The boom in smartphone availability and use means more people are connected more of the time. Consumer-focused industries, from media to banking, must adapt to cope with the resulting closeness of their customers. A key sector under pressure to connect through mobile platforms is aviation.
Mobile development is at the top of airlines’ priority lists. Some 70 per cent of carriers believe smartphones will be a top-two sales channel (along with websites) by 2015, according to a recent global survey on airline IT trends by Switzerland-based Sita, a major aviation technology and infrastructure provider.
“[Ticket] sales via smartphones represent the largest proportion of all emerging channels, with 2 per cent of sales today rising to over 7 per cent by 2015 [more than all emerging channels combined],” says Sita market analyst Thomas Knierim.
“Sales are already quite high, considering that today only half of airlines offer tickets via mobile apps [applications]. Nine out of 10 airlines are planning to sell tickets through mobile phones by 2015, establishing mobile as a mainstream distribution channel for airline tickets,” he adds.
While mobile may not be a significant sales channel in percentage terms, it accounted for about $2.6bn in annual worldwide ticket sales in 2011, according to New York-based travel market research company PhoCusWright. For an industry the Canada-headquartered International Air Transport Association (IATA) predicts will make an overall profit of $4.1bn in 2012, this is critical revenue.
Airlines’ customers will want to see mobile applications that have a wide range of relevant functionalities
Gerry Samuels, Mobile Travel Technologies
Gerry Samuels, chief executive officer (CEO)of Mobile Travel Technologies (MTT), a developer of mobile platforms based in Ireland, confirms the channel’s potential for revenue growth. “One of MTT’s recently launched airline mobile applications reported $1.6m in flight bookings and 400,000 downloads of the app just one month after launch. [The airline has] projected [it will] reach $160m in revenue through its mobile channel within 12 months.”
Middle East airlines have yet to embrace mobile as fully as their Western counterparts, but success stories are emerging. After launching mobile apps for Apple’s iPhone and Google’s Android platform, Kuwait-based Jazeera Airways recorded 8.5 per cent of its total bookings for June 2012 through its apps, compared with about 60 per cent through its main website.
“We are now at a stage where anyone can book with Jazeera Airways, whatever their device is,” says Rafik Boghdady, vice-president of sales at the airline. “We are on iOS [Apple’s operating system] and Android through our own native apps, and on every other internet-connected mobile platform with our mobile-optimised website.
“The apps enable customers to browse through flight schedules, book, choose their seats, pay and manage their bookings,” he adds. “[They] also give customers access to our office locations and numbers, to a list of services available for Business Class travellers and to more information about Jazeera Airways.”
Currently, Jazeera Airways is the only regional airline to offer full-function mobile apps, putting it well ahead of the region’s biggest players. Etihad Airways offers an app, launched in January 2010, for its frequent-flyer-programme members, but this does not offer booking or travel management functionality.
Although mobile revenue is currently low for most carriers, the potential of mobile platforms lies in allowing airlines to engage much more comprehensively with their customers, offering improved service and functionality. This would create deeper customer loyalty and potentially more repeat bookings.
“A successful mobile project is one that gets its travellers hooked, or [that] they become reliant on throughout the ‘connected traveller lifecycle’, and one that customers or users are incentivised to share with their networks to virally expand the project’s reach,” says Shashank Nigam, CEO of Singapore-based aviation consultancy SimpliFlying, which has advised airlines and airports in the Middle East and globally on customer engagement.
The traveller lifecycle concept is not new, but the emergence of the internet and, more recently, connected mobile devices, has disrupted it substantially. SimpliFlying’s connected traveller lifecycle is the firm’s codification of how a consumer interacts with an airline through mobile.
Nigam says the customer goes through four stages. “He dreams of a trip while possibly on Facebook on his mobile, plans the trip through TripAdvisor and Kayak mobile apps, books the trip from an airline’s mobile app and finally shares multiple aspects of his travels using his mobile devices.”
Now, travellers can remain connected throughout their journeys, sharing their experiences through social networks. Smart airlines will aim to help with this element of the journey as well, beyond the normal airline functions of booking and managing a flight. Jazeera Airways is again a regional first-mover, offering booking through social media site Facebook – a booking channel pioneered by US-based Delta in 2010, and followed by others airlines, including the Netherland’s KLM and Malaysia Airlines.
“We are one of the few airlines in the world that enables customers to book and pay for their seats through a native Facebook application,” says Jazeera’s Boghdady.
He adds that the airline is also working on customer engagement through social media. “We are very much invested in both mobile and social,” he says. “Whether they have an idea or need help with their booking, customers can now directly interact with Jazeera Airways on [micro-blogging service] Twitter, Facebook and [photo-sharing app] Instagram.”
SimpliFlying’s Nigam says this is likely to give a return on investment. “Airlines that can marry the concept of social networking with their products and services well can definitely look forwards to significant revenues from engagement through social media, which is now even more accessible thanks to mobile.”
Dubai-based airline Emirates has also seen recent success on Facebook, gaining more than 700,000 Facebook fans less than six months after launching its page. “Emirates ensures that its online initiatives are accessible and mobile-friendly by choosing already mobile-friendly platforms, such as Facebook,” says Nigam.
Research by Sita reports that nine out of 10 airlines are planning to invest in social media over the next three years, with 39 per cent seeing it as a customer service tool beyond its more traditional role as a marketing channel. The research suggests Middle East airlines also follow these global trends.
MTT’s Samuels says social functionality is becoming a requirement of mobile apps rather than an add-on. “Airlines’ customers will want to see mobile applications that have a wide range of relevant functionalities, that provide personalised, contextualised services, that offer a full end-to-end service for their journey, that demonstrate regular improvements to the mobile service, and that enable integration with other channels such as web and social media,” he says.
For mobile, the most effective way to do this is through a native app – software written specifically for a platform. Each native app can be a development project in itself, and with four major mobile platforms – Apple iOS, Google Android, Windows Phone and BlackBerry OS – dominating the market, app development demands high investment by airlines.
Samuels says the cost of developing the mobile channel is comparable to developing an e-commerce site, with a range “from a few thousand dollars to hundreds of thousands of dollars”. This range covers mobile websites up to and including dedicated mobile apps. The more complex an app is, and the more integration required, the higher the cost.
Of the big three regional airlines – Emirates, Etihad and Qatar Airways – Etihad is currently the only carrier with an app in the marketplace. Other airlines remain tight-lipped about their mobile application plans, but sources close to Emirates confirm it is working on a range of applications, with one for the iPad likely to be the first to launch later this financial year.
“Most Middle East airlines are evaluating plans to launch mobile apps in the next 12 months,” says SimpliFlying’s Nigam.
Ahead of app development, more regional airlines have chosen to roll out mobile-optimised websites, which can offer core functionality to mobile users across multiple platforms, without having to take on complex app development.
“While the mobile app gives branded presence in the customer’s device, multiple versions need to be created for various platforms and it can be expensive,” says Nigam. “Hence, a website optimised for the mobile experience may be the way to go for companies looking to get into this space.”
A significant issue for the majority of airlines, whether developing a mobile app or mobile website, is integrating a new mobile platform into their back-end IT systems. For carriers with older systems, this presents a major technological hurdle.
“Over the past 15 years the vast majority of airlines have been adding new channels without replacing their back-end legacy systems – and they wouldn’t be doing so if it wasn’t cost-effective,” says Sita’s Knierim. “But the continuing problem is that these integrations could work much better if they were on new-generation systems designed from the ground up to support these kinds of channels. For example, business logic to manage merchandising and respond in real time to customer relationships would ideally be in the core systems and hence available to all channels seamlessly, rather than being implemented separately on a channel-specific basis.”
Legacy core systems are not easily replaced, because they are hugely complex and highly mission critical, he says. This is why they have such a long life-cycle. The cost of developing and launching a complete new-generation alternative to the legacy passenger services system (PSS) core suitable for a full-service carrier would be measured in hundreds of millions of dollars. Suppliers, including Sita, are looking at ways to upgrade outdated back-end systems.
A recent report by Madrid-based aviation IT vendor Amadeus on the “always-connected traveller” found the same.
“Even the most sophisticated airline websites still rely on core airline systems, such as the PSS or Departure Control System, for key reservation and check-in functions. Mobile airline implementations must embrace the entire airline eco-system and seamlessly exchange information between platforms, ultimately delivering personalised services to the airline passenger on any device wherever they are connected,” the report said.
This transition from having a few thousand specialist users access these systems to exposing their functionality to hundreds of thousands of travellers internationally every day, means airlines may be forced to upgrade their core systems to offer the flexible mobile services consumers around the world, and in the Middle East, are now demanding.
Nine out of 10 airlines worldwide are planning to sell tickets through mobile phones by 2015