As technology evolves, so does consumer behavior. Therefore, airlines need to adapt their strategic planning process to accommodate new expectations.
In this new business landscape, airlines need to formulate a comprehensive distribution strategy. This approach should be broadly informed by the proactive, smart application of new technologies. Due to evolving customer behavior patterns, changing sales channel dynamics and technological developments, airlines need to maintain a customer-centric attitude to remain relevant in an increasingly turbulent market. As such, the strategic planning process comprises three key areas, which are discussed here.
Implement a transformative travel distribution model
To create a business model that responds to the demands of an evolving distribution market, airlines need to identify the key challenges. By and large, these challenges are yield, load factor, and sales overheads. From here, these challenges need to be compartmentalized by channel, cabin, and country. By distilling this information, airlines can better understand customer demand in different regions and define where revenue could be increased. Subsequently, airlines can adjust priorities across direct channels, third-party distributors and loyalty programs to boost profit.
Additionally, airlines need to make sure their direct channels are attractive to all customer segments. For leisure customers, airlines need to showcase their personalized service, from products to staff interactions. In the corporate segment, airlines need to provide tailor-made products and fares that bypass GDS to ensure these high-yield clients are getting the best possible deal.
As for third-party agents, airlines can assume that GDS is here to stay. Due to the disparate nature of OTAs and other intermediaries, the access GDS provides to numerous inventories is likely to remain indispensable for the foreseeable future. Therefore, airlines should collaborate with GDS as part of the strategic planning process. Through these partnerships, airlines can develop technology solutions that improve personalization and customer service. This will enable airlines to drive sales through GDS-driven indirect channels.
Foster meaningful collaboration
Traditional approaches to collaboration often lack scope to align with the strategic planning process. Therefore, airlines and distributors should explore how to create partnerships that nurture cooperation and maximize profit. Airlines should build collaborations that enable competitive pricing and develop stronger bonds with intermediaries, in both the corporate and retail sector. Furthermore, distribution partners can benefit from these arrangements by exploiting an airline’s brand visibility, customer base, and loyalty program data.
Establish robust internal operations
Partnerships are important when creating business opportunities – however, airlines need to enhance their internal capabilities to maintain the balance of power. After all, data is an increasingly valuable resource. Therefore, airlines need to maintain the following capabilities to make sure their data strategy is sound:
The ability to integrate all customer data to create accurate profiles, enabling a fully personalized service.
The skills to transform customer insights into products and services that meet customer aspirations.
The technological expertise to make sure digital channels are offering market-leading integrated services, linking product sales to relevant information and social media.
An attractive loyalty program that adds value and keeps customers engaged.
A data-driven business culture underpinned by technological agility, so business can adapt to new technologies and rapidly exploit their potential.
Why a strategic planning process for customer-centric service is crucial
In today’s highly competitive omnichannel distribution market, customer service is the key brand differentiator. Therefore, airlines need to have an effective distribution model, develop effective partnership and maintain robust internal capabilities. A coherent strategy should permeate the organization, ensuring all employees are enabling and contributing a customer-centric culture.