4 pags commercial airline for ticket selling

Digital Transformation Paper: Aviation Industry

Group 10: Michelle Lomoz, Dave Ducharme, Yunkuan Gao, Qianrui Yang, Tiana Young

Managing Digitization & Transformation

30 November 2022

Industry Leaders in the Digital Transformation

The pandemic forced airlines to redesign and rethink many of their systems specifically how they communicate with customers and provide support and loyalty. The pandemic forced airlines to resdesing their business strategies in order to gain trust from consumers that flying is still safe. Airlines are using new technology to make the customer the focus again. The digital transformation has to do with using big data in order to enhance the customer experience. The airline industry is shifting to using AI technology, blockchain technology, big data and data transparency, quantum computing and new production tools.[footnoteRef:0] Industry leaders have made a lot of advancements and have seen the financial benefits. [0: https://cloud.google.com/blog/transform/how-digital-transformation-is-making-the-airlines-better]

AI Technology

There has been a heavy investment into AI technology that has made progressive advancements in airline operational functions. World leaders in aviation like Qatar Airway, Delta Air Lines, and Air France are investing heavily into AI applications to better manage customer relationships, operations, and security management. For example, AirAsia is using artificial intelligence to make the passenger experience more seamless. They are introducing a new biometric technology called FACES that removes the need for passengers to present travel documents and quicken the check-in by facial recognition. AI technology and algorithms are being used for chatbot software to help customers with online booking and changing of flights.[footnoteRef:1] [1: https://www.scc.com/insights/sectors/private-sector/travel-and-logistics/digital-transformation-in-the-aviation-industry/]

Southwest Airlines is using AI application for customer feedback in order to help with customer support and improve their operations. Traveling has become easier and less of a hassle due to these customer support platforms. American airlines is using their newly developed app called dynamic rebooking which gives the customer control of their travel plans and help them with rebooking.[footnoteRef:2] Malaysia airlines is working with google cloud and IT partner Amadeus hospitality to build and develop a chatbot so customers can ask airlines questions, book and pay flights, and new itineraries. [2: https://www.scc.com/insights/sectors/private-sector/travel-and-logistics/digital-transformation-in-the-aviation-industry/]

Operations

AI technology that has been used in the automotive industry along with other has shown increased efficiency in operations, as a result, the aviation industry has reaped similar benefits. The use of AI in operations is being used to optimize ticket prices, number of seats, areas under travel restrictions, evaluating flying conditions, and preventing malfunctions in flight time. For example, Delta airlines is using facial recognition technology and biometric bag drop technology to improve their operations. In 2021, Delta developed an App called Fly Delta where passenergers can pre-check their luggage in order to make the time in the airport smoother.[footnoteRef:3] Addiitoanlly, Delta Airlines has cameras that recognize passengers faces to identify customers as they walk through gates. The bag drop technology allow flyers to have their face scanned and then their bags tagged and printed automatically so they can pass certain checkpoints faster and with ease. Another realm in the operations of aviation that is using advanced technology is predicting air traffic and weather. Since the pandemic has ended it is expected that a lot more customers will be flying, so making the quality of flying more efficient and safer the increase of AI technology has been applied. Both Alaska Airlines and Delta Airlines have implemented AI technology to cut costs on flight operations and minimizing maintenance cancelations due to poor weather conditions.[footnoteRef:4] Alaska Airlines implemented Flyways AI platform to predict potential flying routes based on previous customers flying patterns in the past. Since the implementation of this program, they have seen savings in fuel costs and reduced carbon emissions. Additionally, Alaska Airlines can manage their employees and save costs on labor due to better predictions in popular flying routes. Along with Alaska Airlines, Delta has been using an AI platform that predicts weather in order to save themselves maintenance costs and improve the customer experience when inclement weather was to be predicted. [3: https://www.acuitykp.com/blog/digital-transformation-of-the-airline-industry/] [4: https://www.acuitykp.com/blog/digital-transformation-of-the-airline-industry/]

Big Data in Airlines

Society has been shifting to using big data and implementing the data to improve businesses and make more profit. The impact of big data usage in the airline industry is massive because it is helping safety inflight, improve route planning and air traffic, offer promotions based on previous behavior, aircraft design and performance improvement, and manage customer experience. Aviation technology data helps the aviation industry monitor safety of their planes by recording the operations status of planes and monitor malfunctions.[footnoteRef:5] Aviation management big data monitors operational performance and optimizes avation performance. For example, the European aviation safety agency launched Data4Safety to document in flight data, air traffic, weather to improve safety across the industry. Increasing the safety of flights gives customers ease of mind as they begin to fly more after the pandemic. Making the customer the center piece of importance will allow airlines to gain more trust from customers. Southwest Airlines has teamed up with NASA to design and develop an automated system that helps detect and prevent future accidents in aviation operations both in flight or on the ground prior to flight. Due to the increasing number of flyers and planes in the air, Air Navigation Service Providers (ANSPs) and airports are using big data to exchange information and monitor air traffic.[footnoteRef:6] Harris Corporation developed SkyFusion that is a collaborative single platform where air traffic control towers across the country can exchange big data to increase safety for flyers and monitor planes in-flight. [5: https://www.acuitykp.com/blog/digital-transformation-of-the-airline-industry/ ] [6: https://www.acuitykp.com/blog/digital-transformation-of-the-airline-industry/]

Blockchain

Blockchain has also entered the aviation market. Blockchain technology is being used for automated payments for international and domestic purposes. This blockchain technology is secure and reduces back-office operating costs. Delta Air Lines is currently working with the Blockchain Research Institute to explore this new technology.[footnoteRef:7] Blockchain is also allowing passengers to track their bags and cargo from point A to point B. If passengers can track their bags in real-time without fearing losing their luggage, this will increase trust between airline industries and passengers. Lastly, a lot of airline companies have developed their own apps to enhance the customer experience. Industry leaders like Delta, Spirit, American, etc. have developed loyalty programs that can be accessed through their apps. Customers can manage their frequent flyer points and choose how they want to redeem these points. Singapore Airlines has been using blockchain applications to offer promotions to customers. [7: https://www.acuitykp.com/blog/digital-transformation-of-the-airline-industry/]

Financial Growth

It has been forecasted that the digital transformation adopted by the aviation industry is expected to create up to $305 billion dollars in value, throught increased profitability. Due to the pandemic, the airline industry lost huge profits that summed up to about $137.7 billion dollars. According to research, it is stated that the new digital transformation tools used by airlines will cause an increased value of 5 to 10 dollars per passenger.[footnoteRef:8] Sources show that about 65% of passengers were willing to share their data in exchange for optimal service when flying. Thus, American Airlines capitalized on this information showing increased profits from 2017 to 2019. American Airlines loyalty revenue in 2017 was $2,979 million, compared to $3,179 million in 2019.[footnoteRef:9] This number is only expected to grow as more digital transformations unfold. Industry leaders, Delta Airlines and United Airlines also reported huge profits from their loyalty programs. Delta Airlines and United Airlines reported $9.1 billion dollars and $5.3 billion dollars, respectively, in loyalty driven profits in 2019.[footnoteRef:10] Analysts claim that the digitalization in the airline industry will rearch $35 billion dollars in revenue by 2030.[footnoteRef:11] It is evident that the digital transofrmation in the airline industry was necessary due to the pandemic. Therefore, airline companies began developing and innovating to the meet the needs of customers and society to not fall behind. The digital transformation has increased profits for companies and is expected to grow even more in the next decade. [8: https://www.apty.io/blog/aviation-digital-transformation] [9: https://thinksmobility.com/insights/blog/airline/the-airline-industry-is-making-a-comeback-with-digitalization/ ] [10: https://thinksmobility.com/insights/blog/airline/the-airline-industry-is-making-a-comeback-with-digitalization/] [11: https://www.prnewswire.com/news-releases/worldiwde-airline-digitalization-growth-opportunities---expected-to-achieve-more-than-35-billion-by-2030-301355738.html ]