Airlines

Airlines Are Trying to Get Personal With Your Data


Airlines Are Trying to Get Personal With Your Data

Photograph by Max Oppenheim/Getty Images

Delta Air Lines (DAL) recently gave 22,000 flight attendants new Nokia (NOK) Lumia smartphones to help handle sales of food, drinks, and on-board seat upgrades. Ho-hum news. However, there was a more intriguing tidbit in the airline’s press release: “In the future, Delta expects to provide flight attendants with certain customer-specific information to enable more personalized service.”

Delta—and nearly all its rivals—are working to know their passengers more intimately as a way to bolster profits. In the race to differentiate their product, compete beyond price, and become more sophisticated merchants, airlines are looking forward to a day when they can exploit the enormous data trove amassed in the course of routine business. Armed with that information—a customer’s spending, seat preferences, preferred hub connections, flight patterns, booze choices, frequent-flier mileage use, and much else—the idea behind “personalization” is that a company can engender greater loyalty, induce people to spend larger sums, and possibly even make flying more enjoyable.

Before any of that happens, however, airlines will need to get their basic retail operations to work right and focus on the simple stuff, such as selling transport to and from airports, says Brett Proud, chief executive officer of GuestLogix (GXI:CN), a Toronto firm that provides retail processing technology for airlines. Most airlines, for example, tout the utility of their mobile apps to book and change flights, yet none of those carriers use their apps to push retail offers to customers, says Proud, an airline merchandising veteran who is presenting his views at the Future Travel Experience Global 2013 conference this week in Las Vegas.

Airlines need “to get the buying behavior there,” Proud argues. “[Airport] transportation really is the low-hanging, simple stuff to charge for. Unfortunately, it doesn’t have the highest margin but it does get the behavior going in the right direction.” Beyond a lift from the airport, movies that have stopped playing in theaters but aren’t out yet on video tend to sell well on flights, as do tickets to local attractions where a flight is headed, Proud says.

In the U.S., at least, the type of personalization envisaged by Delta’s new phones will begin modestly. If your connecting flight is delayed or canceled, for example, a flight attendant will be able to more quickly convey data on how the airline has rebooked your trip. Cabin staff will also know precisely who the most loyal customers are on each flight, based on their mileage balances and flight histories, and potentially, who is a big-spending VIP.

Still, airlines will probably need to overcome a “creepiness factor” as travelers see their data deployed more widely in these merchandising efforts, says Jay Sorensen, president of IdeaWorks, an airline consulting firm. Wireless devices given to flight attendants will let an airline communicate new policy and procedures much more quickly than in the past. But Sorensen also believes flight attendants will struggle over the sheer volume of people carried by major airlines, given their other duties. That could minimize how tailored an airline’s service or product offerings become. “It’s really hard to do right, and when you talk about an airline the size of a Delta, United (UAL) or American (AAMRQ)—wow,” Sorensen says. “It just becomes manifestly difficult.”

Before the days of a flight attendant wishing you a happy birthday or delivering, unasked, your favorite bourbon before dinner, it’s more likely that airlines will ramp up their retailing. Post-boarding upgrades may be one area of untapped revenues on long-haul flights. China’s largest airline, China Southern (ZNH), and Copa Holdings (CPA), the Panama-based airline, auction unsold seats in their premium cabins, with China Southern averaging additional income of $5,000 to $6,000 per flight selling upgrades to business class, Proud said.

While that kind of revenue from a roomier seat may never be seen on a U.S. domestic airline, at least prepare for when flight attendants know your birthday—and exactly how old you are.

Bachman is an associate editor for Businessweek.com.

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Companies Mentioned

  • DAL
    (Delta Air Lines Inc)
    • $37.84 USD
    • 0.16
    • 0.42%
  • NOK
    (Nokia OYJ)
    • $8.14 USD
    • -0.04
    • -0.49%
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