates from the established norm.
Automated rebooking systems for airlines. Recently, SWISS International Airlines adopted an automated rebooking system. They claim that the entire rebooking takes about 3 minutes to handle. Passengers just receive SMS’s confirming their new flights. And it’s a great result. The faster you find new seats, the greater the chances that disruption won’t drastically impact the travelers’ plans.
However, these fully automated solutions also have their drawbacks. Boarding Area back in 2014 argued that automated rebooking can make things even worse than they are with manual, call center-driven rebooking. Passengers won’t always be happy with the new flight or schedule that the airline suggests them and, more importantly, fully automated rebooking leaves passengers without control. Passengers should choose and agree with proposed options. So, automated rebooking is a viable option only if it’s supported with a suggestions mechanism that directly communicates with passengers and allows them to refund the ticket if a proposed option doesn’t fit.
Rebooking software for travelers. Considering the previous paragraph, today, the trend is to let customers help themselves without intermediaries. The more control a passenger has, the less frustration from interaction with a particular airline he or she experiences. For instance, Freebird is the application for business travelers that helps quickly book a new ticket in case of disruption. The app sends notifications to users proposing re-booking options.
Software for accommodation. Sometimes waiting for a rebooked flight in an airport isn’t an option and airlines should take care of their passengers stuck in the middle of their trips. If housing is needed, airlines can either use their own metasearch engines to source accommodation options or make deals with vendors that provide these services to airlines. For instance, Roomstorm, is a startup that aims at finding a place to sleep for those hit by disruption, including crews. The service has access to 300,000 hotels around the world. Providing a decent accommodation won’t aid airlines in management of the disruption itself, but it can reduce the dissatisfaction factor and help maintain passenger loyalty.
Streamline crew management and communication
When a disruption happens, airports and airlines should also consider the ways crews and airline workers communicate with each other and coordinate their interactions. We’ve already discussed enterprise mobility solutions employed in the hospitality industry to improve both horizontal and vertical frontline communication. Let’s expand on that discussion here.
In order to improve in-team interactions, the airline company can provide employees with mobile tools to streamline communication. For instance, Lufthansa Crew is a decision support instrument that allows for efficient crew tracking, rostering, and crew controller resource management. It also includes semi-automatic crew housing.
AltexSoft was engaged in building similar crew management software for Merlot Aero. It supports operations across multiple time zones and has broad integration capacities to simultaneously collect and analyze traffic and airline operational data both internally and from third-parties. The system is mobile-based, so airline workers are always updated about any changes, can react to them in an organized manner, and share contextual data among each other.
But management tools aren’t always custom and airline-tailored. Singapore Airlines utilizes HipChat and JIRA Service Desk by Atlassian. They are used for communication and agile crew management. The isolated software ecosystems work on the base of constantly updating data flow and have everything needed for aircrews: in-team chats, schedule tracking, task lists, issue lists, reports. Effective and quick crew communication is a vital part of IROPs troubleshooting.
Disruption management is all about customer experience
According to the whitepaper we cited by Forbes Insights and Sabre, adopting advanced technologies is considered the main factor for improved operational performance and customer experience. Moreover, building customer loyalty and reducing operational costs, 49 percent and 53 percent respectively, are top priorities for airlines. Eventually, all disruption management procedures narrow down to improving customer and employee experience. While the industry becomes increasingly competitive with new tech-savvy players entering it all the time, putting customers first is the most worthwhile, long-term strategy.
Originally published at AltexSoft’s blog: “Travel Disruption Management: Tech Opportunities in the Travel Industry”