The explosion of low cost carriers in the region and their anticipated growth – a true revolution for the airline industry in Latin America – was at the heart of IATA’s Wings of Change event, one of the most important aviation conferences in Latin America and the Caribbean.
I was delighted to participate in the panel “More Choice for the Passenger: The Evolution of Airline Business Models” together with 5 industry experts. One of the panelists, Estuardo Ortiz, CEO & Founder of JetSMART airlines, explained the business model based on obtaining traffic not from other airlines, but from people previously using others methods of transportation such as buses or cars. Since JetSMART’s entry into the market, 100% of its traffic has come from that target group. Therefore, its strategy and all its decisions are focused on cost so the airline can sell at very low prices to attract this new traveler segment. The low price strategy is working and the numbers speak for themselves. Estuardo stated that 5 to 8% of customers in the last few months have been people who had never flown before.
But how is the customer experience changing with this revolution? As I mentioned during the panel, I strongly believe that the key is to offer a consistent and relevant experience to the passengers throughout the entire journey while educating them and providing clear information on the choices they are making. Whether they are traveling with an LCC or a full service carrier, communication is key. For example, from the inspiration and booking stages, it should be clear what their fare includes and if it allows purchase of additional services, avoiding unpleasant surprises at the airport.
Technology has to support the communication needed across all channels. The Amadeus merchandizing platform can assist airlines thanks to its ability to set rules and define different options in multiple channels, at the right time and with high level of personalization.
I believe that managing the increasing amount of information that airlines have to process, while boosting collaboration and exchange with other players in the ecosystem is a key challenge – but a challenge that also offers an opportunity for Amadeus, airlines and the industry as a whole.