InnoKOL | Sandeep Bahl : Airline Product Offerings Need to Create Real Value, Not Just Serve as A Means for Raising A Buck

2019/09/25 Innoverview Read

On Sept.25th, We had a fascinating  conversation with Mr.Sandeep Bahl ,the Chief Airline Advisor of Q&A Business Advisory,talking about his leadership experience on Market access and entry, Developing Sales Channels and Revenue Generation, Building Marketing, Finance and Operations related infrastructure for a number of major Airlines and related industries. 

Innoverview: How would you describe yourself ? What’s your motto?

Sandeep: I envision risks with open mind.

Vision without an associated action is a day dream. Life is like a book and everyday is a new page. You can write your own book and make each page the way you want it.

Innoverview: Can you please share more about your educational and professional background? And we’d love to hear what brought you to Aviation.

Sandeep: Yes sure.. I was born in India and did my schooling in Delhi - capital of India and undergraduate studies from Hotel school here.I did my post graduation and an MBA from UK and did several other studies in China and Australia and other countries.I have worked in many companies from across the world but my main focus always been Asia Pacific region. I started my career as a chef cooking inflight meals for airlines and from here my love for aviation started.And since then it’s been 30 years I got into the wonderful world of airlines, hotels, travel industry.

Innoverview: The curb-to-gate-to-destination experience needs an extreme makeover. What are your suggestions for Airlines to improve customer experience and satisfaction based on what they are willing to pay?

Sandeep: For each traveler, the balance between product, service and convenience will shift, affecting the overall price that they are willing to pay for a flight. Customers place a value on – divided into categories of product, service and convenience. Empowering the traveler to decide how much they are willing to pay – while still giving airlines a tremendous amount of control – has been only a positive move.

Customer experience is more about the product of the interactions between an Airlines and a customer throughout the duration of their relationship. These are all the aspects that ultimately make you feel something and can include everything from the packaging an item arrived in, speaking to a customer service agent or receiving a notification email, the way in which customers perceive these interactions. 

Airlines’ Customer experience involves the integration of physical, emotional and psychological processes that occur throughout the customer journey. 

In the past companies competed primarily on things like price or brand but now the overall customer experience is the real driver and large number of companies now expects to compete mostly based on customer experience. 

A successful strategy would see these three areas of customer service, customer experience and customer engagement to interact with each other very closely. 

Customer service should expand beyond the simple reactive role of the past. Support should be assisting your customers throughout the journey, before they purchase, during and afterwards. Agents will need to be empowered to go above and beyond with customers to help create winning experiences.

All three areas should be personalized and consistent across all channels to achieve maximum impact.

Innoverview: A confluence of emerging technologies can unlock incredible solutions for airlines, specifically around pain points such as security checkpoints, baggage systems, route optimization, helping consumers navigate busy airports, and mitigating the impact of weather delays and equipment failure. From your perspective, what are the innovative technologies and how will them affect aviation?

Sandeep: The future of emerging technologies for airlines and its customers belongs to a collection of capabilities. The next generation is a networked, connected family of systems that communicate and work together constantly. The aviation community comprises of many different stakeholders and their “systems” that frequently interact with each other. The opportunities for the airlines ecosystem to thrive are abundant due to continuous increased in demand for air travel and fierce competition between airlines and evolving customer expectations. Use of biometrics, walk in body scanners, fast mm wavelength security screening devices for luggage etc are now in use to cut the wait times during security etc.

Airlines are working with partners to offer a more attractive product, including interactive seamless search tools and potentially new way to monetize services in the future. An interline partnership with local carriers along with preferred search engine extends the net work of both partners without increasing the real cost burden and also to overcome customer’s inconvenience due to uncontrollable factors such as weather etc. Airlines like Delta and United have deployed AI and machine learning tools to manage their irregular operations whereas system automatically assign the next available flights incase a customer has missed their original booked flight due to unavoidable circumstances.

But it’s the standard operating process (SOPs) of the airlines at airports that need to be looked at. A challenging operating environment can drive decreased customer satisfaction – eg security anxiety increases airport crowding and wait times. So a rigorous quantification of what matters to customers is important to inform aspiration and using cross-stakeholders to develop customer experience vision.

The overall customer experience is what stays with the customer and will ultimately decide if they will come back to you or recommend your airline to others.

Innoverview: Travel “distribution” is becoming more like “e-commerce,” with campaigns, offers, and channel marketing edging out the simpler “product push” of yesteryear. How will you predict the future of global distribution channels?

Sandeep: Depending on the market where you operate the trends are different for travel distribution channels. For airlines the meta trend in some countries appears to be looking for value and relevance in a post-digital era (yes in some places its post digital) as for their it’s about developing scale, own distribution ecosystem and delivering relevance and value to traveling customers.

After an aggressive push on Big-Data, data minimization is going to be a key trend as its going to be collecting what you need and being transparent on the use. Customizations as we see today from e-commerce and channel marketing will move to focused individual “experience” services and product. The distribution channels will evolve into a technology service grouping that delivered seamlessly for all the activities a customer requires using platform of distributed ledger, AI-reality augmentation and quantum computing.

But in some markets despite the heightened role of technology in the Fourth Industrial Revolution, the airline industry acknowledges that travellers are not fully converted to the digital realm when it comes to seeking advice.

Innoverview: In essence, airlines must become better retailers. In doing so, they will begin to understand the principles and value of total revenue optimization (TRO). What are the opportunities and challenges to optimizing the profit model from your experience and perspective?

Sandeep: AI, VR, Cloud to capture customer preferences and creating unique customer experiences that customer value and willing to pay.  

Airlines leverage data and use analytics to create relevant products and services that customers want, effectively market those offerings, and maximize revenue across channels. The opportunities are tremendous to increase profits but focus of airlines to become better retailers depends on their customer focused product development as well. E.g. 

Value-Based Airline Product Development

Ultimately, airlines that engage in positive merchandising (i.e. “Here’s how you can make your flight even more comfortable and memorable” – rather than negative merchandising (i.e. “Want to check that bag? It’ll cost you”) 

Airline product offerings need to create real value, not just serve as a means for raising a buck. 

For example, international flights might offer services that reduce mobile roaming charges, or stock local SIM cards based on destination. Business travelers could benefit from pre-paid transport and international plugs. Ask yourself what would most reduce hassle and stress for your passengers, and go from there.

Capacity utilization is demand/supply. That is Revenue per Kilometer (RPK) divided by Available seats per kilometer (ASK) – of the available capacity what portion was paid for by revenue passengers. This is referred to as “load factor”. A sister concept is that of seat factor – the portion of seats occupied in a flight. At a sector level seat factor and load factor would be the same as the distance flown at sector level is constant, but at a network level load factor is the weighted average of the sector wise seat factor. The distance of each sector becomes the weight given to the seat factor of that sector. Load factor essentially acts as the “Volume” element of the demand equation.

The price element of the demand equation has multiple levels. Average fare is the first level of analysis, by dividing total passenger revenue by number of revenue passengers we get an understanding of average revenue per passenger. However, this could be a little misleading, average fare essentially equates the revenue from a passenger travelling a short sector to one who is travelling a very long sector. To put things in perspective, the fare paid by a passenger who is travelling from Shanghai to Jinan is being given equal weight to the passenger who is travelling from Shanghai to Urmuqi.  

So to optimize revenue and profitability airlines can do basic following things:

Analyze / segment the market and create fare products that align with different customer behaviors (ancillaries buy on board, insurance, full package etc) 

Drive sales efforts by managing key accounts and channels 

Continuously optimize inventory allocation based on passenger demand forecast

Tracking the Profit or Loss generated on each route i.e. tracked at different cost tiers.

Innoverview: In less than two decades China has grown from travel minnows to the world’s most powerful outbound market, leapfrogging the US – and leaving it in its wake. What does that mean for Airlines, Hotels and Destinations?

Sandeep: Chinese travelers continue to march on to explore the world and its great as this is increasing demand for airlines, hotels, local destinations and activities, amusement parks, restaurants, shopping malls etc. Tourism sector depends on travelers, but changing demographics of travelers they need to fine tune their product offering accordingly. Airlines have designed their route networks based on where Chinese travelers want to travel, inflight entertainment has more of Chinese content and hotels have now dining and experience centers tailored to Chinese customer’s expectations. 

In fact, focusing on the Chinese customer experience has become the single most important way for airlines, hotels and destinations to achieve success—often becoming its key differentiator and competitive advantage.  Together these all add up to the critical moments—the touch points—that create an overall customer experience for their Chinese customers.

Innoverview: We’ve noticed that you are one of the famous speakers in global  conferences, what’s your benchmark to select the top-tier industrial conferences?

Sandeep: Thank you!! I prefer to attend conferences where I can learn new things, network with key leaders of industries, irrespective if we talk about airlines, hotels, marketing or new technology that can be adopted to deliver exceptional customer service and experience.