McKinsey & Company has just published the « eight myths of airline retailing ». I’ve compared with my own notes, started in 2010 when airlines came to IATA to discuss their needs and pain points related to selling their products and services to customers across all sales channels.
« Myth #1: Airlines have already captured the full value of customer preferences » => it’s been a myth for people who see travel (or other services) as a commodity. Indeed, if people only wanted to get from A to B regardless of time and comfort, they would be right.
« Myth #2: More personalization always equals better experiences » => Not really a myth, as content personalization allows easier choice in the shopping experience and service personalization allows more relevant travel experiences.
« Myth #3: Travelers prefer to book travel components separately » => Not really a myth, and it relates to personalization. Unless sellers can bundle travel components that make sense to the customer (e.g. a tour), travelers will book travel components which are all only one click away.
« Myth #4: Basic digital presence and traditional promotions are enough to sell airline products effectively » => Airline digital presence remains basic in many cases, where the website is a thin layer on top of the reservation system. Only a few airlines rethink the digital experience as if they were a digital player.
« Myth #5: Recent growth of direct channels means they will soon dominate flight bookings » => The old myth of 1999 was that the internet would lead to direct channels only. It became the case for low-cost carriers, but the corporate world and some of the leisure world remain indirect. Until the AI bots arrive…
« Myth #6: Travelers’ flight-booking frustrations mainly relate to legacy technology » => Not a myth. Travelers’ concerns about finding the best price, hidden fees and lack of flexibility in changes and refunds are due to airline commercial policies and to legacy technology. Modern technology and processes will remove the frustrations, for airlines who want it.
« Myth #7: Digital convenience has sped up travel decision-making » => Similar to the previous item, digitalization has empowered customers to search and compare better and faster, with some limitations due to technology.
« Myth #8: Social media is the dominant source of travel inspiration » => True for the younger generation, while search engines and online travel agents remain the source of travel comparison, and airline websites for booking.
Besides these customer related myths, there are other myths about airline retailing:
> Travel agencies require a GDS to access airline offers
> The airline offer requires a filed fare
> The airline order requires a PNR, ticket and EMD
> Interlining requires GDS and EDIFACT
> « Modern retailing » will cost more to airlines than legacy systems
> Changing to Offers and Orders is too risky, it won’t happen
What is the biggest myth you’ve heard? 🤓