SIA's digitalisation efforts take off amid operating challenges

Singapore

SINGAPORE Airlines (SIA) is investing significantly in its digital initiatives as it seeks to boost revenue as well as enhance operations and customer service amid increasingly crowded skies.

The airline group is channelling "several hundreds of millions" of dollars over a five-year span as part of wide-scale efforts to digitalise its operations.

"It's increasingly difficult for companies to stand out from others," SIA's senior vice-president (sales & marketing) Campbell Wilson said in an interview with The Business Times. "SIA has been able to stand out from others for a long time by virtue of history, service reputation (and) the Singapore Girl. We can't rest on these laurels."

One key part of its ongoing digital revamp is building a holistic database on its passengers, from which it will leverage data analytics and algorithms to derive insights on each passenger. Such insights will enable the airline group to offer tailored products and services to individual consumers via channels such as its website or electronic direct mailers (EDMs).

"What technology allows us to do is to present the right combination of products, services and price that . . . best suits (a) person's profile," added Mr Wilson, stressing that this enables the airline group to differentiate itself from low-cost carriers and other full-service carriers that may not be able to put together similar packages.

The aim is to convert existing website traffic to a transaction and ultimately, revenue. While increasing conversion is the "lowest hanging" fruit, it would also be the "biggest mover of the needle", he noted. "A lot of people get to our website and don't actually complete through the transaction."

One example of a personalised offer for the silver generation could include promising a meet-and-assist service on arrival and a seat near the front of the cabin - services that may not cost extra, but could provide value to a passenger. Personalising the sales experience is increasingly important as more and more consumers let their fingers do the shopping by going online, Mr Wilson went on to highlight.

Some of these efforts are starting to pay off. Thanks to data analytics, SIA has been able to drive a 20 per cent greater uptake in sales of preferred seats - which come at a fee - to selected passengers. This can be expanded to other areas of ancillary revenue such as duty free products, insurance and cabin upgrades.

This comes as legacy carriers such as SIA and Cathay Pacific grapple with an increasingly competitive industry, with the Gulf and Chinese carriers expanding aggressively on routes, often at cutthroat fares. For FY16/17, SIA posted a 55 per cent slump in full-year earnings to S$360.4 million, weighed down in part by declining yields.

The airline is working on improving operations by rolling out apps for its pilots and ground staff, while its engineering division is leveraging predictive maintenance for the upkeep of aircraft. To this end, it is working with tech giants such as IBM as well as startup firms. Its cabin crew already have an app to help them better serve passengers onboard, as well as to enhance operational processes.

From mid-June, its pilots will have access to apps on company-issued iPads giving them flight-related updates, which will allow them to go straight-to-the-gate without having to stop at the control centre. The app covers pre-flight through post-flight operations - such as the flight plan and pilot rosters - and also cuts down on paperwork.

"That saves a lot of time and improves productivity for pilots," pointed out George Wang, SIA's senior vice-president of information technology. In the interest of security, data in the app is protected with encryptions and access controls; pilots will also only be able to access information relating to their own flights.

Similarly, an app will be made available for ground services staff by year end so they can work more efficiently, while giving them access to more data which will help with decision-making and serving customers, Mr Wang added.

Meanwhile, other features are due to be introduced for SIA's website and app, namely tie-ups with Samsung Pay, Apple Pay and ride hailing service Grab. A one-touch payment option is also on the agenda for added convenience.

On the back-end, the group is "re-wiring" its underlying technical framework so that improvements and new features can be rolled out more swiftly on its website and app. The first phase is slated for completion by the beginning of next year.

Other airlines are also turning to various forms of digitalisation to keep costs low, increase revenue and improve customer satisfaction. It was reported that low cost carrier AirAsia, for example, plans to analyse passenger data to find ways to enhance passenger experience.

Digitisation aside, SIA chief Goh Choon Phong has set up a transformation office as part of a broad review so that the airline can position itself better for long-term growth. This will include taking a hard look at ways to generate additional revenue, reduce costs, exploit synergies and improve businesses processes.

"SIA has done more to respond and adapt than most of its peers," noted Centre for Aviation (CAPA) analyst Brendan Sobie, commenting on the transformation efforts in a recent report. "However, the industry is changing at an even faster speed and competition has never been so intense," he went on to say, adding that SIA may still need to push the envelope even further.