By Boris Rybak, Infomost Consulting
While more and more people are using air travel these days, they are at the same time becoming increasingly disappointed and frustrated with the poor quality of services provided. Airlines’ never-ending chase for a larger market share and their growing tendency to be cavalier with their customers is affecting passenger loyalty – despite the drive for constant improvement.
The result is that the interests of travellers and their air transport service providers are continuing to drift further away from each other, leading to a situation where present-day air transport is lagging behind global corporations in terms of customer relations. Yet, to secure their market positions airlines need to finally face their critics.
This is of particular importance in view of several recent respected researches into the market’s development over the next two decades. These forecasts are mainly quite optimistic, projecting that global traffic will double from 4.1 billion passengers in 2018 to 8.2 billion by 2037, with an average growth rate of 3.5 per cent per year. The main growth driver is the projected expansion of the middle class segment from its current 40 per cent to 55 per cent by 2037, whilst the global population in the same period is expected to add 20 per cent to the world’s existing 7.56 billion people. The specific number of flights per capita is growing largely in proportion to the increase of the middle class, in other words for people who can afford air travel.
Russia’s place among the emerging markets is quite a significant one, both in terms of the absolute number of flights per capita and its growth rate. The level of mobility of the Russian population by 2037 is projected to grow by 214 per cent, reaching the existing level of Germany, or 65 per cent of that in the USA. By 2037, Russia’s mobility will be roughly equal to China, will exceed Uzbekistan by a multiple of 10, and will be fourfold that of India.
The overall financial indicators of the global air travel industry are quite impressive too. In 2018 global airlines’ profits may reach US$33.8 billion with a total income of $834 billion exceeding 2017’s performance ($754 billion) by 10.7 per cent. The industry is already achieving record annual financial turnovers in the history of civil aviation and, if this trend continues as forecast, the positive financial result will remain. This will allow the global air transport industry to afford the massive equipment upgrade in parallel with the ambitious plans of the aircraft manufacturers as they implement the newest materials, smart electronics and systems using artificial intelligence, for example. IATA, Airbus and Boeing experts all paint this same rosy picture. There is no need to question these professional forecasts made by the industry’s long-time partner IATA, which remains the intellectual core of the industry, and even less so those of Boeing and Airbus, two companies which possess huge amounts of data and probably the best analytical and prognostic potential in the aviation world.
So, is everything blossoming in the world of commercial aviation? I’m afraid not. The path of development the industry has chosen to follow during the last few decades also raises some serious concerns. Many things indicate that all of us – those that manage airlines and those that consult them with market research and forecasts – have started to realise that those qualities that made air transport an indisputable leader in customer relations 30 or 40 years ago have been gradually disappearing.
So today, adopting the role of ‘devil’s advocate’, I would like to take off my aviation consultant’s hat, that of someone who is capable of explaining why things happen and why nothing else can and should happen by law. Instead I suggest taking a look at the industry not through the eyes of its professionals, but through the eyes of its customers and, primarily business passengers, many of whom fly at least several times a month, making up the core of the global airlines’ customer base, those who bring the bulk of revenue to our business. Actually, those are our own eyes as well.
I will purposely not dwell on all the technical aspects of the development of commercial aviation, although even these are discouraging. But, in the last 30 years, the Internet has inexorably changed our world. Completely. Forever. A revolution has turned around the world of communications, of bioengineering. And what has happened in commercial aviation during the same period? Nothing: same speeds, same altitudes, same total travel times, same archaic air traffic management systems – albeit now using more or less contemporary technologies, but still based on management concepts developed in the 1950s. And the cost of aircraft (with the list of options constantly shrinking) and their maintenance has at least doubled.
But let us speak instead about air travel as a commercial service that is being offered to an increasing number of people. Despite certain successes in implementing mass products for passengers, and contrary to endless promotions of service improvements, the common opinion of passengers, especially frequent flyers, is that the quality of their air travel experience is continuing to deteriorate.
Passengers’ discontent reveals itself diversely, spontaneously and, most often, irrationally, but this trend is obviously on the rise. It certainly is a rare case when a passenger leaves an enthusiastic comment about his or her trip, and you wouldn’t see a public movement in support of the favoured airline, the likes of those held for Virgin Atlantic in England in the early 1990s.
It seems to me that there are two sides to this phenomenon. On the one hand, due to general economic factors, the quality of air travel has indeed deteriorated compared to what passengers experienced some 30 or 40 years ago. On the other hand, the expectations of today’s new generation of passengers – those aged between 25 and 35 – have changed radically compared to the expectations of their predecessors.
The new leaders in the technology market – corporations such as Uber, Google, Amazon, Netflix, Facebook and Apple — have raised the bar of interaction with the customer to new heights, by giving them exactly what they want, when they want it, the way they want and for the best price. Compared with that background, today’s airlines and airports look not just out-dated, but they resemble hopelessly obsolete relics of a bygone era.
By the way, the average age of the senior executives of the world’s 20 largest airlines is beyond 59. And these bosses represent mainly public companies, which report to their shareholders. Industry-wide, this average age is even higher. So can we hope and expect that companies run by, basically, pensioners, will be at the forefront of technological progress or become the pioneers of customer relations? Hardly.
So what is typical for today’s air transport? Let’s attempt an open-minded review of what is actually happening and where it is taking us.
The pursuit of European and Asian airlines in the notorious chase for market share, and the sometimes unrelenting use of ‘wild competition’, such as price damping, the direct and hidden cheating of customers and regulators, and the cartel agreement that exists between North American airlines, all of which have become evident in recent years, unambiguously demonstrate that the interests of passengers and air transport service providers (i.e. airlines and airports) are drifting farther and farther apart.
Today, air transport service providers’ main objective is to receive as much gross revenue as possible whilst at the same time reducing their operational costs to a bare minimum, primarily through increasing asset utilisation rates, that is aircraft and ground infrastructure. Peek into any airline strategy or annual report – it’s all there.
But the primary requirements of an air traveller are diametrically different – to spend as little time and money on the trip, and arrive at the destination refreshed and on time. A passenger takes all aspects of the journey as one whole experience where the simple process of purchasing the ticket, a comfortable flight, and quick and convenient ground services are of equal importance. Let’s look into how an air trip is typically organised today.
PURCHASING THE TRIP
No offence, my numerous friends from different airlines, but the fact is that no other service industry is more rigid, more hard-core, and as extremely unfriendly to its customers as air transport. And if there are any exceptions to this, then they are all probably attributable to the acts of good people who work for airlines and airports, than to the corporate strategies of their employers. Name any other business where, several months in advance, a client pays a full price for a yet un-rendered service and, if he doesn’t or is unable to use it, in most cases waits several weeks for a refund and pays a huge penalty for the privilege, or receives no refund at all. What’s more, this same practice even applies to premium and business class passengers, a situation that is absurd. Furthermore, any amendment to the terms of the initial agreement (such as a date change, for instance) is subject to ridiculous penalties. The question is: why? It seems that from the viewpoint of today’s customer, the purchase of an air travel ticket today resembles something not even from the previous century, but from a previous epoch. Regardless of the endless bragging of airlines calling themselves the leaders of Internet technology, from the standpoint of the modern customer’s concept of ‘good service’, the websites of most airlines are almost worthless. Take for instance that annoying requirement to endlessly repeatedly insert your personal data, and retype it if you make a mistake, let alone the ‘memory’ of previous purchases, data and preferences etc. There’s much talk about NDC [New Distribution Capability], but it’s not the reality yet, and when it does become the reality, the true leaders of the customer market are likely to be light years ahead.
Amazon’s Prime customers spend on average 30 seconds on buying whatever — they confirm selected goods, confirm payment method, confirm delivery address – all this data is uploaded from the instantly accessible Amazon’s base. By contrast, the average reservation time for an Aeroflot’s Elite Plus passenger is about 30 times more.
Amazon’s average response time to inquiries, such as the purchase status or current location of the package, takes one or two minutes. Try to chase up an airline about a piece of luggage left behind, and in most cases it would take days. If you’re lucky.
The time required to pass through airport procedures is constantly increasing. Today, most airlines and airports recommend that passengers arrive at the airport some three to four hours prior to departure for an international flight, and this recommended time just keeps on growing. One of the reasons for this is quite trivial – in their striving for revenues, airports really try to squeeze everything they can from the existing infrastructure. The interests of the passengers are clearly not the priority. In almost everywhere in the world there’s a lack of comfortable waiting space, even for premium class passengers. Instead, huge floor areas are occupied by shops and eateries that, although of no real use to many passengers, are capable of generating additional revenues for the airports. Indeed, where else can you find a bottle of coke for $10, or a salad for $15? London’s Heathrow airport was once described as a shopping mall ‘with runways attached’.
The physical lack of space and the shortage of personnel (also due to economies) are impeding the elimination of queues for check-in and other services. The great hopes that the wonderful new technology of e-tickets, self check-in counters and so on, would remove the crowds has, in reality, turned sour. Seemingly, all you need to do now is drop your baggage. But I’m afraid that the self-baggage check-in that everyone is raving about won’t solve the problem, as it was not resolved by on-line registration or self check-in counters.
Security checks are the real torment of today’s air travellers. It is simply impossible to explain the necessity of undressing billions of them nearly to their underwear – and then dig into their baggage, when virtually any information on the passengers, the vast majority of whom are credible and legitimate, can be instantly accessed. For some inexplicable reason, immigration/passport control is considered bad manners to even mention. But allow me to question the point of this procedure for the passengers when their passports and biometric data are there in all databases of all governments and security services.
Last year, some queues at passport control at London Heathrow’s Terminal 4 arrivals hall reached three or up to four hours, and at Terminal 5 they were between 1.5 and two hours. At Moscow’s Sheremetyevo (Terminals D, E and F) they stretched for two hours. This situation is much the same at many airports around the world.
Airport passenger information, dare I say it, remains Kafkaesque, with the current trend of the so-called airpolis (airport-metropolis) mapping a route to your gate becoming something of a comic riddle. And what do you do with last-minute gate changes?
But flight delays just top it all. Today, such delays are notorious for nearly all airlines. There are indeed a great number of objective reasons why a flight may be delayed. However, my observations show that a large number of them are caused by poor qualifications and by staff shortages, factors which result in turmoil during turnarounds and other ground handling activities. And it is no use trying to equate these chain reactions with real problems like weather cataclysms or disruptions in airport operations – mass media eagerly post images of the crowds of people completely unsettled and thrown off their stride.
As I mentioned above, aircraft operated by airlines have changed very little in the last three decades, except the seat pitch has decreased and the seats themselves have become uncomfortably narrower. What is new are the increasing examples of discrimination, rarely observed elsewhere in today’s service sector. Its victims are disabled people, children, families, large or tall people – all categories of passengers who do not fit into the prescribed ‘standard’ template. For any deviation, passengers pay a disproportionate additional price – under the threat of being denied the service.
After 9/11, American carriers in the face of bankruptcy were forced to search for new ways to generate revenue. They noticeably lowered their already poor service standards and introduced a huge number of new fees for services, such as for baggage handling, security and of course those amazing fuel surcharges. Such ‘innovations’ were not only quickly copied with great enthusiasm by airlines across the board, but they raised an entire constellation of followers who imposed restrictions on carry-on items, eliminated on-board catering, introduced payments for choice of seat in the cabin, for check-in at the airport and a multitude of other service ‘inventions,’ bogus charges which annoy passengers so much.
The cherry on the icing on the cake is the on-board, low-speed internet connection for $50 for two or three hours; no facility to re-charge your mobile devices – and restrictions on their use on board.
SO, WHAT SHALL BE DONE?
The mounting conflict of the interests of passengers, airlines and airports indicates that with the expected growth of the air travel market, the established industry matrix and its entire operational system has reached the complete exhaustion of the limits of its potential, suggesting imminent changes, the time for which is ripe.
Some problems, perhaps, may indeed be solved through implementation of new technologies. This is something IATA keeps telling us, trying to push the industry in the right direction with its initiatives. However, observations during the last two decades make it dubious that these changes may actually materialise if the existing approaches and motivations of the service providers remain. If we – today’s stakeholders and participants of the air transport system – want to secure our position in the market, we should all take decisive steps towards the modernisation of our operations. We need to do it quickly, before the arrival of some new Jeff Bezos who will do it instead, by creating a travel service which will truly appeal to customers, thereby killing off the conventional airlines business, maybe even along with conventional airports.
Such a scenario doesn’t appear all that improbable. Before Amazon, selling goods by mail was a huge and seemingly rock-solid business for half a century, one of the hallmarks of American service, like Burger King or Wal-Mart. But with the advent of Amazon, mail order sank into oblivion as a phenomenon and a business model, joined later by conventional taxi journeys with the advance of Uber, and the value of personal film cameras after digital cameras and smartphones came on the scene.
So, let’s leave the position of an unhappy customer, and return to the industry. It’s high time airlines and airports adopted a modern, human-centric approach, where air travel is a seamless process, where airlines and airports are one whole, and not incoherent monopolies with their miserable clients. It’s not a bad idea to build the service procedures around the concept that passengers are human beings and, beyond that, all human passengers are different. The ‘one-size-fits-all’ concept just doesn’t work anymore. The passenger wants to get precisely what he or she needs and when it is needed.
I, for one, would be delighted to receive such a proactive message from any airline, but primarily from those of which I am premium passenger (gold, emerald, admiral and so on) and which supposedly already know quite a lot about me. It might read:
‘Dear Boris, from your previous trips, we know that around this time you usually travel to N for a couple of weeks. We have researched the most attractive travel options and found the dates when we can offer you the best prices for the class you usually choose. In addition, we have contacted the hotels where you have been staying for the last five years and received their offers for these dates. The car rental you usually use has not come up with any interesting offers, but company Y has some. During your stay in N there will be several music concerts, which are likely to be of interest to you.
Below is our summarised proposal. Please check the options you like, and we’ll take care of the rest…’
You may say I’m a dreamer,
But I’m not the only one…
In fact, that’s nothing super-natural. It could be done today, if it were not for a lack of motivation. Within the framework of the industry’s current business models it appears extremely difficult to monetise such an approach. Also, the air travel industry simply has hardly mastered any new approaches. Apple doesn’t have any loyalty programme, but there aren’t more loyal customers on earth than Apple’s.
Naturally, you’ll ask me, what has the Russian air transport market to do with it? All we can ever hope for is merely creating quality transportation services, improving flight safety and sustaining prices at their present levels. However, it seems to me that the present situation, which requires the complete reinvention of the entire ideology and technology of air travel, creates great advantages for the developing markets, such as Russia, India and China. To build a new airport in Europe, even a very conventional one – or let alone an airport, just a new runway – would take a decade. In Russia, with political will in place, it can be done in five years. There’s a relatively inexpensive qualified workforce, and the geographical location can be quite favourable. Also, it is easier to implement new IT systems where there’s no legacy burdens from the past.
If you take a fresh and unbiased look at the potential air travel ecosystem, in Russia we could come up with something marginally more interesting than what Emirates did 30 years ago, and what Turkish did a decade ago. But to truly break ground and dash forward, we need to look at the entire travel process from a new perspective. And re-invent it completely. Is that even possible? I am sure it is.
Many of us still remember how the first true low-cost airlines that sprouted initially in the United States, then in Europe, felt like a breath of fresh air. And how Richard Branson and his Virgin Atlantic revolutionised customer relations in the early 1990s – just by looking at travel through the eyes of the passenger, not those of the airline.
After my address at the Wings of the Future forum in Moscow in November 2018, many delegates from different countries – naturally, aviation professionals – approached me afterwards just to express their solidarity with my ideas. We, those who are connected with commercial aviation, find ourselves in a challenging situation. We know the industry inside out, but as frequent flyers, just like everyone else, we suffer from the imperfect and archaic system.
We at Infomost Consulting are striving to create a platform, a social media group or an interactive information channel dedicated to, if not trying to solve this problem, then at least attempting its apprehension. I invite everyone who is interested to join in this effort. We really want these discussions to lead to the integration of forecasts and development scenarios to be joined not only by aviation professionals, but also by today’s leaders of customer relations from hi-tech companies, progressive marketing experts and futurologists, public opinion leaders, bloggers and professional travellers. We will try to push the ideas we come up with into authorities and social initiative groups, and get young business people involved.
All to make our life – that of the frequently flying and frequently struggling passenger – better. Without waiting until someone else comes and saves us.
By Boris Rybak, Infomost Consulting
Russian Aviation Insider
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