Travel in the Credit Crunch

It's no surprise that Americans are traveling less during the credit crunch era. One of the pillars that had been supporting domestic carriers in the downturn, however -- international travel -- is now also showing signs of slowing. What started out as a tough year for air travel has become a very difficult one, with operating costs still high, and capacity reductions tied to those high costs.

But airline challenges go beyond the current credit crunch. Airlines derive credit from a variety of sources, so air carriers are not tied to just the banks involved in the credit crisis. It's more complex than that. With credit tight, IT investments made by airlines are also at risk -- ironically, the same investments that would enable them to be more nimble and efficient in tight credit situations. But I believe that if a particular technology carries with it a proven return on investment, those types of projects can and will get done. The technology that airlines really want and need is that which allows them to most effectively manage their operations, including enabling more passengers to manage their own air travel.

Airlines are focused like never before on projects that will ultimately cut costs, drive revenue growth, and, logically, profits. For example, a robust technology that enables airlines to more efficiently manage passenger and cargo load factors or departure operations will help them save money and resources. Also, expect to see more customer relationship management-based pricing. This is ticket pricing derived on your value to the airline. Basing prices on a formula that uses your historical data, credit data, etc., is something none of the airlines are doing yet. But other businesses do it successfully, so it's on the table.

It is hard to say how soon this all may happen. But realize that in the not-too-distant future, airlines will be able to recognize you and your history with that carrier just as other hospitality companies do. You will someday soon be identified when your ticket is booked, which will trigger an automated system of weighting your customer value to the airlines. To reap the rewards, of course, you will need to provide more information up front so that the airline will be able to recognize you, log in your loyalty program number, and apply their reward policies. Bottom line: The credit crunch is accelerating change among the airlines. Although what the future holds is unclear, you can be sure the way in which carriers and customers interact will be far different. And there's no going back.

Airline Futurist • Miami • www.us.amadeus.com

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