Airline Business Foundations Essay Example

Digital and Mobile Technology in the Airline Industry

Technology has been viewed as one of the most breathtaking spectacles to have ever taken place in the world. The business industry has also remained dynamic. However, the rapid advances of information technology have influenced industry operations greatly. The airline industry has not been left behind in this new development. Airlines find themselves facing unprecedented pressure to continue producing economic value or fall out of business. It should be observed that labor, fuel and asset costs continue to escalate coupled with a shrinking customer base and heightening the competition levels. For instance, the International Air Transport Association (IATA) indicated that the industry made losses amounting to nine billion US dollars. Further, the association reported that only few airlines were able to earn a return on investment larger than capital costs.

Due to the increasing competition, airlines recognize the value of adopting mobile technologies in their operations (International Air Travel Association, 2010). Competition is an aspect of business which is overly dynamic as demonstrated in the paper. It is also known that customers have become more techno-savvy than before. With the number of customers whose information technology knowledge increases with each day, airlines need to expand their services to ensure mobile technology services are on offer. For this reason, it is arguable that airlines adopt mobile and other information technology platforms to ensure that their customer base is protected. In addition, the same approach is critical in a bid to attract potential customers. For instance airlines such as the Alaska Airlines, Continental Airlines and American Airlines have been on the forefront in integrating mobile technology into their operations (Serling, 2008; Bamber, Gittell, Kochan & von Nordenflytch, 2009). The companies rely on paperless boarding passes and mobile applications in selling tickets and giving travelers real time check-in services. The platforms are also significant in ensuring that the entire traveling experience is desirable. In particular, mobile technology provides customers with an opportunity to take charge of their traveling experiences. It should be noted that with the expansion of the usage of smartphones and Web technology, customers are able to choose what they need. Mobile technology has been especially useful in freeing time for customers. As an illustration, customers do not need to visit airline premises physically since they can make their choices using the online platform. In this regard, it is evident that customers are spared the agony of cueing to secure tickets or make enquiries about travel concerns.

Challenges are imminent in any industry. Moreover, competition poses serious concerns. In the airline industry, innovative entrants, new operating models, and increasing airline consideration are some of the emerging challenges. Thus, leading airlines recognize the value of keeping pace with the changing dynamics in order to remain relevant. Whereas, it is thought that such challenges have serious ramifications, it is also anticipated that the adoption of new approaches such as the mobile technology would have a significant impact on the industry.

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Indicative Statistics

The adoption of mobile technology has increased greatly in the last ten years. The International Telecommunications Union (2009) projected that world mobile phone subscribers were to hit the five billion mark by 2010. Among the five billion mobiles, one billion devices were expected to have the Internet access (International Data Corporation, 2009). The overall forecast revealed that shipments of smartphones were to continue expanding at roughly 26% each year up to 2015. In the face of such changing mobile statistics, various business engagements such as transport/flying were bound to change to reflect the prevailing realities.

Mobile Boarding Passes

The introduction of mobile boarding passes has also had considerable effects. For instance, when Horizon Air and Alaska Airlines introduced mobile applications for BlackBerry, iPhone and Windows Mobile, their intention was clear (Serling, 2008). These airlines appreciated the value customers place on convenience. To ensure that that objective is realized, the airlines introduced the applications. Using the applications, customers are able to check flight status, flight schedules, check-in times and flight alerts. With such services, it is easier for the companies to retain customers. Moreover, these services are central to the improvement of the company’s revenue through the promotion of customer loyalty.

The services are also significant in terms of product/service differentiation. It should be noted that the airline industry offers more or less, similar services. Hence, gaining a competitive edge requires genius innovations to differentiate the services that are offered. Through product differentiation, industry players are able to cut a niche for themselves. For instance, the Alaska Airlines has managed to differentiate itself as a market leader in offering superior customer service, in addition to easing customers’ traveling experiences (Serling, 2008). The adoption of mobile technology is central to the attainment of such goals. In a nutshell, the mobile technology is of great use regarding attempts of airlines to reach customers and satisfy their needs.

The Continental Airlines became the first airline to extend mobile boarding passes to customers plying the Britain-United States route (Bamber, Gittell, Kochan & von Nordenflytch, 2009). The Continental Airline offers mobile passes which reveal flight and passenger information. In practice, it is expected that this technology saves money for the company. This is due to the fact that adopting the technology is cheaper compared to employing people to be checking and counter-checking details. Similarly, such technology facilitates saving time since the systems are automatic. In addition, an automated system eliminates inefficiencies associated with manual systems such as duplication or manipulation of tickets.

The Continental Group offers the passes at forty-two airports, and plans to expand its services to other airports across the globe (Bamber, et al., 2009). The fact that customers have an opportunity to access services while on the move is a great invention. However, not each customer owns a smartphone. For that reason, the companies adopting such technologies do not need to assume that every customer is served. However, mobile technology extends to calling. This allows those customers who do not have smartphones to call, and enquire about their flights or services on offer.

The issue of competition dominates business circles. In 2009, the Continental Airlines partnered with Jumptap in running a campaign intended to increase brand awareness (Bamber, et al., 2009). The partnership was also intended to increase interest on reductions in fare prices. On its part, Jumptap was required to run graphical banners, and host a study on the Continental Company’s brand. In the study, the focus was on measuring customers’ perceptions about the company’s presence. Through the initiative, the intention to purchase the company’s tickets using mobile platforms went up by 22 % while the mobile purchase of tickets rose by the same percentage. The implication is that mobile passes have gained acceptance, and their usage is likely to continue expanding.

It should also be noted that the use of text messaging is critical in mobile communication. Text messaging is cost effective and time saving. For this reason, its use continues to rise. In the airline industry, unexpected events may occur. Therefore, under such circumstances, reaching customers could be difficult. However, text messaging allows airlines to reach customers instantaneously. This is useful especially when it is necessary to inform customers about unexpected delays so that they can readjust their schedules.

Advertising is a critical component in the marketing field. Airlines need to market their products. This is not only necessary in creating brand awareness, but also in notifying existing customers about new product or service offerings. Through the use of mobile technology, airlines have a potent tool to reach both existing and prospective customers. Through advertising, customers know what is on offer, and make choices to suit their preferences. Consequently, the airlines received an opportunity to influence customers’ decisions through the use of mobile advertising.

In truth, mobile technology is cost effective to airlines and time saving to customers, aspects that augur well for the airline industry. The mobile technology is not only interactive, but is also critical in improving the air traveling experience.

Possibilities

Evidence shows that the shift in mobile technology affects business considerations of any industry (Amit & Zott, 2001). Put differently, the mobile telephone offers a new platform where organizations can develop new content and services to enhance both interactions and operations. With this development, business organizations such as airlines are enabled to personalize services. Personalization of services is instrumental in empowering passengers and employees. It should be noted that personalization of services entails tailoring services to meet individual demands. Through adjustments, companies are able to satisfy peculiar demands to different customers. Such an approach is critical in business since it contributes to an increase in customer levels of satisfaction leading to increased returns as customer loyalty increases. It is equally important to note that with mobile communication technology, airlines are in a position to store customer data in a central database. Such databases are significant when serving customers since airline employees are able to understand customers’ preferences, and serve them based on their demands.

In customer-based industries, airlines have a chance to gain clients’ loyalty by adopting mobile technologies (Turban, Lee, King & Chung, 2000). This position is held in reference to service and operational innovations. As already observed, the increased adoption of mobile technology accompanied by a wide range of applications enhances the ability of airlines to create new passenger, experiences, touch points and capabilities necessary to offer personalized services.

The current revolution in the airline industry is largely attributed to mobile technology. It is notable that traditional organizational models are changing with a view to exploiting emerging opportunities. The shift has led some organizations to experiment with offerings of personalized services. The International Telecommunications Union (2009) found that mobile-based applications were on a dramatic increase. The boarding passes account for a significant expansion. It is projected that mobile boarding will continue to increase as airlines hasten the replacement of traditional approaches with modern ones. Card-based applications including cards used to access premium lounges, credit card as well as cash payments and baggage receipts are also likely to be replaced as airlines hasten the integration of mobile technologies into their systems. At the same time, the preference for wireless devices among airline staff in supporting aircraft maintenance is expected to rise.

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In regards to aircraft maintenance, the adoption of mobile-based messaging services has also risen significantly (International Telecommunications Union, 2009). This affects aircraft bases and headquarters. This turn of events is largely attributable to the digitalization of airline operations as airlines move to take full advantage of emerging opportunities. The emerging opportunity of increasing the exchange of information is significant since it is expected to bring the element of real time communication into the industry. Thus, this type of technology is expected to open an opportunity for real-time solutions to emerging issues.

Another possibility that emerges out of the digitalization of operations is on problem resolution. Through the use of text messages, airlines now have a new way to respond to different types of concern (Pappas, 2000). For instance, airlines have a better platform to handle emergency situations. Through the use of email, airlines are in a position to furnish customers with information on gate requirements, flight details, cross-selling and upselling of supplementary goods and services.

Another aspect that has already been dealt with is advertising. However, the focus is on receiving an additional platform to create awareness about products and services (Pappas, 2000). The online platforms are of particular significance since they have a wide spread reach, implying that airlines can reach a big population at a short time.

Impact

The adoption of digital and mobile technologies is examined in reference to efficiency, novelty, lock-in and complementariness. It is arguable that the adoption of Internet and mobile technologies is significant in reducing operational costs. As pointed, using such technologies is cheaper compared to employing personnel to handle the same issues. Similarly, the use of the Internet or digital platforms in advertising is cheaper than using traditional approaches (Pappas, 2000). Consequently, the adoption of modern technologies has influenced the advertising landscape.

Efficiency remains a fundamental aspect in airline business. This is due to the fact that efficiency is a critical driver of value when making decisions. It should be noted that customers make decisions based on their perceptions of the value of products or services (Feldman, 2008). When transaction efficiency costs are high, the costs would increase leading to the reduced value of interaction between a service provider and a consumer. With the adoption of digital platforms, airlines are in a position to offer pre-purchase services to customers (Feldman, 2008). This implies that customers are able to survey the company’s products to determine whether what is on offer meets their demands or not. It is after such surveys that customers make decisions. This approach is both critical in cost-cutting measures to both the airlines and customers since no party wastes each other’s time and resources in making decisions. Viewed differently, online platforms are cheaper to maintain and access since no resources are wasted in unnecessary clerical activities.

Real-Time Decision-Making

Digital platforms offer plausible avenues where real-time decisions can be made (Croft, 2001). For instance, when reserving flights, one does not need to rely on airline agents. Instead, a customer only needs to sign in into his/her account and reserve a slot. It is also worth noting that a customer does not need to cover a certain geographical space in order to close a deal. The mobile technology is critical in sealing transactions from wherever location one is (Feldman, 2008). Upon placing a request, airlines are able to instantaneously furnish customers with payment details confirming the completion of transactions. In this regard, mobile technology plays a huge role in satisfying both customers’ and airline’s needs. It also emerges that the online interface provides customers and airlines with an opportunity to interact. Such interactions have been thought as instrumental in developing a strong attachment where customers become loyal. Similarly, levels of customers’ trust are expanding, which is an important aspect in successful business operation. Digital platforms can also allow airlines to receive an instant feedback regarding any promotional activities that they run (Feldman, 2008). The same applies to the determination of demand and customers’ needs. Another important issue is that digital platforms allow airline organizations to monitor competitors’ progress. Knowing competitors’ level of service delivery allows an airline organization to adjust its services in order to keep pace or move ahead of the rest.

It is often remarked that information is power. Since information is viewed as power, having it is significant. Digital platforms, availability of data and mobility of devices are critical in the dissemination of information (Croft, 2001). Hence, the widespread use of digital and mobile technologies is significant to the airline industry in as far as the airline industry is concerned. It has been observed that real-time decisions are critical to the success of many ventures, such as air transport. For that to succeed, it is important to access up-to-date information. Having such information is significant in decision-making as it helps to satisfy customers’ needs and airline aspirations.

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Airline and Customer Decision-Making

Mobile and digital devices enable customers to make intelligent as well as precise decisions concerning traveling services (Croft, 2001). This applies to traveling from one’s residence or office to the airports. As it was already observed, through the use of mobile technology, a customer is able to monitor proceedings at airports. Such information is useful for the customers in their decision-making process. For instance, a customer can monitor airport traffic or check on flight status before deciding how to adjust his/her arrangements. Moreover, integrated systems can inform customers on proceedings regarding coming earlier or delaying arrival at the airport.

Some of the alerts available are travel-related. Under the travel platforms, the alerts sent relate to security status, flight time, etc. (Feldman, 2008). The author also observes another service which is mobile marketing. It reflects a form of dynamic packaging or personalization of services. Mobile marketing caters for new offerings or discounts. The third service considered is the mobile concierge service which relies on pushing a button. Upon pushing a button, a customer is able to access a concierge which is used to extend personalized services. In the fourth category, mobile payment is possible due to the increased capability of smartphones. Smartphones have become secure electronic wallets which are preferable given the context of digital business. Another critical development is based on extension of services with augmented reality. Mobile technology facilitates location or context awareness allowing for an immersive environment for passengers. Most importantly, mobile technology has enabled airlines to ensure real time intelligence. Such technologies allow airlines to shift attention from analytical yield management based on batches to optimized real-time yield management on the basis of customer location and preferences.

Susceptibility to Failure

Technology is susceptible to failure. In an event that technology fails, it is possible that communication would be affected negatively (Pappas, 2000). Such issues as phishing are also common. It is also possible to infiltrate an organization’s platform and send misleading messages to the customers. However, leading airlines employ stringent measures to protect their online and mobile platforms. With particular attention to fraud, it is notable that online fraudsters are always looking for avenues to defraud unsuspecting people. Hence, customers are required to be careful whenever they use online or mobile payment systems. It should also be noted that the adoption of a uniform platform such as the one used to notify customers about new products or offers could be counterproductive. Some customers consider being jammed with messages as an affront on their peace.

Competition

With the adoption of digital platforms in airline industry, customers’ knowledge has expanded. Unlike in the past where information was inaccessible, now anybody with a mobile digital device has a chance to find information (International Telecommunications Union, 2009). Such realities, coupled with an growing number of industry players have led to the increased competition. The implication is that organizations are required to monitor such events and ensure that they offer competitive products and services to wade off competition. In a nutshell, the increased amount of accessible data, the spread of mobile and digital technologies have contributed to the increase in the airline industry competition.

Summary

The paper centers on the possibilities and impact of mobile, digital applications and the use of increasing data in the airline industry. From the opening remarks, it is indicated that technology is among the most influential processes that have taken place relating to the conduct of business. Despite increasing costs which made the industry unattractive, the role of digital and mobile technology has opened new realms for airline industry players.

Indicative statistics which are useful in understanding the airline industry dynamics are presented. The statistics are based on the International Telecommunications Union (2009) which projected that by 2010, world mobile phone subscribers were set to increase to five billion. One billion of users were expected to have devices with Internet capability. Overall, the projection indicated that shipments of smartphones were expected to remain on an upwards trend. Roughly, the statistics was expected to increase by 26% each year up to 2015. Various business engagements such as transport were bound to be affected to reflect the prevailing realities.

It is established that competition has heightened partly due to the development in mobile and digital technologies. This is due to the fact that spread of such technologies has contributed to an increase in customers’ awareness regarding product offerings as well as product pricing. Similarly, large information or data about competitors are available to an industry player. The implication is that the players have to continue innovating products and services to stay ahead of the airline industry.

Some of the most notable influences of mobile and digital technology on the industry are visible in the introduction of mobile boarding passes. Apart from enhancing convenience, airlines introducing such passes contribute significantly to an automated scheduling of flights which is more cost effective compared to the manual system. Thus, the introduction of such systems was critical in increasing companies’ revenues.

Text messaging also emerges as an important development based on the adoption of digital and mobile platforms. The paper finds that text messaging is cost effective as well as time saving. Its use in the airline industry continues to rise, as unexpected events may occur any time. Thus, text messaging assumes significance in reaching customers to inform them about unanticipated events. The mobile and digital technology also has a bearing on advertising and the market approaches that airline companies employ. The paper proceeds to remark that mobile technology is cost effective to airlines as well as time saving to customers. The mobile technology is also found to be interactive and critical in improving the air traveling experience.

Digital and mobile platforms support real-time decision-making. This aspect is of particular relevance when reserving flights as customers do not need to rely on airline agents to complete their transactions. It is demonstrated that mobile and digital technologies are critical in completing transactions from any location. This holds since placing a request is enough to allow airlines to furnish customers with payment details confirming the completion of a transaction instantaneously. Hence, it is evident that mobile technology plays a big role in satisfying both customers’ and airlines’ needs. The paper also shows that the online interface allows customers and airlines to interact freely. These interactions are instrumental in developing strong attachments between the two parties. In conclusion, it is observed that mobile and digital technologies have had far-reaching implications, in addition to opening new possibilities for the airline industry.

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