Leading the Digital Metamorphosis of the Airline Industry

Airline

Nov 29

Case Study: A Digital Transformation Journey in the Airline Industry

Introduction

This company has dramatically transformed itself from one of the world's deadliest airlines into one of the safest airlines in the world with the maximum seven stars rating. The transformation didn't just happen in a few years but through decades of well planning and executions. In 2017, the company continued to develop its IT platform, where almost 100% of the company's business processes were automated. Today, it continues to innovate and lead the airline industry.

Types of Transformation

Decades of Digital Transformation

Steps of Digital Transformation

1. Transformation Objectives. Any business issues encountered?

It had a bad reputation for having one of the greatest incidents and crashed airlines, especially during the Sixties and Seventies, with a remarkable 60 million passengers a year. The Nineties were better but still not as good since it still was involved in some incidents or accidents.
As the largest airline company in Russia, the growth in the number of passengers triggered the urgency of modernization.

2. Set Goals

Retire old planes with the safest models from Airbus and Boeing from 1994 to 2009
Rebrand and redefine itself by hiring branding experts (early 2000s)
Achieve digitalization in all business processes and operations to meet the need for a gradual increase in the number of passengers
Utilize the latest technologies from the world's top IT companies to help automate the repair maintenance and fleet management
Establish a foundation for future growth and global expansion

3. How to implement

Since 2013, the company has begun to implement a series of IT strategies include the creation of a unified IT platform that manages all external and internal facing processes such as registration, ticketing, and ordering spare parts.

Develop a marketing tool that targets the audience with analytics technologies that can help predict and attract customers while growing the customer base through carefully searching and selecting potential customers
Develop 3 main platforms to implement their digital technologies: SAP ERP enterprise management system, Lufthansa Systems for billing, and the Sabre system for armoring.
Develop various subsystems include the maintenance of the flight validity and maintenance and repair of aircrafts
Use the Internet of Things (IoT) in multiple locations include onboard aircraft reporting status
Develop AI solutions to assist the discovery of fuel price, pricing of passenger traffics, spare part requirements, and conditions of weather, runway, and environment.

4. Technology Tools

Use IBM's most advanced technologies turn data into valuable insight from extracting predictive pattern
By using IBM technologies, SPSS and BigInsights, the company developed the analytical system that can create predictive modeling with data mining and machine learning by leveraging over 300 data points, such as purchase history, destination types, and the number of purchased tickets.
With the analytical system, the company can tailor the customer journey from ticket to flight by creating unique customer profiles and the customer lifetime value.

5. Process Review

The company continues to monitor the progress of the digital transformation with various internal metrics, and its annual results have been published as well.
The company reported an 11.4% increase in passenger numbers for the first eight months of 2019, in line with its target growth rate for the year.
The company has in place the Innovative Development Programme until 2025, which defines the key focus areas, activities, and KPIs for innovation. The KPIs include reduced product costs, higher quality of services, energy savings, lower environmental footprint, and increased labor productivity.
The company is on course to achieve its 10th straight year of traffic growth.
From 2008 to 2018, its compound average growth rate in passenger numbers was 17.0%.

Digital Strategy Analysis

Digital technology is embedded across all operating processes of the company to ensure passenger satisfaction throughout the customer journey
The process of digital transformation is apparent and transparent in all internal and external processes, such as aircraft maintenance, management of the security, and customer journeys and experience, including ticket sales, mobile app development, and website enhancement.
Develop mid-term and long-term strategic plans and goals to support growth, and they are reviewed and updated on an annual basis.

Results

In 2019, Aeroflot Group enjoys the status among the to 20 global airlines by passenger traffic, and in 2018, the company carried 55.7 million passengers and ranked 18th globally. According to CAPA (Centre for Aviation), Aeroflot is a clear-cut leader among European carriers with annual passenger traffic growth of 56.08%, which is the best score overall across the world aviation.
The continuous expansion by Aeroflot Group of its positions in the global aviation elite is sure evidence of the successful implementation of the ambitious goals of Aeroflot's 2023 Strategy. The job of continuous improvement never ends. Aeroflot continues to seek to adopt new technologies and approaches to improve its operating performance and customer service.
With a Brand Strength Index score of 88.8, this makes the world's most powerful airline brand.
Hold Four Star Airline status from Skytrax, the authority on airline service quality.
On TripAdvisor Best Airlines list (based on customer reviews from around the world) and named the best major airline in Europe

About the Company

Aeroflot, a Russian company that serves 159 destinations in 54 countries. Aeroflot is the Russia's flagship carrier.

Aeroflot's 250-strong fleet is the youngest of any airline worldwide that operates more than 100 aircraft. In 2018, Aeroflot carried 35.8 million passengers (55.7 million passengers as Aeroflot Group, including subsidiaries).