In January, the Lufthansa Group and the Lufthansa Innovation Hub established a new research alliance with Hopper focused on the subject of artificial intelligence. That was their third technology-related investment within a year, following investments in the startups Fleet Logistics and cargo.one. Photo: Lufthansa Group
HAMBURG, Germany — Airlines must move faster in the digital world if they are to be successful. This was one of the key takeaways from the 2019 Aircraft Interior Expo's (AIX) "Passenger Experience Conference" in Hamburg.
The success of airlines is key for the satellite industry, given how many hope that selling bandwidth for connected transportation will be a driver for future revenue growth. Christian Langer, chief digital officer of Lufthansa Group says the airline industry can learn a lot from the automotive sector when it comes to innovation.
“Today, our industry has a unique position of fixing people to a seat for 10 hours. The car industry will be similar in the future. The innovation cycle of the automotive industry is much, much quicker. Our customers will compare experiences from the car. We have to speed up innovation cycles,” he said.
An interesting fact that Langer pointed out, which again could have relevance to the satellite sector, is that $47 billion in venture capital (VC) was invested in the aerospace industry last year, significantly higher than in previous years. These start-ups could be key in driving a more progressive future for airlines. Langer admits Lufthansa is in the observer’s seat here, but says Lufthansa can learn from these companies.
“We try to keep up the pace. How can we speed up internal processes to keep speed with a start-up? Speed is the thing we have to learn as a traditional company,” Langer said.
Recently, Lufthansa announced it entered into a research alliance with Hopper focused on the subject of artificial intelligence. Lufthansa has made three technology-related investments within a year, following investments in the startups Fleet Logistics and cargo.one.
By leveraging powerful machine learning and AI, Hopper's proprietary technology accurately predicts flight and hotel prices and offers its users personalized recommendations at the optimal booking time, as well as alternative travel offers. This research project – in which the Lufthansa Group is making a multi-million-dollar investment – is an example of the direction airlines could head in the future.
Langer also spoke about how airlines may have to change loyalty programs, as young people may no longer be interested in collecting miles and points in the same way. He spoke of things like car sharing, scooter rental perhaps having a broader appeal to young travelers.
LEO at AIX
One of the main speakers this morning was Johanna A Bergi, CEO of Atlantic Airways, an airline that serves the residents of the Faroe Islands. It has fleet of three aircraft, soon to be four, and flies to 10 different countries.
Interestingly, Atlantic Airways is working to provide connectivity services via Iridium’s Low Earth Orbit (LEO) constellation. It is working with AirFi, a provider of flexible IFE systems to provide these connectivity services. Even though it is a very small airline, it could be a sign of things to come in terms of other airlines eventually placing their operations in LEO technology.
“We were a launch customer for AirFi LEO. Technology is helping us. We are cherry picking the best technology. We want everyone to have the same experience,” Bergi said.
When looking at the connected aircraft a lot of emphasis/pressure will be placed on the likes of Boeing and Airbus to come up with the aircraft of the future that power this new layer of connectivity services. Anais Marzo da Costa, head of aircraft interiors marketing at Airbus, said there is a “mobile revolution” taking place with the number of smartphone users set to double from three to six billion over the next few years.
In terms of connected aircraft, growth will also be pretty pronounced, going from 7,300 aircraft connected in 2017 to over 23,000 by 2025. This would clearly have huge implications for the satellite industry if we were to see this level of growth in the number of connected aircraft.
“Things are moving quite fast," said Marzo da Costa. "Smartphones are the number one traveler's companion. There are more multiscreen environments. We are in a transition phase. Already 57 airlines were offering wireless IFE streaming in 2018. Airlines are developing personalized offers by mobile connectivity, data analytics. According to research, 27 percent of passengers would be happy to share personal data, if it leads to a better customer experience.”
However, there were some grey areas, particularly when it comes to deciding who owns the customer data, whether airlines or the customers themselves. As airlines become more and more connected this will be a key issue.
The overriding message is that airlines are going to move with more speed in terms of their digital strategies and undoubtedly consume more bandwidth to enable these strategies, which can only be good news for the satellite sector.