Leveraging customer analytics in airline industry

Partner Resource

Leveraging customer analytics in airline industry

In collaboration with Knowledge@Wharton

The airline industry has been one of the pioneers in the use of decision support systems by implementing concepts and tools such as frequent flier programs, revenue management systems and scheduling systems. This paved the way for other business sectors to successfully adopt ideas like dynamic pricing and loyalty programs.

Recent advancements in data collection, storage and processing techniques allow the gleaning of data not just from one customer, but from a representative class of customers. This enhances the scope of personalization that was previously not possible.

The ultimate aim of using advanced analytical tools and techniques is to make better decisions. In the airline industry, these decisions are all about trade-offs between customer centricity for revenue enhancement and the need for cost reduction. Though from a statistical perspective, there are techniques to manage trade-offs, they are complex to accommodate and implement. Hence, it is crucial for everyone involved to do more than just collect data and crunch numbers.

There is a need to understand the business nuances impacting the trade-offs. A top-down approach is required for a complete overhaul of the type of metrics used to judge the business outcomes. Customer lifetime value and customer attention metrics become critical, since by their very nature, they represent some of the aforementioned trade-offs. Once customer centricity becomes the focal point, analytical capabilities will follow suit.

The application of analytical technologies is further expected to lead to more rewarding partnerships with other members of the travel value chain as they enable a holistic approach to understand customer behavior patterns across different touch points.

Airlines have also set the ball rolling by stepping into the great unknown world of social media. In the past, airlines invested millions of dollars on conducting surveys to understand a customer’s experience (such as booking or flying). But as the surveys were, by design, carried out after the trip, the gap between booking and travel meant that the feedback from customers lacked spontaneity. With social media, customers can provide unconstrained responses about their experiences instantly. This kind of real-time feedback gives airlines an opportunity to provide quick resolutions and beat negative perceptions.

Read the conversation between WNS expert and Knowledge@Wharton on analytics in the airline industry.


   Peter Fader, Professor of Marketing at The Wharton School of the University of Pennsylvania and an analytics expert
   Raj Sivakumar, Corporate SVP - WNS, Head of Travel - Technology and Strategy


About our Partner

Knowledge@Wharton, the online business analysis journal of the Wharton School of the University of Pennsylvania.

Trade-off among the three objectives, customer centricity, revenue enhancement and cost reduction will be the key to successful application of data analytics in Airline Industry