Airlines Embracing Analytics to Stave Off Disruption
Over the past five years, we’ve seen the incredible rise of Uber and Airbnb, two tech-savvy startups that turned the travel and hospitality industries upside down. Now airlines are starting to fight back by embracing big data analytics in a bid to own the customer experience.
The odds of a company like Uber making a move in the commercial airline business is small. After all, running an airline requires huge investments in airplanes, fuel, and skilled people who can fly and maintain them—just the sort of investments that Uber avoids with its crowdsourced mobile transportation service.
But that’s not to say that airlines aren’t at risk of losing money and significance as a result of being outmaneuvered by smarter digital companies, according to Dave O’Flanagan, the CEO and co-founder of Boxever, an Irish provider data analytic services for airlines.
“Airlines aren’t going to be disrupted by Uber. We’re not going to get crowdsourced airplanes anytime soon,” O’Flanagan says. “But they will be get disrupted by things like Facebook M and Google Now. If that happens, then airlines are going to be relegated to being logistics companies, where they’re responsible for all the hard stuff, but the digital companies who live and breath technology and data will be the travel assistants.”
O’Flanagan founded Boxever four years ago to provide airlines with the type of big data analytic capabilities that all large companies will eventually need just to survive in an increasingly connected world. While analytics have been employed in the airline industry for decades, the advent of new data types, new analytic capabilities, and the mobile phone revolution is transforming what it means to serve passengers in the airline business.
Airlines are embracing the same type of big data analytic capabilities that telecommunications, media, and retail firms have been using for some time. In Boxever’s case, the company specializes in helping airlines to optimize the customer experience, in both the physical and digital worlds.
“Ultimately what airlines or travel companies want to do is to create differentiated travel experiences,” O’Flanagan tells Datanami. “They want to get away from sending dumb emails and stupid trigger communications in the airport, and they want to start thinking about how they can be more smart with communications with the customer, how can they be a trusted travel companion or a concierge. And to do that, they need to take in more data sets and be smarter about how they react.”
Boxever brings a variety of analytic capabilities to bear on its customers’ data, which includes transactional history, Web and mobile clickstreams, and public social media data. By first integrating the disparate data sets and then using proprietary algorithms to generate a more detailed view of individual airlines passengers, its customers commonly enjoy a 5 to 15 percent boost in up-sell and cross-sell opportunities, O’Flanagan claims.
“Our technology aggregates data from all these sources–both real-time behavioral and also in batch–from all these different systems and then orchestrates what the next-best action is for a particular customer, at whatever touchpoint they’re currently interfacing with,” he says. “That could be in person, in the airport or cabin, or on the digital channels.”
The Dublin company employs a variety of technologies in its engine, including the Apache Spark machine learning framework, the Apache Cassandra NoSQL database, and Postgres and MySQL databases, along with plenty of Scala and Java code. By running its infrastructure on the Amazon Web Services cloud–with data residing in Ireland, the United States, and Australia–Boxever is able to deliver to customers a shrink-wrapped analytic service that’s operational in a matter of months.
While the biggest airlines have already embraced big data analytics to some degree and are making significant investments to build up in-house expertise, many of the midsize regional carriers are still beginning their big data analytics journey and value the guidance of a trusted companion. Today, Boxever is serving as that trusted companion to Emirates, Air Italia, and Air New Zealand.
A recent rule change by the U.S. Department of Transportation could make it easier for airlines to develop big data applications that drive marketing efforts. In July, the DOT gave airlines the go-ahead to use passenger data for marketing purposes. The European Commission then followed suit, opening the way for airlines to make more use of the data.
O’Flanagan, who started his big data career analyzing call detail records for Vodafone Group in the 2000s, recognized a growing demand for analytics in the transportation business in 2007. “I saw there was a real burning need [for big data analytics] in the travel sector, airlines specifically,” he says. “I was amazed to see that airlines had multiple disparate data sources, all disconnected, very poor analytics and insight, no CRM and very little capability to do any form of analytics or personalization.”
A window of opportunity is currently open for airlines to make use of the huge stockpile of data that they’re sitting on, and to operationalize it for real-time decision making. But O’Flanagan recognizes that the opportunity is neither easily acted upon, nor will it last forever.
“We get excited when an airline has a recent appointee from a retail company or a media or marketing agency,” he says. “We can see they decided that the guys in organization who traditionally flew planes and kept them in the sky are not the guys to lead them in the next stage of digital. And that’s when we know they’re serious.”