Understanding How Data Analytics helps Airlines during Crisis

As the scope of survival for airlines gets parochial, emerging technologies such as data analytics and artificial intelligence are assisting in the revival of the aviation industry. Data analytics is the technique of analyzing the raw data for making intelligent decisions. For airlines, data analytics is a powerful tool for continuing operations.

Challenges for Airline Companies

The COVID-19 pandemic has added huge distress amongst the aviation sector, particular to the airline's companies. With the extended lockdown and restriction on tourism, this year has been the most challenging for the airlines. The International Air Transport Associations (IATA) has estimated a loss of worth US$84 billion for a net profit margin of -20.1%. The report by IATA states that the revenue will fall 50% to US$419 billion from US$838 billion in 2019. In 2021, the losses are expected to be cut to US$15.8 billion as revenues rise to US$598 billion.

Alexandre de Juniac, IATA's Director General and CEO state that, "Financially, 2020 will go down as the worst year in the history of aviation. On average, every day of this year will add $230 million to industry losses. In total, that's a loss of $84.3 billion. It means that based on an estimate of 2.2 billion passengers this year, airlines will lose $37.54 per passenger. That's why government financial relief was and remains crucial as airlines burn through cash."

However, the turmoil amongst the airline's companies began way before COVID-19 pandemic halted operations. Owing to the loss in revenue, many international fleet companies filed for bankruptcy. And while some were able to get back to the business through state or government aid, others were either liquidated or acquired by other non-fleet companies. For example, the aviation industry in India witnessed consequent setbacks of three international airline companies between 2018-2020. A report released by the Centre for Aviation in March this year states that by the end of May, most global airlines will be bankrupt.

Revenue Management

Data analytics is considered to be the ace card of revenue management for airlines companies. It helps in identifying which flights routes are demanded by the customers and the prices which the customers are willing to pay. As the domestic travel restrictions have significantly eased, companies are using data analytics to map out the maximum passengers in particular routes, for prioritizing and managing the air travel. Additionally, data analytics assists airline companies in deciding the pricing range, by analyzing customer behavior. Moreover, data analytics also aids in deciding the expected marginal seat revenue (ESMR) and ancillary prize optimization. This becomes extremely important in detecting the likeliness of a passenger cancelling the flight, to negate the revenue loss. During the crisis, revenue management has become imperative for airline companies.

Air safety and Airplane Maintenance

Airlines lost more than 30% of its revenue, due to delay in flights because of an unplanned maintenance glitch. Data analytics integrated with predictive analytics assists airline companies to manage the internal system operations. By analyzing the historical data accumulated in the sensors, computer and desktops, airline companies evaluate the technical situation and predict the instances that can hinder air safety. This way they can avoid the expenses caused due to delay in flights.

Offering More Customized Services to the Customers

Through data analytics, airline companies can analyze the customer behaviour and preferences, based on the feedback given to them. By leveraging AI for feedback analysis and data analytics for market research, airlines can identify the areas where they lack in customer support. In this way, they can offer a more customized service to the customers.