Airlines have long sought to enhance their retail capabilities, aiming to provide passenger experiences akin to those in other sectors, thereby boosting revenue and profit margins. However, outdated legacy systems have often hindered these aspirations. Today, new airline distribution solutions are revolutionizing the industry by enabling personalized offers, direct customer engagement, and streamlined travel experiences. The introduction of the New Distribution Capability (NDC) and ONE Order standards by the International Air Transport Association (IATA) allows airlines to revamp customer offers, orders, settlement, and delivery processes.
These evolving standards, while not perfect, promise more personalized and cost-effective air travel distribution, increased strategic flexibility, and better decision-making. Airlines can now craft tailored offers based on individual customer preferences and loyalty, improving customer satisfaction and reducing operational complexities. Traditional aviation data systems are becoming obsolete as airlines adopt more service-oriented platforms.
Incorporating e-commerce technologies in offer and order management is helping airlines interact with AI chatbots to drive revenue. This transition to retail-hardened solutions aids in reducing costs and complexity while ensuring timely and accurate settlements with partners. By 2030, over 90% of airlines plan to overhaul their distribution systems, with some already making significant progress.
Research indicates that airlines nearing completion of their order management transformations anticipate up to 17% revenue improvements and 24% cost reductions. Enhanced customer intimacy and satisfaction, along with increased revenue, are among the expected benefits. Early adopters of these technologies are likely to gain a competitive edge, as others delay necessary upgrades.
To modernize effectively, airlines need not overhaul everything at once. Incremental improvements in AI-powered personalization and mobile-first platforms can enhance customer loyalty and travel experiences. Integrating AI with CRM and ERP systems allows for customized offers that align with customer demand and value, potentially boosting sales and improving customer satisfaction metrics.
Another priority is integrating passenger data across various touchpoints, including third-party platforms, to offer tailored products and dynamic pricing. AI-driven capabilities now make hyper-segmentation and personalized pricing achievable, optimizing pricing and revenue management based on demand, competition, and customer behavior. The next phase of digital transformation promises real-time offer creation and distribution, reducing costs and driving revenue growth.
