Is innovation harder to deliver in travel Travel Tech Insights

Is innovation harder to deliver in travel?

Successfully progressing innovation from idea to implementation stage in the travel sector is notoriously hard. At Travel Tech Summit: The Future of Travel, leaders from the global airline industry revealed how it’s done.

The event, organised by trade and innovation agency Enterprise Ireland, was attended by key travel industry executives from around the world, as well as from Ireland’s fast-growing travel tech sector.

A panel moderated by Kevin O’Shaughnessy, CEO of travel app City Hook, titled “Is Innovation Harder to Deliver in Travel?”, delivered insights from companies including American Airlines, International Airlines Group (IAG) and  SITA, the world’s leading specialist in air transport communications and IT solutions, whose innovation lab is based in Donegal.

Locating decision makers in travel

In an industry as large and complex as aviation, having an advocate within the target organisation is crucial, delegates heard.

“It’s critical to know who the decision makers are and in large organisations that’s hard,” said Kevin MacFarland, managing director digital, American Airlines.

“It may seem like marketing is going to be able to make this decision, when in reality it involves payments, so if you don’t get the accounting folks on board in an airline, things are going to get cratered. That’s really hard to figure out.”

To help, American Airlines will pair staff at executive level with start-ups it is partnering, to help them navigate. “Otherwise you’re just wasting your time and ours,” he said.

Having an advocate is also important because no new product exists in isolation.

“It’s going to have to work with all the other 20 million systems that are in an airport or an airline,” said Barry McLaughlin, lead architect at SITA Lab. “If you’re not from a travel industry background you’ve got to take the time to understand it, and to understand the pressures that people are under in airport and airline operations.”

Problem-driven innovation in travel

To succeed, innovation in the sector should be led by organisational or customer need.

“Our view is two to five years out, we’re looking at technology that is just emerging and trying to see what problem does that solve,” said McLaughlin.

“We are constantly talking to our customers and we’ll try and marry it with some problem they are facing or some opportunity they want to investigate.”

Where it finds a match between a technology that might work for a particular scenario, it will move to proof of concept.

“We always build something and always partner with an airline or airport to put it in and see if it works. If something doesn’t work, we shelve it and that’s fine. Where it actually gets harder is where it does work, because now you’ve got to transition this into your portfolio.”

Innovation that scales

To be adopted at American Airlines, an innovation must have the ability to scale. “If it’s not going to scale to 500 airports eventually, it’s probably not something we are going to progress,” said MacFarland.

One of the most structured programmes open to start-ups in the travel space is IAG’s accelerator programme, Hangar 51.

Securing a place is competitive, however, with hundreds of applicants whittled down to just 10. These then work side by side with IAG team members to develop their solutions, said Dupsy Abiola, head of global innovations at IAG.

Abiola sits in the Group’s digital transformation team and actively scouts out emerging technology with the potential to solve significant problems across the Group’s operations.

Tips for start-ups targeting travel

Start-ups pitching to the sector must both know its audience and be easy to work with, she advised.

“As entrepreneurs, you have to understand the market you are targeting. You also have to be a good partner in order to get from the emerging technology you have to a scaled solution. Sometimes we see technologies that are really interesting but the teams aren’t easy to work with, for a variety of reasons,” she said.

Lack of industry awareness is problematic. “When start-ups all over the world pitch me their solutions I ask ‘Are you a replacement or are you an add on?’ A lot of people are basically saying ‘You need all the things you currently have, plus an additional GBP 2 million for my solution’. If so, how are you going to make the value case?” she asked.

“If it’s a replacement product, they need to understand what they are replacing – and why. If it’s an add on product, which budget are they going into, to magic this GBP 2m for their solution?”

Although travel is beset by legacy systems, the right innovation should sit well within them, just as Stripe has proven possible in the similarly beset banking and payments sectors, she pointed out.

Be aware, however, of the particular regulatory and other constraints specific to travel.

“If your solution requires multiple loads of sensitive data and multiple touchpoints, you have got to understand what you are asking of these companies, how likely is it that they are going to put in an unknown entity, and if so, the enormity of that task,” she warned.

“If it’s something that is fizzy and simple, that adds value and doesn’t require touching operations, that’s a very different conversation to ‘I want to add something interesting to the side of your planes’.”

At American Airlines, “there’s a real bifurcation with things that hit the operation,” agreed MacFarland. “Our motto is to move fast and deliver customers and team members safely, not break things.”

Be aware that even a seemingly simple app that tells people how long it will be before they reach their departure gate brings with it a raft of additional liability and operational complexity, he cautioned.

While speakers were looking at emerging technologies ranging from robotics to machine learning and blockchain, each was at pains to point out that it’s not about the innovation per se, but about improving their business.

“We’re super focused on running the best airline in the world, that’s what we are here to do,” explained MacFarland.

“We’re an airline, we’re not an investment company. We will make investments, we will help partners to scale if it’s strategic and good for our industry and our customers to do so, but for us it’s about taking care of team members who are taking care of customers, so that investors want to invest.”

“If you can scale and make great returns – then great, because it’s going to improve our customers’ experience and our employees’ experience. That’s the heart of our approach, versus any particular area of innovation or investment strategy.”

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