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IATA VISION 2050: How should airlines provide travelers in 2050 to make them not only satisfied customers but industry advocates?

An Overview with Recommendations from a Customers Point of View

By Wang Hongjun hongjun.wang@gmail.com Undergraduate Nanyang Business School, Nanyang Technological University (Singapore)

This article was first written and submitted by Wang Hongjun for the IATA Vision 2050 Contest (http://www.iata.org/about/Pages/vision-2050.aspx) an essay contest for students and aviation professionals below the age of 30. The competition was organized by the International Air Transport Association and attracted entries from all over the world. This essay answered to 1 of 4 contest subtopics How should airlines provide travelers in 2050 to make them not only satisfied customers but industry advocates? by providing An Overview with Recommendations from a Customers Point of View. This essay was awarded 1st Runner-up Position and commended for its different perspective and solid research by a judging panel. As the 1st Runner-up, Hongjun will be invited to attend the IATA AGM in June 2011 with air travel and accommodation expenses covered by the Organizers. This article is being provided to you in full for free with the permission of the author and you are free to circulate it to others as long as the article is kept in its entirety with full credit to the author. Highlights from this article will also be published in Airlines International Magazine, which is IATAs flagship magazine.

By Wang Hongjun (hongjun.wang@gmail.com) 1st Runner-up in IATA Vision 2050 Contest

Page 2 of 5 Simply Answered: Provide travelers with performance that far exceeds their expectations. To forecast the future, we will look at the current consumer decision making process and existing trends to identify how airlines can increase consumer advocacy. While technology may change drastically, human nature will in essence remain the same and technological advancements will always be applied to humanitys needs. Todays Me Generation consumers are increasingly self-centered and do things out of a primary need to show others and look good through social comparison. The increased narcissism of this generation and the next will define expectations for the next 40 years. Airlines need to design the experience around customers and be more attentive to these needs. Given air travels increased accessibility, flying from one point to another without mishap is taken for granted and occurrences of the unexpected or minor annoyances will affect how customers feel about the experience and what they tell their networks. Summary Customers are demanding more personalized service and attention (evidenced by ever increasing consumer complaints/feedback) They seek to express their identity, social status and signal their desires through the products they consume Increased social connectivity enables them to signal and share stories that reflect their social identities while converging with like-minded people

The following model will help identify areas where consumer advocacy can be nurtured by 2050.

By Wang Hongjun (hongjun.wang@gmail.com) 1st Runner-up in IATA Vision 2050 Contest

CONSUMPTION & CONVERSATION MODEL

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PRE PURCHASE SEARCH

DECISION

EXPERIENCE

POST PURCHASE

PURPOSE & SOCIAL IDENTITY Who am I? Why am I flying? Business / Leisure Where to? With who?

EXPECTATIONS Known/Unknown Initial/Adjusted Assessment Criteria Price/Reliability/etc Decision Reconciliation of trade-offs

FEEL PURCHASE Easy/Difficult Hidden surprises? (pleasant/unpleasant) Guarantees? Happy /Neutral /Irritated Comfort EVALUATION (Below/Adequate / Beyond )Expectation Outstanding Events (+ve & -ve leave strong impressions)

Causes Comparison (Upwards/ Downwards/Horizontal) Connection (with airline / other passengers) Externalities (other Passengers, Environment) How others are treated (visual feedback)

Dissonance Justification (internal/external)

PERCEPTION Existing Knowledge/Impression

CONVERSATIONAL VALUE Why should I tell others? Negative/Positive

Based on: 1 Hand (Past Experience) 2nd Hand (Social Network) 3rd Party (Advertorial Claims)
st

PERCEPTUAL DEPOSIT Ongoing accumulation of experience / perception that builds on/ reduces the existing positive / negative impression. Inward towards your internal perception bank Outward towards other peoples perception bank

By Wang Hongjun (hongjun.wang@gmail.com) 1st Runner-up in IATA Vision 2050 Contest

Page 4 of 5 Recommendations To prevent commoditization and airline price wars caused by the growth of LCCs by 2050, airlines must align services with the unique expectations and social identities of their targeted market segment. Social identities adopted by customers help frame expectations. Business travelers value reliability, frequent holiday-makers enjoy variety and affordability, while honeymooners seek blissful happiness. Segmentation along purpose and social identities will be effective in managing expectations, maximizing profits and increasing user satisfaction by delivering above the promised expectations. Low-cost does not necessarily mean low-class and airlines should work on delivering meaning to their brands and defining what it represents in usage, status and identity. I.e.: XX customers fly more, fly with the young crowd, I get there on time or I enjoy the fine things in life. So that customers can associate with and express themselves through their choice of airline. In theory, Happiness can be increased by reducing unpleasant incidents. 1. Most travelers o readily recount unhappy incidents and take a pleasant flight for granted because a cautionary tale bears more conversational value than a non-event exist in state of emotional neutrality during the flight

2. Extremities evoke a reaction and create conversational value To evoke happiness, airlines can: 1. Remove annoyances Unintended elbow /knee jabs during the flight, having peoples rear near your face during meals and engaging in awkward aisle-side tangos are currently accepted as part of the package. To ensure a truly pleasant flight, future innovation should eradicate space constraints. 2. Do the unexpected - Pleasant surprises generate positive reactions and customers are likelier to share these experiences because of its conversational value. i.e. I found a $50 voucher in my seat! While not everyone benefits from such surprises, the visible effort to do more than expected will help create the perception of trying harder than others.

By Wang Hongjun (hongjun.wang@gmail.com) 1st Runner-up in IATA Vision 2050 Contest

Page 5 of 5 Customers like to feel important. While the potential cost of making every customer feel important may be inhibitive, the potential rewards of consumer advocacy necessitate the pursuit of relations with customers while managing the associated costs. Here are two key areas to start: Complaint Management Customers expect a human response to their complaints. The most common failures include ignoring complaints or the lack of a follow-through of promised action. Some may forget their complaint; others will elevate the issue further to seek a resolution. Airlines should adopt industry wide standards created in consultation with customers through a Wikistyled compilation that will be reviewed every X years to ensure customer service excellence by guiding customer service officers in solving complaints. Customer Involvement Increase opportunities for customer participation: o Active Roles in - frequent flyer program design, destination planning etc o Crowdsource for marketing purposes like naming of airplanes and inflight magazine content Create system for implementing and rewarding customers suggestions, good feedback and ideas on how to improve the user-experience Rewards can be non-monetary, such as an acknowledgement that boosts the customers ego. For instance a Brilliant Idea Certificate can be awarded and an online poll for the best idea of the year could be conducted with prize giveaways.

These will encourage customers to talk about their contributions and bond airlines with customers. Once customers feel connected, they are likelier to become consumer advocates who are accepting of mistakes because every mistake is viewed as an opportunity for them to contribute towards their airlines improvement and be rewarded for it. In conclusion, technology in 2050 may be way more complex than what we are able to imagine and may solve the current constraints we face, our emotions and feelings will remain largely constant. Therefore, to please future customers, we have to start now by focusing on their user experience and apply future technological advancements for their benefit. (Total: 1000 words including Model)

By Wang Hongjun (hongjun.wang@gmail.com) 1st Runner-up in IATA Vision 2050 Contest