There has been a lot of shouting about big data and it is clear that there should be something useful in it for our industry given the massive amount of data we generate. (See my previous post on big data).
The timing is right. Processing and storage costs for data have dropped dramatically over the last decade, while manipulating data on a large scale has never been faster and easier, thanks to the cloud.
But we are yet to fully understand how to exploit big data, which for some people is giving it the feel of a solution looking for a problem.
The last time I posted on this subject I talked about potential operational benefits. This is the area SITA Lab is looking at. We're exploring the possibilities of aggregating operational data to see how we can optimize performance in the airport environment. It includes data from areas such as fuel and baggage management, as well as the various assets used by airlines and airports to turn aircraft around efficiently. Look out for updates on this later in the year.
The other area where big data is starting to make an impact is on the retailing side of our business.
Airlines were fast to grasp the potential of selling tickets online. The industry was almost entirely e-ticketing by the end of 2007 and today around 75% of tickets are bought online - way above the level of goods sold online for high street retailers.
But airlines have fallen behind the retail industry in exploiting this advantage. Retailers use their customer data far more effectively to provide shoppers with a more relevant and customized experience. Amazon, for instance, makes up to 20%-30% of its revenues from its recommendation engine, according to some reports.
For the most part airlines only use one database for customer intelligence - their loyalty program. But what about the rest of their customers who are not enrolled? Leisure travelers in particular tend not to be members of frequent flyer programs, nor do business travelers who are affiliated to a rival carrier program.
Airlines are looking to use big data and predictive analytics to identify and understand the preferences of these 'unknown' travelers. What we can expect as passengers is a highly personalized engagement with airlines whether it is on the website or using our mobile phone. Recommendations and 'exclusive' offers will be the norm as airlines bet on the power of suggestion as a way to grow their top line.
It's a fast developing area so check out SITA's Insight paper Big data: a big boost for ancillary revenues. There will also be plenty of discussion on big data at this year's Air Transport IT Summit, so get along if you can, or follow on social media.