Customer-centricity, digitization are exec priorities

Focusing on the wants and needs of travelers – and doing so with solutions based on convenient, digital-first strategies – is at the top of the to-do list for the travel executives as the world emerges from the constraints of the pandemic.

That was one of the themes of an online discussion hosted by CarTrawler Wednesday title Beyond Recovery: The Transformation of Travel in 2022.

The event coincided with the release of a report, The Evolution of Travel: CarTrawler’s Consumer Trends for 2022 , based on a survey of 2,000 travelers in the United States and United Kingdom conducted in late November and early December.

One finding of the report is that respondents are looking for more flexibility, with 73% willing to spend more for flight insurance now than they would have pre-pandemic, and 36% indicating the risk of canceled flights and bookings is a top concern when thinking about travel.

Speaking as part of the panel, Hopper co-founder and CEO Fred Lalonde says travel brands should view this as an opportunity to drive new revenue by offering financial ancillary products that alleviate consumers’ stress.

“There’s a consistent theme that customers, if the product is good, are willing to spend more. ... They are willing to spend $40 more to get certainty, protection, predictability," he says. "I think this is the single most important thing the pandemic has taught us."

EasyJet chief commercial officer Sophie Dekkers agrees, saying the airline has seen its ancillary revenue increase, despite the fact it eliminated fees for changing flights.

“Things like allocated seating – people want that certainty now. So our ancillary revenue is up significantly higher than where it was in 2019,” she says.

“It will be interesting to see how much that becomes permanent behavior. But certainly what we are seeing at the moment is it seems to be sticking.”

United Airlines CEO Scott Kirby says ancillary strategy needs to be part of a broader goal of understanding and serving the needs of customers.

“We’ve tried to make a change to focus on what the customer really wants. There hasn’t been enough, in my view, customer focus from airlines in the United States or ... around the world,” Kirby says.

"[We've tried to] look at ancillaries even more through the eyes of what the customer wants, not in a punitive way. There’s been too much punitive ancillaries in aviation, I think, in the past as opposed to offering customers something better than they have normally received.”

Direct distribution and loyalty still top of mind

Kirby went on to explain how that customer-centric mindset is also why he believes booking direct with an airline better serves the needs of travelers than booking through third parties.

“If you book at United ... the information, the data that you have available, particularly if there is a flight delay, is so, so much better. Those that book direct with us, we have all their contact information, giving them a series of other options if they wanted to [change]. For customers that don’t book direct, it is abysmal – we don’t have the ability to touch them and tell them what’s going on. We can send an email to Expedia, but Expedia doesn’t do anything with it,” he says.

“We are trying to take all the stress that we can out of traveling. And a lot of that is communication ... so it’s less about a distribution strategy; it’s more about a strategy of doing what’s right for the customer, which means the customer is ultimately better served by coming direct.”

CarTrawler’s report also finds that survey respondents value loyalty programs, with 86% enrolled in at least one program and about 20% ranking earning or using loyalty rewards as a top priority when planning a trip.

There’s been too much punitive ancillaries in aviation in the past as opposed to offering customers something better than they have normally received.

Scott Kirby - United Airlines

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British Airways CEO Sean Doyle says he sees loyalty becoming “more and more relevant” for his airline in the future. Doyle says there are opportunities to increase the number of products the airline offers that “use loyalty as a currency” and to create offerings that combine the airline’s holiday package business and its loyalty program.

“We’ve invested a lot in our platforms and having more products on the shelf,” Doyle says.

“I do think loyalty is a great sort of lever in terms of a relationship, but also I think using loyalty at every point in the digital experience helps you win that battle for repeat business and also that battle for convenience. I think we are heading to the point where the loyalty currency will be as useful to us as the cash transaction, where it has the same utility in terms of how people consume.”

Lalonde says the airlines have been very effective at building loyalty programs - so effective, in fact, that “if there’s a loyal United or BA customer, we’re not going to move them over to Hopper. It’s just never going to happen.” But he sees an opportunity for Hopper and other third-party travel sellers to create an effective loyalty program that’s based on a digital wallet where users can earn, burn and exchange loyalty rewards seamlessly.

“As people move to these supercomputers in their pocket with the predictions, the notifications, the idea of having cash in the app ready to go ... having a mechanism where you can get bonuses depending on what you buy is just a completely unexplored whitespace in my opinion. I don’t think there’s a good Western app that does that in travel or otherwise. I think it’s one of the biggest opportunities,” he says.

“As we enter this we’re looking at payments, we’re looking at being on both sides of the transaction, we’re looking at paying out interest. Seventy percent of our customers, for example, pay with debit cards, and they actually have a separate bank account where they save up. What could we do in partnership with our suppliers if we are able to coalesce that experience and start to interchange?”

The value of user-friendly, mobile-first solutions is reiterated in the survey findings. The report concludes: “Consumers want a seamless mobile infrastructure to help manage their travel experiences, and brands that can make travel less complicated and more rewarding will reap the benefits of loyal customers for years.”

When asked to predict the biggest challenge for the travel industry in the next three to five years - beyond sustainability, which the survey found is a priority for travelers - several panelists agreed investing in mobile, digital solutions is at the top of the list.

“People have better appreciation for and value the digital experience. They’ve gone through a period when they are traveling and need to show papers that most people had forgotten about for years,” says IATA director general Willie Walsh.

“Improving the digital experience for customers, I think it’s one of the key areas that every airline and indeed every business is going to focus in on. We want to meet and do business face-to-face, but we want to be facilitated and enabled through digital.”