Simon Farrell

Introduce Digital Efficiencies and Improve Website Accessibility

In August, The Evening Standard published an interesting article detailing the poor state of a number of UK airlines’ websites, particularly with reference to accessibility. We won’t go naming those rated as poor, but you can read the full article which lists some of the best and worst performers. According to Airlines UK, the industry contributed £24 billion to the UK economy in 2022 and provides over one million jobs. Yet, both flights and traveller numbers were still 25% lower than in 2019 and the CAA doesn’t anticipate the industry returning to that level of activity until next year or 2025.

Given the various headwinds endured in recent years, no UK airline operator can afford to get by on sub-standard digital infrastructure, in a time where customer expectations are only becoming more demanding. You only have to recall the collapse of operators like Monarch Airlines and Flybe, in arguably more benign times, to get a hint of the perilous nature and prospect of rapidly changing fortunes of the industry’s operators.

The standard and efficiency of airlines’ technology and the sophistication of customer experience is rarely the sole, or even the main, reason for operator failure. But as with both Monarch and Flybe, technology-related factors contributed to, and exacerbated, wider critical failings around strategy and operations. As a digital transformation and change consultancy, Panamoure naturally advocates the pragmatic implementation of the most appropriate technologies, not only to enhance companies’ operational processes but to introduce flexibility and adaptability that helps our clients navigate the next inevitable economic downturn or, even more potentially damaging, black swan event.

How Panamoure Can Help

The Financial Times reported that British Airways’ owner, IAG, returned to profitability in 2022 for the first time since the grounding of flights during lockdowns, and much of the industry across the globe is doing likewise. This can only be encouraging and, as growing numbers of airline businesses return hopefully to a more stable activity, we recommend they take the opportunity to look to their website offerings to address any other failings, and to also assess where digital efficiencies can help grow revenue, reduce costs and risk, and improve profitability.

Remediation of website accessibility, such as is suggested in The Evening Standard, is not that difficult and needn’t be overly costly. In the course of making that assessment, it makes sense to cast the net wider and assess where other efficiencies might be introduced, conceivably at a cost that is not that significant to businesses with balance sheets of airlines’ dimensions and can yield surprisingly rapid ROI. We can help you to develop and implement a digital transformation strategy that will improve your overall digital capabilities and performance. This can include improving your website, introducing new digital products and services, optimising your digital marketing and sales strategies, and the practical and cost-effective inclusion of data and insight-led AI and other disruptive technologies.

The PE Value Creation Impetus

Globally, many airlines remain privately held and independent or publicly listed and many have successfully established digital by default models. Much of our own work is with private equity portfolio companies and what is interesting here, is the focus of those private capital investors upon value creation within a holding period that is typically just four to six years. It’s over three decades since TPG saved Continental Airlines, in the days when digital consumerism itself was still in its infancy and private equity was still largely a financial engineering play.

Fast forward to the last couple of decades, and private equity interest persists but alongside it, there are considerably more value creation levers for investors to consider and apply. Most firms today take a far more operational approach to their investments. Increasingly present, but still with a lot of opportunity to be explored, digital transformation and the inclusion of disruptive technologies is an area that can still be extensively applied to many airlines, associated assets, and extended supply chains.

Here is a couple of examples where troubled airlines’ misfortunes have been turned around, either through the value-focused intervention of operationally minded private equity investors, or the timely provision of an appropriate form of capital to help deliver improved technology application and consequently improved efficiency. Their progress and application of technology should provide hope and encouragement for any UK operators currently navigating today’s turbulent air routes and supporting infrastructure.

Virgin Australia- Global multi-stage investor, Bain Capital, acquired Virgin Australia for about $2.5 billion, including debt, in September 2020 after the airline was placed in voluntary administration on the back of seven consecutive years of annual losses, even before the onset of Covid-19. A “significant pipeline of technology projects” and an extensive digital roadmap to upgrade digital interfaces and platforms were quickly established and implemented to enhance passenger experience. More recently the company has announced upgrades to its retailing capabilities, through an expanded partnership with travel retail specialist Sabre. The wider restructuring means Virgin and Bain are tentatively looking at relisting the company sometime around November 2023, with a valuation that is anticipated to return the equity investment after just three years, with more return to follow.

easyJet- As a publicly listed company, easyJet launched easyJet holidays to partly fill the gap left by the collapse of Thomas Cook in 2007. Financial support from KKR’s European Special Situations Fund in 2015 enabled a relaunch of the holidays business in 2019, with ATCOM’s reservation and omni-channel travel platform implemented. easyJet holidays had over one million customers in 2022 and accounted for over 6% of group revenue. easyJet has also invested heavily in AI, Cloud and big data solutions to help reduce costs related to fuel, carbon emissions, food waste and maintenance. It has also developed a mobile app with novel features and has one of the most user-friendly and accessible airline websites.

Our own recent, and ongoing, experience within the industry involves the assessment and improvement of the IT capability and customer experience for one of the UK’s major international airports. We are helping this client to rapidly engage data and analytics functions to better understand customer needs and preferences, and to identify areas where the customer experience can be improved. We have also introduced artificial intelligence applications to automate tasks and to provide personalised customer responses.

Whether PE-backed, publicly listed or determinedly independent, airlines, like airports, need to use data and analytics, artificial intelligence, and other disruptive technologies to improve customer experience. After all, there’s little point in the booking and website access experience spoiling what might otherwise be a great customer holiday experience. Airlines that embrace digital transformation and invest in new technologies will be better positioned to meet the needs of those customers and to better compete in the increasingly competitive airline industry.

If you are involved in managing an airline business and you are in any way concerned about the performance of your website or would like to learn more about other digital opportunities to improve operations, please get in touch with Panamoure today using the below contact form.

Do you have a project that you would like to discuss? If so, please submit your details below and one of our partners will be in touch.
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