Is it time for airlines to really think hard about innovation?
AIR TRAVEL today is cheap, convenient, and quite comfortable — no matter where you want to go. As a result, everyone is traveling by air, for work and leisure, more than ever before.
According to the International Air Transport Association (IATA), global passenger traffic data for August 2018 shows that demand (measured in total revenue passenger kilometers) climbed 6.4 percent compared to the year-ago period.
This was slightly above the 6.1 percent annual increase for July.
August capacity (available seat kilometers) increased by 5.5 percent, and load factor (representing capacity utilization in the industry) climbed 0.7 percentage point to 85.3 — which was the highest for any month since at least 1990.
Obviously, as air travel picks up, regulators and businesses in the region need to think about how to increase capacity, improve operations, and wow customers, all at the same time.
It’s time the industry made serious investments in innovation.
The need for airline innovation in the APAC
A further analysis of IATA’s data revealed that the bulk of the traffic, 33.7 percent came from the Asia Pacific region alone.
In fact, August traffic for airlines in the region increased 7.5 percent compared to the year-ago period, which was an acceleration compared to a 7.2 percent rise in July.
Capacity rose 6.1 percent and load factor rose 1.1 percentage points to 82.6 percent.
According to the IATA, the upward trend in passenger traffic remained very strong, supported by structural changes, including ongoing rises in living standards in the region, as well as more route options for passengers that translate into time savings and ultimately stimulate demand.
Demand in the region is increasing rapidly — and the industry must find ways to work with startups and collaborate with peers to ensure uninterrupted growth.
North American airlines JetBlue, for example, is focused on improving the customer experience through technology — and although it doesn’t fly to Asia, the company’s technology investment arm JetBlue Technology Ventures is coming to Singapore to scout for talent and ideas next month.
A JetBlue executive told Tech Wire Asia that the company has already made 20 investments in innovative technology startups and is hoping to experience what entrepreneurs on the other side of the planet have to offer.
Through a formal competition at the Future Travel Experience Asia Expo, the technology venture capital firm is hoping to connect with startups that will not only benefit its parent company but also international innovation partners such as Air New Zealand.
One of the startups that the company has already invested in, albeit outside of Asia, is Unicoaero — which manages lost, missing, and mishandled baggage.
In less than 3 years, the company has tied up with 16 airlines including Air China, Singapore Airlines, and All Nippon Airways — significantly reducing heartaches and frustrations when it comes to baggage issues, and transforming the customer experience automatically.
JetBlue’s technology investment arm is run by JetBlue veterans who understand the industry and the business and can separate the wheat from the chaff when it comes to tech-startups claiming to have the next billion dollar idea. The company’s executives coming to Asia next month expect to be wowed by innovative pitches.
“This industry needs innovation, especially in the face of thinning margins and increasing competition. Leveraging technology can create significant value for customers and make travel better than ever before,” a company executive told Tech Wire Asia.
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