AI for Aviation Industry
“These days no one can make money on the goddamn airline business. The economics represent sheer hell.” – C. R. Smith, American Airlines
The ex-CEO’s quote from the 1970’s is still applicable to the airline industry of today. According to the International Air Transport Association (IATA) the global Airline industry has doubled its revenues from US$369 billion in 2004 to a projected $746 billion in 2014 but making stable and consistent profits still remains elusive. Increase in competitiveness, customer expectations, fuel expenses, low cost carriers, labour unrest are some of the major issues challenging the airline industry . For example fuel accounts for almost 20% of a carrier’s cost structure and the fuel prices are expected to increase to $64.9/barrel ( which is a 25% increase compared to the current cost/barrel) over the next year, which is significantly going to affect the profits made by the airline industry. Correspondingly, with the constant fluctuations in the traditional passenger traffic, airlines will be scrambling to fill the unused capacity – a variable that drastically increases the operating costs per trip. It is no wonder that when thrown in an omni-present hyper-competitive environment that constantly drives price wars, the executives always look for ways to reduce costs and drive additional revenues. This is exactly what is happening with the Airline industry.
“Make your product easier to buy than your competition, or you will find your customers buying from them, not you.” – Mark Cuban, Dallas Mavericks
Out of all the ways that can help improve revenue, Customer service could be the one touch-point of airline operations to improve their revenues. There is enough proof that customers are willing to pay the extra penny for a good service. Be it targeted marketing, new reservations or post-reservation services; customer experience is the next battleground for the airlines looking to differentiate themselves.
A detailed primary research (lots of reading and talking to other airline travelers), it was established that 73% of airline travelers agree that the customer service experience with most of the airlines is dissatisfactory and time-consuming. Increase in the no.of air travelers, insufficient customer service personnel, language barriers have also been contributing significantly to this attitude in the customers of the airline industry. This shows that, despite their continued efforts of making labor-intensive customer service investments, the airlines are unable to produce the results needed to improve their ROI.
Voicy from Voicemonk brings you an AI-enabled virtual agent that can be your customer engagement personnel letting you to completely automate the process of customer service to all your customers. Being a natural dialogue platform, Voicy enables your customers to converse with it, while retaining the context of earlier conversations ensuring customer satisfaction.
But how does this benefit airlines in terms of numbers?
The airline industry has an average passenger load factor of 80%. An AI-enabled chatbot solution with awareness of passenger context through multiple channels (Facebook, Slack, Telephone or SMS) can facilitate conversational commerce translating into just-in-time bookings. We anticipate this improves utilization upto 84% resulting in an additional $0.72 profits per passenger, representing a 16% increase from the current industry average.
Approximately 5% of airline revenue is spent on customer servicing costs. On an annual basis, that is approximately $30 per passenger. Trials with Voicy for Airline indicate that this service cost can potentially fall to $24 per passenger, resulting in $120M savings annually, a non-trivial amount in an industry with only 4.1% net profit margin.
A recent study by SH&E, a leading aviation consultancy estimated that as a percentage of revenues, the latter activities’ share ranges from >10% for a carriers such as British Airways to ~3% for LCC’s such as Ryan Air. This means it costs most carriers approximately $30 to acquire and book new customers as opposed to $10 for LCC’s. Voicy.AI with its contextual/historical awareness and tight integration with backend ecommerce, payment, CRM, marketing platform could enable most carriers to reduce this cost to approximately $26/passenger over 2 years.
Wish to see a demo of our agent live in action?
Check this out: https://rebrand.ly/vmairline