Budget airlines spend big on data
EUROPE'S low-cost airlines once mocked the air miles programmes run by flag carriers as expensive relics of a bygone era.
But after watching wide-eyed as customer databases were valued at billions of dollars, they are scrambling to catch up.
Europe's two largest low-cost carriers, Ryanair and easyJet, have both swallowed their pride in the past year and launched customer loyalty schemes.
They have announced significant investments in data analytics.
Their aim is to ape retailers like Amazon.com and Tesco in driving profits
by leveraging data from vast online
customer bases to create highly
personalised offers and adapt services
to customer preferences more quickly.
"This has transformed retail and
it's going to transform airlines," said
Kenny Jacobs, a former Tesco executive spearheading Ryanair's digital drive as chief marketing officer.
He has overseen the hiring of
150 IT specialists since he was appointed 21/2 years ago.
EasyJet chief executive Carolyn McCall, who last year appointed the company's first head of data science to oversee 25 data analytics specialists, has described data as "incredibly important" for the airline.
A spokesman for easyJet described
the potential benefits from digitisation
and data analytics as "exponential".
John Walton, who writes for online aviation publication Runway Girl Network, said, from the customer's point of view, they and other airlines had some way to go.
"I see few visible signs of European airlines - or indeed other airlines - using the rich data they hold to drive bookings and revenues," he said, citing a lack of useful, targeted offers from any of the half a dozen airline loyalty schemes he held.
Ryanair and easyJet are taking different approaches, with Ryanair focusing squarely on selling optional extras while easyJet sees ticket pricing at the heart of its data drive.
First introduced in the 1980s, air miles programmes allowing customers to earn free flights by sticking to one carrier were sometimes set up as independent entities.
In 2014, analysts put a value of up to US$2.5 billion (S$3.4 billion) on the
loyalty division of Qantas when it was considering floating it or selling a part.