NB: This is a guest article by John Grant, executive vice president, airport strategy & marketing at ASM Ltd., a UBM Aviation company.
The recent PhoCusWright Conference did not disappoint in producing another remarkable ensemble of travel innovations designed to delight travelers through the use of social media, mobile, Internet and gadget technologies.
Many of today’s household names in travel were launched at the conference since its debut 17 years ago, and this year was no exception.
But I can’t help feeling that consumers have more travel innovations promising to help them navigate, communicate and collaborate than they could ever possibly use, and that some of the creators define themselves more by love of technology than passion for travel.
What will define the future travel leaders from the fly-by-nights? I believe a key indicator is to identify the tech-focused innovators that actually know the global travel ecosystem well enough to capture a meaningful portion of it.
For the generation of innovators who grew up with Facebook, Twitter and touch screens, it seems logical that travel 2.0 should advance the consumer experience through useful and entertaining Web 2.0 technology — especially in air travel, given the lucrative markets of China, India, Russia and Brazil, and the rapid growth of air travel to, from and within these regions.
Of course Web 2.0 plays an integral role, but a very important, very complex part of the journey happens on the back end — in the airports, airplanes, cargo operations and route management operations that facilitate the act of air travel.
It also occurs in the infrastructure surrounding the airport, including the tourism boards, economic agencies and local businesses affected by air service development in the region.
Sustainable success will come to the innovators who understand not just their corner of the market but the ecosystem as a whole — and thus where new opportunities may exist.
Easier said than done, right? Here are some tips on where to start:
1. Use market intelligence to inform business decisions
Gut feelings and consumer focus groups aren’t enough in the complex world of travel. The world’s most valuable companies didn’t start investing in data once they became successful… market intelligence helped them get there.
Any business worth its weight will calculate every angle of risk versus reward before executing.
2. Study trends to map the future
Study the monthly, annual and 10-year performance trends of the specific airports, airlines, routes, countries and regions that apply to your business.
Understanding changes in flight capacity and frequency and the drivers behind them, as well as analyzing market trends over time, can help you anticipate areas of opportunity for driving short-term and long-term incremental revenue.
3. Understand the fundamentals of airport route development
I’m often surprised by how little is understood about route development by the travel industry at large. Airports are the hub of travel and planes can’t land without an airport runway.
Bringing new airlines and routes to an airport can mean millions for a region’s economy and requires the collaboration of the entire community of stakeholders, including airport authorities, tourism boards, regulators, hoteliers and your own business.
4. Plan for crises
Whether a pandemic or volcanic ash, protestors or wars, there will always be something impacting travel. Yet every airport and region responds differently to world events.
Knowing the patterns will help you forecast and anticipate the effects Mother Nature and man-made events may have on your business. The good news is that the industry is remarkably resilient, which we found in our OAG 30-Year World Crisis Analysis.
Study how others have handled various scenarios, and anticipate the opportunities that may exist for your business to help when disaster strikes. Then put plans in place to execute on a dime.
5. Don’t do it alone
The world of tech innovation thrives on its youthful leadership. My advice to travel innovators: create with the spirit of youth and execute with the wisdom of experience.
There is simply no substitute for skilled expertise when it comes to the complex world of travel, especially when trying to break into foreign markets. Knowing the many factors to anticipate can mean the difference between success and failure.
To further illustrate these points, consider these real-world examples:
Several years ago, China Airlines ceased service from Taipei to Auckland, New Zealand, because the flights were unprofitable, though there’s a large Taiwanese migrant community in Auckland.
Unwilling to simply accept the loss and its impact on the region, Auckland Airport commissioned ASM to conduct a detailed analysis of market sizing, gaps in regional service, competitive capacity, financial models, types of aircraft serving the surrounding markets, and more.
The analysis found that China Airlines’ aircraft were sitting unused for several hours on layovers in Brisbane, Australia. Working alongside Tourism New Zealand and representatives of the New Zealand government in Taiwan, Auckland Airport was able to secure the re-entry of China Airlines to the New Zealand market, putting to use the aircraft downtime to establish service three times per week from Taipei to Auckland via Brisbane.
The move was immediately profitable and resulted in additional connections to many of China Airline’s destinations across Asia, including mainland China, Japan, Hong Kong, Vietnam and the Philippines. Today Auckland Airport is thriving, mainly due to its focus and persistence on expanded service to and from Asia.
A more recent example of powerful market analysis is that of British Airways’ parent company IAG and its potential acquisition of bmi.
The move increases British Airways’ slot holding in London Heathrow from 46% to 51%, and importantly gives BA the early morning arrivals slots into LHR, which are of extreme value for securing the premium business-class traffic out of Asia.
BA’s capacity will increase from 41% to 46%, because the average bmi aircraft size is smaller than the British Airways average. Now, with more slots and capacity, BA is strongly positioned to expand into new markets where it has been losing ground to competitors, including in the lucrative Asian markets.
NB: This is a guest article by John Grant, executive vice president, airport strategy & marketing at ASM Ltd., a UBM Aviation company.
