Innovation Is Not A Choice
From an article appearing in IATA’s ‘Airline international’ in 2017
As air transport experiences advancing digitization there’s never been a greater need to rapidly harness the power of innovation and bring the benefits to the industry’s passengers and players – across all industry operations and at every step of the journey.
Such is the view of SITA CTO, Jim Peters. Peters believes that: “Given the multiplicity of players, touchpoints and interactions in the air transport eco-system it’s vital to proceed with innovation in a collaborative fashion, working closely with partners to put into place trials and pilots that can lead the way to rapid and successful implementation.
“But it’s also important to remember that innovation is for the good of the entire industry, globally, so we must base it on global standards and digital infrastructures,” says Peters.
This is much like the approach SITA has taken with the Common-Use Beacon Registry – to offer beacon-based services over shared infrastructure – which was subsequently turned over to IATA and ACI.
So it is that innovation, ‘digital transformation’ and ‘digital disruption’ – driven by the Internet of Things, analytics, mobility, cloud, security and more – have become the hot topics dominating air transport CIO agendas.
Equally, they remain top of mind with industry associations, which is why we include extracts below from an IATA ‘Airlines International’ feature earlier this year, which reasons that ‘digitalization is forcing a paradigm shift in business models,’ but asks the question: ‘can airlines move quickly enough’ and ‘keep up with the digital pace’?
IATA: Can airlines keep up with digital pace?
Alexandre de Juniac, IATA’s Director General and CEO, has already made clear his focus on improving the industry’s speed of innovation.
“I value speed,” he says. “Our world is changing very rapidly. Each day brings something new—at times it’s a challenge, other times it’s an opportunity.
"The key to success is being able to respond quickly. My experience in the air transport industry has been that we often struggle with speed, and, as a result, innovation can suffer.”
“The rate of change is increasing across all industries, and especially a customer-facing industry like aviation,” says Tim Grosser, IATA’s Head of Digital Transformation.
“The way to communicate with customers is continuously changing. If you don’t innovate, your current or future competitor will. Innovation is not a choice. The mindset must be to move faster.”
The problem can be boiled down to basic math. At best, only one in 10 ideas will bear fruit and so it is essential to find that one idea as quickly as possible.
Grosser suggests airlines need a structured process to move from idea to evaluation to implementation. Rather than focus purely on creating new ideas, airlines must also plan and control the execution of the innovation project portfolio.
An idea without realization is just an idea, not innovation. The key is to define the problem that needs solving and then focus on the scope of the solution required.
Accepting failure and understanding global trends are essential. “The failure of ideas is part of the process, and brings you one step closer to finding that successful idea,” Grosser notes.
“But you must focus on where you want to innovate by looking at the big challenges, which have the big payout. Also, look at new technologies and see where they are providing new opportunities.”
Partnerships throughout the process increase the chances of a positive outcome. Already, many airlines are partnering with technology providers, universities, and startups to brainstorm potential new products and test their viability.
This needn’t be a costly affair. “Not so many years ago, developing a new, technology-based product would have involved lots of resources, such as buying a server and setting it up,” says Grosser.
“That took time and money. Now, thanks to cloud computing, if necessary, we could do tests multiple times a day and for a few hundred dollars. Cloud computing is a major tool for speeding up innovation.”
At October’s World Passenger Symposium, Dr Jassim Haji, Director of Information Technology at Gulf Air, revealed that the implementation of cloud technology has enabled the airline to reduce the number of physical servers 35%, amounting to a 24% cost saving in capital expenditure. These cost savings enable more investment into innovation.
And there are other methods too. No longer is it necessary to develop a product and put it out to market before you truly know whether your customers are interested.
Old-style marketing and focus groups might have eventually provided an acceptable insight before. But these days, a simple icon for people to click through for more information will tell you if people are interested and if that product is worth developing.
Valuable data can be at a company’s fingertips within hours. Leading tech firms use such approaches to take an idea to a minimal viable product in just three months. Airlines are not yet at that speed but it provides a guideline for the industry’s aspirations.
“Being quick and being accurate are not competing goals,” explains Grosser. “They can coexist quite happily. Being smart in innovation leads not only to speed but to a better product.”
In short, it is much easier now for airlines to experiment or change direction.
Personalization is a key area where the speed of innovation will be crucial. Just as everybody wants a coffee made to their exact specifications, so too will the travel experience become even more customized.
An emerging trend in this regard is artificial intelligence. “This is becoming a mature concept and airlines should be looking at it closely for future development,” says Grosser.
“Algorithms are capable of learning. A spelling mistake when you type in a search engine is a simple version of this.
“It will ask ‘did you mean this’ and it will probably be right because it has learned over time. So, for airlines, if the passenger books A, B, and C then most likely she will want D. That’s an opportunity to offer it now!”
Mobile is the main channel for personalization and seems set to stay that way as it corresponds with larger, global trends. Rob Webb, Chief Information and Technology, Officer, Etihad, says the global traveler’s digital experience is a key factor in purchasing decisions and mobile is working. “I wish I had invested a lot more money in mobile a lot faster,” he notes.
Many other aspects of airline distribution and operations could benefit from timely innovation. Fortunately, many airlines are beginning to invest heavily and innovation has become a main driver of business.
IATA’s Simplify the Business (StB) program is assisting. It has partnered with a Silicon Valley incubation firm, Plug and Play, to drive innovation across the industry.
In 2016, StB focused on reinventing the baggage process, the future of payments, digital identity, and collaboration via open application program interfaces.
This program assists both large and small airlines by pooling resources and collectively focusing on the major problems.
“Tectonic changes are underway,” stresses Neetan Chopra, SVP, Emirates Group IT. “Digital business models have a completely different form.
"We are used to steady growth but these new digital artisans live in an exponential world. It is not about doing digital, it is about being digital. It is about action. Ideas should be shared but for a business it is about execution and speed."