Digital transformation in the airline industry

By
Radu Iliescu
,
January 29, 2020
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minute read

For any airline heavily invested in and increasingly reliant on technology, keeping abreast of disruption is only successfully accomplished through anticipating trends and evolving with industry.

As it stands, the two most fundamental recent trends and probable future directions of evolution in the airline industry are consolidation and digital transformation. If the former tends to happen often spontaneously and opportunistically, driven by the ever more acute competition and over-fragmentation of the market, the latter requires deliberately and carefully planned initiatives, typically relying on complex, long-term programmes and often massive investments.

As an industry, we are on the verge of becoming (once again) mature digital players, with many of even the most full-service and network-minded carriers either approaching or having already exceeded the 50% direct digital distribution threshold. At the same time, NDC, in spite of all its challenges and limitations, has become the preferred strategic indirect distribution channel and a genuine driving force behind the ongoing transformation of the industry.

But what does digital transformation mean? As a concept, we mean the strategic re-engineering of an organisation’s operations, technology and processes for the digital customer. This includes everything from the digitisation of manual processes to the shift towards data-driven, customer-centric thinking.

Nevertheless, a number of common misconceptions about what digital transformation entails and misrepresentations concerning how it should be approached (and executed) are making transformational digital programmes some of the most challenging and risky of airline endeavours. So risky that in fact there have been a remarkable number of significant failed initiatives in the recent years (often affecting highly reputable, industry-leading carriers).

In an industry that is so reliant on technology that one single IT failure may mean a complete interruption of operations for up to several days – and where its associated investments, running costs and effects are such that they can actually make or break an airline business – it is crucial to develop a good understanding of how to approach digital transformation. Those carriers that have failed to innovate or have bitten off more than they can chew often quickly pay the price of their mistakes, whether that means massive investment write-offs, loss of trust and appreciation of their customers or simply falling behind their competitors.

What Drives Airlines towards Digital Transformation

There are a number of reasons why airlines and airline groups embark on large-scale, transformational digital initiatives:

  1. Simplification, automation, streamlining and cost optimisation of their business
  2. Functional limitations, especially those related to delivering more customer-centric and tailored product offering and experiences
  3. Business continuity risks, mainly related to reliance on legacy technological solutions and/or security
  4. Reducing dependencies, constraints and costs related to legacy distribution models and the disproportionate power of a few oligopolist providers
  5. (For large airline groups) Group consolidation and enabling more effective, centralised control and governance processes

Whether you are looking to reduce your IT costs, enable more dynamic and personalised merchandising, future-proof your fundamental commercial technology stack or ensure that termination of the Full Content Agreement with your GDS partners is both commercially viable in the short term as well as a strategic win in the long term, our experiences and insight may be of use. Below, we’ll tackle some of the challenges airlines face in their transformation initiatives, and detail our recommendations.

Challenges for airlines

Digital transformation is not easy. There are several challenges airlines face when looking to modernise their approach.

Achieving effective personalisation in online spaces is particularly challenging. Everyone wants to be like Amazon – for example unbundling and re-bundling within the shopping basket, personalised and contextualised offer management, and seamless handling of delivery and service issues. This kind of interface remains highly desirable for those in the airline industry, but it is difficult to replicate.

Last year McKinsey released a report that was critical of the weak attempts to improve hyper-personalisation by airline companies. To improve customer experience, the report suggests investment in better digital assistants, faster page load times and a more sophisticated approach to displays on smartphones.

The constraints of legacy distribution, especially in cases where GDS Full Content Agreements are still in place, is also a hurdle for airline companies. Ideally, airlines want to avoid diverting customers away from their website, but contractual barriers present a challenge to the design of an airline’s digital product offering and experience.

The maturing of IATA NDC and the emergence of ONE Order is indicative of the airline industry’s intention to simplify the ordering process for customers. However, some have noted that, without the proper introduction of interline, NDC is incomplete and will remain a challenge.

The aggressive revenue targets for all sales channels have also become a challenging dilemma for airlines. This is especially true for those focused on the digital side of business. The technical and business complexity of digital transformation is often underestimated.

How to approach digital transformation

In previous transformation efforts, several airlines have taken a top-down approach that aims to transform with detailed requirements, traditional procurement and in a heavily engineered manner. In some cases, the implementation has been heavy-handed. A big dramatic solution has often been favoured to replace the incumbent solution completely and in one go.

As best practice, the approach to any transformative project should keep the following in mind.

  • Consider Best-of-Breed Architectures

When there isn’t a single off-the-shelf solution available on today’s market, some co-creation with a combination of vendors is inevitable.

With a multitude of best-of-breed vendors, delivery requires a synchronised approach. Select vendors who are prepared to align their development sprints in order to foster agile delivery of end-to-end use cases.

  • Take Smaller and Faster Steps

A series of smaller and faster steps are better than one giant leap in terms of implementation. With regard to the migration approach, airlines should consider introducing a new solution to run alongside the incumbent platform (side by side) and gradually shift users towards the new solution. This requires clear thinking about which use cases to focus on and how to maintain a coherent customer experience in the transitionary period. It also requires flexible IT operating models within the airline to manage dual solutions.

  • Data-driven View of the Customer

Equally, it is important to remain focussed on the customer in challenging transformation projects. Explicit customer profiling is feasible, and as a facet of a data-driven strategy, it works well to enable personalised product offering and a better UX.

Investment in UX/UI designs should occur early on to promote clarity of the use case amongst your vendors’ teams. Understanding the experience from the customer’s perspective is required from all providers, even those working on ‘back-end’ components.

  • Marginal Gains and Consolidation

New contracting models are required to foster agile and incremental delivery. Airlines and industry vendors have tended towards 5-year contract terms in the past. However, in the area of digital retailing, shorter contract terms are a better way of coping with changing needs.

Technical consolidation without a similar business process simplification and adaptation is likely to fail. If you take the approach that all business processes should be left intact and only technology should align with them, this is likely to create huge technical complexity and constrain the benefits of transformation.

  • Choose Your Battles

Airlines should carefully assess which components should be replaced or transformed and which should not. Transformation should not always be forced on components that are performing well (e.g. because of abstract architectural considerations). An ideologically driven complete transformation is unlikely to deliver equal value across the entire tech stack.

It is useful to make a pragmatic evaluation or breakdown of components into the following categories:

a. Components that in themselves deliver substantial value through a transformation (e.g. bringing significant cost savings or revenue generation);

b. Components that don’t directly deliver substantial value through transformation but are needed as enablers / dependencies for other components (e.g. enablers of agility);

c. Components that fall in neither (a) nor (b) and which may not need to be transformed (or at least could be treated with lower priority).

Be prepared to sacrifice scope on an ongoing basis in order to deliver to original cost, effort or timeline targets. It is important from the outset to define an allocation of scope deliverables that can be postponed or de-scoped entirely when/if necessary. Ideally, these should not be positioned as ‘droppable’ until the moment when it is absolutely necessary in order to preserve the critical path.

Takeaway

The race to achieve successful digital transformation in the airline industry is good for competition and, ultimately, good for travellers. We can see that airlines that either refuse to innovate or attempt to take dramatic leaps in their digitisation process tend to fail more often than not. Whatever the pressure for a perfectly comprehensive solution, an incremental and pragmatic approach is much more likely to succeed and deliver value more quickly and safely.

Learn more about how Branchspace can help boost online conversion. If you have any questions, drop us a line and we’ll be happy to help.

The average airline web portals is not broken. It loads, it sells tickets. It technically does what it's supposed to do.

And yet, the experience feels tiring.

You notice it when you try to do something simple. Change a seat. Find your gate. Understand what happens if a flight is delayed. Suddenly you are scanning long pages, decoding airline terminology, clicking back and forth just to stay oriented.

The problem is not with the features, It is effort effort required in getting from A to B.

Airline portals still expect travellers to think like systems. To understand menus, categories, fare families, ancillaries, rules. But travellers arrive with something much simpler. Intent.

They want to get something done and get on with their journey.

This article posits that airline web portals should stop behaving like navigation systems and start acting as intent-aware decision environments. When UX is designed to reduce effort, adapt to context, and quietly support travellers at each stage of the journey, portals become calmer to use, easier to trust, and far more effective for airlines.

The basics still matter more than airlines think

Before talking about AI or personalisation, it is worth being honest about the fundamentals.

You can see that accessibility standards aren’t yet being applied and portals aren’t optimised for mobile, which results in performance drops. Navigation feels heavier than it needs to be. Search often works, but only if you already know what to ask and how the airline expects you to ask it.

These are not exciting topics, but they shape everything that comes after. If a portal is slow, confusing, or inaccessible, no amount of intelligence layered on top will fix the experience.

At Branchspace, we see this repeatedly. Airlines want to move faster, personalise more, experiment. But the UX foundation is not always ready to support that ambition.

Where portals lose traveller trust

The biggest UX issues are rarely dramatic, they are subtle and cumulative:

  • A vague error message that offers no next step
  • A long paragraph that hides the one thing the traveller needs to know
  • Three different words for the same concept depending on where you are in the journey
  • A mobile page that technically works but feels endless

In isolation these are small instances, but they compound to create friction for a user. And friction erodes confidence.

Travellers begin to hesitate, scan more carefully, and spend extra effort just trying to stay oriented. They stop trusting that the portal will help them when things go wrong. Good UX goes beyond delight, it is about reassurance.

Decision-making is the real job of UX

Every airline portal is a decision-making environment:

  1. Choose a flight
  1. Choose a fare
  1. Choose a seat
  1. Decide whether to rebook or wait

The role of UX is not to present all options equally. It is to reduce the mental work required to choose well.

That is where simple principles matter more than flashy ideas: clear visual hierarchy, familiar patterns, plain language, and progressive disclosure.

When these are done properly, travellers stop analysing the interface and start moving confidently through it.

This is also where intent-led thinking becomes powerful. When portals are designed around tasks rather than pages, complexity begins to fall away naturally.

What changes when you design for intent

airline web portal checklist items

When you stop designing for navigation and start designing for intent, the portal behaves differently:

  • Shift the focus to intent and the portal begins to respond in new ways
  • Search leads the experience rather than sitting in the background
  • Logged-in travellers with an upcoming trip see what they can do next, instead of being asked to explore

This is the direction we have been taking with platforms like Triplake by allowing the portal to respond to context, trip stage, loyalty status and behaviour.

Where AI actually helps and where it should stay quiet

AI has a role in airline UX, but it works best when it stays in the background rather than taking centre stage. The strongest AI-driven experiences are often the ones you barely notice, because the interface feels simpler and the path forward feels clearer.

That might mean routing a traveller straight to the right outcome based on a natural language query, or surfacing the most relevant rebooking option when a disruption occurs. In other moments, it is about removing repetition altogether, using known preferences to spare travellers from making the same choices again and again.

At its best, AI offers clarity, supports decisions without trying to make them on the traveller’s behalf. People still want to feel in control of their journey, they just do not want to work so hard to get there.

The portal is becoming a living interface

The most interesting shift we are seeing has very little to do with technology and everything to do with behaviour. Airline portals are gradually moving away from being static websites and towards adaptive interfaces that respond to where a traveller is in their journey.

Before the trip, the portal helps you prepare. On the day of travel, it shifts into a supportive role, surfacing the information that matters most in the moment. Afterwards, it follows up, closing the loop rather than simply ending the experience.

Making this work demands modular design systems, flexible platforms, and teams that think beyond individual pages and flows. It is not an easy change, but it is both achievable and increasingly necessary.