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Airlines

Keeping up with the times

From Google Glass and the SkyCouch, to free lounges for all, airlines will try anything to attract additional revenue. But, discovers Ian Putzger, they need to keep their eyes on yields
 

Apparently there are lots of people who are desperate to check in for their flights using a timepiece. Several airlines have moved to allow passengers to put their smartphones aside and conduct the process with a smartwatch instead. One of the early movers is airberlin, which allows users of its iPhone app to send a digital boarding pass to their Pebble smartwatch. Besides the barcode, the watch also displays the flight’s departure time, gate number and seat.

 

According to a spokesperson for airberlin, the new functionality has been widely used. “There is a lot of potential with the smartwatch and it will continue to play an important role for us in the future,” she states. The airline is currently looking into being able to offer the service on smartwatches from other providers.

 

It was only a matter of time before new gadgets hit the airline business, although some of the early deployments were not very convincing. Virgin Atlantic, which has experimented with Sony smartwatches, also ran trials with Google Glass for its employees. These tests revealed some issues with limited battery life, problems with the zooming ability of the lens for some way-finding applications, as well as occasional connectivity glitches.

 

Jay Sorensen, president of IdeaWorksCompany, reckons that this technology is not ready for commercial application in the aviation business. “I don’t think it can easily and naturally fit the needs of airports or airlines at this time. I think it needs more refinement before it becomes a practical application in the marketplace. At this point a tablet is more powerful,” he reflects.

 

He is more enthusiastic about the eTag/eTrack initiative from Air France-KLM that turns suitcases into connected devices. It consists of a permanent bag tag (the eTag) and a tracking device, which the carrier developed in co-operation with FastTrack Company, Samsonite and KPN. The tag is an electronic baggage label that attaches to the outside of the suitcase, while eTrack is placed inside the luggage. Travellers can label their luggage at home and trace it in real-time over the duration of their journey.

 

Although trials were only set to kick off at the start of this year, the eTag/eTrack had already received universal plaudits, including winning Accenture’s Innovation Award as the most promising innovation of 2014. “The eTag is a good move. It reduces investment in lost bag retrieval,” agrees Solomon Wong, executive vice president of InterVISTAS.

 

Both Wong and Sorensen have questions about global compatibility issues for eTag/eTrack but are nevertheless convinced that it will be successful. Sorensen hails it as a model for the concept of linking new fees with superior service elements.

 

Airlines should avoid replacing ‘free’ with ‘fee’, Sorensen stresses. He points to the introduction of bag fees, which in most cases meant levying a charge from one day to the next. Alaska Airlines, on the other hand, created a delivery guarantee when it made the switch: if the traveller’s bag did not reach the bag belt within 25 minutes of flight arrival, the consumer could choose from a $25 travel voucher or 2,500 frequent flier miles. The guarantee had the surprising consequence of encouraging employees to do better and the delivery standard and was later improved to 20 minutes.

 

With the eTag/eTrack element, Air France-KLM “does not make a new fee but makes a new product to change the dynamics,” Sorensen comments. “This is a wonderful component for a new bag fee. It improves service.”

 

Online booking represents a huge opportunity for innovation in generating ancillary revenue streams. According to Gartner, by 2020 customers will complete 85% of a transaction without speaking to anyone. Wong sees ample scope for development of electronic payment, pointing to the rapid rise of Apple Pay in some segments. Biometrics, which have so far had little impact on payment from mobile devices, stand to make significant headway there, he thinks.

 

Advances in technology should also move the industry forward with the development of personalised services. Looking at today’s state of play, this has “some way to go to sort out the basics first”, cautions Sorensen. Offering upgrades to first class passengers and pre-order meal options for business class travellers does not suggest an advanced degree of sophistication, he remarks.

 

Wong sees an encouraging step in this direction in Qantas’s endeavour to let passengers on red-eye flights specify some options at the booking stage, notably to be left sleeping and undisturbed until a set time before landing.

 

He is less enthusiastic about Air New Zealand’s ‘SkyCouch’, which turns a row of seats into a bed. Aviation consultant George Hamlin is not enamoured with the concept either, nor with plans at Thomson Airways to set up a ‘Beach Snack Bar’ as part of a ploy to introduce more leisure-friendly amenities in its premium cabin. “Is this the most economic use of space?” he muses. “The airlines seem in a race to the bottom on yield. They need more seats, not fewer.”

 

More promising are schemes to give anxious passengers some peace of mind over missed flights. Wiz Air offers late passengers who reach their gate within 30 minutes of the scheduled departure time the chance to book for the next flight for a flat fee of €70. Vueling offers its customers a missed flight cover starting at €12.75.

 

In a twist of Sorensen’s counsel to associate a new fee with a new service element, Jeju Air has established free lounges designed to function as incubators for ancillary revenues. Aiming to wrest business from package tour companies, they combine free soft drinks, coffee and wifi access, with booking services for airport transfers, car rental, accommodation and sightseeing also available. This is clearly preferable to a passenger potentially stranded at the airport, armed with a smartphone and with some time to kill.


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