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tick with what you got - it seems to work fine. Revenue management teams may be hearing that response from Airline execs as they seek better systems and processes to help them navigate the tedious manual tasks of managing revenue.
It could be a catch 22 - is now the time to invest in something new when it’s hard to envision immediate revenue upside due to weak passenger demand?
On the other hand, waiting until demand returns means missing out on a competitive advantage and leveraging the low-risk scenario of making a change when demand is slow and passenger volumes are lower.
You Can’t Teach an Old System New Tricks
The worst thing airlines could do is rely on their old systems, old processes, and frankly their old logic for what is clearly going to be a new way of competing and serving passengers.
This means being less retrospective and more forward facing. For instance, due to this year’s demand shock any historical booking curves or processes should be replaced with agile workflows that can quickly adapt to current and ever-changing customer demand signal data.
Criteria that was top of mind for passengers and businesses last year such as trans-continental holidays and trade conferences are completely different this year so why would last year's systems, data and processes be acceptable now?
Not to mention the origins of those systems and processes (some of which are a decade old, at least!) were severely outdated even before the age of ‘the new normal.’
I don't mind a good throw of the dice at the craps table every now and then, but I'm not willing to bet on exactly when consistent demand will return to the airline industry or what it will look like when it does.
Even researchers can’t agree on the date and rely on a broad range of prediction scenarios.
The only thing I will bet on is that the demand patterns and volatility will be different than the steady volumes and patterns the industry enjoyed for the past 5 years.
I'm not saying it wasn't a slog in the past 5 years, airlines were definitely investing money and sweat equity into optimizing revenue, but they didn't need to worry much about major volatility or huge swings in the pattern of demand between seasons or business and leisure segments.
Then it all changed with the onslaught of the pandemic. Airlines themselves are commenting on these irregular patterns and treading carefully. In a recent article on CNBC Southwest Airlines acknowledged “inconsistent” booking patterns, as booking improvements stalled after increasing demand in May and June.
Gaining a Competitive Advantage
If it's inevitable, make it immediate.
It is inevitable the airline industry will recover, even if nobody can predict exactly when. It is also inevitable that the passenger demand will behave differently and as such, new processes will be required.
If it's inevitable, why not immediately start preparing to capture every demand spike and get an edge however you can?
During times of difficulty and uncertainty, it’s very natural to go to the default response of sitting on your hands and feeling too overwhelmed to even know where to begin, or at the very least, go on the defensive. Trust me, as an executive of a travel-tech startup, I know this feeling firsthand!
But after collecting yourself and coming to terms with the situation, it’s best to stay on the offensive and ensure you’re positively effecting the circumstances that are under your control.
"Adaptation must happen now in preparation for the demand resurgence, not in conjunction with it when it’ll already be too late."
With razor thin margins and an ultra-competitive landscape, the airline industry is Darwinian by nature. Now while under harsher climates, the pursuit of survival has been made even more difficult.
Just as Darwinism informs us that the fittest will survive, it’s the most adaptable airlines which can evolve that will come out of this demand shock, not just as a survivor, but as a prosperous business.
However, that adaptation must happen now in preparation for the demand resurgence, not in conjunction with it when it’ll already be too late.
If airlines wait to improve their systems and processes, they will fall behind by at least 6-12 months. And by the time they get moving, it’s very likely it’ll be too late to catchup to the more aggressive competition.
We have already seen examples of this in July with Volaris and Viva Aerobus gaining market share against competitors in the Mexico market.
It’s an over used cliché, especially now, to say “don’t let a crisis go to waste” but the meaning shouldn’t be lost. The stage has been set; it is a low risk environment for system migrations right now.
Time will tell which airlines seize the opportunity or fall prey to their competitors and their own legacy deportment.
