Embracing digital transformation to enrich the customer experience in the airline industry

White paper:

2

ContentsIntroduction .................................................................................................................. 3

Executive summary .......................................................................................... 4

The seamless passenger journey ............................................... 5

New Experience Travel Technologies ................................ 6

The case for transformation .............................................................. 7

One ID .................................................................................................................................... 8

ONE Order ................................................................................................................. 10

The challenges ....................................................................................................... 11

The seamless baggage journey .................................................. 12

The challenges ....................................................................................................... 15

Big data ............................................................................................................................. 16

Artificial intelligence ................................................................................... 17

The Internet of Things ............................................................................. 19

The challenges ....................................................................................................... 20

Conclusion and bibliography ......................................................... 21

3

Eswar Venkatachalam is Senior Vice President and Global Head of Travel, Transportation, Hospitality, and Logistics Industries at Hexaware. He has 25+ years of consulting experience, including 15 years of t ravel industry experience in providing consulting services

to clients in IT strategy, product development, IT transformation, product implementation, and application development.

Does good customer service depend on technology?Yes. Technology is an integral part of customer service in the travel industry. Especially given the increasing expectation from customers on user experience and value proposition, it is imperative for the travel industry to leverage technological innovation. Customer service is about being “connected and engaged”; this is enabled seamlessly through technology, which helps agents service the customer more efficiently, besides enhancing the customer’s self-service capabilities.

What do you think are the main challenges for airlines trying to embrace digital

transformation?Airlines need to transform their infrastructure and applications to embrace the digital transformation journey. This will be a crucial challenge, as they have to transform their existing technology and streamline their processes for on-demand scale-up, to facilitate rich omni-channel experiences for customers, and to create a single source of truth for ease of data maintenance.

Airlines have a huge wealth of information, requiring them to unlock its potential through a digital platform to monetize the data.

Airlines have to equip themselves to meet the expectations of customers who are becoming more reliant on digital technology and are

demanding intuitive and smart communication with airlines.

Do airlines have the right skills and experience to take on digital transformation work alone?Airlines must transform their current states to meet the market’s demand intuitively by utilizing the myriad of new technologies emerging daily. Though some airlines have the capabilities of doing so, partnering with IT solution and service providers will bring industry best practices and expertise to fulfill the time-to-market expectation.Airlines have to address the demanding needs of having solution architects and full-stack developers to accelerate the

Introductiondigital transformation journey. Airlines will look for service providers to bring the talents from a scalability perspective.

What areas of the customer experience will be most affected by artificial intelligence?Artificial intelligence (AI) is emerging as one of many core disruptive technologies in the aviation industry. By allowing the industry to understand key issues while enabling an opportunity to increase revenue, AI software facilitates on-demand customer support, enhances self-service capabilities, and increases operational efficiency.

The impact of this technology is evident through AI ChatBoTs and AI CheckBoTs. The former, often called “virtual travel agents”, are emerging as assistant tool kits by acting on various items such as flight searches, ticket booking, and flight updates. AI CheckBoTs, meanwhile, are emerging as a way to optimize boarding assistance to complete the check-in process.

The probability of flight delays and lost connections based on factors like the destination airport’s weather conditions are provided by predictive analytics that enables airlines and airports to proactively plan passenger services and recovery.

In terms of the overall digital transformation, what do you think are the most exciting areas being worked on where we will see the biggest changes?As the travel industry is increasingly competitive and complex, the next generation of customers demand newer technologies and advanced self-service capabilities. It is becoming increasingly important for airlines to know their customer, offer relevant services to them, and build value in their propositions. Digital transformation for better customer experience will trigger a sea change in the coming era.

For more information or to download our app for Android or iOS, visit: hexaware.com/industries/travel-and-transportation/

4

Executive summaryAviation is a fiercely competitive industry with every airline intent on perfecting the customer proposition.

But with legacy systems and outdated processes, building any kind of offer for the customer is challenging. An airline in such a situation has limited information available as the small amount of data exists in silos. It cannot be shared within the organization or with partners. In short, there is little customer relationship.

This whitepaper examines the technologies that will enable the customer relationship to be a true one-to-one discussion. New systems will present the customer with choices based on their indicated preferences and supply the means to fulfil the desired options in a seamless

and cost-effective manner.New Experience Travel

Technologies (NEXTT) will get the airline customer from door-to-door in a manner of their choosing. It may one day include multiple off-airport facilities. Imagine checking in and passing security at a dedicated downtown rail terminal that effortlessly transports you airside.

No matter the manner of the journey, One ID will utilize biometrics to fast-track the customer through aviation processes while allowing customers and providers alike one-stop easy access to all

services contracted through an airline.

Customers will also be able to request their baggage to be picked up from their home or office and delivered straight to their destination hotel. New technologies will also allow baggage tracking at every step of a customer’s journey.

Developing new offers for customers will be achieved through a combination of big data, artificial intelligence, and the internet of things. A 360° view of data will build a complete picture of the customer’s preferences as artificial intelligence will

extrapolate this to perfect the offer. The ubiquitous connectivity of the Internet will facilitate the service provision and provide feedback of new data to ensure real-time updates.

Some personalization is possible today. However, with the right technological partners, airlines can move beyond offering window or aisle seat choices. They can unlock enormous potential by building the customer relationship and putting in place the facilities and services required. It is a virtuous cycle, a true win-win for customers and suppliers.

5

65% The percentage of passengers willing to share additional personal information (such as address of destination, travel purpose, picture) to speed up their processing at the airport vs 70% in 2017

The digital transformation of the travel industry is nothing new. Electronic tickets were introduced in 2008. Self-service kiosks became commonplace and were soon followed by online check-in. The use of automated border control is becoming more prevalent.

But all these developments essentially replicate the previous paper processes. They changed the details but did not change the industry.

The new digital transformation era must deliver a fundamental paradigm shift. Passengers are demanding a more personalized and efficient experience. When browsing Amazon or other online services, they get recommendations, and their preferences are noted. For the millennial generation, this is the norm. They expect nothing less from airlines.

Fortunately, the aviation

industry is embracing the age of data and digitization through several industry initiatives. All require stakeholder engagement and the alignment of the aviation value chain to achieve success.

The seamless passenger journey

6

The umbrella project for much of the industry’s work in customer service is the New Experience Travel Technologies (NEXTT) initiative. Developed jointly by Airports Council International (ACI) and IATA, it aims to ensure that the transport of passengers, baggage, and cargo benefits from the latest technology developments to improve not only the experience of customers but also the reliability and efficiency of passenger processing.

All facilities should be cost-efficient while balancing capacity with demand. They must also deliver an appropriate level of service to the next generation travelers.

NEXTT will help the developers of new facilities spend their money wisely by promoting a coordinated approach that is essential to deliver services of maximum value to the industry.

An information backbone,

for example, will enable the entire NEXTT vision, from interactive decision making, to advanced processing and further on to off-site technologies. Prioritizing the various opportunity areas will assist IATA, ACI, and NEXTT partners in creating the strategic direction of the industry and adopting new emerging travel technologies.

Full details of NEXTT can be found at http://nextt.iata.org/

New Experience Travel Technologies

$1.5tn The amount expected to be spent on global airport infrastructure development up to 2030

7

Benefits in excess of an uncoordinated,

disparate approach

All key stakeholders can realise significant benefits

Strong net benefit

Reduced airport infrastructure

investment

Commonalities in digital transformations unlock the greatest efficiencies

Tangible reduction in additional terminal

investments

An increased capacity of existing infrastructure

Creates an essential need for a collective approach

Common nomenclature required

Interoperability essential

The case for transformationNick Careen, IATA Senior Vice President

8

One IDRevolutionizing air travel through end-to-end identity management, One ID is a part of the NEXTT vision. A trusted, digital identity, One ID will utilize an identity management platform, identity verification, and a trusted framework for sharing.

One ID has the potential to make border control redundant at the departure airport, for example, with the relevant information sent to the concerned authorities. As airlines and suppliers will also know where passengers are in the travel process, they may consider it worthwhile to offer deals for airport amenities, such as lounge access or a restaurant discount.

Connecting to multiple systems for identification checks is both expensive for the airlines and inconvenient for passengers. Being able to easily and quickly identify the passenger will therefore be a cornerstone of aviation’s digital transformation. The technology to achieve this is already available. Biometrics are working well. Facial recognition

software has become the dominant form, although both fingerprint and iris are being used.

The IATA 75th Annual General Meeting (AGM) unanimously agreed to accelerate the global implementation of the One ID initiative. It furthermore called upon the ICAO Member States to endorse the digital travel credential specifications that will offer a secure and efficient alternative to passports.

The industry in turn will need to cooperate with all countries to develop global standards, allowing passenger identity information to be accessed on a need-to-know /allow-to-know basis in line with various data privacy requirements and regulations.

64%The percentage of passengers who want to use a single biometric identity token for all their travel interactions. One ID will make that a realityIATA Global Passenger Survey

9

Various elements of the One ID concept are being tested at airports around the world including:• Atlanta International Airport and many

others in the United States• Aruba International Airport• Heathrow Airport• Sydney Airport• Schiphol Airport• Changi Airport• Dubai International Airport

One ID

10

ONE Order makes purchasing easy for an airline customer. It is an industry standard that creates a single access point for all services contracted through an airline.

No matter what is bought, or which company ultimately supplies the goods or service, only one record is created that can be easily tracked by the customer and by suppliers. This marks the end of multiple reservation records, including the passenger name record, in addition to the e-ticket and electronic miscellaneous document (EMD). In their place will be a standardized and expandable reference used by all partners, distribution channels, ground handling agents, border control, and airport staff.

ONE Order enables the exchange of real-time information about travelers

and their travel purchases, making airlines more efficient and providing customers with superior service. The newer methods of data exchange used in blockchain can be implemented where appropriate.

The ONE Order standard is being tested with the aim to have pioneer airlines use ONE Order—or at least a limited version—in a live environment by 2020.

Although there are no targets post-2020, reaching a critical mass of transactions will naturally be at the core of future endeavors.

ONE Order

11

The greatest challenge to the idea of seamless passenger travel is probably the current industry mindset. More than 100 years of organically evolved systems and processes, with safety a top priority, has made the industry reluctant to accept change without due care and consideration.

But increasing demand, environmental pressures, and many other factors are increasing the pressure for radical transformation. For example, as One ID is predicated on a single identity check, it will change the sequences and structures that have been in place since the development of the travel industry.

The multitude of stakeholders involved in all such processes must trust and collaborate with each other. Customs, border control, airport, airlines, and suppliers all need to buy in to the various projects.

A concrete challenge is establishing regulations in individual countries. Data sharing and identity verification must be enshrined in the law. There is then the complex task of harmonizing those laws across borders. In Europe, the General Data Protection Regulation came

into force in 2018 and is recognized as a stringent law that adds a layer of complexity to the exchange of data involving European citizens.

Regarding ONE Order, particular issues are the legacy IT ecosystems that come replete with their own idiosyncrasies and jargons. Reservation systems provided the industry with the passenger name record (PNR), in turn sending information to a departure control system. The e-ticket, meanwhile, functions as a record of payment and as a mechanism to track service delivery. Abandoning this highly individualistic framework and adopting Internet e-commerce retailing terms will be the first step on the road to airlines becoming better retailers. This needs to be followed by a trusted network-based sharing of ONE Order among the partners for service delivery.

The challenges

12

Getting passengers safely and methodically to their destination is only one part of the travel equation. Their bags must accompany them throughout their journey as well. The hassles of dropping off, tagging, and picking up baggage must be reduced as much as possible.

Airlines routinely unbundle their offerings, causing heightened awareness among passengers about the cost of transporting baggage and the quality of the services offered.

Baggage mishandling rates are low given the amount of baggage the industry handles. However, the existing commercial model is likely to prove unsustainable. Human labor and advanced baggage sortation systems are expensive and under or over-utilized with regulations further complicating the issue. This overall process can be improved for airlines, ground handlers, and passengers alike.

The seamless baggage journey

Reasons for delayed bags

SITA 2019 Baggage IT Insights

Transfer mishandling

Ticketing error/Bag switch/Security/Other

Loading error

Arrival mishandling

Airport/Customs/Weather/Space-weight restriction

Failure to load

Tagging error

13

24.8mThe number of bags mishandled in 2018 out of a total 4.36 billion bags carried. This cost the industry $2.4 billionSITA 2019 Baggage Report

The seamless baggage journey

14

It is often old technology that offers the best pathway to the future. Radio-frequency identification (RFID) has always been an excellent idea. However, when RFID first appeared on the scene, its business case was questionable in an era of austerity.

Costs have dropped over time, and the new IATA Resolution 753 mandates bag tracking for its members at four key data points in the journey. Moreover, the reliability of the technology has improved, as evidenced by its successful deployment in many other industries, including retail and healthcare, where it provides high accuracy in real-time inventory information. IATA estimates that the combination of RFID and modern messaging standards will reduce the bag mishandling rate 25%.

RFID uses appropriately chipped baggage tags to send data to a reader. In addition to adding information on chips while overwriting existing data encoding, technology equipped with RFID can be in a fixed location or in a handheld machine to help

overcome irregular operations.More importantly, RFID will

work in parallel with barcode technologies and systems in the foreseeable future. Although airlines can implement RFID at any rate they choose, faster implementation will achieve a swifter return on investment.

The business case for RFID improves with scale and there is little doubt that its implementation will represent a significant change in the industry processes. In fact, the industry is exploring mandating an RFID inlay for all bag tags manufactured after 2020.

The next step will be reusable RFID. RFID will be built into a suitcase, eliminating the need to tag the bag. This is most likely a few years away but is already the subject of industry discussion.

The seamless baggage journey

78%The percentage of members implementing IATA Resolution 753. It calls for bag trackingat four key points: check-in,loading, transfer, and arrivals

15

Implementing RFID is a complex and detailed task. Every reader installation point has to be studied individually and as part of a network.

This is made even more difficult as other stakeholders, including airports and ground handlers, will be involved in both the deployment and use of the system. Systems will need to be integrated with excellent Wi-Fi connectivity. And there

needs to be a registry of the RFID tags to facilitate reuse and avoid duplicates.

Nevertheless, the technology exists, the business case is there, and the pressure from passengers for better service instils the desire for change. Door-to-door service

Bag tracking and RFID opens the door for new service opportunities. If regulations keep pace with the aviation industry’s quest to improve their offerings, there is nothing to prevent drop off and pick up at multiple off-airport locations. A door-to-door baggage service will become reality.

Never having to ferry heavy baggage on and off cars, buses, trains, or trolleys will likely be viewed as a premium service by passengers and a revenue generator by service providers.

The challenges

80%The goal is to have 80% of passenger journeys RFID-enabled in the next four years

16

Big dataTechnology continues to advance daily. To help the industry make smarter decisions, reduce costs, improve productivity, and meet customer demand, the next generation of tools will be vital not only for sustainable growth but also simply for survival in a fiercely competitive industry.

The amount of overall data produced is accelerating at a phenomenal rate. More than 90% of data existing today was generated in the last two years.

Big data is at the core of the next generation of customer-facing technologies. It is traditionally described as having volume, variety, and velocity. Huge swathes of data from multiple sources in multiple formats often need to be handled in real time.

The aviation industry’s challenge is to ensure it can thoroughly analyze the vast array of data at its disposal. The fragmented nature of the industry has prevented a quick fix. However, it is essential that big data is embraced.

Better decision making and

predictive modelling is founded on getting the right information at the right time. This, however, relies on systems interfacing with each other while still retaining their own idiosyncrasies where necessary. This is not just a technical issue; the terminology must be consistent too. The Airline Industry Data Model (AIDM) is vital in this respect, serving as a dictionary for industry-agreed vocabulary.

Airport Collaborative Decision Making (A-CDM) is a good indicator of what might be achieved. A-CDM seeks to make airport operations more efficient through the sharing of relevant data when and where necessary, helping to ensure flights depart on time.

2.5qnThere are 2.5 quintillion bytes of data produced every day Forbes / Domo

17

Big data will feed into artificial intelligence (AI), a generic term that covers a wealth of opportunities. AI is a computer program that performs human-like logical reasoning.

Customer service as delivered by humans will not be entirely replaced by machines, but it will be fundamentally transformed. Data will be automatically processed by AI, leading to personalized offers delivered in a real-time conversation with customers. Staff will need to

react accordingly as passengers are already accustomed to this paradigm, as witnessed in online retail.

As AI learns by analyzing data and technology develops further, it will add contextual awareness to its capabilities, putting a range of service activities within the customer’s grasp.

AI-driven Bots will help with many low-level customer requirements like initial bookings. Predictive analytics will meanwhile allow the aviation value chain to allocate resources as needed, notifying passengers to alleviate potential queues or explain and reduce delays. Throughout the travel process, customers will get unique offers driven by AI analytics that are then fulfilled by AI-inspired systems.

AI must be embraced by the industry. It is becoming prevalent in other fields and customers will expect the insights it brings to the travel

industry. Moreover, if AI does not become widespread in the industry, new entrants will likely make gains at the expense of incumbents. Obtaining access to AI knowledge and expertise will be paramount.

Industry stakeholders should always remember, however, that AI technology solutions should solve a defined problem and not be employed just as a gimmick. That said, AI projects must be implemented quickly and efficiently, as the pace of change is accelerating and there will be new entrants ready to disrupt.

Artificial intelligence

Customer touch-point capabilities

Offer management

Customer info & value chain

Customer events Journey extras

Order management Departure management Flight management Arrivals management

Queue management Lounge management Guest feedback & compensation management

Guest reaccommodation

Communications management

Shop Purchase Pre-flight In-flight Post-flight

18

AI capabilities

PlanningRobotics

Deep learning

Supervised

Expert systems

Unsupervised

Content extractionClassification

Machine translation

Question answering

Text generation

Image recognition

Machine vision

Speech to text Text to speech

AINatural learning processing Machine learning

Speech

Vision

Artificial intelligence

19

The Internet of Things (IoT) extends Internet connectivity to equipment and other devices. It therefore is a primary generator of the ever-increasing amounts of data in the world.

Examples from the healthcare sector clearly illustrate the potential for customer-facing services. Connected contact lenses can check the glucose levels of patients with diabetes or work on the focus of a long-sighted eye. Smart mirrors connected to smartphones can deliver essential information while users prepare for the day ahead. Voice search features connected to the mirror will help refine the content displayed.

In aviation terms, imagine a customer being able to see flight information the moment they walk into an airport—already possible with Google Glass, glasses with an inbuilt display. The customer has a better experience and the airport design can be transformed. Perhaps Flight Information Display Screens won’t be so dominant and can be handed over to marketing or passenger advice teams. Real-time information can de-stress

passengers and lead to changes in passenger flow, providing an increased opportunity for service offers.

It’s not just customers using Google Glass. SITA and Virgin using have completed a trial using Glass to greet VIPs.

Much of the work being done centers on mobility. Bluetooth-based beacon technology—known by Apple as iBeacons although it works with Android devices as well—can easily send out signals to smartphone applications, which can then download relevant information. There are clearer use cases for staff to improve the customer experience. A service agent could have all information they need to know before the customer has even stepped up to the desk.

SITA has already launched a “Beacon Registry” for airports to allow multiple applications to use Common Use Beacons (CUBES).

The Internet of Things

200bnThe number of connected devices by 2020. In 2006 there were 2 billion

20

Big data, artificial intelligence, and the Internet of Things are powerful ideas with unique challenges. They represent a fundamental shift that has never been witnessed by the industry. The advent of reservation systems, new aircraft, and e-tickets were minor in comparison.

It is not the technology that is the problem. It is that the aviation value chain that is mired in isolated legacy systems that aren’t inclined to communicate and are not easily persuaded to do so.

Overall, though, technologies are maturing daily and many of the examples cited are already in situ and working well.

Still, the implications of the technology need to be considered. Even if systems can communicate, data exchange—which is the basis of all these developments—is a regulatory minefield in an industry that necessarily deals in personal information and traverses

borders and disciplines. The European General Data Protection Regulation is gaining strength as the de facto standard on data use but has some stringent conditions.

Furthermore, staff will need to be re-trained, either to work with the technology or in new disciplines created by the technology. At the moment, training is lagging behind developments and skill gaps are beginning to emerge.

Additionally, greater use of AI can also lead to product cannibalism and a perceived downgrading of brand value as customers get used to dealing in a one-stop, digital world.

The challenges

21

Conclusion

Bibliography• sas.com/en_gb/insights/big-data/

what-is-big-data.html• airlines.iata.org• iata.org• sita.aero• forbes.com/sites/

bernardmarr/2018/05/21/how-much-data-do-we-create-every-day-the-mind-blowing-stats-everyone-should-read/#4fdb6f4960ba

• medium.com/datadriveninvestor/10-powerful-iot-examples-worth-your-attention-1c06276a2e54

• developer.aero

A rich, personalized customer experience is only possible if airlines truly understand each customer as an individual.

Once, the customer offer involved comfortable seating or a delicious meal, with the inflight entertainment system being cutting edge. However, this situation existed only because the customer relationship lasted as long as the flight. Airlines didn’t really know their customer and customers were similarly ill-informed about the airline. Prices and schedules were the primary determinants to book an airline ticket.

A lot has changed over the course of time. Loyalty programs started to provide some basic insights and marketing tools segmented the customer base to further refine the service proposition. Eventually, the online revolution strengthened opportunities to know the customer better. Developments have come thick and fast, and segmentation has finally

reached the individual level.True personalization will

transform the entire travel process. This whitepaper has shown that it will be possible to pick up bags from home, verify a customer’s identity just once, and continually make and fulfil relevant offers.

Travel is being digitally transformed because the customer is also going through that process. It is no longer enough to engage with the customer only while they are onboard. There needs to be true value in a continuous one-to-one dialogue.

Getting to this point will not be easy, for individual airlines and for the industry as a whole. But it is possible and there are experts out there who can help. Ignoring the industry’s digital transformation is not an option. Airlines must embrace it to enrich the customer experience and to serve the increasing demand for air travel.

Hexaware’s experience in assisting airlines and travel technology companies to move from paper to digitization suggests that the travel industry is ready to embrace the IATA initiatives described in this whitepaper.

IT service providers with the right solution can enable airlines to enjoy a smoother and faster transformation. Each airline has a unique set of technology stacks and therefore needs digital transformation solutions customized to leverage existing investments and adapted to business requirements. A trusted technology partner who understands the business set-up and technology landscape, with ready consultants and solutions for digital transformation, can help airlines soar to new heights and engage with their customers in mutually rewarding relationships.