Digital innovation is an immense topic for all airlines, who are increasingly exploring how digital developments can help them realise efficiencies and improvements across their businesses. Lufthansa Innovation Hub’s Research & Intelligence team has taken it upon itself to take a deep dive into this subject matter to create an overall ranking of the most digital airlines. Here, FTE takes a look at the report, which compares 26 major carriers in Europe and the Americas across four categories – Digital Organisation, Digital Strategy, Digital Product and Digital Engagement.
Firstly, some background information: The approach used for the Airline Digital Index (ADiX) report considers the customer-facing side (Digital Output) as well as internal capabilities (Digital Input) relevant to digital success. Input covers the fields of Organisation and Strategy; Output encompasses Product and Engagement. A total of 38 metrics are aggregated into an index, providing a final score of digital maturity for each airline. The data for all metrics was collected between 2017 and 2019 depending on the variable.
The report states: “Airlines are large organisations with very well-established processes, given the importance of safety. Everything is repeatedly tested before it can be rolled out. This puts the airline industry in a different position than more experimental markets like e-commerce or media. Nevertheless, digitalisation and automation offer huge potential in the airline sector, and not least of all for improving safety.
“Tracking the progress towards unlocking the value in digitalisation is challenging. We decided to develop the Airline Digital Index (ADiX) exactly because of this difficulty. The ADiX quantifiably measures digitalisation amongst a selected group of airlines, providing some clarity and comparability regarding carriers’ readiness to prepare for the digital future.”
The airlines covered in the report were selected based on geography, language and relevance, as well as size, measured via passenger numbers and fleet size. Europe and the Americas were selected partly to narrow down the complexity of the project.
The full ADiX report is available here (with an exclusive 30% discount for our readers when using the code “fteonly”). In this article we look at a small selection of the findings.
Among the categories explored in detail is “Digital Product”, which includes everything from online and mobile products/services to having a Wi-Fi connection on board. The metrics try to capture both the availability and quality of these products.
SAS tops the table in the metrics relating to Digital Product, mainly driven by strong performance in loading speeds and very short app updating cycles. However, when it comes to Online Booking Ease (a part of Digital Product), Vueling is the leader, with 29 clicks needed to book a domestic flight online – the fewest of any airline covered in the report. Norwegian is second with 31 clicks.
Meanwhile, in the Inflight Connectivity category – as measured by share of fleet with Wi-Fi infrastructure (based on publicly available information) – JetBlue (100%) and Southwest (100%) top the scores, with Norwegian in third place (90.74%). The report states: “We hold the belief that airlines which place emphasis on digital success strive towards ensuring a seamless digital experience on board. While some passengers relish the (rare) lack of connectivity that flying can offer, other travellers see it as a disturbance. Providing the connectivity option to customers is undoubtedly a digital asset. We are therefore happy to congratulate Southwest, JetBlue, and Norwegian for pioneering in-flight Wi-Fi connectivity.”
Another of the categories explored in detail is Digital Organisation, which is topped overall by Eurowings, followed by easyJet and then United. This category is further broken down into Digital Workforce, Recruitment of Digital Talent, Digital Leadership Recruiting, Digital Management, and Asset Intensity.
When it comes to Digital Workforce specifically – defined by the share of employees (on LinkedIn) that work in either technology or digital-related fields – KLM comes out on top, with Aer Lingus and Eurowings in second and third place respectively.
The report states: “Having a large share of tech and digital employees can be taken as a strong signal that an airline has numerous digital projects in place which require the deployment of this talent. As employing tech people is expensive, we can infer that airlines are getting value out of their digital talent and, by proxy, out of their digital initiatives. Being able to attract and keep this digital talent is equally important. This indicates that the respective airline is offering the right environment to satisfy its tech people (culture, IT infrastructure, challenging mission, etc.) and laying the foundation for driving digital innovation forward in the long run.
It continues: “A counter-argument could be that many organisations work heavily with external IT providers, meaning their share of employees in digital/IT is low despite many projects being deployed. Yet, working with external providers still requires in-house digital talent to select, manage, and successfully complete the right projects. Furthermore, deciding to bring more tech talent in-house implies that companies consider digital innovation a core capability that needs to be leveraged with full control.”
Also noteworthy is the fact that when it comes to Recruitment of Digital Talent – measured by the share of open vacancies with digital-related job titles – three US-based carriers, Alaska Airlines (33%), JetBlue (29.5%) and United Airlines (28.7%), make up the top-three.
“An average share of over 20% of job postings targeting tech roles by the leading 10 airlines is an impressive statement, especially for an industry like ours whose workforce is largely made up of operational roles (think of pilots, cabin crew, ground staff) as they are the ones responsible for fulfilling the core task of what every airline does: flying travellers from A to B,” the report states. “This high share of digital jobs is a strong indicator that many airlines have realised the importance of technology in addressing today’s customers and in making smarter decisions across a variety of internal functions (e.g. pricing, network planning, MRO).”
Investing in startups
Another eye-catching section of the report takes a look at Digital VC Investment, defined as the number of investments in startups by airlines (again based on publicly available information). Looking at the top-five, as of January 2019 JetBlue had made 20 startup investments, KLM, British Airways and Iberia had each made seven, and easyJet and United had made four investments each.
According to the report: “Looking at the results, JetBlue clearly leads the pack with its dedicated corporate venture capital unit, JetBlue Technology Ventures. JetBlue correlates its investment activity with being one of the more modern airlines among our ADiX sample, by virtue of having been founded in only 1998.”
If you’re interested in purchasing Lufthansa Innovation Hub’s full 50-page Airline Digital Index (ADiX) report, click here and use the discount code “fteonly” for an exclusive 30% discount.