The aviation industry sits in a volatile, highly competitive market with razor-thin margins (on average 3.7%). Now, as geopolitical changes affect jet fuel costs, soaring competition, and rapidly evolving passenger expectations, airlines still operating on outdated business models are struggling to stay competitive, while forward-thinking carriers are shifting their focus from survival to scalable growth, through digital retailing, operational resilience, and personalised travel experiences.
The traditional model of relying on ticket sales, and filling cabins is no longer sustainable for an airline’s growth. And one thing is clear, airlines will stagnate or fail, if they only sell seats and cannot unlock every opportunity before, during and after the flight. The future of aviation will lie in not only taking passengers to their destination, but curating personalised, seamless, and memorable travel experiences every step of the way, that can be monetised.
To do this, the aviation sector must start looking to the examples of the biggest modern retailers out there, like Amazon, or consumer favourites like Uber and Apple, if they want to deliver best-in-class customer experiences during and beyond a flight. Curating, bundling and upselling travel experiences that passengers want to buy into, will unlock a more sustainable, and profitable business model for airlines. And data readiness will be central to airlines putting growth back on the agenda with retailing.
Expectations are changing
Legacy carriers in particular are under immense financial pressures, and are chained to a foundation of outdated technology that limits their ability to be agile and flexible in the face of concerning factors like economic uncertainty, and uncontrollable delays. Low-cost carriers (LCCs) in comparison often have more advanced technology stacks, and are already starting to generate revenue from supplementary services to seat sales, such as onboard meals, travel insurance, and priority boarding offers.
Travellers are calling out for seamless, integrated services and wanting airlines to offer a solution to the currently fragmented and frustrating process of booking a trip. Today, passengers juggle separate platforms to book flights, hotels, transportation, activities, and insurance. Airlines can step up to simplify the entire experience – curating the entire journey in a single intuitive process. Not only will passengers save time and benefit from the kinds of intuitive shopping experiences offered by other sectors, but airlines can also gain revenue, relevance and build loyalty.
The missing piece? Data
Being able to offer elevated retail experiences is nearly impossible for airlines that can’t collect or utilise passenger data. Without rich, accessible data, airlines can’t personalise offers, optimise pricing or create relevant bundles. Data is the foundation of meaningful retailing. And managing visibility into customers and their purchasing patterns will allow airlines to serve them better.
Using data to drive retail revenue
The real value of data lies in how airlines activate it. With the aid of AI-powered platforms, airlines can contextualise information in real time and generate highly personalised dynamic offers. They can offer packages unique to the passenger, that expand their seat offering to include secondary services like hotels, insurance, and lounge access, unlocking relevance and extra revenue.
Airlines that leverage advanced technologies will be able to power a smart, digital retail platform that puts convenience at the centre of the shopping experience for travellers. And data will drive this dynamic retailing at scale and define the next generation of airline success. With contextual, data driven retailing, airlines will evolve from service providers to full-scale, travel experience curators. For passengers, that will mean a smoother travel experience, with an easier time planning trips, and having bundled services at their fingertips. For airlines, new revenue streams will be unlocked, along with the potential for stronger customer relationships, and crucially, better improved profit margins.
Reimagining the airline journey
The aviation industry stands at a crossroads. Airlines can continue to sell seats and risk, irrelevance, or embrace a digital retailing model that unlocks new revenue, loyalty and growth. This shift demands investment in intelligent infrastructure, but the payoff is long term resilience. The skies ahead are full of opportunity for those ready to sell beyond the seat and reimagine the future of air travel.
(Editor’s Note: Gautam Shekar is Senior Vice President, Regional Head Asia Pacific & Middle East, at IBS Software.)
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