Industry Context

The torrid times for airlines continue. An industry stricken by the pandemic faces a difficult economic future. Unprecedented economic support for the industry topped over $220 billion USD in the first year of the pandemic and losses were well above $120 billion USD in the year to 31 December 2020. These results, combined with over $200 billion USD in debt raised, brings some perspective to the improved performance in the first half of 2021, albeit with variants denting the recovery in primarily domestic air traffic.

Pre-crisis around two-thirds of revenues were generated by international markets which, today, for many, remain effectively closed to non-essential travel. Restrictions on travel change almost daily. The resumption of travel, particularly internationally, depends in a large part on vaccination programs, testing and the opening of international borders without hotel and other forms of quarantine. In addition, businesses remain cautious in allowing their employees to travel for work related matters. Conversely, there is a pent-up demand and a desire from customers for air travel to return to some sort of new normal and for long postponed holidays and breaks to be reinstated1.

Key trends

The biggest airline industry customer trends in 2021 are geared towards improving the digital and physical user experience and making travelers feel confident, particularly regarding health and safety. Airlines have multiple touchpoints with their customers. At every touchpoint it is an opportunity to offer convenience and maybe even delight, it is a way to inspire future loyalty. As airlines prepare for passenger growth, they have responded to the pandemic across each of the Six Pillars:

Integrity
Standing by their passenger commitments on refunds, sanitization, and the prioritization of health and safety of passengers and crew

Resolution
Reflecting the changing environment with flexible changing and cancellation policies. Many airlines waived change fees early in the pandemic, so travelers can feel confident booking travel and know that they won’t be penalized if their plans change.

Expectations
Staying current about travel requirements is crucial for travelers. That is why, for many airlines, this information has been included into their websites in a very visible area, as a homepage banner, where users can access it more easily. They know how influential this data is to decide whether to book a flight or not, so it has become a must.

Time and effort
While the airline industry have no control over vaccine distribution, many countries require proof of vaccination for entry. To simplify this process, the IATA (International Air Transport Association) encourages airlines to include a health “passport app” within their consumer-facing apps.

Personalization
Making the entire customer experience from check-in to shopping to inflight entertainment a touchless one. This end-to-end contactless experience incorporates the customer’s smartphone for check-in, payment options, and choosing inflight entertainment. It can also check for COVID symptoms.

Empathy
Showing that you care about the passenger experience in touchpoints beyond just the aircraft has become essential.

The Customer Experience Leaders

IATA anticipate the return to growth is expected now in 2022 and the airlines in our Hall of Fame are well positioned to take advantage of it.

Alaska Airlines puts customers at the center of the entire travel journey, from making a reservation to the in-flight experience and post-flight service. Employees are trained to anticipate travelers’ needs and create a memorable service with a smile. Each employee receives an “empowerment toolkit” with vouchers and things they can use to help customers.2

Jet Blue, have bult on their outstanding record for customer service by investing significantly in artificial intelligence to support aircraft and crew scheduling to minimize disruption and make life easier for its passengers.

For Jet2 it is the consistent delivery on the brand promise, friendly low fares, a focus on passengers having a “lovely” experience and the substantial take up of Jet2 holiday packages which provide higher margins in a low-cost world.

Singapore Airlines continue their dominance of the airline customer experience as number one in Singapore. Its singular focus on all aspects of the end to end customer experience, coupled with innovation, digital prowess, and a commitment to the communities it serves mean it is a global leader.

It is being pursued closely by two Japanese Airlines, ANA and JAL, both well known for the quality of their passengers’ experience. For ANA the focus is on the end to end customer journey across 28 defined stages, each stage is designed to exceed the customer’s expectations. Investments in a digital platform to manage customer expectations around delays and disruption links customer information with operational information to the benefit of the customer.

Similarly JAL have focused on the end to end experience using its kaizen approach of spotting problems and finding elegant, customer-centered solutions. This is supported by investment in digital technology which enables a contactless experience across all airport touchpoints, using images collected at check in to verify the passenger as the progress through the different stages of their journey such as baggage, security, boarding and, planned for the future, for passport control as well. The whole idea is to create a seamless and frictionless travel experience.3

Whilst the airline sector is not new to shocks, the COVID-19 pandemic is turning out to be much deeper and longer than any in its 100 year history. Domestic markets will recover first, with intense competition for the customer between the full service and lower cost players as well as new entrants ready to take off. Long haul travel is really yet to re-emerge however it is clear that a safe and digitally enabled journey will be key for customers.

Malcolm Ramsay
Global head of aviation, KPMG

Airline Industry Hall of Fame 2021

Alaska Airlines


US

ANA (All Nippon Airways)


Japan

Garuda Indonesia


Indonesia

JAL (Japan Airlines)


Japan

Jet2


UK

JetBlue Airways


US

KLM


Netherlands

Saudia


Saudi Arabia

Singapore Airlines


Singapore

Southwest Airlines


US

1 https://www.iata.org/en/iata-repository/publications/economic-reports/airline-industry-economic-performance---april-2021---report/

https://www.bloomberg.com/news/articles/2017-05-24/how-alaska-airlines-became-the-best-airline-in-the-u-s

3 https://www.i-cio.com/cxo/interview/item/japan-airlines-digitally-re-imagining-the-air-passenger-experience